Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals With Acute Kidney Injury, Conditions for Coverage for End-Stage Renal Disease Facilities, End-Stage Renal Disease Quality Incentive Program, and End-Stage Renal Disease Treatment Choices Model, 55760-55843 [2024-14359]

Agencies

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

[Federal Register Volume 89, Number 129 (Friday, July 5, 2024)]
[Proposed Rules]
[Pages 55760-55843]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-14359]



[[Page 55759]]

Vol. 89

Friday,

No. 129

July 5, 2024

Part III





 Department of Health and Human Services





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 Centers for Medicare and Medicaid Services





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42 CFR Parts 410, 413, 494, et al.





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

Federal Register / Vol. 89 , No. 129 / Friday, July 5, 2024 / 
Proposed Rules

[[Page 55760]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 410, 413, 494, and 512

[CMS-1805-P]
RIN 0938-AV27


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

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update and revise the End-Stage Renal 
Disease (ESRD) Prospective Payment System for calendar year 2025. This 
rule also proposes to update the payment rate for renal dialysis 
services furnished by an ESRD facility to individuals with acute kidney 
injury. In addition, this proposed rule would update requirements for 
the Conditions for Coverage for ESRD Facilities, ESRD Quality Incentive 
Program, and ESRD Treatment Choices Model.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, by August 26, 2024.

ADDRESSES: In commenting, please refer to file code CMS-1805-P.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1805-P, P.O. Box 8010, 
Baltimore, MD 21244-8010.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1805-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
    [email protected] or Nicolas Brock at (410) 786-5148, for 
issues related to the ESRD Prospective Payment System (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 Drug Add-on Payment Adjustment (TDAPA) or 
Transitional Add-On Payment Adjustment for New and Innovative Equipment 
and Supplies (TPNIES).
    [email protected], for issues related to the ESRD Quality 
Incentive Program (QIP).
    [email protected], for issues related to the ESRD Treatment 
Choices (ETC) Model.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to 
view public comments. CMS will not post on Regulations.gov public 
comments that make threats to individuals or institutions or suggest 
that the commenter will take actions to harm an individual. CMS 
continues to encourage individuals not to submit duplicative comments. 
We will post acceptable comments from multiple unique commenters even 
if the content is identical or nearly identical to other comments.
    Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a 
plain language summary of this rule may be found at https://www.regulations.gov/.
    Current Procedural Terminology (CPT) Copyright Notice: Throughout 
this proposed rule, we use CPT[supreg] codes and descriptions to refer 
to a variety of services. We note that CPT[supreg] codes and 
descriptions are copyright 2020 American Medical Association (AMA). All 
Rights Reserved. CPT[supreg] is a registered trademark of the AMA. 
Applicable Federal Acquisition Regulations (FAR) and Defense Federal 
Acquisition Regulations (DFAR) apply.

Table of Contents

    To assist readers in referencing sections contained in this 
preamble, we are providing a Table of Contents.
I. Executive Summary
    A. Purpose
    B. Summary of the Major Provisions
    C. Summary of Cost and Benefits
II. Calendar Year (CY) 2025 End-Stage Renal Disease (ESRD) 
Prospective Payment System (PPS)
    A. Background
    B. Proposed Provisions of the CY 2025 ESRD PPS
    C. Transitional Add-On Payment Adjustment for New and Innovative 
Equipment and Supplies (TPNIES) Applications and Proposed Technical 
Change for CY 2025 Payment
    D. Continuation of Approved Transitional Add-On Payment 
Adjustments for New and Innovative Equipment and Supplies for CY 
2025
    E. Continuation of Approved Transitional Drug Add-On Payment 
Adjustments for CY 2025
III. Proposed CY 2025 Payment for Renal Dialysis Services Furnished 
to Individuals With AKI
    A. Background
    B. Proposal to Allow Medicare Payment for Home Dialysis for 
Beneficiaries With AKI
    C. Proposed Annual Payment Rate Update for CY 2025
    D. AKI and the ESRD Facility Conditions for Coverage
IV. Proposed Updates to the End-Stage Renal Disease Quality 
Incentive Program (ESRD QIP)
    A. Background
    B. Proposed Updates to Requirements Beginning With the PY 2027 
ESRD QIP
    C. Requests for Information (RFIs) on Topics Relevant to ESRD 
QIP
V. End-Stage Renal Disease Treatment Choices (ETC) Model
    A. Background
    B. Provisions of the Proposed Rule
    C. Request for Information
VI. Collection of Information Requirements
VII. Response to Comments
VIII. 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
IX. Files Available to the Public via the Internet

I. Executive Summary

A. Purpose

    This rule proposes changes related to the End-Stage Renal Disease 
(ESRD) Prospective Payment System (PPS),

[[Page 55761]]

payment for renal dialysis services furnished to individuals with acute 
kidney injury (AKI), the Conditions for Coverage for ESRD facilities, 
the ESRD Quality Incentive Program (QIP), and the ESRD Treatment 
Choices (ETC) Model. Additionally, this rule proposes and discusses 
policies that reflect our commitment to achieving equity in health care 
for our beneficiaries by supporting our ability to assess whether, and 
to what extent, our programs and policies perpetuate or exacerbate 
systemic barriers to opportunities and benefits for underserved 
communities. For example, we are proposing to expand access to home 
dialysis for patients with acute kidney injury, which would assist this 
vulnerable population with transportation and scheduling issues and 
allow them to have flexibility in their dialysis treatment modality. 
Additionally, we discuss the incorporation of oral-only drugs into the 
ESRD PPS bundled payment beginning January 1, 2025, which will expand 
access to the 21 percent of the ESRD PPS population who do not have 
Part D coverage. Our internal data show that a significant portion of 
ESRD beneficiaries who lack Part D coverage are African American/Black 
patients with ESRD. Our policy objectives include a commitment to 
advancing health equity, which stands as the first pillar of the 
Centers for Medicare & Medicaid Services (CMS) Strategic Plan,\1\ and 
reflect the goals of the Administration, as stated in the President's 
Executive Order 13985.\2\ 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, 
socioeconomic status, geography, preferred language, or other factors 
that affect access to care and health outcomes.'' \3\ In the calendar 
year (CY) 2023 ESRD PPS final rule, we noted that, when compared with 
all Medicare fee-for-service (FFS) beneficiaries, Medicare FFS 
beneficiaries receiving dialysis are disproportionately young, male, 
African American, have disabilities and low income as measured by 
eligibility for both Medicare and Medicaid (dual eligible status), and 
reside in an urban setting (87 FR 67183). In this proposed rule, we 
continue to address health equity for beneficiaries with ESRD who are 
members of underserved communities, including but not limited to those 
living in rural communities, those who have disabilities, and racial, 
and ethnic minorities and sovereign American Indian and Alaska Native 
tribes. The term `underserved communities' refers to populations 
sharing a particular characteristic, including geographic communities, 
that have been systematically denied a full opportunity to participate 
in aspects of economic, social, and civic life.\4\
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    \1\ Centers for Medicare & Medicaid Services (2022). Health 
Equity. Available at: https://www.cms.gov/pillar/health-equity.
    \2\ 86 FR 7009 (January 25, 2021). https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
    \3\ Centers for Medicare & Medicaid Services (2022). Health 
Equity. Available at: https://www.cms.gov/pillar/health-equity.
    \4\ 86 FR 7009 (January 25, 2021). 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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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 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 percentage increase, 
reduced by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act. This rule proposes updates to the 
ESRD PPS for CY 2025.
2. Coverage and Payment for Renal Dialysis Services Furnished to 
Individuals With Acute Kidney Injury (AKI)
    On June 29, 2015, the President signed the Trade Preferences 
Extension Act of 2015 (TPEA) (Pub. L. 114-27). Section 808(a) of the 
TPEA amended section 1861(s)(2)(F) of the Act to provide coverage for 
renal dialysis services furnished on or after January 1, 2017, by a 
renal dialysis facility or a provider of services paid under section 
1881(b)(14) of the Act to an individual with AKI. Section 808(b) of the 
TPEA amended section 1834 of the Act by adding a new subsection (r) 
that provides for payment for renal dialysis services furnished by 
renal dialysis facilities or providers of services paid under section 
1881(b)(14) of the Act to individuals with AKI at the ESRD PPS base 
rate beginning January 1, 2017. This proposed rule would update the AKI 
payment rate for CY 2025. Additionally, this rule proposes to extend 
payment for home dialysis and the payment adjustment for home and self-
dialysis training to renal dialysis services provided to beneficiaries 
with AKI.
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 establishes 
incentives for facilities to achieve high quality performance on 
measures with the goal of improving outcomes for ESRD beneficiaries. 
This rule proposes to replace the Kt/V Dialysis Adequacy Comprehensive 
clinical measure with a Kt/V Dialysis Adequacy measure topic and to 
remove National Healthcare Safety Network (NHSN) Dialysis Event 
reporting measure beginning with Payment Year (PY) 2027. This rule also 
requests public comment on two topics relevant to the ESRD QIP.
4. End-Stage Renal Disease Treatment Choices (ETC) Model
    The ETC Model is a mandatory Medicare payment model tested under 
section 1115A of the Act. The ETC Model is operated by the Center for 
Medicare and Medicaid Innovation (Innovation Center). The ETC Model 
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.'' Subsequently, the ETC Model has 
been updated three times in the annual ESRD PPS final rules for 
calendar year (CY) 2022 (86 FR 61874), CY 2023 (87 FR 67136), and CY 
2024 (88 FR 76344).
    This proposed rule would make certain changes to the methodology 
CMS uses to identify transplant failure for the purposes of defining an 
ESRD beneficiary and attributing an ESRD beneficiary to the ETC Model. 
We are also soliciting input from the public

[[Page 55762]]

through a Request for Information (RFI) on topics pertaining to 
increasing equitable access to home dialysis and kidney 
transplantation. Feedback we receive from the public will be used to 
inform CMS' thinking regarding opportunities and barriers the 
Innovation Center may address in potential successor models to the ETC 
Model.

B. Summary of the Major Provisions

1. ESRD PPS
     Proposed update to the ESRD PPS base rate for CY 2025: The 
proposed CY 2025 ESRD PPS base rate is $273.20, an increase from the CY 
2024 ESRD PPS base rate of $271.02. This proposed amount reflects the 
application of the wage index budget-neutrality adjustment factor 
(0.990228) and a productivity-adjusted market basket percentage 
increase of 1.8 percent as required by section 1881(b)(14)(F)(i)(I) of 
the Act, equaling $273.20 (($271.02 x 0.990228) x 1.018 = $273.20).
     Proposed modification to the wage index methodology: We 
are proposing a new ESRD-specific wage index that would be used to 
adjust ESRD PPS payment for geographic differences in area wages on an 
annual basis. For CY 2025, we are proposing to change our methodology 
to use mean hourly wage data from the Bureau of Labor Statistics (BLS) 
Occupation Employment and Wage Statistics (OEWS) program and full time 
equivalent (FTE) labor and treatment volume data from freestanding ESRD 
facility Medicare cost reports to produce an ESRD-specific wage index 
for use, instead of using the hospital wage index values for each 
geographic area, which are derived from hospital cost report data. 
Additionally, we are proposing to update the wage index to reflect the 
latest core-based statistical area (CBSA) delineations determined by 
the Office of Management and Budget (OMB) to better account for 
differing wage levels in areas in which ESRD facilities are located.
     Proposed annual update to the wage index: For CY 2025, we 
are proposing to update the wage index using the proposed new 
methodology previously discussed based on the latest available data. 
This is consistent with our past approach to updating the ESRD PPS wage 
index but would use the proposed new wage index methodology based on 
data from BLS and freestanding ESRD facility Medicare cost reports.
     Proposed modification to the outlier policy: We are 
proposing to revise the outlier policy in several ways. For the outlier 
payment methodology, we are proposing to use a drug inflation factor 
based on actual spending on drugs and biological products rather than 
the growth in the price proxy for drugs used in the ESRD Bundled 
(ESRDB) market basket. We are also proposing to use the growth in the 
ESRDB market basket price proxies for laboratory tests and supplies to 
estimate CY 2025 outlier spending for these items. Additionally, we are 
proposing to account for the post-TDAPA add-on payment adjustment 
amount for outlier-eligible drugs and biological products during the 
post-TDAPA period. Lastly, we are proposing to expand the list of 
eligible ESRD outlier services to include drugs and biological products 
that were or would have been included in the composite rate prior to 
establishment of the ESRD PPS.
     Proposed annual update to the outlier policy: We are 
proposing to update the outlier policy based on the most current data 
and the proposed methodology changes previously discussed. Accordingly, 
we are proposing to update the Medicare allowable payment (MAP) amounts 
for adult and pediatric patients for CY 2025 using the latest available 
CY 2023 claims data. We are proposing to update the ESRD outlier 
services fixed dollar loss (FDL) amount for pediatric patients using 
the latest available CY 2023 claims data and update the FDL amount for 
adult patients using the latest available claims data from CY 2021, CY 
2022, and CY 2023. For pediatric beneficiaries, the proposed FDL amount 
would increase from $11.32 to $223.44, and the MAP amount would 
increase from $23.36 to $58.39, as compared to CY 2024 values. For 
adult beneficiaries, the proposed FDL amount would decrease from $71.76 
to $49.46, and the MAP amount would decrease from $36.28 to $33.57. We 
note that the proposed inclusion of composite rate drugs and biological 
products would cause a significant increase in the proposed FDL and MAP 
amounts for pediatric patients due to high-cost composite rate drugs 
furnished to pediatric beneficiaries; this is discussed in further 
detail in section II.B.3.e of this proposed rule. The 1.0 percent 
target for outlier payments was achieved in CY 2023, as outlier 
payments represented approximately 1.0 percent of total Medicare 
payments.
     Proposed update to the offset amount for the transitional 
add-on payment adjustment for new and innovative equipment and supplies 
(TPNIES) for CY 2025: The proposed CY 2025 average per treatment offset 
amount for the TPNIES for capital-related assets that are home dialysis 
machines is $10.18. This proposed offset amount reflects the 
application of the proposed ESRDB productivity-adjusted market basket 
update of 1.8 percent ($10.00 x 1.018 = $10.18). There are no capital-
related assets set to receive the TPNIES in CY 2025 for which this 
offset would apply.
     Proposed update to the Post-TDAPA Add-on Payment 
Adjustment amounts: We calculate the post-TDAPA add-on payment 
adjustment in accordance with Sec.  413.234(g). The proposed post-TDAPA 
add-on payment amount for Korsuva[supreg] is $0.4047 per treatment, 
which would be included in the calculation of the total post-TDAPA add-
on payment adjustment for each quarter in CY 2025. The proposed post-
TDAPA add-on payment adjustment amount for Jesduvroq is $0.0019 per 
treatment, which would be included in the calculation for only the 
fourth quarter of CY 2025. We are proposing to update these post-TDAPA 
add-on payment adjustment amounts according to the most recent data for 
the final rule. We are proposing to publish the final post-TDAPA add-on 
payment adjustment amount for drugs and biological products that do not 
have a full year of utilization data at the time of rulemaking after 
the publication of the final rule through a Change Request (CR). For CY 
2025, this would be the case for Jesduvroq.
     Proposed update to the Low-Volume Payment Adjustment 
(LVPA): We are proposing to modify the LVPA policy to create a two-
tiered LVPA whereby ESRD facilities that furnished fewer than 3,000 
treatments per cost reporting year would receive a 28.3 percent upward 
adjustment to the ESRD PPS base rate and ESRD facilities that furnished 
3,000 to 3,999 treatments would receive an 18.0 percent adjustment. We 
are also proposing that the tier determination would be based on the 
median treatment count over the past three cost reporting years.
     Inclusion of oral-only drugs in the ESRD PPS bundled 
payment: Under 42 CFR 413.174(f)(6), payment to an ESRD facility for 
oral-only renal dialysis service drugs and biological products is 
included in the ESRD PPS bundled payment effective January 1, 2025. In 
this proposed rule, we are providing information about how we will 
operationalize the inclusion of oral-only drugs into the ESRD PPS as 
well as budgetary estimates of the effects of this inclusion for public 
awareness.

[[Page 55763]]

2. Payment for Renal Dialysis Services Furnished to Individuals With 
AKI
     Proposed update to the payment rate for individuals with 
AKI: We are proposing to update the AKI payment rate for CY 2025. The 
proposed CY 2025 payment rate is $273.20, which is the same as the base 
rate proposed for the ESRD PPS for CY 2025.
     Proposed payment for home dialysis for beneficiaries with 
AKI: We are proposing to allow Medicare payment for beneficiaries with 
AKI to dialyze at home. Payment for home dialysis treatments furnished 
to beneficiaries with AKI would be made at the same payment rate as in-
center dialysis treatments. We are proposing to permit ESRD facilities 
to bill Medicare for the home and self-dialysis training add-on payment 
adjustment for beneficiaries with AKI, and to implement this adjustment 
in a budget neutral manner. We are proposing changes to the ESRD 
facility conditions for coverage (CfCs) to implement this policy 
change.
3. ESRD QIP
    Beginning with PY 2027, we are proposing to replace the Kt/V 
Dialysis Adequacy Comprehensive clinical measure, on which facility 
performance is scored on a single measure based on one set of 
performance standards, with a Kt/V Dialysis Adequacy measure topic, 
which would be comprised of four individual Kt/V measures and scored 
based on a separate set of performance standards for each of those 
measures. We are also proposing to remove the National Healthcare 
Safety Network (NHSN) Dialysis Event reporting measure from the ESRD 
QIP measure set beginning with PY 2027. We are requesting public 
comment on a potential health equity payment adjustment and are also 
requesting public comment on potential future updates to the data 
validation policy.
4. ETC Model
    We are proposing a modification to the methodology used to 
attribute ESRD Beneficiaries to the ETC Model, specifically, to the 
definition of an ESRD Beneficiary at 42 CFR 512.310. Under the ETC 
Model, CMS attributes ESRD beneficiaries to the ETC Model that meet 
several criteria including having a kidney transplant failure less than 
12 months after the transplant date. We are proposing to refine the 
methodology we use identify ESRD Beneficiaries with a kidney transplant 
failure to reduce the likelihood that CMS is overestimating the true 
number of transplant failures for the purposes of the model. We provide 
more detail on the proposal and its rationale in section V.B of this 
proposed rule.
    We are also seeking input from the public through a RFI on the 
future of the ETC Model, potential successor Models and other 
approaches CMS may consider to support beneficiary access to patient-
centered modalities for treatment of ESRD.

C. Summary of Costs and Benefits

    In section VIII.D.5 of this proposed rule, we set forth a detailed 
analysis of the impacts that the proposed changes would have on 
affected entities and beneficiaries. The impacts include the following:
1. Impacts of the Proposed ESRD PPS
    The impact table in section VIII.D.5.a of this proposed rule 
displays the estimated change in Medicare payments to ESRD facilities 
in CY 2025 compared to estimated Medicare payments in CY 2024. The 
overall impact of the CY 2025 payment changes is projected to be a 2.2 
percent increase in Medicare payments. Hospital-based ESRD facilities 
have an estimated 3.9 percent increase in Medicare payments compared 
with freestanding ESRD facilities with an estimated 2.1 percent 
increase. We estimate that the aggregate ESRD PPS expenditures would 
increase by approximately $170 million in CY 2025 compared to CY 2024 
as a result of the proposed payment policies in this rule. Because of 
the projected 2.2 percent overall payment increase, we estimate there 
would be an increase in beneficiary coinsurance payments of 2.2 percent 
in CY 2025, which translates to approximately $30 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 certain new and innovative equipment and supplies. The 
TDAPA and the TPNIES are not budget neutral.
    As discussed in section II.D of this proposed rule, since no new 
items were approved for the TPNIES for CY 2024 (88 FR 76431) there are 
no continuing TPNIES payments for CY 2025. In addition, since we did 
not receive any applications for the TPNIES for CY 2025, there would be 
no new TPNIES payments for CY 2025. As discussed in section II.E of 
this proposed rule, the TDAPA payment periods for Jesduvroq and 
DefenCath[supreg], would continue into CY 2025. As described in section 
VIII.D.5.b of this proposed rule, we estimate that the TDAPA payment 
amounts in CY 2025 would be approximately $207,675, of which, $41,535 
would be attributed to beneficiary coinsurance amounts.
2. Impacts of the Proposed Payment Rate for Renal Dialysis Services 
Furnished to Individuals With AKI
    The impact table in section VIII.D.5.c of this proposed rule 
displays the estimated change in Medicare payments to ESRD facilities 
for renal dialysis services furnished to individuals with AKI compared 
to estimated Medicare payments for such services in CY 2024. The 
overall impact of the CY 2025 changes is projected to be a 1.9 percent 
increase in Medicare payments for individuals with AKI. Hospital-based 
ESRD facilities would have an estimated 2.6 percent increase in 
Medicare payments compared with freestanding ESRD facilities that would 
have an estimated 1.9 percent increase. The overall impact reflects the 
effects of the proposed Medicare payment rate update and the proposed 
CY 2025 ESRD PPS wage index, as well as the proposed policy to extend 
payment for AKI dialysis at home, which is not expected to have any 
impact on payment rates. As discussed in section III.C.3, we are 
proposing to extend the ESRD PPS home and self-dialysis training add-on 
adjustment to AKI patients; however, that adjustment is required to be 
implemented in a budget neutral manner for AKI payments, so it would 
not have any impact on the overall payment amounts for AKI renal 
dialysis services and therefore is not included in these estimates. We 
estimate that the aggregate Medicare payments made to ESRD facilities 
for renal dialysis services furnished to individuals with AKI, at the 
proposed CY 2025 ESRD PPS base rate, would increase by $1 million in CY 
2025 compared to CY 2024.
3. Impacts of the PY 2027 ESRD QIP as Proposed
    We estimate that, as a result of previously finalized policies and 
changes to the ESRD QIP that we are proposing in this proposed rule, 
the overall economic impact of the PY 2027 ESRD QIP will be 
approximately $145.1 million. The $145.1 million estimate for PY 2027 
includes $130.5 million in costs associated with the collection of 
information requirements and approximately $14.6 million in payment 
reductions across all facilities.

[[Page 55764]]

4. Impacts of the Proposed Changes to the ETC Model
    The proposed change to the definition of an ESRD Beneficiary for 
the purposes of attribution in the ETC Model is not expected to have a 
net effect on the model's projected economic impact.

II. Calendar Year (CY) 2025 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) (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 (Affordable Care Act) 
(Pub. L. 111-148), established that beginning with CY 2012, and each 
subsequent year, the Secretary shall annually increase payment amounts 
by an ESRD market basket percentage increase 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 \5\ (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).
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    \5\ 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 
proposed rule except where referencing specific language in the Act 
or regulations.
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    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 percentage increase 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.
    Section 204 of the Stephen Beck, Jr., Achieving a Better Life 
Experience Act of 2014 (ABLE) (Pub. L. 113-295) 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 drugs and biological products 
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 an individual for the 
treatment of ESRD in the ESRD facility or in a patient's home. We have 
codified our definition of renal dialysis services at Sec.  413.171, 
which is in 42 CFR part 413, subpart H, along with other ESRD PPS 
payment policies. The ESRD PPS base rate is adjusted for 
characteristics of both adult and pediatric patients and accounts for 
patient case-mix variability. The adult case-mix adjusters include five 
categories of age, body surface area, low body mass index, onset of 
dialysis, and four comorbidity categories (that is, pericarditis, 
gastrointestinal tract bleeding, hereditary hemolytic or sickle cell 
anemia, myelodysplastic syndrome). A different set of case-mix 
adjusters are applied for the pediatric population. Pediatric patient-
level adjusters include two age categories (under age 13, or age 13 to 
17) and two dialysis modalities (that is, peritoneal or hemodialysis) 
(Sec.  413.235(a) and (b)(1)).
    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 six 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)); (4) a TPNIES for certain new and innovative renal 
dialysis equipment and supplies (Sec.  413.236(d)); (5) a transitional 
pediatric ESRD add-on payment adjustment (TPEAPA) of 30 percent of the 
per-treatment payment amount for renal dialysis services furnished to 
pediatric ESRD patients (Sec.  413.235(b)(2)); and (6) a post-TDAPA 
add-on payment adjustment for certain new renal dialysis drugs and 
biological products after the end of the TDAPA period (Sec.  
413.234(g)).
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 appeared in 
the August 12, 2010, issue of 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.

[[Page 55765]]

    Most recently, we published a final rule, which appeared in the 
November 6, 2023, 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 2024 ESRD PPS final rule.'' In that rule, we updated the ESRD 
PPS base rate, wage index, and outlier policy for CY 2024. We also 
finalized a post-TDAPA add-on payment adjustment; a TPEAPA for 
pediatric ESRD patients for CYs 2024, 2025, and 2026, administrative 
changes to the LVPA eligibility requirements to allow additional 
flexibilities for ESRD facilities impacted by a disaster or other 
emergency, clarifications on our TPNIES eligibility requirements, and, 
effective January 1, 2025, requirements for ESRD facilities to report 
time on machine for in-center hemodialysis treatments, and to report 
discarded amounts of renal dialysis drugs and biological products from 
single-dose containers or single-use packages. For further detailed 
information regarding these updates and policy changes, see 88 FR 
76344.

B. Proposed Provisions of the CY 2025 ESRD PPS

1. Proposed CY 2025 ESRD Bundled (ESRDB) Market Basket Percentage 
Increase; Productivity Adjustment; and Labor-Related Share
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 
percentage increase 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 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. In the CY 2023 
ESRD PPS final rule (87 FR 67141 through 67154), we finalized a revised 
and rebased ESRDB input price index to reflect a CY 2020 base year.
    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.
b. Proposed CY 2025 ESRD Market Basket Update
    We propose to use the 2020-based ESRDB market basket as finalized 
in the CY 2023 ESRD PPS final rule (87 FR 67141 through 67154) to 
compute the proposed CY 2025 ESRDB market basket percentage increase 
based on the best available data. Consistent with historical practice, 
we propose to estimate the ESRDB market basket percentage increase 
based on IHS Global Inc.'s (IGI) forecast using the most recently 
available data at the time of rulemaking. IGI is a nationally 
recognized economic and financial forecasting firm with which CMS 
contracts to forecast the components of the market baskets. As 
discussed in section II.B.1.b.(3) of this proposed rule, we are 
proposing to calculate the market basket update for CY 2025 based on 
the proposed market basket percentage increase and the proposed 
productivity adjustment, following our longstanding methodology.
(1) Proposed CY 2025 Market Basket Percentage Increase
    Based on IGI's first quarter 2024 forecast of the 2020-based ESRDB 
market basket, the proposed CY 2025 market basket percentage increase 
is 2.3 percent. We are also proposing that if more recent data become 
available after the publication of this proposed rule and before the 
publication of the final rule (for example, a more recent estimate of 
the market basket percentage increase), we would use such data, if 
appropriate, to determine the CY 2025 market basket percentage increase 
in the final rule.
(2) 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 ESRDB market basket percentage increase 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 
fiscal year (FY), year, cost reporting period, or other annual period) 
(the ``productivity adjustment'').
    The Bureau of Labor Statistics (BLS) publishes the official 
measures of productivity for the United States economy. As we noted in 
the CY 2023 ESRD PPS final rule (87 FR 67155), 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 would not 
affect the data or methodology.\6\ 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 CMS's website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. In 
addition, in the CY 2022 ESRD PPS final rule (86 FR 61879), we noted 
that effective for CY 2022 and future years, we would be changing the 
name of this adjustment to refer to it as the productivity adjustment 
rather than

[[Page 55766]]

the MFP adjustment. We stated this was not a change in policy, as we 
would continue to use the same methodology for deriving the adjustment 
and rely on the same underlying data.
---------------------------------------------------------------------------

    \6\ Total Factor Productivity in Major Industries--2020. 
Available at: https://www.bls.gov/news.release/prod5.nr0.htm.
---------------------------------------------------------------------------

    Based on IGI's first quarter 2024 forecast, the proposed 
productivity adjustment for CY 2025 (the 10-year moving average of TFP 
for the period ending CY 2025) is 0.5 percentage point. Furthermore, we 
are proposing that if more recent data become available after the 
publication of this proposed rule and before the publication of the 
final rule (for example, a more recent estimate of the productivity 
adjustment), we would use such data, if appropriate, to determine the 
CY 2025 productivity adjustment in the final rule.
(3) CY 2025 Market Basket Update
    In accordance with section 1881(b)(14)(F)(i) of the Act, we propose 
to base the CY 2025 market basket percentage increase on IGI's first 
quarter 2024 forecast of the 2020-based ESRDB market basket. We propose 
to then reduce the market basket percentage increase by the estimated 
productivity adjustment for CY 2025 based on IGI's first quarter 2024 
forecast. Therefore, the proposed productivity-adjusted CY 2025 ESRDB 
market basket update is equal to 1.8 percent (2.3 percent market basket 
percentage increase reduced by a 0.5 percentage point productivity 
adjustment). Furthermore, as noted previously, we are proposing that if 
more recent data become available after the publication of this 
proposed rule and before the publication of the final rule (for 
example, a more recent estimate of the market basket percentage 
increase and/or productivity adjustment), we would use such data, if 
appropriate, to determine the CY 2025 market basket percentage increase 
and productivity adjustment in the final rule.
(4) Labor-Related Share
    We define the labor-related share 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. For the CY 2025 
ESRD PPS payment update, we are proposing to continue using a labor-
related share of 55.2 percent, which was finalized in the CY 2023 ESRD 
PPS final rule (87 FR 67153 through 67154).
2. Proposed CY 2025 ESRD PPS Wage Indices
a. Background
    Section 1881(b)(14)(D)(iv)(II) of the Act provides that the ESRD 
PPS may include a geographic wage index payment adjustment, such as the 
index referred to in section 1881(b)(12)(D) of the Act, 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, we established a policy to adjust the labor-
related portion of the ESRD PPS 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. 
Under current policy, we use the Office of Management and Budget's 
(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/.
    We have also adopted methodologies for calculating wage index 
values for ESRD facilities that are located in urban and rural areas 
where there are 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 have computed the average wage index value of all 
hospitals in urban areas within the State to serve as a reasonable 
proxy for the wage index of that urban CBSA. For rural areas with no 
hospital data, we have computed the wage index using the average 
hospital 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).
    Under Sec.  413.231(d), a wage index floor value of 0.6000 is 
applied under the ESRD PPS as a substitute wage index for areas with 
very low wage index values, as finalized in the CY 2023 ESRD PPS final 
rule (87 FR 67161). Currently, all areas with wage index values that 
fall below the floor are located in Puerto Rico and the US Virgin 
Islands. However, the wage index floor value is applicable for any area 
that may fall below the floor. A further 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) and the CY 2023 ESRD 
PPS final rule (87 FR 67161).
    An ESRD facility's wage index is applied to the labor-related share 
of the ESRD PPS base rate. In the CY 2023 ESRD PPS final rule (87 FR 
67153), we finalized the use of a labor-related share of 55.2 percent. 
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 that same 
rule, 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. In the CY 
2023 ESRD PPS final rule (87 FR 67161), we finalized a permanent policy 
under Sec.  413.231(c) to apply 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. For CY 2025, as discussed in section II.B.1.b.(4) of this 
proposed rule, the proposed labor-related share to which the wage index 
would be applied is 55.2 percent.
    In the CY 2011 ESRD PPS final rule (75 FR 49116) and the CY 2011 
final rule on Payment Policies Under the Physician Fee Schedule (PFS) 
and Other Revisions to Part B (75 FR 73486) we established an ESRD PPS 
wage index methodology to use the most recent pre-floor, pre-
reclassified hospital wage data collected annually under the hospital 
inpatient prospective payment system (IPPS). The ESRD PPS wage index 
values have historically been calculated without regard to geographic 
reclassifications authorized for acute care hospitals under sections 
1886(d)(8) and (d)(10) of the Act and utilize pre-floor hospital data 
that are unadjusted for occupational mix.
b. Proposed Methodology Changes for the CY 2025 ESRD PPS Wage Index
    CMS has received feedback on our longstanding ESRD PPS wage index 
methodology from interested parties through comments on routine wage 
index updates in the annual ESRD PPS proposed rules. Commenters often 
suggest specific improvements for the

[[Page 55767]]

ESRD PPS wage index. In the CY 2024 ESRD PPS final rule (88 FR 76359 
through 76361), we discussed the comments on the routine wage index 
proposals from the CY 2024 ESRD PPS proposed rule (88 FR 42436); 
commenters, including the Medicare Payment Advisory Commission 
(MedPAC), suggested that we 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. MedPAC specifically suggested that CMS implement 
the recommendations discussed in its June 2023 report to Congress,\7\ 
which recommended moving away from the current IPPS wage index 
methodology in favor of a methodology based on all employer wage data 
for all Medicare PPSs with industry specific occupational weights. 
Additionally, MedPAC suggested that the new methodology reflect local 
area level differences in wages between and within metropolitan 
statistical areas and statewide rural areas and smooth wage index 
differences across adjacent local areas. MedPAC stated that, compared 
to the current IPPS wage index methodology, a methodology based on all 
employer wage data with industry-specific occupational weights would 
improve the accuracy and equity of payments for provider types other 
than inpatient acute care hospitals, such as ESRD facilities.
---------------------------------------------------------------------------

    \7\ https://www.medpac.gov/wp-content/uploads/2023/06/Jun23_MedPAC_Report_To_Congress_SEC.pdf.
---------------------------------------------------------------------------

    In past years some interested parties have contended that the 
methodology used to construct the current ESRD PPS wage index does not 
accurately reflect the ESRD facility labor market. These interested 
parties have noted that the ESRD PPS wage index is based on the IPPS 
wage index, which uses hospital data, which commenters have stated may 
not be applicable for ESRD facilities. More specifically, commenters 
have suggested that the types of labor used in ESRD facilities differ 
significantly from the types of labor used by hospitals, which may 
result in the use of relative wage values across the United States that 
do not accurately match the actual relative wages paid by ESRD 
facilities. For example, if ESRD facilities have a different proportion 
of registered nurses (RNs), technicians and administrative staff 
compared to hospitals, and if wages for each of those labor categories 
vary differentially across the country, it is possible that relative 
wages for ESRD facilities, given their occupational mix, would vary 
differently from relative wages for hospitals across CBSAs. Because of 
this, some commenters have specifically requested that CMS develop an 
ESRD PPS wage index based only on data from ESRD facilities. 
Additionally, some commenters have criticized the time lag associated 
with using the IPPS wage index, which is generally based on data from 
four FYs prior to the rulemaking year (see, for example, 88 FR 58961).
(1) December 2019 Technical Expert Panel (TEP)
    In response to feedback from interested parties on the ESRD PPS 
wage index, CMS's data contractor hosted a Technical Expert Panel (TEP) 
in December of 2019.\8\ During this TEP, the contractor presented a 
potential alternative approach to the wage index, which utilized BLS 
data to address the concerns of commenters, to initiate a discussion on 
the ramifications of a potential new ESRD PPS wage index that would 
combine two sources of existing data to more closely reflect the 
occupational mix in ESRD facilities. The methodology presented at this 
TEP utilized publicly available wage data for selected occupations from 
the BLS OEWS survey and occupational and fulltime equivalency (FTE) 
data from freestanding ESRD facility cost reports (Form CMS 265-11, OMB 
No. 0938-0236). Specifically, this approach used the freestanding ESRD 
facility cost reports to determine the national average occupational 
mix and relative weights for ESRD facilities. Next, the contractor 
applied the estimated county-level wages based on BLS OEWS \9\ to 
obtain occupation-specific wages in each county. The BLS OEWS data is 
updated annually using sample data collected in six semiannual survey 
panels over the prior 3-year period, which allows for the inclusion of 
more recent data than the hospital cost-report data that is utilized by 
the IPPS wage index. Therefore, as noted during the TEP, this new 
methodology would allow CMS to adjust wage index values to reflect 
relative changes in wage conditions in a timelier fashion compared to 
the current ESRD PPS wage index methodology. Additionally, as noted 
during the TEP, by utilizing FTE data reported on the freestanding ESRD 
facility cost reports, this methodology is likely more reflective of 
the occupational mix employed by ESRD facilities than the hospital wage 
index.
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    \8\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-may-2020.pdf.
    \9\ The OEWS program produces estimates of employment and wages 
by occupation based on a survey of business establishments. OEWS 
data are released annually with a May reference date. Each set of 
OEWS estimates is based on data from six semiannual survey panels 
collected over a 3-year period. For example, the May 2022 OEWS wage 
estimates are based on six semiannual survey panels from November 
2019 through May 2022.
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    Panelists at this TEP generally indicated their preference for the 
presented alternative wage index methodology, because it utilized more 
recent wage data from the BLS OEWS program. Panelists also favored how 
the alternative methodology was more targeted to ESRD facilities by 
utilizing FTE data from ESRD facility cost reports in determining the 
occupational mix. Some panelists voiced concerns about using publicly 
available BLS geographic area data, as the data do not disaggregate 
wages by health care sector, and therefore wages from acute care 
hospitals are not differentiated from outpatient care centers and other 
non-hospital health care settings. Some panelists noted that this would 
result in a wage index based on the publicly available BLS OEWS data 
having some of the same limitations for which the use of the IPPS wage 
index has been criticized--mainly that it includes wage data from 
hospitals.
(2) Proposed New Methodology for Using BLS Data To Calculate the ESRD 
PPS Wage Index
    Based on feedback we received in response to past ESRD PPS proposed 
rules and from the December 2019 TEP, we have developed a new ESRD PPS 
wage index methodology that we believe better reflects the ESRD 
facility labor market. Similar to the methodology presented in the 
December 2019 TEP, this proposed new methodology utilizes two data 
sources: one for occupational mix and one for geographic wages. First, 
we determine a national ESRD facility occupational mix (NEFOM) based on 
cost report data from freestanding ESRD facilities. Second, we extract 
and use data from the publicly available BLS OEWS survey on the average 
wages in each CBSA for each labor category present in the NEFOM. We 
note that because the publicly available BLS data are available at the 
Metropolitan Statistical Area (MSA), non-MSA and New England City and 
Town Area (NECTA) levels, and the wage index is designated at the CBSA 
level (which uses MSAs and other area designations that differ from 
non-MSAs and NECTAs), we use the area definition dataset \10\ that 
accompanies

[[Page 55768]]

the BLS data to assign wages at the county level, and map counties to 
CBSAs using a crosswalk. This crosswalk is included in Addendum B, 
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.
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    \10\ For more information on MSAs and non-MSAs please see: 
https://www.bls.gov/oes/current/msa_def.htm. For more information on 
the most recent CBSA delineations (as discussed later in this 
section) please see: https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf.
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(a) Description of Proposed Data Sources
(i) Data From the BLS OEWS Metropolitan and Nonmetropolitan Area 
Occupational Employment and Wage Estimates
    The BLS OEWS program publishes annual estimates of employment and 
wages by occupation. Each set of OEWS estimates is based on data from 
six semiannual survey panels collected over a 3-year period. For 
example, the May 2022 OEWS wage estimates, published in April 2023, are 
based on six semiannual survey panels from November 2019 to May 2022. 
We are proposing to use publicly available mean hourly wage data at the 
MSA level,\11\ which is available online at https://www.bls.gov/oes/. 
OEWS wage data collected in earlier survey panels are ``aged'' or 
updated to the reference date of the estimates based on adjustment 
factors derived from the OEWS survey data using a regression model. The 
BLS OEWS mean hourly wage data that are presented in this proposed 
rule, and are utilized for the new wage index methodology described in 
detail later in this section of this proposed rule, reflect this 
updated data. Table 1 shows the occupation codes based on the Standard 
Occupational Classification (SOC) and the corresponding SOC 
occupational title for each SOC, alongside the colloquial name that we 
use to refer to workers in specific occupations throughout this 
proposed rule. The ESRD PPS colloquial names match the FTE categories 
captured on Worksheet S-1, lines 23 through 30 of the freestanding ESRD 
facility cost report form. The SOC System is a United States government 
system for classifying occupations. It is used by Federal Government 
agencies collecting occupational data, enabling comparison of 
occupations across data sets. When considering the use of BLS data we 
had to determine which occupation code was appropriate for each 
occupation in the NEFOM. For many of these occupations, the 
corresponding BLS code was straightforward. For example, BLS code 29-
1141 is for ``Registered Nurses'' which matches the category on the 
cost reports from which the NEFOM is derived exactly. For the 
occupations that were not necessarily specific to the healthcare field, 
for example administrative staff, we used BLS codes that were specific 
for healthcare, such as code 43-6013 for ``Medical Secretaries and 
Administrative Assistants.'' We believe that these are the most 
appropriate codes, as a more general code may not capture the specifics 
of the healthcare labor market.
---------------------------------------------------------------------------

    \11\ We use the territory-level data for Guam and Virgin 
Islands, since the MSA and non-MSA level data is not available.
---------------------------------------------------------------------------

BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP05JY24.008


[[Page 55769]]


BILLING CODE 4120-01-C
    The BLS OEWS data used for this analysis includes mean wages by 
occupation for all industries combined located in a MSA (or non-MSA 
area or NECTA), including the hospital industry. While interested 
parties have criticized the current ESRD PPS wage index methodology's 
sole reliance on hospital data, we believe that inpatient hospital data 
is appropriate to include here for several reasons. Principally, as 
explained later in this section, the wage data is being weighted based 
on an occupational mix that is specific to ESRD facilities, which makes 
this proposed methodology more accurate to the wage environment of ESRD 
facilities regardless of the source of the wage data. Additionally, 
ESRD facility data is included in the BLS data, while ESRD facilities 
generally are not included in the hospital cost report data used in the 
IPPS wage index (with the exception of hospital-based ESRD facilities). 
Lastly, hospitals are a major contributor to labor markets, and it is 
reasonable to think that ESRD facilities compete with hospitals (as 
well as other healthcare facilities) when it comes to hiring labor; as 
such, the inclusion of hospital data would provide additional insight 
into the labor markets of these areas.
    A limitation of the publicly available BLS OEWS data is that the 
survey only includes information on the wages that employers paid to 
their employees. Therefore, the OEWS does not include self-employed 
contract labor wages or benefits paid to employees, which are reflected 
in the IPPS wage index. Nevertheless, we believe that this data source 
would be an improvement over the use of the IPPS wage index for the 
ESRD PPS, as its purpose is to identify geographic differences in 
wages. Assuming wages spent on self-employed contract labor wages and 
employee benefits vary similarly to employee wages; we would not expect 
any significant difference arising from this limitation of the BLS 
data. We anticipate that most traveling nurses and technicians would be 
employed by an agency, and therefore would be included in the OEWS 
estimates; however as worksite location reporting is optional,\12\ we 
note it is possible that some of the wages for these traveling nurses 
and technicians could be included in the MSA in which their employing 
agency is located, rather than the MSA in which they worked. However, 
we would not anticipate that this would have an appreciable impact on 
the OEWS estimates used for this methodology. Additionally, we note 
that the OEWS would only include the wages paid to these contract 
workers, so the OEWS estimates would likely not include the full cost 
of the contract labor paid by the ESRD facilities to the contracting 
agency. We cannot separately estimate the prevalence of self-employed 
contract labor at ESRD facilities from the rest of contract labor, 
which we believe would still provide some insight into the potential 
limitation of the exclusion of self-employed contract labor wages from 
the BLS OEWS. We note that all contract labor costs represent 
approximately 5 percent of compensation costs in the 2020-based ESRDB 
market basket (87 FR 67143). Our analysis of freestanding ESRD facility 
cost report FTE data indicates that approximately 1.3 percent of RN 
hours and 1.1 percent of technician hours were contract labor in 2022. 
Additionally, our data show that the share of contract labor hours has 
been relatively stable over time but has increased slightly when 
compared to the prior few years.
---------------------------------------------------------------------------

    \12\ https://www.bls.gov/respondents/oes/instructions.htm#online.
---------------------------------------------------------------------------

    One potential concern about use of the BLS OEWS data is that in 
some cases, the BLS OEWS may not have usable data for a county for an 
occupation, which is used in the construction of the new ESRD PPS wage 
index according to the methodology presented later in this section. 
This occurs when BLS is unable to publish a wage estimate for a 
specific occupation and area because the estimate does not meet BLS 
quality or confidentiality standards.\13\ For reference, among the 
25,808 unique county-occupation combinations, the wage information 
missing rate is 5.2 percent. To impute the missing data, we perform a 
regression using the most similar (by mean hourly wage) occupation (of 
the occupations we are proposing to include in the wage index 
methodology, presented in table 1) for which there is no missing data. 
For dietitians we use RNs, for technicians we use LPNs and for nurses' 
aides we use administrative staff. The regression includes controls for 
whether the county is rural, the census region in which the county is 
located, and the natural logarithm of the treatment count of the 
county. For the CY 2025 ESRD PPS wage index we only had to impute 
missing county-level data for dietitians, technicians, and nurses' 
aides; however, for future years, we may have to impute data for other 
occupations.
---------------------------------------------------------------------------

    \13\ https://www.bls.gov/oes/oes_ques.htm.
---------------------------------------------------------------------------

    We have conducted an analysis on historical BLS OEWS data for the 
occupations presented in table 1. We have found that mean hourly wages 
for these categories are increasing over time, consistent with what we 
would expect given the ESRD PPS market basket increases. Given this 
analysis, we believe that the BLS OEWS data are reasonably stable and 
appropriately reflect general wage inflation trends that ESRD 
facilities face. Therefore, the mean hourly wage estimates for a given 
year are appropriately reflective of wages which ESRD facilities face.
(ii) Data From Freestanding ESRD Facility Cost Reports
    Under Sec.  413.198(b)(1), all ESRD facilities must submit the 
appropriate CMS-approved cost report in accordance with Sec. Sec.  
413.20 and 413.24, which provide rules on financial data and reports, 
and adequate cost data and cost finding, respectively. Generally, these 
cost reports have a time range of January 1 to December 31 of a given 
year, but they can represent any 12-month period. Included in these 
cost reports is information on the number of full-time equivalent (FTE) 
positions employed by the ESRD facility. FTEs are stratified by 
occupation type, such as RNs, LPNs, technicians, and administrative 
staff. For the purpose of these cost reports, an FTE represents a 40-
hour work week averaged across the year. Specifically, the cost reports 
define FTEs as the sum of all hours for which employees were paid 
during the year divided by 2080 hours. The cost reports also state 
personnel involved in more than one activity must have their time 
prorated among those activities. For example, an RN who provided 
professional services and administrative services is counted in both 
the RN line and the administrative line according to the number of 
hours spent in each activity.
    For the proposed methodology presented in this section, we are 
proposing to use FTEs to calculate the occupational mix for all 
freestanding ESRD facilities. For the purposes of this section, we use 
the term ``freestanding ESRD facilities'' to mean ESRD facilities that 
complete the independent renal dialysis facility cost report (Form CMS 
265-11, OMB No. 0938-0050). We note that these ESRD facilities are a 
subset of ``independent'' facilities as defined at Sec.  413.174(b), as 
cost-reporting is only one of 5 criteria used in the determination of 
whether an ESRD facility is independent or hospital-based as listed at 
Sec.  413.174(c). For the purposes of this section, we refer to ESRD 
facilities that complete the hospital cost report (Form CMS 2552-10, 
OMB No. 0938-0050) as ``ESRD facilities that are financially integrated

[[Page 55770]]

with a hospital,'' per the criteria at Sec.  413.174(c)(5). This 
occupational mix represents the average proportion of hours spent on 
the duties of that occupation at all freestanding ESRD facilities 
nationally. This national mix includes FTE data on both staff and 
contract labor from freestanding ESRD facility cost reports for each 
occupational category. Table 2 presents the NEFOM calculated from the 
freestanding ESRD facility cost report data from cost reporting periods 
beginning on or after January 1, 2022, and before December 31, 2022 
(2022 cost report data), with four decimal places of precision. We note 
that this is the most recent complete year of cost reporting data for 
both this proposed rule and for the CY 2025 ESRD PPS final rule, as the 
latest 2022 cost reports could have begun in December 2022 and ended in 
December 2023, although some 2022 cost reports were not yet available 
at the time of the analysis for this proposed rule. For the 
approximately 1.7 percent of freestanding ESRD facilities without 2022 
cost report data available at the time of rulemaking for this proposed 
rule, 2021 cost report data was used. The occupational mix weights used 
in the proposed new wage index methodology are presented in terms of 
the number of FTEs per 1000 treatments, although we note that the 
specific denominator does not impact the calculation, as these are 
relative weights. Table 2 also includes percentages that represent the 
percent of FTEs for each occupation in the NEFOM. For example, RNs 
represent approximately 30 percent of the NEFOM, which means that 
across the nation, 30 percent of all hours worked by employees at 
freestanding ESRD facilities are worked by RNs. We note that we did not 
include FTEs that were reported as ``other'' occupations in the cost 
reports in this occupational mix, because we could not determine what 
occupation(s) this represented and, therefore, could not get 
appropriate wage estimates. ``Other'' occupations would have accounted 
for 3.8 percent of the NEFOM if included.
[GRAPHIC] [TIFF OMITTED] TP05JY24.009

    We note that the NEFOM is calculated as a part of the proposed wage 
index methodology described in detail below from freestanding ESRD 
facilities cost reports, and that the NEFOM is not an input in the wage 
index calculation. However, we are presenting the NEFOM here to inform 
the calculation process for any interested parties which wish to 
replicate the calculation.
    For this proposed methodology, we are proposing to only utilize 
data from freestanding ESRD facilities, which comprise the vast 
majority of ESRD facilities. ESRD facilities that are financially 
integrated with a hospital represent approximately 4.5 percent of ESRD 
facilities. It is necessary to make this distinction, as ESRD 
facilities that are financially integrated with a hospital complete a 
different cost report form (Form CMS 2552-10, OMB No. 0938-0050), which 
does not include all the occupational categories included on the 
freestanding facility cost report (Form CMS 265-11, OMB No. 0938-0050). 
Specifically, ESRD facilities that are financially integrated with a 
hospital do not include administrative and management staff hours in 
their cost reports. FTE data for administrative and management staff 
are necessary for this analysis, so we are proposing to exclude 
hospital-integrated cost reports. We believe that the occupational mix 
for freestanding ESRD facilities is likely similar to the mix for ESRD 
facilities that are financially integrated with a hospital (which, as 
noted earlier, make up a small proportion of all ESRD facilities), such 
that we would not expect significantly different results if we were 
able to include ESRD facilities that are financially integrated with a 
hospital in this analysis.

[[Page 55771]]

    We conducted additional analyses to ensure that this occupational 
mix data would be appropriate for the construction of an ESRD facility 
wage index. First, we reviewed the occupational mix for ESRD facilities 
on a regional level to determine if the use of a single national 
occupational mix was appropriate. While we found some variation across 
regions, the variation was generally relatively small between regions, 
with the weight values for each occupation being within a few 
percentage points. The main exceptions to this were in the United 
States territories, which had higher variation in occupational mix, 
likely due in large part to the relatively few ESRD facilities in those 
regions. Additionally, we found that lower volume ESRD facilities 
tended to have slightly different occupational mixes, requiring 
relatively more administrative and management staff FTEs, likely due to 
the lack of economies of scale for these occupations at lower treatment 
volume levels. Second, we conducted an analysis on the change in the 
national occupational mix over the past 5 years and found little 
variation over this time period. Both of these analyses indicate that 
the use of a single national occupational mix is appropriate for 
constructing an ESRD facility wage index as the occupational mix is 
reasonably similar to most region's occupational mixes and relatively 
stable over time.
    Additionally, we are proposing to use treatment volume data from 
freestanding ESRD facilities as reported on freestanding ESRD facility 
cost reports. This treatment volume data is used in the wage index 
calculation as a weight on the county level wages when calculating the 
wages for a CBSA. The calculation is described in further detail in 
section II.B.2.b.(2)(b) of this proposed rule.
    We emphasize the importance of accurate cost report data for this 
proposed policy as well as other current and potential policies under 
the ESRD PPS, such as facility-level or case-mix adjustment refinement. 
We strongly urge ESRD facilities to carefully review cost report data 
to ensure continued accuracy so that future refinements to the ESRD PPS 
are based on the best data possible.
(iii) IPPS Hospital Wage Index
    The new proposed wage index methodology uses the established ESRD 
PPS wage index methodology, which is based on the IPPS hospital wage 
index, for the purposes of standardizing the new wage index (step 6 in 
the methodology described in section II.B.2.b.(2).(b)). Consistent with 
our established ESRD PPS methodology, we use the most recent pre-floor, 
pre-reclassified hospital wage data collected annually under the IPPS. 
The ESRD PPS wage index values under the established methodology are 
calculated without regard to geographic reclassifications authorized 
for acute care hospitals 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 2025, the updated wage data are generally for 
hospital cost reporting periods beginning on or after October 1, 2020, 
and before October 1, 2021 (FY 2021 cost report data). Under Sec.  
413.231(d), a wage index floor value of 0.6000 is applied under the 
ESRD PPS as a substitute wage index for areas with very low wage index 
values, as finalized in the CY 2023 ESRD PPS final rule (87 FR 67161). 
For the purposes of the proposed new wage index methodology, we are 
referring to this older wage index methodology as the ``ESRD PPS legacy 
wage index.'' Consistent with our established policy of updating wage 
indices in the final rule, we intend to use the most recent IPPS wage 
index for the construction of the CY 2025 ESRD PPS legacy wage index 
for the final rule. We note that the purpose of calculating the ESRD 
PPS legacy wage index is solely for standardizing the new ESRD PPS wage 
index, ensuring that the treatment weighted average of the new ESRD PPS 
wage index is the same as it would have been under the established 
methodology. This ensures that the changes associated with the proposed 
new wage index methodology are contained to the wage index, whereas 
changes associated with shifts in utilization would be reflected in the 
wage index budget neutrality factor. For example, if the new 
methodology resulted in a significant increase in the number of high-
wage index facilities, the standardization factor would decrease wage 
index values across the board to keep the treatment-weighted average of 
the legacy and new wage index methodologies the same; in contrast, if 
utilization trends resulted in a significant increase in the number of 
treatments furnished by ESRD facilities in high-wage index areas, the 
treatment weighted average of both the legacy and new wage index 
methodologies would increase which would need to be accounted-for by 
the wage index budget neutrality adjustment factor. This is described 
in more detail in step 6 of the proposed new wage index methodology in 
section II.B.2.b.(2)(b) of this proposed rule.
(iv) Time Lag Associated With Proposed New Data Sources
    One concern expressed by interested parties about the current ESRD 
PPS wage index methodology is that the IPPS wage index, used as its 
basis, uses data from approximately 4 fiscal years prior. Interested 
parties have opined that this delay makes the ESRD PPS wage index less 
responsive to certain changes in wages, such as inflation.\14\ We note 
that the purpose of the wage index is to reflect geographic difference 
in the area wage levels, and that national trends in wages, including 
wage inflation, are accounted for by the ESRDB market basket percentage 
increase. We note that the IPPS wage index is generally responsive to 
geographic variation in wages, including variation stemming from local 
or regional inflation. However, as interested parties have raised 
concerns about the time lag associated with our use of the IPPS wage 
data, we discuss the difference between the time lag associated with 
our use of the IPPS wage index for the ESRD PPS and the proposed new 
ESRD PPS wage index methodology discussed later in this section of the 
preamble.
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    \14\ We note that in accordance with section 1886(d)(14)(E)(1) 
of the Act, the IPPS wage index is required to employ data based on 
``a survey conducted by the Secretary (and updated as appropriate) 
of the wages and wage-related costs of subsection (d) hospitals in 
the United States.'' The IPPS is based on the most current audited 
hospital wage data from Worksheet S-3, Parts II, III and IV of the 
Medicare cost report, CMS Form 2552-10 (OMB Control Number 0938-0050 
with an expiration date of September 30, 2025) (see, for example, 88 
FR 58961).
---------------------------------------------------------------------------

    As previously discussed in this section, the new ESRD PPS wage 
index methodology that we are proposing would use data from BLS OEWS 
and freestanding ESRD facility cost reports. BLS publishes OEWS data 
annually with a May reference date, with estimates typically released 
in late March or early April of the following year. Each set of OEWS 
estimates is based on six semi-annual survey samples spanning the prior 
3 years. Wages collected in earlier survey panels are updated to the 
reference date of the estimates based on wage adjustment factors 
derived from the OEWS survey data using a regression model. The 
freestanding ESRD facility cost report data that can be analyzed at the 
time of rulemaking are generally from 2 CYs prior. Specifically, for 
the proposed wage index presented in Addendum B of this ESRD PPS 
proposed rule, the BLS OEWS data is derived from surveys conducted from 
November 2019 through May 2022, and the cost report data generally 
covers cost reporting periods

[[Page 55772]]

beginning on or after January 1, 2022, and before December 31, 
2022.\15\ The publicly available BLS OEWS data is an average using data 
collected over a 3-year period which improves stability and 
predictability of the OEWS estimates over time. We note that, should 
this methodology be finalized as proposed in the CY 2025 ESRD PPS final 
rule, the most recent update of BLS OEWS data for a given year would be 
available early enough to be included in the ESRD PPS final rule, but 
not in the proposed rule. Under this proposed new methodology, BLS OEWS 
data collected as recently as May 2023 would be utilized for the final 
CY 2025 ESRD PPS wage index.
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    \15\ In cases where 2022 freestanding cost report data are not 
available at the time of this proposed rule, 2021 data was used. 
This was the case for 131 ESRD facilities, approximately 1.7 percent 
of the ESRD facilities in this analysis. We expect that in 
calculating the wage indices in the final rule only 2022 cost report 
data would be used.
---------------------------------------------------------------------------

    Both the ESRD facility cost report data and the BLS OEWS data are 
more recent than the data used for the IPPS wage index. Additionally, 
the purpose of using the freestanding ESRD facility cost report data in 
this proposed methodology would be to establish a national occupational 
mix for ESRD facilities, which we are calling the NEFOM. We intend to 
present the NEFOM annually to reflect the latest complete year of cost 
report data at the time of rulemaking to inform the public of the 
relative weights assigned to each occupation. Given that freestanding 
facility cost reports are submitted on a rolling basis, the most recent 
data would generally be obtained from cost reports beginning in the CY 
3 years prior to the CY for which we are setting rates (that is, for 
this CY 2025 proposed rule, the latest complete year of cost report 
data are from cost reports beginning in CY 2022). Based on our analysis 
of prior years' cost report data, we do not anticipate that the 
national occupational mix would change much from year-to-year. 
Additionally, we note that the use of a single national occupational 
mix for all ESRD facilities would limit the impact of changes in 
employment patterns on the wage index, as all ESRD facilities would be 
similarly impacted by a change in the NEFOM. As the wage index is a 
relative value, the main way that a change in the NEFOM would impact an 
ESRD facility's wage index would be if the CBSA in which that ESRD 
facility is located has relatively high or low wages for an occupation 
that experiences growth or shrinkage in the NEFOM. Thus, the main 
driver in changes from year-to-year under this proposed new wage index 
methodology likely would be the BLS OEWS data, which, for the final 
rule, would include survey data as recent as May of the year prior to 
the rulemaking year.
    We note that, at the time of the analysis conducted for this 
proposed rule, the May 2023 BLS OEWS update was not yet available. As 
previously discussed, some ESRD facilities' CY 2022 cost reports were 
not available. Should the proposed new wage index methodology be 
finalized, we would update the wage index values based on the most 
recent BLS OEWS data available. We are also proposing to use most 
recent cost report data available for cost reporting periods beginning 
in CY 2022 and update the NEFOM accordingly in the final rule. Using 
the most recent 2022 data available for the calculation of the new ESRD 
PPS wage index methodology in the final rule would be consistent with 
our established ESRD PPS wage index methodology of updating ESRD 
facility wage indices between the proposed and final rules.
    We note that our proposed new wage index methodology does use the 
IPPS wage index to create the ESRD PPS legacy wage index, which is used 
to standardize the results of the new ESRD PPS wage index methodology. 
We recognize the concerns we have heard regarding the data lag 
associated with our use of the IPPS wage index for the ESRD PPS. 
However, as the ESRD PPS legacy wage index would only be used to 
calculate a treatment-weighted average of the legacy wage index to 
standardize the wage index values derived under the proposed new 
methodology, the proposed new ESRD PPS wage index would continue to 
reflect the relative differences in area wages based on the more recent 
BLS OEWS data. Therefore, any effect of any data lag of the ESRD PPS 
legacy wage index on the proposed new ESRD PPS wage index would be 
minimal.
(v) Comparison Between Proposed New Methodology Data Sources and 
Hospital Data
    The other main concern that interested parties have raised about 
our current ESRD PPS wage index methodology is that the IPPS wage index 
is based on hospital cost report data. As previously discussed, 
interested parties have stated that hospital cost report data is not 
necessarily the most appropriate source for estimating geographic 
differences in wages paid by ESRD facilities. These interested parties 
predominantly point to the different occupational mix employed by ESRD 
facilities as the main differentiator between inpatient hospitals and 
ESRD facilities; however, there may also be differences in wages paid 
for the same occupational labor category in the two settings. 
Differences in wages within the same occupation could arise from any 
number of factors, including differences in duties, hours, required 
experience, or desirability of the position.
    Table 3 compares the national average occupational mix and 
corresponding wages for occupations employed by freestanding ESRD 
facilities to that of hospitals from IPPS data. The source of average 
wages used here for ESRD facilities is the BLS OEWS and average IPPS 
wages are derived from the IPPS occupational survey (Form CMS-10079) as 
presented in the fiscal year (FY) 2024 IPPS Public Use File (PUF),\16\ 
representing data from 2019. The mean hourly wage data from BLS is from 
the May 2022 OEWS estimates, which are based on six panels of survey 
data from November 2019 through May 2022.
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    \16\ Files related to the FY 2024 IPPS final rule are available 
online at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2024-ipps-final-rule-home-page.
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BILLING CODE 4120-01-P

[[Page 55773]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.010

BILLING CODE 4120-01-C
    We note that the hospital wage data (column F) presented in table 3 
presents the wages paid by hospitals to employees, as derived from the 
IPPS occupational survey data, for the purposes of comparing to the BLS 
data. This data is used to adjust the hospital average hourly wage, 
calculated using hospital cost report data, based on the provider-
specific occupational mix. This differs from the hospital cost report 
data used for the IPPS wage index, as that does not break down all 
wages and related costs by occupation.
    Compared to hospitals, ESRD facilities generally use slightly 
higher proportions of RNs and LPNs and significantly fewer nurse aides 
and medical aides (column B). Additionally, the freestanding ESRD 
facility cost reports include additional occupational categories to 
reflect the labor mix employed by ESRD facilities.
(b) Construction of the Proposed New ESRD PPS Wage Index
    Under our proposal, once we have the calculated wages for each 
relevant labor category by county (using a crosswalk between MSA, non-
MSA and NECTA and counties) and the NEFOM, we would construct the new 
ESRD PPS wage index using the following steps. These are the general 
steps which we use when constructing the proposed new ESRD PPS wage 
index; for a more detailed look at the specific computational steps we 
execute in the code to calculate the proposed wage index, including 
steps related to data collection and cleaning, see the supplementary 
document in Addendum C.
    1. We calculate the treatment count-weighted mean hourly wage for 
each occupation for each CBSA by multiplying the mean hourly wage data 
from the BLS OEWS by the treatment count for each county within that 
CBSA and dividing by the total treatment count of all counties within 
the CBSA. We weight mean hourly wage by treatment count to ensure that 
the mean hourly wage for the CBSA is proportional with the actual wages 
paid by ESRD facilities in the CBSA. This avoids a situation where a 
particularly high or low wage county within a CBSA has no ESRD 
facilities but still has a large impact on the wage index for that

[[Page 55774]]

CBSA. This reasoning extends to each instance in which we weight values 
by treatment counts.
    2. We calculate the ESRD facility mean hourly wage in each CBSA by 
multiplying the treatment count-weighted mean hourly wage (from step 1) 
for each occupation for a given CBSA with the corresponding weight of 
the NEFOM for each occupation and then sum each category's amount to 
get the total.
    3. We calculate the treatment count-weighted mean hourly wage for 
each occupation at the national level by multiplying the mean hourly 
wage for the occupation in each CBSA by the treatment count of that 
CBSA and dividing by the aggregated treatment count nationally.
    4. We calculate the national ESRD facility mean hourly wage by 
multiplying the national mean hourly wage (from step 3) for each 
occupation by the corresponding weight of the NEFOM for each occupation 
and then sum each category's amount to get the total.
    5. We divide the ESRD facility mean hourly wage for each CBSA by 
the national ESRD facility mean hourly wage to create a raw wage index 
level (that is, a wage index that has not been normalized as described 
in step 6).
    6. We multiply the raw wage index level for each CBSA by a 
treatment weighted average of the CY 2025 ESRD PPS legacy wage index 
constructed using the established ESRD PPS methodology based on IPPS 
Medicare cost report data and divide the product by the treatment 
weighted average of raw wage indices, which equals 1 by 
construction.\17\ This is to ensure that the treatment-weighted average 
of new BLS-based wage indices is the same as the weighted average of 
the current wage indices. By ensuring the weighted average of the new 
wage index is the same as the weighted average of the pre-floor pre-
reclassification IPPS wage index we have normalized the new wage index 
such that it is more comparable to the former ESRD PPS wage index 
methodology. This prevents the possibility that the treatment-weighted 
average of the new wage index is significantly different than the 
treatment-weighted average of the established methodology. We include 
this step because our goal in establishing the proposed new wage index 
methodology is not to alter the significance of the wage index in 
determining each ESRD facility's payment, but rather to ensure that the 
wage index values better reflect relative labor costs that affect ESRD 
facilities specifically. We note that because we apply a wage index 
budget neutrality adjuster (discussed in section II.B.4.b), the 
proposed new wage index methodology would not increase total payments 
to ESRD facilities even absent this step.
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    \17\ Treatment weighted average of wage indices are calculated 
by multiplying the wage index value for each CBSA by the treatment 
count in the CBSA, and dividing by the aggregate national treatment 
count.
---------------------------------------------------------------------------

    7. We apply the 0.6000 floor to the wage index by replacing any 
wage index values that fall below 0.6000 with a value of 0.6000, which 
is the wage index floor for the ESRD PPS as established in the CY 2023 
ESRD PPS final rule (87 FR 67166).
    After following these steps, we would obtain the wage index values 
for each CBSA (based on the new OMB delineations as discussed later in 
this section of the preamble) according to the proposed ESRD PPS wage 
index methodology described previously. We note that the 5 percent cap 
in year-over-year decreases in wage index values would be applied for 
each ESRD facility after the new wage index is calculated based on the 
proposed methodology for the CBSA in which the ESRD facility is located 
and, therefore, is not reflected in the wage index value for a CBSA in 
Addendum A, 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. This is necessary as this 
cap protects ESRD facilities in the rare circumstances when changes in 
policy related to the wage index methodology or CBSA delineations cause 
an ESRD facility to be in a significantly lower wage index area in a 
given year when compared to the previous year (87 FR 67161). As 
discussed later in this section, for CY 2025 we are proposing to adopt 
new OMB delineations of CBSAs relative to those used in the CY 2024 
ESRD PPS wage index. As this 5 percent cap applies to an ESRD facility, 
and not to a CBSA, it would protect any ESRD facility that is 
delineated into a much lower wage-index CBSA for CY 2025.
(c) Methodological Alternatives Considered
    While developing this new wage index methodology, we have 
considered several different alternatives regarding both data sources 
used for the new wage index methodology and construction of the wage 
index itself. We considered the feasibility of requesting the use of 
confidential BLS OEWS data. This was one suggestion from the December 
2019 TEP. Confidential data would have some benefits over public data, 
primarily that it would provide greater disaggregation of wages by 
employer type, such as wages paid by ESRD facilities. Additionally, 
confidential BLS data could have a timeframe other than the 3-year 
pooled sample used in the public data, for example using only the most 
recent year's data. However, we note that the OEWS survey sample is 
designed to be statistically representative only when all 3 years of 
the sample are combined, so the use of an alternative or shorter 
timeframe may not be appropriate. We have determined that the publicly 
available BLS data would be the most appropriate for our wage index, as 
it still provides precise estimates of wages and would allow for far 
better transparency. Additionally, we believe that the inclusion of 
data from other employers (meaning employers that are not ESRD 
facilities) would improve the robustness of the methodology, as ESRD 
facilities compete for labor against these other employers.
    When considering the use of BLS data we had to determine which 
occupation code was appropriate for each occupation in the NEFOM. As 
discussed previously, for many of these occupations, the corresponding 
BLS code was straightforward as many of the occupations present in the 
freestanding ESRD facility cost reports matched a single BLS code. 
However, for technicians employed by ESRD facilities we gave further 
consideration to two different BLS codes. As presented in table 1, we 
are proposing to use code 29-2099 for ``Health Technologists and 
Technicians, All Other'' for the construction of the methodology to 
account for the labor costs of technicians. This is the most 
appropriate category, as ``technicians'' in the freestanding ESRD 
facility cost reports generally refers to dialysis technicians, which 
do not fall into any of the other BLS codes for health technologists 
and technicians. Additionally, we note that the SOC uses ``dialysis 
technician'' as an illustrative example for code 29-2099.\18\ However, 
we had some concerns about using this category, as it does not 
specifically represent dialysis technicians, but rather all health 
technicians that do not fit in the other categories. Because the 
category is non-specific, also known as a ``residual'' category, we 
were concerned with the impact of the inclusion of other, non-dialysis 
technicians in this category. To avoid any issues arising from the use 
of a

[[Page 55775]]

residual category, we considered using code 29-2010 for ``Clinical 
Laboratory Technologists and Technicians.'' Although this category does 
not fit dialysis technicians as well, it has the benefit of not being a 
residual category, and it had fewer counties with missing data. 
However, we determined that it was most appropriate to use the most 
similar category for dialysis technicians, being the category in which 
data for dialysis technicians would be included, which is code 29-2099 
``Health Technologists and Technicians, All Others.''
---------------------------------------------------------------------------

    \18\ https://www.bls.gov/soc/2018/major_groups.htm.
---------------------------------------------------------------------------

    As an alternative to using a single national occupational mix for 
ESRD facilities we considered using regional or state-level 
occupational mixes. The considered alternative would use a similar 
methodology to the construction of the NEFOM, but with a different 
occupational mix for each census region or state and would apply the 
occupational mix in the same way in the construction of the wage index. 
This is to say, the BLS data for a CBSA would be weighted by the 
occupational mix for the region or state in which that CBSA is located. 
This alternative was considered, in part, because of a suggestion from 
a panelist at the December 2019 TEP who pointed out that different 
states have different laws regarding staffing requirements for ESRD 
facilities, which was not reflected in the methodology presented at the 
TEP. We conducted an analysis comparing a state-level occupational mix 
wage index to the national occupational mix wage index methodology 
presented previously. This analysis found some notable differences, 
including higher wage index values in the pacific census region, but 
many regions experienced little change. We decided against the use of 
state-level or regional occupational mixes for three main reasons. The 
first is that the use of different occupational mixes for different 
ESRD facilities made the methodology significantly more complicated and 
difficult to understand. The second is that this methodology made it so 
that one ESRD facility could be in an area with higher wages for all 
occupations compared to another ESRD facility but receive a lower wage 
index value due to having an occupational mix which favored lower-
paying occupations. This could be perceived as being inconsistent with 
the intent of the wage index to recognize differences in ESRD facility 
resource use for wages specific to the geographic area in which 
facilities are located (83 FR 56967). Lastly, we are concerned about 
the possibility that, should we use anything other than a national 
occupational mix, the state-level or regional occupational mix could be 
manipulated. This would be especially relevant for states or regions 
with few ESRD facilities and, therefore, individual ESRD facilities 
would have an outsized impact on the occupational mix for that state or 
region. Accordingly, we believe that the use of a single national 
occupational mix is the most appropriate for this proposed new ESRD 
facility wage index methodology.
    We considered proposing a ``phase-in'' policy for this proposed 
wage index methodology change, which could be implemented in addition 
to the 5 percent cap on wage index decreases. One potential example of 
a phase-in policy could be a 50/50 blended methodology, where an ESRD 
facility would receive the average of their wage indices from the 
proposed new and legacy methodologies for the first year of 
implementation. However, we decided that such a phase-in policy was 
unnecessary in light of the 5 percent cap on year-to-year wage index 
decreases for ESRD facilities. We believe that an additional, or 
alternative, phase-in policy would further complicate this change. 
Additionally, a phase-in policy could hurt ESRD facilities that would 
receive a higher wage-index under the new methodology, which we do not 
believe would be appropriate, as we believe the new methodology based 
on BLS data is the best approximation of the labor costs those ESRD 
facilities face.
    We considered setting the NEFOM through rulemaking separately from 
the routine wage index update. Under this alternative, we would 
periodically update the NEFOM, for example every 2 years, with 
potentially more years of freestanding ESRD facility cost report data. 
This would mean that the NEFOM would be a rounded input in the wage 
index methodology, rather than a figure precisely calculated as an 
intermediary step in the methodology. This would slightly simplify the 
calculation steps and would allow for complete transparency on the 
NEFOM. However, we have decided to instead derive the FTEs per 1000 
treatments for each occupation as the weights as a part of the wage 
index calculation as that would increase the precision of this 
calculation. Additionally, given the transparency of the FTE data 
derived from publicly available cost reports, we can still publish the 
NEFOM for the coming year in rulemaking alongside the updated wage 
index; however, we note that the NEFOM we publish would have a lower 
precision so replications using the published NEFOM as an input may be 
slightly off. Furthermore, compared to setting the NEFOM through 
rulemaking less frequently than annually, the proposed methodology to 
calculate the NEFOM as a part of the wage index methodology annually 
would be more responsive to national trends in occupational mix for 
ESRD facilities.
    Finally, we considered whether it was most appropriate to use 
something other than the mean hourly wage for the BLS OEWS data for the 
construction of the wage index. There are always concerns when using 
the mean of a data set that the figure could be unduly influenced by 
outliers. One potential alternative would be to use the median hourly 
wage data instead. The median hourly wage is available by occupation in 
publicly available BLS data, and the median is not as influenced by 
outliers as the mean. We also considered using the geometric mean, 
instead of arithmetic mean, as that is also less influenced by 
outliers; however the geometric mean is not provided in publicly 
available BLS data. Ultimately, we determined that the mean hourly wage 
is the most appropriate for this new wage index methodology, as any 
outliers are relevant data points insofar as some ESRD facilities may 
pay wages significantly higher than the average.
c. Example Calculation Using the Proposed New Wage Index Methodology
    Table 4 is an example of a calculation of the wage index for a 
hypothetical ESRD facility in a hypothetical CBSA under the proposed 
new methodology. This CBSA contains three counties, each with a 
different mean hourly wage and treatment count. Table 4 presents the 
mean hourly wage and treatment count used in the calculation.

[[Page 55776]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.011

    Step 1. Calculate the treatment count-weighted mean hourly wage for 
each occupation for each CBSA by multiplying the mean hourly wage data 
from the BLS OEWS by the treatment count for each county within that 
CBSA and dividing by the total treatment count of all counties within 
the CBSA.

RN wage = [(200 * $45) + (300 * $40) + (500 * $50)]/1000 = $46.0
LPN wage = [(200 * $30) + (300 * $30) + (500 * $35)]/1000 = $32.5
Nurse aide wage = [(200 * $15) + (300 * $20) + (500 * $10)]/1000 = 
$14.0
Technicians wage = [(200 * $30) + (300 * $35) + (500 * $25)]/1000 = 
$29.0
Social worker wage = [(200 * $30) + (300 * $25) + (500 * $35)]/1000 
= $31.0
Administration wage = [(200 * $20) + (300 * $25) + (500 * $20)]/1000 
= $21.5
Dietitian wage = [(200 * $35) + (300 * $30) + (500 * $30)]/1000 = 
$31.0
Management wage = [(200 * $60) + (300 * $65) + (500 * $50)]/1000 = 
$56.5

    Step 2. Calculate the ESRD facility mean hourly wage in the CBSA by 
multiplying the treatment count-weighted mean hourly wage (from step 1) 
for each occupation for the CBSA with the corresponding weight of the 
NEFOM for each occupation and sum each category's amount to get the 
total. The NEFOM for CY 2025 is presented in table 5. For the purposes 
of ensuring the calculation in this section is as easy to understand as 
possible we are using the percentage values from the NEFOM rounded to 
the nearest tenth of a percent. This makes the wage values calculated 
in this step and step 4 more intuitive as they would represent a 
weighted average of the wages in the CBSA. We note that in the actual 
calculation of the wage index, as described in Addendum C, we calculate 
the number of FTEs per 1000 treatments for each occupation and use 
those as the weights, so that the weights have a higher level of 
precision.

[[Page 55777]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.012

ESRD facility mean hourly wage for this CBSA = (0.300 * $46.0) + (0.040 
* $32.5) + (0.024 * $14.0) + (0.381* $29.0) + (0.047 * $31.0) + (0.107 
* $21.5) + (0.045 * $31.0) + (0.055 * $56.5) = $34.75

    Step 3. Calculate the treatment count-weighted mean hourly wage for 
each occupation at the national level by multiplying the mean hourly 
wage for the occupation in each CBSA by the treatment count of that 
CBSA and dividing by the aggregated treatment count nationally.
    To simplify this calculation, assume there are 3 CBSAs as follows:
    [GRAPHIC] [TIFF OMITTED] TP05JY24.013
    

[[Page 55778]]


    Step 4. Calculate the national ESRD facility mean hourly wage by 
multiplying the national mean hourly wage (from step 3) for each 
occupation by the corresponding weight of the NEFOM for each occupation 
and sum each category's amount to get the total. Similarly to step 2, 
we are using the percentages from the NEFOM as weights for the purposes 
of this example calculation.

National average ESRD facility wage = (0.300 * $46.90) + (0.040 * 
$32.58) + (0.024 * $18.67) + (0.381 * $32.28) + (0.047 * $32.61) + 
(0.107 * $19.52) + (0.045 * $31.49) + (0.055 * $56.64) = $36.27

    Step 5. Divide the ESRD facility mean hourly wage for each CBSA by 
the national ESRD facility mean hourly wage to create a raw wage index 
level.

Raw wage index value = $34.75/$36.27 = 0.95809

    Step 6. Multiply the raw wage index for each CBSA by a treatment 
weighted average of the CY 2025 ESRD PPS legacy wage index constructed 
using the established ESRD PPS methodology based on IPPS data and 
divide the product by the treatment weighted average of raw wage 
indices (which equals 1 by construction). This is to ensure that the 
treatment-weighted average of new BLS-based wage indices is the same as 
the weighted average of the current wage indices (for the purpose of 
this hypothetical calculation we have used a value of 1.00679).

Pre-floor wage index value = 0.95809 * 1.00679/1 = 0.9646

    Step 7. Apply the 0.6000 floor to the wage index by replacing any 
wage index values which fall below 0.6000 with 0.6000.

Final wage index value = 0.9646
d. Estimated Impacts of Proposed Change to Wage Index Methodology
    The proposed new wage index methodology described previously would 
be a substantial change from the current approach used by the ESRD PPS 
to evaluate variations in wages across geographic areas. Compared to 
the current methodology based on hospital cost report data, this new 
methodology would use survey data on wages for occupations relevant to 
furnishing renal dialysis services, which includes data from ESRD 
facilities and other similar outpatient settings and is weighted 
according to the average occupational mix of freestanding ESRD 
facilities. This proposed methodological change, if finalized, would be 
associated with significant changes in wage index values, and therefore 
payment amounts, for ESRD facilities. Full impacts for the proposed CY 
2025 ESRD PPS wage index, alongside the updated CBSA delineations and 
rural transition policy discussed in section II.B.2.f of this proposed 
rule, are presented in table 18 in section VIII.D.5.a of this proposed 
rule, including application of the 5 percent cap on year-to-year wage 
index decreases. The 5 percent cap policy would mitigate the impact of 
the proposed changes to the wage index methodology for CY 2025. Column 
3 of table 6 presents the payment impacts associated with only the 
proposed new wage index methodology without the 5 percent cap on 
decreased wage indices (with an appropriate wage index budget 
neutrality adjustment following the established methodology discussed 
at section II.B.4.b) for the purpose of demonstrating its potential 
long-term ramifications. For comparison, column 4 of table 6 presents 
the same payment impacts with the 5 percent cap applied. The figures in 
these columns represent the expected payment change associated from the 
move from the CY 2025 ESRD PPS legacy wage index to the proposed new 
wage index methodology. As an example, this table shows that rural ESRD 
facilities would see a payment increase of 1.014 (or an increase of 1.4 
percent) without the 5 percent cap but only 1.007 (or 0.7 percent) with 
the 5 percent cap. One major driver of this discrepancy is the fact 
that changes to the ESRD PPS wage index are budget neutral, so by 
limiting the negative impact of the change on some facilities through 
the 5 percent cap, we reduce payments to ESRD facilities not impacted 
by the cap. Because the 5 percent cap would impact fewer ESRD 
facilities in each subsequent year by design, column 4 is not a 
reasonable proxy for long term payment impacts associated with this 
policy, but rather it represents the expected change in payment to ESRD 
facilities for CY 2025 as a result of only the proposed wage index 
methodology change.
BILLING CODE 4120-01-P

[[Page 55779]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.014

BILLING CODE 4120-01-C
    Column 3 of table 6 shows the effect that this proposed new wage 
index methodology would have on ESRD facilities, stratified by facility 
type,

[[Page 55780]]

location, and size, without application of the 5 percent cap on any 
decrease in wage index values. These impacts still include the 0.600 
wage index floor because, unlike the 5 percent cap on decreased wages, 
the wage index floor could affect an ESRD facility for every future 
year. The 5 percent cap, however, would likely only affect an ESRD 
facility for a limited number of years until its wage index value lines 
up with the wage index value for the CBSA in which it is located. We 
note that the ESRD PPS does not have a cap on wage index increases, so 
ESRD facilities located in CBSAs that receive a substantial increase in 
wage index value associated with this proposed new methodology would 
not have the impact of that change mitigated and, therefore, that 
change is reflected in the full impacts in section VIII.D.5.a of this 
proposed rule. However, without the 5 percent cap on wage index 
decreases the budget-neutrality factor applied to the ESRD PPS in the 
hypothetical model from which column 3 was derived is larger (the 
application of which would result in a smaller decrease to the ESRD PPS 
base rate), such that ESRD facilities that had a positive change in 
wage index would experience an even greater positive change.
    For comparison, column 4 represents the impacts for CY 2025 with 
the 5 percent cap applied. As discussed previously, this is not a 
reasonable proxy for long term payment impacts because (assuming no 
other changes) the 5 percent cap on wage index decreases would apply to 
a lower number of ESRD facilities each year until ESRD facilities 
receive the wage index for the CBSA in which they are located. However, 
this column does show the impact of applying the 5 percent cap for CY 
2025, both for ESRD facilities for which the cap would apply and other 
ESRD facilities that would receive lower payments due to budget 
neutrality.
    Based on column 3 (as a proxy for long-term impacts), the use of 
the proposed new wage index methodology would result in a notable 
increase in payments to rural ESRD facilities and ESRD facilities 
located in the East South Central census region. Use of the proposed 
new wage index methodology would result in a notable decrease in 
payments to the Pacific census region and the United States Pacific 
Territories (that is, Guam, American Samoa, and the Northern Marianas 
Islands, which are the only Unites States Pacific Territories with an 
ESRD facility). Generally, we include the United States Pacific 
territories together with the Pacific census region, as that is the 
census region in which these territories are located according to the 
United States Census Bureau. However, for this analysis examining the 
effects of CMS' proposed wage index methodology we have opted to 
separate the territories from the Pacific census region, because we 
believe that it is important to evaluate the impact on these 
territories carefully due to their remote geographic location and 
resulting unique economic situation. Column 4 of table 6 shows how the 
application of the 5 percent cap mitigates these changes for CY 2025, 
as ESRD facilities in the United States Pacific territories would have 
a decrease in payment by a factor of only 0.964 rather than 0.930.
    We note that the 5 percent cap on wage index decreases would apply 
to ESRD facilities that are located in a CBSA (based on CY 2025 CBSA 
delineations) with a wage index value 5 percent lower than the CY 2024 
wage index value for their CBSA (based on CY 2024 CBSA delineations). 
The impacts detailed in column 3 are presented for the sole purpose of 
illustrating the potential long-term ramifications of the proposed new 
wage index methodology once sufficient time has passed such that the 5 
percent cap on year-over-year decreases would no longer constrain the 
overall effect of this proposed new methodology on wage index values.
    We have conducted an analysis comparing the hypothetical results of 
applying this new wage index methodology in past years to the actual 
ESRD PPS wage index methodology based on the IPPS wage index for those 
years. We have found that the application of the new wage index 
methodology consistently yields mean and median wage index values 
slightly higher than the actual mean and median wage index values used 
for those years, implying that the wage index resulting from this new 
methodology is relatively stable. Additionally, we have found that the 
payment impacts based on facility type did not change much when using 
data from claim years 2019 through 2022, with most facility types that 
are projected to receive a payment increase for CY 2025 associated with 
the proposed new wage index methodology seeing a payment increase in 
past years. Similarly, most facility types that are projected to 
receive a payment decrease in CY 2025 associated with the proposed new 
wage index methodology were found to have received payment decreases in 
our hypothetical analysis of past years. Therefore, we have determined 
that this new wage index methodology is relatively stable when 
analyzing the differences between the new proposed wage index and the 
ESRD PPS legacy wage index.
e. Proposed CY 2025 ESRD PPS Wage Index
    For CY 2025, we propose to update the wage indices to account for 
updated wage levels in areas in which ESRD facilities are located using 
the proposed new methodology described previously, in subpart b of this 
section, according to the most recent available data. We believe that 
the use of this proposed new methodology is appropriate and responds to 
the feedback we have received from interested parties regarding the 
limitations of the current wage index. Specifically, the use of BLS 
OEWS data would allow for this new wage index methodology to be more 
responsive to differences in ESRD facility wage levels across the 
country. Additionally, by using occupational mix data from the 
freestanding ESRD facility cost reports, this proposed methodology 
would better reflect the actual wage costs incurred by ESRD facilities. 
We believe that this proposed new methodology would be most appropriate 
to use for the ESRD PPS due to several reasons specific to ESRD 
facilities. First, freestanding ESRD facility cost reports contain 
detailed occupational FTE data, which allows CMS to create a wage index 
that is tailored to the wage costs faced by ESRD facilities based on 
their unique staffing needs. Dissimilarities between hospital 
occupation mix and ESRD facility occupational mix make the use of the 
IPPS data less appropriate for ESRD facilities. In addition, the ESRD 
PPS has a lower labor-related share than most other Medicare payment 
systems.\19\ This proposed new ESRD PPS wage index methodology 
addresses these specific circumstances.
---------------------------------------------------------------------------

    \19\ For example, under section 1886(d)(3)(E) of the Act, the 
IPPS applies a labor related share of 62 percent for each hospital 
unless this would result in lower payments to the hospital than 
would otherwise be made.
---------------------------------------------------------------------------

    We recognize that there are several methodological limitations to 
using a wage index based on publicly available BLS OEWS data. 
Specifically, this data source lacks information on employee benefits 
and the full cost of contract labor and includes information from 
hospitals and other healthcare providers. However, we believe that the 
benefits of using this proposed new wage index methodology would 
outweigh these limitations, as the use of BLS OEWS wage data weighted 
by an occupational mix derived from freestanding ESRD facility cost 
report data would allow for a wage index that is more representative of 
the geographic

[[Page 55781]]

variation in wages faced by ESRD facilities.
    For CY 2025, we are also proposing to use OMB's most recent CBSA 
delineations as published in OMB Bulletin No. 23-01, which is based on 
the data from the 2020 decennial census, for the purposes of the CY 
2025 ESRD PPS wage index and rural facility adjustment. This is 
consistent with our historical practice of updating the CBSA 
delineations periodically according to the most recent OMB 
delineations, most recently in the CY 2021 ESRD PPS final rule (85 FR 
71430 through 71434). We discuss this policy in greater detail in 
section II.B.2.f of this proposed rule. For more information on the OMB 
delineations we refer readers to the OMB Bulletin No. 23-01: https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf.
    To implement the proposed change in wage index methodology, we are 
proposing to amend the regulations at 42 CFR 413.196(d)(2) and 
413.231(a). Effective January 1, 2025, the amended Sec.  413.196(d)(2) 
would state that CMS updates on an annual basis ``The wage index using 
the most current wage data for occupations related to the furnishing of 
renal dialysis services from the Bureau of Labor Statistics and 
occupational mix data from the most recent complete calendar year of 
Medicare cost reports submitted in accordance with Sec.  413.198(b).'' 
The amended Sec.  413.231(a) would state that ``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 (established by 
CMS) which reflects the relative level of wages relevant to the 
furnishing of renal dialysis services in the geographic area in which 
the ESRD facility is located.''
    For CY 2025, we propose to update the ESRD PPS wage index to use 
the most recent BLS OEWS wage data and the most recent CY 2022 
freestanding ESRD facility cost report occupational mix and treatment 
volume data available. At the time the analysis was conducted for this 
proposed rule, the most recent BLS OEWS wage data available represented 
May 2022. We propose that if more recent data become available after 
the development of this ESRD PPS proposed rule and before the 
publication of the ESRD PPS final rule (for example, the April 2024 
release of May 2023 OEWS data, which was published after the analysis 
performed for this proposed rule), we would use such data, if 
appropriate, to determine the CY 2025 ESRD PPS wage index in the ESRD 
PPS final rule. The proposed CY 2025 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 2024 wage index and the proposed CY 
2025 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.
(1) Alternative CY 2025 ESRD PPS Wage Index Using Established 
Methodology
    We are presenting a version of the current ESRD PPS wage index 
constructed using our established methodology with the most recent 
available data, which we are referring to as the ESRD PPS legacy wage 
index methodology. The purpose of presenting the legacy methodology 
with modifications is to illustrate an alternative to the proposed new 
methodology described previously for consideration by interested 
parties to facilitate comments on this proposed rule. The inclusion of 
a CY 2025 version of the ESRD PPS legacy wage index methodology allows 
for interested parties to compare wage index values under the current 
methodology and proposed new methodology. For the reasons previously 
discussed, we believe that the proposed new wage index methodology 
based on BLS data is the most appropriate for ESRD facilities; however, 
we intend to consider commenters' input on this proposal and the 
alternative wage index based on the established methodology (updated 
with the most recent data) when making a determination about the best 
approach in the final rule.
    For this alternative wage index, we would use the ESRD PPS legacy 
wage index, which is based on the most recent pre-floor, pre-
reclassified hospital wage data collected annually under the IPPS. The 
ESRD PPS legacy wage index values are calculated without regard to 
geographic reclassifications authorized for acute care hospitals 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 2025, 
the updated wage data are generally for hospital cost reporting periods 
beginning on or after October 1, 2020, and before October 1, 2021 (FY 
2021 cost report data). This CY 2025 version of the legacy wage index 
methodology includes the updates to OMB's CBSA delineations, as the 
proposal to update those delineations is separate from the proposal to 
use the new wage index methodology. Under this possible alternative 
wage index using the legacy ESRD PPS methodology, we would still use 
the most recent available OMB CBSA delineations.
    Under this alternative methodology, we would update the ESRD PPS 
legacy wage index to use the most recent hospital wage data. We would 
update those data if more recent data become available after the 
publication of this proposed rule and before the publication of the 
final rule (for example, using a more recent estimate of the IPPS 
hospital wage data), and we would use such data, if appropriate, to 
determine the CY 2025 ESRD PPS alternative wage index in the final 
rule. The alternative CY 2025 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 2024 wage index and the alternative CY 2025 
wage index. Addendum B provides an ESRD facility level impact analysis. 
Addendum B is available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices.
(2) Request for Comments on This Proposal
    We believe that our proposed new ESRD PPS wage index methodology 
would more accurately estimate the geographic variation in wages paid 
by ESRD facilities when compared to the current ESRD PPS wage index 
based on the IPPS wage index. However, we acknowledge that this 
proposed new methodology, if finalized, would represent a significant 
change to the established ESRD PPS wage index methodology, both by 
changing the data sources and the calculations for the wage index. We 
are requesting comments on all aspects of the proposed new methodology, 
including the use of BLS OEWS data for CBSA-level wage estimates, the 
use of mean hourly wage (rather than median hourly wage), the use of 
freestanding ESRD facility cost reports for deriving occupational mix 
weights based on FTEs for each occupation per 1000 treatments as 
presented in the NEFOM, the use of the ESRD PPS legacy wage index for 
standardization, and the computational

[[Page 55782]]

steps used to calculate the wage index. We welcome any insights into 
potential methodological improvements, particularly related to some of 
the limitations of the new data sources discussed previously, including 
the absence of the cost of employee benefits and the full cost of 
contract labor in the BLS data, and the inability of this proposed 
methodology to capture differences in ESRD facility occupational mix 
across different geographic areas. Based on the comments we receive, we 
may modify the methodological steps used to calculate the wage index in 
the final rule. Additionally, we are requesting comments on the 
proposed use of the new wage index methodology compared to the 
established wage index methodology based on the IPPS wage index which 
was used to create the alternative ESRD PPS legacy wage index. We are 
also requesting comments on the distributional implications of this 
wage index proposal, with specific consideration to rural areas and 
remote or isolated areas such as the United States territories in the 
Pacific. Lastly, we are requesting comments on our proposal to begin 
using our new wage index methodology beginning on January 1, 2025.
f. Proposed Implementation of New OMB Labor Market Delineations
(1) Background
    As previously discussed in this proposed rule, the wage index used 
for the ESRD PPS is historically calculated using the most recent pre-
floor, pre-reclassified hospital wage data collected annually under the 
IPPS and is assigned to an ESRD facility based on the labor market area 
in which the ESRD facility is geographically located. We are proposing 
a new wage index methodology that would similarly be based on the labor 
market in which an ESRD facility is located. ESRD facility labor market 
areas are delineated based on the CBSAs established by OMB. In 
accordance with our established methodology, we have historically 
adopted through rulemaking CBSA changes that are published in the 
latest OMB bulletin. Generally, OMB issues major revisions to 
statistical areas every 10 years, based on the results of the decennial 
census. However, OMB occasionally issues minor updates and revisions to 
statistical areas in the years between the decennial censuses.
    In the CY 2015 ESRD PPS final rule (79 FR 66137 through 66142), we 
finalized changes to the ESRD PPS wage index based on the newest OMB 
delineations, as described in OMB Bulletin No. 13-01 \20\ issued on 
February 28, 2013. We implemented these changes with a 2-year 
transition period (79 FR 66142). OMB Bulletin No. 13-01 established 
revised delineations for United States Metropolitan Statistical Areas, 
Micropolitan Statistical Areas, and Combined Statistical Areas based on 
the 2010 Census. OMB Bulletin No. 13-01 also provided guidance on the 
use of the delineations of these statistical areas using standards 
published on June 28, 2010, in the Federal Register (75 FR 37246 
through 37252).
---------------------------------------------------------------------------

    \20\ https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/bulletins/2013/b13-01.pdf.
---------------------------------------------------------------------------

    On July 15, 2015, OMB issued OMB Bulletin No. 15-01,\21\ which 
updated and superseded OMB Bulletin No. 13-01 issued on February 28, 
2013. These updates were based on the application of the 2010 Standards 
for Delineating Metropolitan and Micropolitan Statistical Areas to the 
United States Census Bureau population estimates for July 1, 2012, and 
July 1, 2013.
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    \21\ https://www.bls.gov/bls/omb-bulletin-15-01-revised-delineations-of-metropolitan-statistical-areas.pdf.
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    On August 15, 2017, OMB issued OMB Bulletin No. 17-01,\22\ which 
updated and superseded OMB Bulletin No. 15-01 issued on July 15, 2015. 
These updates were based on the application of the 2010 Standards for 
Delineating Metropolitan and Micropolitan Statistical Areas to the 
United States Census Bureau population estimates for July 1, 2014, and 
July 1, 2015. In OMB Bulletin No. 17-01, OMB announced a new urban 
CBSA, Twin Falls, Idaho (CBSA 46300).
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    \22\ https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/bulletins/2017/b-17-01.pdf.
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    On April 10, 2018, OMB issued OMB Bulletin No. 18-03 \23\ which 
updated and superseded OMB Bulletin No. 17-01 issued on August 15, 
2017. On September 14, 2018, OMB issued OMB Bulletin No. 18-04,\24\ 
which updated and superseded OMB Bulletin No. 18-03 issued on April 10, 
2018. OMB Bulletin Numbers 18-03 and 18-04 established revised 
delineations for Metropolitan Statistical Areas, Micropolitan 
Statistical Areas, and Combined Statistical Areas, and provided 
guidance on the use of the delineations of these statistical areas. 
These updates were based on the application of the 2010 Standards for 
Delineating Metropolitan and Micropolitan Statistical Areas to the 
United States Census Bureau population estimates for July 1, 2015, and 
July 1, 2016. In the CY 2021 ESRD PPS final rule (85 FR 71430 through 
71434), we finalized changes to the ESRD PPS wage index based on the 
most recent OMB delineations from OMB Bulletin No 18-04. This was the 
most recent time we have updated the labor market delineations used for 
the ESRD PPS and, as such, reflects the labor market delineations we 
used for CY 2024 (88 FR 76360).
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    \23\ https://www.whitehouse.gov/wp-content/uploads/2018/04/OMB-BULLETIN-NO.-18-03-Final.pdf.
    \24\ https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf.
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    In the July 16, 2021, Federal Register (86 FR 37777), OMB finalized 
a schedule for future updates based on results of the decennial Census 
updates to commuting patterns from the American Community Survey, an 
ongoing survey conducted by the Census Bureau. In accordance with that 
schedule, on July 21, 2023, OMB released Bulletin No. 23-01. A copy of 
OMB Bulletin No. 23-01 may be obtained at https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf. According to OMB, 
the delineations reflect the 2020 Standards for Delineating Core Based 
Statistical Areas (``the 2020 Standards''), which appeared in the 
Federal Register on July 16, 2021 (86 FR 37770 through 37778), and the 
application of those standards to Census Bureau population and journey-
to-work data (that is, 2020 Decennial Census, American Community 
Survey, and Census Population Estimates Program data).
    We believe it is important for the ESRD PPS to use, as soon as 
reasonably possible, the latest available labor market area 
delineations to maintain a more accurate and up-to-date payment system 
that reflects the reality of population shifts and labor market 
conditions. We believe that using the most current OMB delineations 
would increase the integrity of the ESRD PPS wage index system by 
creating a more accurate representation of geographic variations in 
wage levels, especially given the proposed new wage index methodology 
discussed previously. We have carefully analyzed the impacts of 
adopting the new OMB delineations and find no compelling reason to 
delay implementation. Therefore, we are proposing to adopt the updates 
to the OMB delineations announced in OMB Bulletin No. 23-01 effective 
for CY 2025 under the ESRD PPS for use in determining both the wage 
index and the rural adjustment for ESRD facilities. This would be 
implemented along with the new ESRD PPS wage index methodology, if 
finalized, or along with the alternative ESRD PPS legacy wage

[[Page 55783]]

index based on IPPS data, should the proposed new wage index 
methodology not be finalized.
    As previously discussed, we finalized a 5 percent permanent cap on 
any decrease to a provider's wage index from its wage index in the 
prior year in the CY 2023 ESRD PPS final rule (87 FR 67161). We are not 
proposing any additional transition policy for the CY 2025 wage index 
as we believe the 5 percent cap effectively mitigates the negative 
impact of large wage index decreases for an ESRD facility in a single 
year. In addition, we are proposing to phase out the rural adjustment 
for ESRD facilities that are transitioning from rural to urban based on 
these CBSA revisions, as discussed in section II.B.2.f.(2) of this 
proposed rule. For a further discussion of changes to OMB's CBSA 
delineations, including a list of changes to specific CBSAs, see the FY 
2025 IPPS proposed rule (89 FR 36139).
(2) Proposal To Phase Out the Rural Facility Adjustment for Facilities 
Affected by Changes to CBSAs
    In the CY 2016 ESRD PPS final rule (80 FR 69001), we established a 
policy to provide a 0.8 percent payment adjustment to the base rate for 
ESRD facilities located in a rural area. This adjustment was based on a 
regression analysis, which indicated that the per diem cost of 
providing renal dialysis services for rural facilities was 0.8 percent 
higher than that of urban facilities after accounting for the influence 
of the other variables included in the regression. This 0.8 percent 
adjustment has been part of the ESRD PPS each year since it was 
finalized beginning for CY 2016, and its inclusion in the ESRD PPS is 
codified at Sec.  413.233.
    As previously discussed in this proposed rule, we are proposing a 
methodological change to the ESRD PPS wage index methodology as well as 
changes to the CBSA delineations. In the CY 2023 ESRD PPS final rule, 
we finalized a policy to cap year-to-year decreases in the wage index 
for any ESRD facility at 5 percent (87 FR 67161). The primary purpose 
of this change was to mitigate the negative effect associated with an 
ESRD facility being reclassified into a lower wage index CBSA as a 
result of changes in OMB's most recent CBSA delineations. We anticipate 
that the proposed change to the CBSA delineations and the changes to 
the wage index methodology, if finalized, would lead to numerous ESRD 
facilities having a significant decrease in wage index value in CY 2025 
compared to CY 2024. As previously discussed, the adoption of OMB 
Bulletin No. 23-01 would determine whether an ESRD facility is 
classified as urban or rural for purposes of the rural facility 
adjustment in the ESRD PPS. Although the rural facility adjustment is 
not directly related to the wage index, the application of both is 
determined by the CBSA in which an ESRD facility is located and, 
therefore, is potentially subject to significant changes associated 
with the new CBSA delineations. It is reasonable to conclude that these 
proposed shifts in the CBSA delineations, in combination with the wage 
index methodological changes proposed in this proposed rule, could lead 
to a year-over-year decrease in payment greater than what a 5 percent 
decrease to the wage index would cause even if the decrease in the wage 
index value alone would be less than 5 percent. To mitigate the scope 
of changes that would impact ESRD facilities in any single year, we are 
proposing to implement a 3-year phase out of the rural facility 
adjustment for ESRD facilities that are located in a CBSA that was 
categorized as rural in CY 2024 and is recategorized as urban in CY 
2025, as a result of the updates to the CBSA delineations associated 
with the proposed adoption of OMB Bulletin No. 23-01.
    Overall, we believe implementing updated OMB delineations would 
result in the rural facility adjustment being applied where it is 
appropriate to adjust for higher costs incurred by ESRD facilities in 
rural locations. However, we recognize that implementing these proposed 
changes, if finalized, would have different effects among ESRD 
facilities and that the loss of the rural facility adjustment could 
lead to some hardship for ESRD facilities that had anticipated 
receiving the rural facility adjustment in CY 2025. Therefore, we 
believe it would be appropriate to consider whether a transition period 
should be used to implement these proposed changes.
    For ESRD facilities located in a county that transitioned from 
rural to urban in OMB Bulletin 23-01, we considered whether it would be 
appropriate to phase out the rural facility adjustment for affected 
ESRD facilities. Adoption of the updated CBSAs in OMB Bulletin 23-01, 
if finalized as proposed, would change the status of 44 ESRD facilities 
currently designated as ``rural'' to ``urban'' for CY 2025 and 
subsequent CYs. As such, these 44 newly urban ESRD facilities would no 
longer receive the 0.8 percent rural facility adjustment. Consistent 
with the rural transition policy proposed for Inpatient Psychiatric 
Facilities (IPFs) and Inpatient Rehabilitation Facilities (IRFs) for FY 
2025 (89 FR 23188, 89 FR 22267 through 22268) we are proposing a 3-
year, budget neutral phase-out of the rural facility adjustment for 
ESRD facilities located in the 54 rural counties that would become 
urban under the new OMB delineations, given the potentially significant 
payment impacts for these ESRD facilities. We believe that a phase-out 
of the rural facility adjustment transition period for these 44 ESRD 
facilities would be appropriate, because we expect these ESRD 
facilities would experience a steeper and more abrupt reduction in 
their payments compared to other ESRD facilities. We are proposing to 
adopt these new CBSA delineations in a year in which we are also 
proposing substantial methodological changes to our wage index. While 
these proposed changes, if finalized, would increase payment accuracy 
across the ESRD PPS, we also recognize that some ESRD facilities could 
lose the rural facility adjustment and receive a significantly lower 
wage index value in the same year. We believe that it is appropriate 
for this proposed transition policy to be budget-neutral compared to 
ending the rural adjustment for these facilities in CY 2025 because it 
is an extension of the rural facility adjustment, which is implemented 
budget-neutrally, and a result of the change in CBSA delineations, 
which is proposed to be implemented budget-neutrally alongside the wage 
index changes. The reasoning behind this proposal is similar to the 
reasoning behind the 5 percent cap on year-to-year decreases in wage 
index values which was finalized in the CY 2023 ESRD PPS final rule (87 
FR 67161), as it would ameliorate unexpected negative impacts to 
certain ESRD facilities. This rural phase-out in combination with the 5 
percent cap policy would best reduce the negative effects on any single 
ESRD facility resulting from changes to the CBSA delineations. 
Therefore, we are proposing to phase out the rural facility adjustment 
for these facilities to reduce the impact of the loss of the CY 2024 
rural facility adjustment of 0.8 percent over CYs 2025, 2026, and 2027, 
consistent with the similar IPF and IRF proposals previously discussed. 
This policy would allow ESRD facilities that are classified as rural in 
CY 2024 and would be classified as urban in CY 2025 to receive two-
thirds of the rural facility adjustment for CY 2025, or a 0.53 percent 
adjustment. For CY 2026, these ESRD facilities would receive one-third 
of the rural facility adjustment, or a 0.27

[[Page 55784]]

percent adjustment. For CY 2027, these ESRD facilities would not 
receive a rural facility adjustment. We believe a 3-year budget-neutral 
phase-out of the rural facility adjustment for ESRD facilities that 
transition from rural to urban status under the new CBSA delineations 
would best accomplish the goals of mitigating the loss of the rural 
facility adjustment for existing CY 2024 rural ESRD facilities. The 
purpose of the gradual phase-out of the rural facility adjustment for 
these ESRD facilities is to mitigate payment reductions and promote 
stability and predictability in payments for existing rural ESRD 
facilities that may need time to adjust to the loss of their CY 2024 
rural payment adjustment or that experience a reduction in payments 
solely because of this re-designation. This policy would be 
specifically for ESRD facilities that are rural in CY 2024 that become 
urban in CY 2025. We are not proposing a transition policy for urban 
ESRD facilities that become rural in CY 2025 because these ESRD 
facilities would receive the full rural facility adjustment of 0.8 
percent beginning January 1, 2025, and they would not experience the 
same adverse effects as an ESRD facility that unexpectedly loses a 
payment adjustment. We understand that compared to rural payment 
adjustments in other Medicare payment systems, the ESRD PPS rural 
facility adjustment is not large in magnitude (for example, the rural 
adjustments for IPFs and IRFs are 17 percent and 14.9 percent, 
respectively), but it is important for ESRD facilities to be able to 
reasonably predict what their payments from the ESRD PPS would be in 
the next year. We solicit comments on this proposed policy.
3. Proposed CY 2025 Update to the Outlier Policy
a. 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 erythropoiesis stimulating agents (ESAs) 
necessary for anemia management. Some examples of the patient 
conditions that may be reflective of higher facility costs when 
furnishing dialysis care are frailty and obesity. A patient's specific 
medical condition, such as secondary hyperparathyroidism, may result in 
higher per treatment costs. The ESRD PPS recognizes that some patients 
require high cost care, 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.\25\
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    \25\ 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.
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    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 ESRD 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.\26\ 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.
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    \26\ Transmittal 2033 issued August 20, 2010, was rescinded and 
replaced by Transmittal 2094, dated November 17, 2010. Transmittal 
2094 identified additional drugs and laboratory tests that may also 
be eligible for ESRD outlier payment. Transmittal 2094 was rescinded 
and replaced by Transmittal 2134, dated January 14, 2011, which 
included one technical correction. https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R2134CP.pdf.
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    Under Sec.  413.237, an ESRD facility is eligible for an outlier 
payment if its imputed (that is, calculated) MAP amount per treatment 
for ESRD outlier services exceeds a threshold. In past years, the MAP 
amount has reflected 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 per treatment plus the fixed dollar 
loss (FDL) amount. As described in the following paragraphs, the ESRD 
facility's predicted MAP amount is the national adjusted average ESRD 
outlier services MAP amount per treatment, further adjusted for case-
mix and facility characteristics applicable to the claim. We use the 
term ``national adjusted average'' in this section of this proposed 
rule 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 ESRD PPS base rate to account 
for the proportion of the estimated total Medicare 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

[[Page 55785]]

patients (75 FR 49140). As we explained in the CY 2011 ESRD PPS final 
rule (75 FR 49138 through 49139), the predicted outlier services MAP 
amounts for a patient are determined by multiplying the adjusted 
average outlier services MAP amount by the product of the patient-
specific case-mix adjusters applicable using the outlier services 
payment multipliers developed from the regression analysis used to 
compute the payment adjustments.
    Lastly, in the CY 2023 ESRD PPS final rule, we finalized an update 
to the outlier methodology to better target 1.0 percent of total 
Medicare payments (87 FR 67170 through 67177). We explained that for 
several years, outlier payments had consistently landed below the 
target of 1.0 percent of total ESRD PPS payments (87 FR 67169). 
Commenters raised concerns that the methodology we used to calculate 
the outlier payment adjustment since CY 2011 results in underpayment to 
ESRD facilities, as the base rate has been reduced by 1.0 percent since 
the establishment of the ESRD PPS to balance the outlier payment (85 FR 
71409, 71438 through 71439; 84 FR 60705 through 60706; 83 FR 56969). In 
response to these concerns, beginning with CY 2023, we began 
calculating 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 stated in the CY 2023 ESRD PPS 
final rule that we would continue to calculate the adult and pediatric 
MAP amounts for CY 2023 and subsequent years following our established 
methodology. In that same CY 2023 ESRD PPS final rule, we provided a 
detailed discussion of the methodology we use to calculate the MAP 
amounts and FDL amounts (87 FR 67167 through 67169).
    For CY 2025, we are proposing several methodological and policy 
changes to the ESRD PPS outlier policy to address a number of concerns 
that interested parties have raised in recent years. Although we note 
that the 1.0 percent outlier target was achieved in CY 2023, it was not 
achieved in the majority of the years since the establishment of the 
ESRD PPS in 2011. We expect that each of the proposed changes would 
support the ability of the ESRD PPS to continue targeting outlier 
payments at 1.0 percent in CY 2025 and subsequent years. We discuss 
each of these proposed changes in detail in the following sections.
b. Proposed Expansion of ESRD Outlier Services
(1) Background and Current Issues
    In the CY 2011 ESRD PPS final rule we finalized a policy that only 
renal dialysis services that were or would have been separately 
billable prior to the inception of the ESRD PPS would be eligible for 
the outlier payment. In the CY 2011 ESRD PPS proposed rule we explained 
that we believed that any unusual variation in the cost of the renal 
dialysis services comprising the base rate under the ESRD PPS would 
likely to be due to variation in the items and services that were, at 
that time, separately billable under Part B or renal dialysis service 
drugs and biological products that were then covered under Part D (74 
FR 49988). We received some comments at that time that requested CMS 
consider alternative ways to determine outlier eligibility, including 
expanding eligibility to all renal dialysis services. However, we noted 
that we did not have adequate data at that time to include all 
Composite Rate Services (that is, renal dialysis services included in 
the composite payment system established under section 1881(b)(7) of 
the Act and the basic case-mix adjusted composite payment system 
established under section 1881(b)(12) of the Act, as defined in 
regulation at Sec.  413.171) in the outlier calculation (74 FR 49989, 
75 FR 49135).
    In the CY 2019 ESRD PPS proposed rule we issued a comment 
solicitation on the potential expansion of outlier payments to 
composite rate supplies, drugs, and biological products (83 FR 34332). 
In this RFI, we detailed that such a change could promote appropriate 
payment for composite rate drugs once the TDAPA period has ended. 
Commenters' responses to this comment solicitation were mixed (83 FR 
56969 through 56970). One commenter expressed that such a change would 
promote and incentivize the development of innovative new therapies and 
devices to treat the highly vulnerable ESRD adult and pediatric patient 
populations. Some commenters responded specifically regarding the TDAPA 
that extending availability of outlier payments would be particularly 
important when no additional money is being added to the base rate for 
the drug, as is the case with most drugs and biological products 
receiving the TDAPA. However, some commenters, including MedPAC, did 
not agree that such an expansion of the outlier eligible services would 
improve care, generally indicating that expanding the list of ESRD 
outlier services would hamper the outlier payment's functionality. One 
commenter stated that the purpose of the outlier adjustment was to pay 
for unusually costly patients, not new drugs and biological products, 
which the commenter felt the outlier payment was unable to do 
adequately. MedPAC commented that an outlier policy should act as a 
stop-loss insurance for medically necessary care, and outlier payments 
are needed when the ESRD PPS' payment adjustments do not capture all of 
the factors affecting providers' costs of delivering care. To that end, 
MedPAC stated that to develop an effective outlier policy, CMS must 
first develop accurate patient-level and facility-level payment 
adjustments. MedPAC further cautioned that should CMS expand the list 
of eligible ESRD outlier services, we should be clear as to what would 
qualify for the outlier payment.
    In subsequent years, we took steps to expand the outlier policy to 
include certain potentially costly renal dialysis services that would 
have been included in the composite rate prior to the ESRD PPS. In the 
CY 2020 ESRD PPS final rule we finalized that any new and innovative 
renal dialysis equipment or supply would be eligible for the outlier 
adjustment after the end of the TPNIES period, regardless of whether it 
would have been separately billable prior to 2011 (84 FR 60697). In 
that rule, we explained that we believed allowing these items to be 
outlier eligible after the end of the TPNIES period would allow for 
these new and innovative supplies to be competitive with the other 
equipment and supplies also accounted for in the ESRD PPS base rate by 
establishing a level playing field where products could gain market 
share by offering the best practicable combination of price and quality 
(84 FR 60693). In the CY 2021 ESRD PPS final rule, we finalized that 
capital-related assets that are home dialysis machines will not become 
ESRD outlier services at the end of the TPNIES payment period (85 FR 
71399). We explained that as assets, capital-related home dialysis 
machines are distinct from operating expenses such as the disposable 
supplies and leased equipment with no conveyed ownership rights. Unlike 
assets, these latter items are generally accounted for on a per patient 
basis and therefore, when used in excess of the average, constitute 
outlier use, which makes them eligible for outlier payments (85 FR 
71424).
    The definition of ESRD outlier services is codified at Sec.  
413.237(1)(a). Currently, drugs and biological products that were or 
would have been paid under the composite rate are not considered ESRD 
outlier services, and

[[Page 55786]]

costs for these drugs are not included in the calculation for outlier 
payments on ESRD PPS claims. Current regulations at Sec.  413.171 
define Composite Rate Services as: ``Items and services used in the 
provision of outpatient maintenance dialysis for the treatment of ESRD 
and included in the composite payment system established under section 
1881(b)(7) and the basic case-mix adjusted composite payment system 
established under section 1881(b)(12) of the Act.'' Under our 
longstanding policy, drugs and biological products that are substitutes 
for composite rate drugs and biological products are considered to be 
included in the composite rate portion of the ESRD PPS. In the CY 2011 
ESRD PPS final rule (75 FR 49048), we cited to existing guidance in the 
Medicare Benefit Policy Manual, Pub. 100-02, chapter 11, section 
30.4.1, which explicitly stated, ``drugs used in the dialysis procedure 
are covered under the facility's composite rate and may not be billed 
separately. Drugs that are used as a substitute for any of these items, 
or are used to accomplish the same effect, are also covered under the 
composite rate.'' This guidance remains in effect and was subsequently 
re-designated to section 20.3.F of the same chapter.
    In the CY 2024 ESRD PPS final rule (88 FR 76391), we finalized a 
policy to pay, beginning for CY 2024, a post-TDAPA add-on payment 
adjustment for any new renal dialysis drug or biological product that 
is considered included in the ESRD PPS base rate that has previously 
been paid for using the TDAPA under Sec.  413.234(c)(1). This post-
TDAPA add-on payment adjustment generally will be applied for a period 
of 3 years following the end of the TDAPA period for those products. We 
finalized that the post-TDAPA add-on payment adjustment amount will be 
calculated based on the most recent available 12 months of claims data 
and the latest available full calendar quarter of average sales price 
(ASP) data (88 FR 76396). We explained that we divide the total 
expenditure of the new renal dialysis drug or biological product by the 
total number of ESRD PPS treatments furnished during the same 12-month 
period. In addition, we finalized that we adjust the post-TDAPA add-on 
payment adjustment amount paid on claims by the patient-level case-mix 
adjustment factors; accordingly, we apply a reduction factor to the 
post-TDAPA add-on payment adjustment amount to account for the 
application of the patient-level case-mix adjustment factors. We 
codified these policies by revising Sec.  413.234(c)(1)(i) and adding 
regulations at Sec.  413.234(b)(1)(iii), (c)(1)(ii), (c)(3), and (g) 
that describe the post-TDAPA add-on payment adjustment and the 
calculation we use to determine the post-TDAPA add-on payment 
adjustment amount. In addition, we amended Sec.  413.230 by adding 
reference to the post-TDAPA add-on payment adjustment in the 
calculation of the ESRD PPS per treatment payment amount.
    In the same CY 2024 ESRD PPS final rule, we summarized comments 
regarding the outlier policy as it pertains to the post-TDAPA add-on 
payment adjustment (88 FR 76396). One commenter pointed out that the CY 
2024 ESRD PPS proposed rule did not indicate whether the ESRD PPS 
outlier adjustment would apply to products for which a post-TDAPA add-
on payment adjustment is calculated. In response, CMS stated that under 
current policy, after the end of the TDAPA period, a drug or biological 
product is considered an eligible outlier service only if it meets the 
requirements of Sec.  413.237(a)(1). We clarified that any renal 
dialysis drug or biological product included in the calculation of the 
post-TDAPA add-on payment adjustment would be considered an eligible 
ESRD outlier service only if it meets the requirements of Sec.  
413.237(a)(1). However, we further clarified that under current policy, 
Korsuva[supreg], the only renal dialysis drug with a TDAPA period 
ending in CY 2024, would not be considered an eligible ESRD outlier 
service after the end of its TDAPA period, because it is a substitute 
for diphenhydramine hydrochloride, which was included in the composite 
rate prior to 2011, and therefore does not meet the requirements of 
Sec.  413.237(a)(1) (that is, it would not have been, prior to January 
1, 2011, separately billable under Medicare Part B).
    Most recently, we have heard concerns from interested parties that 
excluding drugs and biological products that are substitutes for--or 
are used to achieve the same effect as--composite rate drugs and 
biological products from the definition of ESRD outlier services could 
limit the ability of the ESRD PPS outlier adjustment to appropriately 
recognize the drivers of cost for renal dialysis services. We 
considered these concerns, as well as the comments we received in 
response to prior rulemaking, to develop proposed changes to the 
definition of ESRD outlier services.
(2) Proposed Definition of ESRD Outlier Services
    We are proposing to change the definition of ESRD outlier services 
at Sec.  413.237(a)(1) to include drugs and biological products that 
were or would have been included in the composite rate prior to the 
establishment of the ESRD PPS. We note that this proposal would expand 
outlier eligibility to longstanding drugs and biological products that 
were historically included in the composite rate, as well as newer 
drugs and biological products that are currently included in the 
calculation of the post-TDAPA add-on payment adjustment. As discussed 
in section II.B.3.c of this proposed rule, we are proposing technical 
changes to the calculation of outlier payments that would appropriately 
account for the post-TDAPA add-on payment adjustment for ESRD outlier 
services that are drugs and biological products.
    First, we considered the original intent behind the policy to limit 
outlier payments to drugs that were or would have been separately 
billable prior to 2011, which was that these drugs were likely the main 
drivers of the variation in the costs of treatment (74 FR 49988). We 
continue to believe that an important aspect of the outlier adjustment 
should be its ability to target ESRD cases that are unusually costly. 
If the outlier adjustment methodology failed to recognize the main 
drivers of variation in the costs of ESRD treatment, then it could 
result in cases that are not unusually costly qualifying for the 
outlier adjustment, which would mean the impact of the outlier 
adjustment would be diluted. As we noted earlier in this proposed rule, 
many of the responses to the comment solicitation in the CY 2019 ESRD 
PPS proposed rule expressed concerns that expanding the scope of ESRD 
outlier services would potentially dilute the impact of the outlier 
adjustment. We considered the potential impact of expanding the 
definition of ESRD outlier services to include additional drugs and 
biological products not currently included. We agree with the 
commenters who noted that the purpose of the outlier payment is not to 
pay for new drugs and biological products (83 FR 56969). Rather, as we 
discussed in the CY 2011 ESRD PPS final rule (75 FR 49134), CMS 
established the current outlier policy, including the 1.0 percent 
outlier target, 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. Under our 
current policy, new renal dialysis drugs and biological products that 
are paid for using the TDAPA are not considered

[[Page 55787]]

ESRD outlier services. As we explained in the CY 2016 ESRD PPS final 
rule (80 FR 69023), this is because during the TDAPA period we make a 
payment adjustment for the specific drug in addition to the base rate, 
whereas outlier services have been incorporated into the base rate. In 
contrast, the post-TDAPA add-on payment adjustment is paid on all 
claims, and drugs that are included in the post-TDAPA add-on payment 
adjustment amount are considered included in the ESRD PPS base rate. As 
a result, the amount paid under the post-TDAPA add-on payment 
adjustment does not correspond to the amount of a drug or biological 
product used on a claim, which would not be accounted for in any 
existing payment adjustment other than the outlier adjustment. For 
example, our analysis shows that patients using Korsuva[supreg] have 
costs of approximately $150 per treatment; however, because this drug 
is not recognized as an ESRD outlier service, these costs are not 
accounted for in determining the payment amount for the claim. 
Beginning April 1, 2024, the CY 2024 post-TDAPA add-on payment 
adjustment for Korsuva[supreg] increases the payment amount per 
treatment by approximately $0.25, which is adjusted by the patient-
level case-mix adjusters applicable to the claim. In aggregate, the 
post-TDAPA add-on payment adjustment accounts for 65 percent of the 
cost of furnishing Korsuva[supreg]; however, this payment is spread 
across all ESRD PPS treatments.
    We are not proposing to expand outlier eligibility to drugs and 
biological products that are paid for using the TDAPA during the TDAPA 
payment period, as the TDAPA amount is based on the full price (100 
percent of ASP) for the amount of such drugs that is utilized and 
billed on the claim.
    We considered only expanding the definition of ESRD outlier 
services to include drugs and biological products that were previously 
paid for using the TDAPA. As commenters have noted, new renal dialysis 
drugs and biological products are likely to be drivers of cost, because 
these drugs are typically more expensive. We recognized the importance 
of supporting access to new renal dialysis drugs and biological 
products under the ESRD PPS through the establishment of the post-TDAPA 
add-on payment adjustment beginning in CY 2024 (88 FR 76391). We 
explained in the CY 2024 ESRD PPS final rule that we agreed with 
commenters who expressed concerns that the ESRD PPS' current mechanisms 
may not fully account for the costs of these new drugs (88 FR 76388). 
We noted that several commenters stated that the outlier adjustment and 
the ESRDB market basket updates cannot adequately account for these 
costs, and several organizations noted that if additional renal 
dialysis drugs and biological products with significant costs were 
incorporated into the outlier payment calculation, the threshold to 
qualify for outlier payments would increase dramatically, thus 
adversely affecting access to products traditionally eligible for the 
outlier payment adjustment. We described comments which expressed that 
this increase in the outlier threshold may also raise health equity 
concerns because, as we noted in the CY 2023 ESRD PPS final rule (87 FR 
67170 through 67171), the outlier adjustment protects access for 
beneficiaries whose care is unusually costly. We recognized that if the 
outlier threshold were to increase significantly due to significant use 
of a new renal dialysis drug or biological product after the end of the 
TDAPA period, then ESRD facilities might be incentivized to avoid 
treating costlier beneficiaries.
    We believe it would be appropriate for the definition of ESRD 
outlier services to include all drugs and biological products that 
previously were paid for using the TDAPA. The inclusion of these drugs 
and biological products would help ensure appropriate payment when a 
patient's treatment is exceptionally expensive due to an ESRD facility 
furnishing such drugs or biological products to the patient whose 
treatment requires them. In the CY 2011 ESRD PPS proposed rule, we 
explained that significant variations in formerly separately billable 
items and services could impair access to appropriate care, as an ESRD 
facility may have a disincentive to provide adequate treatment to those 
ESRD patients likely to have significantly higher than average costs 
(74 FR 49988). We believe ESRD facilities may face similar 
disincentives for furnishing drugs and biological products that 
previously received payment under the TDAPA. We believe that this 
change would also align with the statutory authority for the outlier 
adjustment under section 1881(b)(14)(D)(ii) of the Act by protecting 
patients' access to medically necessary care through a payment 
adjustment that more fully recognizes unusual variations in the type or 
amount of such care. Specifically, we believe this change would 
encourage ESRD facilities to take on ESRD patients who would 
potentially require expensive new drugs and biological products, 
promoting health equity for these patients who require costlier care. 
Additionally, the technical changes we are proposing in section 
II.B.3.c of this proposed rule would limit the impact of such drugs and 
biological products on the outlier threshold calculation, thereby 
enabling the ESRD PPS outlier adjustment to continue to protect access 
for beneficiaries whose care is unusually costly.
    In light of the past comments described earlier in this section, we 
further considered whether expanding eligibility to all renal dialysis 
drugs and biological products that are Composite Rate Services, as 
defined at Sec.  413.171, would be appropriate. As we have previously 
stated, the purpose of the outlier adjustment is to protect access for 
beneficiaries whose care is unusually costly. Although we continue to 
expect that the main drivers of cost would be drugs and biological 
products that were previously separately billable under Part B or Part 
D, or were previously paid for using the TDAPA, we nevertheless 
recognize that some patients could require higher utilization of 
composite rate drugs and biological products, which may result in the 
overall cost of their renal dialysis care being unusually high. For 
example, as noted in section II.B.3.e of this proposed rule, our 
analysis has identified that certain composite rate drugs are 
significant drivers of cost for pediatric patients, and therefore the 
proposed inclusion of those drugs as ESRD outlier services would 
improve the ability of the ESRD PPS outlier adjustment to target 
payment for pediatric patients whose care is exceptionally costly. 
Including composite rate drugs and biological products in the 
calculation of the outlier adjustment could appropriately support care 
for such ESRD patients, because payments under the outlier adjustment 
would better align with resource use.
    We also considered the comments from MedPAC in response to the CY 
2019 ESRD PPS proposed rule. Specifically, MedPAC stated that to 
develop an effective outlier policy, CMS must first develop accurate 
patient-level and facility-level payment adjustments. As we stated in 
the CY 2024 ESRD PPS final rule, interested parties have encouraged CMS 
to develop a patient cost model that is based on a single patient-level 
cost variable that accounts for all composite rate and formerly 
separately billable services (88 FR 76399). We finalized the collection 
of time on machine data, beginning for CY 2025, which we stated would 
allow for a higher proportion of composite rate costs to be allocated 
to patients with longer renal dialysis treatment times, and ultimately 
inform CMS refinements to existing patient-level adjusters,

[[Page 55788]]

including age and comorbidities (88 FR 76400). We believe that 
expanding the definition of ESRD outlier services could further support 
our understanding of the costs of Composite Rate Services, because it 
would encourage more comprehensive reporting of renal dialysis drugs 
and biological products that were formerly included in the composite 
rate for the purposes of calculating outlier payments. This increased 
reporting would in turn support future revisions to patient-level 
adjustment factors that consider more complete information about costs 
at the patient level.
    We do not agree that the proposed inclusion of composite rate drugs 
and biological products would dilute the impact of the outlier 
adjustment, as some commenters in response to the CY 2019 ESRD PPS 
proposed rule suggested. Rather, our analysis indicates that the 
inclusion of these drugs and biological products would appropriately 
recognize the situations when the provision of these services is 
unusually costly, which we estimate would increase the amount of 
outlier payment per outlier-eligible claim, thereby more effectively 
protecting access for beneficiaries whose care is exceptionally costly. 
As discussed in section II.B.3.e. of this proposed rule, if we made no 
changes to our outlier methodology or the definition of ESRD outlier 
services for CY 2025, the average outlier payment for outlier-eligible 
cases among pediatric patients would be $25.02, and the average outlier 
payment for adult patients would be $53.45. Under the proposed changes 
to outlier eligibility, the average outlier payment for pediatric and 
adult patients would increase to $73.24 and $57.16, respectively. 
Furthermore, as discussed later in section II.B.3.e of this proposed 
rule, the inclusion of composite rate drugs and biological products 
would increase the pediatric MAP amount by a large amount, reflecting 
the utilization of certain high-cost composite rate drugs. Although the 
proposed CY 2025 adult MAP amount is lower than the final CY 2024 adult 
MAP amount, we note that the proposed adult MAP amount for CY 2025 is 
approximately $0.79 higher than it would be absent the proposed policy 
changes in this rule, which demonstrates that the inclusion of 
composite rate drugs and biological products would result in a higher 
MAP amount for adults.
    In summary, the inclusion of composite rate drugs and biological 
products as ESRD outlier services would include more costs in the 
calculation of the ESRD PPS outlier adjustment for each case. As a 
result, fewer claims would qualify for outlier payments, but the amount 
of outlier payment per claim would be higher. Therefore, rather than 
diluting the impact of the outlier adjustment, these proposed changes 
would increase the impact of the outlier adjustment.
    We are proposing to amend the language at 42 CFR 413.237 by adding 
a new paragraph (a)(1)(vii), which would add to the list of renal 
dialysis services defined as ESRD outlier services the following: 
``Renal dialysis drugs and biological products that are Composite Rate 
Services as defined in Sec.  413.171.''
c. Proposed Changes to Predicted MAP Calculation for Outlier 
Eligibility
    As we discussed in the CY 2023 ESRD PPS final rule (87 FR 67169), a 
claim is eligible for outlier payment when its imputed MAP amount 
exceeds the sum of the predicted MAP amount and the fixed dollar loss 
threshold. The predicted MAP amount for a claim is based on the 
national average MAP amount, adjusted by the case-mix adjustment 
factors that apply for that claim's patient-level and facility-level 
characteristics. As a result, when a claim's adjustment factors 
increase the payment amount per treatment, the claim's predicted MAP is 
also increased. This is because we expect that more complex patients 
would require a higher amount of spending for outlier services. 
However, this higher expected cost is recognized through a higher per 
treatment payment amount. In other words, a more complex patient must 
have even higher costs than are already accounted for in the adjustment 
factors compared to a less complex patient to be considered unusually 
costly. By increasing the predicted MAP based on the case-mix 
adjustment factors, the ESRD PPS outlier policy ensures that only cases 
that are unusually costly are considered for outlier payment.
    As previously discussed in this proposed rule, we finalized a post-
TDAPA add-on payment adjustment in the CY 2024 ESRD PPS final rule. The 
post-TDAPA add-on payment adjustment for certain new renal dialysis 
drugs and biological products is generally applied for 3 years after 
the end of the TDAPA period (88 FR 76388 through 76397). The amount of 
this post-TDAPA add-on payment adjustment that is applied to an ESRD 
PPS claim is adjusted by any applicable patient-level case-mix 
adjustments under Sec.  413.235, and this adjusted amount is added to 
the payment amount for each ESRD PPS treatment billed. We explained in 
the CY 2024 ESRD PPS final rule that during this 3-year post-TDAPA add-
on payment period, a drug or biological product would be eligible for 
the outlier add-on payment if it met all of the other criteria for the 
outlier payment (88 FR 76396). The only drug or biological product 
which was set to end its TDAPA period in CY 2024 (and therefore would 
receive the post-TDAPA add-on payment adjustment that year) was 
Korsuva[supreg], which is a substitute for a composite rate drug and, 
therefore, not outlier eligible under existing Sec.  413.237(a)(1) (88 
FR 76396). Therefore, we did not propose any changes to the ESRD PPS 
outlier methodology to account for the post-TDAPA add-on payment 
adjustment in the CY 2024 ESRD PPS proposed rule as that would not have 
affected payments for CY 2024.
    As noted previously, we are proposing to expand outlier eligibility 
to include renal dialysis drugs and biological products that are 
Composite Rate Services as defined in Sec.  413.171. This would mean 
that new drugs and biological products that are included in the 
calculation of the post-TDAPA add-on payment adjustment amount would 
become outlier eligible after the end of the TDAPA period, regardless 
of whether they are substitutes for composite rate drugs or biological 
products.
    We are also proposing changes to the ESRD PPS outlier methodology 
to account for any future drugs and biological products which are 
outlier eligible during the post-TDAPA period. We propose to add the 
case-mix adjusted post-TDAPA add-on payment adjustment amount to the 
predicted MAP for a patient. This is appropriate because the post-TDAPA 
add-on payment adjustment amount represents average utilization of a 
drug or biological product, and is added to the payment amount, 
adjusted by the case-mix adjusters for the patient. This would prevent 
duplicate payment for these drugs and biological products by accounting 
for the portion of the cost for these drugs or biological products 
which is included in the ESRD PPS bundled payment. We note that this 
proposed change would not affect the calculation of the imputed MAP for 
a claim, because a claim's imputed MAP would include the actual 
utilization of the drug or biological product that is included in the 
calculation of the post-TDAPA add-on payment adjustment, if that drug 
or biological product is billed on the claim.
    We considered proposing to modify the average MAP amount to account 
for outlier eligible drugs and biological products that are already 
included in the calculation of the post-TDAPA add-

[[Page 55789]]

on payment adjustment amount, rather than proposing to modify the 
predicted MAP amount for each claim. However, we note two main 
limitations with taking such an approach. First, the average MAP is set 
annually for an entire year and does not change from quarter to 
quarter; in contrast, the post-TDAPA add-on payment adjustment amount 
can change from quarter to quarter depending on when a drug or 
biological product's TDAPA period ends and the number of drugs and 
biological products included in the calculation. Second, our 
longstanding methodology for calculating the predicted MAP for outlier 
payments applies the outlier services multipliers to the average MAP. 
However, when we calculate the post-TDAPA add-on payment adjustment 
amount for a claim, we apply the ESRD PPS case-mix adjusters, which are 
different from the outlier services multipliers. We believe it would be 
most appropriate to continue to apply the ESRD PPS case-mix adjusters 
to the post-TDAPA add-on payment adjustment amount for the purposes of 
outlier calculation, so that the estimate of a claim's expected 
spending would align with the calculation used for the post-TDAPA add-
on payment adjustment. For these reasons, we believe that it is more 
appropriate and more operationally feasible to apply the case-mix 
adjusted post-TDAPA add-on payment adjustment amount to the predicted 
MAP for claims during the quarters in which the drug or biological 
product is receiving the post-TDAPA add-on payment adjustment, rather 
than publishing different average MAPs for different quarters of a 
single year.
    For CY 2025, the impact of this technical modification would be a 
small increase to the pediatric and adult FDL amounts, due to the small 
post-TDAPA add-on payment adjustment amount calculated for each quarter 
of CY 2025, as discussed in section II.B.6 of this proposed rule. 
Without this proposed methodological change, the pediatric FDL amount 
would increase by $0.68. Likewise, the adult FDL amount would increase 
by $0.89. This proposed methodological change would avoid those 
increases, resulting in the proposed CY 2025 adult and pediatric MAP 
and FDL amounts shown in table 7 of this proposed rule. Although the 
effect would be small for CY 2025, we note that the proposed increase 
would be larger in potential future situations when utilization of a 
drug or biological product during the post-TDAPA payment period could 
be higher.
d. Proposed Technical Modifications to the Inflation Factors Used for 
the Outlier Calculations
(1) Background
    In the CY 2011 ESRD PPS final rule we finalized our ESRD PPS 
outlier methodology, which included our methodology for updating data 
from past years to the CY for which CMS is establishing payment rates 
(75 FR 49134). In the CY 2023 ESRD PPS final rule, we finalized an 
update to the outlier methodology to better target 1.0 percent of total 
Medicare payments (87 FR 67170 through 67177) by prospectively 
calculating 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. In that final rule we also 
clarified our longstanding methodology for updating data from prior 
years for the purposes of the outlier calculations (87 FR 67167). For 
drugs and biological products, we use a blended 4-quarter moving 
average of the ESRDB market basket price proxies for pharmaceuticals to 
inflate drug prices to the CY for which CMS is establishing payment 
rates. For laboratory tests, we inflate laboratory test prices to the 
CY for which CMS is establishing payment rates using a CPI forecast to 
estimate changes for years in which a new data reporting period will 
take place for the purpose of setting Clinical Laboratory Fee Schedule 
(CLFS) rates.\27\ For supplies, we apply a 0 percent inflation factor, 
because these prices are based on predetermined fees or prices 
established by the Medicare contractor.
---------------------------------------------------------------------------

    \27\ Since 2018, there has been no updated reporting for most 
clinical diagnostic laboratory tests; therefore, the forecast 
estimate used since CY 2018 for the ESRD PPS outlier methodology has 
been 0.
---------------------------------------------------------------------------

    In the CY 2023 ESRD PPS final rule (87 FR 67173), we noted that 
MedPAC supported the proposed revisions to the FDL methodology, but 
also urged CMS to refine its approach for applying the pricing data 
that the agency uses to project future spending for outlier services, 
particularly for drugs. Specifically, 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.
    As discussed in the following sections, we have undertaken analysis 
of prices for ESRD outlier services and are proposing several technical 
changes to the inflation factors.
(2) Proposed Changes to the Inflation Factor for Outlier Eligible Drugs 
and Biological Products
    As described earlier, we use a blended 4-quarter moving average of 
the ESRDB market basket price proxy for Pharmaceuticals to inflate drug 
prices to the upcoming CY for the purpose of estimating spending for 
outlier drugs and biological products in that CY. Historically, this 4-
quarter moving average is a positive factor, meaning that our 
longstanding methodology for modeling outlier spending amounts assumes 
that prices for ESRD outlier drugs and biological product will 
increase. For example, the current projection of the CY 2025 price 
growth for ESRD outlier drugs and biological products, based on the 
ESRDB market basket price proxy for Pharmaceuticals for CY 2025, is 1.9 
percent, based on the IGI 1st quarter 2024 forecast with historical 
data through the 4th quarter of 2023.
    To compare the actual changes in prices for ESRD outlier drugs and 
biological products against the assumed rate of change derived from the 
ESRDB market basket price proxies, we constructed an index of prices 
for ESRD outlier drugs and biological products. As previously discussed 
in section II.B.3.b of this proposed rule, we are proposing to expand 
the definition of ESRD outlier services to include renal dialysis drugs 
and biological products that were or would have been included in the 
composite rate prior to the establishment of the ESRD PPS. Accordingly, 
our constructed drug price index included these drugs and biological 
products as well as drugs and biological products that have 
historically been included in the definition of ESRD outlier services.
    Because the list of ESRD outlier drugs and biological products 
changes over time, we are proposing to derive a chained Laspeyres price 
index of the drugs and biological products included in the definition 
of the ESRD outlier services. A chained Laspeyres price index does not 
require a fixed basket of drugs and biological products during the 
observation window. We constructed and then trended forward the year-
over-year change in price index levels for this outlier drug index to 
calculate a projected inflation factor for ESRD outlier drugs and 
biological products for CY 2025, using the following steps:
    Step 1: We obtained the annual list of ESRD outlier service drugs 
and biological products that appear in ESRD

[[Page 55790]]

PPS claims during the CYs 2017 through 2023. These include both 
composite rate and formerly separately billable drugs and biological 
products.
    Step 2: We obtained quarterly ASP for each drug and biological 
product during the same period 2017 through 2023, substituting annual 
ASP when quarterly information was not available.
    Step 3: We obtained quarterly utilization data for each drug and 
biological product for the period 2017 through 2023.
    Step 4: For each quarter, we established the base period as the 
prior quarter and held utilization fixed at the base period. We then 
constructed a Laspeyres price index based on all drugs and biological 
products that had price information in that quarter and the prior 
quarter.
    Step 5: We chained together the quarterly indices starting from the 
1st quarter 2017 through the 4th quarter 2023 to express price changes 
in the 4th quarter 2017 relative to the 1st quarter 2017. This step was 
repeated for all prior quarters, keeping the starting period fixed at 
the 1st quarter 2017.
    Step 6: We calculated the percentage change between the current and 
prior 4th quarter chained price index for each year for CY 2021, 2022, 
and 2023, which we used as the annual drug price inflation factor for 
each year.
    Step 7: Using the chained price indexes for the three most recent 
CYs (2021, 2022, and 2023), we used a linear regression to project 
forward these three historical inflation factors to determine the CY 
2025 inflation factor.
    Using this methodology, we calculated a projected inflation factor 
of -0.7 percent, meaning that prices for ESRD outlier drugs and 
biological products are projected to be 0.7 percent lower in CY 2025 
relative to the prices of the ESRD outlier drugs and biological 
products in than in CY 2024. We note that our analysis of year-over 
year changes in prices for ESRD outlier drugs and biological products 
shows a consistent, downward trend in prices, which stands in contrast 
to the positive inflation factors we have historically used to model 
outlier payments. As a result, our modeling of outlier spending in 
prior years has assumed that outlier prices would increase, when the 
ASP data shows that overall the prices have decreased.
    Based on the results of our analysis, we believe that applying an 
inflation factor based on the actual change in prices for ESRD outlier 
drugs and biological products would enable the ESRD PPS outlier 
adjustment to better target 1.0 percent of outlier payments in CY 2025, 
because such an inflation factor would better reflect the observed 
historical trend in spending and utilization for such drugs and 
biological products. Although we have historically used the ESRDB 
market basket price proxy for Pharmaceuticals as the basis of our 
inflation assumptions for outlier modeling, and we believe that market 
basket price proxies would continue to be a reasonable and technically 
appropriate source for such assumptions, we note that the market basket 
price proxies serve a distinctly different purpose than the inflation 
factors. As we explained in the CY 2023 ESRD PPS final rule (87 FR 
67147), we select the most appropriate wage and price proxies currently 
available to represent the rate of price change for each expenditure 
category. In contrast, the purpose of the inflation factors used in our 
outlier modeling is to represent the expected rate of change in price 
and utilization, so that we can prospectively set accurate FDL and MAP 
amounts that will result in outlier payments that equal 1.0 percent of 
total ESRD PPS payments. Decreasing our estimates of future outlier 
spending, as we are proposing to do, would result in lower FDL and MAP 
amounts, thereby increasing the number of claims that could be eligible 
for the outlier payment adjustment and the amount of outlier payments 
that would be paid on each claim. Revising our assumptions about future 
spending for ESRD outlier drugs and biological products would improve 
the ability of the ESRD outlier adjustment to pay for the costliest 
ESRD PPS claims. Therefore, we are proposing to use the projected 
inflation factor for ESRD outlier services that are drugs and 
biological products derived from the historical trend in prices and 
utilization for ESRD outlier drugs, as described in the previous 
paragraph. In section II.B.3.e of this proposed rule, we present the 
proposed CY 2025 MAP and FDL amounts calculated using this proposed 
methodology.
(3) Proposed Changes to the Inflation Factors for Outlier Eligible 
Laboratory Tests and Supplies
    As previously discussed, CMS uses different methodologies for the 
inflation factors for laboratory tests and supplies. We inflate 
laboratory test prices to the upcoming CY using a CPI forecast to 
estimate changes for years in which a new data reporting period will 
take place for the purpose of setting CLFS rates; however, the forecast 
estimate used since CY 2018 for the ESRD PPS outlier methodology has 
been 0, because there has been no updated reporting for most clinical 
diagnostic laboratory tests since the CY 2018 CLFS. For supplies, we 
apply a 0 percent inflation factor, because these prices are based on 
predetermined fees or prices established by the Medicare contractor. In 
the CY 2011 ESRD PPS proposed rule, we explained that we chose to use 
these factors so that the MAP would be based on pricing mechanisms 
currently in place for these services (74 FR49991).
    The ESRDB market basket uses price proxies for goods and services 
included in furnishing renal dialysis services to determine the ESRDB 
market basket update. For example, the market basket price proxy for 
laboratory services is the PPI Industry for Medical and Diagnostic 
Laboratories (BLS series code #PCU621511621511) representing the change 
in the price of laboratory services conducted by medical and diagnostic 
laboratories reported on the ESRD facility cost reports. Similarly, the 
market basket price proxy for supplies is the PPI Commodity for 
Surgical and Medical Instruments (BLS series code #WPU1562) 
representing the change in the price of medical supplies reported on 
the ESRD facility cost reports.
    We have considered whether these longstanding assumptions about 
price changes for laboratory tests and supplies would be appropriate 
for modeling changes in spending for outlier-eligible laboratory tests 
and supplies. Unlike with drugs and biological products, we do not have 
detailed historical pricing data for ESRD outlier laboratory tests and 
supplies to permit us to perform a similar analysis for these services 
as we did for drugs and biological products. However, we can compare 
the historical inflation factors we have used to the growth in the 
market basket price proxies for these categories of renal dialysis 
services. For supplies, we would typically assume a 0 percent update; 
however, the average 10-year historical growth in the PPI Commodity for 
Surgical and Medical Instruments is 0.9 percent. Likewise, in years 
when there is a CLFS data reporting period, we would typically use an 
inflation factor for laboratory tests based on a CPI projection, 
reduced by the productivity adjustment, through June of the year prior 
to the update year; however, the average 10-year historical annual 
growth for the PPI Industry for Medical and Diagnostic Laboratories is 
-0.4 percent.
    Beginning for CY 2025, we are proposing to use the ESRDB market 
basket price proxies for laboratory tests and supplies for the purpose 
of calculating the growth in estimated spending for these outlier 
services in the upcoming CY. These would replace the current inflation 
factors which are used for laboratory tests and supplies. Compared to 
the current inflation

[[Page 55791]]

factors we use, we anticipate that the market basket price proxies for 
laboratory tests and supplies would more appropriately reflect the 
change in prices of the laboratory tests and supply costs that are used 
by ESRD facilities. We believe that using the market basket price 
proxies would better allow the ESRD PPS to estimate the changes in the 
prices of laboratory tests and supplies, which would improve the 
ability for CMS to target outlier payments at 1.0 percent of total ESRD 
PPS payments. We note that decreasing our estimates of future outlier 
spending would result in lower FDL and MAP amounts, thereby increasing 
the number of claims that could be eligible for the outlier payment 
adjustment and the amount of outlier payment that would be paid on each 
claim. Revising our assumptions about future spending for ESRD outlier 
drugs and biological products would improve the ability of the ESRD PPS 
outlier adjustment to pay for the costliest ESRD PPS claims. In section 
II.B.3.e of this proposed rule, we present the proposed CY 2025 MAP and 
FDL amounts calculated using these inflation factors.
e. CY 2025 Update to the Outlier Services MAP Amounts and FDL Amounts
    For CY 2025, we are proposing to update the MAP amounts for adult 
and pediatric patients using the latest available CY 2023 claims data. 
We are proposing to update the ESRD outlier services FDL amount for 
pediatric patients using the latest available CY 2023 claims data, and 
to update the ESRD outlier services FDL amount for adult patients using 
the latest available claims data from CY 2021, CY 2022, and CY 2023, in 
accordance with the methodology finalized in the CY 2023 ESRD PPS final 
rule (87 FR 67170 through 67174). The latest available CY 2023 claims 
data showed outlier payments represented approximately 1.0 percent of 
total Medicare payments.
    The impact of this proposed update is shown in table 7, which 
compares the outlier services MAP amounts and FDL amounts used for the 
outlier policy in CY 2024 with the updated proposed estimates for this 
proposed rule for CY 2025. The estimates for the proposed CY 2025 MAP 
amounts, which are included in column II of table 7, were inflation 
adjusted to reflect projected 2025 prices for ESRD outlier services, in 
accordance with the proposed changes to the inflation factors discussed 
in section II.B.3.d of this proposed rule.
[GRAPHIC] [TIFF OMITTED] TP05JY24.015

    As demonstrated in table 7, the estimated FDL per treatment that 
determines the CY 2025 outlier threshold amount for adults (column II; 
$49.46) is lower than that used for the CY 2024 outlier policy (column 
I; $71.76). The lower threshold is accompanied by a decrease in the 
adjusted average MAP for outlier services from $36.28 to $33.57. For 
pediatric patients, there is an increase in the FDL amount from $11.32 
to $223.44. There is a corresponding increase in the adjusted average 
MAP for outlier services among pediatric patients, from $23.36 to 
$58.39. We note that this substantial increase in the outlier threshold 
for pediatric patients reflects the proposed inclusion of certain 
composite rate drugs for outlier consideration, notably Healthcare 
Common Procedure Coding System (HCPCS) code J2997 (Injection, alteplase 
recombinant, 1 mg). As a result, a smaller proportion of pediatric 
patients would receive outlier payments, but the average outlier 
payment amounts would be significantly higher.
    We estimate that the percentage of patient months qualifying for 
outlier

[[Page 55792]]

payments in CY 2025 would be 7.18 percent for adult patients and 6.00 
percent for pediatric patients, based on the 2023 claims data and 
methodology changes proposed in sections II.B.3.c and II.B.3.d of this 
proposed rule.
f. 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 1.0 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. In 
the 2023 ESRD PPS final rule, we finalized a change to the outlier 
methodology to better achieve this 1.0 percent target (87 FR 67170 
through 67174). Based on the CY 2023 claims, outlier payments 
represented approximately 1.0 percent of total payments, which has been 
our policy goal since the establishment of the ESRD PPS outlier 
adjustment. We believe the proposed methodological changes to the 
outlier calculation and the proposed change to the definition of ESRD 
outlier services would continue to effectively set the outlier MAP and 
FDL amounts for CY 2025 and future years, enabling the ESRD PPS to 
continue targeting outlier payments at 1.0 percent of total payments. 
We also note that the proposed 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.
4. Proposed Impacts to the CY 2025 ESRD PPS Base Rate
a. 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. Sec.  413.220 and 
413.230. The CY 2011 ESRD PPS final rule also provides a detailed 
discussion of the methodology used to calculate the ESRD PPS base rate 
and the computation of factors used to adjust the ESRD PPS base rate 
for projected outlier payments and budget neutrality in accordance with 
sections 1881(b)(14)(D)(ii) and 1881(b)(14)(A)(ii) of the Act, 
respectively. Specifically, the ESRD PPS base rate was developed from 
CY 2007 claims (that is, the lowest per patient utilization year as 
required by section 1881(b)(14)(A)(ii) of the Act), updated to CY 2011, 
and represented the average per treatment 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, the 
TDAPA, the TPNIES, the post-TDAPA add-on payment adjustment, and the 
TPEAPA for CYs 2024, 2025 and 2026.
b. Proposed Annual Payment Rate Update for CY 2025
    We are proposing an ESRD PPS base rate for CY 2025 of $273.20. This 
would be a 0.8 percent increase from the CY 2024 ESRD PPS base rate of 
$271.02. This proposed update reflects several factors, described in 
more detail as follows:
    Wage Index Budget-Neutrality Adjustment Factor: We compute a wage 
index budget-neutrality adjustment factor that is applied to the ESRD 
PPS base rate. For CY 2025, we are not proposing any changes to the 
methodology used to calculate this factor, which is described in detail 
in the CY 2014 ESRD PPS final rule (78 FR 72174). We computed the 
proposed CY 2025 wage index budget-neutrality adjustment factor using 
treatment counts from the 2023 claims and facility-specific CY 2024 
payment rates to estimate the total dollar amount that each ESRD 
facility would have received in CY 2024. The total of these payments 
became the target amount of expenditures for all ESRD facilities for CY 
2025. Next, we computed the estimated dollar amount that would have 
been paid for the same ESRD facilities using the proposed CY 2025 ESRD 
PPS wage index and proposed labor-related share for CY 2025. As 
discussed in section II.B.2 of this proposed rule, the ESRD PPS wage 
index for CY 2025 includes the proposed new wage index methodology 
based on BLS data and the proposed use of the most recent OMB 
delineations based on 2020-census data.\28\ The total of these payments 
becomes the new CY 2025 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 2025 amount. When we 
multiplied the wage index budget-neutrality factor by the applicable CY 
2025 estimated payments, aggregate Medicare 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 the wage index updates and revisions do not 
increase or decrease aggregate Medicare payments. The proposed CY 2025 
wage index budget-neutrality adjustment factor is 0.990228. This 
proposed CY 2025 wage index budget-neutrality adjustment factor 
reflects the impact of all proposed wage index policy changes, 
including the proposed CY 2025 ESRD PPS wage index using the new ESRD 
PPS wage index methodology based on BLS data, the 5 percent cap on 
year-to-year decreases in wage index values, the updated CBSA 
delineations, the 3 year rural phase-out for ESRD facilities in 
currently-rural CBSAs that would become urban under the new 
delineations, and the labor-related share. We note that the application 
of the 5 percent cap on wage index decreases has a sizable impact on 
the budget-neutrality factor this year due to the proposed new wage 
index methodology. That is, because a substantial number of ESRD 
facilities would have experienced a greater than 5 percent decrease in 
wage index value as a result of the proposed new wage index 
methodology, the budget-neutrality adjustment factor needed to offset 
the effect of limiting those decreases to 5 percent is larger than we 
expect it would be in a typical year. We note that the proposed CY 2025 
wage index budget-neutrality factor does not include any impacts 
associated with the TPEAPA, as was the case with last year's combined 
wage index-TPEAPA budget-neutrality factor. This is consistent with how 
we have historically applied budget neutrality for case-mix adjusters, 
including pediatric case-mix adjusters. We do not routinely apply a 
budget-neutrality factor to account for changes in overall payment 
associated with changes in patient case-mix in years in which we do not 
propose any changes to the case-mix adjustment amount. Although the 
TPEAPA was established under the authority in section 
1881(b)(14)(D)(iv) of the Act, which does not require budget 
neutrality, we stated in the CY 2024 ESRD PPS final rule that we were 
implementing the TPEAPA in a budget neutral manner because it was 
similar to the pediatric case-mix adjusters, and it accounts for costs 
which would have been included in the cost reports used in the analysis 
conducted when we created the ESRD PPS bundled payment in the CY 2011 
ESRD PPS final rule (88 FR 76378). Therefore, it would not be

[[Page 55793]]

appropriate to apply a budget-neutrality factor for the TPEAPA for CY 
2025.
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    \28\ https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf.
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    Market Basket Update: 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 an ESRD market basket percentage 
increase. As discussed in section II.B.1.b.(1) of this proposed rule, 
the latest CY 2025 projection of the ESRDB market basket percentage 
increase is 2.3 percent. In CY 2025, 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 
previously discussed in section II.B.1.b.(2) of this proposed rule, the 
latest CY 2025 projection of the productivity adjustment is 0.5 
percentage point, thus yielding a proposed CY 2025 productivity-
adjusted ESRDB market basket update of 1.8 percent for CY 2025. 
Therefore, the proposed CY 2025 ESRD PPS base rate is $273.20 (($271.02 
x 0.990228) x 1.018 = $273.20). We are also proposing that if more 
recent data become 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 percentage increase or 
productivity adjustment), we would use such data, if appropriate, to 
determine the CY 2025 ESRDB market basket update in the final rule.
5. Proposed Update to the Average per Treatment Offset Amount for Home 
Dialysis Machines
    In the CY 2021 ESRD PPS final rule (85 FR 71427), we expanded 
eligibility for the TPNIES under Sec.  413.236 to include certain 
capital-related assets that are home dialysis machines when used in the 
home for a single patient. To establish the TPNIES basis of payment for 
these items, we finalized the additional steps that the Medicare 
Administrative Contractors (MACs) must follow to calculate a pre-
adjusted per treatment amount, using the prices they establish under 
Sec.  413.236(e) for a capital-related asset that is a home dialysis 
machine, as well as the methodology that CMS uses to calculate the 
average per treatment offset amount for home dialysis machines that is 
used in the MACs' calculation, to account for the cost of the home 
dialysis machine that is already in the ESRD PPS base rate. For 
purposes of this proposed rule, we 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 CYs.
    There are currently no capital-related assets that are home 
dialysis machines set to receive TPNIES for CY 2025, as the TPNIES 
payment period for the Tablo[supreg] System ended on December 31, 2023, 
and there are no TPNIES applications for CY 2025. However, as required 
by Sec.  413.236(f)(3)(v), we propose to update the TPNIES offset 
amount annually according to the methodology described previously.
    We propose a CY 2025 TPNIES offset amount for capital-related 
assets that are home dialysis machines of $10.18, based on the proposed 
CY 2025 ESRDB productivity-adjusted market basket update of 1.8 percent 
(proposed 2.3 percent market basket percentage increase reduced by the 
proposed 0.5 percentage point productivity adjustment). Applying the 
proposed update factor of 1.018 to the CY 2024 offset amount resulted 
in the proposed CY 2025 offset amount of $10.18 ($10.00x 1.018 = 
$10.18). We propose to update this calculation to use the most recent 
data available in the CY 2025 ESRD PPS final rule.
6. Proposed Updates to the Post-TDAPA Add-On Payment Adjustment Amounts
    In the CY 2024 ESRD PPS final rule we finalized an add-on payment 
adjustment for certain new renal dialysis drugs and biological 
products, which would be applied for 3 years after the end of the TDAPA 
period (88 FR 76388 through 76397). This adjustment, known as the post-
TDAPA add-on payment adjustment, is adjusted by the patient-level case-
mix adjuster and is applied to every ESRD PPS claim. In that final rule 
we also clarified that for each year of the post-TDAPA period we would 
update the post-TDAPA add-on payment adjustment amounts based on 
utilization and ASP of the drug or biological product. For CY 2024 
there is one drug, Korsuva[supreg] (difelikefalin), included in the 
calculation of the post-TDAPA add-on payment adjustment. In the CY 2024 
ESRD PPS final rule (88 FR 76397), we finalized that the post-TDAPA 
add-on payment adjustment amount for Korsuva[supreg] would be $0.2493 
and would begin on April 1, 2024.
    For CY 2025, we will have two drugs included in the calculation of 
the post-TDAPA add-on payment adjustment. The post-TDAPA add-on payment 
adjustment period for one of these drugs, Korsuva[supreg], began on 
April 1, 2024, so, conditional upon the continued receipt of the latest 
full calendar quarter of ASP data as described in Sec.  413.234(c)(3), 
Korsuva[supreg] will be included in the calculation for the post-TDAPA 
add-on payment adjustment for the entirety of CY 2025. The other drug, 
Jesduvroq (daprodustat), began its 2-year TDAPA period on October 1, 
2023, so its post-TDAPA add-on payment adjustment period will begin on 
October 1, 2025, conditional upon the continued receipt of the latest 
full calendar quarter of ASP data.
    Based on the most recent utilization data, and following the 
calculation explained in the CY 2024 ESRD PPS final rule (88 FR 76388 
through 76389) and Sec.  413.234(g), the proposed post-TDAPA add-on 
payment adjustment amount for Korsuva[supreg] is $0.4047 for all 4 
quarters of CY 2025. Under that same methodology, the proposed post-
TDAPA add-on payment adjustment amount for Jesduvroq is $0.0019 for 
only the last quarter of CY 2025. We note that utilization data 
available at the time of this proposed rulemaking for Jesduvroq 
included only data from October 2023 through February 2024. As 
discussed in the CY 2024 ESRD PPS final rule (88 FR 76388 through 
76389), we intend to update these calculations with the most recent 
available data in the final rule. Table 8 shows the proposed post-TDAPA 
add-on payment adjustment amounts for each quarter of CY 2025.

[[Page 55794]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.016

a. Proposal To Publish Post-TDAPA Add-On Payment Adjustment Amounts 
After the Final Rule in Certain Circumstances
    As discussed in the CY 2024 ESRD PPS final rule (88 FR 76393) and 
codified at 42 CFR 413.234(g), we have finalized a post-TDAPA add-on 
payment adjustment, which is based on the most recent year of 
utilization data and is calculated annually in each rulemaking cycle. 
Under Sec.  413.234(g)(1), CMS bases the post-TDAPA add-on payment 
adjustment calculation on the most recent 12-month period of 
utilization for the new renal dialysis drug or biological product and 
the most recent available full calendar quarter of ASP data. However, 
when a drug or biological product begins its TDAPA period in the fourth 
quarter of a CY, and, therefore, would be included in the post-TDAPA 
add-on payment adjustment calculation beginning in the fourth quarter 2 
CYs later, there would likely not be a full year's worth of utilization 
data available at the time of proposed or final rulemaking for that CY 
due to the time-lag associated with collecting and processing 
utilization data for the final rule. For example, at the time of 
rulemaking for last year's ESRD PPS final rule, we had data available 
through June 2023 when calculating the post-TDAPA add-on payment 
adjustment amount for Korsuva[supreg] (88 FR 73697). However, for a 
drug or biological product that began its TDAPA payment period in 
October of the prior year, data from October through June would only 
represent 9 months of data. We believe it is important to have a full 
year's utilization data when determining the post-TDAPA add-on payment 
adjustment amount so that the post-TDAPA add-on payment adjustment 
appropriately captures the utilization of the drug or biological 
product as required by Sec.  413.234(g)(1).
    We are proposing that when there is insufficient data at the time 
of rulemaking, we would publish the post-TDAPA add-on payment 
adjustment amount via Change Request (CR) once we have a full 12 months 
of data. Specifically, we would publish the post-TDAPA add-on payment 
adjustment amount in a CR under the following circumstances: (1) a drug 
or biological product is ending its TDAPA period during the CY, and 
therefore under Sec.  413.234(c)(1) will begin being included in the 
post-TDAPA add-on payment adjustment amount calculation during that CY; 
and (2) that drug or biological product does not have at least 12 full 
months of utilization data at the time the final rule is developed. We 
would still include an estimated post-TDAPA add-on payment adjustment 
amount in the proposed rule and update that estimated amount in the 
final rule, but we would note that the estimated amount presented in 
the final rule is subject to change. We note that the final post-TDAPA 
add-on payment adjustment amount published after the final rule could 
be higher or lower than the estimated amount presented in the final 
rule. We do not anticipate having less than a full year's utilization 
data at the time of rulemaking for drugs and biological products that 
begin receiving TDAPA payments in quarters other than the fourth 
quarter of the year; however, should such an instance arise, we would 
similarly publish the post-TDAPA add-on payment adjustment amount in a 
CR once 12 months of utilization data is available. We would indicate 
the quarterly release CR in which we intend to publish the final post-
TDAPA add-on payment adjustment amount.
    For CY 2025, there is one TDAPA drug, Jesduvroq, which is ending 
its TDAPA period in CY 2025 and for which we do not anticipate having a 
full 12 months' worth of utilization data at the time of final 
rulemaking. As such, we would indicate in the final rule that we intend 
to publish the post-TDAPA add-on payment adjustment amount for CY 2025 
for Jesduvroq once we have a full year of utilization data. We 
generally intend to publish this updated post-TDAPA add-on payment 
adjustment amount two calendar quarters prior to the end of the TDAPA 
period, as this would allow for sufficient time to gather and analyze a 
year's worth of utilization data. For this drug, and for any drug or 
biological product that begins its TDAPA period in the fourth quarter 
of a CY, we would generally publish the post-TDAPA add-on payment 
adjustment amount at the beginning of the second quarter of the last CY 
of that drug or biological product's TDAPA period (that is, two 
calendar quarters before the drug is included in the post-TDAPA add-on 
payment adjustment amount). However, should circumstances arise that 
prevent us from calculating a post-TDAPA add-on payment adjustment 
amount at that time, we would publish the final post-TDAPA add-on 
payment adjustment amount at a later time.
    This approach to publishing the post-TDAPA add-on payment 
adjustment amount calculation would not impact any drug or biological 
product that has at least one full year's worth of utilization data at 
the time when the analysis for the final rule is developed, nor would 
it impact any drug or biological product that is already

[[Page 55795]]

included in the post-TDAPA add-on payment adjustment calculation for a 
given CY. We do not intend to routinely update post-TDAPA add-on 
payment adjustment amounts quarterly, as we believe this would make it 
more difficult for ESRD facilities to estimate payments. However, for 
drugs or biological products that lack a full year's worth of 
utilization data at the time when the analysis for the final rule is 
developed, we believe it is appropriate to take this additional step to 
ensure that their post-TDAPA add-on payment adjustment is based on 12 
months of utilization data as required by Sec.  413.234(g)(1).
7. Inclusion of Oral-Only Drugs Into the ESRD PPS Bundled Payment
a. 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 that 
section states that these services include other drugs and biologicals 
\29\ that are furnished to individuals for the treatment of ESRD and 
for which payment was made separately under this title, and any oral 
equivalent form of such drug or biological.
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    \29\ 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 
proposed rule except where referencing specific language in the Act 
or regulations.
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    When we implemented the ESRD PPS in 2011 (75 FR 49030), we 
interpreted this provision as including not only injectable drugs and 
biological products used for the treatment of ESRD (other than ESAs and 
any oral form of ESAs, which are included under clause (ii) of section 
1881(b)(14)(B) of the Act), but also all oral drugs and biological 
products used for the treatment of ESRD and furnished under title XVIII 
of the Act. We also concluded that, to the extent oral-only drugs or 
biological products used for the treatment of ESRD do not fall within 
clause (iii) of section 1881(b)(14)(B) of the Act, such drugs or 
biological products would fall under clause (iv) of that 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 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 drugs and biological 
products with only an oral form. We also finalized a policy to delay 
payment for oral-only drugs under the ESRD PPS until January 1, 2014. 
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 ESRD PPS payment rates effective January 1, 2014, 
once we had collected and analyzed adequate pricing and utilization 
data. 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 for those beneficiaries with 
such coverage.
    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.
    Since then, the Congress has acted three times to further delay the 
inclusion of oral-only renal dialysis service drugs and biological 
products in the ESRD PPS. Specifically, as discussed in section II.A.1 
of this proposed rule, ATRA in 2013, as amended by PAMA in 2014, and 
amended by ABLE in 2014, ultimately delayed the inclusion of oral-only 
drugs into the ESRD PPS until January 1, 2025.
    Section 217(c)(1) of PAMA also required us to adopt a process for 
determining when oral-only drugs are no longer oral-only and to 
incorporate them into the ESRD PPS bundled payment. 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. In the CY 
2016 ESRD PPS proposed rule (80 FR 37839), we noted that when the 
existing oral-only drugs (which were, at that time, only phosphate 
binders and calcimimetics) were determined no longer to be oral-only 
drugs, we would pay for them using the TDAPA. We stated that this would 
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.
    In 2017, when an injectable calcimimetic became available, CMS 
issued a Change Request \30\ to add all calcimimetics, including oral 
and injectable forms, to the ESRD PPS bundled payment beginning in CY 
2018. CMS paid the TDAPA for calcimimetics for a period of 3 years (CY 
2018 through CY 2020). When the TDAPA period ended, we went through 
rulemaking (85 FR 71410) to increase the ESRD PPS base rate beginning 
in CY 2021 to incorporate the cost of calcimimetics.
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    \30\ https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/mm10065.pdf and 
https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2018downloads/r1999otn.pdf.
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    Most recently, in the CY 2023 ESRD PPS final rule (87 FR 67185 
through 67186), we finalized a revision to the regulatory definition of 
an oral-only drug, effective January 1, 2025, to clarify our 
longstanding policy by specifying that an oral-only drug has no 
injectable functional equivalent. The effective date of this revised 
definition will coincide with the January 1, 2025, incorporation of 
oral-only drugs into the ESRD PPS under Sec.  413.174(f)(6). The 
revised definition of oral-only drugs reflects that drugs with similar 
end-action effects are treated as equivalent under the ESRD PPS, 
consistent with our approach to designating drugs into ESRD PPS 
functional categories.
b. Current Policy for Oral-Only Drugs in CY 2025
    Existing regulations at Sec.  413.174(f)(6) state that effective 
January 1, 2025, oral-only drugs will be paid for under the ESRD PPS. 
Although oral-only drugs are excluded from the ESRD PPS bundled payment 
until January 1, 2025, they are currently recognized as renal dialysis 
services as defined in regulation at Sec.  413.171. Accordingly, CMS is 
planning to incorporate oral-only drugs into the ESRD PPS bundled 
payment beginning January 1, 2025, using the TDAPA, as described in the 
CY 2016 ESRD PPS final rule (80 FR 69027) and subsequent rules.
    As we stated in the CY 2023 ESRD PPS final rule (87 FR 67180), 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 for outside the ESRD PPS. We stated that

[[Page 55796]]

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. We stated that if no other 
injectable equivalent (or other form of administration) of phosphate 
binders is approved by the FDA prior to January 1, 2025, we would pay 
for these drugs using the TDAPA under the ESRD PPS for at least 2 years 
beginning January 1, 2025. CMS will use the same process that it used 
for calcimimetics to incorporate phosphate binders into the ESRD PPS 
beginning January 1, 2025. CMS discussed its process for incorporating 
calcimimetics in CMS Transmittal 1999, dated January 10, 2018, and in 
MLN Matters Number: MM10065.31 32 Pricing for phosphate 
binders under the TDAPA will be based on pricing methodologies 
available under section 1847A of the Act. A new renal dialysis drug or 
biological product is paid for using the TDAPA, which is based on 100 
percent of ASP. If ASP is not available then the transitional drug add-
on payment adjustment 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. In such cases, CMS will undertake 
rulemaking to modify the ESRD PPS base rate, if appropriate, to account 
for the cost and utilization of phosphate binders in the ESRD PPS 
bundled payment.
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    \31\ https://www.cms.gov/Regulations-and-Guidance/Guidance/
Transmittals/2018Downloads/R1999OTN.pdf.
    \32\ https://www.cms.gov/Outreach-and-Education/Medicare-
Learning-Network-MLN/MLNMattersArticles/Downloads/MM10065.pdf.
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    We note that on October 17, 2023, a new oral phosphate lowering 
agent received FDA marketing approval. According to the FDA label 
information for this drug, XPHOZAH\TM\ (tenapanor) is indicated to 
reduce serum phosphorus in adults with chronic kidney disease who are 
on dialysis. CMS has identified XPHOZAH\TM\ to be a renal dialysis 
service because it is used to treat or manage a condition associated 
with ESRD. Specifically, it is used as an add-on therapy in patients 
who have an inadequate response to phosphate binders or who are 
intolerant of any dose of phosphate binder therapy. XPHOZAH\TM\ tablets 
are taken orally, usually twice a day with meals. CMS has also 
determined that XPHOZAH\TM\ meets the current regulatory definition of 
an oral-only drug as defined at Sec.  413.234(a), and therefore, in 
accordance with Sec.  413.174(f)(6), is not paid for under the ESRD PPS 
until January 1, 2025. Consistent with policies adopted in the CY 2016 
and CY 2023 ESRD PPS final rules (see 80 FR 69025 and 87 FR 67183), 
XPHOZAH\TM\ will be included in the ESRD PPS effective January 1, 2025, 
using the drug designation process under Sec.  413.234.
    As set forth in Sec.  413.174(f)(6), effective January 1, 2025, 
payment to an ESRD facility for renal dialysis service drugs and 
biological products with only an oral form furnished to ESRD patients 
will be incorporated within the prospective payment system rates 
established by CMS in Sec.  413.230 and separate payment will no longer 
be provided. As noted earlier in this section, we have recently 
published operational guidance, including information about TDAPA 
payment, HCPCS codes, and ASP reporting requirements and timelines for 
phosphate binders at https://www.cms.gov/files/document/including-oral-only-drugs-esrd-pps-bundled-payment.pdf. We note that we will use the 
same process that it used for calcimimetics to incorporate phosphate 
binders into the ESRD PPS beginning January 1, 2025, and that we will 
not be following this process for any other oral drugs or biological 
products. Manufacturers would need to apply for a HCPCS code and the 
TDAPA for any other oral drugs or biological products.
    We note that for any other oral-only drugs, such as XPHOZAH\TM\, we 
will apply our drug designation process as we do for all new renal 
dialysis drugs and biological products, consistent with Sec.  413.234 
and the policy finalized in CY 2016 ESRD PPS final rule (80 FR 69027) 
and reiterated in the CY 2023 ESRD PPS final rule (87 FR 67180).
c. Operational Considerations Related to the Incorporation of Oral-Only 
Drugs
    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. These 
advantages included 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.
    In November 2023, in accordance with section 632(d) of ATRA, the 
Government Accountability Office (GAO) published a Report to 
Congressional Committees titled, ``End-Stage Renal Disease: CMS Plans 
for including Phosphate Binders in the Bundled Payment.'' (GAO-24-
106288).\33\ The report summarized the current status of payment for 
the phosphate binders as well as identifying areas of operational 
concerns. These include challenges related to hiring the staff needed 
for ESRD facilities to provide phosphate binders to patients, 
complexities relating to system updates needed to accommodate the 
volume and broad array of phosphate binders, and costs related to 
dispensing, storage, and transportation. The considerations identified 
in the GAO report generally align with the comments we have received on 
past ESRD PPS proposed rules. The GAO also interviewed dialysis 
organization representatives who stated that they are preparing to make 
the anticipated adjustments needed to dispense the phosphate binders.
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    \33\ https://www.gao.gov/assets/d24106288.pdf.
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    With respect to considerations related to staffing, we note that 
the ESRD PPS includes payment for staffing related to the provision of 
renal dialysis services. We believe there are several strategies that 
ESRD facilities could employ to efficiently use available staff time to 
provide phosphate binders. There are parallels between the 
administration of phosphate binders and the administration of oral 
calcimimetics, which are also typically taken daily. First, we expect 
that patients with ESRD generally receive treatment for at least 3 
hours per session, typically three times per week. We believe that 
during this treatment window there is generally staff availability to 
provide the patient with pre-packaged medication, which we note could 
include medication for multiple days. Second, ESRD facilities could 
maximize the efficiency of staff time by mailing the prescriptions, to 
the extent that doing so is consistent with state pharmacy laws. For 
example, the GAO report identified that one large dialysis organization 
only mails oral prescriptions to patients' homes, while others mail the 
medication to either the ESRD facility or the patient's home. Third, 
the GAO report identified that some ESRD facilities contract with 
outside pharmacies rather than operating their own pharmacy. By 
contracting with outside pharmacies, ESRD facilities could reduce or 
avoid the need to hire additional pharmacists and pharmacy staff to 
manage the volume of prescriptions.
    Another challenge identified by the dialysis organizations was the 
complexity of dispensing phosphate binders because of the broad array 
of phosphate binders and the high volume of pills.\34\ We acknowledge 
there are six

[[Page 55797]]

common types of phosphate binders as compared to only one type of 
calcimimetics. The GAO report also noted that unlike calcimimetics, 
phosphate binders are typically taken with every meal and snack. We 
note that although Medicare will begin paying for phosphate binders 
under the ESRD PPS beginning January 1, 2025, we are not establishing 
any requirements regarding how or where patients take these 
medications. These decisions are made and will continue to be made by 
the patient, nephrologist, and care team.
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    \34\ Ibid.
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    We recognize that updates may be required to ESRD facilities' 
systems, including electronic medical records, billing systems, and 
inventory management systems to accommodate new procedures for 
dispensing phosphate binders. As we previously noted, we initially 
delayed the incorporation of oral-only drugs into the ESRD PPS in 2011, 
in part to allow ESRD facilities to make such operational changes and 
logistical arrangements. In addition, we have provided operational 
guidance at https://www.cms.gov/files/document/including-oral-only-drugs-esrd-pps-bundled-payment.pdf that addresses HCPCS coding, 
billing, and price information. We expect that ESRD facilities will be 
able to make these system changes in advance of January 1, 2025.
    Dialysis organizations have expressed concerns surrounding CMS 
using ASP to determine the TDAPA amount added to the ESRD PPS base rate 
for phosphate binders, which they believe does not adequately provide 
for dispensing cost.\35\ Under current TDAPA policy, CMS plans to pay 
the TDAPA based on 100 percent of ASP for phosphate binders for at 
least 2 years. However, recognizing the high percentage of ESRD 
beneficiaries that have at least one phosphate binder prescription and 
the large volume of phosphate binder prescriptions, we are considering 
whether it may be appropriate to make additional payment to account for 
operational costs in excess of 100 percent of ASP, such as dispensing 
fees, when paying the TDAPA for phosphate binders. Unlike drugs and 
biological products for which payment is already included in the ESRD 
PPS base rate, including all other drugs and biological products in 
existing functional categories, dispensing fees and other costs are not 
currently included in the ESRD PPS base rate for phosphate binders. 
Therefore, we are considering whether a potential change in TDAPA 
payment policy for phosphate binders to account for such costs would be 
consistent with the TDAPA policy as finalized in the CY 2019 and CY 
2020 ESRD PPS final rules (83 FR 56948 and 84 FR 60673 through 60676). 
For example, we may consider paying ASP + 6 percent for 2 years as we 
did for calcimimetics. As discussed in the CY 2011 ESRD PPS final rule, 
the amounts added to the ESRD PPS base rate for oral drugs at that time 
were based on data from Part D, which included dispensing fees (75 FR 
49043). We are soliciting comment on the extent to which 100 percent of 
ASP is appropriate for TDAPA payment amount for phosphate binders and 
whether there are any costs associated with the inclusion of phosphate 
binders into the ESRD PPS bundled payment that may not be accounted for 
by 100 percent of ASP. CMS may finalize a change in the TDAPA payment 
amount for phosphate binders after considering comments on this topic.
---------------------------------------------------------------------------

    \35\ Ibid.
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    As noted earlier, we have issued guidance \36\ about the process we 
will use for paying the TDAPA for the phosphate binders and for their 
incorporation into the ESRD PPS bundled payment. This guidance 
addresses several key topics including billing information, information 
about the discarded drug policy, and information for manufacturers 
about reporting timelines for ASP data.
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    \36\ https://www.cms.gov/medicare/payment/prospective-payment-systems/end-stage-renal-disease-esrd and https://www.cms.gov/files/document/including-oral-only-drugs-esrd-pps-bundled-payment.pdf.
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d. Expected Impact of Incorporation of Oral-Only Drugs
    We anticipate that the incorporation of oral-only drugs into the 
ESRD PPS will increase access to these drugs for beneficiaries. We 
estimate that there will be an increase in Medicare spending as a 
result of this increase in access. Specifically, CMS has been 
monitoring and analyzing data regarding beneficiary access to Medicare 
Part D drugs; increases in expenditures 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, with significant positive health equity 
impacts. For example, based on the results of our ESRD PPS monitoring 
analyses, in December 2017, prior to incorporation of calcimimetics 
into the ESRD PPS bundle, utilization was at 28.97 percent for African 
American/Black beneficiaries but went up to 35.31 percent in January 
2018 and eventually to 39.04 percent in at the end of the TDAPA period 
for calcimimetics in December 2021. This 10.07 percentage point 
increase in utilization reflects the significant access improvement for 
African American/Black beneficiaries of incorporating formerly oral-
only drugs into the ESRD PPS.
    Lastly, as part of the preparation for the inclusion of phosphate 
binders into the ESRD PPS, CMS has monitored Part D utilization of, and 
spending for, phosphate binders. We have developed budgetary estimates 
of the changes in Medicare Part B and Part D spending, which are 
discussed in section VIII.C.1 of this proposed rule.
8. Proposed Changes to the Low-Volume Payment Adjustment (LVPA)
a. Background on the LVPA
    Section 1881(b)(14)(D)(iii) of the Act provides that the ESRD PPS 
shall include a payment adjustment that reflects the extent to which 
costs incurred by low-volume facilities (as defined by the Secretary) 
in furnishing renal dialysis services exceed the costs incurred by 
other facilities in furnishing such services, and for payment for renal 
dialysis services furnished on or after January 1, 2011, and before 
January 1, 2014, such payment adjustment shall not be less than 10 
percent. Therefore, the ESRD PPS provides a facility-level payment 
adjustment to ESRD facilities that meet the definition of a low-volume 
facility.
    Under Sec.  413.232(b), a low-volume facility is an ESRD facility 
that, based on the submitted documentation: (1) furnished less than 
4,000 treatments in each of the 3 cost reporting years (based on as-
filed or final settled 12-consecutive month costs reports, whichever is 
most recent, except as specified in paragraphs (g)(4) and (5)) 
preceding the payment year; and (2) has not opened, closed, or received 
a new provider number due to a change in ownership (except where the 
change in ownership results in a change in facility type or as 
specified in paragraph (g)(6)) in the 3 cost reporting years (based on 
as-filed or final settled 12-consecutive month cost reports, whichever 
is most recent) preceding the payment year.
    In addition, under Sec.  413.232(c), for purposes of determining 
eligibility for the LVPA, the number of treatments considered furnished 
by the ESRD facility equals the aggregate number of treatments 
furnished by the ESRD

[[Page 55798]]

facility and the number of treatments furnished by other ESRD 
facilities that are both under common ownership with, and 5 road miles 
or less from, the ESRD facility in question. To receive the LVPA, an 
ESRD facility must submit a written attestation statement to its 
Medicare Administrative Contractor (MAC) confirming that it meets the 
requirements as specified in Sec.  413.232 and qualifies as a low-
volume ESRD facility. For purposes of determining eligibility for the 
LVPA, ``treatments'' mean total hemodialysis equivalent treatments 
(Medicare and non-Medicare). For peritoneal dialysis patients, one week 
of peritoneal dialysis is considered equivalent to three hemodialysis 
treatments (80 FR 68994). Section 413.232(e) generally imposes a yearly 
November 1 deadline for attestation submissions unless extraordinary 
circumstances justify an exception and specifies exceptions for certain 
years where the deadline is in December or January. The November 1 
attestation timeframe provides 60 days for a MAC to verify that an ESRD 
facility meets the LVPA eligibility criteria (76 FR 70236). The ESRD 
facility would then receive the LVPA for all the Medicare-eligible 
treatments in the payment year. Once an ESRD facility is determined to 
be eligible for the LVPA, a 23.9 percent increase is applied to the 
ESRD PPS base rate for all treatments furnished by the ESRD facility 
(80 FR 69001).
    In the CY 2011 ESRD PPS final rule (75 FR 49118 through 49125), we 
finalized the methodology used to target the appropriate population of 
ESRD facilities that were low-volume facilities based on a treatment 
threshold. After consideration of public comments, we originally 
established an 18.9 percent adjustment for ESRD facilities that furnish 
less than 4,000 treatments annually and indicated that this increase to 
the base rate would encourage small ESRD facilities to continue 
providing access to care.
    In the CY 2016 ESRD PPS proposed rule (80 FR 37819), we analyzed 
ESRD facilities that met the definition of a low-volume facility under 
Sec.  413.232(b) as part of the updated regression analysis and found 
that these ESRD facilities still had higher costs compared to other 
ESRD facilities. A regression analysis of low-volume facility claims 
from CYs 2012 and 2013 and cost report data indicated a multiplier of 
1.239; therefore, we proposed an updated LVPA adjustment factor of 23.9 
percent in the CY 2016 ESRD PPS proposed rule (80 FR 37819) and 
finalized this policy in the CY 2016 ESRD PPS final rule (80 FR 69001). 
This update was implemented budget neutrally alongside numerous other 
changes to the case-mix and facility-level adjusters. In CY 2022, 352 
ESRD facilities received the LVPA. Using the most recent available data 
for CY 2023, the number of ESRD facilities receiving the LVPA was 330.
    In the CY 2021 ESRD PPS final rule (85 FR 71443), we finalized a 
policy to allow ESRD facilities flexibility for LVPA eligibility due to 
the COVID-19 Public Health Emergency (PHE). Under Sec.  413.232(g)(4), 
for purposes of determining ESRD facilities' eligibility for payment 
years 2021, 2022, and 2023, we only considered total dialysis 
treatments for any 6 months of their cost-reporting period ending in 
2020. In the CY 2024 ESRD PPS final rule (88 FR 76344), we finalized 
changes to the LVPA regulation at Sec.  413.232 that allow ESRD 
facilities affected by disasters and other emergencies to qualify for 
exceptions to certain eligibility requirements for the LVPA. Facilities 
may close and reopen if they experience an emergency, or they may 
temporarily exceed the 4,000-treatment threshold if they take on 
additional patients displaced by an emergency and still qualify for the 
LVPA.
(1) Current Issues and Concerns
    Interested parties, including MedPAC and the GAO,\37\ have 
recommended that we make refinements to the LVPA to better target ESRD 
facilities that are critical to beneficiary access to dialysis care in 
remote or isolated areas.\38\ These groups and other interested parties 
have also expressed concern that the strict treatment count used to 
determine eligibility introduces a ``cliff-effect'' that may 
incentivize ESRD facilities to restrict their patient caseload to 
remain below the 4,000 treatments per year for the LVPA threshold.\39\
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    \37\ https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun20_ch7_reporttocongress_sec.pdf.
    \38\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2021.pdf.
    \39\ 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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    We considered several changes to the LVPA eligibility criteria to 
address the concerns that interested parties, including the GAO and 
MedPAC, raised about targeting LVPA payments to ESRD facilities that 
are necessary to protect access to care and are not located near other 
ESRD facilities. Specifically, these interested parties have requested 
that we take into consideration the geographic isolation of an ESRD 
facility within the LVPA methodology. Section 1881(b)(14)(D)(iii) of 
the Act requires that the LVPA must reflect the extent to which costs 
incurred by low-volume facilities (as defined by the Secretary) in 
furnishing renal dialysis services exceed the costs incurred by other 
facilities in furnishing such services. Our analysis has found that 
isolated low-volume facilities do not face higher costs than other low-
volume facilities. Therefore, we do not believe that this requested 
change reconciles with the central statutory requirements and 
limitations for the LVPA, and we are considering alternative 
approaches, including potentially addressing this issue through a new 
payment adjustment separate from the LVPA based on section 
1881(b)(14)(D)(iv) of the Act. Currently, we are analyzing claims and 
cost data regarding dialysis treatment levels and cost to inform 
options for potentially tailoring our methodology to meet the 
requirements of the statute, while simultaneously collecting additional 
data on geographic isolation of ESRD facilities. The ESRD PPS has 
separate facility-level payment adjustments for low-volume facilities, 
as set forth in 42 CFR 413.232, and facilities in rural areas, as set 
forth in Sec.  413.233. To avoid overlap with these existing facility-
level adjustments, we are analyzing the impact of potentially creating 
a new payment adjustment and considering innovative methodological 
options, such as the local dialysis need methodology on which we 
requested information in the CY 2024 ESRD PPS proposed rule (88 FR 
42441 through 42445).
    In addition, we have heard from interested parties that the 
eligibility criteria for the LVPA are very explicit and leave little 
room for flexibility in certain circumstances (85 FR 71442). Some also 
view the attestation process as burdensome to ESRD facilities and 
believe it may discourage participation by small ESRD facilities with 
limited resources that would otherwise qualify for the LVPA.\40\ Given 
these concerns, we have considered alternative approaches to the LVPA 
that would reduce burden, remove negative incentives that may result in 
gaming, and better target ESRD facilities that are critical for 
beneficiary access.
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    \40\ 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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    CMS's contractor has held three Technical Expert Panels (TEPs) to 
discuss potential refinements to the ESRD PPS.\41\ During the 2018, 
2019, and

[[Page 55799]]

2020 TEPs, panelists, including representatives from ESRD facilities, 
independent researchers, patient advocates, and representatives from 
professional associations and industry groups (86 FR 36397), discussed 
limitations of the current LVPA methodology and potential alternatives. 
In the CY 2022 ESRD PPS proposed rule, we included a RFI to inform LVPA 
payment reform (86 FR 36398 through 36399). All fourteen responses to 
the CY 2022 ESRD PPS RFI for LVPA wrote in support of either 
eliminating or revising the current LVPA or rural facility 
adjustment.\42\ One small dialysis organization within a large non-
profit health system responded that it is reliant upon the LVPA and the 
rural facility adjustment and supports both adjustments, albeit with 
modifications. MedPAC renewed its support for a new Low-Volume and 
Isolated (LVI) adjustment with a recommendation for a three-tiered 
approach for treatment thresholds, which would incorporate geographic 
isolation into its methodology and may disincentivize gaming. MedPAC 
called upon CMS to provide clear and timely criteria for ESRD facility 
eligibility and ensure the LVPA methodology is transparent. In 
concurrence with MedPAC, a coalition of dialysis organizations, three 
large dialysis organizations (LDOs), a non-profit kidney organization, 
and a provider advocacy coalition commented that the rural facility 
adjustment should be eliminated and a LVI methodology should be 
adopted, as they considered a methodology based upon census tracts to 
be both complicated and lacking transparency. Numerous commenters wrote 
in support of a tiered adjustment to mitigate the cliff effect and 
gaming. Commenters raised concerns regarding the reliance of the census 
tract methodology used by the rural facility adjustment upon `driving 
time' as a data measure, noting this presents legitimate equity issues. 
ESRD facilities that have relied upon both the LVPA and rural payment 
adjustments to remain operational expressed opposition to elimination 
of either adjustment.\43\
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    \41\ https://www.cms.gov/medicare/medicare-fee-for-service-payment/esrdpayment/educational_resources.
    \42\ https://www.cms.gov/files/document/cy-2022-esrd-pps-rfi-summary-comments.pdf.
    \43\ The materials from the TEPs and summary reports can be 
found at https://www.cms.gov/medicare/medicare-fee-for-service-payment/esrdpayment/educational_resources.
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    In the CY 2022 ESRD PPS proposed rule LVPA RFI, we sought input on 
alternative approaches to the LVPA methodology (86 FR 36398 through 
36399).\44\ Specifically, we requested input on--(1) whether a 
distinction other than census tract information should be considered; 
and (2) what criteria should be used to determine the threshold(s) of 
adjusted latent demand (in treatment counts) which determine LVPA 
eligibility. Additionally, we explored the LVI adjustment that MedPAC 
recommended in its June 2020 report to Congress. Under the LVI 
methodology, a determination that a facility is low volume and isolated 
would be based on that facility's distance from the nearest facility 
and its total treatment volume. Regarding the LVI methodology, we 
requested input on the concerns for facilities that would lose the LVPA 
under the LVI methodology and the potential for gaming within the LVI 
methodology. In addition, we requested input regarding the extent that 
the LVI methodology captures more isolated (and most often rural) 
facilities, and whether a separate rural facility adjustment should be 
maintained. As previously discussed, our most recent analysis of cost 
report data does not support the claim that isolated low-volume ESRD 
facilities face higher costs than non-isolated ESRD facilities; 
therefore, the LVI methodology would not adhere to the statutory 
requirement for the LVPA set forth at section 1881(b)(14)(D)(iii) of 
the Act.
(2) CY 2024 RFI on Potential Changes to the LVPA
    In the CY 2024 ESRD PPS proposed rule (88 FR 42430 through 42544), 
we issued a RFI regarding several possible modifications to the current 
LVPA methodology.\45\ We provided commenters the option of maintaining 
a single LVPA threshold, establishing LVPA tiers, or utilizing a 
continuous function. We received 23 comments in response to the RFI, 
all of which had differing opinions. A coalition of dialysis 
organizations recommended a two-tiered approach, while MedPAC 
reiterated their support for a LVI adjustment. A common theme among a 
handful of comments was concern about administrative burden and 
transparency regarding the methodology that is chosen. Most commenters 
believed that the issue of payment cliffs is substantial, but many did 
not believe any of the options presented in the RFI could successfully 
eliminate gaming completely.
(3) CY 2024 RFI on the Rural Facility Adjustment
    We have considered several changes to the LVPA eligibility criteria 
to address the concerns that the GAO and MedPAC raised about targeting 
LVPA payments to ESRD facilities that are necessary to protect access 
to care and are not located near other ESRD facilities. As previously 
discussed, we do not believe the suggestion to consider facilities' 
geographic isolation reconciles with the central statutory requirements 
and limitations for the LVPA, and we are considering alternative 
approaches, including potentially addressing this issue through a new 
payment adjustment separate from the LVPA based on section 
1881(b)(14)(D)(iv) of the Act.
    The LVPA and rural adjusters currently result in increased payments 
to some geographically isolated ESRD facilities, but these adjusters do 
not specifically target geographically isolated ESRD facilities. 
Interested parties, including MedPAC and the GAO, have recommended that 
CMS make refinements to the LVPA and rural adjusters to better target 
ESRD facilities that are critical to beneficiary access to dialysis 
care in remote or isolated areas. The GAO and MedPAC, among others, 
have also raised concerns about targeting LVPA payments to ESRD 
facilities that are not located near other ESRD facilities to protect 
access to care.
    In the CY 2024 ESRD PPS proposed rule's LVPA RFI (88 FR 42441 
through 42445), we solicited comments on a potential new payment 
adjustment that accounts for isolation, rurality, and other 
geographical factors, including local dialysis need (LDN). The LDN 
methodology, as described in the CY 2024 ESRD PPS proposed rule (88 FR 
42430 through 42544), would consider LDN instead of basing payment 
strictly upon a rural designation, as provided for by Sec. Sec.  
413.233 and 413.231(b)(2). In the CY 2024 ESRD PPS proposed rule's LVPA 
RFI, we suggested the utilization of census tracts to identify 
geographic areas with low demand, then calculating latent demand by 
multiplying the number of beneficiaries near (``near'' was defined by 
driving time to ESRD facilities) an ESRD facility by the average number 
of treatments for ESRD beneficiaries. The threshold to qualify for the 
LVPA could then be applied by determining the amount of adjusted latent 
demand. The ESRD facilities that fall below the threshold would be 
eligible. The statutory requirements for the LVPA under section 
1881(b)(14)(D)(iii) of the Act generally would not allow for CMS to 
account for geographic isolation outside of the extent to which low-
volume facilities face higher costs in furnishing renal dialysis 
services than other facilities, and preliminary analysis found that, in 
general, low-volume facilities that are rural, isolated, or located in 
low-demand areas did not have higher costs than low-volume ESRD 
facilities overall. Because of this, the LDN methodology

[[Page 55800]]

would be implemented under the authority in 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.
    We received 23 comments in response to the LVPA RFI, all of which 
had differing opinions.\46\ Some commenters supported eliminating the 
rural adjuster and reallocating its funds to either the LVPA or to a 
new adjustment that considers LDN. Others stated the rural facility 
adjustment should be removed, and those dollars be incorporated into 
one of the tiered LVPA methodologies. Many commenters noted that a 
LVPA, a rural facility adjustment, and a possible LDN-based adjustment 
would be redundant. A coalition of dialysis organizations stated that 
CMS's reliance on zip codes to identify rural facilities is no longer 
an adequate proxy for facilities in need, and cited data that many 
rural facilities enjoy a large patient count and positive profit 
margins. Other commenters supported the rural facility adjustment, 
explaining that it was especially appropriate in conjunction with a 
modified LVPA methodology, since under the options presented by CMS in 
the RFI, many facilities would experience significant decreases in 
payment. They claimed that the additional funds provided by the rural 
facility adjustment would protect against the closure of rural 
facilities. Several commenters expressed concern about administrative 
burden and transparency in a general sense, no matter the methodology 
chosen.
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    \46\ https://www.cms.gov/files/document/cy-2024-esrd-pps-lvpa-rfi-summary-comments.pdf.
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    Generally, commenters were opposed to a payment adjustment based on 
the LDN methodology, reiterating many of the concerns raised during the 
2020 TEP. A coalition of dialysis organizations voiced the concern that 
the LDN methodology would take away providers' ability to make 
financial decisions about their operations, since they would not be 
able to predict their eligibility for the LDN payment adjustment nor 
the amount they would receive. They maintained that the LDN may not 
target the appropriate facilities and could provide opportunities for 
gaming. The coalition also claimed that the central issue faced by 
these facilities is low patient count, which they stated that the LDN 
methodology would not recognize, and thus the adjustment could be 
provided to facilities that are isolated, but have high patient counts, 
and are not in need of an additional payment adjustment. A coalition of 
dialysis organizations and a non-profit dialysis association both 
stated that the current LVPA provision to aggregate the treatments of 
facilities under common ownership that are not at least 5 miles apart 
is an important feature that discourages gaming, one that is not 
included in the LDN methodology. Furthermore, the coalition noted that 
the LDN methodology would lack stability, given that patient location 
varies over time. MedPAC suggested that if the LDN were adopted, CMS 
should ensure that the methodology is transparent; for example, making 
the specifications and results for the regression equation available on 
CMS's website and in the Federal Register. In addition, MedPAC stated 
that CMS should note how often the model would be updated, discuss how 
census tract populations changing over time would affect the stability 
of the adjustment, and how the approach would address MedPAC's 
anticipated increase in home dialysis use.
    In addition to the questions outlined in the CY 2024 ESRD PPS 
proposed rule LVPA RFI, CMS has also considered incorporating isolation 
criteria into the rural facility adjustment, where payment of the 
adjustment could be limited to ESRD facilities that are isolated from 
other ESRD facilities, or a higher adjustment could be applied for 
isolated rural facilities than for non-isolated rural facilities. 
Alternatively, the current rural facility adjustment could be replaced 
by an adjustment based solely on isolation. We note that recent 
analysis has confirmed that, in general, low-volume facilities that are 
rural, isolated, or located in low-demand areas did not have higher 
costs than low-volume ESRD facilities overall. This analysis aligns 
with suggestions from various commenters, including MedPAC, to refine 
or remove the rural facility adjustment to better target ESRD 
facilities that are critical to beneficiary access and are likely not 
being adequately targeted under the current methodology. However, we 
note that many ESRD facilities which receive the rural facility 
adjustment are critical to patient access and that these ESRD 
facilities may be relying on the additional payment from the rural 
facility adjustment for the coming years. As discussed in section 
II.B.2.f.(2) of this proposed rule, we are proposing to implement a 
phase-out policy for ESRD facilities that lose the rural facility 
adjustment as a result of being redesignated from a rural area to an 
urban area in the most recent CBSA delineations. We are not proposing 
any other changes to the rural facility adjustment in this proposed 
rule.
b. Proposed Tiered LVPA Methodology
    The goals of the ESRD PPS (including the LVPA) are to align 
resource use with payment, advance health equity and protect access to 
renal dialysis services for vulnerable beneficiaries in underserved 
communities, including rural and isolated communities, by increasing 
payments to certain ESRD facilities in these areas to align with their 
higher costs. As noted in the CY 2016 ESRD PPS final rule (80 FR 68967 
through 69077), we aim to target the benefit of the LVPA to facilities 
that serve the access needs of patients in remote locations. In the CY 
2022 ESRD PPS final rule (86 FR 61874 through 62026), we detailed our 
commitment to achieving equity in health care outcomes for our 
beneficiaries using the definition of equity set forth in Executive 
Order 13985,\47\ which places emphasis on individuals who belong to 
underserved communities. In the CY 2023 ESRD PPS proposed rule RFI (87 
FR 38464 through 38586), we reiterated our commitment to achieving 
equity in health care and noted that we aim to align ESRD facility 
resource use with payment. Recent feedback from interested parties 
indicates that the current LVPA payment structure may lead some ESRD 
facilities to treat fewer patients to avoid a payment cliff. Proposing 
a revised methodology that would reduce the incentive for gaming, as 
the GAO described, would help advance health equity by removing the 
incentive for some ESRD facilities to limit access to renal dialysis 
services. We would expand access through payments that incrementally 
align resource use with payment to ESRD facilities that furnish 
different volumes of treatment.
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    \47\ 86 FR 7009 (January 25, 2021). 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 proposed rule, we are proposing to refine the LVPA 
methodology to include two tiers based on treatment volume with 
different payment adjustments for each tier. This proposed methodology 
would be similar to the methodology described in the CY 2024 ESRD PPS 
proposed rule RFI (88 FR 42430 through 42544), but with methodological 
changes to improve consistency in an ESRD facility's tier assignment 
from year to year.
    We analyzed cost report data from ESRD facilities to develop the 
tiered thresholds and adjustment amounts for the proposed LVPA. This 
analysis used a logarithmic regression model that controls for various 
geographical and

[[Page 55801]]

facility level characteristics, including facility type and region, to 
estimate cost differences based on treatment volume. We also simulated 
attestation patterns by excluding a stratified random sample of ESRD 
facilities who are eligible for LVPA payment but do not submit LVPA 
attestations. This step allowed us to account for the fact that a 
portion of ESRD facilities that were within the treatment volume 
threshold routinely did not attest to meeting the LVPA requirements for 
other reasons. We analyzed numerous different potential tiered payment 
structures based on this analysis, where the estimated cost for the 
tier uses the upper bound of the treatment count for that tier. Based 
on the results of this analysis, we are proposing a two-tiered 
approach; we believe the two-tiered approach is appropriate because it 
strikes a balance between simplicity for ESRD facilities, sufficiently 
large tiers to allow for treatment volume variation from one year to 
the next, and payment adequacy for current low-volume facilities, 
particularly those with the lowest volume.
    Table 9 presents our proposed two-tiered LVPA methodology, which is 
based on data from ESRD facility cost reports such that the reporting 
periods include some part of the period between January 1, 2020, to 
December 31, 2022 (that is, beginning or ending during these 3 CYs). We 
note that we have required budget neutrality for any change to the LVPA 
methodology, so any proposed changes to the LVPA cannot increase or 
decrease total estimated ESRD PPS payments; therefore, the two sets of 
potential adjustment factors in table 9 would be implemented budget-
neutrally. The second column presents the unscaled adjusters, which if 
implemented, would cause the ESRD PPS base rate to be reduced by a 
factor of 0.999262, approximately $0.20, to achieve budget neutrality. 
The third column presents the adjusters scaled down by a factor of 
0.815 to maintain the LVPA payment amount under the existing 
methodology of $26.7 million based on the expected CY 2025 LVPA 
payments. Using the scaled adjusters would maintain budget neutrality 
without lowering the ESRD PPS base rate.
[GRAPHIC] [TIFF OMITTED] TP05JY24.017

    The adjustment factors in the second column are derived from the 
regression explained previously. These results indicate that facilities 
which furnish less than 3,000 treatments have costs that are 34.9 
percent higher than non-low-volume facilities, and facilities that 
furnish between 3,000 and 3,999 treatments have costs that are 22.2 
percent higher. The adjustment factors in the third column, which are 
scaled down, reflect the same relationship between the two tiers of 
low-volume facilities and non-low-volume facilities.
    We believe that a two-tier scaled approach is appropriate because 
it would increase payments to facilities with the lowest volume while 
keeping payment changes contained within the LVPA. In CY 2016 ESRD PPS 
final rule (80 FR 68972 through 69004) when we last updated the LVPA 
adjustment factor, we also updated most of the facility-level and case-
mix adjusters. At that time, it was appropriate to apply a budget-
neutrality factor that represented all of the changes to the facility-
level and case-mix adjusters. However, we are only proposing changes to 
the LVPA at this time, and it is most appropriate to contain the 
changes within the current LVPA by applying a scaling factor to the 
LVPA adjusters.
    We also analyzed a three-tiered option that would include a tier 
for ESRD facilities furnishing between 4,000 and 5,000 treatments, 
which is presented in table 10. As noted previously, we considered both 
scaled and unscaled adjustment factors, with both maintaining budget 
neutrality. Our analysis showed that the scaled, three-tiered option 
would reduce payments for facilities furnishing less than 3,000 
treatments as compared to both the current LVPA methodology and the 
proposed two-tiered scaled methodology. Because payments for facilities 
furnishing between 4,000 and 5,000 treatments would increase, payments 
for the lowest-volume facilities would need to decrease to maintain 
budget neutrality, which we do not believe would align with the goals 
of the LVPA outlined previously. We believe that if we were to propose 
a three-tiered option, budget neutralizing the base rate rather than 
scaling the adjustment factors would better align with these goals. Our 
analysis shows that an unscaled three-tiered adjustment would result in 
a $0.99 reduction to the base rate. We are seeking comment on our 
proposed scaled, two-tier proposal and on the alternative three-tier 
LVPA structure. We note that, should this alternative be finalized, we 
would make changes to Sec.  413.232(b)(1) to reflect the increased LVPA 
threshold of 5,000. As discussed further in the next subsection, we are 
proposing to determine an ESRD facility's LVPA tier based on the median 
treatment count volume of the last three cost-reporting years, rather 
than using a single year treatment count. Therefore, expanding LVPA 
eligibility to ESRD facilities that furnished fewer than 5,000 
treatments in each of the past three cost-reporting years would also 
increase the number of ESRD facilities that would qualify for tier 1 
and tier 2, since ESRD facilities which furnished between 4,000 and 
4,999 treatments in one of the

[[Page 55802]]

past 3 years and fewer than 4,000 (or 3,000 for tier 1) in the other 2 
years could qualify in these tiers.
[GRAPHIC] [TIFF OMITTED] TP05JY24.018

c. Proposed Changes to the LVPA for CY 2025
    We are proposing a two-tiered LVPA using the scaled adjusters 
presented in the second column of table 9. ESRD facilities that fall 
into the first tier (those that furnish fewer than 3,000 treatments) 
would receive a payment adjustment of 28.4 percent. Those that fall in 
the second tier (those that furnish 3,000 or more treatments but fewer 
than 4,000 treatments) would receive a payment adjustment of 18.1 
percent. Outside of the change to the LVPA amount, this proposed change 
would not impact how the LVPA is applied to ESRD PPS payments.
    One potential complication with a tiered approach to the LVPA is 
that there are still payment cliffs present between the tiers. This may 
discourage ESRD facilities from increasing their treatment volume in a 
given year, especially if it is uncertain whether the ESRD facility's 
treatment volume in future years will stay at the increased level. To 
address this, we are proposing to determine an ESRD facility's LVPA 
tier based on the median treatment count volume of the last three cost-
reporting years, rather than using a single year treatment count. This 
proposed methodology would smooth payments over years, increasing 
stability and predictability in payments to low-volume facilities. We 
are also proposing that, should a facility receive an exception under 
Sec.  413.232(g)(5) in one or more of the past three cost-reporting 
years, the median treatment count of the unaffected cost-reporting 
years would be used to make the facility's tier determination. We note 
that the median of two numbers is the average of those numbers, and the 
median of one number is that number. In the case that a facility does 
not have cost-reporting data from the last 3 years that are unaffected 
by a disaster or other emergency, we would assign the facility to a 
tier based on their last full year of unaffected treatment volume, 
assuming all LVPA eligibility criteria are met.
    We believe that the proposed median treatment approach would 
promote stability, especially for facilities whose treatment counts are 
on the margins of a tier. We also believe that the proposed smoothing 
methodology for determining the treatment volume tier for which an ESRD 
facility qualifies is better than the alternative of using the highest 
tier (in terms of treatment volume) for which an ESRD facility has 
qualified in each of the past years. For example, if we used the 
highest tier of the last 3 years and a facility furnishes 3,500 
treatments in one of the past 3 years, it would be categorized as tier 
2 even if it furnished fewer than 3,000 treatments in the other 2 
years. We believe that the proposed smoothing would mitigate the 
introduction of a cliff-effect within the tiers.
    By contrast, under the proposed smoothing methodology, if the cost-
reporting data indicated that the facility furnished 2,500, 2,999, and 
3,500 treatments in the 3 years preceding the payment year, the median 
tier would be identified (tier 1 in this case), and the facility would 
(in the proposed two-tier system with scaling) receive a 28.4 percent 
payment adjustment for all of the treatments furnished during the 
payment year. We expect that any higher or lower payments from year to 
year under this policy would balance out over time without putting 
additional burden on the MACs. The structure of the proposed scaled, 
two-tier LVPA methodology is presented in table 10, and the structure 
of the alternative three-tier unscaled LVPA methodology is presented in 
table 11. For the purposes of comparison, we have included the scaled 
and unscaled version of both of the potential LVPA structures.
    We note that we are not proposing any changes to the methodology 
for determining eligibility for the LVPA under Sec.  413.232(b)(1), as 
the purpose of this proposed change is to better allocate payments 
within the LVPA, not to expand the LVPA to facilities that have 
furnished more than 4,000 treatments in one of the past three cost-
reporting years. We would continue to determine eligibility for the 
LVPA based on a facility's treatment count in each of the three cost-
reporting years preceding the payment year as set forth in Sec.  
413.232(b)(1) and would not consider the median treatment count over 
that period for purposes of determining eligibility. Likewise, we are 
not proposing any changes to Sec.  413.232(g)(5), which allows for an 
exception to the requirement at Sec.  413.232(b)(1) in the case of a 
disaster or other emergency. In the CY 2011 ESRD PPS final rule (75 FR 
49030 through 49214), we stated that we believe a 3-year waiting period 
serves as a safeguard against facilities that have the opportunity to 
take a financial loss in establishing facilities that are purposefully 
small. In response to the CY 2024 ESRD PPS proposed rule RFI (88 FR 
42430 through 42544), several interested parties commented that they 
believe CMS should maintain the 3-year attestation to determine 
eligibility for the LVPA, as it is an important

[[Page 55803]]

safeguard against gaming. In addition, if we were to use the median 
tier methodology to determine LVPA eligibility, we estimate that the 
adjustment factors would decrease, because the scaling factor used to 
maintain budget neutrality within the LVPA would be smaller to account 
for a larger amount of ESRD facilities qualifying for the LVPA.
    If finalized, the proposed median treatment count methodology for 
determining an eligible ESRD facility's LVPA tier would improve the 
stability and predictability of the LVPA by basing tier determination 
on the median treatment count of the last 3 years as opposed to the 
treatment count for each of the last 3 years, where facilities could be 
disqualified from a higher adjustment based on marginal changes. The 
proposed tiered smoothing methodology would also better align payment 
with resource use by minimizing the impact of the payment cliff between 
the LVPA tiers in a transparent and reproducible fashion. We are 
soliciting comments on each aspect of our proposal: (1) the tiered 
structure of the LVPA; (2) using the median treatment count volume to 
determine the LVPA payment tier for ESRD facilities that are eligible 
for the adjustment; and (3) the scaling of the adjusters to maintain 
LVPA payments at the same level. As previously discussed, we are also 
considering an alternative three-tiered structure, which would have the 
effect of reducing the base rate by $0.99. We are soliciting comments 
on whether this alternative methodology could be more appropriate than 
the proposed methodology. We recommend readers to provide as much 
detail as possible in their response to the comment solicitation.
d. RFI on Improving the LVPA for New ESRD Facilities
    As previously discussed, we recognize the importance of revising 
the ESRD PPS LVPA methodology to ensure that payments are accurately 
aligned with resource use, adequately target low-volume facilities, and 
strive for healthcare equity for ESRD beneficiaries. We are seeking 
information from the public about potential approaches to further 
refine the ESRD PPS methodology, which we would take into consideration 
for any potential future changes to the LVPA.
    This section describes a RFI regarding the LVPA. Upon reviewing 
this RFI, respondents are encouraged to provide complete, but concise 
responses. This RFI is issued solely for information and planning 
purposes; it does not constitute a Request for Proposal (RFP), 
application, proposal abstract, or quotation. This RFI does not commit 
the United States Government to contract for any supplies or services 
or make a grant award. Further, we are not seeking proposals through 
this RFI and will not accept unsolicited proposals. Responders are 
advised that the United States Government will not pay for any 
information or administrative costs incurred in response to this RFI; 
all costs associated with responding to this RFI will be solely at the 
interested party's expense. Failing to respond to this RFI will not 
preclude participation in any future procurement, if conducted.
    We note that we will not respond to questions about the policy 
issues raised in this RFI. We may or may not choose to contact 
individual responders. Such communications would only serve to further 
clarify written responses. Contractor support personnel may be used to 
review RFI responses. Responses to this RFI are not offers and cannot 
be accepted by the United States Government to form a binding contract 
or issue a grant. Information obtained because of this RFI may be used 
by the United States Government for program planning on a non-
attribution basis. Respondents should not include any information that 
might be considered proprietary or confidential. All submissions become 
United States Government property and will not be returned. We may 
publicly post the comments received, or a summary thereof.
    As previously discussed, under Sec.  413.232(b), a low-volume 
facility is an ESRD facility that, based on the submitted 
documentation: (1) furnished less than 4,000 treatments in each of the 
3 cost reporting years (based on as-filed or final settled 12-
consecutive month costs reports, whichever is most recent, except as 
specified in paragraphs (g)(4) and (5)) preceding the payment year; and 
(2) has not opened, closed, or received a new provider number due to a 
change in ownership (except where the change in ownership results in a 
change in facility type or as specified in paragraph (g)(6)) in the 3 
cost reporting years (based on as-filed or final settled 12-consecutive 
month cost reports, whichever is most recent) preceding the payment 
year.
    We are soliciting comment on potential changes to the LVPA 
eligibility for new ESRD facilities that could be included as part of 
either the proposed tiered structure or a different methodology in the 
future. As previously discussed, the current single-threshold LVPA 
methodology and the proposed tiered LVPA methodology (discussed in the 
previous section) rely upon 3 years of cost-reporting data to determine 
eligibility for the adjustment. We are considering whether it could be 
appropriate to modify this requirement to support access to renal 
dialysis in underserved areas by allowing LVPA payments for new ESRD 
facilities that have not yet accrued 3 years of cost-reporting data. We 
are also evaluating the most appropriate way for a new low-volume ESRD 
facility to demonstrate or attest that it expects to be low-volume. 
Alongside this potential change, we are considering whether it would be 
appropriate to implement a reconciliation process for ESRD facilities 
that fail to furnish a low enough treatment volume to qualify for the 
LVPA or their predicted tier. For example, should the proposal to 
implement a tiered LVPA be finalized, the determination of a facility's 
tier assignment for the first year would be based on their anticipated 
treatment count, for which they would receive the corresponding LVPA 
amount. Then, if the ESRD facility furnished a treatment volume count 
that would otherwise have qualified them for a different tier, we would 
also undergo a reconciliation process. For future years the ESRD 
facility would receive the LVPA amount of the tier following the same 
smoothing methodology (should it be finalized) based on the median of 
their treatment counts for the available years. After we receive the 
cost-reporting data for the year in question, the facility could be 
placed in the appropriate LVPA tier, and could either re-pay CMS for an 
overestimation, or receive additional payment from CMS for an 
underestimation, if applicable. The anticipated treatment count for the 
following year could then be based upon the actual treatment count of 
the prior year. This process would be followed until a new ESRD 
facility gathers 3 years of cost-reporting data, after which the median 
treatment count over those 3 years would determine the facility's tier 
assignment if the proposed LVPA methodology is finalized. We are 
issuing this RFI to seek feedback on the potential future changes to 
the LVPA, as described previously, and to solicit further input from 
interested parties to inform potential future modifications to the 
methodology used to determine the LVPA.
    In particular, we seek input and responses to the following 
considerations, requests, and questions:
    ++ Whether the LVPA or another adjustment, such as the LDN 
methodology discussed earlier, would be the most appropriate payment 
pathway to support access to renal dialysis services in areas that do 
not

[[Page 55804]]

currently have sufficient capacity to furnish these services to all 
Medicare beneficiaries.
    ++ What would be the most appropriate way or ways for a new ESRD 
facility to demonstrate or attest that it expects to be low-volume?
    ++ The potential for future reconciliation process as an 
appropriate accommodation for new ESRD facilities.
    ++ Whether a reconciliation process would be an effective tool for 
making appropriate payments to existing ESRD facilities that have three 
or more years of cost reporting data.
    ++ Would a reconciliation process be operationally straightforward 
and understandable for an ESRD facility that has opened in the past 3 
years?
    ++ Would a reconciliation process make it more difficult for ESRD 
facilities to plan and budget for future payment years? Is this 
outweighed by the potential benefit of earlier access to the LVPA for 
these new facilities?
    ++ Would it be useful or feasible to implement a reconciliation 
process for ESRD facilities that have not opened in the past 3 years 
but, for whatever reason, may have furnished a low enough treatment 
volume to qualify for the LVPA?
    ++ Could the LVPA be changed in any way to better support ESRD 
facilities opening in underserved areas? Are there any costs specific 
to low-volume facilities for which the current LVPA does not account?
    ++ How are the costs for providers of low-volume home dialysis 
different from the costs for providers of low-volume in-center 
dialysis? Could the LVPA be an appropriate pathway to support the 
provision of home dialysis through increased payment?

C. Transitional Add-On Payment Adjustment for New and Innovative 
Equipment and Supplies (TPNIES) Applications and Proposed Technical 
Change for CY 2025

1. Background
    In the CY 2020 ESRD PPS final rule (84 FR 60681 through 60698), we 
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. For 
additional background of the TPNIES we refer readers to the CY 2024 
ESRD PPS final rule (88 FR 76410 through 76412).
    Our practice is to include the summary of each TPNIES application 
and our analysis of the eligibility criteria for each application in 
the annual ESRD PPS proposed rule. Because we did not receive any 
applications for the TPNIES for CY 2025, no TPNIES application summary 
or CMS analysis has been included in this proposed rule.
2. Proposed Technical Change to Sec.  413.236(b)(4)
    As part of the TPNIES eligibility requirements in Sec.  
413.236(b)(4), a covered equipment or supply must have 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 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 particular CY. We have identified a minor error in 
Sec.  413.236(b)(4). Specifically, we inadvertently transposed the 
words orthotics and prosthetics within the DMEPOS acronym. The acronym 
was intended to read durable medical equipment, prosthetics, orthotics, 
and supplies (DMEPOS) instead of durable medical equipment, orthotics, 
prosthetics and supplies (DMEPOS).
    As described in the HCPCS Level II Coding Procedures, HCPCS Level 
II is a standardized coding system that is used primarily to identify 
drugs, biologicals and non-drug and non-biological items, supplies, and 
services not included in the CPT[supreg] code set jurisdiction, such as 
ambulance services and durable medical equipment, prosthetics, 
orthotics, and supplies (DMEPOS) when used outside a physician's 
office.
    While the HCPCS level II Coding Procedures include DMEPOS as an 
example of items for which HCPCS Level II codes are established, we 
believe that the phrase non-drug and non-biological items more broadly 
reflects all items, supplies, and services for which HCPCS Level II 
codes are established and aligns with the HCPCS Level II coding 
procedures on the CMS website. Therefore, we are proposing a technical 
change at Sec.  413.236(b)(4) to remove the reference to the phrase 
durable medical equipment, orthotics, prosthetics and supplies (DMEPOS) 
and replace it with the phrase non-drug and non-biological items. We 
are also adding the word supplies. These technical changes would better 
reflect the broader category of non-drug and non-biological item coding 
in the HCPCS Level II Coding Procedures available on the CMS 
website.\48\
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    \48\ Healthcare Common Procedure Coding System (HCPCS) Level II 
Coding Procedures. Available at: https://www.cms.gov/medicare/coding/medhcpcsgeninfo/downloads/2018-11-30-hcpcs-level2-coding-procedure.pdf. Accessed on January 16, 2024.
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D. Continuation of Approved Transitional Add-On Payment Adjustments for 
New and Innovative Equipment and Supplies for CY 2025

    In this section of the final rule, we identify any items previously 
approved for the TPNIES and for which payment is continuing for CY 
2025. As described in the CY 2024 ESRD PPS final rule, no new items 
were approved for the TPNIES for CY 2024 (88 FR 76431). As such there 
are no items previously approved for the TPNIES for which payment is 
continuing in CY 2025.

E. Continuation of Approved Transitional Drug Add-On Payment 
Adjustments for CY 2025

    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 July 2023, CMS approved Jesduvroq 
(daprodustat) for the TDAPA under the ESRD PPS, effective October 1, 
2023. Implementation instructions are specified in CMS Transmittal 
12157, dated July 27, 2023, and available at: https://www.cms.gov/files/document/r12157cp.pdf.
    In April 2024, CMS approved DefenCath[supreg] (taurolidine and 
heparin sodium) for the TDAPA under the ESRD PPS, effective July 1, 
2024. Implementation instructions are specified in CMS Transmittal 
12628, dated May 9, 2024, and available at: https://www.cms.gov/files/document/r12628CP.pdf.
    Table 11 identifies the two new renal dialysis drugs for which the 
TDAPA payment period as specified in Sec.  413.234(c)(1) would continue 
in CY 2025: Jesduvroq (daprodustat) that was approved for the TDAPA 
effective in CY 2023 and DefenCath[supreg] (taurolidine and heparin 
sodium) that was approved for the TDAPA effective in CY 2024. Table 11 
also identifies the products' HCPCS coding information as well as the 
payment adjustment effective dates and end dates.

[[Page 55805]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.019

III. Proposed CY 2025 Payment for Renal Dialysis Services Furnished to 
Individuals With 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 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 1861(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. Proposal To Allow Medicare Payment for Home Dialysis for 
Beneficiaries With AKI

1. Background
    In the CY 2017 ESRD PPS final rule, we indicated that we did not 
expect beneficiaries with AKI to dialyze at home; therefore, the home 
dialysis benefit was not extended to beneficiaries with AKI (81 FR 
77870). There were commenters who advocated for beneficiaries to have 
the option to dialyze in a home setting, particularly those 
beneficiaries who started peritoneal dialysis (PD) in the hospital and 
desired to continue PD after discharge. However, other commenters 
indicated that beneficiaries with AKI needed close supervision during 
dialysis. Additionally, some commenters indicated that dialysis for AKI 
is a short-term treatment, and beneficiaries would not have time to 
learn to administer a home therapy. Therefore, we finalized the AKI 
payment policy in the CY 2017 ESRD PPS final rule as proposed without 
extending the AKI benefit to home dialysis beneficiaries. We indicated 
that we would gather data on the AKI population and the extent of home 
training necessary to safely self-administer dialysis in the home, and 
that we would consider the use of home dialysis for beneficiaries with 
AKI in the future as we find that it may be beneficial for subsets of 
beneficiaries.
    In past years we have received comments regarding the site of renal 
dialysis services for Medicare beneficiaries with AKI, with the most 
recent comments received in response to the CY 2024 ESRD PPS proposed 
rule to update to the AKI dialysis payment rate (88 FR 76433). We have 
monitored data for beneficiaries with AKI and researched data in 
journal articles discussing the potential to expand dialysis for 
beneficiaries with AKI to a home setting, as noted in the CY 2017 ESRD 
PPS final rule (81 FR 77871).
    In the CY 2017 ESRD PPS final rule, we clarified that the ESRD 
Facility Conditions for Coverage (CfCs) apply to ESRD facilities, not 
to ESRD beneficiaries, and noted that the ESRD facility CfCs would be 
the appropriate regulatory location for standards addressing care 
provided to beneficiaries with AKI in ESRD facilities. We finalized a 
policy that our CfCs would not need to be revised to address the 
provision of dialysis treatment to beneficiaries with AKI (81 FR 77871 
through 77872).
    In December 2020, CMS's data contractor held a TEP that considered 
data related to utilization review and cost of AKI treatments since 
2017. The TEP solicited input regarding how reported costs align with 
realized costs of treatment for beneficiaries with AKI. During the TEP, 
participants suggested that we extend Medicare payment for 
beneficiaries with AKI to allow them to dialyze in a home setting. 
Additionally, the TEP indicated that beneficiaries with AKI could 
benefit from different treatment regimens. The TEP noted that more 
frequent, gentler dialysis with a lower ultrafiltration rate would be a 
viable option for some beneficiaries. Members of the panel commented on 
the similar treatment frequencies observed for beneficiaries with AKI 
and ESRD, stating that the payment system is currently constructed to 
facilitate the standard treatment plan for beneficiaries with AKI. 
Panelists recommended that the ESRD PPS should be flexible in terms of 
number of treatments for beneficiaries with AKI, so that those who need 
more frequent treatments are not impeded from receiving them.

[[Page 55806]]

Panelists related instances of hospitals starting a patient on PD, 
which can be done frequently in the home setting, only to convert the 
patient to a more standard treatment regimen such as three in-center 
hemodialysis treatments per week before discharging the patient to a 
dialysis facility. Panelists also advocated that we provide Medicare 
payment for beneficiaries with AKI to be treated at home.
    We solicited comments regarding potentially modifying the site of 
renal dialysis services for beneficiaries with AKI and payment for AKI 
in the home setting as a RFI in the CY 2022 ESRD PPS proposed rule (86 
FR 36322, 36408). We received 16 comments from LDOs, patient advocacy 
groups, professional organizations, small dialysis organization within 
a large non-profit health system, and non-profit organizations. Most of 
the comments favored providing a payment option for beneficiaries with 
AKI to dialyze in a home setting; however, some commenters expressed 
concerns about doing so. A small dialysis organization within a large 
non-profit health system indicated that beneficiaries with AKI may have 
chronic kidney disease at a lesser stage, such as, Stage 3 or Stage 4 
chronic kidney disease (CKD) rather than ESRD; however, the AKI makes 
dialysis necessary. This commenter noted that if the AKI were to cause 
the beneficiary's underlying Stage 3 or Stage 4 CKD to progress to ESRD 
in the future, training them to use a home modality during the AKI 
episode could prepare the patient for a home modality if they are 
diagnosed as having ESRD. One LDO indicated there is evidence that PD, 
which is typically used in the home setting, is associated with better 
preservation of residual kidney function compared to hemodialysis. A 
national organization of beneficiaries and kidney health care 
professionals advocated that PD may be learned quickly, reduces rapid 
hemodynamic changes that may potentiate kidney injury and impede 
recovery, and does not require a high-risk central venous catheter to 
provide treatment. We note that these comments are specific to PD as a 
treatment modality; however, when considering such a policy we would 
include payment for both PD and hemodialysis (HD) in the home setting 
for beneficiaries with AKI, consistent with our payment policy for home 
dialysis for patients with ESRD.
    Most recently, as noted in the CY 2024 ESRD PPS final rule (88 FR 
76433), we received 10 public comments on our proposal to update the 
payment rate for renal dialysis services furnished to individuals with 
AKI. Commenters included a coalition of dialysis organizations, a non-
profit dialysis organization, a trade association, a renal product 
development company, and multiple large dialysis organizations. Most of 
the commenters requested that we allow payment for beneficiaries with 
AKI to select home dialysis modalities by changing the current policy, 
even though it was not proposed in the CY 2024 ESRD PPS proposed rule.
    We acknowledge there have been concerns in the past regarding the 
safety of beneficiaries with AKI dialyzing at home. However, we have 
carefully reviewed the totality of the information and evidence 
presented to the agency and now recognize that current information 
regarding beneficiaries with AKI dialyzing in a home setting supports 
more frequent dialysis at a lower ultrafiltration rate. The ability to 
dialyze at a lower ultrafiltration rate supports a decrease in 
hemodynamic fluctuation and the complications associated with it, which 
in turn support recovery of kidney function.
2. Technical Analysis
    Although there is only limited research regarding the use of home 
dialysis for the treatment of AKI, we note that several studies support 
the use of home dialysis to generally improve access to dialysis and 
provide care that better meets patient needs. We note that many of the 
studies related to home dialysis in the AKI patient population use PD 
as the treatment modality, which is consistent with comments received 
during the December 2020 TEP and comments received during rulemaking as 
noted previously. Additionally, data from the United States Renal Data 
System (USRDS) Annual Data Report (ADR), indicates the percentage of 
incident dialysis patients performing home HD was only 0.4 percent in 
2021, and a significant majority of dialysis patients performing home 
dialysis chose PD.\49\ We believe that the choice of a home modality 
would be comparable in the beneficiary population for those with AKI as 
those initiating chronic maintenance dialysis for ESRD. However, we 
affirm payment would be provided for either modality of home dialysis. 
For example, PD was used frequently for patients during the COVID-19 
PHE due to challenging situations such as supply shortages, staffing 
shortages, and limited surgical availability for the placement of a 
venous access. A multicenter, retrospective, observational study of 94 
patients who received acute PD in New York City in the spring of 2020 
indicated that rapid deployment of acute PD was feasible. The rates of 
death and renal recovery were like those of patients with AKI requiring 
kidney replacement therapy (KRT) in other cohorts. Of those who were 
discharged on dialysis, four were discharged on PD, and one was 
discharged on HD.\50\
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    \49\ Annual Data Report  USRDS (nih.gov), https://usrds-adr.niddk.nih.gov/2023/end-stage-renal-disease/2-home-dialysis.
    \50\ https://www.sciencedirect.com/science/article/pii/S0085253821004567.
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    The International Society for Peritoneal Dialysis (ISPD) reiterated 
in the 2020 guidelines, updated from the 2014 guidelines for PD in AKI, 
that PD should be considered a suitable modality for treatment of AKI 
in all settings. This was a strong recommendation from the ISPD based 
on evidence rated at the second highest level used by ISPD.\51\ 
Researchers found little to no difference between PD and hemodialysis 
in all-cause mortality, recovery of kidney function, or infection as a 
complication.\52\ This finding is augmented by an article that reviewed 
the resurgence of PD for the treatment of AKI since the COVID-19 PHE. 
The article lists cost effectiveness, low infrastructure requirements, 
ease of staff training, and more rapid recovery of renal function as 
benefits to the use of PD to treat AKI. A survey of nephrologists from 
three international conferences reported that 50.8 percent and 36.4 
percent of respondents felt that PD was suitable for treating AKI in 
the wards and ICU, respectively. PD is the predominant therapy used to 
treat pediatric patients with AKI, and until the mid to late 1990s was 
the predominant therapy to treat adults with AKI, but the use of this 
therapy has waned since the advent of pump driven continuous kidney 
replacement therapy.\53\
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    \51\ https://journals.sagepub.com/doi/10.1177/0896860820970834.
    \52\ https://pubmed.ncbi.nlm.nih.gov/29199769/.
    \53\ https://academic.oup.com/ckj/article/16/2/210/6696026.
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    Admittedly, most studies regarding recovery of kidney function in 
patients with AKI are based around hospitalized patients. There are 
very limited studies suggesting that self-care dialysis can yield 
faster recovery of kidney function; however, the results are not 
conclusive.\54\ One study of hospitalized patients with AKI indicated 
that a median of 10 patients recovered kidney function more quickly 
utilizing PD.\55\ Another study of hospitalized patients with AKI 
indicated that while the

[[Page 55807]]

recovery of kidney function was similar in PD and HD (28 and 26 
percent) there was a significantly shorter time to the recovery of 
kidney function for patients with AKI that utilized PD.\56\
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    \54\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4594060/.
    \55\ https://onlinelibrary.wiley.com/doi/pdfdirect/10.1111/1744-9987.12660.
    \56\ https://www.sciencedirect.com/science/article/pii/S0085253815528664.
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    Further support for this proposal comes from CMS AKI monitoring 
data, in which we found that current provision of AKI dialysis is very 
similar to the provision of ESRD dialysis. Data from the 2021 Quarter 4 
public use file (PUF) \57\ for AKI showed that hemoglobin for 
beneficiaries with ESRD averaged 10.6 gm/dL while the average 
hemoglobin for beneficiaries with AKI averaged 9 gm/dL. Beneficiaries 
with AKI were less likely to be prescribed an ESA than patients with 
ESRD. However, research indicates that patients using PD have a lower 
rate of anemia that those using HD. Patients receiving PD require lower 
doses of ESAs and iron than patients receiving HD.\58\ This may 
indicate that dialyzing in a home environment could be effective to 
manage anemia in beneficiaries with AKI more appropriately, as the 
USRDS ADR indicates incident patients with ESRD typically choose PD as 
a home modality over home HD.\59\ We believe that beneficiaries with 
AKI would make similar choices. Approximately 8 percent of 
beneficiaries with ESRD experience incidences of fluid overload, while 
beneficiaries with AKI experience episodes for which congestive heart 
failure was reported within 30, 60, and 90 days (which can be related 
to fluid overload) at rates of around 42 percent, 50 percent, and 53 
percent, respectively.\60\ This data is of concern because fluid 
overload in beneficiaries with AKI can be detrimental to recovering 
kidney function. Additionally, this data supports conclusions drawn 
from an article involving the review of 1754 patients with AKI 
requiring dialysis. The article indicates that treatment protocols for 
patients with AKI were like those of incident ESRD patients despite the 
underlying differences in treatment goals. The article further 
indicates that most patients with AKI who recovered had discontinued 
dialysis without ever having been weaned from their initial dialysis 
prescription, suggesting there may be substantial opportunity to wean 
dialysis sooner.\61\ There is significant need to individualize the 
treatment of every kidney patient, but particularly beneficiaries with 
AKI, as this omission could result in a missed opportunity to recover 
kidney function.
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    \57\ https://www.cms.gov/medicare/payment/prospective-payment-systems/end-stage-renal-disease-esrd/esrd-prospective-payment-system-esrd-pps-overview-claims-based-monitoring-program.
    \58\ https://academic.oup.com/ckj/article/16/12/2493/7210548.
    \59\ Annual Data Report  USRDS (nih.gov), https://usrds-adr.niddk.nih.gov/2023/end-stage-renal-disease/2-home-dialysis.
    \60\ https://www.cms.gov/medicare/payment/prospective-payment-systems/end-stage-renal-disease-esrd/esrd-prospective-payment-system-esrd-pps-overview-claims-based-monitoring-program.
    \61\ https://journals.lww.com/jasn/abstract/2023/12000/initial_management_and_potential_opportunities_to.9.aspx.
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    We believe the proposal to provide payment for beneficiaries with 
AKI to dialyze in a home setting aligns closely with the CMS Strategic 
Pillars \62\ of expanding access, engaging the ESRD community by being 
responsive to TEPs and RFIs, and driving innovation to promote patient 
centered care. While there is not utilization data for beneficiaries 
with AKI using a home modality, the USRDS ADR, indicates that 
disparities currently exist for self-care dialysis in the home setting 
for the ESRD beneficiary population, with fewer Black and Hispanic 
beneficiaries choosing a home dialysis modality. Additionally, fewer 
Medicare and Medicaid dual eligible beneficiaries choose a home 
dialysis modality.\63\ Providing the ability for beneficiaries with AKI 
to choose self-care dialysis in a home setting would offer a pathway to 
reduce these current disparities (insofar as the AKI population mirrors 
the ESRD beneficiary population) by promoting access to treatment, as 
well as removing a disparity in care between AKI beneficiaries and ESRD 
beneficiaries. It is crucial that the policy revisions to payment for 
AKI renal dialysis consider health equity and the effects on 
underserved populations. The rate of AKI was about 81 percent higher 
among Black beneficiaries than among White beneficiaries.\64\ We have 
reviewed comments and concerns from interested parties and agree that 
home dialysis could benefit beneficiaries with AKI. We note that issues 
with fluid management could be managed with more frequent, gentler 
modalities, such as PD. We trust that providing an avenue to expand 
treatment modalities would encourage individualized and patient-
centered treatment plans for beneficiaries with AKI, for example, 
addressing anemia and ESA management. We would continue to monitor 
outcomes for beneficiaries with AKI with the expectation that AKI PUF 
are being reviewed in quality improvement efforts by ESRD facilities 
that provide services to beneficiaries with AKI.
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    \62\ https://www.cms.gov/about-cms/what-we-do/cms-strategic-plan.
    \63\ https://usrds-adr.niddk.nih.gov/2023/end-stage-renal-disease/2-home-dialysis.
    \64\ Annual Data Report  USRDS (nih.gov), https://usrds-adr.niddk.nih.gov/2023/chronic-kidney-disease/4-acute-kidney-injury.
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3. Proposal To Extend Home Dialysis Benefit to Beneficiaries With AKI
    As previously discussed, we did not extend the home dialysis 
benefit to beneficiaries with AKI when initially implementing the 
benefit (81 FR 77870). However, as discussed in the prior section, we 
reviewed AKI monitoring data showing that outcomes for anemia, ESA use, 
and fluid management are not necessarily reflective of the specific, 
individualized care, and close supervision by qualified staff currently 
required during the in-center dialysis process. We note research 
demonstrates the use of PD is correlated with positive outcomes for 
fluid management and a lower rate of anemia with less utilization of 
ESAs and iron, as previously discussed. As we stated in the previous 
section, research related to home dialysis in the AKI patient 
population has primarily discussed results using PD as the modality; 
however, we would provide payment for either PD or HD as a home 
modality. CMS's goal is for beneficiaries with AKI to receive the 
necessary care to improve their condition, recover kidney function, and 
be weaned from dialysis treatment. We also note that the literature 
exhibits a high correlation between the use of PD treatment for 
beneficiaries with AKI and positive outcomes for fluid management, 
infection rates, mortality, and recovery of kidney function.\65\ 
Additionally, we reviewed analysis demonstrating that the use of PD to 
manage the care of beneficiaries with AKI as a result of COVID-19 was 
successful and that beneficiaries who have successfully begun a 
treatment regime that could transition from the hospital to a home 
modality should not have to change treatment to an in-center treatment 
modality.
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    \65\ https://pubmed.ncbi.nlm.nih.gov/29199769/.
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    After careful review of current research and the outcomes noted 
during the COVID-19 PHE, we propose to extend the home dialysis benefit 
as defined at 42 CFR 410.52 to beneficiaries with AKI for either PD or 
HD. As discussed in section III.C.1 of this proposed rule, we are 
proposing that the payment amount for home dialysis for AKI 
beneficiaries would be the same as the payment amount for in-center 
dialysis for AKI beneficiaries, consistent with payment parity within 
the ESRD PPS. This payment amount

[[Page 55808]]

would be the ESRD PPS base rate, adjusted for geographic area, as 
described in section II.C.2 of this proposed rule. Additionally, as 
discussed in section III.C.3 of this proposed rule, we are proposing to 
extend the add-on payment adjustment for home and self-dialysis 
training in the same amount as for patients with ESRD, on a budget 
neutral basis. We propose to revise Sec.  413.373, which currently 
states ``The payment rate for AKI dialysis may be adjusted by the 
Secretary (on a budget neutral basis for payments under section 
1834(r)) by any other adjustment factor under subparagraph (D) of 
section 1881(b)(14) of the Act,'' by adding paragraph (a) before ``The 
payment rate'' that reads ``CMS applies the wage-adjusted add-on per 
treatment adjustment for home and self-dialysis training as set forth 
at Sec.  413.235(c) to payments for AKI dialysis claims that include 
such training.'' We propose to move the current language to paragraph 
(b) with a technical revision to add ``of the Act'' after ``section 
1834(r)''. Furthermore, as discussed in section III.D of this proposed 
rule, we are proposing changes to the ESRD facility CfCs that would 
accommodate the provision of home dialysis for beneficiaries with AKI 
and help ensure safe and high-quality care for Medicare beneficiaries 
in this setting.
    We are proposing to amend Sec.  410.52 to provide Medicare payment 
for the treatment of patients with AKI in the home setting. We are 
proposing to revise Sec.  410.52 to read ``Medicare Part B pays for the 
following services, supplies, and equipment furnished to a patient with 
ESRD or an individual with Acute Kidney Injury (AKI) as defined in 
Sec.  413.371 of this chapter in his or her home:'' by striking the 
words ``an ESRD patient'' after ``to'' and adding the words ``a patient 
with ESRD or an individual with Acute Kidney Injury (AKI) as defined in 
Sec.  413.371 of this chapter'' after ``to''. We are also proposing to 
revise Sec.  413.374(a) to read: ``The AKI dialysis payment rate 
applies to renal dialysis services (as defined in subparagraph (B) of 
section 1881(b)(14) of the Act) furnished under Part B by a renal 
dialysis facility or provider of services paid under section 
1881(b)(14) of the Act, including home services, supplies, and 
equipment, and self-dialysis.''

C. Proposed Annual Payment Rate Update for CY 2025

1. CY 2025 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 
market basket update, geographic wage adjustments, and any other 
discretionary adjustments, for such year. We note that ESRD facilities 
could 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.4 of this proposed rule, the 
proposed ESRD PPS base rate is $273.20, which reflects the application 
of the proposed CY 2025 wage index budget-neutrality adjustment factor 
of 0.990228 and the proposed CY 2025 ESRDB market basket percentage 
increase of 2.3 percent reduced by the proposed productivity adjustment 
of 0.5 percentage point, that is, 1.8 percent. Accordingly, we are 
proposing a CY 2025 per treatment payment rate of $273.20 (($271.02 x 
0.990228) x 1.018 = $273.20) for renal dialysis services furnished by 
ESRD facilities to individuals with AKI. This proposed payment rate is 
further adjusted by the wage index, as discussed in the next section of 
this proposed rule.
2. Geographic Adjustment Factor
    Under section 1834(r)(1) of the Act and regulations at Sec.  
413.372, the amount of payment for AKI dialysis services is the base 
rate for renal dialysis services determined for a year under section 
1881(b)(14) of the Act (updated by the ESRDB market basket percentage 
increase 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. As discussed 
in section II.B.2.b of this proposed rule, we are proposing a new ESRD 
PPS wage index methodology, which utilizes BLS OEWS data and 
freestanding ESRD facility cost report data. We are proposing to use 
this same methodology when adjusting AKI dialysis payments to ESRD 
facilities, consistent with our historical practice of using the ESRD 
PPS wage index for AKI dialysis payments. 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 ESRD 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. We also apply the wage index policies regarding 
the 0.600 wage index floor (87 FR 67161 through 67166) and the 5 
percent cap on wage index decreases (87 FR 67159 through 67161) to AKI 
dialysis payments to ESRD facilities. ESRD facilities would utilize the 
same staff to provide renal dialysis services to and educate 
beneficiaries with AKI as those beneficiaries with ESRD. Therefore 
utilizing the same wage index methodology would be appropriate in 
accordance with Sec.  413.372, which addresses the payment rate for AKI 
dialysis and refers to Sec.  413.231 for the wage adjustment. As stated 
previously, we are proposing a CY 2025 AKI dialysis payment rate of 
$273.20, adjusted by the ESRD facility's wage index.
3. Other Adjustments to the AKI Payment Rate
    Section 1834(r)(1) also provides that the payment rate for AKI 
dialysis may be adjusted by the Secretary (on a budget neutral basis 
for payments under section 1834(r)) by any other adjustment factor 
under subparagraph (D) of section 1881(b)(14) of the Act. As discussed 
in the previous section, we are proposing to extend AKI dialysis 
payment to home dialysis.
    In implementing payment for home dialysis in the AKI patient 
population, we considered our existing payment policies for home 
dialysis for beneficiaries with ESRD. In the CY 2011 ESRD PPS final 
rule, we explained that although we included payments for providing 
training to beneficiaries in computing the ESRD PPS base rate, we 
agreed with commenters that we should pay for home dialysis training as 
an add-on payment adjustment under the ESRD PPS to account for the cost 
of providing training to beneficiaries on the use of home dialysis 
modalities. Thus, we finalized the home dialysis training add-on 
payment adjustment of $33.44 per treatment as an additional payment 
made under the ESRD PPS when one-on-one home dialysis training is 
furnished by a nurse for either hemodialysis or peritoneal dialysis 
training and retraining (75 FR 49063). We clarified our policy on 
payment for home dialysis training again in the CY 2013 ESRD PPS final 
rule, in which we stated that training costs are included in the ESRD 
PPS base rate; however, we also provide an add-on payment adjustment 
for each home and self-dialysis training treatment furnished by a 
Medicare-certified home dialysis training facility (77 FR 67468). We 
explained in the CY 2017 ESRD PPS final rule that it is not the intent 
of the add-on treatment to reimburse a facility

[[Page 55809]]

for all of the training costs furnished during training treatments. 
Rather, the single ESRD PPS base rate, all applicable case-mix and 
facility-level adjustments, as well as the add-on payment should be 
considered the Medicare payment for each training treatment and not the 
training add-on payment alone (81 FR 77854).
    We considered making payment for home dialysis for beneficiaries 
with AKI under the ESRD PPS base rate without an add-on payment 
adjustment for home modality training. As we noted in the background 
section, the ESRD PPS base rate upon which the AKI dialysis payment 
rate is established contains monies for training related costs. 
However, we are concerned that not providing a home and self-dialysis 
training add-on payment adjustment for AKI dialysis may limit access to 
home dialysis care for the AKI beneficiary population. As previously 
noted, incorporation of an adjustment factor under subparagraph (D) of 
section 1881(b)(14) of the Act into AKI dialysis payments must be done 
on a budget neutral basis for payments under section 1834(r) of the 
Act. Therefore, establishing an add-on adjustment for training for home 
and self-care dialysis could have an impact on the AKI base rate.
    We have reviewed options for applying budget neutrality to a home 
and self-dialysis training add-on payment adjustment for beneficiaries 
with AKI. We are considering applying a budget neutrality adjustment 
factor by reducing the AKI dialysis payment rate amount (which is based 
on the ESRD PPS base rate and is then adjusted for wages according to 
Sec.  413.372) for renal dialysis services provided to patients with 
AKI to account for the add-on training adjustment. For example, we 
might estimate utilization of home dialysis in the AKI patient 
population using ESRD PPS data and on that basis derive a budget 
neutrality adjustment factor to apply to the AKI payment rate that 
would ensure that total payments to ESRD facilities for renal dialysis 
services provided to patients with AKI do not increase as a result of 
implementing the home and self-dialysis add-on training adjustment. To 
develop an estimate for consideration we used publicly available data 
to build an example. Using the fourth quarter data from the 2022 ESRD 
PUF,\66\ the average monthly percentage of renal dialysis treatment 
furnished via home dialysis for 2022 was 15.4 percent. Using data from 
table 19 in section VIII.D.5.c, which indicates there were 279,000 AKI 
dialysis treatments in 2023, we could estimate that the same percentage 
of beneficiaries with AKI would choose a home modality as did 
beneficiaries with ESRD; therefore, we could estimate that 42,966 AKI 
dialysis treatments would be performed in a home setting. Using the 
USRDS ADR data, we could estimate the average beneficiary with AKI 
using a home PD modality would receive 15 PD training treatments. From 
the fourth quarter 2022 AKI PUF,\67\ we calculate 10,802 first time 
beneficiaries with AKI. Using this data, we could estimate a cost of 
training to be $2,370,498.90 (10,802 x 0.154 x 15 x $95.57) or $8.50 
($2,370,498.90/279,000) per AKI treatment. Therefore, in this example, 
we would reduce the AKI dialysis payment rate by this per treatment 
amount to budget neutralize the home dialysis training add-on payment 
adjustment for beneficiaries with AKI. This means the AKI CY 2025 base 
rate would be $264.70 ($273.20-$8.50) using this estimate. Although we 
do not include it in this example, we note the training add-on payment 
adjustment is affected by the wage index; therefore, the wage index 
would be reflected in a final estimated reduction.
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    \66\ https://www.cms.gov/medicare/payment/prospective-payment-systems/end-stage-renal-disease-esrd/esrd-prospective-payment-system-esrd-pps-overview-claims-based-monitoring-program.
    \67\ https://www.cms.gov/medicare/payment/prospective-payment-systems/end-stage-renal-disease-esrd/esrd-prospective-payment-system-esrd-pps-overview-claims-based-monitoring-program.
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    However, this option would entail that the ESRD PPS base rate would 
not be equal to the AKI dialysis payment rate once the budget 
neutrality adjustment factor is applied, which could disincentivize 
ESRD facilities from treating patients who have AKI. Additionally, we 
do not have utilization data for home and self-dialysis in the AKI 
beneficiary population. Therefore, any initial budget neutrality 
adjustment to the AKI dialysis payment rate would require an estimation 
as in the potential equation described previously. We are further 
considering whether, if we apply a budget neutrality adjustment factor 
to the AKI payment rate based on an estimation, we should reconcile 
payments to ESRD facilities for renal dialysis services provided to 
patients with AKI later to modify the budget neutrality adjustment 
factor based on actual utilization data.
    Due to these constraints, we are seeking comments regarding the 
need for a home and self-dialysis training add-on payment adjustment 
for AKI beneficiaries along with suggestions on how to budget 
neutralize the add-on payment adjustment for home and self-dialysis 
training for AKI beneficiaries considering the statutory requirement. 
Additionally, we are soliciting comments on other venues in which 
beneficiaries with AKI might receive training for home and self-
dialysis, such as inpatient or outpatient hospital departments or 
nephrologist offices.
    We propose, in accordance with section 1834(r)(1) of the Act and 
Sec.  413.373, to extend the home and self-dialysis training add-on 
payment adjustment under Sec.  413.235(c) to payments for renal 
dialysis services provided to beneficiaries with AKI using a home 
modality. We propose to make payment for a home and self-dialysis add-
on training adjustment at the same amount currently applicable under 
the ESRD PPS of $95.57 with a limit of 15 training treatments for PD 
and a limit of 25 training treatments for HD per patient excluding 
retraining sessions (75 FR 49063). Additional information regarding the 
maximum number of training treatments for which CMS provides payment 
under the ESRD PPS is located in the Medicare Claims Processing 
Manual.\68\ To further inform our decisions on the AKI home and self-
dialysis training payment policies we would need to have data regarding 
the utilization of AKI home renal dialysis service. We are interested 
in receiving data that could provide additional insight for calculating 
a budget neutrality adjustment factor for the AKI home and self-
dialysis training add-on adjustment as described previously, such as, 
the actual or estimated number of training sessions furnished and the 
number of beneficiaries with AKI using a home modality. The analysis of 
this data would inform our estimates for a budget neutrality adjustment 
factor for training for home dialysis for beneficiaries with AKI or 
future decisions about how we compute the AKI home and self-dialysis 
training add-on adjustment. We intend to use this information to make a 
determination on an add-on training adjustment in the CY 2025 ESRD PPS 
final rule or in future rulemaking for subsequent years. If the 
proposal to extend the home and self-dialysis training add-on payment 
adjustment to payment for renal dialysis services provided to patients 
with AKI is finalized, we would also adopt an approach to ensure that 
the adjustment is implemented budget neutrally in the final rule, 
considering the comments received on this proposed rule.
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    \68\ https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c08.pdf.

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[[Page 55810]]

D. AKI and the ESRD Facility Conditions for Coverage

1. Statutory and Regulatory Background
    ESRD is a kidney impairment that is irreversible and permanent. 
Dialysis is a process for cleaning the blood and removing excess fluid 
artificially with special equipment when the kidneys have failed. 
People with ESRD require either a regular course of dialysis or kidney 
transplantation to live. Given the high costs and absolute necessity of 
transplantation or dialysis for people with failed kidneys, Medicare 
provides health care coverage to qualifying individuals diagnosed with 
ESRD, regardless of age, including coverage for kidney transplantation, 
maintenance dialysis, and other health care needs. AKI is an acute 
decrease in kidney function due to kidney damage or kidney failure that 
may require dialysis. Unlike people with ESRD, individuals with AKI who 
require dialysis are expected to regain kidney function within three 
months. People with either ESRD or AKI can receive outpatient dialysis 
services from Medicare-certified ESRD facilities, also called dialysis 
facilities.
    The Medicare ESRD program became effective July 1, 1973, and 
initially operated under interim regulations published in the Federal 
Register on June 29, 1973 (38 FR 17210). In the July 1, 1975, Federal 
Register (40 FR 27782), we published a proposed rule that revised 
sections of the ESRD requirements. On June 3, 1976, the final rule was 
published in the Federal Register (41 FR 22501). Subsequently, the ESRD 
Amendments of 1978 (Pub. L. 95-292), amended title XVIII of the Social 
Security Act (the Act) by adding section 1881. Sections 1881(b)(1) and 
1881(f)(7) of the Act further authorize the Secretary to prescribe 
health and safety requirements (known as conditions for coverage or 
CfCs) that a facility providing dialysis and transplantation services 
to dialysis patients must meet to qualify for Medicare payment. In 
addition, section 1881(c) of the Act establishes ESRD Network areas and 
Network organizations to assure that dialysis patients are provided 
appropriate care. The ESRD CfCs were first adopted in 1976 and 
comprehensively revised in 2008 (73 FR 20369). 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 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.
    Medicare pays for routine maintenance dialysis provided by 
Medicare-certified ESRD facilities, also known as dialysis facilities. 
To gain certification, the State survey agency performs an on-site 
survey of the facility to determine if it meets the ESRD CfCs at 42 CFR 
part 494. If a survey indicates that a facility is in compliance with 
the conditions, and all other Federal requirements are met, CMS then 
certifies the facility as qualifying for Medicare payment. Medicare 
payment for outpatient maintenance dialysis is limited to facilities 
meeting these conditions. As of March 2024, there are approximately 
7,700 Medicare-certified dialysis facilities in the United States,\69\ 
providing dialysis services and specialized care to people with ESRD; 
3,700 of which provide home dialysis services, including training and 
support.\70\
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    \69\ https://qcor.cms.gov/active_nh.jsp?which=7&report=active_nh.jsp.
    \70\ https://qcor.cms.gov/active_nh.jsp?which=7&report=active_nh.jsp.
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    The ESRD CfCs found at 42 CFR part 494, consist of the health and 
safety standards that all Medicare participating dialysis facilities 
must meet. These standards set baseline requirements for patient 
safety, infection control, care planning, staff qualifications, record 
keeping, and other matters to ensure that all patients with kidney 
failure receive safe and appropriate care. In addition, the CfCs 
require patients to be informed about all treatment modalities 
(hemodialysis or peritoneal dialysis) and settings (home dialysis 
modalities or in-facility hemodialysis) (Sec.  494.70(a)(7)). A 
dialysis facility that is certified to provide services to home 
patients must ensure that home dialysis services are at least 
equivalent to those provided to in-facility patients and meet all 
applicable conditions of Sec.  494.100. The patient's interdisciplinary 
team must oversee training of the home dialysis patient, the designated 
caregiver, or self-dialysis patient before the initiation of home 
dialysis or self-dialysis (as defined in Sec.  494.10). Dialysis 
facilities monitor home dialysis by documenting adequate comprehension 
of the training; retrieving and reviewing complete self-monitoring data 
and other information at least every two months; and maintaining this 
information in the patient's medical record.
    In the CY 2017 ESRD PPS final rule (81 FR 77834), we clarified that 
ESRD facility CfCs apply to ESRD facilities, not to people with ESRD, 
and noted that the ESRD CfCs would be the appropriate regulatory 
location for standards addressing care provided to beneficiaries with 
AKI in ESRD facilities. While the language of the ESRD CfCs does not 
directly address treatment of beneficiaries with AKI, we believe that 
the current ESRD facility requirements are sufficient to ensure that 
such patients are dialyzed safely. For example, infection control 
protocols are the same for any individual receiving hemodialysis, 
regardless of the cause or likely trajectory of their kidney 
disfunction. For the areas in which care and care planning may differ, 
such as frequency of certain patient assessments, we note that the CfCs 
set baseline standards and do not limit additional or more frequent 
services that may be necessary for beneficiaries with AKI receiving 
temporary dialysis as they recover kidney function.
    During the development of the CY 2017 ESRD PPS final rule, we did 
not anticipate that beneficiaries with AKI would be candidates for home 
dialysis due to the likely short-term duration of treatment and the 
unique needs of AKI. Specifically, it was our understanding that 
beneficiaries with AKI require supervision by qualified staff during 
their dialysis and close monitoring through laboratory tests, often 
conducted more frequently than for people with ESRD, to ensure that 
they are receiving appropriate care as their kidney function improves. 
Therefore, we did not propose to extend the home dialysis benefit to 
beneficiaries with AKI at that time (81 FR 77870). However, for the 
reasons discussed in section III of this proposed rule, we are 
proposing to extend coverage of home dialysis services to beneficiaries 
with AKI, allowing them flexibility in choosing their preferred 
treatment modality. The choice between home and in-center dialysis 
reflects a combination

[[Page 55811]]

of clinical, social, and financial considerations. Since the ESRD CfCs 
apply to ESRD facilities as a whole, not to solely to their patients 
with ESRD, we are proposing clarifying revisions to the CfCs to align 
with the proposed coverage changes.
2. AKI and Home Dialysis
    The United States Renal Data System 2023 Annual Data Report (ADR) 
contains updated information about the chronic kidney disease and ESRD 
populations in the U.S. through the end of 2021; the statistics in this 
section were published in this report.\71\ The number of Medicare fee-
for-service beneficiaries over the age of 18 years who received 
outpatient dialysis for the treatment of AKI increased steadily until 
2019, when it reached 11,180 and then plateaued.\72\ The adjusted 
percentage of hospitalizations in which AKI was diagnosed increased 
steadily between 2011 (15.5 percent) and 2021 (26.8 percent), with a 
particularly large increase in 2020 during the first year of the COVID-
19 pandemic.\73\
---------------------------------------------------------------------------

    \71\ United States Renal Data System. 2023 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 2023. https://usrds-adr.niddk.nih.gov/2023/chronic-kidney-disease/4-acute-kidney-injury.
    \72\ Ibid.
    \73\ Ibid.
---------------------------------------------------------------------------

    Under current Medicare regulations, ESRD facility beneficiaries 
with AKI are restricted to receiving in-center hemodialysis, regardless 
of their individual prognosis or course of treatment prior to hospital 
discharge.\74\ Since Congress expanded treatment options for those 
living with AKI to include dialysis facilities in 2017 (81 FR 77834, 
77866), clinical understanding of AKI has advanced. However, these 
patients are often subject to the standardized treatment durations and 
schedules intended to treat patients with ESRD; unlike these patients, 
individuals with dialysis-dependent AKI could potentially avoid long-
term dialysis through recovery of kidney function. As a result, we 
believe it is necessary to provide for more flexibility in the modality 
options available to beneficiaries with AKI. In this proposed rule, we 
propose to expand coverage of home dialysis for beneficiaries with AKI, 
increasing patient options for dialysis treatment beyond in-center 
hemodialysis and empowering these patients to make decisions about 
their care. In addition, this proposed change reflects efforts to 
increase home dialysis access and uptake. We are proposing to revise 
the ESRD facility CfCs to align with the proposed payment changes.
---------------------------------------------------------------------------

    \74\ 42 CFR part 494.
---------------------------------------------------------------------------

    Hemodialysis (HD) is the modality most often initiated by hospital 
staff for urgent start patients, but often the patient is discharged to 
an in-center clinic. Given a choice, most patients with ESRD prefer 
home dialysis over in-center hemodialysis. Peritoneal dialysis (PD) is 
a home dialysis method and offers benefits such as absence of central 
venous access and therefore preservation of veins, low cost, and 
decreased time per dialysis session, as well as convenience.\75\ While 
home hemodialysis (HHD) is a safe and effective modality for 
beneficiaries with AKI, the dominant modality is PD. From 2011 to 2021, 
the percentage of all adults with dialysis performing home dialysis 
increased from 7.5 percent to 13.4 percent.\76\ Individuals living in 
more rural areas were more likely to be using PD (9.9 percent) and HHD 
(2.0 percent) than their more urban counterparts (8.2 percent PD and 
1.5 percent HHD).\77\
---------------------------------------------------------------------------

    \75\ Bassuner J, Kowalczyk B, Abdel-Aal AK. Why Peritoneal 
Dialysis is Underutilized in the United States: A Review of 
Inequities. Semin Intervent Radiol. 2022 Feb 18;39(1):47-50. doi: 
10.1055/s-0041-1741080.
    \76\ USRDS Annual Data Report 2023.
    \77\ Ibid.
---------------------------------------------------------------------------

    The current policies restricting access to home dialysis modalities 
for beneficiaries with AKI perpetuate current inequities in dialysis 
experiences. The percentage of all-cause hospitalizations of 
beneficiaries with AKI is consistently higher among older populations, 
men, and Black beneficiaries.\78\ The ADR reported Black beneficiaries 
experienced a slightly larger increase in the percentage of 
hospitalizations with AKI in 2020 than White beneficiaries (14.8 
percent vs. 11.6 percent).\79\ In 2021, the rate of AKI was about 81 
percent higher among Black Medicare beneficiaries, at 108.8 per 1000 
person-years, than among White beneficiaries (60.1 per 1000 person-
years).\80\ White beneficiaries were less likely to develop dialysis-
requiring AKI than Black or Hispanic beneficiaries.\81\ Those with a 
higher neighborhood Social Deprivation Index score (more deprivation) 
were more likely to experience AKI requiring dialysis than those living 
in neighborhoods with less deprivation; this was especially true among 
Hispanic beneficiaries.\82\ Older Medicare beneficiaries living in a 
neighborhood with more deprivation were more likely to experience an 
AKI hospitalization with dialysis than those living in neighborhoods 
with less deprivation.\83\
---------------------------------------------------------------------------

    \78\ USRDS Annual Data Report 2023.
    \79\ Ibid.
    \80\ Ibid.
    \81\ Ibid.
    \82\ Ibid.
    \83\ Ibid.
---------------------------------------------------------------------------

    There is a disproportionate lack of home dialysis for low-income 
communities and communities of color. This data includes all dialysis 
beneficiaries, not just those with AKI. Patients in all race/ethnicity 
groups living in neighborhoods with more deprivation are less likely to 
initiate dialysis at home. The ADR shows White and Asian patients were 
substantially more likely to dialyze at home than Black and Hispanic 
patients.\84\ Across all levels of neighborhood deprivation Black and 
Hispanic patients were much less likely to start dialysis at home than 
White patients.\85\ Overall, the ADR highlights large racial/ethnic and 
socioeconomic disparities in access to home dialysis. We anticipate 
that providing the option of home dialysis to beneficiaries with AKI, 
will increase access and equitable care.
---------------------------------------------------------------------------

    \84\ Ibid.
    \85\ Ibid.
---------------------------------------------------------------------------

    By providing multiple choices of dialysis modality (in-center 
dialysis, PD, or HHD), patients can choose which one best suits their 
needs. Solutions that encourage and facilitate initiation of home 
education and training in the hospital by nephrologists, dialysis 
nurses and hospital social workers, could significantly increase the 
adoption of home dialysis for beneficiaries with AKI. Initially, in the 
CY 2017 ESRD PPS final rule, we expressed concern about beneficiaries 
with AKI receiving dialysis at home, particularly PD, due to the unique 
medical needs of the patients; we finalized the rule as proposed 
without extending the AKI benefit to home dialysis patients (81 FR 
77870). As discussed in section III.C.1 of this proposed rule, we have 
received comments regarding the site of renal dialysis services for 
Medicare beneficiaries with AKI. Over the years, we have monitored data 
for beneficiaries with AKI and research discussing the potential to 
expand dialysis for beneficiaries with AKI to a home setting. In 
addition, during the COVID-19 PHE, many patients who developed AKI 
received home dialysis successfully.86 87 Both professional

[[Page 55812]]

nephrologist societies, the Renal Physicians Association and the 
American Society of Nephrology, agree beneficiaries with AKI can safely 
receive dialysis at home via PD or HHD.\88\ The Renal Physicians 
Association has long supported access to all dialysis modalities for 
beneficiaries with AKI as it aligns with the goals to expand access to 
home dialysis and increase the number of programs utilizing emergent or 
urgent PD, as opposed to HD, as rescue therapy for patients presenting 
in urgent need.\89\ By revising the CfCs to allow beneficiaries with 
AKI to utilize home dialysis, we would increase patient options for 
renal replacement treatment beyond in-center hemodialysis and empower 
these patients to make decisions about their care.
---------------------------------------------------------------------------

    \86\ Cozzolino M, Conte F, Zappulo F, Ciceri P, Galassi A, 
Capelli I, Magnoni G, La Manna G. COVID-19 pandemic era: is it time 
to promote home dialysis and peritoneal dialysis? Clin Kidney J. 
2021 Feb 2;14(Suppl 1):i6-i13. doi: 10.1093/ckj/sfab023.
    \87\ Geetha D, Kronbichler A, Rutter M, Bajpai D, Menez S, 
Weissenbacher A, Anand S, Lin E, Carlson N, Sozio S, Fowler K, 
Bignall R, Ducharlet K, Tannor EK, Wijewickrama E, Hafidz MIA, Tesar 
V, Hoover R, Crews D, Varnell C, Danziger-Isakov L, Jha V, Mohan S, 
Parikh C, Luyckx V. Impact of the COVID-19 pandemic on the kidney 
community: lessons learned and future directions. Nat Rev Nephrol. 
2022 Nov;18(11):724-737. doi: 10.1038/s41581-022-00618-4.
    \88\ AdvaMed to CMS (January 24, 2023).
    \89\ Renal Physicians Association. ``RPA Comments on the 2017 
ESRD PPS Proposed Rule Including AKI Policy'' https://ww.renalmed.org/page/ESRDPPSRuleComments? (2016).
---------------------------------------------------------------------------

3. Proposed Changes
    To support treatment location choices for individuals with AKI 
requiring dialysis and to align with the proposed coverage changes, we 
propose conforming changes throughout the ESRD CfCs at 42 CFR part 494 
to clarify that the option for home dialysis services is available to 
all patients. Specifically, we note that the phrase ``ESRD patients'' 
is exclusive of beneficiaries with AKI. The phrase ``kidney failure'' 
is inclusive of people whose kidney function is inadequate such that 
dialysis is necessary to maintain or prolong life. This can be a 
temporary (AKI) or permanent (ESRD) condition. Accordingly, we are 
proposing to amend the definitions of home dialysis and self-dialysis 
at Sec. Sec.  494.10, 494.70(c)(1)(i), and 494.130 introductory text by 
removing the descriptor ``ESRD.'' In addition, we are proposing to 
amend Sec. Sec.  494.70(a)(1) and (10) and 494.80 introductory text by 
revising the phrase ``ESRD'' to say ``kidney failure;'' Sec.  
494.90(b)(4) by revising the phrase ``ESRD care'' to say ``dialysis 
care;'' Sec.  494.100(a)(3)(i) by revising the phrase ``management of 
ESRD'' to say ``management of their kidney failure;'' Sec.  494.120 
introductory text by revising the phrase ``serve ESRD patients'' to say 
``serve patients with kidney failure;'' and lastly Sec.  494.170 
introductory text by revising the phrase ``provider of ESRD services'' 
to say ``provider of dialysis services.'' We welcome comments on these 
proposed changes. Specifically, are these proposed revisions adequate 
to ensure access to home dialysis services for individuals with AKI?
4. Expected Impact
    Beneficiaries with AKI requiring dialysis represent a small subset 
of individuals treated in outpatient dialysis facilities. Specifically, 
around 12,000 patients would be eligible for this optional service.\90\ 
Expanding coverage to include beneficiaries with AKI would not present 
any changes in burden on ESRD facilities or establish new information 
collections subject to the Paperwork Reduction Act.
---------------------------------------------------------------------------

    \90\ USRDS Annual Data Report 2023.
---------------------------------------------------------------------------

IV. Proposed Updates to the End-Stage Renal Disease Quality Incentive 
Program (ESRD QIP)

A. Background

    For a detailed discussion of the 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 citations provided at IV.A of the CY 2024 ESRD PPS final rule 
(88 FR 76433). We have also codified many of our policies for the ESRD 
QIP at 42 CFR 413.177 and 413.178.

B. Proposed Updates to Requirements Beginning With the PY 2027 ESRD QIP

1. PY 2027 ESRD QIP Measure Set
    In this proposed rule, we are proposing to replace the Kt/V 
Dialysis Adequacy Comprehensive clinical measure, a comprehensive 
measure on which facilities are scored for each payment year using one 
set of performance standards, with a Kt/V measure topic comprised of 
four individual Kt/V measures, beginning with PY 2027. We are also 
proposing to remove the National Healthcare Safety Network (NHSN) 
Dialysis Event reporting measure from the ESRD QIP measure set 
beginning with PY 2027. Table 12 summarizes the previously finalized 
and proposed updated measures that we would include in the PY 2027 ESRD 
QIP measure set. The technical specifications for current measures that 
would remain in the measure set for PY 2027 can be found in the CMS 
ESRD Measures Manual for the 2024 Performance Period.\91\ The proposed 
technical specifications for the measures in the proposed Kt/V measure 
topic can be viewed at https://www.cms.gov/medicare/quality/end-stage-renal-disease-esrd-quality-incentive-program/technical-specifications-esrd-qip-measures. If the Kt/V measure topic is finalized, these 
specifications will be included in the CMS ESRD Measures Manual for the 
2025 Performance Period.
---------------------------------------------------------------------------

    \91\ https://www.cms.gov/files/document/esrd-measures-manual-v91.pdf.
    \92\ In previous years, we referred to the consensus-based 
entity by corporate name. We have updated this language to refer to 
the consensus-based entity more generally.
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[[Page 55813]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.020


[[Page 55814]]


BILLING CODE 4120-01-C
2. Proposal To Replace the Kt/V Dialysis Adequacy Comprehensive 
Clinical Measure With a Kt/V Dialysis Adequacy Measure Topic Beginning 
With the PY 2027 ESRD QIP
    Section 1881(h)(2)(A)(i) states that the ESRD QIP must evaluate 
facilities based on measures of dialysis adequacy. Beginning with the 
PY 2027 ESRD QIP, we are proposing to replace the Kt/V Dialysis 
Adequacy Comprehensive clinical measure, a single comprehensive measure 
on which facility performance is calculated using one set of 
performance standards for each payment year, with a Kt/V Dialysis 
Adequacy Measure Topic, a measure topic comprised of four individual 
Kt/V measures on which facility performance is calculated using 
performance standards for each individual Kt/V measure.\93\ We are 
proposing to remove the Kt/V Dialysis Adequacy Comprehensive clinical 
measure under Sec.  413.178(c)(5)(i)(E), Measure Removal Factor 5 (a 
measure that is more strongly associated with desired patient outcomes 
for the particular topic becomes available), and proposing to replace 
it with the proposed Kt/V Dialysis Adequacy Measure Topic, which 
consists of four individual Kt/V measures. Under this proposed update, 
the individual Kt/V measures would be adult hemodialysis (HD) Kt/V, 
adult peritoneal dialysis (PD) Kt/V, pediatric HD Kt/V, and pediatric 
PD Kt/V.
---------------------------------------------------------------------------

    \93\ For further information related to the Kt/V Dialysis 
Adequacy Comprehensive clinical measure, we refer readers to 77 FR 
67487 through 67490, 79 FR 66197 through 66198, and 80 FR 69053 
through 69057.
---------------------------------------------------------------------------

    By replacing the current Kt/V Dialysis Adequacy Comprehensive 
clinical measure with four separate measures, we would be able to 
assess Kt/V performance more accurately based on whether the patient is 
an adult or child and what type of dialysis the patient is receiving. 
We are also proposing to score the four measures as a Kt/V Dialysis 
Adequacy Measure Topic and to limit the total weight of that topic to 
11 percent of the TPS, which is the weight of the current Kt/V Dialysis 
Adequacy Comprehensive clinical measure. These proposals would continue 
to maintain Kt/V measurement as an important part of the quality of 
care assessed by the ESRD QIP. Facilities are eligible to receive an 
individual Kt/V measure score if they treat at least 11 eligible 
patients using the modality addressed by that particular measure. For 
example, a facility treating at least 11 eligible pediatric HD patients 
during the applicable performance period would be scored on the Kt/V 
Pediatric HD measure. We would calculate a facility's measure topic 
score by first calculating the facility's performance on each of the 
Adult HD Kt/V, Adult PD Kt/V, Pediatric HD Kt/V, and Pediatric PD Kt/V 
measures, as applicable, using the applicable achievement threshold, 
benchmark, and improvement threshold for the payment year. Second, we 
would calculate the total number of eligible patients for weighting 
each of these measure scores to calculate a single measure topic score. 
We would calculate this total number by summing all eligible patients 
included in the denominator for each individual measure. Third, we 
would calculate the weighted score for each measure within the measure 
topic by dividing the number of patients included in the denominator 
for each individual measure by the total number of eligible patients 
for all of the measures within the measure topic and multiplying by the 
respective measure score. Finally, we would add the weighted measure 
scores together and round them to the nearest integer. An example of 
how we would calculate the measure topic score for a facility that 
treats the minimum number of patients to be eligible for scoring on all 
four of the measures is provided below.
[GRAPHIC] [TIFF OMITTED] TP05JY24.021

    Under our proposal, a facility would not need to be eligible for 
scoring on all four individual measures to receive a measure topic 
score. For example, a facility that exclusively treats adult HD 
patients and, for that reason, is eligible to be scored on only the Kt/
V Adult HD measure would receive a topic score that is the same score 
as its individual Kt/V measure score. The proposed measure topic 
scoring considers both a facility's individual ESRD patient population 
and the treatment modalities it offers, and then weights its 
performance on the topic proportionately to its overall ESRD patient 
population. As a result, we believe that a facility's measure topic 
score will be more reflective of its actual performance among its 
patient population and offered modalities than its current Kt/V 
Dialysis Adequacy Comprehensive clinical measure score, which is a 
composite assessment that blends the Kt/V measure data of all patients 
treated at that facility.
    We previously adopted a Kt/V Dialysis Adequacy Measure Topic that 
included three of the four measures that we are now proposing to 
include in the topic (adult HD Kt/V, adult PD Kt/V, and pediatric HD 
Kt/V) in the CY 2013 ESRD PPS final rule (77 FR 67487 through 67490). 
In the CY 2015 ESRD PPS final rule (79 FR 66197 through 66198), we 
updated the Kt/V Dialysis Adequacy Measure Topic to include the 
pediatric PD Kt/V measure as well. In the CY 2016 ESRD PPS final rule 
(80 FR 69053 through 69057), we replaced the Kt/V Dialysis Measure 
Topic with the current Kt/V Dialysis Adequacy Comprehensive clinical 
measure, which assesses the percentage of all patient-months for both 
adult and pediatric patients whose average delivered dose of dialysis 
(either hemodialysis or peritoneal dialysis) met the specified 
threshold during the performance period. This change allowed more 
facilities to be eligible for measure

[[Page 55815]]

scoring, which in turn allowed us to evaluate the care provided to a 
greater proportion of ESRD patients.
    At the time we finalized the Kt/V Dialysis Adequacy Comprehensive 
clinical measure, three facilities were eligible for scoring on the 
pediatric HD Kt/V measure, six facilities were eligible for scoring on 
the pediatric PD Kt/V measure, 1,402 facilities were eligible for 
scoring on the adult PD Kt/V measure, and 6,117 facilities were 
eligible for scoring on the adult HD Kt/V measure. Given the relatively 
low numbers of facilities eligible for scoring on the pediatric HD Kt/
V, pediatric PD KT/V, and adult PD Kt/V measures at that time, we 
adopted the Kt/V Dialysis Adequacy Comprehensive clinical measure to 
help ensure that data reflecting those patient populations contributed 
to facilities' total performance scores. Since the CY 2016 ESRD PPS 
final rule, however, Kt/V measure data (using the PY 2024/CY 2022 ESRD 
QIP eligible facility list, CY 2022 EQRS data, and CY 2022 claims data) 
indicates that more facilities are treating greater numbers of 
pediatric HD patients and pediatric PD patients, as well as greater 
numbers of adult PD patients, and therefore would be eligible to be 
scored on the individual measures based on an 11-patient case minimum. 
For example, there are now 21 pediatric HD facilities and 28 pediatric 
PD facilities with at least 11 qualifying patients. This shows a 600 
percent increase in facilities eligible to be scored on the pediatric 
HD Kt/V measure, and a 366 percent increase in facilities eligible to 
be scored on the pediatric PD Kt/V measure, since the CY 2016 ESRD PPS 
final rule. Additionally, there are now 2,538 facilities eligible for 
scoring on the adult PD Kt/V measure, an 81 percent increase since the 
CY 2016 ESRD PPS final rule. By contrast, the number of facilities 
eligible for scoring on the adult HD Kt/V measure has increased by 14 
percent during that same period of time.
    In light of the increase in the proportions of pediatric HD 
patients, pediatric PD patients, and adult PD patients being treated at 
ESRD facilities since the time we adopted the Kt/V Dialysis Adequacy 
Comprehensive clinical measure, we have determined that it is 
appropriate and more reflective of facility performance to reintroduce 
the Kt/V Dialysis Adequacy Measure Topic in the ESRD QIP. In addition, 
the proposed measure topic scoring methodology will more accurately 
capture facility performance with respect to dialysis adequacy because 
it assesses those facilities based on performance standards tailored 
according to Kt/V measurements that reflect ESRD patient age and 
treatment modality.
    The proposed replacement of the Kt/V Dialysis Adequacy 
Comprehensive clinical measure with a Kt/V Dialysis Adequacy Measure 
Topic would also not affect a facility's measure data reporting 
requirements. A facility would continue to report the same Kt/V measure 
data into EQRS and Medicare claims as it would for the current Kt/V 
Dialysis Adequacy Comprehensive clinical measure. However, under the 
proposed Kt/V Dialysis Adequacy Measure Topic, the measure data would 
be used to score the facility on four individual Kt/V measures, as 
applicable based on their ESRD patient population and treatment 
modalities.
    The proposed replacement of the Kt/V Dialysis Adequacy 
Comprehensive clinical measure with a Kt/V Dialysis Adequacy Measure 
Topic would also advance the CMS National Quality Strategy Goals by 
scoring facilities on measure data that more accurately reflects the 
quality of care provided to different kinds of ESRD patients on 
different treatment modalities. The proposed Kt/V Dialysis Adequacy 
Measure Topic would allow us to evaluate dialysis adequacy in adult HD 
patients, adult PD patients, pediatric HD patients, and pediatric PD 
patients by scoring facilities in a way that accounts for differences 
in patient populations and treatment modalities. Therefore, this 
proposed update would ensure that a facility's performance on the 
measure topic more accurately reflects the quality of care provided by 
the facility.
    We welcome public comment on this proposal to replace the Kt/V 
Dialysis Adequacy Comprehensive clinical measure with a Kt/V Dialysis 
Adequacy Measure Topic consisting of an adult HD Kt/V measure, an adult 
PD Kt/V measure, a pediatric HD Kt/V measure, and a pediatric PD Kt/V 
measure, for the PY 2027 ESRD QIP and subsequent years.
3. Proposal To Remove the NHSN Dialysis Event Reporting Measure From 
the ESRD QIP Measure Set Beginning With PY 2027
    To ensure continued impact and effectiveness of our measure set on 
facility performance, we are proposing to remove the NHSN Dialysis 
Event reporting measure beginning with PY 2027. When we first adopted 
the NHSN Dialysis Event reporting measure in the CY 2012 ESRD PPS final 
rule (76 FR 70268 through 70269), we stated that reporting dialysis 
events to the NHSN by all facilities supports national goals for 
patient safety, including the reduction of Hospital Acquired Infections 
(HAIs). In the CY 2014 ESRD PPS final rule, we replaced the NHSN 
Dialysis Event reporting measure with the NHSN Bloodstream Infection 
(BSI) clinical measure (78 FR 72204 through 72207). We introduced the 
clinical version of the measure to hold facilities accountable for 
monitoring and preventing infections in the ESRD population, and to 
hold facilities accountable for their actual clinical performance on 
the measure. In the CY 2017 ESRD PPS final rule (81 FR 77879 through 
77882), we reintroduced the NHSN Dialysis Event reporting measure to 
complement the NHSN BSI clinical measure as a way to incentivize 
facilities to report complete and accurate monthly dialysis event data 
in compliance with the NHSN Dialysis Event protocol.\94\ In 
reintroducing the measure, we noted our concerns that facilities were 
not consistently reporting monthly dialysis event data, given the 
incentive to achieve high clinical performance scores on the NHSN BSI 
clinical measure. We stated that this may have been an unintended 
consequence of replacing the previous NHSN Dialysis Event reporting 
measure with the NHSN BSI clinical measure (81 FR 77879). Therefore, in 
the CY 2017 ESRD PPS final rule, we reintroduced the NHSN Dialysis 
Event reporting measure to be included in the ESRD QIP measure set 
along with the NHSN BSI Clinical Measure.
---------------------------------------------------------------------------

    \94\ For further information related to the NHSN Dialysis Event 
reporting measure, we refer readers to 76 FR 70268 through 70269 and 
78 FR 72204 through 72207.
---------------------------------------------------------------------------

    Based on our analyses, facilities are consistently reporting 
monthly dialysis event data, and have been doing so for several years. 
In an assessment of ESRD QIP measure rate performance trends during PY 
2020 through PY 2022, performance in the 5th percentile through the 
100th percentile was 100 percent on the NHSN Dialysis Event reporting 
measure for all three performance years, meaning that most eligible 
facilities reported data on the measure for each of those years.\95\ If 
most eligible facilities are reporting NHSN Dialysis Event measure data 
each year and measure performance levels at the 5th percentile and the 
100th percentile are the same each year, then NHSN dialysis event data 
are now reported consistently and the measure is

[[Page 55816]]

not likely to drive improvements in care.
---------------------------------------------------------------------------

    \95\ Partnership for Quality Measurement. 2023 Measure Set 
Review (MSR): End Stage Renal Disease Quality Incentive Program 
(ESRD-QIP). September 2023. Available at: https://p4qm.org/sites/default/files/2023-09/MSR-Report-ESRD-QIP-20230911.pdf.
---------------------------------------------------------------------------

    Our proposal to remove the NHSN Dialysis Event reporting measure is 
consistent with evolving the program to focus on a measure set of high-
value, impactful measures that have been developed to drive care 
improvements for a broader set of ESRD patients. As such, we are 
proposing to remove this measure from the ESRD QIP measure set under 
Sec.  413.178(c)(5)(i)(A), Measure Removal Factor 1 (measure 
performance among the majority of ESRD facilities is so high and 
unvarying that meaningful distinctions in improvements or performance 
can no longer be made). Although we believe that removing this measure 
would enable facilities to focus on the remaining measures in the ESRD 
QIP measure set, we note that facilities would still be required to 
fully comply with the NHSN Dialysis Event protocol and report all 
dialysis event data, including BSI, for the NHSN BSI Clinical Measure.
    We welcome public comment on our proposal to remove the NHSN 
Dialysis Event reporting measure from the ESRD QIP measure set, 
beginning with PY 2027.
4. Proposed Revisions to the Clinical Care and Reporting Measure 
Domains Beginning With the PY 2027 ESRD QIP
    In the CY 2024 ESRD PPS final rule (88 FR 76481 through 76482), we 
finalized revisions to the ESRD QIP measure domains beginning with PY 
2027. The measure domains and weights we finalized in the CY 2024 ESRD 
PPS final rule are depicted in table 13a.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP05JY24.022

    In this proposed rule, we are proposing to revise the Clinical Care 
Domain beginning with PY 2027 to reflect our proposal to replace the 
Kt/V Comprehensive Dialysis Adequacy Comprehensive clinical measure 
with a Kt/V Dialysis Adequacy Measure Topic, and to revise the measure 
weights in the Reporting Measure Domain to reflect our proposal to 
remove the NHSN Dialysis Event reporting measure from the ESRD QIP 
measure set. Under our proposal, the weight of the Kt/V Dialysis 
Adequacy Topic would continue to be the same as the current weight of 
the Kt/V Dialysis Adequacy Comprehensive Measure, but that weight would 
be applied to a facility's measure topic score, instead of being 
applied, as it is now, to a facility's score on the single Kt/V 
Comprehensive Dialysis Adequacy Comprehensive clinical measure.
    Given our proposal to remove the NHSN Dialysis Event reporting 
measure from the ESRD QIP beginning with PY 2027, we are also proposing 
to update the individual measure weights in the Reporting Domain to 
accommodate the proposed new number of measures. Consistent with our 
approach in the CY 2023 ESRD PPS final rule, we are proposing to assign 
individual measure weights to reflect the proposed updated number of 
measures in the Reporting Measure Domain so that each measure is 
weighted equally (87 FR 67251

[[Page 55817]]

through 67253). Although we are proposing to change the number of 
measures and the weights of the individual measures in the Reporting 
Measure Domain, we are not proposing to change the weight of any of the 
five domains. The measures that would be included in each domain, along 
with the proposed new measure weights, for PY 2027 are depicted in 
table 13b.
[GRAPHIC] [TIFF OMITTED] TP05JY24.023

    We welcome public comment on these proposals to update the Clinical 
Care Measure Domain and Reporting Measure Domain.
5. Performance Standards for the PY 2027 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 determined appropriate by the Secretary, and must be 
established prior to the beginning of the performance period for the 
year involved, as required by sections 1881(h)(4)(B) and (C) of the 
Act. We refer readers to the CY 2013 ESRD PPS final rule (76 FR 70277), 
as well as Sec.  413.178(a)(1), (3), (7), and (12), for further 
information related to performance standards.
    In the CY 2024 ESRD PPS final rule (88 FR 76480 through 76481), we 
set the performance period for the PY 2027 ESRD QIP as CY 2025 and the 
baseline period as CY 2023. In this proposed rule, we are estimating 
the performance standards for the PY 2027 clinical measures in table 14 
using data from CY 2022, which are the most recent data available. We 
intend to update these performance standards for all measures, using CY 
2023 data, in the CY 2025 ESRD PPS final rule.

[[Page 55818]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.024

    In addition, we summarize in table 15 our requirements for 
successful reporting on our previously finalized reporting measures for 
the PY 2027 ESRD QIP.

[[Page 55819]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.025

6. Eligibility Requirements for the PY 2027 ESRD QIP
    In this proposed rule, we are proposing to update eligibility 
requirements as part of our proposal to replace the Kt/V Dialysis 
Adequacy Comprehensive clinical measure with a Kt/V Dialysis Adequacy 
Measure Topic beginning with PY 2027. Our previously finalized and 
proposed new minimum eligibility requirements are described in table 
16.

[[Page 55820]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.026


[[Page 55821]]


[GRAPHIC] [TIFF OMITTED] TP05JY24.027

BILLING CODE 4120-01-C
    We welcome public comment on these proposals to update the minimum 
eligibility requirements to reflect the proposed Kt/V Dialysis Adequacy 
Measure Topic.
7. Payment Reduction Scale for the PY 2027 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 Sec.  413.178(a)(8).
    Under Sec.  413.177(a), we implement 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, up to a maximum reduction of 2 percent. For PY 2027, we 
estimate using available data that a facility must meet or exceed an 
mTPS of 51 to avoid a payment reduction. We note that the mTPS 
estimated in this proposed rule is based on data from CY 2022 instead 
of the PY 2027 baseline period (CY 2023) because CY 2023 data are not 
yet available. We will update and finalize the mTPS and associated 
payment reduction ranges for PY 2027, using CY 2023 data, in the CY 
2025 ESRD PPS final rule.
[GRAPHIC] [TIFF OMITTED] TP05JY24.028

C. Requests for Information (RFIs) on Topics Relevant to ESRD QIP

    As discussed in the following sections, we are requesting 
information on two topics to inform future revisions to the ESRD QIP. 
First, we are requesting information regarding potential future 
modifications to the existing ESRD QIP scoring methodology to reward 
facilities based on their performance and the proportion of their 
patients who are dually eligible for Medicare and Medicaid. Second, we 
are requesting information regarding potential updates to the data 
validation policy to encourage accurate, comprehensive reporting of 
ESRD QIP data.
    Please note that each of these sections in this proposed rule is an 
RFI only. In accordance with the implementing regulations of the 
Paperwork Reduction Act of 1995 (PRA), specifically 5 CFR 1320.3(h)(4), 
these general solicitations are exempt from the PRA. Facts or opinions 
submitted in response to general solicitations of comments from the 
public, published in the Federal Register or other publications, 
regardless of the form or format thereof, provided that no person is 
required to supply specific information pertaining to the commenter, 
other than that necessary for self-identification, as a condition of 
the agency's full consideration, are not generally considered 
information collections and therefore not subject to the PRA.
    Respondents are encouraged to provide complete but concise 
responses. These RFIs are issued solely for information and planning 
purposes; they do not constitute a Request for Proposal (RFP), 
applications, proposal abstracts, or quotations. These RFIs do not 
commit the United States Government to contract for any supplies or 
services or make a grant award. Further, we are not seeking proposals 
through these RFIs and will not accept unsolicited proposals. 
Responders are advised that the United States Government will not pay 
for any information or administrative costs incurred in response to 
these RFIs; all costs associated with responding to these RFIs will be 
solely at the interested party's expense. Not responding to these RFIs 
does not preclude participation in any future procurement, if 
conducted. It is the responsibility of the potential responders to 
monitor these RFI announcements for additional information pertaining 
to this request. Please note that we will not respond to questions 
about the policy issues raised in these RFIs. CMS may or may not

[[Page 55822]]

choose to contact individual responders. Such communications would only 
serve to further clarify written responses. Contractor support 
personnel may be used to review RFI responses. Responses to this notice 
are not offers and cannot be accepted by the United States Government 
to form a binding contract or issue a grant. Information obtained as a 
result of these RFIs may be used by the United States Government for 
program planning on a non-attribution basis. Respondents should not 
include any information that might be considered proprietary or 
confidential. These RFIs should not be construed as a commitment or 
authorization to incur cost for which reimbursement would be required 
or sought. All submissions become United States Government property and 
will not be returned. CMS may publicly post the comments received, or a 
summary thereof.
1. Request for Public Comment on Future Change to the Scoring 
Methodology To Add a New Adjustment That Rewards Facilities Based on 
Their Performance and the Proportion of Their Patients Who Are Dually 
Eligible for Medicare and Medicaid
    Achieving health equity, addressing health disparities, and closing 
the performance gap in the quality of care provided to disadvantaged, 
marginalized, or underserved populations continue to be priorities for 
CMS as outlined in the CMS National Quality Strategy.\96\ CMS defines 
``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, socioeconomic status, geography, 
preferred language, or other factors that affect access to care and 
health outcomes.\97\ We are working to advance health equity by 
designing, implementing, and operationalizing policies and programs 
that reduce avoidable differences in health outcomes.
---------------------------------------------------------------------------

    \96\ Centers for Medicare & Medicaid Services. (2022) CMS 
National Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
    \97\ Health Equity Strategic Pillar. Centers for Medicare & 
Medicaid Services. https://www.cms.gov/pillar/health-equity.
---------------------------------------------------------------------------

    The ESRD QIP adopted three new health-equity focused quality 
measures in the CY 2024 ESRD PPS final rule (88 FR 76437 through 76446; 
76466 through 76480). Although commenters were generally supportive of 
the new measures, a few commenters recommended that the ESRD QIP take 
additional action to support facilities that treat patient populations 
with higher proportions of health-related social needs (HRSNs) (88 FR 
76473). We are considering updating our scoring methodology in future 
rulemaking to add Health Equity Adjustment bonus points to a facility's 
TPS that would be calculated using a methodology that incorporates a 
facility's performance across all five domains for the payment year and 
its proportion of patients with dual eligibility status (DES), meaning 
those who are eligible for both Medicare and Medicaid coverage.
    In the 2016 Report to Congress on Social Risk Factors and 
Performance Under Medicare's Value-Based Purchasing Programs, the 
Office of the Assistant Secretary for Planning and Evaluation (ASPE) 
reported that beneficiaries with social risk factors had worse outcomes 
and were more likely to receive a lower quality of care.\98\ Patients 
with DES experience significant disparities are also likely to be more 
medically complex and remain one of the most vulnerable 
populations.99 100 101 DES remains the strongest predictor 
of negative health outcomes.\102\
---------------------------------------------------------------------------

    \98\ Office of the Assistant Secretary for Planning and 
Evaluation, U.S. Department of Health & Human Services. First Report 
to Congress on Social Risk Factors and Performance in Medicare's 
Value-Based Purchasing Program. 2016. Available at: https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/171041/ASPESESRTCfull.pdf.
    \99\ Johnston, K.J., & Joynt Maddox, K.E. (2019). The Role of 
Social, Cognitive, And Functional Risk Factors In Medicare Spending 
For Dual And Nondual Enrollees. Health Affairs (Project Hope), 
38(4), 569-576. https://doi.org/10.1377/hlthaff.2018.05032.
    \100\ Johnston, K.J., & Joynt Maddox, K.E. (2019). The Role of 
Social, Cognitive, and Functional Risk Factors in Medicare Spending 
for Dual and Nondual Enrollees. Health Affairs (Project Hope), 
38(4), 569-576. https://doi.org/10.1377/hlthaff.2018.05032.
    \101\ Wadhera, R.K., Wang, Y., Figueroa, J.F., Dominici, F., 
Yeh, R.W., & Joynt Maddox, K.E. (2020). Mortality and 
Hospitalizations for Dually Enrolled and Nondually Enrolled Medicare 
Beneficiaries Aged 65 Years or Older, 2004 to 2017. JAMA, 323(10), 
961-969. https://doi.org/10.1001/jama.2020.1021.
    \102\ Office of the Assistant Secretary for Planning and 
Evaluation, U.S. Department of Health & Human Services. Second 
Report to Congress on Social Risk Factors and Performance in 
Medicare's Value-Based Purchasing Program. 2020. Available at: 
https://aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs.
---------------------------------------------------------------------------

    We recently finalized a Health Equity Adjustment scoring policy for 
the Hospital Value-Based Purchasing (VBP) Program (88 FR 59092 through 
59106) and the Skilled Nursing Facility (SNF) VBP Program (88 FR 53304 
through 53316). These policies provide Health Equity Adjustment bonus 
points to top tier performing hospitals and SNFs with a high proportion 
of patients with DES, and each program's policy is tailored to meet the 
needs of the specific program. For example, in the Hospital VBP 
Program, the Health Equity Adjustment bonus is calculated based on a 
hospital's performance on each of the four measure domains and its 
proportion of patients with DES (88 FR 59095 through 59096). In the SNF 
VBP Program, the Health Equity Adjustment bonus is calculated based on 
a facility's performance on each measure and its proportion of patients 
with DES (88 FR 53309 through 53311).
    Our policy for scoring performance on the ESRD QIP is codified at 
Sec.  413.178(e). In this proposed rule, we are requesting public 
comment on potential future modifications to the existing scoring 
methodology to reward excellent care to underserved populations. We 
also note that any Health Equity Adjustment bonus for the ESRD QIP 
would need to align with the Program's statutory requirements under 
section 1881(h) of the Act. We welcome public comment on the following:
     Would a Health Equity Adjustment be valuable to the ESRD 
QIP?
    ++ If a Health Equity Adjustment would be valuable to the ESRD QIP, 
how should it be structured?
    ++ If a Health Equity Adjustment would not be valuable to the ESRD 
QIP, why not?
     Are there other approaches that the ESRD QIP could propose 
to adopt to effectively address healthcare disparities and advance 
health equity?
2. Request for Public Comment on Updating the Data Validation Policy 
for the ESRD QIP
    One of the critical elements of the ESRD QIP's success is ensuring 
that the data submitted to calculate measure scores and TPSs are 
accurate. The ESRD QIP includes two types of data validation for this 
purpose: The EQRS data validation (OMB Control Number 0938-1289) and 
the NHSN validation (OMB Control Number 0938-1340). In the CY 2019 ESRD 
PPS final rule, we adopted the CROWNWeb (now EQRS) data validation as a 
permanent feature of the Program (83 FR 57003). In the CY 2020 ESRD PPS 
final rule, we adopted the NHSN data validation as a permanent feature 
of the Program (84 FR 60727). Under both data validation policies, we 
validate EQRS and NHSN data from a sample of facilities randomly 
selected for validation. If a facility is randomly selected for 
validation but does not submit the requested records, 10 points are 
deducted from the facility's TPS.

[[Page 55823]]

    In this proposed rule, we are requesting public comment on ways to 
update the data validation policy to encourage accurate, comprehensive 
reporting of ESRD QIP data. We have reviewed data validation policies 
in other quality reporting programs such as the Hospital Inpatient 
Quality Reporting (IQR) Program (81 FR 57180) and the Hospital 
Outpatient Quality Reporting (OQR) Program (76 FR 74486). These 
programs have adopted data validation policies that require a hospital 
selected for data validation to achieve a 75 percent reliability or 
accuracy threshold to receive full credit for data validation 
reporting.
    We welcome comments on potential future policy proposals that would 
encourage accurate, comprehensive reporting for data validation 
purposes, such as introducing a penalty for facilities that do not meet 
an established reporting or data accuracy threshold, introducing a 
bonus for facilities that perform above an established reporting or 
data accuracy threshold, developing targeted education on data 
validation reporting, or requiring that a facility selected for 
validation that does not meet an established reporting or data accuracy 
threshold be selected again the next year.

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 Children's Health Insurance Program (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 ESRD 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.\103\ CMS excludes all United States 
Territories from the Selected Geographic Areas.
---------------------------------------------------------------------------

    \103\ 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 
Performance Payment Adjustment (PPA). For the PPA, we assess ETC 
Participants' home dialysis rates and transplant rates during a 
Measurement Year (MY), which includes 12 months of performance data. 
Each MY has a corresponding PPA Period--a 6-month period that begins 6 
months after the conclusion of the MY. We adjust certain payments for 
ETC Participants during the PPA Period based on the ETC Participant's 
home dialysis rate and transplant rate, calculated as the sum of the 
transplant waitlist rate and the living donor transplant rate, during 
the corresponding MY.
    Based on an ETC Participant's achievement in relation to benchmarks 
based on the home dialysis rate and transplant rate observed in 
Comparison Geographic Areas during the Benchmark Year, and the ETC 
Participant's improvement in relation to their own home dialysis rate 
and transplant rate during the Benchmark Year, we would 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.
    CMS has modified the ETC Model several times. In the CY 2022 ESRD 
PPS final rule, we finalized a number of changes to the ETC Model. We 
adjusted 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 LDT Beneficiaries (86 FR 
61950 through 61951). We changed 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). In the CY 2023 ESRD PPS final rule (87 FR 67136) we finalized 
further changes to the ETC Model. We updated the PPA achievement 
scoring methodology beginning in the fifth MY of the ETC Model, which 
began on January 1, 2023 (87 FR 67277 through 67278). We also clarified 
requirements for qualified staff to furnish and bill kidney disease 
patient education services under the ETC Model's Medicare program 
waivers (87 FR 67278 through 67280) and finalized our intent to publish 
participant-level model performance information to the public (87 FR 
67280). In the CY 2024 ESRD PPS final rule (88 FR 76344) we finalized a 
policy whereby an ETC Participant may seek administrative review of a 
targeted review determination provided by CMS.

B. Provisions of the Proposed Rule

    We are proposing a modification to the definition of ESRD 
Beneficiary at 42 CFR 512.310 as that definition is used for the 
purposes of attributing beneficiaries to the ETC Model. As finalized in 
the Specialty Care Models final rule and codified at Sec.  512.360, CMS 
retrospectively, that is, following a MY, attributes ESRD Beneficiaries 
and Pre-emptive Living Donor Transplant (LDT) Beneficiaries to an ETC 
Participant for each month during a MY. An ESRD Beneficiary may be 
attributed to an ETC Participant if the beneficiary has already had a 
kidney transplant and has a non-AKI dialysis or MCP claim less than 12 
months after the beneficiary's transplant date and has a kidney 
transplant failure ICD-10

[[Page 55824]]

diagnosis code documented on any Medicare claim. Based on feedback from 
model participants, we became aware that the use of the ICD-10 code 
T86.12 to identify transplant failures may be incorrectly identifying 
beneficiaries for attribution to the ETC Model because a claim that is 
only coded with T86.12 may signify delayed graft function rather than a 
true transplant failure. To ensure that we are correctly identifying 
ESRD beneficiaries for the purposes of ETC Model ESRD Beneficiary 
attribution, we are proposing to modify our definition of an ESRD 
Beneficiary at Sec.  512.310. Our regulations currently define an ESRD 
Beneficiary as a beneficiary that meets either of the following 
criteria: (1) is receiving dialysis or other services for end-stage 
renal disease, up to and including the month in which the beneficiary 
receives a kidney transplant up to and including the month in which the 
beneficiary receives a kidney transplant, or (2) has already received a 
kidney transplant and has a non-AKI dialysis or MCP claim at least 12-
months after the beneficiary's latest transplant date; or less than 12-
months after the beneficiary's latest transplant date and has a kidney 
transplant failure diagnosis code documented on any Medicare claim. We 
are proposing to modify the second criterion to specify that the 
beneficiary's latest transplant date must be identified by at least one 
of the following: (1) two or more MCP claims in the 180 days following 
the date on which the kidney transplant was received; (2) 24 or more 
maintenance dialysis treatments at any time after 180 days following 
the transplant date; or (3) indication of a transplant failure after 
the beneficiary's date of transplant based on data from the Scientific 
Registry of Transplant Recipients (SRTR). We are proposing that if a 
beneficiary meets more than one of these criteria, that CMS will 
consider that beneficiary an ESRD Beneficiary for the purposes of ETC 
model attribution starting with the earliest month in which the 
transplant failure was recorded. In our analysis of the proposed 
methodology for identifying transplant failures, we found that the use 
of all three criterion correctly identified more true transplant 
failures than did the use of T86.12 alone.
    We considered a proposal to modify the language at 42 CFR 512.310 
that an ESRD Beneficiary is a beneficiary that has already received a 
kidney transplant and has a non-AKI or MCP dialysis claim less than 12 
months after the beneficiary's latest transplant date with kidney 
transplant failure diagnosis code documented on any Medicare claim. We 
considered removing the last clause; in other words, removing the 
specification that that the beneficiary must have a kidney transplant 
failure diagnosis code documented on any Medicare claim. We are not 
proposing this modification to the definition of an ESRD Beneficiary 
because doing so would preclude the possibility for a beneficiary to be 
attributed to the ETC Model for 12-months after a transplant, 
regardless of if the transplant failed. We are concerned that this 
scenario would reduce the number of attributed beneficiary-months that 
would be available for us to use to calculate the home dialysis and 
transplant rate for ETC Participants. We are soliciting comment on our 
proposal to modify the definition of an ESRD Beneficiary to more 
accurately identify beneficiaries that may be attributed to the ETC 
Model due to receiving a kidney transplant that fails within 12-months 
of its receipt.

C. Request for Information

1. Request for Information
    In the Specialty Care Models final rule, we referenced a report 
from the Public Policy/Advocacy Committee of the North American Chapter 
of the International Society for Peritoneal Dialysis that describes 
barriers to increased adoption of home dialysis including educational 
barriers, the need for home care partner support, the monthly visit 
requirement for the Monthly Capitation Payment (MCP) under the 
Physician Fee Schedule, variations in dialysis business practices in 
staffing allocation, lack of home clinic independence, and other 
restrictions resulting in the inefficient distribution of home dialysis 
supplies (85 FR 61265).\104\ The National Kidney Foundation (NKF) 
Kidney Disease Outcomes Quality Initiative (KDOQI) controversies 
conference report, ``Overcoming Barriers for Uptake and Continued Use 
of Home Dialysis: An NKF-KDOQI Conference Report,'' describes clinical, 
operational, policy, and societal barriers to increased prescribing of 
and retention on home modalities. For example, lack of clinical 
confidence in prescribing home dialysis, lack of infrastructure, 
financial costs to patients associated with home modifications, the 
need for space to store home dialysis supplies, lack of housing, lack 
of appropriate education, care partner burnout, and patient fear of 
self-cannulation.\105\
---------------------------------------------------------------------------

    \104\ Golper TA, Saxena AB, Piraino B, Teitelbaum, I, Burkart, 
J, Finkelstein FO, Abu-Alfa A. Systematic Barriers to the Effective 
Delivery of Home Dialysis in the United States: A Report from the 
Public Policy/Advocacy Committee of the North American Chapter of 
the International Society for Peritoneal Dialysis. American Journal 
of Kidney Diseases. 2011; 58(6): 879-885.doi:10.1053/
j.ajkd.2011.06.028.
    \105\ Chan, C.T., Collins, K., Ditschman, E.P., Koester-
Wiedemann, L., Saffer, T.L., Wallace, E., & Rocco, M.V. (2020). 
Overcoming barriers for uptake and continued use of home dialysis: 
An NKF-Kdoqi Conference Report. American Journal of Kidney Diseases, 
75(6), 926-934. https://doi.org/10.1053/j.ajkd.2019.11.007.
---------------------------------------------------------------------------

    Since the Specialty Care Models final rule was published, 
interested parties have spoken to us about challenges associated with 
increasing access to home dialysis, particularly among beneficiaries 
with lower socioeconomic status, who have lower rates of home dialysis 
and kidney transplantation than people with higher socioeconomic 
status. The ETC Model was designed to address these barriers; for 
example, CMS applied the Home Dialysis Payment Adjustment (HDPA) to 
assist dialysis organizations with overcoming market realities that 
impose substantial barriers to opening and sustaining home dialysis 
programs. The upside and downside risk associated with the Performance 
Payment Adjustment (PPA) are designed to be strong incentives for 
behavioral change towards increasing beneficiary access to home 
dialysis. In the CY 2022 ESRD PPS final rule, we finalized a policy 
whereby we stratify achievement benchmarks based on the proportion of 
attributed beneficiaries who are dual eligible for both Medicare and 
Medicaid or who receive the Low-Income Subsidy (LIS) (86 FR 61968). We 
also finalized the Health Equity Incentive (HEI), which rewards ETC 
Participant aggregation groups that demonstrate greater than 2.5 
percentage points improvement on the home dialysis and transplant rate 
among dual eligible and LIS recipient beneficiaries from the Benchmark 
Year (BY) to the MY with a .5 increase in their improvement score (86 
FR 61971).
    Performance accountability in the ETC Model is scheduled to end on 
June 30, 2026. We are concerned that the end of performance 
accountability may reduce incentives for dialysis organizations to 
invest in access to home dialysis and address the challenges of the 
type we describe previously in this section. We are interested in 
hearing from interested parties regarding policies that the Innovation 
Center may consider specifically incorporating into any successor model 
to the ETC Model or that CMS may consider generally. Given the growth 
in ESRD beneficiaries choosing Medicare Advantage plans,\106\

[[Page 55825]]

we are particularly interested in policies that may encourage Medicare 
Advantage Organizations (MAOs) to improve beneficiary access to home 
dialysis modalities.
---------------------------------------------------------------------------

    \106\ Nguyen, K.H., Oh, E.G., Meyers, D.J., Kim, D., Mehrotra, 
R., & Trivedi, A.N. (2023). Medicare advantage enrollment among 
beneficiaries with end-stage renal disease in the first year of the 
21st Century Cures Act. JAMA, 329(10), 810. https://doi.org/10.1001/jama.2023.1426.
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    We are soliciting input on the following topics that may improve 
our understanding of other policy interventions that may increase 
access to high quality home dialysis within the context of Innovation 
Center models and across CMS.
    1. How should any future Innovation Center model that incorporates 
home dialysis incorporate what the community has learned from the ETC 
Model?
    2. What barriers to home dialysis could be addressed through the 
ESRD Prospective Payment System (PPS)? We request that commenters be as 
specific as possible.
    3. What approaches could CMS consider to increase beneficiary 
access to home dialysis modalities in Medicare Advantage?
    4. How should nephrologist payment from traditional, fee-for-
service Medicare and from MAOs account for clinician-level barriers to 
prescribing and retaining patients on home modalities?
2. Exemption of the RFI From the Paperwork Reduction Act Implementing 
Regulations
    Please note, this is a RFI only. In accordance with the 
implementing regulations of the Paperwork Reduction Act of 1995 (PRA), 
specifically 5 CFR 1320.3(h)(4), this general solicitation is exempt 
from the PRA. Facts or opinions submitted in response to general 
solicitations of comments from the public, published in the Federal 
Register or other publications, regardless of the form or format 
thereof, provided that no person is required to supply specific 
information pertaining to the commenter, other than that necessary for 
self-identification, as a condition of the agency's full consideration, 
are not generally considered information collections and therefore not 
subject to the PRA.
    Respondents are encouraged to provide complete but concise 
responses. This RFI is issued solely for information and planning 
purposes; it does not constitute a Request for Proposal (RFP), 
applications, proposal abstracts, or quotations. This RFI does not 
commit the United States Government to contract for any supplies or 
services or make a grant award. Further, we are not seeking proposals 
through this RFI and will not accept unsolicited proposals. Responders 
are advised that the United States Government will not pay for any 
information or administrative costs incurred in response to this RFI; 
all costs associated with responding to this RFI will be solely at the 
interested party's expense. Not responding to this RFI does not 
preclude participation in any future procurement, if conducted. It is 
the responsibility of the potential responders to monitor this RFI 
announcement for additional information pertaining to this request. 
Please note that we will not respond to questions about the policy 
issues raised in this RFI. We may or may not choose to contact 
individual responders. Such communications would only serve to further 
clarify written responses. Contractor support personnel may be used to 
review RFI responses. Responses to this notice are not offers and 
cannot be accepted by the United States Government to form a binding 
contract or issue a grant. Information obtained as a result of this RFI 
may be used by the United States Government for program planning on a 
non-attribution basis. Respondents should not include any information 
that might be considered proprietary or confidential. This RFI should 
not be construed as a commitment or authorization to incur cost for 
which reimbursement would be required or sought. All submissions become 
United States Government property and will not be returned. We may 
publicly post the comments received, or a summary thereof.

VI. Collection of Information Requirements

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

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

    We refer readers to the CY 2024 ESRD PPS final rule for information 
regarding wage estimates and resulting information collection burden 
calculations used in this proposed rule (88 FR 76484 through 76485). To 
derive wage estimates, we used data from the United States Bureau of 
Labor Statistics' May 2022 National Occupational Employment and Wage 
Estimates for Medical Records Specialists, who are responsible for 
organizing and managing health information data, are the individuals 
tasked with submitting measure data to the ESRD Quality Reporting 
System (EQRS) (formerly, CROWNWeb) and the Centers for Disease Control 
and Prevention's (CDC's) NHSN, as well as compiling and submitting 
patient records for the purpose of data validation. When this analysis 
was conducted, the most recently available median hourly wage of a 
Medical Records Specialist was $22.69 per hour.\107\ 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. Using these assumptions, we estimated an hourly labor cost of 
$45.38 as the basis of the wage estimates for all collections of 
information calculations in the ESRD QIP.
---------------------------------------------------------------------------

    \107\ https://www.bls.gov/oes/2022/may/oes292072.htm.
---------------------------------------------------------------------------

    We used this wage estimate, along with updated facility and patient 
counts, to estimate the total information collection burden in the ESRD 
QIP for PY 2027 in the CY 2024 ESRD PPS final rule (88 FR 76485 through 
76486). We will update the information collection burden to reflect 
updated wage estimates, along with updated facility and patient counts, 
in the CY 2025 ESRD PPS final rule.

B. Estimated Burden Associated With the Data Validation Requirements 
for PY 2027 (OMB Control Numbers 0938-1289 and 0938-1340)

    We refer readers to the CY 2024 ESRD PPS final rule for information 
regarding the estimated burden associated with

[[Page 55826]]

data validation requirements for PY 2027 (88 FR 76485 through 76486). 
In the CY 2024 ESRD PPS final rule, we estimated that the aggregate 
cost of the EQRS data validation for PY 2027 would be approximately 
$34,035 (750 hours x $45.38), or an annual total of approximately 
$113.45 ($34,035/300 facilities) per facility in the sample. We will 
update the aggregate cost of EQRS data validation to reflect updated 
wage estimates in the CY 2025 ESRD PPS final rule. The burden cost 
increase associated with these requirements will be submitted to OMB in 
the revised information collection request (OMB control number 0938-
1289; Expiration date: November 30, 2025). We estimated that the 
aggregate cost of the NHSN data validation for PY 2027 would be 
approximately $68,070 (1,500 hours x $45.38), or a total of 
approximately $226.90 ($68,070/300 facilities) per facility in the 
sample. We will update the aggregate cost of NHSN data validation to 
reflect updated wage estimates in the CY 2025 ESRD PPS final rule. 
While the burden hours estimate would not change, the burden cost 
updates associated with these requirements will be submitted to OMB in 
the revised information collection request (OMB control number 0938-
1340; Expiration date: November 30, 2025).

C. Estimated EQRS Reporting Requirements for PY 2027 (OMB Control 
Number 0938-1289)

    To estimate 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 2024 ESRD PPS 
final rule, we estimated that the burden associated with EQRS reporting 
requirements for the PY 2027 ESRD QIP was approximately $130.5 million 
for approximately 2,877,743 total burden hours (88 FR 76486).
    We are proposing changes to the ESRD QIP measure set in this 
proposed rule, but do not anticipate that any of these proposals would 
affect the burden we have previously estimated for EQRS reporting 
requirements for PY 2027. Beginning with PY 2027, we are proposing to 
replace the Kt/V Dialysis Adequacy Comprehensive measure with a Kt/V 
Dialysis Adequacy Measure Topic. However, we are not proposing to 
update facility reporting requirements as part of that proposal. 
Additionally, although we are proposing to remove one measure from the 
ESRD QIP measure set beginning with PY 2027, the proposed measure 
removal would not impact EQRS reporting requirements on facilities. We 
provided the burden estimate for PY 2027 in the CY 2024 ESRD PPS final 
rule (88 FR 76486), and will update the information collection burden 
to reflect updated wage estimates, along with updated facility and 
patient counts, in the CY 2025 ESRD PPS final rule. In the CY 2024 ESRD 
PPS final rule, we estimated that the amount of time required to submit 
measure data to EQRS would be 2.5 minutes per element and did not use a 
rounded estimate of the time needed to complete data entry for EQRS 
reporting. There are 136 data elements for 507,837 patients across 
7,833 facilities, for a total of 69,065,832 elements (136 data elements 
x 507,837 patients). At 2.5 minutes per element, this would yield 
approximately 367.3 hours per facility. Therefore, the PY 2027 burden 
would be 2,877,743 hours (367.3 hours x 7,833 facilities). Using the 
Medical Records Specialist wage estimate available at that time, we 
estimated that the PY 2027 total burden cost would be approximately 
$130.5 million (2,877,743 hours x $45.38). We intend to re-calculate 
the burden estimate for PY 2027, 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 in the CY 2025 ESRD PPS final rule. The information 
collection request under the OMB Control Number: 0938-1289 will be 
revised and sent to OMB.

D. ESRD Treatment Choices Model

    Section 1115A(d)(3) of the Act exempts Innovation Center model 
tests and expansions, which include the ETC Model, from the provisions 
of the PRA. Specifically, this section provides that the provisions of 
the PRA do not apply to the testing and evaluation of Innovation Center 
models or to the expansion of such models.
    If you comment on these information collections, that is, 
reporting, recordkeeping or third-party disclosure requirements, please 
submit your comments electronically as specified in the ADDRESSES 
section of this proposed rule.
    Comments must be received on/by August 26, 2024.

VII. Response to Comments

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

VIII. 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 Act, as added by 
section 153(b) of 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 Affordable Care Act (Pub. L. 111-148), established that 
beginning CY 2012, and each subsequent year, the Secretary shall 
annually increase payment amounts by an ESRD market basket percentage 
increase, reduced by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act. This proposed rule includes proposed 
updates and policy changes to the ESRD PPS for CY 2025. These changes 
include a proposed new wage index methodology which utilizes BLS data, 
a proposed wage index budget-neutrality adjustment factor, a proposed 
expansion to the ESRD PPS outlier list, proposed methodological changes 
to the outlier calculation, proposed updates to the TPNIES offset 
amount, proposed updates to the post-TDAPA add-on payment adjustment 
amounts for Korsuva[supreg] and Jesduvroq, and proposed changes to the 
LVPA payment structure. Failure to publish this proposed rule would 
result in ESRD facilities not receiving appropriate payments in CY 2025 
for renal dialysis services furnished to ESRD beneficiaries.
    This proposed rule also has several proposed policy changes to 
improve payment stability and adequacy under the ESRD PPS. These 
include updates to the LVPA and payments for ESRD outlier services. We 
believe that each of these proposed changes would improve payment 
stability and adequacy under the ESRD PPS.

[[Page 55827]]

2. AKI
    This rule proposes updates to the payment rate for renal dialysis 
services furnished by ESRD facilities to individuals with AKI. 
Additionally, we are proposing to extend Medicare payment for home 
dialysis to beneficiaries with AKI. As discussed in section III.C of 
this proposed rule, we are also proposing to apply the updates to the 
ESRD PPS base rate and wage index to the AKI dialysis payment rate. 
Failure to publish this proposed rule would result in ESRD facilities 
not receiving appropriate payments in CY 2025 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 CMS to reduce the payments 
otherwise made to a facility under the ESRD PPS by up to two percent if 
the facility does not satisfy the requirements of the ESRD QIP for that 
year. This rule proposes updates for the ESRD QIP, which would remove 
the NHSN Dialysis Event reporting measure from the ESRD QIP measure set 
beginning with PY 2027 and replace the Kt/V Dialysis Adequacy 
Comprehensive clinical measure with a Kt/V Dialysis Adequacy Measure 
Topic beginning with PY 2027.
4. ETC Model
    The ETC Model is a mandatory Medicare payment model tested under 
the authority of section 1115A of the Act, which 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 such programs.
    This proposed rule proposes a change to the ETC Model, specifically 
to the methodology CMS uses to identify transplant failures for the 
purposes of defining an ESRD beneficiary and attributing an ESRD 
beneficiary to the ETC Model. As described in detail in section V.B of 
this proposed rule, we believe it is necessary, for the purposes of 
accuracy, to adopt this change to the ETC Model.

B. Overall Impact

    We have examined the impacts of this proposed 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), Executive Order 14094, entitled 
``Modernizing Regulatory Review'' (April 6, 2023), the Regulatory 
Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 
1102(b) of the 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). Executive 
Order 14094 amends section 3(f) of Executive Order 12866 (Regulatory 
Planning and Review). The amended 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 $200 
million or more in any 1 year, (adjusted every 3 years by the 
Administrator of OMB's Office of Information and Regulatory Affairs 
(OIRA) for changes in gross domestic product) or adversely affect in a 
material way the economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local, territorial, or Tribal governments or communities; (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 legal or 
policy issues for which centralized review would meaningfully further 
the President's priorities or the principles set forth in this 
Executive order.
    A regulatory impact analysis (RIA) must be prepared for a 
regulatory action that is significant under section 3(f)(1). Based on 
our estimates of the combined impact of the ESRD PPS, ESRD QIP, and ETC 
provisions in this proposed rule, OIRA has determined this rulemaking 
is significant per section 3(f)(1). Pursuant to Subtitle E of the Small 
Business Regulatory Enforcement Fairness Act of 1996 (also known as the 
Congressional Review Act), OIRA has also determined that this proposed 
rule meets the criteria set forth in 5 U.S.C. 804(2). 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 proposed regulations, and the Department has 
provided the following assessment of their impact.

C. Impact Analysis

1. ESRD PPS
    We estimate that the proposed revisions to the ESRD PPS would 
result in an increase of approximately $170 million in Medicare 
payments to ESRD facilities in CY 2025, which includes the amount 
associated with updates to the outlier list, updates to the outlier 
methodology and thresholds, payment rate update, updates to the wage 
index methodology, updates to the OMB CBSA delineations, proposed 
changes to the LVPA, the updated post-TDAPA add-on payment adjustment 
amounts, and continuation of the approved TDAPA as identified in table 
18. Although the incorporation of oral-only renal dialysis drugs and 
biological products into the ESRD PPS in CY 2025 is provided for by 
existing regulations and is not impacted by this proposed rule, we 
estimate for reference that total ESRD PPS spending for phosphate 
binders will be approximately $870 million in CY 2025 ($220 million in 
beneficiary coinsurance payments and $650 million in Medicare Part B 
spending); however we note that these drugs are currently being paid 
for under Medicare Part D, which we estimate will lead to a decrease in 
spending of approximately $690 million ($90 million in beneficiary 
premium offset and $600 million in Medicare Part D spending), for a net 
payment increase of $180 million.
2. AKI
    We estimate that the proposed updates to the AKI payment rate would 
result in an increase of approximately $1 million in Medicare payments 
to ESRD facilities in CY 2025.
3. ESRD QIP
    We estimate that, as a result of our previously finalized policies 
and the policies we are proposing in this proposed rule, the updated 
ESRD QIP will result in $14.6 million in estimated payment reductions 
across all facilities for PY 2027.
4. ETC Model
    The change we are proposing to the definition of an ESRD 
Beneficiary for the purposes of attribution in the ETC Model is not 
expected to change the model's projected economic impact.
5. Summary of Impacts
    We estimate that the combined impact of the policies proposed in 
this rule on payments for CY 2025 is $170 million based on the 
estimates of the updated ESRD PPS and the AKI payment rates. We 
estimate the impacts of the ESRD

[[Page 55828]]

QIP for PY 2027 to be $130.5 million in information collection burden 
and $14.6 million in estimated payment reductions across all 
facilities. Finally, we estimate that the proposed methodology change 
to the ETC Model would not affect the model's projected economic impact 
described in the Specialty Care Models final rule (85 FR 61114) and in 
the CY2022 ESRD PPS final rule (86 FR 61874).

D. Detailed Economic Analysis

    In this section, we discuss the anticipated benefits, costs, and 
transfers associated with the changes in this proposed rule. 
Additionally, we estimate the total regulatory review costs associated 
with reading and interpreting this proposed rule.
1. Benefits
    Under the CY 2025 ESRD PPS and AKI payment, ESRD facilities would 
continue to receive payment for renal dialysis services furnished to 
Medicare beneficiaries under a case-mix adjusted PPS. We continue to 
expect that making prospective Medicare payments to ESRD facilities 
would enhance the efficiency of the Medicare program. Additionally, we 
expect that updating the Medicare ESRD PPS base rate and rate for AKI 
treatments furnished by ESRD facilities by 1.8 percent based on the 
proposed CY 2025 ESRDB market basket percentage increase of 2.3 percent 
reduced by the proposed CY 2025 productivity adjustment of 0.5 
percentage point would improve or maintain beneficiary access to high 
quality care by ensuring that payment rates reflect the best available 
data on the resources involved in delivering renal dialysis services. 
We estimate that overall payments under the ESRD PPS would increase by 
2.2 percent as a result of the proposed policies in this rule.
2. Costs
a. ESRD PPS and AKI
    We do not anticipate the provisions of this proposed rule regarding 
ESRD PPS and AKI rates-setting would create additional cost or burden 
to ESRD facilities.
b. ESRD QIP
    We have made no changes to our methodology for calculating the 
annual burden associated with the information collection requirements 
for EQRS data validation (previously known as the CROWNWeb validation 
study) or NHSN data validation. Although we do not anticipate that the 
proposals in this proposed rule regarding ESRD QIP will create 
additional cost or burden to ESRD facilities for PY 2027, in the CY 
2025 ESRD PPS final rule, we intend to update the estimated 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.
3. Transfers
    We estimate that the updates to the ESRD PPS and AKI payment rates 
would result in a total increase of approximately $170 million in 
Medicare payments to ESRD facilities in CY 2025, which includes the 
amount associated with proposed updates to the outlier thresholds, and 
proposed updates to the wage index. This estimate includes an increase 
of approximately $1 million in Medicare payments to ESRD facilities in 
CY 2025 due to the updates to the AKI payment rate, of which 
approximately 20 percent is increased beneficiary coinsurance payments. 
We estimate approximately $140 million in transfers from the Federal 
Government to ESRD facilities due to increased Medicare program 
payments and approximately $30 million in transfers from beneficiaries 
to ESRD facilities due to increased beneficiary coinsurance payments 
because of this proposed rule.
4. Regulatory Review Cost Estimation
    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this ESRD PPS proposed 
rule, we should estimate the cost associated with regulatory review. 
Due to the uncertainty involved with accurately quantifying the number 
of entities that will review the ESRD PPS proposed rule, we assume that 
the total number of unique commenters on last year's ESRD PPS proposed 
rule, which was 256 for the CY 2024 ESRD PPS proposed rule, is equal to 
the number of individual reviewers of this proposed rule. We 
acknowledge that this assumption may understate or overstate the costs 
of reviewing this proposed 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 CY 2024 ESRD PPS proposed rule. 
For these reasons we determined that the number of past commenters 
would be a fair estimate of the number of reviewers of this proposed 
rule. We welcome any comments on the approach in estimating the number 
of entities which will review this proposed rule.
    We also recognize that different types of entities are in many 
cases affected by mutually exclusive sections of this proposed rule, 
and therefore for the purposes of our estimate we assume that each 
reviewer reads approximately 50 percent of this proposal. We seek 
comments on this assumption.
    Using the May 2023 wage information from the BLS for medical and 
health service managers (Code 11-9111), we estimate that the cost of 
reviewing this rule is $129.28 per hour, including overhead and fringe 
benefits \108\ (https://www.bls.gov/oes/current/oes_nat.htm). Assuming 
an average reading speed, we estimate that it will take approximately 
160 minutes (2.67 hours) for the staff to review half of this proposed 
rule, which has a total of approximately 80,000 words. For each entity 
that reviews the rule, the estimated cost is $345.18 (2.67 hours x 
$129.28). Therefore, we estimate that the total cost of reviewing this 
regulation is $88,366.08 ($345.18 x 256).
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    \108\ Calculated by multiplying the mean wage for medical and 
health service managers by 2 to account for overhead and fringe 
benefits.
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5. Impact Statement and Table
a. CY 2025 End-Stage Renal Disease Prospective Payment System
(1) Effects on ESRD Facilities
    To understand the impact of the changes affecting Medicare payments 
to different categories of ESRD facilities, it is necessary to compare 
estimated payments in CY 2024 to estimated payments in CY 2025. To 
estimate the impact among various types of ESRD facilities, it is 
imperative that the estimates of Medicare payments in CY 2024 and CY 
2025 contain similar inputs. Therefore, we simulated Medicare payments 
only for those ESRD facilities for which we can calculate both current 
Medicare payments and new Medicare payments.
    For this proposed rule, we used CY 2023 data from the Medicare Part 
A and Part B Common Working Files as of February 16, 2024, as a basis 
for Medicare dialysis treatments and payments under the ESRD PPS. We 
updated the 2023 claims to 2024 and 2025 using various updates. The 
proposed updates to the ESRD PPS base rate are described in section 
II.B.4 of this proposed rule. Table 18 shows the impact of the 
estimated CY 2025 ESRD

[[Page 55829]]

PPS payments compared to estimated Medicare payments to ESRD facilities 
in CY 2024.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP05JY24.029


[[Page 55830]]


[GRAPHIC] [TIFF OMITTED] TP05JY24.030

BILLING CODE 4120-01-C
    Column A of the impact table indicates the number of ESRD 
facilities for each impact category and column B indicates the number 
of dialysis treatments (in millions). The overall effect of the 
proposed routine updates to the outlier payment policy, including 
proposed changes to the inflation factors used for calculating MAP and 
FDL amounts described in section II.B.3 of this proposed rule, is shown 
in column C. For CY 2025, the impact on all ESRD facilities because of 
the proposed changes to the outlier payment policy would be an increase 
in estimated Medicare payments of approximately 0.4 percent.
    Column D shows the effect of the proposed 2-tiered LVPA as 
described in section II.B.8 of this proposed rule. This adjustment is 
implemented in a budget neutral manner, so the total impact of this 
proposed change would be 0.0 percent. However, there would be 
distributional impacts of this change, if finalized, primarily 
increasing payments to facilities that furnish fewer than 3000 
treatments by 0.8 percent and lowering payments to ESRD facilities that 
furnish between 3000 and 4000 treatments by 0.7 percent. Because we are 
proposing to use the scaled adjustment factors, the only impact of this 
proposed policy is among ESRD facilities that are eligible for the 
LVPA.
    Column E shows the effect of year-over-year payment changes related 
to the proposed post-TDAPA add-on payment adjustment amounts as 
described in section II.B.6 of this proposed rule and current TDAPA 
payments. The post-TDAPA add-on payment adjustment will not be budget 
neutral, but the total impact on payment is 0.1 percent due to 
relatively low utilization of drugs for which we will pay this 
adjustment in CY 2025.
    Column F reflects the impact of the proposed expansion of outlier 
eligibility to formerly composite rate drugs. Overall the proposed 
changes to the outlier policy, including those reflected in column C of 
this table, are budget neutral insofar as we estimate that we would 
better hit the 1 percent target for outlier payments. These proposed 
changes would increase payments for facilities that treat a higher 
proportion of exceptionally costly cases.
    Column G reflects the effect of the proposed changes to the ESRD 
PPS wage index methodology, the proposed adoption of the new OMB CBSA 
delineations, the continued application of the 5 percent cap on wage 
index decreases, and the proposed rural transition policy as described 
in section II.B.2 of this proposed rule. This proposed update would be 
budget neutral, so the total impact of this proposed policy change is 
0.0 percent. However, there would be distributional impacts of this 
proposed change, if finalized. The largest increase would be to ESRD 
facilities in Puerto Rico and the Virgin Islands, which would receive 
3.1 percent higher payments because of the

[[Page 55831]]

proposed updated ESRD PPS wage index. The largest decrease would be for 
pacific ESRD facilities, which would receive 2.1 percent lower payments 
because of the updated ESRD PPS wage index and methodological changes.
    Column H reflects the overall impact, that is, the effects of the 
proposed outlier policy changes, proposed LVPA changes, the proposed 
post-TDAPA add-on payment adjustment amounts, the proposed new wage 
index methodology, the proposed new CBSA delineations, the proposed 
rural transition policy, and the proposed payment rate update as 
described in section II.B.4 of this proposed rule. The proposed ESRD 
PPS payment rate update for CY 2025 is 1.8 percent, which reflects the 
proposed ESRDB market basket percentage increase for CY 2025 of 2.3 
percent and the proposed productivity adjustment of 0.5 percent. We 
expect that overall ESRD facilities would experience a 2.2 percent 
increase in estimated Medicare payments in CY 2025. The categories of 
types of ESRD facilities in the impact table show impacts ranging from 
a 0.0 percent increase to a 5.2 percent increase in their CY 2025 
estimated Medicare payments.
    This table does not include the impact of the inclusion of oral-
only drugs to the ESRD PPS as we are unable to calculate facility level 
estimates at this time. Furthermore, we note that the incorporation of 
oral-only renal dialysis drugs and biological products into the ESRD 
PPS in CY 2025 is provided for by existing regulations and is not 
impacted by this proposed rule. For public awareness, we estimate an 
increase in Medicare Part B spending of approximately $870 million in 
CY 2025, and a corresponding decrease in Medicare Part D spending of 
approximately $690 million in CY 2025, associated with payment for 
phosphate binders under the ESRD PPS.
(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 2025, we estimate that 
the ESRD PPS would have zero impact on these other providers.
(3) Effects on the Medicare Program
    We estimate that Medicare spending (total Medicare program 
payments) for ESRD facilities in CY 2025 would be approximately $7.2 
billion. This estimate considers a projected decrease in fee-for-
service Medicare ESRD beneficiary enrollment of 2.1 percent in CY 2025.
(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 
2.2 percent overall increase in the CY 2025 ESRD PPS payment amounts, 
we estimate that there would be an increase in beneficiary coinsurance 
payments of 2.2 percent in CY 2025, which translates to approximately 
$30 million.
    As we have previously noted, the incorporation of oral-only renal 
dialysis drugs and biological products into the ESRD PPS in CY 2025 is 
provided for by existing regulations and is not impacted by this 
proposed rule. For public awareness, we estimate an increase in 
beneficiary coinsurance payments of $220 million. As noted in section 
II.B.7 of this proposed rule, we anticipate that the inclusion of oral-
only drugs in the ESRD PPS will increase access to these drugs for 
beneficiaries, particularly disadvantaged populations who currently do 
not have Part D coverage.
(5) Alternatives Considered
(a) Proposed Wage Index Changes
    We considered several alternatives for the proposed new wage index 
methodology discussed in section II.B.2 of this proposed rule. We 
considered both alternatives for the data sources we propose to use for 
the new wage index methodology and construction of the wage index 
itself. These alternatives include using confidential BLS data instead 
of the publicly available data, using different occupation codes for 
the occupations included in the analysis than those chosen, the use of 
state-level or regional occupational mixes instead of a single national 
occupational mix, an alternative or additional phase-in policy for the 
wage index methodology change, setting the NEFOM annually through 
rulemaking instead of as a part of the wage index methodology, and the 
use of a summary statistic other than mean hourly wage for the BLS OEWS 
data (such as the median). These alternatives and the reasons we did 
not propose them are discussed in further detail in section 
II.B.2.b.(c) of this proposed rule.
(b) Expansion of Outlier Eligibility
    We considered only expanding outlier eligibility to drugs and 
biological products previously paid for under the TDAPA after the end 
of the TDAPA period. As discussed in section II.B.3.b of this proposed 
rule, we have instead decided to propose to expand outlier eligibility 
to all drugs and biological products that were or would have been 
composite rate services prior to the inception of the ESRD PPS.
(c) TDAPA for Phosphate Binders
    We considered, but did not propose, paying the TDAPA for phosphate 
binders based on an amount greater than 100 percent of ASP, to account 
for additional costs such as dispensing fees. For example, we 
considered paying the TDAPA for phosphate binders at 106 percent of ASP 
for at least 2 years to mirror our TDAPA payment approach for the first 
2 years for calcimimetics. However, as discussed in section II.B.7.c of 
this proposed rule, we believe that it is most appropriate to use the 
current standard TDAPA payment amount of 100 percent of ASP for 
phosphate binders. We are soliciting comments on this policy and may 
consider finalizing changes in the final rule.
(d) Proposed Changes to the LVPA
    We considered, but did not propose, expanding LVPA eligibility to 
ESRD facilities which furnished more than 4000 treatments in one of the 
past 3 years whose median treatment volume over the past 3 years was 
less than 4000. However, we felt that this would be inappropriate as 
the purpose of this proposed change is to better allocate payments 
within the LVPA, not to expand the LVPA. Additionally, using the median 
tier methodology for LVPA eligibility would reduce the LVPA payments 
for ESRD facilities that would qualify under the current methodology by 
a notable amount due to the lower scaling factor. As discussed in 
section II.B.8.c of this proposed rule, we are not proposing any 
changes to the LVPA eligibility requirements at 42 CFR 413.232(b).
b. Continuation of Approved Transitional Drug Add-On Payment 
Adjustments (TDAPA) for New Renal Dialysis Drugs or Biological Products 
for CY 2025
    Two renal dialysis drugs for which the TDAPA was paid in CY 2024 
would continue to be eligible for the TDAPA in CY 2025.
(1) Jesduvroq (Daprodustat)
    On July 27, 2023, CMS Transmittal 12157 \109\ implemented the 2-
year TDAPA period specified in Sec.  413.234(c)(1) for Jesduvroq 
(daprodustat). The TDAPA payment period began on October 1, 2023, and 
will continue through September 30,

[[Page 55832]]

2025. As stated previously, TDAPA payment is based on 100 percent of 
ASP. If ASP is not available, then the TDAPA is based on 100 percent of 
WAC and, when WAC is not available, the payment is based on the drug 
manufacturer's invoice.
---------------------------------------------------------------------------

    \109\ CMS Transmittal 12157, dated July 27, 2023, is available 
at: https://www.cms.gov/files/document/r12157cp.pdf.
---------------------------------------------------------------------------

    We based our impact analysis on the most current 72x claims data 
from November 2023, when utilization first appeared on the claims, 
through February 2024. During that timeframe, the average monthly TDAPA 
payment amount for Jesduvroq (daprodustat) was $23,075. In applying 
that average to each of the 9 remaining months of the TDAPA payment 
period in CY 2025, we estimate $207,675 in spending ($23,075 * 9 = 
$207,675) of which, approximately $41,535 ($207,675 * 0.20 = $41,535) 
would be attributed to beneficiary coinsurance amounts.
(2) DefenCath[supreg] (Taurolidine and Heparin Sodium)
    On May 9, 2024, CMS Transmittal 12628 \110\ implemented the 2-year 
TDAPA period specified in Sec.  413.234(c)(1) for DefenCath[supreg] 
(taurolidine and heparin sodium). The TDAPA payment period will begin 
on July 1, 2024, and will continue through June 30, 2026.
---------------------------------------------------------------------------

    \110\ CMS Transmittal 12628, dated May 9, 2024, is available at: 
https://www.cms.gov/files/document/r12628CP.pdf.
---------------------------------------------------------------------------

    We have not included Medicare impact estimates in this proposed 
rule but intend to update the impact estimates to include DefenCath in 
the CY 2025 ESRD PPS final rule.
c. Payment for Renal Dialysis Services Furnished to Individuals With 
AKI
(1) Effects on ESRD Facilities
    To understand the impact of the proposed changes affecting Medicare 
payments to different categories of ESRD facilities for renal dialysis 
services furnished to individuals with AKI, it is necessary to compare 
estimated Medicare payments in CY 2024 to estimated Medicare payments 
in CY 2025. To estimate the impact among various types of ESRD 
facilities for renal dialysis services furnished to individuals with 
AKI, it is imperative that the Medicare payment estimates in CY 2024 
and CY 2025 contain similar inputs. Therefore, we simulated Medicare 
payments only for those ESRD facilities for which we can calculate both 
current Medicare payments and new Medicare payments.
    For this proposed rule, we used CY 2023 data from the Medicare Part 
A and Part B Common Working Files as of February 16, 2024, as a basis 
for Medicare for renal dialysis services furnished to individuals with 
AKI. We updated the 2023 claims to 2024 and 2025 using various updates. 
The updates to the AKI payment amount are described in section III.C of 
this proposed rule. Table 19 shows the impact of the estimated CY 2025 
Medicare payments for renal dialysis services furnished to individuals 
with AKI compared to estimated Medicare payments for renal dialysis 
services furnished to individuals with AKI in CY 2024.
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[[Page 55834]]


[GRAPHIC] [TIFF OMITTED] TP05JY24.032

BILLING CODE 4120-01-C
    Column A of the impact table indicates the number of ESRD 
facilities for each impact category, and column B indicates the number 
of AKI dialysis treatments (in thousands). Column C shows the effect of 
the proposed CY 2025 wage index changes, including the proposed changes 
to the ESRD PPS wage index methodology, the proposed adoption of the 
new OMB CBSA delineations, the continued application of the 5 percent 
cap on wage index decreases, and the proposed rural transition policy 
as described in section II.B.2.f.(2) of this proposed rule.
    Column D shows the overall impact, that is, the effects of the 
proposed wage index budget-neutrality adjustment factor, wage index 
updates, and the payment rate update of 1.8 percent, which reflects the 
proposed ESRDB market basket percentage increase for CY 2025 of 2.3 
percent and the proposed productivity adjustment of 0.5 percentage 
point. We expect that overall ESRD facilities will experience a 1.9 
percent increase in estimated Medicare payments in CY 2025 for 
treatment of AKI patients. This table does not include any 
distributional impacts of payments to ESRD facilities associated with 
the extension of payment for AKI home dialysis or extension of the add-
on payment adjustment for training for home and self-dialysis, as we 
are unable to estimate potential uptake at a facility level at this 
time. However, we note that because the implementation of that 
adjustment would be required by section 1834(r)(1) of the Act to be 
budget neutral, we are considering whether it would be appropriate to 
apply a reduction to the AKI dialysis payment rate for budget 
neutrality, which could result in distributional payment changes in the 
future. The categories of types of ESRD facilities in the impact table 
show impacts ranging from an increase of 0.0 percent to an increase of 
3.7 percent in their CY 2025 estimated Medicare payments for renal 
dialysis services provided by ESRD facilities to individuals with AKI.
(2) Effects on Other Providers
    Under section 1834(r) of the Act, as added by section 808(b) of 
TPEA, we are proposing to update the payment rate for renal dialysis 
services furnished by ESRD facilities to beneficiaries with AKI. The 
only two Medicare providers and suppliers authorized to provide these 
outpatient renal dialysis services are hospital outpatient departments 
and ESRD facilities. The patient and his or her physician make the 
decision about where the renal dialysis services are furnished. 
Therefore, this change would have zero impact on other Medicare 
providers.
(3) Effects on the Medicare Program
    We estimate approximately $70 million would be paid to ESRD 
facilities in CY 2025 because of patients with AKI receiving renal 
dialysis services in an 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 coinsurance 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

[[Page 55835]]

amount, we expect beneficiaries to pay less coinsurance 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 
adjustments 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.
    As discussed in section III.B of this proposed rule, we are 
proposing to allow for payment for AKI dialysis in the home setting, 
and as discussed in section III.C.3 of this proposed rule we are 
proposing to apply the home and self-dialysis training add-on payment 
adjustment for such services provided to AKI patients. We considered 
proposing to pay for AKI home dialysis without the training add-on 
adjustment; however, we are concerned that access to home dialysis for 
AKI beneficiaries could be negatively impacted in the absence of an 
add-on payment adjustment to support home dialysis training.
d. ESRD QIP
(1) Effects of the PY 2027 ESRD QIP on ESRD Facilities
    The ESRD QIP is intended to promote improvements in the quality of 
ESRD dialysis facility services provided to beneficiaries. The general 
methodology that we use to calculate a facility's TPS is described in 
our regulations at Sec.  413.178(e).
    Any reductions in the ESRD PPS payments as a result of a facility's 
performance under the PY 2027 ESRD QIP will apply to the ESRD PPS 
payments made to the facility for services furnished in CY 2027, 
consistent with our regulations at Sec.  413.177.
    For the PY 2027 ESRD QIP, we estimate that, of the 7,833 facilities 
(including those not receiving a TPS) enrolled in Medicare, 
approximately 28.3 percent or 2,214 of the facilities that have 
sufficient data to calculate a TPS would receive a payment reduction 
for PY 2027. Among an estimated 2,214 facilities that would receive a 
payment reduction, approximately 65 percent or 1,443 facilities would 
receive the smallest payment reduction of 0.5 percent. We are updating 
the estimated impact of the PY 2027 ESRD QIP that we provided in the CY 
2024 ESRD PPS final rule (88 FR 76495 through 76497). Based on our 
proposals, the total estimated payment reductions for all the 2,214 
facilities expected to receive a payment reduction in PY 2027 would be 
approximately $14,647,335. Facilities that do not receive a TPS do not 
receive a payment reduction.
    Table 20 shows the updated overall estimated distribution of 
payment reductions resulting from the PY 2027 ESRD QIP.
[GRAPHIC] [TIFF OMITTED] TP05JY24.033

    To estimate whether a facility would receive a payment reduction 
for PY 2027, we scored each facility on achievement and improvement on 
several clinical measures 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 21) in accordance 
with the policies proposed in this proposed rule. Measures used for the 
simulation are shown in table 21.

[[Page 55836]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.034

    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 
clinical 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 consistent with the proposed policies outlined in section IV.B of 
this proposed rule. Facility reporting measure scores were estimated 
using available data from CY 2022. 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 2027 for each 
facility resulting from this proposed rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2022 and December 2022 by the facility's estimated payment 
reduction percentage expected under the ESRD QIP, yielding a total 
payment reduction amount for each facility.
    Table 22 shows the estimated impact of the ESRD QIP payment 
reductions to all ESRD facilities for PY 2027. 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 2027 ESRD QIP, the actual 
impact of the PY 2027 ESRD QIP may vary significantly from the values 
provided here.
BILLING CODE 4120-01-P

[[Page 55837]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.035

BILLING CODE 4120-01-C
(2) Effects on the Medicare Program
    For PY 2027, we estimate that the ESRD QIP would contribute 
approximately $14,647,335 in Medicare savings. For comparison, table 23 
shows the payment reductions that we estimate will be applied by the 
ESRD QIP from PY 2018 through PY 2027.

[[Page 55838]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.036

(3) Effects on Medicare Beneficiaries
---------------------------------------------------------------------------

    \111\ In the CY 2022 ESRD PPS final rule, we adopted a special 
scoring methodology and payment policy for PY 2022 due to 
significant impacts related to the COVID-19 public health emergency 
(86 FR 61918 through 61919). Under this policy, we did not apply any 
payment reductions to ESRD facilities for PY 2022.
---------------------------------------------------------------------------

    The ESRD QIP is applicable to ESRD facilities. Since the Program's 
inception, there is evidence of 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 
continue to monitor and evaluate 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 will 
provide additional information about the impact of the ESRD QIP on 
beneficiaries as we learn more by examining these impacts through the 
analysis of available data from our existing measures.
(4) Alternatives Considered
    In section IV.B.2 of this proposed rule, we are proposing to 
replace the Kt/V Dialysis Adequacy Comprehensive clinical measure with 
a Kt/V Dialysis Adequacy Measure Topic beginning with PY 2027. We 
considered not proposing this change. However, we concluded that 
replacing this measure was appropriate to ensure that facilities are 
scored on Kt/V measure data according to the individual facility's ESRD 
patient population and treatment modalities.
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), the CY 
2022 ESRD PPS final rule (86 FR 61874), the CY 2023 ESRD PPS final rule 
(87 FR 67136), and the CY 2024 ESRD PPS final rule (88 FR 76344) 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. For the 
results of the detailed economic analysis of the ETC Model and a 
description of the methodology used to perform the analysis, see the 
Specialty Care Models final rule (85 FR 61114).
(2) Data and Methods
    A stochastic simulation was created to estimate the financial 
impacts of 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).
    Table 24 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 would 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). The minor methodological change to the 
definition of an ESRD Beneficiary is not expected to change this 
estimate.
(3) Medicare Estimate--Primary Specification, Assume Rolling Benchmark

[[Page 55839]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.037

    In table 24, 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 Specialty Care Models final rule (85 FR 61353) and 
the CY 2022 ESRD PPS final rule (86 FR 60214 through 60216).
(4) Effects on the Home Dialysis Rate, the Transplant Rate, and Kidney 
Transplantation
    The change proposed in this rule is not expected to impact the 
findings reported for the effects of the ETC Model on the home dialysis 
rate or the transplant rate described in the Specialty Care Models 
final rule (85 FR 61355) and the CY 2022 ESRD PPS final rule (86 FR 
62017).
(5) Effects on Kidney Disease Patient Education Services and HD 
Training Add-Ons
    The change proposed in this rule is not expected to 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) and the CY 2022 ESRD PPS 
final rule (86 FR 62017).
(6) Effects on Medicare Beneficiaries
    Our proposal to revise the definition of an ESRD Beneficiary for 
the purposes of attribution is not expected to impact the findings 
reported for the effects of ETC Model on Medicare beneficiaries. 
Further details on the impact of the ETC Model on ESRD Beneficiaries 
may be found in the Specialty Care Models final rule (85 FR 61357) and 
the CY 2022 ESRD PPS final rule (86 FR 61874).
(7) Alternatives Considered
    Throughout this proposed rule, we have identified our policy 
proposal and alternatives considered, and provided information as to 
the likely effects of these alternatives and rationale for our 
proposal.
    The Specialty Care Models final rule (85 FR 61114), the CY 2022 
ESRD PPS final rule (86 FR 61874), the CY 2023 ESRD PPS final rule (87 
FR 67136), the CY 2024 ESRD PPS final rule (88 FR 76344), and the 
proposals herein address a model specific to ESRD. These rules provide 
descriptions of the requirements that we waive, identify 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 
section V.B. and to the above citations.

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 25 showing the classification of the impact associated with the 
provisions of this proposed rule.

[[Page 55840]]

[GRAPHIC] [TIFF OMITTED] TP05JY24.038

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, an ESRD facility is classified as a small business if it has 
total revenues of less than $47 million in any 1 year.\112\ For the 
purposes of this analysis, we exclude the ESRD facilities that are 
owned and operated by LDOs and regional chains, which would have total 
revenues of more than $6.5 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 FFS 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 461 ESRD facilities that are independent and 347 ESRD 
facilities that are hospital-based, as shown in the ownership category 
in table 18, to be small businesses. These ESRD facilities represent 
approximately 11 percent of all ESRD facilities in our data set.
---------------------------------------------------------------------------

    \112\ https://www.sba.gov/content/small-business-size-standards.
---------------------------------------------------------------------------

    Additionally, we identified in our analytic file that there are 779 
ESRD facilities that are considered nonprofit organizations, which is 
approximately 10 percent of all ESRD facilities in our data set. In 
total, accounting for the 360 nonprofit ESRD facilities that are also 
considered small businesses, there are 1,227 ESRD facilities that are 
either small businesses or nonprofit organizations, which is 
approximately 16 percent of all ESRD facilities in our data set.
    As its measure of significant economic impact on a substantial 
number of small entities, HHS uses a change in revenue of more than 3 
to 5 percent. As shown in table 18, we estimate that the overall 
revenue impact of this proposed rule on all ESRD facilities is a 
positive increase to Medicare FFS payments by approximately 2.2 
percent. For the ESRD PPS updates in this proposed rule, a hospital-
based ESRD facility (as defined by type of ownership, not by type of 
ESRD facility) is estimated to receive a 3.9 percent increase in 
Medicare FFS payments for CY 2025. An independent facility (as defined 
by ownership type) is likewise estimated to receive a 0.5 percent 
increase in Medicare FFS payments for CY 2025. Among hospital-based and 
independent ESRD facilities, those furnishing fewer than 3,000 
treatments per year are estimated to receive a 4.5 percent increase in 
Medicare FFS payments, and those furnishing 3,000 or more treatments 
per year are estimated to receive a 1.6 percent increase in Medicare 
FFS payments. Among nonprofit ESRD facilities, those furnishing fewer 
than 3,000 treatments per year are estimated to receive a 5.8 percent 
increase in Medicare FFS payments, and those furnishing 3,000 or more 
treatments per year are estimated to receive a 2.3 percent increase in 
Medicare FFS payments.
    For AKI dialysis, we are unable to estimate whether patients would 
go to ESRD facilities, however, we have estimated there is a potential 
for $70 million in payment for AKI dialysis treatments that could 
potentially be furnished in ESRD facilities.
    Based on the estimated Medicare payment impacts described 
previously, we do not believe that the change in revenue threshold will 
be reached by the policies in this proposed rule. Therefore, the 
Secretary has certified that this proposed rule will not have a 
significant economic impact on a substantial number of small entities.
    For the ESRD QIP, we estimate that of the 2,214 ESRD facilities 
expected to receive a payment reduction as a result of their 
performance on the PY 2027 ESRD QIP, 409 are ESRD small entity 
facilities. We present these findings in table 20 (``Estimated 
Distribution of PY 2027 ESRD QIP Payment Reductions'') and table 22 
(``Estimated Impact of ESRD QIP Payment Reductions to ESRD Facilities 
for PY 2027'').
    For the ETC Model, we do not anticipate any impact from our 
proposal to modify the definition of an ESRD Beneficiary for the 
purposes of beneficiary attribution in the model.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of

[[Page 55841]]

the Act, we define a small rural hospital as a hospital that is located 
outside of a metropolitan statistical area and has fewer than 100 beds. 
We do not believe this proposed rule would have a significant impact on 
operations of a substantial number of small rural hospitals because 
most dialysis facilities are freestanding. While there are 108 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 108 
rural hospital-based ESRD facilities would experience an estimated 5.5 
percent increase in payments. Therefore, the Secretary has certified 
that this proposed rule will not have a significant impact on the 
operations of a substantial number of small rural hospitals.

G. Unfunded Mandates Reform Act Analysis (UMRA)

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2024, that 
threshold is approximately $183 million. 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. Therefore, this proposed rule does not mandate any requirements 
for State, local, or Tribal governments, or for the private sector.

H. Federalism

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

IX. Files Available to the Public

    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 CMS's website 
under the regulation number, CMS-1805-P, at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices. In addition to the 
Addenda, limited data set files (LDS) 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 June 21, 2024.

List of Subjects

42 CFR Part 410

    Diseases, Health facilities, Health professions, Laboratories, 
Medicare, Reporting and recordkeeping requirements, Rural areas, X-
rays.

42 CFR Part 413

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

42 CFR Part 494

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

42 CFR Part 512

    Administrative practice and procedure, Health care, Health 
facilities, Health insurance, Intergovernmental relations, Medicare, 
Penalties, Reporting and recordkeeping requirements.

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

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

0
1. The authority citation for part 410 continues to read as follows:

    Authority: 42 U.S.C. 1302, 1395m, 1395hh, 1395rr, and 1395ddd.

0
2. Section 410.52 is amended by revising paragraph (a) introductory 
text to read as follows:


Sec.  410.52  Home dialysis services, supplies, and equipment: Scope 
and conditions.

    (a) Medicare Part B pays for the following services, supplies, and 
equipment furnished to a patient with ESRD or an individual with Acute 
Kidney Injury (AKI) as defined in Sec.  413.371 of this chapter in his 
or her home:
* * * * *

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
3. 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), 1395m, 1395x(v), 1395x(kkk), 1395hh, 1395rr, 1395tt, 
and 1395ww.

0
4. Section 413.196 is amended by revising paragraph (d)(2) to read as 
follows:


Sec.  413.196  Notification of changes in rate-setting methodologies 
and payment rates.

* * * * *
    (d) * * *
    (2) The wage index using the most current wage data for occupations 
related to the furnishing of renal dialysis services from the Bureau of 
Labor Statistics and occupational mix data from the most recent 
complete calendar year of Medicare cost reports submitted in accordance 
with Sec.  413.198(b).
* * * * *
0
5. Section 413.231 is amended by revising paragraph (a) to read as 
follows:


Sec.  413.231  Adjustment for wages.

    (a) 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 (established by CMS) which reflects the relative 
level of wages relevant to the furnishing of renal dialysis services in 
the geographic area in which the ESRD facility is located.
* * * * *
0
6. Section 413.236 is amended by revising paragraph (b)(4) to read as 
follows:


Sec.  413.236  Transitional add-on payment adjustment for new and 
innovative equipment and supplies.

* * * * *
    (b) * * *
    (4) Has a complete Healthcare Common Procedure Coding System 
(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

[[Page 55842]]

biannual Coding Cycle 2 for non-drug and non-biological items, 
supplies, and services as specified in the HCPCS Level II coding 
guidance on the CMS website prior to the particular calendar year;
* * * * *
0
7. Section 413.237 is amended by adding paragraph (a)(1)(vii) to read 
as follows:


Sec.  413.237  Outliers.

    (a) * * *
    (1) * * *
    (vii) Renal dialysis drugs and biological products that are 
Composite Rate Services as defined in Sec.  413.171.
* * * * *
0
8. Section 413.373 is revised to read as follows:


Sec.  413.373  Other adjustments to the AKI dialysis payment rate.

    (a) CMS applies the wage-adjusted add-on per treatment adjustment 
for home and self-dialysis training as set forth at Sec.  413.235(c) to 
payments for AKI dialysis claims that include such training.
    (b) The payment rate for AKI dialysis may be adjusted by the 
Secretary (on a budget neutral basis for payments under section 1834(r) 
of the Act) by any other adjustment factor under subparagraph (D) of 
section 1881(b)(14) of the Act.

0
9. Section 413.374 is amended by revising paragraph (a) to read as 
follows:


Sec.  413.374  Renal dialysis services included in the AKI dialysis 
payment rate.

    (a) The AKI dialysis payment rate applies to renal dialysis 
services (as defined in subparagraph (B) of section 1881(b)(14) of the 
Act) furnished under Part B by a renal dialysis facility or provider of 
services paid under section 1881(b)(14) of the Act, including home 
services, supplies, and equipment, and self-dialysis.
* * * * *

PART 494--CONDITIONS FOR COVERAGE FOR END-STAGE RENAL DISEASE 
FACILITIES

0
10. The authority citation for part 494 continues to read as follows:


    Authority:  42 U.S.C. 1302 and 1395hh.
0
11. Section 494.10 is amended by revising the definitions of ``Home 
dialysis'' and ``Self-dialysis'' to read as follows:


Sec.  494.10  Definitions.

* * * * *
    Home dialysis means dialysis performed at home by a patient or 
caregiver who has completed an appropriate course of training as 
described in Sec.  494.100(a).
    Self-dialysis means dialysis performed with little or no 
professional assistance by a patient or caregiver who has completed an 
appropriate course of training as specified in Sec.  494.100(a).
* * * * *
0
12. Section 494.70 is amended by revising paragraphs (a)(1) and (10) 
and (c)(1)(i) to read as follows:


Sec.  494.70  Condition: Patients' rights.

* * * * *
    (a) * * *
    (1) Respect, dignity, and recognition of his or her individuality 
and personal needs, and sensitivity to his or her psychological needs 
and ability to cope with kidney failure;
* * * * *
    (10) Be informed by the physician, nurse practitioner, clinical 
nurse specialist, or physician's assistant treating the patient for 
kidney failure of his or her own medical status as documented in the 
patient's medical record, unless the medical record contains a 
documented contraindication;
* * * * *
    (c) * * *
    (1) * * *
    (i) How plans in the individual market will affect the patient's 
access to, and costs for the providers and suppliers, services, and 
prescription drugs that are currently within the individual's plan of 
care as well as those likely to result from other documented health 
care needs. This must include an overview of the health-related and 
financial risks and benefits of the individual market plans available 
to the patient (including plans offered through and outside the 
Exchange).
* * * * *
0
13. Section 494.80 is amended by revising the introductory text to read 
as follows:


Sec.  494.80  Condition: Patient assessment.

    The facility's interdisciplinary team consists of, at a minimum, 
the patient or the patient's designee (if the patient chooses), a 
registered nurse, a physician treating the patient for kidney failure, 
a social worker, and a dietitian. The interdisciplinary team is 
responsible for providing each patient with an individualized and 
comprehensive assessment of his or her needs. The comprehensive 
assessment must be used to develop the patient's treatment plan and 
expectations for care.
* * * * *
0
14. Section 494.90 is amended by revising paragraph (b)(4) to read as 
follows:


Sec.  494.90  Condition: Patient plan of care.

* * * * *
    (b) * * *
    (4) The dialysis facility must ensure that all dialysis patients 
are seen by a physician, nurse practitioner, clinical nurse specialist, 
or physician's assistant providing dialysis care at least monthly, as 
evidenced by a monthly progress note placed in the medical record, and 
periodically while the hemodialysis patient is receiving in-facility 
dialysis.
* * * * *
0
15. Section 494.100 is amended by revising paragraph (a)(3)(i) to read 
as follows:


Sec.  494.100  Condition: Care at home.

* * * * *
    (a) * * *
    (3) * * *
    (i) The nature and management of their kidney failure.
* * * * *
0
16. Section 494.120 is amended by revising the introductory text to 
read as follows:


Sec.  494.120  Condition: Special purpose renal dialysis facilities.

    A special purpose renal dialysis facility is approved to furnish 
dialysis on a short-term basis at special locations. Special purpose 
dialysis facilities are divided into two categories: vacation camps 
(locations that serve patients with kidney failure while the patients 
are in a temporary residence) and facilities established to serve 
patients with kidney failure under emergency circumstances.
* * * * *
0
17. Section 494.130 is revised to read as follows:


Sec.  494.130  Condition: Laboratory services.

    The dialysis facility must provide, or make available, laboratory 
services (other than tissue pathology and histocompatibility) to meet 
the needs of the patient. Any laboratory services, including tissue 
pathology and histocompatibility must be furnished by or obtained from, 
a facility that meets the requirements for laboratory services 
specified in part 493 of this chapter.
0
18. Section 494.170 is amended by revising the introductory text to 
read as follows:


Sec.  494.170  Condition: Medical records.

    The dialysis facility must maintain complete, accurate, and 
accessible records on all patients, including home patients who elect 
to receive dialysis supplies and equipment from a supplier that is not 
a provider of dialysis services and all other home dialysis patients

[[Page 55843]]

whose care is under the supervision of the facility.
* * * * *

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

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

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

0
20. Section 512.310 is amended by revising the definition of ``ESRD 
Beneficiary'' to read as follows:


Sec.  512.310  Definitions.

* * * * *
    ESRD Beneficiary means a beneficiary who meets any of the 
following:
    (1) Is receiving dialysis or other services for end-stage renal 
disease, up to and including the month in which the beneficiary 
receives a kidney transplant up to and including the month in which the 
beneficiary receives a kidney transplant.
    (2) Has already received a kidney transplant and has a non-AKI 
dialysis or MCP claim at least 12 months after the beneficiary's latest 
transplant date.
    (3) Has a kidney transplant failure less than 12 months after the 
beneficiary's latest transplant date as identified by at least one of 
the following:
    (i) Two or more MCP claims in the180 days following the date on 
which the kidney transplant was received;
    (ii) 24 or more maintenance dialysis treatments at any time after 
180 days following the transplant date; or,
    (iii) Indication of a transplant failure after the beneficiary's 
date of transplant based on data from the Scientific Registry of 
Transplant Recipients (SRTR) database.
    (4) If a beneficiary meets more than one of criteria described in 
paragraphs (3)(i) through (iii) of this definition, the beneficiary 
will be considered an ESRD beneficiary starting with the earliest month 
in which transplant failure was recorded.
* * * * *

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-14359 Filed 6-27-24; 4:15 pm]
 BILLING CODE 4120-01-P