Avalere Health
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Insights

Nov 26, 2013

CMS to Phase In Drug Utilization Payment Cut in Final ESRD Rule; Net Update to Base Rate 0.0% in CY 2014

Published

Nov 26, 2013

On Nov. 22, CMS released its final Calendar Year (CY) 2014 End Stage Renal Disease (ESRD) PPS rule, finalizing a 2014 base per treatment rate of $239.02, reduced slightly from $240.36 in CY 2013.

This development is positive for dialysis facilities considering that CMS previously proposed cutting Medicare payments to dialysis facilities by $23.41—to $216.95—reflecting a 12 percent cut accounting for lower Part B drug utilization in 2012 compared with 2007.  In the final rule, CMS also finalized a plan to phase in the 12 percent drug utilization payment reduction over three to four years ($8.16 in CY 2014) as an offset to other payment rate updates, which when combined with a number of other minor adjustments results in an overall impact of 0 percent to total facility payments in CY 2014.

Given the gradual implementation of the payment cuts, lobbying of Congress may be intense through 2016 as stakeholders push for legislation to further mitigate the drug utilization adjustment.  For CY 2016 dialysis facility payments, CMS will conduct an analysis to evaluate how to apply the balance of the drug utilization adjustment to account for the inclusion of oral-only ESRD-related drugs and biological.  CMS also highlighted that it intends to re-examine all of the patient and facility level payment adjustments for the CY 2016 rule.

In the final rule, CMS also increased the training add-on adjustment by 50 percent for both peritoneal dialysis and home hemodialysis training treatments, resulting in an increase of $16.72, for a total training add-on adjustment of $50.16 per training treatment.  CMS did not adjust the number of training sessions allowed per patient.

Lastly, CMS finalized its proposed updates to the Quality Incentive Program (QIP) for CYs 2014-2016, including the addition of five new measures for CY 2016 payments.  The CY 2016 QIP is now expected to result in slightly less than 25 percent of dialysis facilities receiving a negative payment adjustment.

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