On June 26, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2024 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) Proposed Rule (link) and Fact Sheet (link).

Below, ADVI provides the initial topline review of relevant topics. In addition to annual updates to the ESRD base rate, CMS proposes a post-TDAPA add-on payment adjustment for renal dialysis drugs and biological products in existing ESRD PPS functional categories, a requirement for ESRD facilities to report discarded units of renal dialysis drugs and biological products paid under the ESRD PPS, and several clarifications to the TPNIES eligibility criteria.

Comments on the proposed rule are due August 25, 2023.

Proposed Add-on Payment Adjustment for Certain New Renal Dialysis Drugs and Biological Products After the TDAPA Period Ends
 
CMS pays for new renal dialysis drugs and biologicals under the Transitional Drug Add-on Payment Adjustment (TDAPA) for a period of at least 2 years. The TDAPA payment is intended to help ESRD facilities incorporate the use of innovative new drugs and biologicals. However, for new drugs and biologicals classified in an existing ESRD PPS functional category, the ESRD PPS base payment is not adjusted to reflect the added costs after the TDAPA period ends. In the CY 2023 ESRD proposed rule, CMS asked for public comment on methods to establish a payment adjustment for these renal dialysis drugs and biologicals after the TDAPA period ends.
 
Beginning January 1, 2024, CMS proposes to provide an add-on payment adjustment to all ESRD PPS claims set at 65 percent of estimated expenditure for the renal dialysis products in existing ESRD PPS functional categories with expiring TDAPA in the previous year.

A post-TDAPA add-on payment adjustment would apply for 3 years, be case-mix adjusted and would not be budget neutral
CMS proposes to calculate the estimated expenditures annually based on the latest available full calendar quarter of Average Sales Price (ASP) data. Payment of the post-TDAPA add-on payment adjustment would be conditional on receiving ASP data from manufacturers.
Based on CMS’ proposed methodology, the case-mix adjusted post-TDAPA add-on payment adjustment for Korsuva (difelikefalin) is $0.0961.
For products not currently classified within an ESRD PPS functional category, there is an existing process to modify the ESRD PPS and therefore this proposal would not apply.

Proposed policy to require reporting of discarded billing units of certain renal dialysis drugs and biological products paid for under the ESRD PPS
 
CMS proposes a new policy requiring information about discarded amounts of single-vial and single-package renal dialysis drugs and biological products paid for under ESRD PPS.

Beginning January 1, 2024, CMS proposes that ESRD facilities must use the JW or JZ modifiers in ESRD PPS claims and document any discarded amounts in a beneficiary’s medical record.
Facilities would not be required to document in the beneficiary’s medical record when there are no discarded amounts.
CMS seeks to understand the extent to which costs of providing renal dialysis drugs and biological products represent amounts used versus amounts discarded, noting that 40 percent of 2022 TDAPA expenditures represented discarded amounts.
Although the use of these modifiers generally does not apply to products paid for under ESRD PPS, as they are not considered “separately billable”, they are used in certain circumstances (e.g., self-administered erythropoiesis stimulating agents, products unrelated to the treatment of ESRD). For this reason, CMS believes most ESRD facilities would reasonably be able to report the JW and JZ modifiers for renal dialysis drugs and biological products as well.
If finalized, CMS would publish information about which HCPCS codes would be considered single-dose containers or single-use package renal dialysis drugs and biological products, and would issue guidance on operational considerations and billing instructions.
Importantly, while this proposal would not alter payments to ESRD facilities (i.e., products bundled under ESRD PPS would remain not subject to a discarded drug refund), CMS notes the information collected on discarded amounts may inform future payment policies.

Proposed Transitional Pediatric ESRD Add-on Payment Adjustment (TPEAPA)
 
CMS is in the process of collecting data on costs of furnishing dialysis services to pediatric patients and proposes to provide a budget neutral transitional pediatric ESRD add-on payment adjustment (TPEAPA) of 30 percent of the per treatment payment amount. This would apply to:

All ESRD PPS payments for renal dialysis services furnished to pediatric ESRD patients,
For a period of three years – CYs 2024, 2025, and 2026 – beginning on January 1, 2024.
During this time, CMS will continue to collect data from cost reports to evaluate the alignment of resource by pediatric ESRD patients with payment.

Transitional Add-On Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES)
 
Proposed clarifications to the TPNIES review process:

In CY 2020 CMS finalized a policy that would provide additional payment for innovative equipment and supplies used in treating beneficiaries with ESRD and expanded this policy in CY 2021 to include certain capital equipment.
The eligibility criteria established for the TPNIES payment are:
The item has been designated by CMS as a renal dialysis service under § 413.171;
The item is new, i.e. within 3 years of FDA marketing authorization;
The item is commercially available by January 1 of the particular CY in which the payment adjustment would take effect;
The item has a Healthcare Common Procedure Coding System (HCPCS) application submitted by the second biannual coding cycle for DMEPOS items and services;
The item meets the substantial clinical improvement criteria specified in the Inpatient Prospective Payment System (IPPS) regulations at § 412.87(b)(1);
The item is not a capital-related asset, except for capital-related assets that are home dialysis machines.
CMS proposes to clarify that they intend to review TPNIES eligibility according to the above criteria in sequential order. If CMS determines that an item does not meet an eligibility criterion, that item would be determined ineligible for TPNIES and CMS would not continue to evaluate eligibility for the remaining criteria.
If finalized, this policy would apply for TPNIES applications for consideration for CY 2025 payment.
CMS also proposes to clarify that items exempt from FDA premarket notification (510(k)) or premarket approval (PMA) status would not meet the newness criterion and therefore would not be eligible for the TPNIES.
Additionally, CMS proposes to clarify that the 3-year newness period is based on the date of TPNIES application submission.

CMS received one application for consideration under TPNIES for CY 2024.

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Proposed Changes to ESRD PPS

CMS proposes the following updates to the CY 2024 ESRD PPS:

Increase the ESRD PPS base rate to $269.99, a 1.6 percent increase from the CY 2023 base rate.
Proceed with the standard annual update to the ESRD wage index based on latest available data, proposing that payments to all ESRD facilities will increase by 1.6 percent compared to CY 2023 rates, with payments to hospitals increasing by 2.6 percent, and payments to freestanding facilities increasing by 1.6 percent.
Update the outlier services fixed-dollar loss (FDL) amounts for pediatric patients from $23.29 in CY 2023 to $13.71 in CY 2024.
Update the Medicare Allowable Payment (MAP) amounts for pediatric payments from $25.59 in CY 2023 to $24.53 in CY 2024.
Update the outlier services FDL amounts for adult patients from $73.19 in CY 2023 to $78.21 in CY 2024.
Update the MAP amounts for adult payments from $39.62 in CY 2023 to $38.58 in CY 2024.
For CY 2024, CMS proposes an average per treatment offset amount of $9.73 for the TPNIES for capital-related assets that are home dialysis machines.

ESRD Quality Incentive Program (QIP)
 
CMS proposes several modifications to the ESRD QIP:

Technical proposals
CMS proposes to update the definition of “Minimum Total Performance Score” (mTPS) to reflect current CMS practices more accurately.
If there is insufficient data available before the first performance period of a new reporting measure, CMS will set a proxy median of zero for the measure until there is sufficient data to calculate the median. CMS states that this change is meant to provide greater transparency and predictability regarding mTPS payments.
CMS proposes to codify the ESRD QIP measure adoption, retention, and removal policies from previous rulemaking.
Proposals for Payment Year 2026
Add the Facility Commitment to Health Equity reporting measure, which includes five attestation-based questions meant to assess an ESRD facility’s commitment to health equity.
Update the COVID-19 Vaccination Coverage Rate Among Healthcare Personnel reporting measure to align with CDC recommendations.
Convert the Clinical Depression Screening and Follow-Up reporting measure to a clinical measure and update the scoring methodology to align with current clinical guidelines.
Remove the Ultrafiltration Rate reporting measure because it may not accurately reflect the quality of care provided.
Remove the Standardized Fistula Rate clinical measure because the measure to longer aligns with current clinical guidelines.
Proposals for Payment Year 2027
Add the Screening for Social Drivers of Health reporting measure, which assesses the percentage of patients 18 years of age or older that are screened for interpersonal safety, utility help needs, transportation issues, housing instability, and food insecurity.
Add the Screen Positive Rate for Social Drivers of Health reporting measure, which assesses the percentage of patients 18 years or older who screen positive for the areas in the previous measure.

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