On October 27, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2024 End Stage Renal Disease (ESRD) Prospective Payment System (PPS) Final Rule (link) and Fact Sheet (link). Comments on the proposed rule were due August 25, 2023. 
 
Below, ADVI provides the initial topline review of relevant topics. In addition to annual updates to the ESRD base rate, CMS finalized several new policies, including:

A post-TDAPA (Transitional Drug Add-on Payment Adjustment) add-on payment adjustment for certain new renal dialysis drugs and biological products after TDAPA ends.
Requirement to report “time on machine” data and discarded amounts of certain renal dialysis drugs and biological products from single-dose containers and single-use packages, effective January 1, 2025
A new transitional add-on pediatric ESRD dialysis payment adjustment (TPEAPA) for CYs 2024, 2025, and 2026

The final rule also clarified the Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES) review process and eligibility criteria and finalized several modifications to the ESRD QIP.

Add-on Payment Adjustment for Certain New Renal Dialysis Drugs and Biological Products After the TDAPA Period Ends 

CMS is finalizing a new add-on payment adjustment for certain new renal dialysis drugs and biological products in existing ESRD PPS functional categories after the end of the Transitional Drug Add-on Payment Adjustment (TDAPA) period. Beginning January 1, 2024, CMS will provide an add-on payment adjustment to all ESRD PPS payments set at 65 percent of estimated expenditure for the given renal dialysis drug or biological product.

The post-TDAPA add-on payment adjustment will apply for 3 years, be case-mix adjusted, and is not budget neutral.
CMS will 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 adjustment would be conditional on receiving ASP data from manufacturers.
Instead of the proposed productivity-adjusted market basket update, CMS finalized the use of the projected growth in the ESRDB market basket price growth for pharmaceuticals to account for anticipated price growth to the target year. For CY 2024, the ESRDB pharmaceutical price proxy is 1.3 percent.
The first drug to meet the post-TDAPA add-on payment adjustment criteria is Korsuva®. Beginning April 1, 2024 (when the TDAPA payment period for Korsuva® ends), the case-mix adjusted post-TDAPA add-on payment will be $0.2493.
Note: The proposed rule estimated the add-on payment to be $0.0961, based on older utilization data.
CMS will recalculate the post-TDAPA add-on payment adjustment annually in rulemaking.

Policy to require reporting of discarded billing units of certain renal dialysis drugs and biological products paid for under the ESRD PPS 

CMS finalized with modification a new policy requiring information about discarded amounts of single-vial and single-package renal dialysis drugs and biological products paid for under the ESRD PPS.

Beginning January 1, 2025, ESRD facilities must use the JW or JZ modifiers in the 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 clarified that for renal dialysis drugs and biological products from single-dose containers and single-use packaging that are administered to home dialysis patients or that are oral forms of renal dialysis injectable drugs, the ESRD facility should report the amount expected to be discarded.
CMS proposed an effective date of January 1, 2024; however, in response to comments, they delayed the effective date for one year.
CMS intends to publish detailed operational guidance for this requirement by January 1, 2024.
This reporting will not alter payments to ESRD facilities, but CMS notes that the information collected on discarded amounts may inform future payment policies.

Transitional Pediatric ESRD Add-on Payment Adjustment (TPEAPA) 

CMS finalized a new budget-neutral transitional pediatric ESRD add-on payment adjustment (TPEAPA) of 30% of the per treatment payment amount. The TPEAPA adjustment will apply to:

All ESRD PPS payments for renal dialysis services furnished to pediatric ESRD patients,
For a period of three years – calendar years 2024, 2025, and 2026 – beginning January 1, 2024.

CMS will use this three-year time period to collect information added to the cost report form in CY 2023 to assess the alignment of pediatric renal dialysis payment with cost. The TPEAPA adjustment budget neutrality will be applied under ESRD PPS.

Transitional Add-On Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES) 

 CMS finalized three clarifications to the TPNIES eligibility criteria:

CMS’ review of the six TPNIES eligibility criteria is sequential; as CMS reviews a particular equipment or supply and determines that the item has failed to demonstrate having met one of the eligibility criteria, the item will be ineligible for the TPNIES. CMS will not include an analysis of the remaining criteria in the annual CY final rule.
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
This clarification is effective January 1, 2024, and applies for TPNIES applications under consideration for CY 2025 payment.
The three-year newness period is based on the date of the TPNIES application submission, i.e., a complete application must be submitted within 3 years of the FDA marketing authorization; the TPNIES determination does not have to be completed within the 3-year newness period.
Equipment or supplies exempt from FDA premarket notification (510(k)) requirements would not meet the newness criterion, and as such would not be eligible for TPNIES.

CMS received one application for consideration under TPNIES for CY 2024: Buzzy® Pro. The product did not meet the TPNIES eligibility criteria and did not receive the TPNIES in CY 2024.

Changes to ESRD PPS 

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

Increases the ESRD PPS base rate 2024 to $271.02, a $5.45 increase from the CY 2023 base rate of $265.57.
Proceeds with the standard annual update to the ESRD wage index based on latest available data, finalizing that payments to all ESRD facilities will increase by 2.1% compared to CY 2023 rates, with payments to hospitals increasing by 3.1%, and payments to freestanding facilities increasing by 2.0%.
Updates the outlier services fixed-dollar loss (FDL) amounts for pediatric patients from $23.29 in CY 2023 to $11.32 in CY 2024.
Updates the Medicare Allowable Payment (MAP) amounts for pediatric patients from $25.59 in CY 2023 to $23.36 in CY 2024.
Updates the outlier services FDL amounts for adult patients from $73.19 in CY 2023 to $71.76 in CY 2024.
Updates the MAP amounts for adult patients from $39.62 in CY 2023 to $36.28 in CY 2024.
CMS noted that the 1.0% target for outlier payments was not achieved in CY 2022, and that outlier payments represented approximately 0.8% of total Medicare payments rather than 1.0%.
For CY 2024, the average per treatment offset amount for the TPNIES for capital-related assets that are home dialysis machines is $10.00 [$9.73 was proposed].
There are no capital-related assets set to receive the TPNIES in CY 2024 for which this offset will apply.

Other changes to payment policies include:

Low-Volume Payment Adjustment (LVPA)
For CY 2024, CMS is creating an exception to the current LVPA attestation process for ESRD facilities affected by disasters/emergencies. CMS is establishing a process to allow ESRD facilities to temporarily close and reopen, and still continue to receive LVPA, even if the LVPA threshold is exceeded due to treating displaced patients.
Measuring Patient-Level Resource Usage
Beginning January 1, 2025, CMS is requiring ESRD facilities to report the “time on machine” on the ESRD PPS claims. CMS will use this data to estimate dialysis treatment costs for future ESRD PPS adjustment factors.
Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury (AKI)
CMS is finalizing the AKI dialysis payment rate for CY 2024 to $271.02. This equals the CY 2024 ESRD PPS base rate and applies the CY 2024 wage index, as required in statute.

ESRD Quality Incentive Program (QIP) 

 CMS finalized several modifications to the ESRD QIP:

Technical components
Updates 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.
Codifies the ESRD QIP measure adoption, retention, and removal policies from previous rulemaking.
Finalized policies for Payment Year 2026
Adds the Facility Commitment to Health Equity reporting measure, which includes five equity related attestation-based questions.
Updates the COVID-19 Vaccination Coverage Rate Among Healthcare Personnel (HCP) reporting measure to align with updated measure specifications from the CDC.
Converts the Clinical Depression Screening and Follow-Up reporting measure to a clinical measure and updates the scoring methodology to be more aligned with current clinical guidelines.
Removes the Ultrafiltration Rate reporting measure under measure removal factor two (performance or improvement on a measure does not result in better or the intended patient outcomes).
Removes the Standardized Fistula Rate clinical measure under measure removal factor three (a measure no longer aligns with current clinical guidelines or practice).
Finalized policies for Payment Year 2027
Adds the Screening for Social Drivers of Health reporting measure, which assesses the percentage of patients 18 years of age and older screened for food insecurity, housing instability, transportation problems, utility help needs, and interpersonal safety.
Adds the Screen Positive Rate for Social Drivers of Health reporting measure, which assesses the percentage of patients 18 years of age and older who screen positive for one or more of the five health-related social needs listed above.

ADVI will continue monitoring developments and the next steps. This is a delayed release. ADVI Instant content is distributed in real-time for retainer clients. Get in touch to learn more about how we can support your commercialization, market access, and policy needs.