CMS Proposes Revisions to ESRD Payment System, Additions to Quality Incentive Program


The Centers for Medicare and Medicaid Services (CMS) released a proposed rule on July 2, 2012, that addresses dialysis care. The ASN Quality Metrics Task Force is analyzing the proposed rule and, with the ASN Public Policy Board, will provide input to CMS on behalf of ASN members.

The proposed rule updates Medicare’s dialysis payment system administered through the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS). The Prospective Payment System pays a predetermined, fixed amount for all services related to each dialysis treatment. This is also known as a “bundled” payment system.

The Quality Incentive Program (QIP) is the first-ever mandatory value-based purchasing program within the Medicare system. Under the QIP, facilities that do not meet or exceed performance standards on quality measures receive a reduction in their payment rates. The QIP operates concurrently with the ESRD PPS.

After Congress mandated the ESRD PPS and QIP in 2008, approximately 90 percent of dialysis providers elected to begin receiving all payments under the new, bundled payment system from year one.

The proposed changes released for public comment on July 2 would affect dialysis treatments provided during calendar year 2013, while changes to the ESRD QIP would affect payments to providers in 2015 and beyond. Payment reductions would be calculated based on data from dialysis treatments provided beginning in 2013. In addition, the proposed rule describes a proposal to implement changes to bad debt reimbursement to eligible Medicare providers.

How would the proposed rule change the ESRD PPS?

The ESRD PPS base rate set for 2012 was $234.81; CMS proposes to increases this rate to $240.88 per dialysis treatment in calendar year 2013. On the basis of price factors and a projected increase in Medicare dialysis beneficiary enrollment, CMS estimates that dialysis facilities in 2013 will collect approximately $8.7 billion for treatments in 2013, a 3.1 percent overall increase. CMS notes that this increased payment to dialysis facilities means beneficiaries will also likely see a 3.1 percent increase in their co-payment responsibility.

Providers who opted to receive transitional “blended payments” will collect reimbursement that is 25 percent based on the previous composite payment system, and 75 percent based on the new PPS payment system.

Jonathan Blum, CMS deputy administrator and director of the agency’s Center for Medicare, believes “that the policies and rate changes proposed today will continue to help ensure that beneficiaries diagnosed with ESRD continue to get the care they need.”

How would the proposed rule change the ESRD QIP?

The most significant proposed changes would apply to the ESRD QIP starting in 2015. CMS proposes adopting new clinical and reporting measures, as well as expanding the scope of two current reporting measures. These changes reflect a broader range of issues faced by patients who receive dialysis care.

CMS also puts forth criteria for removing or replacing quality measures. Finalized quality measures would remain part of the QIP program unless CMS alters or eliminates them through rulemaking or notification. However, if CMS believes a measure raises potential safety concerns, it proposes to immediately remove the measure from the QIP instead of waiting for the annual rulemaking cycle. The proposed criteria are summarized in Table 1.


Altogether, CMS recommends a total of 11 quality measures in 2015. These are summarized in Table 2. Among the new measures, CMS proposes to institute a reporting-only anemia management measure. Dialysis facilities would be required to report hemoglobin or hematocrit levels and erythropoiesis-stimulating agent (ESA) dose, if applicable, for 98 percent of patients. CMS “monitoring activities indicate that there has been a slight but noticeable increase in transfusions since the adoption of the ESRD PPS” and references a May 2012 United States Renal Data System analysis that found an increase in transfusions among ESRD patients concurrent with PPS implementation. Data collected from the proposed measure would facilitate development of future quality measures in an area “of critical significance to patient safety—anemia and transfusion” states CMS.


If the changes in the proposed rule are finalized, the 2015 QIP would apply new measures of dialysis adequacy to different patient populations—including adult peritoneal dialysis patients and pediatric hemodialysis patients. The proposed National Quality Forum (NQF)-endorsed measures would assess whether patients meet a modality-specific Kt/V threshold, and would replace the current urea reduction ratio measure of dialysis adequacy.

In addition, CMS proposes to add a clinical hypercalcemia measure (examining patient-months of Medicare patients with uncorrected serum calcium concentration >10.2 mg/dL) and expand the existing mineral metabolism measure by requiring facilities to report a serum calcium and serum phosphorus for every qualifying patient-month. The expanded reporting measure would allow CMS to develop mineral metabolism measures based on clinical data in the future.

Looking ahead, CMS is soliciting comments on measures it is considering adopting for future years of the QIP. These measures are summarized in the sidebar.

Proposed QIP scoring and evaluation

CMS proposes using the same scoring methodology for clinical measures in payment year 2015 as it used in payment year 2014 QIP, assessing providers on both “achievement” and “improvement” scales. As in 2014, CMS would score providers in payment year 2015 along an achievement scale ranging from an achievement threshold (set at the 15th percentile of the national facility performance in 2011) to the benchmark (set at the 90th percentile of the national facility performance in 2011).

The improvement scale would range from the improvement threshold (the providers’ own performance on each measure in 2012) to the same benchmark. CMS would again calculate payments using whichever scale the facility scores better on, achievement or improvement.

CMS proposes to establish calendar year 2013 as the performance period for all of the payment year 2015 measures. To ensure time to calculate standards for payment year 2015, CMS proposes calendar year 2011 as the “comparison period” using national performance data from that time to calculate the achievement threshold and benchmarks in payment year 2015 (Table 3). However, CMS requests input on this issue since stakeholders might prefer standards based on more recent data, despite limitations, and requests input.


CMS is accepting public comment regarding the proposed rule until Friday, August 31, 2012. For a complete copy of the proposed rule as well as other resources, please visit the ASN public policy website at

August 2012 (Vol. 4, Number 8)