Medicare Finalizes Changes to ESRD Quality Program, Releases Accountable Care Organization Rules

The Centers for Medicare and Medicaid Services (CMS) last month released its long-awaited rule finalizing changes to the End-Stage Renal Disease Program (ESRD) payment system and the Quality Incentive Program (QIP). The final rule outlined modifications to the ESRD prospective payment system (PPS) for 2012, and it cemented adjustments—as well as major additions—to the QIP program across 2013 and 2014.

The ESRD PPS/QIP final rule came on the heels of another piece of CMS regulation that has been much anticipated by the medical community: the Accountable Care Organization (ACO) final rule, released in late October. The ASN Public Policy Board and the ASN ACO Task Force began analyzing the final rules upon their release to identify their implications for the ESRD program and the practice of nephrology.

ESRD, PPS, and QIP final rule

Taking effect January 1, 2012, the ESRD QIP is the first-ever mandatory pay-for-performance (also known as value-based purchasing) program in the Medicare system. Having finalized the parameters for the first year of the QIP in December 2010, in this final rule the CMS finalized a key component of the second year of the program, 2013, and broad changes to 2014, the third QIP year (Table 1).


Perhaps the most controversial change to the QIP in 2013 is the decision by the CMS to eliminate the quality measure for anemia management at the low end of the hemoglobin spectrum: percentage of Medicare patients at a facility whose hemoglobin levels were greater than 12 g/dL. Many in the nephrology community, including the ASN, raised concerns that the absence of any minimal safeguards for low hemoglobin levels could be problematic for patients, potentially leading to compromised quality of life and functional status or even necessitating otherwise avoidable blood transfusions, and they stated these concerns in comments on the proposed rule. The Congressional Kidney Caucus recently expressed similar concerns about retiring the measure in a letter to the CMS on October 13, 2011.

The CMS acknowledged these concerns in the final rule but cited its own recent National Coverage Decision for ESAs for Treatment of Anemia in Adults, which concluded that the CMS could not identify a low hemoglobin target level that is safe for all patients, as part of its rationale for eliminating the measure. The CMS also noted that it conversed with the U.S. Food and Drug Administration, which agreed that retiring the measure is consistent with its recently revised label for ESAs. Consequently, in 2013 the QIP will comprise just two, equally weighted, quality measures:
  • Percentage of Medicare patients with a hemoglobin level >12.0 g/dL (national performance rate = 14 percent of patients)

  • Percentage of Medicare patients with a urea reduction ratio (URR) >65 percent (national performance rate = 97 percent of patients)

The CMS will also ratchet up the standards that facilities must achieve to avoid a payment reduction. In 2013, facilities must score the full possible 30 points—a change from QIP year 2012, when scoring 26 points would prevent any payment reductions. The performance year (the year from which data will be analyzed to develop scores in 2013) is 2011.

In 2014, the CMS will retain the 2012 measures and add four new measures, bringing the total to six. The one clinical measure added is a combined measure: vascular access type, examining 1) catheter reduction and 2) arteriovenous fistula use. Three of the four new measures, listed below, are reporting-only (yes/no) measures:
  • Report dialysis infections to the Centers for Disease Control and Prevention NHSN Dialysis event reporting system.
  • Administer ICH Consumer Assessment of Health Policy Study.
  • Monitor mineral metabolism (phosphorus and calcium levels).

In the proposed rule, the CMS suggested, but did not finalize, the following three measures for 2014:

Control and Prevention NHSN Dialysis event reporting system.
  • Kt/V (which would have replaced the URR measure of dialysis adequacy): The CMS noted its intention to finalize the Kt/V measures in the future once it could “ensure the validity and consistency” of Kt/V data.

  • Standardized Hospitalization Ratio–Admissions (SHR): The CMS did not finalize the SHR measures because of concerns articulated by the ASN in its comment letter that the measure might not reflect hospitalizations related to ESRD care and could increase the potential for cherry-picking.

  • Vascular access infections (VAI): The CMS concluded that the claims-based data the measure would be based on are not detailed enough to accurately reflect care.

The CMS finalized the bulk of its proposal to adopt a new performance scoring methodology for 2014. The performance of facilities will be determined by the higher of an “Achievement” score (worth up to 10 points) or an “Improvement” score (worth up to 9 points) for clinical measures, with a slightly different approach for the vascular access type. The benchmark to achieve full points in measures on both scales is set as the 90th percentile of all performers nationwide (a change from the proposed rule, in which the CMS proposed to set the benchmark as the mean of the top decile of all performers). More detailed information about the scoring is available on the ASN’s public policy webpage (

Accountable Care Organization final rule

The 696-page ACO final rule creates more generous opportunities for providers to share in savings, relaxes the EHR meaningful use criteria, and reduces the number of quality measures that ACOs must achieve from 65 to 33. And these are just some of the final rule’s many changes to the ACO program compared with the original proposed rule (Table 2).


The CMS received more than 1300 comments on the proposed rule—including from ASN—most of which criticized the proposed program as being too burdensome, being too prescriptive, and offering few financial benefits for participating providers. The CMS responded to many of these concerns in the final rule.

The ASN ACO Task Force is in the process of analyzing the potential opportunities and challenges the lengthy final rule poses for nephrology care, including assessing how nephrologists may interact with ACOs, and it will provide a detailed assessment to ASN members.

Although the final rule included important changes to the financial risks, timeline, and participatory requirements, it seems that few of the modifications addressed the nephrology-specific concerns raised by the ASN and others in the kidney community, or the specialty-specific concerns of other subspecialists. The final rule made it clear that the CMS envisions the ACO program as exclusively focused on primary care. A significant number of the potential pros and cons articulated by the ASN in its comment letter on the proposed rule remain.

Some in the kidney community had requested that the CMS allow renal-specific ACOs—a recommendation that the CMS declined to adopt. Similarly, it rejected suggestions from the cancer community for an oncology-specific ACO. In its comments, the ASN cautioned that as proposed, ACOs may not be well positioned to appropriately care for patients receiving dialysis or those who have a recent kidney transplant, recommending that these patient populations be excluded from attribution to an ACO. Of particular concern to the ASN was that some of the quality measures may not be applicable to dialysis patients and, in some cases, could actually prove harmful and unnecessarily expensive to those patients.

The CMS did not directly respond to these concerns but stated its belief that “adopting restrictions or exclusions on beneficiaries with certain conditions or utilization patterns from assignment to ACOs under the Shared Savings Program would be inappropriate.” The one measure directly pertinent to kidney disease proposed by the CMS (diabetes mellitus: urine screening for microalbumin, or medical attention for nephropathy in diabetic patients) was among the 32 measures eliminated in the final rule.

Nephrologists and other specialists who wish to join an ACO can have patients attributed them and their ACO based on provision of primary care, according to the final rule. Patients will be attributed to ACOs in a stepwise fashion, first to the ACO of a primary care provider that provides the plurality (not majority) of primary care G-codes to a patient. Secondarily, a patient may be assigned to the ACO of a specialist (including a nephrologist) who provides the plurality of primary care G-codes to a patient, if that patient is not receiving primary care services from a primary care provider (whether or not affiliated with an ACO).

Another important change finalized by the CMS is that the historical benchmark expenditures against which ACO performance will be judged will be calculated to account for certain high-cost patient population categories, including ESRD and dual-eligible Medicare and Medicaid beneficiaries.

Overall, the CMS estimates that 50 to 270 organizations will form an ACO, generating $470 million in net federal savings for calendar years 2012 through 2015. Please visit the ASN public policy page for more information about ACOs and their potential effect on patients with kidney disease and on the practice of nephrology.

December 2011 (Vol. 3, Number 12)