Centers for Medicare & Medicaid Services (CMS), HHS.
Final rule.
This final rule updates and makes revisions to the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for calendar year (CY) 2020. This rule also updates the payment rate for renal dialysis services furnished by an ESRD facility to individuals with acute kidney injury (AKI). This rule also updates requirements for the ESRD Quality Incentive Program (QIP). In addition, this rule establishes a methodology for calculating fee schedule payment amounts for new Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) items and services, and a methodology for making adjustments to the fee schedule amounts established using supplier or commercial prices if such prices decrease within 5 years of establishing the initial fee schedule amounts. This rule also revises existing regulations related to the DMEPOS competitive bidding program. This rule also streamlines the requirements for ordering DMEPOS items, and develops a new list of DMEPOS items potentially subject to a face-to-face encounter, written orders prior to delivery and/or prior authorization requirements. Finally, this rule summarizes responses to requests for information on data collection resulting from the ESRD PPS technical expert panel, changing the basis for the ESRD PPS wage index, and new requirements for the competitive bidding of diabetic testing strips.
These regulations are effective January 1, 2020.
Delia Houseal, (410) 786–2724, for issues related to the ESRD QIP.
Julia Howard, (410) 786–8645, for issues related to DMEPOS CBP Amendments.
Jennifer Phillips, (410) 786–1023; Olufemi Shodeke, (410) 786–1649; and Maria Ciccanti, (410) 786–3107, for issues related to the DMEPOS written order, face-to-face encounter, and prior authorization requirements.
The Addenda for the annual ESRD PPS proposed and final rules will no longer appear in the
To assist readers in referencing sections contained in this preamble, we are providing a Table of Contents. Some of the issues discussed in this preamble affect the payment policies, but do not require changes to the regulations in the Code of Federal Regulations (CFR).
This final rule finalizes changes related to the End-Stage Renal Disease
In future rulemaking years, the DMEPOS provisions will be in a separate rule from the ESRD PPS, AKI and ESRD QIP provisions.
On January 1, 2011, we implemented the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS), a case-mix adjusted, bundled PPS for renal dialysis services furnished by ESRD facilities as required by section 1881(b)(14) of the Social Security Act (the Act), as added by section 153(b) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110–275). Section 1881(b)(14) (F) of the Act, as added by section 153(b) of MIPPA, and amended by section 3401(h) of the Patient Protection and Affordable Care Act (the Affordable Care Act) (Pub. L. 111–148), established that beginning calendar year (CY) 2012, and each subsequent year, the Secretary of the Department of Health and Human Services (the Secretary) shall annually increase payment amounts by an ESRD market basket increase factor, reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. This rule updates and makes revisions to the ESRD PPS for CY 2020.
On June 29, 2015, the President signed the Trade Preferences Extension Act of 2015 (TPEA) (Pub. L. 114–27). Section 808(a) of TPEA amended section 1861(s)(2)(F) of the Act to provide coverage for renal dialysis services furnished on or after January 1, 2017, by a renal dialysis facility or a provider of services paid under section 1881(b)(14) of the Act to an individual with acute kidney injury (AKI). Section 808(b) of the TPEA amended section 1834 of the Act by adding a new subsection (r) that provides for payment for renal dialysis services furnished by renal dialysis facilities or providers of services paid under section 1881(b)(14) of the Act to individuals with AKI at the ESRD PPS base rate beginning January 1, 2017. This rule updates the AKI payment rate for CY 2020.
The End-Stage Renal Disease Quality Incentive Program (ESRD QIP) is authorized by section 1881(h) of the Act. The Program fosters improved patient outcomes by establishing incentives for dialysis facilities to meet or exceed performance standards established by the Centers for Medicare & Medicaid Services (CMS). This final rule finalizes several updates to the ESRD QIP.
This rule establishes a gap-filling methodology for the pricing of new DMEPOS items and services in accordance with sections 1834(a), (h), (i) and 1833(o) of the Act for DME, prosthetic devices, orthotics, prosthetics, surgical dressings, and custom molded shoes, extra-depth shoes, and inserts, and section 1842(b) for parental and enteral nutrients (PEN) and medical supplies, including splints and casts and intraocular lenses inserted in a physician's office.
This rule finalizes a one-time adjustment to the gap-filled fee schedule amounts in cases where prices decrease by less than 15 percent within 5 years of establishing the initial fee schedule amounts.
This rule will streamline the requirements for ordering DMEPOS items. It will also develop one Master List of DMEPOS items potentially subject to a face-to-face encounter, written orders prior to delivery and/or prior authorization requirements under the authority provided under sections 1834(a)(1)(E)(iv), 1834(a)(11)(B), and 1834(a)(15) of the Act.
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We are finalizing that the TPNIES will be based on 65 percent of the price established by the Medicare Administrative Contractors (MACs), using the information from the invoice and other relevant sources of information. We will pay the TPNIES for 2-calendar years, after which the equipment or supply will qualify as an outlier service and no change to the ESRD PPS base rate will be made.
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We are updating the AKI payment rate for CY 2020. The final CY 2020 payment rate is $239.33, which is the same as the base rate finalized under the ESRD PPS for CY 2020.
We are finalizing several new requirements for the ESRD QIP beginning with payment year (PY) 2022, including an updated scoring methodology for the National Healthcare Safety Network (NHSN) Dialysis Event reporting measure to allow new facilities and facilities that are eligible to report data on the measure for less than 12 months to be able to receive a score on that measure, and the conversion of the STrR clinical measure (National Quality Forum [NQF] #2979) to a reporting measure while we continue to examine concerns raised by stakeholders regarding the measure's validity. We are not finalizing our proposal to revise the scoring methodology for the MedRec reporting measure and will continue to score that measure using the methodology we adopted in the CY 2019 ESRD PPS final rule.
We are also finalizing the performance and baseline periods for the PY 2023 ESRD QIP and that, beginning with the PY 2024 payment year, we will automatically adopt performance and baseline periods that are advanced 1 year from those specified for the previous payment year.
Finally, we are updating our regulation text so that it better informs the public of the Program's requirements.
This rule finalizes a specific methodology for calculating fee schedule amounts for new DMEPOS items. The fiscal impact of establishing payment amounts for new items based on our proposal cannot be estimated as these new items are not identified and would vary in uniqueness and costs. However, there is some inherent risk that the methodology could result in fee schedule amounts for new items that greatly exceed the costs of furnishing the items.
In cases where fee schedule amounts for new DMEPOS items and services are gap-filled using supplier or commercial prices, these prices may decrease over time. In cases where such prices decrease by less than 15 percent within 5 years of establishing the initial fee schedule amounts, this rule finalizes a one-time adjustment to the gap-filled fee schedule amounts. We will not make these price adjustments in cases where prices increase.
This rule will streamline the requirements for ordering DMEPOS items. It will also develop one Master List of DMEPOS items potentially subject to a face-to-face encounter, written orders prior to delivery and/or prior authorization requirements under the authority provided under sections 1834(a)(1)(E)(iv), 1834(a)(11)(B), and 1834(a)(15) of the Act.
In section X of this final rule, we set forth a detailed analysis of the impacts of the finalized changes for affected entities and beneficiaries. The impacts include the following:
The impact chart in section X of this final rule displays the estimated change in payments to ESRD facilities in CY 2020 compared to estimated payments in CY 2019. The overall impact of the CY 2020 changes is projected to be a 1.6
We estimate that the aggregate ESRD PPS expenditures will increase by approximately $210 million in CY 2020 compared to CY 2019. This reflects a $220 million increase from the payment rate update, a $50 million increase due to the updates to the outlier threshold amounts, and a $60 million decrease due to the change in the basis of payment for the TDAPA for calcimimetics from ASP+6 percent to ASP+0 percent. These figures do not reflect estimated increases or decreases in expenditures based on the refinement to the TDAPA eligibility criteria, conditioning the TDAPA on the availability of ASP data, or providing the TPNIES. The fiscal impact of these policies cannot be determined because the new renal dialysis drugs and biological products eligible for the TDAPA and new renal dialysis equipment and supplies eligible for the TPNIES are not yet identified and would vary in uniqueness and costs. As a result of the projected 1.6 percent overall payment increase, we estimate that there will be an increase in beneficiary co-insurance payments of 1.6 percent in CY 2020, which translates to approximately $40 million.
The impact chart in section X of this final rule displays the estimated change in payments to ESRD facilities in CY 2020 compared to estimated payments in CY 2019. The overall impact of the CY 2020 changes is projected to be a 1.7 percent increase in payments. Hospital-based ESRD facilities have an estimated 1.6 percent increase in payments compared with freestanding facilities with an estimated 1.7 percent increase.
We estimate that the aggregate payments made to ESRD facilities for renal dialysis services furnished to AKI patients at the final CY 2020 ESRD PPS base rate will increase by less than $1 million in CY 2020 compared to CY 2019.
We estimate that the overall economic impact of the PY 2022 ESRD QIP will be approximately $229 million as a result of the policies we have previously finalized and the proposals we are finalizing in this final rule. The $229 million figure for PY 2022 includes costs associated with the collection of information requirements, which we estimate will be approximately $211 million. We also estimate that the overall economic impact of the PY 2023 ESRD QIP will be approximately $223 million as a result of the policies we have previously finalized and are finalizing beginning with PY 2022. The $229 million figure for PY 2023 includes costs associated with the collection of information requirements, which we estimate will be approximately $211 million.
This final rule establishes a specific methodology for calculating fee schedule amounts for new DMEPOS items. The fiscal impact of establishing payment amounts for new items based on this methodology cannot be estimated as the new DMEPOS items are not identified and would vary in uniqueness and costs. However, there is some inherent risk that the final methodology could result in fee schedule amounts for new items that greatly exceed the costs of furnishing the items.
We are finalizing a one-time adjustment to the gap-filled fee schedule amounts in cases where fee schedule amounts for new DMEPOS items and services are gap-filled using supplier or commercial prices, and these prices decrease by less than 15 percent within 5 years of establishing the initial fee schedule amounts. The one-time adjustment should generate savings although it will probably be a small offset to the potential increase in costs of establishing fee schedule amounts based on supplier invoices or prices from commercial payers. The fiscal impact for this provision is therefore considered negligible.
This rule streamlines the requirements for ordering DMEPOS items, and identifies the process for subjecting certain DMEPOS items to a face-to-face encounter and written order prior to delivery and/or prior authorization requirements as a condition of payment. The fiscal impact of these requirements cannot be estimated as this rule only identifies all items that are potentially subject to the face-to-face encounter and written order prior to delivery requirements and/or prior authorization.
On January 1, 2011, we implemented the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS), a case-mix adjusted bundled PPS for renal dialysis services furnished by ESRD facilities, as required by section 1881(b)(14) of the Social Security Act (the Act), as added by section 153(b) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). Section 1881(b)(14)(F) of the Act, as added by section 153(b) of MIPPA and amended by section 3401(h) of the Patient Protection and Affordable Care Act (the Affordable Care Act), established that beginning with calendar year (CY) 2012, and each subsequent year, the Secretary of the Department of Health and Human Services (the Secretary) shall annually increase payment amounts by an ESRD market basket increase factor, reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act.
Section 632 of the American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112–240) included several provisions that apply to the ESRD PPS. Section 632(a) of ATRA added section 1881(b)(14)(I) to the Act, which required the Secretary, by comparing per patient utilization data from 2007 with such data from 2012, to reduce the single payment for renal dialysis services furnished on or after January 1, 2014 to reflect the Secretary's estimate of the change in the utilization of ESRD-related drugs and biologicals (excluding oral-only ESRD-related drugs). Consistent with this requirement, in the CY 2014 ESRD PPS final rule we finalized $29.93 as the total drug utilization reduction and finalized a policy to implement the amount over a 3- to 4-year transition period (78 FR 72161 through 72170).
Section 632(b) of ATRA prohibited the Secretary from paying for oral-only ESRD-related drugs and biologicals under the ESRD PPS prior to January 1, 2016. And section 632(c) of ATRA required the Secretary, by no later than January 1, 2016, to analyze the case-mix payment adjustments under section 1881(b)(14)(D)(i) of the Act and make appropriate revisions to those adjustments.
On April 1, 2014, the Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113–93) was enacted. Section
Section 217(a)(1) of PAMA amended section 632(b)(1) of ATRA to provide that the Secretary may not pay for oral-only ESRD-related drugs under the ESRD PPS prior to January 1, 2024. Section 217(a)(2) of PAMA further amended section 632(b)(1) of ATRA by requiring that in establishing payment for oral-only drugs under the ESRD PPS, the Secretary must use data from the most recent year available. Section 217(c) of PAMA provided that as part of the CY 2016 ESRD PPS rulemaking, the Secretary shall establish a process for (1) determining when a product is no longer an oral-only drug; and (2) including new injectable and intravenous products into the ESRD PPS bundled payment.
Finally, on December 19, 2014, the President signed the Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (ABLE) (Pub. L. 113–295). Section 204 of ABLE amended section 632(b)(1) of ATRA, as amended by section 217(a)(1) of PAMA, to provide that payment for oral-only renal dialysis services cannot be made under the ESRD PPS bundled payment prior to January 1, 2025.
Under the ESRD PPS, a single, per-treatment payment is made to an ESRD facility for all of the renal dialysis services defined in section 1881(b)(14)(B) of the Act and furnished to individuals for the treatment of ESRD in the ESRD facility or in a patient's home. We have codified our definitions of renal dialysis services at § 413.171, which is in 42 CFR part 413, subpart H, along with other ESRD PPS payment policies. The ESRD PPS base rate is adjusted for characteristics of both adult and pediatric patients and accounts for patient case-mix variability. The adult case-mix adjusters include five categories of age, body surface area, low body mass index, onset of dialysis, four comorbidity categories, and pediatric patient-level adjusters consisting of two age categories and two dialysis modalities (§ 413.235(a) and (b)).
The ESRD PPS provides for three facility-level adjustments. The first payment adjustment accounts for ESRD facilities furnishing a low volume of dialysis treatments (§ 413.232). The second adjustment reflects differences in area wage levels developed from core based statistical areas (CBSAs) (§ 413.231). The third payment adjustment accounts for ESRD facilities furnishing renal dialysis services in a rural area (§ 413.233).
The ESRD PPS provides a training add-on for home and self-dialysis modalities (§ 413.235(c)) and an additional payment for high cost outliers due to unusual variations in the type or amount of medically necessary care when applicable (§ 413.237).
The ESRD PPS also provides for a transitional drug add-on payment adjustment (TDAPA) to pay for a new injectable or intravenous (IV) product that is not considered included in the ESRD PPS bundled payment, meaning a product that is used to treat or manage a condition for which there is not an existing ESRD PPS functional category (§ 413.234). In the CY 2019 ESRD PPS final rule (83 FR 56929 through 56949), we finalized a policy to make the TDAPA available for all new renal dialysis drugs and biological products, not just those in new ESRD PPS functional categories, effective January 1, 2020.
Policy changes to the ESRD PPS are proposed and finalized annually in the
On November 14, 2018, we published a final rule in the
The proposed rule, titled “Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule Amounts, DMEPOS Competitive Bidding Program (CBP) Proposed Amendments, Standard Elements for a DMEPOS Order, and Master List of DMEPOS Items Potentially Subject to a Face-to-Face Encounter and Written Order Prior to Delivery and/or Prior Authorization Requirements” (84 FR 38330 through 38421), hereinafter referred to as the “CY 2020 ESRD PPS proposed rule,” was published in the
We received approximately 92 public comments on our proposals, including comments from ESRD facilities; national renal groups, nephrologists and patient organizations; patients and care partners; manufacturers; health care systems; and nurses.
In this final rule, we provide a summary of each proposed provision, a
Section 217(c) of PAMA provided that as part of the CY 2016 ESRD PPS rulemaking, the Secretary shall establish a process for (1) determining when a product is no longer an oral-only drug; and (2) including new injectable and intravenous products into the ESRD PPS bundled payment. Therefore, in the CY 2016 ESRD PPS final rule (80 FR 69013 through 69027), we finalized a process that allows us to recognize when an oral-only renal dialysis service drug or biological product is no longer oral-only, and a process to include new injectable and IV products into the ESRD PPS bundled payment, and when appropriate, modify the ESRD PPS payment amount.
In accordance with section 217(c)(1) of PAMA, we established § 413.234(d), which provides that an oral-only drug is no longer considered oral-only if an injectable or other form of administration of the oral-only drug is approved by FDA. Additionally, in accordance with section 217(c)(2) of PAMA, we codified the drug designation process at § 413.234(b). We finalized a policy in the CY 2016 ESRD PPS final rule (80 FR 69017 through 69022) that, effective January 1, 2016, if a new injectable or IV product is used to treat or manage a condition for which there is an ESRD PPS functional category, the new injectable or IV product is considered included in the ESRD PPS bundled payment and no separate payment is available. The new injectable or IV product qualifies as an outlier service. The ESRD bundled market basket updates the PPS base rate annually and accounts for price changes of the drugs and biological products reflected in the base rate.
In the CY 2016 ESRD PPS final rule, we also established in § 413.234(b)(2) that, if the new injectable or IV product is used to treat or manage a condition for which there is not an ESRD PPS functional category, the new injectable or IV product is not considered included in the ESRD PPS bundled payment and the following steps occur. First, an existing ESRD PPS functional category is revised or a new ESRD PPS functional category is added for the condition that the new injectable or IV product is used to treat or manage. Next, the new injectable or IV product is paid for using the TDAPA described in § 413.234(c). Then, the new injectable or IV product is added to the ESRD PPS bundled payment following payment of the TDAPA.
In the CY 2016 ESRD PPS final rule, we finalized a policy in § 413.234(c) to base the TDAPA on pricing methodologies under section 1847A of the Act and pay the TDAPA until sufficient claims data for rate setting analysis for the new injectable or IV product are available, but not for less than 2 years. During the time a new injectable or IV product is eligible for the TDAPA, it is not eligible as an outlier service. Following payment of the TDAPA, the ESRD PPS base rate will be modified, if appropriate, to account for the new injectable or IV product in the ESRD PPS bundled payment.
After the publication of the CY 2016 ESRD PPS final rule, we continued to hear from the dialysis industry and other stakeholders with suggestions for improving the drug designation process. Therefore, in CY 2019 ESRD PPS rulemaking, we revisited the drug designation process to consider their concerns and we proposed policies that would mitigate these issues.
In the CY 2019 ESRD PPS final rule (83 FR 56929 through 56949), we finalized several provisions related to the drug designation process and the TDAPA under § 413.234, with an effective date of January 1, 2020. In particular, we finalized changes to the drug designation process regulation to: (1) Reflect that the process applies for all new renal dialysis drugs and biological products; (2) establish a definition for “new renal dialysis drug or biological product”; (3) expand the eligibility criteria for the TDAPA; (4) change the TDAPA's basis of payment; and (5) extend the TDAPA to composite rate drugs and biological products that are furnished for the treatment of ESRD. We discuss these changes in detail in the next several paragraphs.
First, we revised the drug designation process regulation at § 413.234 to reflect that the drug designation process applies for all new renal dialysis drugs and biological products that are approved by FDA, regardless of the form or route of administration, that are used to treat or manage a condition associated with ESRD. In the CY 2019 ESRD PPS proposed rule (83 FR 34309 through 34312), we described the prior rulemakings in which we addressed how new drugs and biological products are implemented under the ESRD PPS and how we have accounted for renal dialysis drugs and biological products in the ESRD PPS base rate since its implementation on January 1, 2011. We explained that the drug designation process is dependent upon the ESRD PPS functional categories we developed, and is consistent with the policy we have followed since the inception of the ESRD PPS.
However, we noted in the CY 2019 ESRD PPS proposed rule (83 FR 34311 through 34312) that, because section 217(c)(2) of PAMA only required the Secretary to establish a process for including new injectable and IV drugs and biological products in the ESRD PPS bundled payment, such new products were the primary focus of the regulation we adopted at § 413.234. We explained that we did not codify our full policy in the CY 2016 ESRD PPS final rule for other renal dialysis drugs, such as drugs and biological products with other forms of administration, including oral, which by law are included under the ESRD PPS (though oral-only renal dialysis drugs are excluded from the ESRD PPS bundled payment until CY 2025). Commenters were generally supportive of the proposal, and we finalized the changes to codify our drug designation policy with regard to all drugs.
Second, as part of our updates to the drug designation process regulation in the CY 2019 ESRD PPS final rule (83 FR 56929 through 56932), we replaced the definition of “new injectable or intravenous product” with a definition for “new renal dialysis drug or biological product.” Under the final definition, effective January 1, 2020, a “new renal dialysis drug or biological product” is an “injectable, intravenous, oral or other form or route of administration drug or biological product that is used to treat or manage a condition(s) associated with ESRD. It must be approved by the [FDA] on or after January 1, 2020, under section 505 of the [FD&C Act] or section 351 of the Public Health Service Act, commercially available, have an HCPCS application submitted in accordance with the official HCPCS Level II coding procedures, and designated by CMS as a renal dialysis service under § 413.171. Oral-only drugs are excluded until January 1, 2025.”
Third, we expanded the eligibility criteria for the TDAPA to include all new renal dialysis drugs and biological products, not just those in new ESRD PPS functional categories, in the CY 2019 ESRD PPS final rule (83 FR 56942 through 56843). In the CY 2019 ESRD PPS proposed rule (83 FR 34312 through 34314), we discussed a number of reasons why we were reconsidering our previous policy to limit the TDAPA to products for which there is not an ESRD PPS functional category. We
We explained in the CY 2019 ESRD PPS proposed rule that this uptake period would be best supported by the TDAPA pathway because it would help ESRD facilities transition or test new drugs and biological products in their businesses under the ESRD PPS. We stated that the TDAPA could provide flexibility and target payment for the use of new renal dialysis drugs and biological products during the period when a product is new to the market so that we can evaluate if resource use can be aligned with payment. We further explained that we believe we need to be conscious of ESRD facility resource use and the financial barriers that may be preventing uptake of innovative new drugs and biological products. Thus, we proposed to revise § 413.234(c) to reflect that the TDAPA would apply for all new renal dialysis drugs and biological products regardless of whether they fall within an ESRD PPS functional category, and, for those products that fall within an existing functional category, the payment would apply for only 2 years and there would be no subsequent modification to the ESRD PPS base rate (83 FR 34314). At the end of the 2 years, the product would be eligible for outlier payment unless it is a renal dialysis composite rate drug or biological product.
As we discussed in the CY 2019 ESRD PPS final rule (83 FR 56934 through 56943), we received a variety of feedback from stakeholders on this proposal. Some commenters recommended delaying the expansion of the TDAPA and some urged CMS to consider different policy proposals. Some commenters were supportive of revising the drug designation process regulation to allow more drugs to be eligible for the TDAPA, while others expressed that the process needs to be further evaluated before any expansion. The Medicare Payment Advisory Commission (MedPAC) recommended that we not finalize the policy because it did not require that a new drug be more effective than current treatment and could undermine competition with existing drugs; or, if we do move forward with the policy, that we narrow eligibility to new drugs that fall into an existing ESRD PPS functional category only if they substantially improve beneficiaries' outcomes.
Other commenters had similar concerns and recommended that we require that the TDAPA apply for new renal dialysis drugs and biological products that have clinical superiority over the existing products in the existing functional categories, and they provided suggestions on clinical value criteria. In addition, some commenters believed that the TDAPA should not apply to generic drugs and biosimilar biological products. Commenters asserted that generic drugs and biosimilar biological products seek to provide the same type of treatment and patient outcomes as existing drugs in the ESRD PPS bundled payment. Commenters further believed that these types of drugs and biological products have no clinically meaningful differences and that they should be treated equally in payment and coverage policies. We also received several comments on our proposal to apply the TDAPA for a new renal dialysis drug or biological product that is considered included in the ESRD PPS base rate for 2 years, and to not modify the ESRD PPS base rate following payment of the TDAPA (83 FR 56934 through 56943).
After considering the public comments, in the CY 2019 ESRD PPS final rule, we finalized the expansion of the eligibility criteria for the TDAPA to reflect the proposed policy (83 FR 56943). We explained that there are 2 purposes of providing the TDAPA. For renal dialysis drugs and biological products that fall into an existing ESRD PPS functional category, the purpose of the TDAPA is to help ESRD facilities to incorporate new drug and biological products and make appropriate changes in their businesses to adopt such products; provide additional payment for such associated costs, as well as promote competition among drugs and biological products within the ESRD PPS functional categories. For new renal dialysis drugs and biological products that do not fall within an existing ESRD PPS functional category and that are not considered to be reflected in the ESRD PPS base rate, the purpose of the TDAPA is to be a pathway toward a potential base rate modification (83 FR 56935).
In response to commenters that recommended clinical superiority of new renal dialysis drugs and biological products, we explained in the CY 2019 ESRD PPS final rule (83 FR 56938) that we believed allowing all new drugs and biological products to be eligible for the TDAPA would enable new drugs and biological products to compete with other drugs and biological products in the market, which could mean lower prices for all such products. We also noted our belief that categorically limiting or excluding any group of drugs from the TDAPA would reduce the competitiveness because there would be less incentive for manufacturers to develop lower-priced drugs, such as generic drugs and biosimilar biological products, to be able to compete with higher priced drugs during the TDAPA period. In addition, we noted the question of whether one drug is more effective than another can be impacted by characteristics that vary across patients such as age, gender, race, genetic pre-disposition and comorbidities. We stated that innovation can provide options for those patients who do not respond to a certain preferred treatment regimen the same way the majority of patients respond.
In response to commenters who recommended that we not apply the TDAPA to generic drugs and biosimilar biological products, we explained in the CY 2019 ESRD PPS final rule (83 FR 56938) that the purpose of this policy is to foster a competitive marketplace in which all drugs within a functional category would compete for market share. We stated that we believed including generic drugs and biosimilar biological products under the TDAPA expansion would mitigate or discourage high launch prices. We further explained that we believed including these products would foster innovation of drugs within the current functional categories. We also noted that we believed including these products would give a financial boost to support their utilization, and ultimately lower overall drug costs since these products generally have lower prices. Because of this, we stated that we believed that generic drugs and biosimilar biological products would provide cost-based competition for new higher priced drugs during the TDAPA period and also afterward when they are bundled into the ESRD PPS.
In response to ESRD facilities that expressed concern regarding operational difficulties and patient access issues experienced for current drugs paid for using the TDAPA, we elected to make all of the changes to the drug designation process under § 413.234 and the expansion of the TDAPA eligibility effective January 1, 2020, as opposed to January 1, 2019, to address as many of those concerns as possible (83 FR 56937). We explained in the CY 2019 ESRD PPS final rule that the additional year would provide us with the opportunity to address issues such as transitioning payment from Part D to Part B, coordinating issues involving Medicaid and new Medicare Advantage policies, and working with the current HCPCS process as it applies to the ESRD PPS to accommodate the initial influx of new drugs and biological products. We also indicated that the additional year would allow more time for ESRD facility and beneficiary education about this new policy.
In addition, with regard to the HCPCS process, we explained the additional year would help us operationally in working with the HCPCS workgroup that manages the HCPCS process as it applies to the ESRD PPS to accommodate the initial influx of new renal dialysis drugs and biological products. We explained that in collaboration with the HCPCS workgroup we would make the determination of whether a drug or biological product is a renal dialysis service. We would also determine if the new renal dialysis drug or biological product falls within an existing functional category or if it represents a new functional category (83 FR 56937 through 56938).
With regard to our proposal to not modify the ESRD PPS base rate for new renal dialysis drugs and biological products that fall within existing ESRD PPS functional categories, we explained that we believe the intent of the TDAPA for these products is to provide a transition period for the unique circumstances experienced by ESRD facilities and to allow time for the uptake of the new product. We further explained that we did not believe it would be appropriate to add dollars to the ESRD PPS base rate for new renal dialysis drugs and biological products that fall within existing functional categories and that doing such would be in conflict with the fundamental principles of a PPS.
We also explained that the proposal would strike a balance of maintaining the existing functional category scheme of the drug designation process and not adding dollars to the ESRD PPS base rate when the base rate may already reflect costs associated with such services, while still supporting high-value innovation and allowing facilities to adjust or factor in new drugs through a short-term transitional payment.
We stated in the CY 2019 ESRD PPS final rule (83 FR 56940) that under our final policy, beginning January 1, 2020, for new renal dialysis drugs and biological products that fall within an existing functional category, the application of the TDAPA will begin with the effective date of subregulatory billing guidance and end 2 years from that date.
For new renal dialysis drugs and biological products that do not fall within an existing functional category, we continued the existing policy that application of the TDAPA will begin with the effective date of subregulatory billing guidance and end after we determine through notice-and-comment rulemaking how the drug will be recognized in the ESRD PPS bundled payment.
Fourth, in the CY 2019 ESRD PPS final rule, we changed the TDAPA's basis of payment (83 FR 34314 through 34316). We explained that if we adopted the proposals to expand the TDAPA eligibility criteria using the current basis of payment for the TDAPA—the pricing methodologies available under section 1847A of the Act—Medicare expenditures would increase, which would result in increases of cost sharing for ESRD beneficiaries, since we had not previously provided the TDAPA for all new renal dialysis drugs and biological products. We also discussed other reasons why we believed it may not be appropriate to base the TDAPA strictly on section 1847A of the Act methodologies (83 FR 34315).
Therefore, we proposed to base the TDAPA on 100 percent of ASP (ASP+0) instead of the pricing methodologies available under section 1847A of the Act (which includes ASP+6). For circumstances when ASP data is not available, we proposed that the TDAPA would be based on 100 percent of Wholesale Acquisition Cost (WAC) and, when WAC is not available, the TDAPA would be based on the drug manufacturer's invoice.
In the CY 2019 ESRD PPS final rule (83 FR 56943 through 56948), we discussed several comments received on this proposal. MedPAC supported the proposal to use ASP+0, stating that the ESRD PPS accounts for storage and administration costs and that ESRD facilities do not have acquisition price variation issues when compared to physicians. Conversely, industry stakeholders recommended the basis of payment remain at ASP+6 since they believe it assists with the administrative costs of packaging, handling, and staff. Commenters also recommended that CMS consider the impact of bad debt recovery and sequestration on payment when determining the basis of payment.
After considering public comments, in the CY 2019 ESRD PPS final rule (83 FR 56948), we finalized the policy as proposed, with one revision to change the effective date to CY 2020, and another revision to reflect that the basis of payment for the TDAPA for calcimimetics would continue to be based on the pricing methodologies available under section 1847A of the Act (which includes ASP+6). We explained that we believed ASP+0 is reasonable for new renal dialysis drugs and biological products that fall within an existing functional category because there are already dollars in the per treatment base rate for a new drug's respective category. We also explained that we believed ASP+0 is a reasonable basis for payment for the TDAPA for new renal dialysis drugs and biological products that do not fall within the existing functional category because the ESRD PPS base rate has dollars built in for administrative complexities and overhead costs for drugs and biological products (83 FR 56946).
Fifth and finally, in the CY 2019 ESRD PPS final rule (83 FR 56948 through 56949), we finalized a policy to extend the TDAPA to composite rate drugs and biological products that are furnished for the treatment of ESRD. Specifically, beginning January 1, 2020, if a new renal dialysis drug or biological product as defined in § 413.234(a) is considered to be a composite rate drug or biological product and falls within an existing ESRD PPS functional category, it will be eligible for the TDAPA.
We explained that we believed by allowing all new renal dialysis drugs and biological products to be eligible for the TDAPA, we would provide an ability for a new drug to compete with other similar drugs in the market which could mean lower prices for all drugs. We further explained that we believed that new renal dialysis composite rate drugs and biological products could benefit from this policy as well. Additionally, we explained that we continue to believe that the same unique consideration for innovation and cost exists for drugs that are considered composite rate drugs. That is, the ESRD PPS base rate dollars allocated for these types of drugs may not directly address the costs associated with drugs in this category when they are newly launched and are finding their place in the market. We noted that we had not
In the CY 2020 ESRD PPS proposed rule (84 FR 38337 through 38339), we explained that based on feedback received during and after the CY 2019 ESRD PPS rulemaking, we were proposing to make further refinements to the TDAPA eligibility criteria. As we discussed in the CY 2019 ESRD PPS final rule (83 FR 56935) and in section II.B.1.a of this final rule, we received many comments from all sectors of the dialysis industry and other stakeholders on our proposal in the CY 2019 ESRD PPS rulemaking to expand the TDAPA eligibility to all new renal dialysis drugs and biological products, and each had their view on the direction the policy needed to go to support innovation. We noted in the CY 2020 ESRD PPS proposed rule (84 FR 38338) that commenters generally agreed that more drugs and biological products should be eligible for the TDAPA, that is, they agreed that drugs and biological products that fall within an ESRD PPS functional category should be eligible for a payment adjustment when they are new to the market. However, we noted that commenters also had specific policy recommendations for each element of the drug designation process, including which drugs should qualify for the TDAPA.
We also noted in the CY 2020 ESRD PPS proposed rule (84 FR 38338) that in the CY 2019 ESRD PPS final rule (83 FR 56938) some commenters recommended that CMS not apply the TDAPA to generic drugs or to biosimilar biological products. These commenters explained that they believe the rationale for the TDAPA is to allow the community and CMS to better understand the appropriate utilization of new products and their pricing. We also noted that commenters asserted that generic drugs and biosimilar biological products seek to provide the same type of treatment and patient outcomes as existing drugs in the ESRD PPS bundled payment. Thus, they expressed that the additional time for uptake is unnecessary for these drugs and biological products.
In addition, we stated in the CY 2020 ESRD PPS proposed rule (84 FR 38338) that a drug manufacturer had commented on the CY 2019 TDAPA proposal (83 FR 56938) that a generic drug is not innovative because it must have the same active ingredient, strength, dosage form, and route of administration as the innovator drug it references in its abbreviated new drug application (ANDA). The drug manufacturer further stated that a biosimilar biological product is not innovative because it is required under the Public Health Service Act (the PHS Act) to be highly similar and have no clinically meaningful differences to the reference product and cannot be licensed for a condition of use that has not been previously approved for the reference product or for a dosage form, strength, or route of administration that differs from that of the reference product. We noted that the commenter stated that because they have no clinically meaningful differences, biosimilar biological products and reference products should be treated equally in payment and coverage policies; a biosimilar biological product should not be eligible for the TDAPA when its reference product would not qualify for the payment.
We further explained in the CY 2020 ESRD PPS proposed rule (84 FR 38338), that some commenters on the CY 2019 TDAPA proposal recommended that CMS require that the new renal dialysis drug or biological product have a clinical superiority over existing drugs in the ESRD PPS bundled payment in order to be eligible for the TDAPA, and provided suggestions on clinical value criteria. We stated that a dialysis facility organization expressed concern that the proposed policy would encourage promotion of so called “me too” drugs and higher launch prices, even if moderated after 2 years. We noted that a drug manufacturer recommended that CMS consider when FDA may re-profile a drug and that the commenter further explained that re-profiling a drug may occur when its utility and efficacy are further elucidated or expanded once on-market. We also noted that the commenter recommended that CMS establish a pathway as part of the drug designation process that would allow for manufacturers or other stakeholders to request that CMS reconsider how a particular drug is classified with regard to the functional categories.
In the CY 2020 ESRD PPS proposed rule (84 FR 38338) we discussed MedPAC's comment from the CY 2019 ESRD PPS final rule (83 FR 56936). MedPAC had recommended that CMS not proceed with its proposal to apply the TDAPA policy to new renal dialysis drugs that fit into an existing functional category for several reasons. For example, MedPAC stated that paying the TDAPA for new dialysis drugs that fit into a functional category would be duplicative of the payment that is already made as part of the ESRD PPS bundle. MedPAC also asserted that applying the TDAPA to new dialysis drugs that fit into an existing functional category undermines competition with existing drugs included in the PPS payment bundle since the TDAPA would effectively unbundle all new dialysis drugs, removing all cost constraints during the TDAPA period and encouraging the establishment of high launch prices.
We stated in the CY 2020 ESRD PPS proposed rule (84 FR 38338) that since publishing the CY 2019 ESRD PPS final rule, we have continued to hear concerns about expanding the TDAPA policy from numerous stakeholders, including ESRD facilities and their professional associations, beneficiaries and their related associations, drug manufacturers, and beneficiary groups.
We also stated in the CY 2020 ESRD PPS proposed rule (84 FR 38338), that our data contractor held a Technical Expert Panel (TEP) in December 2018, and gathered input regarding the expanded TDAPA policy at that time. More information about the TEP is discussed in section VIII.A of the CY 2020 ESRD PPS proposed rule (84 FR 38396 through 38400), and in section VIII.A of this final rule. We noted that some ESRD facility associations participating in the TEP generally expressed concern that the TDAPA policy, as finalized in the CY 2019 ESRD PPS final rule, would inappropriately direct Medicare dollars to drugs and biological products that may be new to the market but not new with regard to certain characteristics of the drug itself. For example, commenters noted that section 505 of the FD&C Act is broad and includes FDA approval of a new drug application (NDA), which is the vehicle through which drug sponsors formally propose that FDA approve a new pharmaceutical for sale and marketing in the U.S.
We stated in the CY 2020 ESRD PPS proposed rule (84 FR 38338) that due to the feedback received following publication of the CY 2019 ESRD PPS final rule, we had continued to analyze certain aspects of the policies finalized
We stated in the CY 2020 ESRD PPS proposed rule (84 FR 38338) that in the CY 2019 ESRD PPS final rule (83 FR 56932) we finalized that effective January 1, 2020, a new renal dialysis drug or biological product is defined in § 413.234 as “[a]n injectable, intravenous, oral or other form or route of administration drug or biological product that is used to treat or manage a condition(s) associated with ESRD. It must be approved by the FDA on or after January 1, 2020, under section 505 of the [FD&C Act] or section 351 of the [PHS Act], commercially available, have an HCPCS application submitted in accordance with the official Level II HCPCS coding procedures, and designated by CMS as a renal dialysis service under § 413.171. Oral-only drugs are excluded until January 1, 2025.” We noted that while there are several parts of this definition, in the proposed rule we focused on the requirement that the product be approved by FDA “under section 505 of the [FD&C Act] or section 351 of the [PHS Act].” Specifically, we proposed that certain new renal dialysis drugs approved by FDA under those authorities would not be eligible for the TDAPA under § 413.234(c)(1).
We explained in the CY 2020 ESRD PPS proposed rule (84 FR 38338 through 38339) that section 505 of the FD&C Act and section 351 of the PHS Act provide the authority to FDA for approving drugs and biological products, respectively, and provide several pathways for drug manufacturers to submit NDAs and biologics license applications (BLAs). We noted that we have consulted with FDA and studied the different categories of NDAs and the different biological product pathways to consider whether the full breadth of these authorities aligned with our goals for the TDAPA policy under the ESRD PPS. As we stated in the CY 2019 ESRD PPS final rule (83 FR 56935), the purpose of the TDAPA for new renal dialysis drugs and biological products that fall within an existing functional category is to support innovation and help ESRD facilities to incorporate new products and make appropriate changes in their businesses to adopt such products; provide additional payment for such associated costs, as well as promote competition among drugs and biological products within the ESRD PPS functional categories.
We explained that FDA approves certain new drugs under section 505(c) of the FD&C Act, which includes NDAs submitted pursuant to section 505(b)(1) or 505(b)(2) of the FD&C Act. We further explained that section 505(b)(1) of the FD&C Act is a pathway for “stand-alone” applications and is used for drugs that have been discovered and developed with studies conducted by or for the applicant or for which the applicant has a right of reference, and are sometimes for new molecular entities and new chemical entities that have not been previously approved in the U.S.
We also explained that section 505(b)(2) of the FD&C Act is another pathway for NDAs, where at least some of the information for an approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference. A 505(b)(2) application may rely on FDA's finding of safety and/or effectiveness for a listed drug (an approved drug product) or published literature provided that such reliance is scientifically justified and the 505(b)(2) applicant complies with the applicable statutory and regulatory requirements, including patent certification if appropriate. (See section 505(b)(2) of the FD&C Act and 21 CFR 314.54.) NDAs submitted pursuant to section 505(b)(1) or 505(b)(2) of the FD&C Act are divided into categories by FDA.
We explained in the CY 2020 ESRD PPS proposed rule (84 FR 38339) that the Office of Pharmaceutical Quality in FDA's Center for Drug Evaluation and Research (CDER) has an NDA categorizing system that utilizes NDA Classification Codes. As explained in FDA/CDER Manual of Policies and Procedures (MAPP) 5018.2, “NDA Classification Codes”, the codes evolved from both a management and a regulatory need to identify and group product applications based on certain characteristics, including their relationships to products already approved or marketed in the U.S. FDA tentatively assigns an NDA Classification Code (that is, Type 1 NDA through Type 10 NDA) by the filing date for an NDA and reassesses the code at the time of approval. The reassessment is based upon relationships of the drug product seeking approval to products already approved or marketed in the U.S. at the time of approval. FDA may also reassess the code after approval. We stated that the NDA Classification Codes are not necessarily indicative of the extent of innovation or therapeutic value that a particular drug represents. More information regarding the NDA Classification Codes is available in FDA/CDER MAPP 5018.2 on FDA website at:
We further explained in the CY 2020 ESRD PPS proposed rule (84 FR 38339) that an ANDA is an application submitted by drug manufacturers and approved by FDA under section 505(j) of the FD&C Act for a “duplicate”
We stated that biological products are licensed by FDA under section 351 of the PHS Act. Section 351(a) of the PHS Act is the pathway for “stand-alone BLAs” that contain all information and data necessary to demonstrate that (among other things) the proposed
We stated in the CY 2020 ESRD PPS proposed rule (84 FR 38339) that in addition to consulting with FDA, pharmaceutical statisticians within CMS have provided insight on the potential outcomes of providing payment incentives for promoting competition among drugs and biological products within the ESRD PPS functional categories. Specifically, we learned that certain unintended consequences could arise from providing payment incentives for drugs with innovative qualities (for example, new molecular entities) in the same way as drugs with non-innovative qualities (for example, generic drugs). For example, more attention might be diverted to the less costly duplication of drugs that are already available rather than those that may be more expensive to develop and bring to market. We noted that we believed this could cause an influx of non-innovative drugs to the dialysis space, potentially crowding out innovative drugs.
In the CY 2020 ESRD PPS proposed rule (84 FR 38339 through 38340) we explained that we analyzed the information we gathered since publishing the CY 2019 ESRD PPS final rule and contemplated the primary goal of the TDAPA policy for new renal dialysis drugs and biological products that fall within ESRD PPS functional categories, which is to support innovation and encourage development of these products. We stated that we believed this is accomplished by providing an add-on payment adjustment to ESRD facilities during the uptake period for a new renal dialysis drug or biological product to help the facilities incorporate new drugs and make appropriate changes in their businesses to adopt such drugs. We also noted that the TDAPA provides additional payment for costs associated with these changes.
We stated that in addition to supporting innovation, we were mindful of the increase in Medicare expenditures associated with the expanded TDAPA policy. We noted that the first year in which we paid the TDAPA, CY 2018, resulted in an estimated $1.2 billion increase in ESRD PPS expenditures for two calcimimetic drugs used by approximately 25 percent of the Medicare ESRD population. We recognized that the policy we finalized in the CY 2019 ESRD PPS final rule would mean that each new renal dialysis drug and biological product eligible for the TDAPA would result in an increase in Medicare expenditures. However, we noted that we were balancing an increase in Medicare expenditures with the rationale for fostering a competitive marketplace. We noted that in the CY 2019 ESRD PPS final rule (83 FR 56937), we stated our belief that by expanding the eligibility for TDAPA to all new drugs and biological products we would promote competition among drugs and biological products within the ESRD PPS functional categories, which could result in lower prices for all drugs.
We stated in the CY 2020 ESRD PPS proposed rule (84 FR 38340) that in response to ESRD facility and other dialysis stakeholders' concerns raised during and after the CY 2019 ESRD PPS rulemaking, and after conducting a closer study of FDA's NDA process, we were reconsidering the eligibility criteria that we finalized effective January 1, 2020. Since there are not unlimited Medicare resources, we stated that we believed those resources should not be expended on additional payments to ESRD facilities for drugs and biological products that are not truly innovative, and that such additional payments may facilitate perverse incentives for facilities to choose new products simply for financial gain. We also noted that we believed that since we have the ability to be more selective, through FDA's NDA Classification Codes, with the categories of renal dialysis drugs that would be eligible for the TDAPA for products in existing ESRD PPS functional categories, we can balance supporting innovation, incentivizing facilities with uptake of new and innovative renal dialysis products, and fostering competition for renal dialysis drugs and biological products that are new and innovative, rather than just new.
We acknowledged that the definition finalized in the CY 2016 ESRD PPS final rule (80 FR 69015 through 69027), which includes products “approved by [FDA] . . . under section 505 of the [FD&C Act] or section 351 of the [PHS Act]” has been part of the TDAPA eligibility criteria since the inception of the policy. We also acknowledged that this may be too expansive for purposes of determining eligibility for the TDAPA for new renal dialysis drugs and biological products that fall within an existing functional category. For example, there may be new renal dialysis drugs approved by FDA under section 505 of the FD&C Act that may not be innovative.
We also acknowledged that while dialysis industry stakeholders recommended that we adopt significant clinical improvement standards for the TDAPA eligibility, we believed that unlike many Medicare beneficiaries, the Medicare ESRD beneficiary is significantly complex, with each patient having a unique and challenging profile for medical management of drugs and biological products. We stated that we believed that practitioners should have the opportunity to evaluate the appropriate use of a new drug or biological product and its effect on patient outcomes and interactions with other medications the patient is currently taking. We further noted that the question of whether one drug is more effective than another can be impacted by characteristics that vary across patients such as age, gender, race, genetic pre-disposition and comorbidities. We stated that we believed that innovation of drugs and biological products can provide options for those patients who do not respond to a certain preferred treatment regimen the same way the majority of patients respond.
Therefore, in the CY 2020 ESRD PPS proposed rule (84 FR 38341 through 38344) we discussed categories of drugs that we proposed to exclude from eligibility for the TDAPA and our proposed revisions to the drug designation process regulation in § 413.234 to reflect those categories.
We also proposed to rely on, as a proxy, the NDA Classification Code, as it exists as of November 4, 2015, which is part of FDA/CDER MAPP 5018.2 (84 FR 38340). The FDA/CDER MAPP 5018.2 is available at FDA website
We stated that the classification code assigned to an NDA generally describes FDA's classification of the relationship of the drug to drugs already marketed or approved in the U.S. We proposed that if FDA makes changes to the NDA Classification Codes in FDA/CDER MAPP 5018.2, we would assess FDA changes at the time they are publicly available and we would analyze those changes with regard to their implications for the TDAPA policy under the ESRD PPS (84 FR 38340). We stated that we would plan to propose in the next rulemaking cycle, any necessary revisions to the exclusions set forth in proposed § 413.234(e). We solicited comment on the proposal to rely on, as a proxy, the NDA Classification Codes, as it exists as of November 4, 2015, which is part of the FDA/CDER MAPP 5018.2. We also solicited comments on the proposal that we would assess FDA changes to the NDA Classification Codes at the time they are publicly available to analyze the changes with regard to their implications for the TDAPA policy and propose in the next rulemaking cycle, any necessary revisions to the proposed exclusions.
We explained in the CY 2020 ESRD PPS proposed rule (84 FR 38340) that currently, stakeholders must notify the Division of Chronic Care Management in our Center for Medicare of the interest for eligibility for the TDAPA and provide the information requested (83 FR 56932) for CMS to make a determination as to whether the new renal dialysis drug or biological product is eligible for the adjustment. We stated that, with regard to operationalizing the proposed exclusions, in addition to the information currently described on the CMS ESRD PPS TDAPA web page under the Materials Required for CMS Determination Purposes,
We stated that, as discussed in the CY 2019 ESRD PPS final rule (83 FR 56932), once the information requested by CMS is received and reviewed, for new renal dialysis drugs and biological products eligible for the TDAPA, we will issue a change request with billing guidance that will provide notice that the product is eligible for the TDAPA as of a certain date and guidance on how to report the new drug or biological product on the ESRD claim. We noted that the effective date of this change request will initiate the TDAPA payment period and, for drugs that do not fall within a functional category, the data collection period.
We also noted that for new renal dialysis drugs and biological products that are not eligible for the TDAPA, we will issue a change request that will provide notice that the drug is included in the ESRD PPS base rate, qualifies as an outlier service, and is available for use, to help ensure patients have access to the new product.
In the CY 2020 ESRD PPS proposed rule (84 FR 38341 through 38343), using the current categories in FDA/CDER MAPP 5018.2 effective November 4, 2015, we proposed to exclude Types 3, 5, 7 and 8, Type 3 in combination with Type 2 or Type 4, Type 5 in combination with Type 2, and Type 9 when the “parent NDA” is a Type 3, 5, 7 or 8 from being eligible for the TDAPA under § 413.234(b)(1)(ii) and § 413.234(c)(1). A Type 9 NDA is for a new indication or claim for a drug product that is currently being reviewed under a different NDA (the “parent NDA”), and the applicant does not intend to market this drug product under the Type 9 NDA after approval. We explained that we would use the NDA Classification Codes Type identified at FDA approval. If FDA changes the classification code Type after we start applying the TDAPA with respect to a particular new renal dialysis drug, we would re-evaluate TDAPA eligibility. We also proposed to exclude generic drugs from being eligible for the TDAPA under § 413.234(b)(1)(ii) and § 413.234(c)(1).
In the following paragraphs we provide our description from the CY 2020 ESRD PPS proposed rule of each NDA Type, also referred to as NDA Classification Codes, and generic drugs that we proposed for exclusion and give our justifications for proposing that these products should not be eligible for the TDAPA for new renal dialysis drugs and biological products that fall within an existing ESRD PPS functional category.
As we discussed in the CY 2020 ESRD PPS proposed rule (84 FR 38341), some dialysis stakeholders expressed concern that we would be paying the TDAPA for changes that did not reflect a product being significantly innovative, such as a pill size, pill scoring, oral solutions and suspensions of drugs that were previously only approved as solid oral dosage forms, time-release forms, chewable or effervescent pills, orally disintegrating granules or adsorptive changes, or routes of administration. In response to these concerns, we proposed to exclude Type 3 NDAs, which is for a new dosage form of an active ingredient that has been approved or marketed in the U.S. by the same or another applicant but has a different dosage form, as well as Type 3 in combination with Type 2 or Type 4, from being eligible for the TDAPA under § 413.234(b)(1)(ii). In addition, we proposed to exclude Type 9 NDAs, as discussed in the CY 2020 ESRD PPS proposed rule (84 FR 38345), when the “parent NDA” is a Type 3 NDA.
We explained that FDA's regulation defines an active ingredient as a component of the drug product that is intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to affect the structure or any function of the body of man or other animals (21 CFR 314.3(b), which is incorporated in FDA/CDER MAPP 5018.2).
We also explained FDA's regulation defines dosage form as the physical manifestation containing the active and inactive ingredients that delivers a dose of the drug product (21 CFR 314.3(b), which is incorporated in FDA/CDER MAPP 5018.2). This includes such factors as: (1) The physical appearance of the drug product, (2) the physical form of the drug product prior to dispensing to the patient, (3) the way the product is administered, and (4) the design features that affect the frequency of dosing.
We further stated that for Type 3 NDA drugs, the indication does not need to be the same as that of the already approved drug product. Once the new dosage form has been approved for an active ingredient, subsequent applications for the same dosage form and active ingredient should be classified as Type 5 NDA.
We noted that we believed that for purposes of the ESRD PPS, we do not want to incentivize the use of one
As discussed in the CY 2020 ESRD PPS proposed rule (84 FR 38345), we proposed to exclude Type 5 NDA drugs, which can be a new formulation or new manufacturer, from being eligible for the TDAPA. In addition, we proposed to exclude Type 9 NDAs, when the “parent NDA” is a Type 5 NDA. We noted that drugs that are classified as a Type 5 NDA are sometimes referred to as reformulations or follow-on products. We explained that a Type 5 NDA is for a product, other than a new dosage form, that differs from a product already approved or marketed in the U.S. because of one of the seven following product characteristics.
The first characteristic involves changes in inactive ingredients that require either bioequivalence studies or clinical studies for approval and the product is submitted as an original NDA rather than as a supplement by the applicant of the approved product.
The second characteristic is that the product is a “duplicate” of a drug product by another applicant same active ingredient, same dosage form, same or different indication, or same combination, and requires one of the following 4 items: (a) Bioequivalence testing, including bioequivalence studies with clinical endpoints, but is not eligible for submission as a section 505(j) application; (b) safety or effectiveness testing because of novel inactive ingredients; (c) full safety or effectiveness testing because the product is one of the following four items: (i) Is subject to exclusivity held by another applicant; (ii) is a product of biotechnology and its safety and/or effectiveness are not assessable through bioequivalence testing, (iii) it is a crude natural product, or, (iv) it is ineligible for submission under section 505(j) of the FD&C Act because it differs in bioavailability, for example, products with different release patterns or (d) the applicant has a right of reference to the application.
The third characteristic is that the product contains an active ingredient or active moiety that has been previously approved or marketed in the U.S. only as part of a combination. We explained that this applies to active ingredients previously approved or marketed as part of a physical or chemical combination, or as part of a mixture derived from recombinant deoxyribonucleic acid technology or natural sources. We also explained that an active moiety is the molecule or ion, excluding those appended portions of the molecule that cause the drug to be an ester, salt (including a salt with hydrogen or coordination bonds), or other noncovalent derivative (such as a complex, chelate, or clathrate) of the molecule, responsible for the physiological or pharmacological action of the drug substance (21 CFR 314.3(b)).
The fourth characteristic is that the product is a combination product that differs from a previous combination product by removal of one or more active ingredients or by substitution of a new ester or salt or other noncovalent derivative of an active ingredient for one of more of the active ingredients. We explained that in the case of a substitution of a noncovalent derivative of an active ingredient for one or more of the active ingredients, the NDA would be classified as a Type 2, 5 combination and we proposed to exclude it from eligibility for the TDAPA under § 413.234(b)(1)(ii).
The fifth characteristic is that the product contains a different strength of one or more active ingredients in a previously approved or marketed combination. We explained that a Type 5 NDA would generally be submitted by an applicant other than the holder of the approved application for the approved product. We also explained that a similar change in an approved product by the applicant of the approved product would usually be submitted as a supplemental application.
The sixth characteristic is that the product differs in bioavailability (for example, superbioavailable or different controlled-release pattern) and, therefore, is ineligible for submission as an ANDA under section 505(j) of the FD&C Act.
The seventh characteristic is that the product involves a new plastic container that requires safety studies beyond limited confirmatory testing (see 21 CFR 310.509, Parenteral drugs in plastic containers, and FDA/CDER MAPP 6020.2, Applications for Parenteral Products in Plastic Immediate Containers).
In the CY 2020 ESRD PPS proposed rule (84 FR 38342 through 38343) we noted that some commenters have characterized the types of drugs that are often approved in Type 5 NDAs as reformulations or line extensions. We explained that a line extension is a variation of an existing product.
We explained that we did not believe the characteristics of Type 5 NDA drugs would advance the intent of the TDAPA for new renal dialysis drugs and biological products that fall within an existing functional category. We noted that we believed that while Type 5 NDA drugs may have clinical benefits to patients over previously approved products, we did not make that assessment as part of ESRD PPS payment policy. We stated that we did not believe the types of changes represented by Type 5 NDAs enhance our goal of increased competition with the overarching goal of lowering drug prices. We noted that to the contrary, it seems that a goal of line extensions can be to thwart competition. We also noted that studies indicate that there is no lowering of prices through competition from line extensions. Rather, it has been reported that prices remain rigid and are not lowered. In fact, not only can product line extensions thwart competition, but they inherit the market success of the original brand, sometimes with little quality improvement over the original brand.
We noted that a study published in February 2019, concluded that the pattern of a considerable subset of reformulations prolonged the consumption of costly brand-name products at the expense of timely market entry of low cost generics.
As discussed in the CY 2020 ESRD PPS proposed rule (84 FR 38345), we proposed to exclude Type 7 NDA, which is for a drug product that contains an active moiety that has not been previously approved in an application but has been marketed in the U.S., from being eligible for the TDAPA for renal dialysis drugs and biological products in existing functional categories. In addition, we proposed to exclude Type 9 NDAs when the “parent NDA” is a Type 7 NDA. We explained that this classification only applies to the first NDA approved for a drug product containing this (these) active moiety(ies). They include, but are not limited to the following four items: (1) The first post-1962 application for an active moiety marketed prior to 1938; (2) The first application for an active moiety first marketed between 1938 and 1962 that is identical, related or similar (IRS) to a drug covered by a Drug Efficacy Study Implementation (DESI) notice (FDA's regulation at 21 CFR 310.6(b)(1) states that, “[a]n identical, related, or similar drug includes other brands, potencies, dosage forms, salts, and esters of the same drug moiety as well as any of drug moiety related in chemical structure or known pharmacological properties”); (3) The first application for an IRS drug product first marketed after 1962; and (4) The first application for an active moiety that was first marketed without an NDA after 1962.
We stated that we did not believe the characteristics of Type 7 NDA drugs would advance the intent of the TDAPA policy because these drugs were already on the market. For example, FDA received an application for calcium gluconate, which is on the Consolidated Billing List and is already recognized as a renal dialysis service included in the ESRD PPS base rate. The NDA for calcium gluconate was classified by FDA in 2017 to be a Type 7 NDA. We stated that we believed this drug was not innovative and does not significantly advance the treatment options for ESRD. We also noted that we believed that if the Type 7 NDA drug is determined to be a renal dialysis service, it is likely it is already being used by the facility, so paying the TDAPA for it does not assist the facilities in uptake for their business model, which is one of the goals of the TDAPA. In addition, we stated that we believed paying the TDAPA for Type 7 NDA drugs uses Medicare resources that ultimately could be used to pay for innovative drugs and services that result from research and development in areas of high value innovation. Therefore, we did not consider Type 7 NDA drugs to be eligible for the TDAPA.
As discussed in the CY 2020 ESRD PPS proposed rule (84 FR 38345), we proposed to exclude Type 8 NDA, which is when a prescription drug product changes to an over-the-counter (OTC) drug product, from being eligible for the TDAPA. In addition, we proposed to exclude Type 9 NDAs when the “parent NDA” is a Type 8 NDA. We explained that a Type 8 NDA is for a drug product intended for OTC marketing that contains an active ingredient that has been approved previously or marketed in the U.S. only for dispensing by prescription. We further explained that a Type 8 NDA may provide for a different dosing regimen, different strength, different dosage form, or different indication from the product approved previously for prescription sale.
We explained that if the proposed OTC switch would apply to all indications, uses, and strengths of an approved prescription dosage form (leaving no prescription-only products of that particular dosage form on the market), then FDA indicates that the application holder should submit the change as a supplement to the approved application. We noted that if the
We stated that we did not believe the characteristics of Type 8 NDA drugs would advance the intent of the TDAPA policy for renal dialysis drugs and biological products in existing functional categories because Type 8 NDAs are for drugs transitioning from prescription to OTC, and Medicare does not provide coverage of OTC drugs. We noted that we believed that although certain innovative approaches may help increase access to a broader selection of nonprescription drugs for ESRD beneficiaries, we did not consider the transition from prescription to OTC to be innovative for purposes of the TDAPA policy. We stated that we believed making the TDAPA available for Type 8 NDAs may defeat the intent of lowering overall costs for both the ESRD beneficiary and for Medicare, and was not needed by the facilities to provide additional support during an uptake period so they can be incorporated into the business model. We noted that OTC drugs have already gone through safety trials if they were previously prescription drugs and their end-point physiologic activity had been recognized and documented. Therefore, we stated that we believed the newness is a reflection of accessibility to the general public without having to obtain a prescription through a licensed practitioner. We noted that we believed these drugs, though new to the market, are not sufficiently innovative to qualify for TDAPA eligibility.
We proposed to exclude drugs approved by FDA under section 505(j) of the FD&C Act, which are generic drugs, from being eligible for the TDAPA. As we discussed in the CY 2020 ESRD PPS proposed rule (84 FR 38337 through 38339), an ANDA is an application submitted by drug manufacturers and approved by FDA under section 505(j) of the FD&C Act for a duplicate of a previously approved drug product.
We explained that an ANDA generally must contain information to show that the proposed generic product: (1) Is the same as the reference listed drug (RLD) with respect to the active ingredient(s), conditions of use, route of administration, dosage form, strength, and labeling (with certain permissible differences) and (2) is bioequivalent to the RLD. See section 505(j)(2)(A) of the FD&C Act. In general, an ANDA would not be appropriate if clinical investigations are necessary to establish the safety and effectiveness of the proposed product. A drug product approved in an ANDA is presumed to be therapeutically equivalent to its RLD. A drug product that is therapeutically equivalent to an RLD can be substituted with the full expectation that the substituted product will produce the same clinical effect and safety profile as the RLD when administered to patients under the conditions specified in the labeling.
We noted that, in the CY 2019 ESRD PPS final rule (83 FR 56931), we included generic drugs in the definition of a new renal dialysis drug or biological product eligible for the TDAPA because we believed this would foster both a competitive marketplace and innovation of drugs within functional categories, mitigate high launch prices, and provide a financial boost to support utilization. We explained that during the CY 2019 ESRD PPS rulemaking, we were aware of the pricing strategies being used by certain pharmaceutical companies to block the entry of generic drugs into the market in order to keep drug prices high. Though generic drugs are not considered innovative products, our primary intent in making generic drugs eligible for the TDAPA was to increase competition so that drug prices would be lower for the beneficiary. We then noted that we have since learned that bringing more generic drugs to market, though a significant component in lowering drug prices, is not in and of itself the solution.
We discussed a June 2018 report that examined increased generic drug competition as the primary impetus to curtail skyrocketing drug prices, and found that though it is helpful, there is a ceiling on its impact. It found that generic competition would not affect 46 percent of the estimated sales revenue of the top 100 drugs through 2023.
We also discussed a June 2018 article, which noted that competition has a limited impact on American health care, particularly when it comes to expensive interventions like prescription drugs. The article noted that when an expensive drug's competition within the same family of drugs came on the market the prices did not go down. Rather, the prices increased approximately 675 percent. Each new entrant cost more than its predecessors, and their makers then increased their prices to match the newcomer's. The article stated that when the first generic finally entered the market, its list price was only slightly less at 539 percent above the original entrant. It stated that economists call this “sticky pricing” and the article noted that this is common in pharmaceuticals, and has raised the prices in the U.S. of drugs for serious conditions even when there are multiple competing drugs. Compounding this problem, the article stated that companies have decided it is not in their interest to compete.
We stated in the CY 2020 ESRD PPS proposed rule (84 FR 38344) that for purposes of the ESRD PPS, we believed that we need to strike a balance between enhancing significant renal dialysis drug innovation and encouraging competition through support of innovative drugs that would become optimal choices for ESRD patients and advance their care through improved treatment choices. We noted that we believed that our goal in supporting competition among drugs in the ESRD PPS functional categories was to ultimately affect the launch price of new drugs. We stated that we questioned whether including all new renal dialysis drugs and biological products as eligible for the TDAPA would help us meet that goal. We expressed that reining in launch prices by placing guardrails on line extensions, reformulations and “sticky pricing” while staying mindful of the Medicare trust fund would better enable us to achieve our goals for the TDAPA policy.
Therefore, we proposed to revise the drug designation process regulation at § 413.234 by revising paragraph (b)(1)(ii) and adding paragraph (e), effective January 1, 2020, to specify that a new renal dialysis drug used to treat or manage a condition for which there is an ESRD PPS functional category is not eligible for payment using the TDAPA if it is a generic drug or if the NDA for the drug is classified by FDA as a certain Type—specifically, if the drug is approved under section 505(j) of the FD&C Act or the NDA for the drug is classified by FDA as Type 3, 5, 7 or 8, Type 3 in combination with Type 2 or Type 4, or Type 4, or Type 5 in combination with Type 2, or Type 9
We solicited comments as to whether any NDA Types that would remain eligible for the TDAPA under our proposal should be excluded, and whether any NDA Types that we proposed to exclude should be included, for example, within the NDA Type 3 (new dosage form) the inclusion of IV to oral route of administration.
We stated in the CY 2020 ESRD PPS proposed rule (84 FR 38344) that under our proposal, any new renal dialysis drug or biological product that we did not propose for exclusion, would continue to be eligible for the TDAPA. In the CY 2020 ESRD PPS proposed rule (84 FR 38344 through 38346), we provided some examples of the types of renal dialysis drugs and biological products that we believed would continue to be eligible for the TDAPA under our proposal, using the descriptions in the NDA Classification Codes referenced in the CY 2020 ESRD PPS proposed rule (84 FR 38339 through 38341). We noted that under our proposal, BLAs approved by FDA under section 351 of the PHS Act, which include biological products and biological products that are biosimilar to, or interchangeable with, a reference biological product, also would continue to be eligible for the TDAPA.
In the CY 2020 ESRD PPS proposed rule (84 FR 38344), we explained that a Type 1 NDA refers to drugs containing an NME. We further explained that an NME is an active ingredient that contains no active moiety that has been previously approved by FDA in an application submitted under section 505(b) of the FD&C Act or has been previously marketed as a drug in the U.S.
We stated that we believed the new renal dialysis drugs that are classified by FDA as a Type 1 NDA should continue to be eligible for the TDAPA because they generally fall within the 505(b)(1) pathway typically used for novel drugs, meaning they have not been previously studied or approved, and their development requires the sponsor to conduct all studies needed to demonstrate the safety and efficacy of the drug. We noted that unlike the drugs proposed to be excluded from the TDAPA as described above, these drugs are generally not line extensions of previously existing drugs. We stated that we believed there will be expenses with uptake by ESRD facilities of Type 1 NDA drugs, and one of the goals of the TDAPA is to provide additional support to ESRD facilities during the uptake period for these innovative drugs and help incorporate them into their business model.
In the CY 2020 ESRD PPS proposed rule (84 FR 38344 through 38345), we explained that a Type 2 NDA is for a drug product that contains a new active ingredient, but not an NME. We further explained that a new active ingredient includes those products whose active moiety has been previously approved or marketed in the U.S., but whose particular ester, salt, or noncovalent derivative of the unmodified parent molecule has not been approved by FDA or marketed in the U.S., either alone, or as part of a combination product. Similarly, if any ester, salt, or noncovalent derivative has been marketed first, the unmodified parent molecule would also be considered a new active ingredient, but not an NME. Furthermore, if the active ingredient is a single enantiomer and a racemic mixture (the name for a 50:50 mixture of 2 enantiomers) containing that enantiomer has been previously approved by FDA or marketed in the U.S., or if the active ingredient is a racemic mixture containing an enantiomer that has been previously approved by FDA or marketed in the U.S., the NDA will be classified as a Type 2 NDA. Enantiomers are chiral molecules that are non-superimposable, mirror images of one another.
We stated that we believed the new renal dialysis drugs classified by FDA as Type 2 NDAs should be eligible for the TDAPA because, in part, it covers a single enantiomer active ingredient for which a racemic mixture containing that enantiomer has been approved by FDA. We noted that single enantiomer drugs can lead to fewer drug interactions in the ESRD population, which already has a significant medication burden.
In the CY 2020 ESRD PPS proposed rule (84 FR 38345), we explained that a Type 4 NDA is a new drug-drug combination of two or more active ingredients. We further explained that an application for a new drug-drug combination product may have more than one classification code if at least one component of the combination is an NME or a new active ingredient.
We proposed that new renal dialysis drugs that are classified as a Type 4 NDA should continue to be eligible for the TDAPA if at least one of the components is a Type 1 NDA (NME) or a Type 2 NDA (new active ingredient), both of which merit the TDAPA as previously discussed. We stated that we believed that an added advantage is that while introducing an innovative product, which is not the case for Type 3 NDA drugs, it reduces the pill burden to a patient population challenged with multiple medications and a complex drug regimen. We noted that medication adherence is thought to be around 50 percent in the dialysis population and reducing this burden can improve adherence and should lead to improvement in treatment outcomes.
We noted that we believed the advantages of Type 1 NDA and Type 2 NDA drugs, coupled with the possibility of improved adherence, merits eligibility for the TDAPA in that it encourages both innovators to develop competitive drugs at lower prices for this NDA Type, and ESRD facilities to use the products with the boost that the TDAPA will provide in facilitating uptake of these new products.
In the CY 2020 ESRD PPS proposed rule (84 FR 38345), we explained that a Type 9 NDA is for a new indication or claim for a drug product that is currently being reviewed under a different NDA (the “parent NDA”), and the applicant does not intend to market this drug product under the Type 9 NDA after approval. We explained that a Type 9 NDA is generally submitted as a separate NDA so as to be in
We stated that we believed that since Type 9 NDA is a new clinical indication, this suggests that a drug manufacturer is pioneering a new approach to provide better pharmacologic care for vulnerable ESRD patients with complex medical needs, and we consider this to be sufficiently innovative to warrant TDAPA eligibility.
We noted that we believed renal dialysis drugs that are classified as NDA Types 1, 2, and 4 are all innovative and therefore we proposed that these drugs should continue be eligible for the TDAPA. We stated that when the “parent NDA” is Type 1, 2, or 4, Type 9 NDA would be a new indication of those innovative drugs. Therefore we expressed that the Type 9 NDA, when the “parent” is Type 1, 2, or 4, is just as innovative as Type 1, 2, or 4 and therefore should also be eligible for the TDAPA. We noted that we believed applying the TDAPA with respect to Type 9 NDA new renal dialysis drugs would assist ESRD facilities in adopting these drugs into their treatment protocols for patients, when these drugs are warranted for use in that subset of patients.
In the CY 2020 ESRD PPS proposed rule (84 FR 38345), we explained that a Type 10 NDA is for a drug product that is a duplicate of a drug product that is the subject of either a pending or approved NDA, and the applicant intends to market the drug product under this separate Type 10 NDA after approval. We further explained that a Type 10 NDA is typically for a drug product that has a new indication or claim, and it may have labeling and/or a proprietary name that is distinct from that of the original NDA. When the Type 10 NDA is submitted, it would be given the same NDA Type as the original NDA unless that NDA is already approved. When one application is approved, the other would be reclassified as Type 10 NDA regardless of whether it was the first or second NDA actually submitted.
We stated that we believed renal dialysis drugs with the Type 10 NDAs are sufficiently innovative and should be eligible for the TDAPA because a new indication for a previously submitted drug that is applicable to renal dialysis advances the field and suggests the drug manufacturer is pioneering a new approach to provide better pharmacologic care for vulnerable ESRD patients with complex medical needs. We noted that we believed this could provide savings in terms of time-to-market and research and development, which could be reflected in the launch price of the drug. We further stated that we believed applying the TDAPA with respect to Type 10 NDA new renal dialysis drugs will assist ESRD facilities in adopting these drugs into their treatment protocols for patients when these drugs are warranted for use in that subset of patients.
In the CY 2020 ESRD PPS proposed rule (84 FR 38346), we stated that under our proposal, products that are licensed under section 351 of the PHS Act, which occurs for biological products and biological products that are biosimilar to, or interchangeable with, a reference biological product, would continue to be eligible for the TDAPA.
We explained that a BLA submitted under section 351(a) of the PHS Act is a “stand-alone BLA” that contains all information and data necessary to demonstrate that (among other things) the proposed biological product is safe, pure, and potent.
We explained that an application for licensure of a proposed biosimilar biological product submitted in a BLA under section 351(k) of the PHS Act must contain information demonstrating that the biological product is biosimilar to a reference product. `Biosimilar' means “that the biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components” and that “there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity, and potency of the product” (see section 351(i)(2) of the PHS Act).
We explained that an application for licensure of a proposed interchangeable product submitted in a BLA under section 351(k) of the PHS Act must meet the standards for “interchangeability.” To meet the standards for “interchangeability,” an applicant must provide sufficient information to demonstrate biosimilarity, and also to demonstrate that the biological product can be expected to produce the same clinical result as the reference product in any given patient and, if the biological product is administered more than once to an individual, the risk in terms of safety or diminished efficacy of alternating or switching between use of the biological product and the reference product is not greater than the risk of using the reference product without such alternation or switch (see section 351(k)(4) of the PHS Act). Interchangeable products may be substituted for the reference product without the intervention of the prescribing healthcare provider (see section 351(i)(3) of the PHS Act). Further information regarding biosimilar biological products is available on the FDA website.
We stated that CMS continues to support the development and the utilization of these products that contain innovative technology for the treatment of ESRD. We explained that the process for licensure of biosimilar biological products is a different pathway than that for generic drugs and has different requirements. We noted that we believed that a categorical exclusion from TDAPA eligibility for all biological products that are biosimilar to or interchangeable with a reference biological product, would disadvantage this sector of biological products in a space where we are trying to support technological innovation. While the products themselves are highly similar to the reference biological product notwithstanding minor differences in clinically inactive components; and there are no clinically meaningful differences between the biosimilar biological product and the biological reference product in terms of the safety, purity, and potency of the product, CMS believes the technology used to develop the products is sufficiently new and innovative to warrant TDAPA payment at this time.
However, we noted that unlike NDAs submitted pursuant to sections 505(b)(1) or 505(b)(2) of the FD&C Act, we did not have a categorical system to use as a proxy for assistance in determining which types of applications would meet
In the CY 2020 ESRD PPS proposed rule (84 FR 38346), we noted that we were aware that there are similar concerns about providing the TDAPA for these products that there are with generic drugs. Specifically, we explained that according to a recent report, increased drug class competition for biosimilar biological products has not translated into pricing reductions, and there was a market failure contributing to the rising costs of prescription drugs. The researchers noted that the increases were borne solely by Medicare.
With regard to new renal dialysis drugs and biological products that fall within an existing ESRD PPS functional category, we stated that we believed continuing to include these drugs and biological products as eligible for the TDAPA focuses payment to those products that are innovative in a way that meets the intent of the adjustment. That is, our intention is to support innovation by helping ESRD facilities make appropriate changes in their businesses to adopt such products, provide additional payment for such associated costs, incorporate these drugs and biological products into their beneficiaries' care plans and potentially promote competition among drugs and biological products within the ESRD PPS functional categories. We stated that we planned to continue to monitor the use of the TDAPA for new renal dialysis drugs and biological products that fall within an existing functional category and will carefully evaluate the products that qualify for the payment adjustment. We noted that for new renal dialysis drugs and biological products that do not fall within an existing ESRD PPS functional category, the purpose of the TDAPA continues to be a pathway toward a potential base rate modification.
We stated in the CY 2020 ESRD PPS proposed rule (84 FR 38344), that compared to the TDAPA policy finalized in the CY 2019 ESRD PPS final rule, we believed that these proposed revisions would reduce CY 2020 Medicare expenditures for new renal dialysis drugs and biological products, which would also have a better downstream impact for beneficiary co-insurance. Specifically, we noted that under the expanded policy finalized in the CY 2019 ESRD PPS final rule (83 FR 56932), effective January 1, 2020, the TDAPA would apply for all new renal dialysis drugs and biological products. We stated that we believed that since our proposed policy would carve out certain drug types from being eligible for the TDAPA and would be more limited than the expansive policy finalized in the CY 2019 ESRD PPS final rule for CY 2020, there would be lower Medicare expenditures in CY 2020. Further, the downstream effect of lower Medicare expenditures is lower co-insurance for beneficiaries.
We stated that based on our past experience and our expectation of detailed analysis of future drug product utilization, pricing and payment, we anticipated proposing further refinements to the TDAPA policy through notice and comment rulemaking in the future.
Commenters generally supported our proposal to refine the TDAPA eligibility criteria to target more innovative drugs and biological products. However, they had specific suggestions regarding changes to the proposal. For example, commenters provided suggestions for renal dialysis drugs and biological products that should be excluded (biosimilar biological products), included (first ESRD new indication), and other eligibility criteria (SCI).
The comments and our responses to the comments on our proposal to rely on, as a proxy, the NDA Classification Codes, as well as the proposal for updating the TDAPA exclusions when FDA makes changes to the NDA Classification Codes, are set forth below.
However, one drug manufacturer noted that the NDA Classification Codes are contained in an FDA MAPP that is not subject to public notice, input, or comment, and that can be changed at any time by FDA without providing notice to or seeking input from stakeholders or from CMS. The manufacturer noted that the NDA Classification Codes are not codified in any statutory or regulatory provision and were created solely for FDA's administrative purposes, without any relevance to assessments of innovativeness or therapeutic value.
A drug manufacturer did not support CMS' proposal to exclude certain NDA Types from TDAPA eligibility. The company stated the FDA's NDA Classification Codes are a blunt instrument and an inadequate standard on which to judge innovativeness. In addition, the company stated that the proposal pegs the use of NDA Classification Codes to the version dated November 4, 2015 and makes no provision for an updated future version of such codes.
Regarding the comments that FDA created the NDA Classification Codes for administrative purposes and they should not be used to assess innovativeness or therapeutic value, and the comment requesting that we describe when a drug or biological product is considered to be truly innovative, we believe FDA's NDA Classification Codes provide an objective basis that we can use to distinguish innovative from noninnovative renal dialysis drugs and
We acknowledge that the NDA Classification Codes are not subject to public notice, input, or comment, and can be changed at any time by FDA without providing notice to or seeking input from stakeholders or from CMS. As discussed in section II.B.1.b of the CY 2020 ESRD PPS proposed rule, the Classification Codes assigned to an NDA generally describe FDA's classification of the relationship of the drug to drugs already marketed or approved in the U.S. As we discussed in the CY 2020 ESRD PPS proposed rule, if FDA makes changes to the NDA Classification Codes in FDA/CDER MAPP 5018.2, we would assess FDA changes at the time they are publicly available and we would analyze those changes with regard to their implications for the TDAPA policy under the ESRD PPS. We would plan to propose any necessary language revisions to the exclusions set forth in proposed § 413.234(e) in the next rulemaking cycle.
Some commenters noted that CMS recognizes in its discussion of the Type 10 NDA that a new ESRD indication for a previously approved non-ESRD drug advances the field and presents a new approach to provide care for ESRD patients. The commenters stated that not all products for which a manufacturer obtains a new ESRD indication will be approved through a Type 10 NDA. For example, a product originally approved for a non-ESRD indication through an excluded NDA Type, may have a first ESRD new indication added through an NDA supplement to that NDA, thus resulting in the new ESRD product being excluded from TDAPA eligibility. The commenters asserted that the innovation and investment by this manufacturer to obtain the first ESRD new indication is no less than that of the manufacturer who submits a Type 10 NDA for a new indication, but CMS's proposed criteria would exclude such a drug from TDAPA eligibility. The commenters stated that, by definition, a first ESRD new indication denotes that the product has not been approved for this population previously and is consistent with CMS's intent to limit the TDAPA to truly innovative products.
An ESRD facility and a national dialysis association expressed concerns regarding CMS's proposal to exclude FDA NDA Type 5 and Type 7 from TDAPA eligibility. Regarding Type 5, they believe that new drug formulations may offer specific benefits to patients. For example, they stated that if phosphate binders currently marketed in tablet form were to become available in a topical form, it might offer benefits like decreased satiety and decreased pill burden, which could lead to improved compliance with the medications and increased protein intake, which has been associated with better outcomes for patients with ESRD treated by maintenance dialysis. Regarding Type 7, commenters agreed with CMS that if a drug is being used by an ESRD facility, there is no need for additional payment in the form of TDAPA. However, they believe there should be a requirement to verify that use before CMS concludes that the drug is not eligible.
A few commenters noted that the proposed exclusions would remove from TDAPA eligibility important therapeutic advances that may happen to be new formulations, new indications, and new dosage forms, which can make it easier for the patient to adhere to prescribed therapy and offer significant value in increased quality of life. Commenters noted that the proposal would exclude, for example, a drug that receives a new ESRD indication or is a reformulation that results in a patient needing only one, rather than several doses a day, requiring the patient to be awoken multiple times during the night. They stated that to exclude such new drugs and biological products from TDAPA eligibility could erect barriers to patient use and chill new research into the entire category of ESRD medicine, and would be a great disservice to patients, providers, and the Medicare program, as it would inhibit the ability of physicians and ESRD facilities to incorporate these innovative new therapies into the care of and treatment protocols for their patients with ESRD. In contrast, one non-profit provider association expressed support for CMS's proposal to exclude line extensions from TDAPA eligibility.
One drug manufacturer stated the proposed approach imposes a framework that would categorically exclude many types of innovative new drugs from TDAPA eligibility. For example, the manufacturer stated that a new drug potentially may be assigned a Type 3 or Type 5 NDA by FDA, even if FDA reviews and approves the product under an original NDA through the 505(b)(1) pathway, and even if the drug reflects innovative characteristics and facilitates important benefits, such as improving patient outcomes through safety or efficacy advantages, reducing harmful complications, or providing patients (including specific subpopulations of patients) with new treatment options and/or new access options. The drug manufacturer stated that our proposed approach would impair providers' ability to evaluate and incorporate these important types of innovative new medicines into their practice, and would have detrimental access implications for patients. As such, it would undermine the goals that CMS seeks to achieve through TDAPA with respect to facilitating innovation, competition, and the ability of ESRD facilities to test and accommodate new therapies in their care plans. The drug manufacturer strongly encouraged CMS to modify the proposed criteria to allow for TDAPA eligibility for Type 3 and Type 5 NDAs, noting that new dosage forms and new formulations (among other differences), particularly for IV and injectable products, reflect significant innovation and lead to new access options and treatment flexibility for patients.
One drug manufacturer urged CMS to adopt the modification that a Type 5 drug should be eligible for TDAPA if it contains a previously approved active moiety and obtains approval for an ESRD-related indication for which the active moiety was not previously approved. The drug manufacturer asserted that, to achieve a new indication, a manufacturer will be required to invest the same resources and perform the same research and development, whether the new indication is approved through a Type 10 NDA or a different pathway, such as a supplement to the original NDA.
The commenter noted that there are a myriad of considerations that go into any particular drug's FDA approval
At this time, we do not believe that making a first ESRD new indication for a Type 5 NDA drug eligible for the TDAPA is consistent with CMS's intent to limit the TDAPA to truly innovative products. We believe that while Type 5 NDA drugs may have clinical benefits to patients over previously approved products, we did not make that assessment as part of ESRD PPS payment policy because these are drugs that are currently on the market but may have been reformulated or may be line-extensions. We do not believe that the characteristics of Type 5 NDA drugs would advance the intent of the TDAPA for new renal dialysis drugs and biological products that fall within an existing functional category. As we stated in section II.B.1.c.i.(b) of the CY 2020 ESRD PPS proposed rule (84 FR 38342), we do not believe that the types of changes represented by Type 5 NDAs enhance our goal of increased competition with the overarching goal of lowering drug prices. To the contrary, it seems that a goal of line extensions can be to thwart competition. Studies indicate that there is no lowering of prices through competition from line extensions. Rather, it has been reported that prices remain rigid and are not lowered. In fact, not only can product line extensions thwart competition, but they inherit the market success of the original brand, sometimes with little quality improvement over the original brand. We believe making Type 5 NDA drugs eligible for the TDAPA, even for the first ESRD new indication, may cause more attention to be diverted to the less costly duplication of drugs that are already available rather than those that may be more expensive to develop and bring to market. In addition, this could cause an influx of non-innovative drugs to the dialysis space, potentially crowding out innovative drugs. For these reasons, we continue to believe that providing the TDAPA to ESRD facilities to support the uptake of a drug reflected in an ESRD PPS functional category that may be a line extension or reformulation in their business model is not a judicious use of Medicare resources.
In response to the commenter suggesting that Type 5 NDA drug products are the same as Type 10 NDA drug products, we believe that they are distinct in that Type 5 NDAs are reformulations or line extensions that are not truly innovative and Type 10 NDA drug products are not. As we discussed in the CY 2020 ESRD PPS proposed rule in section II.B.1.c.ii.(e) (84 FR 38345), we believed that Type 10 NDA drug products are sufficiently innovative because a new indication for a previously submitted drug that is applicable to renal dialysis advances the field and suggests the drug manufacturer is pioneering a new approach to provide better pharmacologic care for vulnerable ESRD patients with complex medical needs. We noted that we believed this could provide savings in terms of time-to-market and research and development, which could be reflected in the launch price of the drug. We further stated that we believed applying the TDAPA with respect to Type 10 NDA new renal dialysis drugs will assist ESRD facilities in adopting these drugs into their treatment protocols for patients when these drugs are warranted for use in that subset of patients.
In addition, as we stated in the CY 2020 ESRD PPS proposed rule (84 FR 38340), we believe FDA's NDA Classification Codes provide an objective basis that we can use to distinguish innovative from noninnovative renal dialysis service drugs. We believe that distinguishing drugs in this categorical manner helps us in our effort to support innovation by directing Medicare resources to renal dialysis drugs and biological products that are not reformulations or new dosage forms, while simultaneously balancing our goal to foster competition within the ESRD PPS functional categories by supporting products that advance the treatment for ESRD beneficiaries at a lower cost. We also believe that including some characteristics of an NDA Type without including others undermines the objective basis of the use of this system as a proxy to determine if a new renal dialysis drug or biological product is innovative for the purposes of the TDAPA.
The NDA Classification Code Type 7 is a drug that has been previously marketed but without an approved NDA. With regard to the suggestion that we verify ESRD facility use of a Type 7 drug before deciding that the drug is ineligible for the TDAPA, we do not believe the characteristics of Type 7 would advance the intent of the TDAPA policy because these drugs are already on the market and may already be in use in the ESRD facilities. Thus, providing the TDAPA for Type 7 NDA drugs would not assist the facilities in their uptake for their business model.
With regard to the comment about a drug currently marketed in tablet form that becomes available in a topical form, we believe the commenter is actually referring to Type 3 NDA, which is an NDA Classification Code that we are excluding from the TDAPA. Regarding the comments about excluding line extensions such as new formulations (Type 5) and new dosage forms (Type 3), we do not believe these drugs are sufficiently innovative to warrant TDAPA eligibility and we do not want to provide perverse incentives for ESRD facilities to choose a new dosage form in order to obtain the TDAPA. Although these drugs may provide an expansion of patient treatment options, we continue to believe that these changes are not innovative and should not be eligible for the TDAPA for new renal dialysis drugs and biological products in existing functional categories.
Regarding the comments about erecting barriers to patient use, chilling new research into ESRD medicine, and inhibiting the ability of physicians and ESRD facilities to incorporate these innovative new therapies into treatment protocols for their ESRD patients, we note that beneficiaries have access to all FDA-approved drugs and biological products for renal dialysis services, regardless of whether the ESRD facility receives TDAPA or not. The TDAPA eligibility does not prevent patient access to any renal dialysis services. ESRD patients currently have, and will
After careful consideration of the comments, we are finalizing our proposal to exclude certain NDA types from TDAPA eligibility. That is, we are finalizing to exclude Type 3, 5, 7 or 8, Type 3 in combination with Type 2 or Type 4, or Type 5 in combination with Type 2, or Type 9 when the “parent NDA” is a Type 3, 5, 7 or 8.
MedPAC asserted that to protect the well-being of beneficiaries and ensure good value for the Medicare program and taxpayers, Medicare should not pay more for drug or biological products that have not yet been proven to provide better outcomes for beneficiaries. Therefore, MedPAC noted, a new drug or biological product should not qualify for the TDAPA if there is no evidence that it is an improvement relative to existing care. Similarly, a large dialysis organization (LDO) requested a patient-centered approach to TDAPA eligibility with clear evidence of an improvement in one or more patient-centered outcomes. The LDO suggested that CMS could structure a TDAPA clinical improvement standard similar to the standard that the agency uses to pay for new technologies under the IPPS (specified in § 412.87(b)(1)).
MedPAC stated that CMS's approach relies on FDA approval pathways using a standard that is less stringent than a clinical improvement standard for all drugs and biological products that fit into an ESRD functional category, and should not be used, because on its own does not necessarily reflect improvements in outcomes nor the appropriateness of increased payment for Medicare beneficiaries. The Commission also asserted that the Medicare program, not FDA, should adjudicate spending determinations based on the specific needs of the Medicare population. MedPAC stated that the evaluation of the evidence of whether a new drug or biological product improves Medicare beneficiaries' outcomes should rest with CMS. One non-profit provider association and an LDO suggested the proposed policy could go further by also addressing whether new drugs for renal care represent an SCI, and that the proposed policy stands in contrast to the more robust policy that CMS proposed for new equipment and supplies based on the Medicare IPPS new technology add-on payment. These commenters stated that while it is expected that some drugs with a new molecular entity or new active ingredient will represent an SCI, not all will. They urged CMS to also consider whether a new drug or biological product addresses the needs of a patient population unresponsive to, or ineligible for, currently available treatments, or significantly improves clinical outcomes for a patient population compared to currently available treatments. They maintained that CMS' TDAPA policy should spur innovation by targeting products that do more than offer minor, if any, clinical improvement. For example, a drug that significantly improves compliance because it is not accompanied by complications such as gastrointestinal effects, which can deter patient compliance, might warrant eligibility for TDAPA and higher payment. The commenters suggested that CMS should consider refining TDAPA eligibility based on its own assessment of a product's clinical significance, similar to its proposed approach for the TPNIES.
One drug manufacturer commented that relying on NDA Classification Codes for TDAPA eligibility would significantly discourage investment in the ESRD space. The manufacturer argued that the proposed changes would create a rigid and narrow set of criteria for TDAPA eligibility that would significantly limit the chances for new products to qualify for the opportunity to be evaluated and incorporated into ESRD care plans. The manufacturer expressed concern that innovators will be discouraged from investing time and resources in ESRD research, development, and innovation, because product uptake potential will be uncertain and unlikely. That, in turn, would also result in reduced competition, to the further detriment of ESRD stakeholders and the Medicare program, according to the commenter.
We believe that using the NDA Classification Codes will help us to objectively distinguish drugs that would assist our efforts to support innovation by directing Medicare resources to those new renal dialysis drugs and biological products. We also believe that our proposed approach would promote our goal to foster competition within the ESRD PPS functional categories by supporting products that advance the treatment for ESRD beneficiaries at a lower cost. Additionally, our proposed approach would promote our goal of providing a transition period for the unique circumstances experienced by ESRD facilities and to allow uptake of the new product. That is, our intention is to support innovation by helping ESRD facilities make appropriate changes in their businesses to adopt such products, provide additional payment for such associated costs, incorporate these drugs and biological products into their beneficiaries' care plans and potentially promote competition among drugs and biological products within the ESRD PPS functional categories. We proposed to narrow the types of new renal dialysis drugs and biological products within the ESRD PPS functional groups that are eligible for TDAPA, effective January 1, 2020. To do so, we proposed to extend TDAPA eligibility to those renal dialysis products that are new and innovative, not just new, based on the FDA's NDA Classification Code used for investigational product review. As detailed in the CY 2020 ESRD PPS proposed rule, we believe that the NDA classifications that we are excluding, which includes Type 3 (new dosage forms) are not innovative.
With regard to having an SCI standard, as we discuss in section II.B.1.c of this final rule, we continue to believe that unlike many Medicare beneficiaries, the Medicare ESRD beneficiary is significantly complex, with each patient having a unique and challenging profile, due to a variety of causes, including biochemical differences, genetics and/or co-morbidities, all of which factor into the medical management of drugs and biological products. Practitioners should have the opportunity to evaluate the appropriate use of a new drug or biological product and its effect on patient outcomes and interactions with other medications the patient is currently taking, with other co-morbidities, and with what is age-appropriate. Further, unlike the SCI criteria for the TPNIES, where biochemical differences in patients rarely have an impact, the question of whether one drug is more effective than another can be impacted by characteristics that vary across patients such as age, gender, race, genetic predisposition and comorbidities. Each patient's unique medical profile must be assessed by the patient's physician in determining the plan of care, and we believe that, rather than being too rigid and limiting investment in new therapies, using the NDA Classification Codes for purposes of determining TDAPA eligibility will help promote innovative therapies for the ESRD patient on dialysis and support ESRD facility uptake.
They also commented that, compared to the TDAPA eligibility criteria finalized under the CY 2019 ESRD PPS
One drug manufacturer commented that NDA approval pathways, rather than NDA Classification Codes, are the clearest method for making TDAPA eligibility determinations for new renal dialysis drugs. The same drug manufacturer noted that for drug products, approval through FDA's statutory 505(b)(1) NDA pathway reflects a rigorous process used for new and novel drugs, and requires substantial clinical data and robust review. As such, drugs approved under the 505(b)(1) NDA pathway should be eligible for TDAPA. The drug manufacturer opined that this is a clear standard anchored in statute and not subject to changes based in internal FDA policies and procedures created for administrative purposes.
In addition, the drug manufacturer noted that eligibility on the basis of NDA approval pathway allows clarity for stakeholders and reflects an appropriate balance between the goals CMS has articulated in the CY 2020 ESRD PPS proposed rule with respect to incentives for innovation and concerns regarding costs. The drug manufacturer suggested that CMS should maintain the TDAPA eligibility criteria finalized under the CY 2019 ESRD PPS final rule, which would apply the TDAPA to all new renal dialysis drugs or biological products approved under section 505 of the Federal Food, Drug, and Cosmetic Act or section 351 of the PHS Act, effective January 1, 2020. The drug manufacturer explained that basing the TDAPA eligibility criteria on NDA approval pathway also would be consistent with CMS regulations and policies in other contexts that refer to NDA approval pathways. For example, the Medicaid program has definitions for innovator drugs that focus on NDA approval pathways, and the CMS HCPCS Level II coding process involves considerations of FDA approval pathways (as well as certain FDA Orange Book designations), among other criteria. The commenter further noted that, if CMS does move forward with the proposed modifications, the changes should not go into effect until January 1, 2021. The commenter urged CMS to re-evaluate and revise both the substance of the proposed TDAPA eligibility changes, as well as the proposed effective date for any changes that may be finalized.
With regard to using the FDA approval pathways to determine innovation, we found the use of only the 505(b)(1) pathway to be too narrow and the 505(b)(2) pathway to be too broad. The commenter mentioned using Medicaid's definition of innovator drugs, but that definition includes line extensions and generic drugs and we do not believe those drugs and biological products to be truly innovative for purposes of our TDAPA policy.
We do not agree with the commenter that we should review every new FDA approved drug for dialysis. We believe that it is appropriate for us to use the process that we discussed in the CY 2016 ESRD PPS final rule and on the CMS website
We received several comments from stakeholders specifically supporting the exclusion of generic drugs. The comments and our responses to the comments on our proposal to exclude generic drugs are set forth below.
However, as noted in the CY 2020 ESRD PPS proposed rule, we are aware that there are similar concerns about providing the TDAPA for these products that there are with generics, that increased drug class competition for biosimilar biological products did not translate into pricing reductions, and there was a market failure contributing to the rising costs of prescription drugs with the increases borne solely by Medicare. Therefore, we will monitor future costs of biosimilar biological products as they pertain to renal dialysis, the TDAPA, and the ESRD PPS, and we may revisit the recommendation to exclude biosimilar biological products from TDAPA eligibility in future rulemaking.
Regarding the comment about FDA Breakthrough Therapy Designation products, this refers to a drug that is intended alone or in combination with one or more other drugs to treat a serious or life-threatening disease or condition and has preliminary clinical evidence indicating that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. If a drug is granted Breakthrough Therapy Designation by FDA, FDA will expedite the development and review of such a drug. The FDA does not announce when a drug has been granted Breakthrough Therapy Designation. It does not disclose information regarding sponsors who submitted requests for or who have been granted or denied Breakthrough Therapy Designation. Breakthrough Therapy Designation requests are typically submitted to an Investigational New Drug (IND), and the FDA cannot disclose the existence of an IND, or any submissions that have been submitted to the IND, unless it has previously been publicly disclosed or acknowledged per 21 CFR 312.130(a). The restrictions discussed previously create an issue for determining TDAPA eligibility since this information is not publicly available. To the extent a new renal dialysis drug or biological product is designated as a Breakthrough Therapy and otherwise meets the eligibility criteria for the TDAPA, it would be eligible for the add-on payment adjustment.
Another commenter advocated that CMS create a non-budget neutral methodology to incorporate novel or improved technologies, including drugs and devices that will better the lives of
As we stated in the CY 2016 ESRD PPS final rule (80 FR 69016), we believe we have the authority to add new renal dialysis services to the bundle under both sections 1881(b)(14)(B) of the Act and 217(c)(2) of PAMA. First, we read section 1881(b)(14)(B)(iii) of the Act as requiring the inclusion of a specific category of drugs in the bundle—that is, drugs and biologicals, including those with only an oral form, furnished to individuals for the treatment of ESRD and for which separate payment was made prior to January 1, 2011. We also read section 1881(b)(14)(B)(iv) of the Act as specifying a different category of items that must be included in the bundle—that is, items and services, which includes drugs and biologicals, not specified by sections 1881(b)(14)(B)(i), (ii), or (iii) of the Act. Second, we read the language of section 217(c)(2) of PAMA—“the Secretary of Health and Human Services . . . shall establish a process for . . . including new injectable and intravenous products into the bundled payment system”— to require us to both define and implement a drug designation process for including new injectable and IV products into the ESRD PPS bundled payment.
As we stated in the CY 2019 ESRD PPS final rule (84 FR 56935), we do not believe it would be appropriate to add dollars to the ESRD PPS base rate for new renal dialysis drugs and biological products that fall within existing functional categories and that doing so would be in conflict with the fundamental principles of a PPS. Under a PPS, Medicare makes payments based on a predetermined, fixed amount that reflects the average patient, and the facility retains the profit or suffers a loss resulting from the difference between the payment rate and the facility's cost, which creates an incentive for cost control. It is not the intent of a PPS to add dollars to the base rate whenever something new is made available. Additionally, the statute does not require that we add dollars to the ESRD PPS base rate when a new item is available. As we explained in that rule, the intent of the TDAPA for new renal dialysis drugs and biological products that fall within an ESRD PPS functional category is to provide a transition period for the unique circumstances experienced by ESRD facilities and to allow time for the uptake of the new drug.
Through the legal levers available to us, we strive to not only support innovation and competition for new renal dialysis drugs and biological products that fall within an ESRD PPS functional category, but also to align resource use with payment, while simultaneously balancing that payment with prudent spending of Medicare dollars. Medicare spending on prescription drugs continues to grow at rates far in excess of inflation, which poses challenges for both CMS and for providers seeking to give patients innovative therapies that can improve health outcomes and quality of life but at a cost that both patients and providers can afford.
We also proposed a technical change to § 413.234(a) to revise the definitions “ESRD PPS functional category” and “Oral-only drug” to be consistent with FDA nomenclature. We proposed to change the definition of “ESRD PPS functional category” to replace “biologicals” with “biological products.” We also proposed to change the definition of “Oral-only drug” to
We did not receive any comments on our proposed technical changes to § 413.234(a) to revise the definitions. We are therefore finalizing these changes as proposed.
In the CY 2016 ESRD PPS final rule (80 FR 69025 through 69026), we finalized an exception to the drug designation process for calcimimetics. Specifically, we identified phosphate binders and calcimimetics as oral-only drugs and, in accordance with § 413.234(d), an oral-only drug is no longer considered oral-only if an injectable or other form of administration of the oral-only drug is approved by FDA. We stated that under § 413.234(b)(1), if injectable or IV forms of phosphate binders or calcimimetics are approved by FDA, these drugs would be considered reflected in the ESRD PPS bundled payment because these drugs are included in an existing functional category, so no additional payment would be available for inclusion of these drugs.
However, we recognized the uniqueness of these drugs and finalized in the CY 2016 ESRD PPS final rule that we will not apply this process to injectable or IV forms of phosphate binders and calcimimetics when they are approved because payment for the oral forms of these drugs was delayed and dollars were never included in the base rate to account for these drugs. We further stated that we intend to use notice-and-comment rulemaking to include the oral and non-oral forms of calcimimetics and phosphate binders in the ESRD PPS bundled payment after the payment of the TDAPA. We explained that when these drugs are no longer oral-only drugs, we will pay for them under the ESRD PPS using the TDAPA based on the payment methodologies in section 1847A of the Act for a period of at least 2 years.
Change Request 10065, Transmittal 1889 issued August 4, 2017, replaced by Transmittal 1999 issued January 10, 2018, implemented the TDAPA for calcimimetics effective January 1, 2018. As discussed previously, calcimimetics will be paid using the TDAPA for a minimum of 2 years until sufficient claims data for rate setting analysis is available for these products. Since payments have been made beginning January 1, 2018, a 2-year period would end December 31, 2019. We are still in the process of collecting utilization claims data for both the oral and non-oral form of calcimimetics, which will be used for a rate setting analysis. Therefore, in the CY 2020 ESRD PPS proposed rule, we stated that we will continue to pay for calcimimetics using the TDAPA in CY 2020 (84 FR 38347).
We also discussed in the proposed rule that in the CY 2019 ESRD PPS final rule (83 FR 56943), we stated that we would continue to pay the TDAPA using the pricing methodologies under section 1847A of the Act (which includes ASP+6 percent) until sufficient claims data for rate setting analysis for the new injectable or IV product are available, but not for less than 2 years. We noted that calcimimetics were the first drugs for which we paid the TDAPA (83 FR 56931), and increased Medicare expenditures by $1.2 billion in CY 2018. It is clear, therefore, that ESRD facilities are furnishing these innovative drugs. We explained in the CY 2019 ESRD PPS final rule (83 FR 56943) that one of the rationales for the 6 percent add-on to ASP has been to cover administrative and overhead costs. We also explained that the ESRD PPS base rate has dollars built in for administrative complexities and overhead costs for drugs and biological products (83 FR 56944).
As we stated in the CY 2020 ESRD PPS proposed rule (84 FR 38347), we have provided the TDAPA for calcimimetics for 2-full years, and we believe that is sufficient time for ESRD facilities to address any administrative complexities and overhead costs that may have arisen with regard to furnishing the calcimimetics. Therefore, we proposed that the basis of payment for the TDAPA for calcimimetics, beginning in CY 2020, would be 100 percent of ASP. That is, we proposed to modify § 413.234(c) by removing the clause “except that for calcimimetics it is based on the pricing methodologies under section 1847A of the Social Security Act.” We stated that we believed this proposal strikes a balance between supporting ESRD facilities in their uptake of these products and limiting the financial burden that increased payments place on beneficiaries and Medicare expenditures. We also noted that this policy would be consistent with the policy finalized for all other new renal dialysis drugs and biological products in the CY 2019 ESRD PPS final rule (83 FR 56948).
In addition, we noted that our proposal to condition the application of the TDAPA on CMS's receipt of ASP data, discussed in section II.B.2.c of this final rule, would also apply with respect to calcimimetic products.
The public comments and our responses to the comments regarding our proposal to change the basis of payment for the TDAPA for calcimimetics are set forth below.
A national dialysis association disagreed with MedPAC regarding ASP+6 in the ESRD facility setting. The commenter stated that while ASP+6 is used in physician reimbursement, it is also used across the Medicare program as the reimbursement standard for health care providers of all types, including providers that are much larger than ESRD facilities, such as large hospital systems. This commenter, along with another commenter, expressed that recommending that ESRD facilities be paid differently than other health care providers for the same pharmaceutical products runs counter to MedPAC's longstanding view that Medicare should pay similar rates for similar care.
A drug manufacturer and an LDO expressed similar beliefs as the national dialysis association, stating that CMS should maintain parity in reimbursement across other settings of care in which ASP-based reimbursement is provided at ASP plus
An LDO and a drug manufacturer were disappointed with CMS' proposal to decrease the TDAPA for calcimimetics from ASP+6 to ASP+0. They noted that not all ESRD facilities can purchase a drug at the ASP and stated that this is particularly the case with calcimimetics. They also expressed concern that other policies, including the budget sequester, the 20 percent co-insurance exclusion from bad debt, and unpaid cost-sharing obligations by states, will result in TDAPA payments for calcimimetics far below the ASP. One association stated that cutting the TDAPA reimbursement for calcimimetics to ASP+0 would actually move the baseline reimbursement to, at best, ASP−1.6 after application of the ongoing sequester.
A national dialysis stakeholder organization stated that given the amount of money attributed to the ESRD PPS functional categories other than anemia management, it is difficult to see how any dollars could be used to cover the administrative costs of calcimimetics or any other products. A drug manufacturer and a national dialysis organization noted that ESRD facilities, like other providers of Part B- covered drugs, rely on the 6 percent add-on to help cover the costs of acquiring and handling drugs, and in the case of the oral form of the calcimimetic, dispensing the drug.
Another commenter explained that ESRD facilities need the current 6 percent add-on amount to help pay for the expensive storage, packaging, and administration costs associated with products eligible for the TDAPA (which require facilities to ensure registered nurses are available because they administer calcimimetics to patients). For example, such costs include: Shipping medications to the patient's home, particularly for homecare and nursing home patients; pharmacy dispensing fees, especially in the case of the many small providers that do not have pharmacy licenses; storage and utility costs to account for the drug's refrigeration requirement; purchasing costs; rinse back procedures, which require a registered nurse and the facility ensuring that a registered nurse is on-site; pill usage accounting; and billing procedures and processes, among others. The commenter explained that these costs are especially challenging for small and independent providers to bear when considering the fact that they also generally experience less favorable drug acquisition pricing than LDOs with significant market advantage and negotiating power.
An LDO explained that it continues to face significant administrative and overhead costs resulting from the inclusion of the calcimimetics into the ESRD PPS via the TDAPA. The commenter stated that these costs not transitional as CMS asserts. The commenter explained that it incurs ongoing costs for staff training on clinical protocols as well as costs related to internal updates for clinical and financial systems. A national dialysis association provided similar comments, stating the operational costs associated with furnishing calcimimetics to ESRD beneficiaries, such as storing, handling, and dispensing the drugs, are ongoing for so long as the drugs are furnished under the ESRD PPS and that there is no mechanism through which ESRD facilities can address these costs without reimbursement.
A home dialysis association expressed concern regarding the ESRD facility costs associated with home dialysis patients. The commenter noted that according to their members, approximately 25 percent of patients, both home and in-center, take some form of calcimimetic drug. The commenter explained that for home dialysis patients, the costs associated with actually getting the drug to the patient is especially important given that they are not present in clinic as often as in-center patients. The commenter stated that ESRD facilities must spend considerable time and resources making certain that these patients have access to necessary medications, like calcimimetics. Two commenters stated that CMS made a commitment in the CY 2016 ESRD PPS final rule, and reiterated that commitment in subsequent rulemaking, that it would reimburse the TDAPA using the pricing methodologies under section 1847 of the Act, which includes ASP+6 percent, until sufficient claims data for rate setting analysis are available, but not for less than 2 years. The commenters noted CMS should maintain this commitment to pay the TDAPA for calcimimetics at ASP+6 percent for the duration of the TDAPA period.
We believe that we have flexibility under section 1881(b)(14)(D)(iv) of the Act to base the amount of the TDAPA on a methodology that is not based on a payment methodology under section 1847A of the Act. There is no requirement to use the payment methodologies under section 1847A of the Act for renal dialysis drugs under the ESRD PPS. As a result we have reconsidered the use of the ASP+6 percent methodology under section 1847A of the Act for the TDAPA for calcimimetics and proposed to use ASP+0 instead.
We agree with MedPAC that the ASP+6 percent policy was developed to reimburse physicians for the cost of drugs and that the TDAPA is an add-on payment adjustment to the ESRD PPS
An LDO expressed concern that ESRD facilities will be forced to choose between ceasing to provide the calcimimetics or losing additional money every time they provide calcimimetics. The LDO also expressed concern that the proposal could inhibit generic drug adoption and encourage utilization of the branded IV calcimimetic at great expense to the Medicare program and its beneficiaries. The LDO stated that it is committed to providing patients with the most cost-effective option for treatment, which typically results in prioritizing oral generic drugs and reserving the IV option for patients who otherwise fail to respond to treatment on the oral form. However the LDO strongly urged CMS to consider that, at ASP+0, many providers will lose money on cinacalcet, which could incentivize a shift in first line treatment to the IV version at a much greater cost to the program. A national dialysis association expressed similar concerns, stating that the proposal could incentivize use of the IV calcimimetic over the generic oral calcimimetic as ESRD facilities grapple with choosing the product for which they will lose the least amount of money due to declining reimbursement.
An LDO expressed concern that shifting the basis of payment in the middle of the TDAPA period for calcimimetics could skew the utilization and claims data used to inform post-TDAPA payment and that CMS should continue payment at 106 percent of ASP during the third year of TDAPA to ensure payment adequacy and consistency in utilization data it is collecting.
With respect to the concern that reducing the basis of payment to ASP+0 for calcimimetics will complicate the data we will use when considering whether to modify the base rate at the end of the TDAPA period, we are currently evaluating potential methodologies for this purpose. There are a number options being discussed as a result of stakeholder input and at the time we undergo rulemaking, we will analyze the data available and input received from stakeholders when developing our proposal to incorporate these products into the ESRD PPS base rate.
We do not believe that it is appropriate to consider expenditures in other Medicare or Medicaid funding areas when developing policies under the ESRD PPS. These funding areas are not co-mingled or mutually interchangeable. In addition, the Part B spending includes the injectable form of the calcimimetic which was not covered under Part D. We have further reviewed our data for CY 2018 and stand by the stated 1.2 billion increase to ESRD PPS expenditures.
In the CY 2011 ESRD PPS final rule (75 FR 49200), we added § 413.230 to 42 CFR part 413, subpart H to codify that the per treatment payment amount is the sum of the per treatment base rate established in § 413.220, adjusted for wages as described in § 413.231, and adjusted for facility-level and patient-level characteristics described in §§ 413.232 and 413.235; any outlier payment under § 413.237; and any training adjustment add-on under § 414.335(b). The per treatment payment amount is Medicare's payment to ESRD facilities under the ESRD PPS for furnishing renal dialysis services to Medicare ESRD beneficiaries.
In the CY 2016 ESRD PPS final rule (80 FR 69024), we codified the drug designation process regulation in § 413.234, which provides a TDAPA under § 413.234(c) when certain eligibility criteria are met. We apply the TDAPA at the end of the calculation of the ESRD PPS payment, which is similar to the application of the outlier payment (§ 413.237(c)) and the training add-on adjustment (§ 413.235(c)). That is, once the ESRD PPS base rate is adjusted by any applicable patient- and facility-level adjustments we add to it any applicable outlier payment, training add-on adjustment, or TDAPA.
In CY 2016 ESRD PPS rulemaking, we did not propose a corresponding revision to § 413.230 to reflect that the TDAPA is a component in the determination of the per treatment payment amount. Therefore, in the CY 2020 ESRD PPS proposed rule (84 FR 38347), we proposed a revision to § 413.230 to add paragraph (d) to reflect the TDAPA. We stated that we believed this modification is necessary so that the regulation appropriately reflects all inputs in the calculation of the per treatment payment amount. We noted that this revision to the regulation would not change how the ESRD PPS per treatment payment amount is currently calculated. We also proposed
We also proposed a technical change to § 413.230(c) to replace “§ 414.335(b)” with a more appropriate reference to the training adjustment add-on requirement, which is “§ 413.235(c).” In the CY 2011 ESRD PPS final rule (75 FR 49202) we inadvertently referred to § 414.335(b), which states, “After January 1, 2011, a home and self-training amount is added to the per treatment base rate for adult and pediatric patients as defined in § 413.230” when finalizing § 413.230. Section 413.235(c) similarly states “CMS provides a wage-adjusted add-on per treatment adjustment for home and self-dialysis training.” However, as we explained in the CY 2020 ESRD PPS proposed rule, § 414.335(b) describes the training adjustment add-on when erythropoietin (EPO) is furnished to home dialysis patients, whereas § 413.235(c) describes the application of the training adjustment add-on more generally, even when EPO is not furnished. When we finalized § 413.230 in the CY 2011 ESRD PPS final rule, we intended for the training adjustment add-on to apply more generally, not just when EPO is furnished, and therefore we are proposing to refer to § 413.235(c).
We did not receive any comments on our proposal for technical changes to § 413.230. Therefore, we are finalizing the changes as proposed.
In the CY 2005 Physician Fee Schedule (PFS) final rule, published on November 15, 2004 (69 FR 66299 through 66302) in the
Section 1847A(b)(1)(A) of the Act requires that the Medicare payment for a multiple source drug included within the same HCPCS code be equal to 106 percent of the ASP for the drug products included in the HCPCS code. Section 1847A(b)(1)(B) of the Act also requires that the Medicare payment for a single source drug HCPCS code be equal to the lesser of 106 percent of the ASP for the HCPCS code or 106 percent of the Wholesale Acquisition Cost (WAC) of the HCPCS code (83 FR 56929). The WAC is defined in section 1847A(c)(6)(B) of the Act as the manufacturer's list price for the drug or biological to wholesalers or direct purchasers in the U.S., not including prompt pay or other discounts, rebates or reductions in price, for the most recent month for which the information is available, as reported in wholesale price guides or other publications of drug or biological pricing data.
Section 1847A(c)(4) of the Act further provides a payment methodology in cases where the ASP during 1st quarter of sales is unavailable, stating that in the case of a drug or biologicals during an initial period (not to exceed a full calendar quarter) in which data on the prices for sales for the drug or biological product are not sufficiently available from the manufacturer to compute an ASP for the biological product, the Secretary may determine the amount payable under this section for the drug or biological product based on the WAC or the methodologies in effect under Medicare Part B on November 1, 2003, to determine payment amounts for drugs or biological products. For further guidance on how Medicare Part B pays for certain drugs and biological products, see Medicare Claims Processing Manual (Pub. L. 100–04) (chapter 17, section 20) (
We have used the payment methodology under section 1847A of the Act since the implementation of the ESRD PPS when pricing ESRD related drugs and biological products previously paid separately under Part B (prior to the ESRD PPS) for purposes of ESRD PPS policies or calculations (82 FR 50742 through 50743). In the CY 2016 ESRD PPS final rule (80 FR 69024), we adopted § 413.234(c), which requires that the TDAPA is based on payment methodologies available under section 1847A of the Act (including 106 percent of ASP). We also use such payment methodologies for Part B ESRD related drugs or biological products that qualify as an outlier service (82 FR 50745). For the purposes of the ESRD PPS, we use “payment methodology” interchangeably with “pricing methodology.”
In the CY 2019 ESRD PPS final rule (83 FR 56948) we finalized a revision to § 413.234(c) under the authority of section 1881(b)(14)(D)(iv) of the Act, to base the TDAPA on 100 percent of ASP (ASP+0) instead of the pricing methodologies available under section 1847A of the Act (which includes ASP+6). We also explained in the CY 2019 ESRD PPS final rule (83 FR 56944) that there are times when the ASP is not available. For example, when a new drug or biological product is brought to the market, sales data is not sufficiently available from the manufacturer to compute an ASP. Therefore, we finalized a change to § 413.234(c) to specify that if ASP is not available, the TDAPA is based on 100 percent of WAC (WAC+0) and, when WAC is not available, the payment is based on the drug manufacturer's invoice. We also modified § 413.234(c) to reflect that the basis of payment for the TDAPA for calcimimetics would continue to be based on the pricing methodologies available under section 1847A of the Act (which includes ASP+6). We specified that these changes to § 413.234(c) would be effective January 1, 2020.
In the CY 2019 ESRD PPS final rule (83 FR 56943), we discussed that the TDAPA is a payment adjustment under the ESRD PPS and is not intended to be a mechanism for payment for new drugs and biological products under Medicare Part B. We further explained that we believe it may not be appropriate under section 1881(b)(14)(D)(iv) of the Act to base the TDAPA strictly on the pricing methodologies under section 1847A of the Act. We explained that, in the CY 2019 ESRD PPS proposed rule (83 FR 34315), we considered options on which to base payment under the TDAPA, for example, maintaining the policy as is or
As we discussed in the CY 2020 ESRD PPS proposed rule (84 FR 38348), under the change to § 413.234(c) finalized in the CY 2019 ESRD PPS final rule (83 FR 56948), effective January 1, 2020, the basis of payment for the TDAPA is ASP+0, but if ASP is not available, then it is WAC+0, and if WAC is not available, then it is based on the drug manufacturer's invoice. In the CY 2019 ESRD PPS final rule, we also modified § 413.234(c) to reflect that the basis of payment for the TDAPA for calcimimetics would continue to be based on the pricing methodologies available under section 1847A of the Act (which includes ASP+6). As discussed in section II.B.1.d of the CY 2020 ESRD PPS proposed rule (84 FR 38330) and section II.B.1.d of this final rule, we proposed to modify the basis of payment for the TDAPA for calcimimetics for CY 2020 to ASP+0.
In the CY 2020 ESRD PPS proposed rule (84 FR 38348 through 38349), we discussed that, following publication of the CY 2019 ESRD PPS final rule, we continued to assess our policy allowing for WAC or invoice pricing if ASP is not available, and became concerned that it could lead to drug manufacturers who are not otherwise required to submit ASP data to CMS to delay submission or withhold ASP data from CMS so that ESRD facilities would receive a higher basis of payment for the TDAPA and be incentivized to purchase drugs from those manufacturers.
We stated that calcimimetics were the first drugs for which we paid the TDAPA (83 FR 56931), and this increased Medicare expenditures by $1.2 billion in CY 2018. We noted that the TDAPA for one form of the calcimimetics was based on WAC for 2 quarters, and was more expensive than ASP. In addition, there were delays in the submission of ASP data for that drug, but we are now receiving ASP data for both calcimimetics. We explained that we were concerned about the significant increase in Medicare expenditures that resulted from paying the TDAPA for calcimimetics, and about this trend continuing with new renal dialysis drugs and biological products that become eligible for the TDAPA in the future. We therefore believed we needed to limit the use of WAC (or invoice pricing) as the basis of the TDAPA to as few quarters as practicable to help limit increases to Medicare expenditures while maintaining our goals for the TDAPA policy—namely, supporting ESRD facilities in their uptake of innovative new renal dialysis drugs and biological products for those products that fall within a functional category and providing a pathway towards a potential base rate modification for those products that do not fall within a functional category.
We also noted that we were concerned that ASP will not be made available to CMS by drug manufacturers not currently required by statute to do so. Drug manufacturers who have Medicaid Drug Rebate Agreements as part of the Medicaid Drug Rebate Program are required by section 1927(b)(3) of the Act to submit ASP sales data into CMS quarterly. However, we anticipated there could be drugs marketed in the future that are eligible for the TDAPA, but may not be associated with ASP reporting requirements under section 1927(b) of the Act. While manufacturers that do not have Medicaid Drug Rebate Agreements may voluntarily submit ASP data into CMS,
We pointed out that even for those drug manufacturers who are required to submit ASP data into CMS, not all may fully comply. For the same 3rd quarter of 2012, the OIG found that at least 74 out of the 207 drug manufacturers with Medicaid Drug Rebate Agreements in place did not submit all of their required ASP data for their Part B drugs.
We noted in the CY 2020 ESRD PPS proposed rule (84 FR 38349) that, in addition to our concerns about ASP data reporting generally, we were concerned that the TDAPA policy finalized in the CY 2019 ESRD PPS final rule effective January 1, 2020, could potentially incentivize drug manufacturers who do not have a Medicaid Drug Rebate Agreement to delay or to never submit ASP data in order for ESRD facilities to receive an increased TDAPA for their products. As noted in section II.B.2.a of the CY 2020 ESRD PPS proposed rule, under § 413.234(c), effective January 1, 2020, if ASP is not available to CMS, the basis of payment for the TDAPA is WAC+0 and when WAC is not available, then the TDAPA is based on invoice pricing. As MedPAC discussed in its June 2017 Report to Congress, WAC-based payments would likely increase Medicare expenditures as compared to ASP-based payments. As stated in section 1847A(c)(5) of the Act, ASP is calculated to include discounts and rebates. WAC is ultimately controlled by the manufacturer, and its statutory definition in section 1847A(c)(6)(B) of the Act does not include the discounts
In the CY 2020 ESRD PPS proposed rule (84 FR 38349), we proposed to revise § 413.234(c) to address the following concerns: (1) Increases to Medicare expenditures due to the TDAPA for calcimimetics; (2) drug manufacturers not reporting ASP data for products eligible for the TDAPA; and (3) our TDAPA policy potentially incentivizing drug manufacturers to withhold ASP data from CMS. Under our proposed revisions, we would no longer apply the TDAPA for a new renal dialysis drug or biological product if CMS does not receive a full calendar quarter of ASP data within 30 days of the last day of the 3rd calendar quarter after we begin paying the TDAPA for the product. We noted in the CY 2020 ESRD PPS proposed rule that we were not proposing to modify the current ASP reporting process
As we discussed in section II.B.2.a of the CY 2020 ESRD PPS proposed rule, there is a 2 quarter lag between the sales period for which ASP is reported and the effective date of the rate based on that ASP data. During this period between when the TDAPA is initiated for a product and the effective date of the rate based on the full quarter of ASP data made available to CMS, consistent with the policy finalized in the CY 2019 ESRD PPS final rule (83 FR 56948), the basis of the TDAPA would be WAC+0, and if WAC is not available, then invoice pricing. Once the drug manufacturer begins submitting ASP data, the basis of the TDAPA would be ASP+0. We proposed that if we have not received a full calendar quarter of ASP data for a new renal dialysis drug or biological product by 30 days after the last day of the 3rd calendar quarter of applying the TDAPA for that product, we would stop applying the TDAPA within the next 2-calendar quarters. For example, if we begin applying the TDAPA on January 1, 2021 for an eligible new renal dialysis drug or biological product, and a full calendar quarter of ASP data for that product has not been made available to CMS by October 30, 2021 (30 days after the last day of the 3rd quarter of paying the TDAPA), we would stop applying the TDAPA for that product no later than March 31, 2022 (2 quarters after the 3rd quarter of paying the TDAPA).
We therefore proposed to revise the regulatory text at § 413.234(c) to provide that, notwithstanding the time periods for payment of the TDAPA specified in paragraphs (c)(1) and (c)(2), we would no longer apply the TDAPA for a new renal dialysis drug or biological product if CMS has not received a full calendar quarter of ASP data for the product within 30 days after the last day of the 3rd calendar quarter after the TDAPA is initiated for the product.
We noted in the CY 2020 ESRD PPS proposed rule that we expect that once drug manufacturers begin submitting ASP data into CMS, they would continue to do so for the duration of the TDAPA period as set forth in § 413.234(c). We explained that we continue to believe that basing the TDAPA on ASP+0, as compared to WAC+0 or invoice pricing, is the most appropriate choice for the ESRD PPS, and strikes the right balance of supporting ESRD facilities in their uptake of innovative new renal dialysis drugs and biological products and limiting increases to Medicare expenditures. We stated that if drug manufacturers were to stop submitting full quarters of ASP data for products that are eligible for the TDAPA, and we had to revert to basing the TDAPA on WAC or invoice pricing, we believed we would be overpaying for the TDAPA for those products.
Therefore, we also proposed to revise the regulatory text at § 413.234(c) to state that we would no longer apply the TDAPA for a new renal dialysis drug or biological product if a drug manufacturer submits a full calendar quarter of ASP data into CMS within 30 days after the close last day of the 3rd calendar quarter after the TDAPA is initiated for the product, but at a later point during the applicable TDAPA period specified in § 413.234(c)(1) or (c)(2), stops submitting a full calendar quarter of ASP data into CMS. We explained that we assess pricing for new renal dialysis drugs and biological products eligible for the TDAPA on a quarterly basis. Under our proposal, once we determine that the latest full calendar quarter of ASP is not available, we would stop applying the TDAPA for the new renal dialysis drug or biological product within the next 2-calendar quarters. For example, if we begin paying the TDAPA on January 1, 2021 for an eligible new renal dialysis drug or biological product, and a full calendar quarter of ASP data is made available to CMS by October 30, 2021 (30 days after the close of the 3rd quarter of paying the TDAPA), but a full calendar quarter of ASP data is not made available to CMS as of January 30, 2022 (30 days after the close of the 4th quarter of paying the TDAPA), we would stop applying the TDAPA for the product no later than June 30, 2022 (2 quarters after the 4th quarter of paying the TDAPA).
The comments and our responses to the comments on our proposal to implement an ASP conditional policy for application of the TDAPA are set forth below.
With regard to whether the ASP conditional policy will apply to payments made on or after January 1, 2020 or to ASP data reported in 2020, we note that this policy would become effective January 1, 2020. Therefore, for a renal dialysis drug or biological product for which we are currently paying the TDAPA and for which ASP data is currently being reported, beginning January 1, 2020, if CMS does not receive the latest full calendar quarter of ASP data for the product, CMS will no longer apply the TDAPA beginning no later than 2-calendar quarters after CMS determines that the latest full calendar quarter of ASP data is not available.
One national dialysis association supported MedPAC's suggestion that CMS take steps to ensure manufacturers report ASP data. However, the association specifically disagreed with MedPAC that CMS should require all Part B drug manufacturers report ASP data and believed any such requirement should be imposed directly on drug manufacturers under CMS authorities, and not on ESRD facilities.
An LDO noted the decrease in expenditures due to calcimimetics discussed in the comment from the national dialysis association and stated that the data was inconsistent with CMS' analysis in the proposed rule.
In the CY 2011 ESRD PPS final rule (75 FR 49075), we stated that when we computed the ESRD PPS base rate, we used the composite rate payments made under Part B in 2007 for dialysis in computing the ESRD PPS base rate. These are identified in Table 19 of the CY 2011 ESRD PPS final rule (75 FR 49075) as “Composite Rate Services”. Sections 1881(b)(14)(A)(i) and 1881(b)(14)(B) of the Act specify the renal dialysis services that must be included in the ESRD PPS bundled payment, which includes items and services that were part of the composite rate for renal dialysis services as of December 31, 2010. As we indicated in the CY 2011 ESRD PPS proposed rule (74 FR 49928), the case-mix adjusted composite payment system represents a limited PPS for a bundle of outpatient renal dialysis services that includes maintenance dialysis treatments and all associated services including historically defined dialysis-related drugs, laboratory tests, equipment, supplies and staff time (74 FR 49928). In the CY 2011 ESRD PPS final rule (75 FR 49062), we noted that total composite rate costs in the per treatment calculation included costs incurred for training expenses, as well as all home dialysis costs.
Currently, ESRD facilities are required to report their use of syringes on claims in order to receive separate payment, as discussed in the CY 2011 ESRD PPS final rule (75 FR 49141). However, historically, ESRD facilities were not required to report any other renal dialysis equipment and supplies on claims (with the exception of syringes) because these items were paid through the composite rate and did not receive separate payment. As discussed in the Medicare Claims Processing Manual (chapter 8, section 50.3), CMS directs ESRD facilities to report a dialysis treatment and their charge for the treatment. That charge is intended to reflect the cost of the dialysis treatment (equipment, supplies, and staff time) as well as routine drugs and laboratory tests. This manual is available on the CMS website at
In the CY 2019 ESRD PPS final rule (83 FR 56942 through 56943), we finalized an expansion of the TDAPA to all new renal dialysis drugs and biological products. As part of the CY 2019 ESRD PPS rulemaking, we received several comments regarding payment under the ESRD PPS for certain new, innovative equipment and supplies used in the treatment of ESRD. For example, as we described in the CY 2019 ESRD PPS final rule (83 FR 56972), a device manufacturer and device manufacturer association asked CMS to establish a transitional add-on payment adjustment for new devices that have been granted marketing authorization by FDA. They commented on the lack of new devices granted marketing authorization by FDA for use in an ESRD facility, highlighting the need to promote dialysis device innovation. The commenters indicated they believed the same rationale CMS used to propose broadening the TDAPA eligibility also would apply to new devices. Specifically, the commenters noted that CMS has discretionary authority under section 1881(b)(14)(D)(iv) of the Act to adopt payment adjustments determined appropriate by the Secretary, and stated that precedent supports CMS' authority to use non-budget neutral additions to the ESRD PPS base rate for adjustments under specific circumstances.
A professional association urged CMS and other relevant policymakers to prioritize the development of a clear pathway to add new devices to the ESRD PPS bundled payment (83 FR 56973). The association stated that additional money should be made available to appropriately reflect the costs of new devices under the ESRD PPS bundled payment. A national dialysis organization and a large dialysis organization (LDO) asked CMS to clarify how it incentivizes the development of new dialysis devices. The organization asked CMS to describe how such a device would be included in the ESRD PPS bundle, and suggested the initial application of a pass-through payment, which would be evaluated later based on the data. The organization stated that this evaluation would determine if the device should be included in the ESRD PPS base rate and whether or not additional funds should be added to the ESRD PPS bundled payment.
In addition, as we discussed in the CY 2019 ESRD PPS final rule (83 FR 56973), an LDO requested CMS plan appropriately for innovative devices or other new and innovative products and asked CMS to work with the kidney care community to consider if and how new devices or other new and innovative products delivering high clinical value, can be made available to beneficiaries, whether through the ESRD PPS or through other payment systems. A home dialysis patient group also expressed concern regarding the absence of a pathway for adding new devices to the ESRD PPS bundled payment, stating that it left investors and industry wary of investing in the development of new devices for patients. In response to these comments, we expressed appreciation for the commenters' thoughts regarding payment for new and innovative devices, and stated that we did not include any proposals regarding this issue in the CY 2019 ESRD PPS proposed rule, so we considered these suggestions to be beyond the scope of that rule.
Also, in the CY 2019 ESRD PPS proposed rule, we solicited comment on whether we should expand the outlier policy to include composite rate drugs and supplies (83 FR 34332). We noted that under the proposed expansion to the drug designation process, such expansion of the outlier policy could support appropriate payment for composite rate drugs once the TDAPA period has ended. Additionally, with regard to composite rate supplies, an expansion of the outlier policy could support use of new and innovative devices or items that would otherwise be considered in the ESRD PPS bundled payment. We stated that if commenters believe such an approach is appropriate, we requested they provide input on how we would effectuate such a shift in policy. For example, we noted, the reporting of these services may be challenging since they have never been reported on ESRD claims previously. We specifically requested feedback about how such items might work under the existing ESRD PPS outlier framework or whether specific changes to the policy to accommodate such items are needed.
We received mixed feedback in response to the comment solicitation, which was summarized in the CY 2019 ESRD PPS final rule (83 FR 56969 through 56970). Some LDOs and national dialysis organizations stated that they would prefer a smaller outlier pool with more money in the per treatment base rate while other ESRD facilities agreed that the outlier policy should be more comprehensive and expanded to include more items and services. In our response, we stated we recognized that the commenters' concerns regarding the expansion of outlier eligibility to include composite rate drugs and supplies are inextricably linked to their views on the effectiveness of our broader outlier policy or other payment adjustments. We indicated we would take these views into account as we consider the outlier policy and payment adjustments for future rulemaking.
In light of these comments, in the CY 2020 ESRD PPS proposed rule (84 FR 38350 through 38357), we considered whether additional payment may be warranted for certain new and innovative renal dialysis equipment and supplies. In the CY 2020 ESRD PPS proposed rule, we provided a general description of the IPPS new technology add-on payment (NTAP) and its SCI criteria, and we include that description again in sections II.B.3.a.i and II.B.3.a.ii of this final rule. We stated that we believe a process similar to the IPPS process for establishing SCI for the NTAP could be used to identify the innovative renal dialysis equipment and supplies for which commenters were requesting additional payment under the ESRD PPS. We noted that we believed an NTAP-like payment adjustment under the ESRD PPS would be appropriate in order to support innovation while being responsive to stakeholders.
In the CMS Innovators' Guide to Navigating Medicare,
Also as discussed in the CMS Innovators' Guide to Navigating Medicare,
Hospitals may experience a financial disadvantage as they provide more expensive products and services to Medicare beneficiaries while waiting for MS–DRG payments to reflect the higher costs. Sections 1886(d)(5)(K) and (L) of the Act establish a process of identifying and ensuring adequate payment for new medical services and technologies under the IPPS. As an incentive for hospitals to adopt new technologies during the period before their costs are recognized in the MS–DRG weights, certain new medical services or technologies may be eligible for new technology add-on payments. The new technology add-on payment policy provides additional payments for eligible high cost cases without significantly eroding the incentives provided by a payment system based on averages. To qualify for add-on payments, the regulations at 42 CFR 412.87 generally specify a medical service or technology must be: (1) New, (2) demonstrate a SCI over existing technology, and (3) be high cost such that the MS–DRG payment that would normally be paid is inadequate. For a complete discussion on the new technology add-on payment criteria, we refer readers to the fiscal year (FY) 2012 IPPS/LTCH PPS final rule (76 FR 51572 through 51574).
Since it can take 2 to 3 years for reflection of cost data in the calculation of the MS–DRG weights, technologies generally are considered new for 2 to 3 years after they become available. Applicants must demonstrate that their product offers SCI and the other NTAP requirements.
Under the cost criterion, consistent with the formula specified in section 1886(d)(5)(K)(ii)(I) of the Act, to assess the adequacy of payment for a new technology paid under the applicable MS–DRG prospective payment rate, we evaluate whether the charges for cases involving the new technology exceed the threshold amount for the MS–DRG (or the case-weighted average of all relevant MS–DRGs, if the new technology could be assigned to many different MS–DRGs).
Although any interested party may submit an application for a new technology add-on payment, applications often come from the manufacturer of a new drug or device. Preliminary discussions on whether or not new technologies qualify for add-on payments are published in the annual IPPS proposed rules and are open to public comment.
The actual add-on payments are based on the cost to hospitals for the new technology. A new technology add-on payment is made if the total covered costs of the patient discharge exceed the MS–DRG payment of the case (including adjustments for indirect medical education (IME) and disproportionate share hospital (DSH), but excluding outlier payments). The total covered costs are calculated by applying the cost-to-charge ratio (that is used for inpatient outlier purposes) to the total covered charges of the discharge.
Under § 412.88, if the costs of the discharge exceed the full MS–DRG payment, the additional payment amount equals the lesser of the following: (1) 50 percent of the costs of the new medical service or technology; (2) or 50 percent of the amount by which the total covered costs of the case (as determined above) exceed the standard MS–DRG payment, plus any applicable outlier payments if the costs of the case exceed the MS–DRG, plus adjustments for IME and DSH. More information on IPPS new technology add-on payments, including the deadline to submit an application, is located on the CMS website at
Under section 1886(d)(5)(K)(vi) of the Act, a medical service or technology will be considered a “new medical service or technology” if the service or technology meets criteria established by the Secretary after notice and an opportunity for public comment. For a more complete discussion of the establishment of the current criteria for the new technology add-on payment, we refer readers to the IPPS final rule published on September 7, 2001 in the
• The device offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments.
• The device offers the ability to diagnose a medical condition in a patient population where that medical condition is currently undetectable or offers the ability to diagnose a medical condition earlier in a patient population than allowed by currently available methods. There must also be evidence that use of the device to make a diagnosis affects the management of the patient.
• Use of the device significantly improves clinical outcomes for a patient population as compared to currently available treatments. We also noted examples of outcomes that are frequently evaluated in studies of devices. For example,
++ Reduced mortality rate with use of the technology.
++ Reduced rate of technology related complications.
++ Decreased rate of subsequent diagnostic or therapeutic interventions (for example, due to reduced rate of recurrence of the disease process).
++ Decreased number of future hospitalizations or physician visits. More rapid beneficial resolution of the disease process treatment because of the use of the device.
++ Decreased pain, bleeding, or other quantifiable symptom.
++ Reduced recovery time.
In the FY 2001 IPPS final rule (66 FR 46913), we stated that we believed the special payments for new technology should be limited to those new technologies that have been demonstrated to represent a substantial improvement in caring for Medicare beneficiaries, such that there is a clear advantage to creating a payment incentive for physicians and hospitals to utilize the new technology. We also stated that where such an improvement is not demonstrated, we continue to believe the incentives of the DRG system would provide a useful balance to the introduction of new technologies. In that regard, we also pointed out that various new technologies introduced over the years have been demonstrated to have been less effective than initially thought, or in some cases even potentially harmful. We stated that we believe that it is in the best interest of Medicare beneficiaries to proceed very carefully with respect to the incentives created to quickly adopt new technology.
We noted in the FY 2020 IPPS proposed rule (84 FR 19274 through 19275), that applicants for add-on payments for new medical services or technologies must submit a formal request, including a full description of the clinical applications of the medical service or technology and the results of any clinical evaluations demonstrating that the new medical service or technology represents a SCI, along with a significant sample of cost data to demonstrate that the medical service or technology meets the cost criterion. Complete application information, along with final deadlines for submitting a full application, is posted on the CMS website at
Per section 1886(d)(5)(K)(i) of the Act, the Secretary is required to establish a mechanism to recognize the costs of new medical services and technologies under the payment system after notice and opportunity for public comment. The payment rate updates and policy changes including new technology add-on payments under the IPPS are completed through the annual notice-and-comment rulemaking process with an October 1 effective date. In the proposed rule, CMS reviews each application and the information and clinical evidence provided by the applicant on how it meets each of the new technology add-on payment criteria. Regarding SCI, we work with our medical officers to evaluate whether a technology represents an SCI. Under the IPPS, public input before publication of a notice of proposed rulemaking on add-on payments is required by section 1886(d)(5)(K)(viii) of the Act, as amended by section 503(b)(2) of Public Law 108–173, and provides for a mechanism for public input before publication of a notice of proposed rulemaking regarding whether a medical service or technology represents a SCI or advancement. In the final rule, we make a determination whether an applicant has met the new technology add-on payment criteria and is eligible for the add-on payment.
The IPPS proposed and final rules go on display around April and August, respectively, each year. The FY 2020 IPPS proposed rule is available on the CMS website at
As we stated in the CY 2020 ESRD PPS proposed rule (84 FR 38350 through 38353), following publication of the CY 2019 ESRD PPS final rule (83 FR 56969 through 56970), which discussed the comment solicitation on expanding the outlier policy to include composite rate drugs and supplies, we received additional information from dialysis equipment and supply manufacturers and a TEP meeting held in December 2018 regarding composite rate equipment and supplies. Discussions of the key findings from the TEP meeting can be found in section VIII.A of this final rule. In addition, some manufacturers have informed us that there is little incentive for them to develop innovative equipment and supplies for the treatment of ESRD primarily because ESRD facilities have no incentive to adopt innovative dialysis equipment and supplies since they are included in the ESRD PPS bundled payment and currently no additional payment is made.
In addition, we stated that we believed innovations in kidney care are likely as a result of the Kidney Innovation Accelerator (known as KidneyX). KidneyX is a public-private partnership between the Department of Health and Human Services and the American Society of Nephrology to accelerate innovation in the prevention, diagnosis, and treatment of kidney diseases.
KidneyX seeks to improve the lives of dialysis patients by accelerating the development of drugs, devices, biologics and other therapies across the spectrum of kidney care including prevention, diagnostics, and treatment. KidneyX's first round of prize funding focused on accelerating the commercialization of next-generation dialysis products, aiming to reduce the risk of innovation by streamlining processes, reducing regulatory barriers, and modernizing the way we pay for treatment. More than 150 applications were reviewed, covering a full-range of innovative proposals, including advances in access, home hemodialysis and peritoneal dialysis, adjuncts to current in-center dialysis, and proposals for implantable devices, externally-worn devices and prototypes for an artificial kidney. More information regarding KidneyX is available at the following link:
We stated that we believed some of the prototypes developed as part of the KidneyX will be the type of innovation the commenters requested and we want to incentivize ESRD facility use of those products. We noted that in order for equipment and supplies awarded through the KidneyX to be eligible for the additional payment the items would also need to be determined by CMS to be a renal dialysis service and meet other eligibility criteria described in section II.B.3.b.i of the CY 2020 ESRD PPS proposed rule (84 FR 38353 through 38355). We also noted that the goals for KidneyX and our proposal are different but complementary; KidneyX is focused on accelerating innovation in the prevention, diagnosis, and treatment of kidney disease, at the beginning stages of the development of an innovative product, while our proposals were intended to support uptake of new and innovative renal dialysis equipment and supplies after they have been authorized for marketing by FDA and meet other requirements, all of which happen after the development stage.
In addition, on July 10, 2019, the President signed an Executive Order
As we stated in the CY 2020 ESRD PPS proposed rule (84 FR 38354 through 38355), in consideration of the feedback we have received, we agree that additional payment for certain renal dialysis equipment and supplies may be warranted under specific circumstances. We proposed to provide a transitional add-on payment adjustment for new and innovative renal dialysis equipment and supplies furnished by ESRD facilities (with the exception of capital-related assets). We proposed to call this payment adjustment the Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies or TPNIES.
Renal dialysis equipment and supplies are medically necessary
We stated in the CY 2020 ESRD PPS proposed rule that, for new and innovative equipment and supplies, we believed the IPPS SCI criteria and the process used to evaluate SCI under the IPPS can be used as a proxy for identifying new and innovative equipment and supplies worthy of additional payment under the ESRD PPS. We noted that under the IPPS, CMS has been assessing new technologies for many years to assure that the additional new technology add-on payments to hospitals are made only for truly innovative and transformative products, and we stated that CMS is proposing to adopt the IPPS SCI criteria under the ESRD PPS for the same reason. We explained that we wanted to ensure that the add-on payment adjustments made under the ESRD PPS are limited to new equipment and supplies that are truly innovative. In addition, since renal dialysis services are routinely furnished to hospital inpatients and outpatients, we stated that we believed the same SCI criteria should be used to assess whether a new renal dialysis equipment or supply warrants additional payment under Medicare.
Therefore, we proposed to adopt IPPS's SCI criteria specified in § 412.87(b)(1), including modifications finalized in future IPPS final rules, to determine when a new and innovative renal dialysis equipment or supply is eligible for the TPNIES under the ESRD PPS. That is, we would adopt IPPS's SCI criteria in § 412.87(b)(1) and any supporting policy around this criteria as discussed in IPPS preamble language. We stated that we believed that by incorporating the IPPS SCI criteria for new and innovative renal dialysis equipment under the ESRD PPS, we would be consistent with IPPS and innovators would have standard criteria to meet for both settings. We also proposed to establish a process modeled after IPPS's process of determining if a new medical service or technology meets the SCI criteria specified in § 412.87(b)(1). That is, we proposed that CMS would use a similar process to determine whether the renal dialysis equipment or supply meets the eligibility criteria proposed in newly added § 413.236(b). Similar to how we evaluate whether a new renal dialysis drug or biological product is eligible for the TDAPA, as discussed in the CY 2016 ESRD PPS final rule (80 FR 69019), we would need to determine whether the renal dialysis equipment and supply meets our eligibility criteria for the TPNIES.
We noted that IPPS has additional criteria that is specific to its payment system, that is, a high cost criteria relative to the MS–DRG payment. We did not propose to adopt the specific IPPS high cost criteria requirements under § 412.87(b)(3) under the ESRD PPS since the basis of payment is different. Specifically, under the ESRD PPS, the basis of payment is the per treatment payment amount that is updated annually by the ESRD bundled market basket and the multifactor productivity (MFP) adjustment. For this reason we only proposed to adopt the SCI criteria in § 412.87(b)(1) and did not consider the high cost criteria requirements.
We proposed to exclude capital-related assets from eligibility for the TPNIES, which we would define based on the Provider Reimbursement Manual (Pub. L. 15–1) (chapter 1, section 104.1) as assets that a provider has an economic interest in through ownership (regardless of the manner in which they were acquired). The Provider Reimbursement Manual is available on the CMS website at
Under our proposal, in addition to having marketing authorization by FDA on or after January 1, 2020, and meeting SCI criteria as determined under § 412.87(b)(1), the equipment or supply must be commercially available, have a HCPCS application submitted in accordance with the official Level II HCPCS coding procedures, and have been designated by CMS as a renal dialysis service under § 413.171. We proposed that following FDA marketing authorization, in order to establish a mechanism for payment, the equipment or supply would then go through a process to establish a billing code, specifically a HCPCS code. This information is necessary to conform to the requirements for both CMS and provider billing systems. Information regarding the HCPCS process is available on the CMS website at
Under our proposal, we would model our determination process similar to that of IPPS's NTAP. That is, manufacturers would submit all information necessary for determining that the renal dialysis equipment or supply meets the eligibility criteria listed in § 413.236(b). That would include FDA marketing authorization information, the HCPCS application information, and studies submitted as part of these two standardized processes, an approximate date of commercial availability, and any information necessary for SCI criteria evaluation. For example, clinical trials, peer reviewed journal articles, study results, meta-analyses, systematic literature reviews, and any other appropriate information sources can be considered.
We proposed to provide a description of the equipment or supply and pertinent facts related to it that can be evaluated through notice-and-comment rulemaking. We stated that we would consider whether a new renal dialysis equipment or supply meets the eligibility criteria specified in newly added § 413.236(b) and announce the results in the
For example, under our proposal, in order to receive the TPNIES under the
Alternatively, we considered an application deadline of September 1, however, we proposed an earlier timeframe so that the TPNIES would be implemented sooner. We noted that a September 1 deadline would provide more time initially for manufacturers to submit applications. We solicited comment on the proposed deadline date for the application.
To codify the requirements for the TPNIES, including the eligibility, we proposed to add § 413.236, Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies. We proposed to add § 413.236(a) to state that the basis for the section is to establish a payment adjustment to support ESRD facilities in the uptake of new and innovative renal dialysis equipment and supplies under the ESRD PPS under the authority of section 1881(b)(14)(D)(iv) of the Act.
We proposed to add § 413.236(b) to address the eligibility requirements for the TPNIES. Under the proposed paragraph (b), for dates of service occurring on or after January 1, 2020, we would provide a TPNIES as specified in paragraph (d) that is added to the per treatment base rate established in § 413.220, adjusted for wages as described in § 413.231, and adjusted for facility-level and patient-level characteristics as described in §§ 413.232 and 413.235 to an ESRD facility for furnishing a covered equipment or supply only if the item: (1) Has been designated by CMS as a renal dialysis service under § 413.171, (2) is new, meaning it is granted marketing authorization by FDA on or after January 1, 2020, (3) is commercially available, (4) has a Healthcare Common Procedure Coding System (HCPCS) application submitted in accordance with the official Level II HCPCS coding procedures, (5) is innovative, meaning it meets the criteria specified in § 412.87(b)(1) and related guidance, and (6) is not a capital-related asset that an ESRD facility has an economic interest in through ownership (regardless of the manner in which it was acquired).
We also proposed to add § 413.236(c) to establish a process for the TPNIES eligibility determinations and a deadline for consideration of new renal dialysis equipment or supply applications under the ESRD PPS. That is, we proposed that we would consider whether a new renal dialysis supply or equipment meets the eligibility criteria specified in § 413.236(b) and announce the results in the
We solicited comment on the proposed criteria to determine new and innovative renal dialysis equipment and supplies that would be eligible for TPNIES. In addition, we solicited comment on the use of different evaluative criteria and, where applicable, payment methodologies, for renal dialysis supplies and equipment that may be eligible for the TPNIES under the ESRD PPS. These criteria could include cost thresholds for high cost items. We solicited comment on whether any of the IPPS SCI criteria would not be appropriate for the ESRD facility setting and whether there should be additional criteria specific to ESRD. We sought comment on whether to use FDA's pre-market authorization and De Novo pathways as a proxy for or in place of the proposed SCI criteria. In addition, we solicited comment on potential implementation challenges, such as what sources of data that CMS should utilize to assess SCI and the proposed process that would be used to determine SCI. Finally, we solicited comment on the benefits and drawbacks of the proposed SCI criteria.
The comments and our responses to the comments on our proposals regarding eligibility criteria for the TPNIES are set forth below.
An LDO stated that the proposed eligibility for the TPNIES is overly narrow, and does not address the need and potential for achieving innovations in the most central component of dialysis care. A professional association agreed, noting that significant innovation and technology improvement is occurring in the area of dialysis machines and peritoneal dialysis cyclers and that innovation in the efficiency and effectiveness of water systems would both improve patient quality of care, as well as reduce costs for facilities and help to preserve the nation's water supply.
Another LDO also recommended that CMS eliminate the exclusion for capital-related assets from the TPNIES criteria. The LDO noted it is sensitive to the operational challenges highlighted by CMS that would emerge if capital-related assets were eligible for the TPNIES. The LDO expressed appreciation for CMS' desire to arrive at a policy that is operationally simple but maintained that the challenges cited by CMS in applying the TPNIES to capital-related assets can be overcome. Alternatively, the LDO recommended that CMS consider a separate add-on payment methodology to capture the costs of capital-related assets under its existing authority to include other payment adjustments in the ESRD PPS as the Secretary determines appropriate.
MedPAC stated that the proposal is unclear about whether capital-related assets that are leased are excluded from eligibility for the TPNIES. MedPAC pointed out that in the proposed rule, the definition of a capital-related asset refers to the Provider Reimbursement Manual (Chapter 1, Section 104.1), which does not distinguish between capital-related items that are purchased versus those that are leased. MedPAC requested that we clarify in the CY 2020 ESRD PPS final rule whether a capital-related asset that is leased would be eligible for the TPNIES.
A health services company recommended that CMS clarify that equipment or supplies used for home dialysis are not subject to the “capital-related asset” criteria and confirm that a leased home dialysis device would not be a capital-related asset. The company stated that our proposal uses the hospital cost reporting definition of a depreciable asset, which it strongly believes should not apply in the case of home dialysis equipment or supplies that are not used by multiple patients in a facility but rather are used exclusively by a single patient in the patient's home. The company indicated that this change to the eligibility criteria would help better align the TPNIES with the Administration's bold goals for moving kidney care away from its current reliance on in-center dialysis to more availability and use of home dialysis. A device manufacturer stated that including leased capital equipment is feasible under the currently proposed payment approach, leveraging existing coding mechanisms and the proposed invoice-based payment process.
An LDO acknowledged that the cost report design may make it difficult to differentiate capital-related assets on a per treatment basis and that is why CMS proposed to exclude capital-related assets. However, the LDO stated that in doing so, in effect, CMS is only creating a payment adjustment for renal dialysis supplies. Until the work can be accomplished to differentiate capital related assets on cost reports, the commenter suggested that CMS only exclude capital-related assets generally used for multiple patients. The commenter stated that by allowing single patient use equipment, CMS would be fostering more patient-engaged solutions like those found in the Kidney X prize competition and for home modalities.
A patient advocacy organization stated that while it appreciates the complexity involved in establishing a payment adjustment for capital-related assets on a per-treatment basis, the organization believes it is critically important to implement incentives that may result in lighter and easier to use home dialysis machines, especially given the Administration's efforts to increase the uptake of home dialysis. The organization stated that home dialysis machines are both leased and purchased by facilities, so it believes both types of machines should ultimately be eligible for the TPNIES, though it supports CMS' efforts to begin with considering leased equipment for eligibility.
While we acknowledge that significant innovation and technology improvement is occurring with dialysis machines and peritoneal dialysis cyclers, as well as innovation in the efficiency and effectiveness of water systems, at this time we do not have enough information regarding current usage of the various financial and leasing arrangements, such as those involving capital-leases for depreciable assets versus operating leases recorded as operating expenses. In addition, methodological issues regarding depreciation need to be assessed in order to determine whether TPNIES eligibility for these items would be appropriate. We need to further study the specifics of the various business arrangements for equipment related to renal dialysis services. This would include items that are: (1) Purchased in their entirety and owned as capital-related assets; (2) assets that are acquired through a capital-lease arrangement; (3) equipment obtained through a finance lease and recorded as an asset per the Financial Accounting Standards Board (FASB) guidance on leases (Topic 842) effective for fiscal years beginning after December 15, 2018,
With regard to capital-lease equipment for home dialysis, we note that historically we have always supported patient choice with regard to dialysis modality and we support the Administration's initiatives for home dialysis. However, we did not intend for capital-lease assets to be eligible for the TPNIES at this time. We note that regulations at § 413.130(b)(1) “Introduction to capital-related costs,” specifies that leases and rentals are includable in capital-related costs if they relate to the use of assets that would be depreciable if the provider owned them outright. In the future, we will be closely examining the treatment of capital-related assets under Medicare, including our regulations at § 412.302 regarding capital costs in inpatient hospitals and § 413.130, as they relate to accounting for capital-related assets, including capital-lease and the newly implemented guidance for finance lease arrangements, to determine if similar policies would be appropriate under the ESRD PPS.
Many commenters recommended that CMS adopt timelines that provide maximum flexibility to manufacturers in meeting the application deadline, particularly in the first year of the program and asked that CMS extend the February 1, 2020 application deadline to April or May. They stated that manufacturers would benefit from additional time in the first year of the program because the process will be new and manufacturers were not able to prepare for it during development of their products. More importantly, several commenters urged CMS to allow manufacturers to file applications for products that are expected to receive FDA authorization for marketing before the next calendar year, but not require that marketing authorization take place prior to the application deadline. The commenter pointed out that this approach is allowed for the NTAP application, which requires only that a product is pending marketing authorization at the FDA at the time of filing the NTAP application.
One of the commenters suggested that CMS eliminate the newness criterion. The commenter stated that while little innovation has occurred in ESRD in decades, there are a limited number of products developed that have been unsuccessful in entering the market because of reimbursement barriers. The commenter asserted that the proposed January 1, 2020 date would encourage use of technologies that are currently in development, but have not yet entered the market, putting earlier innovators at a disadvantage. The commenter maintained that the same incentive for use should be applied to technologies that have recently gained approval and have had limited market uptake, in many cases because they are more costly than existing technologies, despite presenting substantial clinical improvement.
A software development company stated that it is important that CMS implement the TPNIES in a manner that maintains a level playing field. In other words, CMS must work collaboratively with FDA to ensure all new market entrants undergo the appropriate regulatory oversight prior to marketing their equipment and supplies. The company stated that CMS must also implement the TPNIES in a manner that avoids rewarding technology vendors for achieving overdue FDA marketing authorization. Further, technologies that have already completed the regulatory oversight process should be able to access the same incentives, that is, the new add-on payment adjustment.
The company encouraged CMS to ensure the eligibility of technologies that have already obtained FDA marketing authorization, and are not reimbursed under the ESRD PPS, for the TPNIES. This approach would assist CMS in achieving greater competition and innovation, as opposed to making eligible just those products granted marketing authorization by the FDA on or after January 1, 2020, as envisioned by the proposed rule.
Another commenter expressed similar concerns and recommended that CMS extend eligibility for the TPNIES to products receiving marketing authorization on or after January 1, 2019, and even consider on or after January 1, 2018 as the criterion. The commenter stated that this would allow a technology to be eligible for the TPNIES if it recently received marketing authorization but has struggled with market adoption because of financial disincentives in the ESRD PPS.
Another commenter recommended that CMS extend the eligibility for the TPNIES back to a January 1, 2018 FDA marketing authorization date. This would give new devices (and drugs) that may be eligible to participate in IPPS' NTAP or OPPS' pass-through, a 2-year window from the regulatory date of approval, or when the product is introduced to market, to participate in the respective programs. The commenter also noted that there have been highly innovative products, which could significantly benefit the Medicare population, which have been approved over the last 2 years. The commenter stated there are a limited number of recently approved highly innovative products for the ESRD patient population and encouraged CMS to grant as much flexibility as possible related to the FDA marketing authorization date.
However, a non-profit provider association stated that a prospective, rather than retrospective, date is appropriate, since part of the basis for providing additional payment is to spur innovation, which industry stakeholders have said has been thwarted.
A device manufacturers association and a device manufacturer and others made a similar recommendation based on their concern that the requirement that all products undergo the SCI determination process will delay patient access to needed therapies. They pointed out that products that receive FDA marketing authorization under the PMA or De Novo pathways must undergo more stringent regulatory review and provide FDA with more data than a 510(k) submission and have demonstrated a level of clinical effectiveness and newness that products cleared under the 510(k) process have not.
They believe that this policy modification would have a negligible effect on the cost of the TPNIES program to the Federal Government, but it would have a tremendous effect on encouraging innovation. The commenters pointed out that no new devices for use in an ESRD facility were authorized by the FDA under a PMA or De Novo application from 2013 to 2017.
A medical technology company agreed, recommending that we allow devices, including capital equipment, that have made significant improvements upon an existing approved device be eligible for the TPNIES when delivering product updates that meet SCI or patient preference criteria. The company stated that this approach would encourage significant innovation that is achievable in a relatively short time period, reaching today's patients.
However, MedPAC stated that CMS should not use FDA's marketing authorization processes, including PMA and De Novo pathways, as a proxy for or in place of the proposed SCI criteria. They maintain that the Medicare program, not the FDA, should adjudicate spending determinations
MedPAC also pointed out that there have been many examples where devices approved through expedited FDA marketing authorization have not resulted in improvements in care relative to existing technologies, and in fact many have been recalled.
Specifically, CMS will use the following criteria to evaluate SCI for purposes of the TPNIES under the ESRD PPS (see § 412.87(b)(1) and § 413.236(b)), based on the IPPS SCI criteria and related guidance:
A new renal dialysis equipment or supply represents an advance that substantially improves, relative to renal dialysis services previously available, the diagnosis or treatment of Medicare beneficiaries. First, and most importantly, the totality of the circumstances is considered when making a determination that a new renal dialysis equipment or supply represents an advance that substantially improves, relative to renal dialysis services previously available, the diagnosis or treatment of Medicare beneficiaries.
Second, a determination that a new renal dialysis equipment or supply represents an advance that substantially improves, relative to renal dialysis services previously available, the diagnosis or treatment of Medicare beneficiaries means:
• The new renal dialysis equipment or supply offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments; or
• The new renal dialysis equipment or supply offers the ability to diagnose a medical condition in a patient population where that medical condition is currently undetectable, or offers the ability to diagnose a medical condition earlier in a patient population than allowed by currently available methods, and there must also be evidence that use of the new renal dialysis service to make a diagnosis affects the management of the patient; or
• The use of the new renal dialysis equipment or supply significantly improves clinical outcomes relative to renal dialysis services previously available as demonstrated by one or more of the following: A reduction in at least one clinically significant adverse event, including a reduction in mortality or a clinically significant complication; a decreased rate of at least one subsequent diagnostic or therapeutic intervention; a decreased number of future hospitalizations or physician visits; a more rapid beneficial resolution of the disease process treatment including, but not limited to, a reduced length of stay or recovery time; an improvement in one or more activities of daily living; an improved quality of life; or, a demonstrated greater medication adherence or compliance; or,
• The totality of the circumstances otherwise demonstrates that the new renal dialysis equipment or supply substantially improves, relative to renal dialysis services previously available, the diagnosis or treatment of Medicare beneficiaries.
Third, evidence from the following published or unpublished information sources from within the U.S. or elsewhere may be sufficient to establish that a new renal dialysis equipment or supply represents an advance that substantially improves, relative to renal dialysis services previously available, the diagnosis or treatment of Medicare beneficiaries: Clinical trials, peer reviewed journal articles; study results; meta-analyses; consensus statements; white papers; patient surveys; case studies; reports; systematic literature reviews; letters from major healthcare associations; editorials and letters to the editor; and public comments. Other appropriate information sources may be considered.
Fourth, the medical condition diagnosed or treated by the new renal dialysis equipment or supply may have a low prevalence among Medicare beneficiaries.
Fifth, the new renal dialysis equipment or supply may represent an advance that substantially improves, relative to services or technologies previously available, the diagnosis or treatment of a subpopulation of patients with the medical condition diagnosed or treated by the new renal dialysis equipment or supply.
We expect that if an application for the TPNIES is submitted by February 1, 2020 for the equipment or supply, the equipment or supply would be available to be sold by January 1, 2021, when the TPNIES period begins, if we determine the item is eligible. In addition, we note that the TPNIES period for a product begins on January 1 and ends 2 years later on December 31. We would expect that manufacturers would want to capitalize on the marketing opportunity available during the TPNIES period and ensure that the equipment or supply is commercially available on January 1. We are concerned that if the equipment or supply is not commercially available on January 1, there may be confusion from ESRD facilities over when the TPNIES period starts and ends. Therefore, we believe this is an important criteria for eligibility for the TPNIES. If the equipment or supply is not commercially available on January 1, the manufacturer would not meet one of the eligibility criteria for TPNIES and no TPNIES payments should be made. For this reason, we expect for the manufacturer to notify CMS by September 1 if the equipment or supply will not be commercially available by January 1. If the manufacturer is unable to have market availability by January 1, 2021, the equipment or supply is not eligible for TPNIES in CY 2021.
We also are finalizing the addition of § 413.236(b) to state that a renal dialysis equipment or supply meet the following eligibility criteria in order to receive the TPNIES: (1) Has been designated by CMS as a renal dialysis service under § 413.171, (2) is new, meaning it is granted marketing authorization by FDA on or after January 1, 2020, (3) is commercially available by January 1 of the particular calendar year, meaning the year in which the payment adjustment would take effect, (4) has a Healthcare Common Procedure Coding System (HCPCS) application submitted in accordance with the official Level II HCPCS coding procedures by September 1 of the particular calendar year (5) is innovative, meaning it meets the criteria specified in § 412.87(b)(1) and related guidance, and (6) is not a capital-related asset that an ESRD facility has an economic interest in through ownership (regardless of the manner in which it was acquired).
We are also finalizing the addition of § 413.236(c) to establish a process for the TPNIES determination and deadline for consideration of new renal dialysis equipment or supply applications under the ESRD PPS. That is, we are finalizing that we will consider whether a new renal dialysis supply or equipment meets the eligibility criteria specified in § 413.236(b) and announce the results in the
In the CY 2020 ESRD PPS proposed rule (84 FR 38355), we stated that, with respect to the new and innovative renal dialysis equipment and supplies, we were not aware of pricing compendia currently available to price these items for the transitional add-on payment adjustment proposal discussed in this section. We also noted that, unlike new renal dialysis drugs and biological products eligible for the TDAPA, ASP and WAC pricing do not exist for renal dialysis equipment and supplies. Unlike the IPPS NTAP methodology, which uses MS–DRG payment and cost-to-charge ratios in its high cost criteria payment calculation, the ESRD PPS has a single per treatment payment amount. Therefore, we proposed to establish a pricing method in the absence of data indicating a true market price.
In accordance with ESRD billing instructions of the Medicare Claims Processing Manual (chapter 8, section 50.3), we proposed that ESRD facilities would report the HCPCS code, when available, and their corresponding charge for the item. We explained that, in accordance with the Provider Reimbursement Manual (chapter 22, section 2203), Medicare does not dictate a provider's charge structure or how it itemizes charges but it does determine whether charges are acceptable for Medicare purposes. Charges should be reasonably and consistently related to the cost of services to which they apply and are uniformly applied. In addition, the Provider Reimbursement Manual (chapter 22, section 2202.4) specifies that charges refer to the regular rates established by the provider for services rendered to both beneficiaries and to other paying patients. Charges should be related consistently to the cost of the services and uniformly applied to all patients whether inpatient or outpatient. All patients' charges used in the development of apportionment ratios should be recorded at the gross value; that is, charges before the application of allowances and discounts deductions.
Since we require charges to be reported at the gross value, we did not propose to use charges as the basis of payment. The ESRD PPS does not have a charge structure or a gap-filling policy similar to the DMEPOS policy. As a result, we proposed to obtain a pricing indicator that requires the item to be priced by Medicare Administrative Contractors (MACs). We proposed to adopt a process that utilizes invoiced-based pricing. We noted that there are instances in which invoice pricing is also used for DMEPOS. Specifically, in the Medicare Claims Processing Manual (chapter 23, section 60.3), we state that “potential appropriate sources for such commercial pricing information can . . . include verifiable information from supplier invoices.”
In addition, we noted that in the CY 2019 Physician Fee Schedule final rule (83 FR 59663), we discussed that invoice based pricing is used to pay for Part B drugs and biologicals in certain circumstances as described in the Medicare Claims Processing Manual (chapter 17, section 20.1.3). For example, if a payment allowance limit for a drug or biological is not included in the quarterly ASP Drug Pricing File or Not Otherwise Classified Pricing File, MACs are permitted to use invoice pricing. MACs may also use invoice based pricing for new drugs and biologicals that are not included in the ASP Medicare Part B Drug Pricing File or Not Otherwise Classified Pricing File. The new drug provision may be applied during the period just after a drug is marketed, that is, before ASP data has been reported to CMS. We stated that we believed using invoices for new drugs and drugs without national pricing is a similar situation to addressing new and innovative renal dialysis equipment and supplies that do not have a national price.
We stated that we believed that an invoice-based approach could be applied to the renal dialysis equipment and supplies that are the focus of our proposal. As noted previously, ESRD facility charges are gross values; that is, charges before the application of allowances and discounts deductions. We stated that we believed the MAC-determined price should reflect the discounts, rebates and other allowances the ESRD facility (or parent company) receives. These terms are defined in the Provider Reimbursement Manual (chapter 8).
Under our proposal, the specific amounts would be established for the new and innovative renal dialysis equipment or supply HCPCS code using verifiable information from the following sources of information, if available: The invoice amount, facility charges for the item, discounts, allowances, and rebates; the price established for the item by other MACs and the sources of information used to establish that price; payment amounts determined by other payers and the information used to establish those payment amounts; and charges and payment amounts, required for other equipment and supplies that may be comparable or otherwise relevant.
We stated that once there is sufficient payment data across MACs, we would consider establishing a national price for the item through notice and comment rulemaking. We invited public comment on this proposed approach for pricing new and innovative renal dialysis equipment and supplies for the transitional add-on payment adjustment proposal discussed in section II.B.3.b.iii of this final rule. We also solicited comment on other pricing criteria and other verifiable sources of information that should be considered.
To mitigate the Medicare expenditures incurred as a result of the TPNIES proposal discussed later in this section of the final rule, we proposed to base the additional payment on 65 percent of the MAC-determined price. We noted that in the FY 2020 IPPS proposed rule (84 FR 19162) a 50 percent capped add-on amount was considered low with regard to providing hospitals with a sufficient incentive to use the new technology. In that rule, we proposed to modify the current payment mechanism to increase the amount of the maximum add-on payment amount to 65 percent. In the FY 2020 IPPS final rule (84 FR 42048), the percentage was revised to be 65 percent. In the CY 2020 ESRD PPS proposed rule (84 FR 38356), we stated we believed that we have the same goal as IPPS with regard to supporting ESRD facility use of new and innovative renal dialysis equipment and supplies. Therefore, we proposed to base the TPNIES on 65 percent of the
In the CY 2020 ESRD PPS proposed rule, we acknowledged that ESRD facilities have unique challenges with regard to implementing new renal dialysis drugs and biological products as discussed in section II.B.1.b of this final rule, and we stated that we believed that the same issues would apply with respect to incorporating new and innovative equipment and supplies into their standards of care. For example, when new and innovative equipment and supplies are introduced to the market, ESRD facilities would need to analyze their budgets and engage in contractual agreements to accommodate the new items into their care plans. Newly marketed equipment and supplies can be unpredictable with regard to their uptake and pricing, which makes these decisions challenging for ESRD facilities. Furthermore, practitioners should have the ability to evaluate the appropriate use of a product and its effect on patient outcomes. We stated that we believed this uptake period would be supported by the proposed TPNIES because it would help facilities transition or test new and innovative equipment and supplies in their businesses under the ESRD PPS. The proposed TPNIES would target payment for the use of new and innovative renal dialysis equipment and supplies during the period when a product is new to the market.
We proposed to apply the TPNIES for 2-calendar years from the effective date of the change request, which would coincide with the effective date of the CY ESRD PPS final rule. We also proposed that after the TPNIES period ends, the item would become an eligible outlier service as provided in § 413.237. Therefore, we proposed revisions to § 413.237(a)(1) to reflect outlier eligibility for the new renal dialysis equipment or supply once the TPNIES period ends. We stated that we believed that 2 years would be a sufficient timeframe for ESRD facilities to set up or adjust business practices so that there is seamless access to the new and innovative equipment and supplies. In addition, historically when we have implemented policy changes whereby facilities need to adjust their system modifications or protocols, we have provided a transition period. We noted that we believed that this 2-year timeframe is similar in that facilities are making changes to their systems and care plans to incorporate the new renal dialysis equipment and supplies into their standards of care and this could be supported by a transition period.
Further, we stated that we believed providing the TPNIES for 2 years would address the stakeholders' concerns regarding additional payment to account for higher cost of more new and innovative equipment and supplies that they believe may not be adequately captured by the dollars allocated in the ESRD PPS base rate. That is, the TPNIES would give the new and innovative equipment and supplies a foothold in the market so that when the timeframe is complete, they are able to compete with the other equipment and supplies also accounted for in the ESRD PPS base rate. Once the 2-year timeframe is complete, we proposed that the equipment or supply would then qualify as an outlier service, if applicable, and the facility would no longer receive the TPNIES for that particular item. Instead, in the outlier policy space, there is a level playing field where products could gain market share by offering the best practicable combination of price and quality.
We noted that this proposal would increase Medicare expenditures, which would result in increases to ESRD beneficiary co-insurance, since we have not previously provided a payment adjustment for renal dialysis equipment and supplies in the past. However, to support agency initiatives and to be consistent with both our TDAPA policy and IPPS payment policies, we noted that we believed that the proposed TPNIES would be appropriate to support ESRD facility uptake in furnishing new and innovative renal dialysis equipment and supplies.
We stated that the intent of the TPNIES would be to provide a transition period for the unique circumstances experienced by ESRD facilities when incorporating certain new and innovative equipment and supplies into their businesses and to allow time for the uptake of the new and innovative equipment and supplies. We explained that, at this time, we do not believe that it would be appropriate to add dollars to the ESRD PPS base rate for new and innovative renal dialysis equipment and supplies because, as noted previously, the ESRD PPS base rate includes the cost of equipment and supplies used to furnish a dialysis treatment. As we have stated in CY 2019 ESRD PPS proposed rule (83 FR 34314), we believe that increasing the base rate for these items could be in conflict with the fundamentals of a PPS. That is, under a PPS, Medicare makes payments based on a predetermined, fixed amount that reflects the average cost and the facility retains the profit or suffers a loss resulting from the difference between the payment rate and the facility's resource use which creates an incentive for facilities to control their costs. It is not the intent of a PPS to add dollars to the base rate whenever a new product is made available.
Therefore, we also proposed to add § 413.236(d) to provide a transitional add-on payment adjustment for new and innovative renal dialysis equipment or supply based on 65 percent of the MAC-determined price, as described in proposed § 413.236(e). The TPNIES would be paid for 2-calendar years. Following payment of the TPNIES, the ESRD PPS base rate would not be modified and the new and innovative renal dialysis equipment or supply would be an eligible outlier service as provided in § 413.237.
We also proposed to add § 413.236(e) to require that the MAC on behalf of CMS would establish prices for the new and innovative renal dialysis equipment and supplies described in newly added § 413.236(b), and that we would use these prices for the purposes of determining the TPNIES. The specific amounts would be established for the new and innovative renal dialysis equipment or supply HCPCS code using verifiable information from the following sources of information, if available: The invoice amount, facility charges for the item, discounts, allowances, and rebates; the price established for the item by other MACs and the sources of information used to establish that price; payment amounts determined by other payers and the information used to establish those payment amounts; and charges and payment amounts, required for other equipment and supplies that may be comparable or otherwise relevant.
We also proposed to add paragraph (e) to § 413.230, Determining the per treatment payment amount, to reflect the TPNIES. We stated that we believed this modification is necessary so the regulation appropriately reflects all inputs in the calculation of the per treatment payment amount.
Since we were proposing to add paragraphs (d) (discussed in section II.B.1.e of this final rule) and (e) to § 413.230, we also proposed a technical change to remove “and” from the end of
In addition, we proposed to revise the definition of ESRD outlier services at § 413.237(a)(1) by adding a new paragraph (a)(1)(v) to include renal dialysis equipment and supplies that receive the TPNIES as specified in § 413.236 after the payment period has ended. We proposed to redesignate existing paragraph (a)(1)(v) as paragraph (a)(1)(vi) and revise the paragraph to state “As of January 1, 2012, the laboratory tests that comprise the Automated Multi-Channel Chemistry panel are excluded from the definition of outlier services.” We proposed this technical edit to reflect an order in the definition of ESRD outlier services as first, items and services included and second, items and services that are excluded.
We also proposed technical changes to § 413.237(a)(1)(i) through (iv) to replace the phrases “ESRD-related” and “used in the treatment of ESRD” with “renal dialysis” to reflect the current terminology used under the ESRD PPS and to replace the word “biologicals” with “biological products” to reflect FDA's preferred terminology.
The comments and our responses to the comments on our proposals regarding pricing of new and innovative renal dialysis equipment and supplies and the proposed changes to ESRD PPS regulations are set forth below. We did not receive comments on our proposal to add paragraph (e) to § 413.230 to reflect the TPNIES, for a technical change to remove “and” from the end of § 413.230(b), for a technical change to include “and” to the end of § 413.230(d), or the technical changes to § 413.237(a)(1)(i) through (iv) to replace the phrases “ESRD-related” and “used in the treatment of ESRD” with “renal dialysis” to reflect the current terminology used under the ESRD PPS and to replace the word “biologicals” with “biological products” to reflect FDA's preferred terminology. We are therefore finalizing these revisions to the regulation text as proposed.
The LDO suggested that CMS should apply funds not expended under the narrower TDAPA eligibility policy to make ESRD PPS adjustments when it adds new products to the ESRD PPS base rate. An adjustment could be established that equals the incremental difference between any amounts associated with the functional category currently in the base rate attributable to the new product's cost. The LDO noted that this might result in CMS adding the product's full cost if the base rate does not include any such reimbursement or a lesser amount that reflects current dollars in the base rate. The LDO also recommended that CMS make similar adjustments to ensure that the base rate reflects costs associated with a new device after a TPNIES ends.
A device manufacturer suggested that, at the end of the TPNIES period, CMS positively adjusts the ESRD PPS base rate to reflect the added value of the TPNIES product. For example, CMS could adjust the ESRD PPS via a value-based modifier adjustment by exercising its authority under section 1881(b)(14)(D)(iv) of the Act to adjust payments under the ESRD PPS for value-enhancing medical products following the expiration of the transitional pass-through period. The value-based modifier could be derived from the demonstrated value of a given TPNIES product—for example, a device's demonstrated impact on averting hospitalizations and other additional resources. The manufacturer suggested that value could be shared between facilities using the new device and the Medicare program.
The patient advocacy organization expressed concern that by leaving a funding “cliff” at the end of the 2-year TPNIES period, clinics may not test new products. The organization also expressed concern that if the device reduces complications and thereby reduces the total cost of care for ESRD patients, but that these savings are not reflected in the fee-for-service (FFS) payment system, the device will be offered to Medicare Advantage enrollees but not to FFS beneficiaries.
Another commenter recommended collection of use data similar to that collected under the TDAPA policy for new renal dialysis drugs and biological products that are in new ESRD PPS functional categories, and if a product is used by a sufficient proportion of Medicare beneficiaries, CMS should increase the ESRD PPS base rate.
A national dialysis association, a device manufacturers association and a device manufacturer also recommended that at the end of the TPNIES period, CMS positively adjust the ESRD PPS base rate to reflect the added value of the TPNIES product. The commenters stated that failure to positively adjust the ESRD PPS base rate after the TPNIES period will result in a situation where providers must absorb the costs of the new product after the expiration of the add-on payment adjustment. This could discourage providers from adopting the new device in the first instance or from using the device for the long-term. The commenters noted that both outcomes would hinder innovation and stall improvements in patient care, which undercuts the fundamental purpose of the TPNIES. The organization stated that the outlier pool was never designed to provide comprehensive reimbursement for new, high-cost products to a significant number of beneficiaries. The outlier pool cannot function as a substitute for thoughtfully building dollars into the base rate to cover expected care.
An LDO disagreed that it would be inappropriate to add new dollars to the ESRD PPS base rate at the end of the TPNIES timeframe. The LDO is concerned that the TPNIES will encourage uptake of high-cost new technologies and then leave providers without a way to cover the costs above the amount accounted for in the base rate after the 2-year window closes. The LDO stated that the outlier policy does not address this funding shortfall and would exclude lower cost innovative supplies that do not exceed the FDL threshold. In addition, although the LDO has longstanding concerns with the outlier mechanism, the LDO agreed that device technologies (like drugs) should be part of the outlier payment mechanism, as they are for other Medicare providers, to address individual high cost cases.
While the LDO agrees that it is not the intent of the PPS to add new money whenever something new is made available, the LDO expressed concern that the current policy does not leave
Moreover, as we have explained with respect to the TDAPA for drugs already reflected in the ESRD PPS functional categories, we believe adding dollars to the ESRD PPS base rate for items that are already reflected in the ESRD PPS base would be inappropriate and would be in conflict with the fundamental principles of a PPS. Under a PPS, Medicare makes payments based on a predetermined, fixed amount that reflects the average patient, and the facility retains the profit or suffers a loss resulting from the difference between the payment rate and the facility's cost, which creates an incentive for cost control. It is not the intent of a PPS to add dollars to the base rate whenever something new is made available. Additionally, the statute does not require that we add dollars to the ESRD PPS base rate when a new item is available.
With regard to the comment about CMS using a value-based modifier adjustment, as we explained in the CY 2020 ESRD PPS proposed rule, the intent of the TPNIES for new and innovative equipment and supplies is to provide a transition period for the unique circumstances experienced by ESRD facilities when incorporating certain new and innovative equipment and supplies into their businesses and to allow time for the uptake of the new and innovative equipment and supplies. For example, when new and innovative equipment and supplies are introduced to the market, ESRD facilities would need to analyze their budgets and engage in contractual agreements to accommodate the new items into their care plans. Newly marketed equipment and supplies can be unpredictable with regard to their uptake and pricing, which makes these decisions challenging for ESRD facilities. Furthermore, practitioners should have the ability to evaluate the appropriate use of a product and its effect on patient outcomes. We believe this uptake period would be supported by the TPNIES because it would help facilities transition or test new and innovative equipment and supplies in their businesses under the ESRD PPS.
We appreciate the suggestion of reducing the TPNIES payment by the amount already included in the ESRD PPS base rate, however, ESRD facilities have historically not reported on claims the utilization of composite rate items and services, which is what these products are considered to be. Therefore we do not have the data sufficient to make these calculations at this time. We note that we included a request for this information in section VIII.A of the CY 2020 ESRD PPS proposed rule on how to collect this data. In response some commenters stated that the composite rate components to price the cost of dialysis treatment was outmoded and unnecessary concept and counter to the objective of the bundled system instituted with the ESRD PPS in CY 2011.
We are concerned about the comment stating that ESRD facilities will choose to not adopt new and innovative equipment and supplies. We do not agree with these commenters because we believe that innovative products that are competitively priced and that add value will be able to be successfully marketed and that ESRD facilities will want to use them. In addition, since we collect monitoring data, we will be aware of utilization and behavior trends and will be able to use this data to inform future policies.
However, a device manufacturer association and a medical technology company requested that we extend the TPNIES period to 4 years. They opined that a 2-year period would discourage small start-up companies from developing innovative equipment and supplies, as building the support and distribution infrastructure nationwide to support new technology implementation takes far longer. They stated that extending the coverage period to 4 years would help level the playing field between small innovators and large, global manufacturers with an existing support and distribution footprint. Several other commenters recommended a 3-year TPNIES period because facilities need several years to set up system modifications and adjust business practices. They stated they believe that at least 3 years is an appropriate timeframe based on CMS' experience with other new technology add-on payment mechanisms.
Further, we believe that the 2-year period gives the ESRD facility the opportunity to incorporate the product into their business model if they choose. The facility would be comparing a product currently in use with a new and innovative product and making a choice if the increased cost would be commensurate with increased clinical value to the beneficiary. We continue to believe providing the TPNIES for 2 years is appropriate for new and innovative products and that a longer timeframe to establish the product's uptake is not necessary, particularly since the ESRD PPS base rate includes money for these products. We are not expanding the duration of the TPNIES period because we believe that 2 years strikes the appropriate balance of supporting innovation while protecting the Medicare expenditures. We note that the TPNIES period begins on January 1, the effective date of the annual ESRD PPS final rule in which we announce our determinations with regard to TPNIES applications, and ends on December 31, that is, 2 years later.
The Commission pointed out that the ASP for a Part B drug reflects the average price realized by the manufacturer for its sales broadly across different types of purchasers and for patients with different types of insurance coverage. It is based on the manufacturer's sales to all purchasers (with certain exceptions) net of manufacturer rebates, discounts, and price concessions. There is a 2-quarter lag in the data used to set ASP-based payment rates. MedPAC stated that an approach similar to how CMS collects ASP data would increase the consistency of pricing data and should lead to more accurate payment rates for items paid under the TPNIES. In establishing a process for collection of average sales price data for equipment and supplies, the Commission recommended that, similar to the TDAPA for new renal dialysis drugs and biological products, CMS should link payment of the TPNIES to a requirement that equipment and supply manufacturers submit ASP-like data to CMS.
Other commenters, including a device manufacturer, a device manufacturers association, and a patient advocacy organization recommended that, instead of the invoice-based pricing process at the MAC level, with possible national-level rates set once there is enough data across multiple MACs, CMS adopt a rate determination process like the NTAP. Under this process, TPNIES applicants, when providing SCI data and other information in their application, can also provide information on the cost of the product. Then, when CMS discusses the application in the ESRD PPS proposed rule, CMS could discuss the cost information provided by the applicant and ask stakeholders (including providers, innovation leaders and patient-centered advocacy organizations) for comments. The national payment rate could then be finalized in the ESRD PPS final rule when CMS accepts or denies the TPNIES application. The commenters indicated that this change in process would elevate the principle and practice transparency and provide far greater certainty for ESRD providers and, more importantly, limit the impact of the TPNIES administrative process on patient access.
A national dialysis stakeholder organization and an LDO asked that CMS ensure that the pricing for the TPNIES is transparent and provides predictability and consistency in pricing. A professional association stated that by their very nature, MACs make local coverage and reimbursement decisions that can vary by region. To ensure consistency and adequacy in pricing and reimbursement, they urged CMS to ensure that the proposed MAC pricing process is transparent and understandable for all stakeholders. Another LDO agreed and requested that CMS specify in the CY 2020 ESRD PPS final rule that MACs must disclose the sources of information relied on (without disclosing proprietary information) so stakeholders can understand the basis for pricing determinations as well as any variations in prices jurisdictions.
A national dialysis association recommended that the MACs should use a transparent, notice-and-comment process in order to establish the reimbursement associated with the TPNIES. The association stated that if the MACs cannot accommodate a notice-and-comment process, then CMS should consider an alternative process for the establishment of reimbursement policy that would ensure the opportunity for notice-and-comment to the public.
With regard to the comments that we rely solely on the manufacturer's estimated cost to the facility and public comments to establish a national payment amount for a TPNIES equipment or supply, we are requesting that manufacturers estimate the cost of the equipment or supply to the facility on a per treatment basis in the application. However, while we believe this information from the manufacturer is one factor in the MAC price determination process, we do not believe it would be appropriate to set a national price based solely on that information. As we explained in the CY 2020 ESRD PPS proposed rule (84 FR 38355), the MAC-determined price would be established using verifiable information from the following sources of information, if available: The invoice amount, facility charges for the item, discounts, allowances, and rebates; the price established for the item by other MACs and the sources of information used to establish that price; payment amounts determined by other payers and the information used to establish those payment amounts; and charges and payment amounts, required for other equipment and supplies that may be comparable or otherwise relevant.
We did not propose to establish a national price because we do not have historical cost data and we are only in the initial phases of developing a
A device manufacturer and a device manufacturers association and others urged CMS to pay 100 percent of the cost of the new product to ensure maximum adoption of the new TPNIES product, and to compensate for any unforeseen costs associated with that product. The commenters stated that the ESRD PPS bundled payment for thrice-weekly dialysis care is a model that encourages efficiency among existing services and inputs but discourages investment in new technologies that offer a new value proposition. They asserted that providing 65 percent of the known costs of the new device through TPNIES does not provide payment for any unanticipated costs of the new technology such as additional staff training, product administration, or facility handling.
In addition, the commenters pointed out that there is a significant lag in payment that requires facilities to assume liability for any excess costs associated with a new device above the ESRD PPS bundled payment amount. Thus, the commenters opined that new devices create a dilemma for providers under the ESRD PPS: Either absorb the costs associated with a new technology to advance the standard of care or forego the new technology despite its clinical benefits. For these reasons, they urged CMS to set the payment adjustment at 100 percent of the cost of the new TPNIES approved product.
However, MedPAC expressed support for the proposal to pay a reduced percentage of the new item's cost as a way to share risk with dialysis providers and provide some disincentive for the establishment of high launch prices. MedPAC also recommended that CMS not explicitly link the ESRD PPS TPNIES payment percentage to the IPPS NTAP mechanism's maximum add-on payment percentage. The Commission pointed out that CMS would have greater flexibility about any future changes to the ESRD PPS payment percentage if it was not explicitly linked to the IPPS payment percentage.
We are also finalizing the addition of § 413.236(e) to require that the MAC on behalf of CMS will establish prices for the new and innovative renal dialysis equipment and supplies described in newly added § 413.236(b), and that we will use these prices for the purposes of determining the TPNIES. The MAC will use verifiable information from the following sources of information, if available: (1) The invoice amount, facility charges for the item, discounts, allowances, and rebates; (2) the price established for the item by other MACs and the sources of information used to establish that price; (3) payment amounts determined by other payers and the information used to establish those payment amounts; and (4) charges and payment amounts required for other equipment and supplies that may be comparable or otherwise relevant.
In addition, we are finalizing the proposed revision to the definition of ESRD outlier services at § 413.237(a)(1) by adding a new paragraph (a)(1)(v) to include renal dialysis equipment and supplies that receive the TPNIES as specified in § 413.236 after the payment period has ended. We are finalizing the redesignation of existing paragraph (a)(1)(v) as paragraph (a)(1)(vi) and the revision of the paragraph to state “As of January 1, 2012, the laboratory tests that comprise the Automated Multi-Channel Chemistry panel are excluded from the definition of outlier services.”
We intend to develop an electronic application for the TPNIES over the next year. In the meantime, in order to implement the TPNIES for CY 2020 and provide an opportunity for equipment and supply manufacturers to apply for TPNIES payment for CY 2021, we are providing in this final rule certain technical instructions for applications submitted in CY 2020. In addition, we will provide these instructions on a new CMS web page under development for the TPNIES.
Submit a complete application with a response to each question below no later than February 1, 2020. An application is considered complete when all of the information requested has been submitted by the date specified and when questions related to the
Additionally, submit an electronic version of the application via email to
Applications must include a response to each question below. CMS may request other information to evaluate specific TPNIES requests. A separate application is required for each distinct equipment or supply included in the TPNIES request.
1. Name, address, telephone number, and email address for the primary and backup contact for the application. If using a consultant, provide a contact from the manufacturer in addition to the consultant's contact information.
2. Trade/brand name of the equipment or supply.
3. Describe the technology in general terminology—What is it? What does it do? How is it used? Also, submit relevant descriptive booklets, brochures, package inserts, as well as copies of published peer-reviewed articles relevant to the new equipment or supply.
4. Have you submitted an application for pass-through payments under the Medicare outpatient prospective payment system or new technology payments under the IPPS? If so, please provide the tracking number or, if it was approved, please provide the date of approval.
5. Under what pathway are you seeking marketing authorization from FDA? What is the date of anticipated FDA marketing authorization for the equipment or supply? Provide a copy of the FDA marketing authorization. If marketing authorization has not yet been granted, provide a copy of the authorization to CMS immediately after it becomes available.
Per 42 CFR 413.236(c), an applicant for the TPNIES must receive FDA marketing authorization for its new equipment or supply by September 1 prior to the beginning of the calendar year (CY) for which the TPNIES would be effective (for CY 2021 payment, not later than September 1, 2020).
6. List the name and telephone number or email address of a contact at FDA who is knowledgeable about the submission for marketing authorization for the new equipment or supply listed above.
7. Will the equipment or supply be available on the market immediately after FDA marketing authorization? If not, provide the date that the equipment or supply came on the market (that is, first sales or availability) and an explanation and documentation of any anticipated delay (for example, manufacturing issues or other reasons). If commercial availability has not yet occurred, provide proof of commercial availability to CMS immediately after it becomes available, for example, a manufacturer's bill of sale. Note that the manufacturer must inform CMS by September 1 if the equipment or supply will not be available by January 1.
8. Is there an investigational device exemption number from the FDA assigned to the equipment or supply? If yes, please provide this code. Refer to
9. What class (I, II, or III) was/is assigned to the equipment or supply? Refer to
10. Has an application for an HCPCS code been submitted? If not, please note that submission of the HCPCS application is required by September 1, 2020, so that we are able to use information from the HCPCS application in our determination process. Refer to
11. What is the anticipated cost of the equipment or supply to the ESRD facility, per treatment? Provide a breakdown of how the cost of the new equipment or supply is calculated.
12. What is the anticipated Medicare and Non-Medicare volume of this equipment or supply for the 2 years in the TPNIES period? Describe how you arrived at this estimate. This estimate should be based on the actual or projected sales of your equipment or supply, not the total population eligible for the equipment or supply.
Once the information requested by CMS is received and reviewed, for equipment and supplies eligible for the TPNIES, we will issue a change request with billing guidance that will provide notice that the equipment or supply is eligible for the TPNIES as of January 1 and technical instructions on how to report the equipment or supply on the ESRD claim. This change request will initiate the TPNIES period and it will end 2 years from the change request's effective date.
Medical devices and related innovations are integral in meeting the needs of patients, especially the most vulnerable patients, such as ESRD patients and those with rare medical conditions. While FDA determines which devices are authorized for marketing, public healthcare programs such as Medicare determine how these products will be covered and paid, which can affect patient access to new and innovative products.
In the CY 2020 ESRD PPS proposed rule (84 FR 38357), we solicited comments on Medicare payment for renal dialysis services that have a Humanitarian Use Device (HUD) designation. Under FDA regulations (21 CFR 814.3(n)), a HUD is a “medical device intended to benefit patients in the treatment or diagnosis of a disease or condition that affects or is manifested in not more than 8,000 individuals in the United States per year.” We explained in the CY 2020 ESRD PPS proposed rule that Medicare has no specific rules, regulations or instructions with regard to HUDs. We noted that we were particularly interested in receiving comments on HUDs that would be considered renal dialysis services under the ESRD PPS, any barriers to payment encountered, and past experience in obtaining
We received 7 comments on this solicitation. The comments and our response are set forth below.
The commenters noted that in 1990, Congress created the HUD program to encourage the research, development and marketing of innovative devices for the treatment of rare diseases or conditions where no comparable devices are available to those patients. They stated that lack of Medicare reimbursement for HUDs impedes access to these treatments for Medicare beneficiaries. They also stated that CMS should ensure that HUDs are eligible for Medicare reimbursement, and suggested that a Congressional directive that HUDs be sold by manufacturers at cost indicates that CMS should establish Medicare payment for HUDs at invoice.
A medical device manufacturing association and a patient advocacy organization noted that there should be Medicare coverage of HUDs and payment for these devices under the ESRD benefit if such devices are required to be used in the ESRD facility, whether they are for the treatment of ESRD or for the treatment of other conditions related to renal dialysis.
A drug manufacturer noted its understanding that the HUD program is a specific FDA program, but encouraged CMS to work with the company and other innovators to protect access to innovative products that treat a disease or condition affecting a very small number of individuals in the U.S. annually. The company noted that drugs that are administered to a small percentage of patients cannot be accounted for properly in a bundled payment system. If dollars are allocated across all patients, then those who require the drug may not receive the care they need because the providers administering it will not have sufficient funds, while those providers who do not provide the product will see a small increase in their base rate. The company stated that money should follow the patient in these circumstances to protect access to drugs that benefit a small number of patients.
A device manufacturer urged CMS to promulgate a regulation clarifying that HUDs are within the definition of renal dialysis services or dialysis services depending on the device's function, and explicitly define that HUDs should be reimbursed based on invoice given that Congress has already addressed the invoice price to be charged. A patient advocacy group urged CMS to ensure a reimbursement pathway for devices with a HUD designation.
In the CY 2011 ESRD PPS final rule (75 FR 49067, 49145 through 49147), CMS adopted the ESA monitoring policy (EMP) under the ESRD PPS for purposes of calculating the base rate and for establishing the outlier policy's percentage and thresholds.
For purposes of calculating the CY 2011 ESRD PPS base rate, payments for ESAs were capped based on determined dose limits as discussed in the Medicare Claims Processing Manual (chapter 8, section 60.4.1). Payments for epoetin alfa in excess of 500,000 units per month in 2007 were capped at 500,000 units and a similar cap was applied to claims for darbepoetin alfa, in which the caps were based on 1,500 mcg per month in 2007 (75 FR 49067).
As we explained in the CY 2020 ESRD PPS proposed rule (84 FR 38357 through 38358) with regard to the application of the outlier policy, since ESAs are considered to be an ESRD outlier service under § 413.237(a)(1)(i), covered units are priced and considered toward the eligibility for outlier payment consistent with § 413.237(b). That is, we apply dosing reductions and ESA dose limits consistent with the EMP prior to any calculation of outlier eligibility. Medicare contractors apply a 25 percent reduction in the reported ESA dose on the claim when the hemoglobin (or hematocrit) level exceeded a certain value, unless the ESRD facility reported a modifier to indicate the dose was being decreased. Also under the EMP, ESRD facilities are required to report other modifiers to indicate a patient's 3-month rolling average hemoglobin (or hematocrit) level so that the Medicare contractor knows when to apply a 50 percent reduction in the reported ESA dose on the claim. In addition to these dosing reductions, we apply ESA dose limits as discussed in the Medicare Claims Processing Manual (chapter 8, section 60.4.1) prior to any calculation of outlier eligibility.
When we adopted the EMP for the ESRD PPS in the CY 2011 ESRD PPS final rule, we explained that the continued application of the EMP would help ensure the proper dosing of ESAs and provide a safeguard against the overutilization of ESAs, particularly where the consumption of other separately billable services may be high, in order to obtain outlier payments (75 FR 49146). In the CY 2020 ESRD PPS proposed rule, we explained that due to implementation of the ESRD PPS and FDA relabeling of epoetin alfa, which stated that the individualized dosing should be that which would achieve and maintain hemoglobin levels within the range of 10 to 12 g/dL, we no longer believed application of the EMP is necessary to control utilization of ESAs in the ESRD population. That is, the impact of no longer paying separately for ESAs, which discourages overutilization, along with practitioners prescribing the biological product to maintain a lower hemoglobin level, has resulted in a decline in its utilization and a stringent monitoring of the biological product's levels in patients.
CMS proposed that, effective January 1, 2020, we would no longer apply the EMP under the ESRD PPS. As we explained in the CY 2020 ESRD PPS proposed rule, since the implementation of the ESRD PPS, ESA utilization has decreased significantly because the structure of the PPS removed the incentives to overuse these biological products. Under our proposal, ESRD facilities would no longer be required to report the EMP-related modifiers and Medicare contractors would no longer apply dosing reduction or dose limit edits to ESA dosing. Therefore, these edits would no longer be applied prior to calculation of outlier eligibility and would no longer be reflected in outlier payments.
We stated that we would continue to require ESRD facilities to report all necessary information for the ESRD Quality Incentive Program, and noted that, as part of managing the ESRD PPS, CMS has a monitoring program in place that studies the trends and behaviors of ESRD facilities under the ESRD PPS and the health outcomes of the beneficiaries who receive their care.
We stated in the CY 2020 ESRD PPS proposed rule that we believed discontinuing this policy would reduce burden for ESRD facilities because the EMP provides an opportunity for appeal to address those situations where there might be medical justification for higher hematocrit or hemoglobin levels. Beneficiaries, physicians, and ESRD facilities are required to submit additional documentation to justify medical necessity, and any outlier payment reduction amounts are subsequently reinstated when documentation supports the higher hematocrit or hemoglobin levels. Thus, we explained that this proposal would reduce the documentation burden on ESRD facilities because they would no longer have to go through the EMP appeal process and submit additional documentation regarding medical necessity.
The comments and our responses to the comments on our proposal to discontinue the application of the EMP under the ESRD PPS are set forth below.
MedPAC stated that the implementation of the ESRD PPS created incentives for ESRD facilities to furnish services more efficiently. MedPAC stated that under the ESRD PPS, in which all renal dialysis drugs and biological products are included in the payment bundle, ESRD facilities have been more judicious in providing all drugs, including ESAs. For example, MedPAC stated that between 2010 and 2017, use of all renal dialysis drugs and biological products paid under the ESRD PPS has declined by 12 percent per year. MedPAC noted that the decline in the use of ESRD drugs under the PPS has occurred without any negative effect on clinical outcomes.
MedPAC stated that by contrast, the TDAPA, which is an add-on payment adjustment for nearly all renal dialysis drugs and biological products that FDA approves on or after January 1, 2020, may promote excess provision of renal dialysis drug products (to the extent clinically possible). MedPAC explained that paying according to the number of units administered gives ESRD facilities greater profits from larger doses than smaller doses (as long as Medicare's payment rate exceeds providers' costs). MedPAC expressed concern that in addition to increased and unnecessary spending for beneficiaries and taxpayers, overuse of drugs can have negative clinical consequences. MedPAC stated that because of the incentive for potential overuse of drugs paid under the TDAPA policy, CMS should not discontinue the EMP. MedPAC urged CMS to establish a formal monitoring policy for all renal dialysis drugs and biological products that are paid under the TDAPA to address their potential for overuse.
With regard to MedPAC's concern that renal dialysis drugs and biological products eligible for the TDAPA may increase unnecessary spending for beneficiaries and taxpayers, in addition to potential negative clinical consequences, we will take these concerns into consideration for future monitoring policies. We believe that with near-real-time claims monitoring we have the ability to closely track ESRD facility behaviors and can take action if we see something concerning.
In accordance with section 1881(b)(14)(F)(i) of the Act, as added by section 153(b) of MIPPA and amended by section 3401(h) of the Affordable Care Act, beginning in 2012, the ESRD PPS payment amounts are required to be annually increased by an ESRD market basket increase factor and reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. The application of the productivity adjustment may result in the increase factor being less than 0.0 for a year and may result in payment rates for a year being less than the payment rates for the preceding year. The statute also provides that the market basket increase factor should reflect the changes over time in the prices of an appropriate mix of goods and services used to furnish renal dialysis services.
As required under section 1881(b)(14)(F)(i) of the Act, CMS developed an all-inclusive ESRD Bundled (ESRDB) input price index (75 FR 49151 through 49162). In the CY 2015 ESRD PPS final rule we rebased and revised the ESRDB input price index to reflect a 2012 base year (79 FR 66129 through 66136). Subsequently, in the CY 2019 ESRD PPS final rule, we finalized a rebased ESRDB input price index to reflect a 2016 base year (83 FR 56951 through 56962).
Although “market basket” technically describes the mix of goods and services used for ESRD treatment, this term is also commonly used to denote the input price index (that is, cost categories, their respective weights, and price proxies combined) derived from a market basket. Accordingly, the term “ESRDB market basket,” as used in this document, refers to the ESRDB input price index.
We proposed to use the CY 2016-based ESRDB market basket as finalized and described in the CY 2019 ESRD PPS final rule (83 FR 56951 through 56962) to compute the CY 2020 ESRDB market basket increase factor based on the best available data. Consistent with historical practice, we proposed to estimate the ESRDB market basket update based on IHS Global Inc.'s (IGI) most recently available forecast. IGI is a nationally recognized economic and financial forecasting firm that contracts with CMS to forecast the components of the market baskets. Using this methodology and the IGI first quarter 2019 forecast of the CY 2016-based ESRDB market basket (with historical data through the fourth quarter of 2018), the proposed CY 2020 ESRDB market basket increase factor was 2.1 percent.
Under section 1881(b)(14)(F)(i) of the Act, for CY 2012 and each subsequent year, the ESRD market basket percentage increase factor shall be reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. The multifactor productivity (MFP) is derived by subtracting the contribution of labor and capital input growth from output growth. We finalized the detailed methodology for deriving the MFP projection in the CY 2012 ESRD PPS final rule (76 FR 40503 through 40504). The most up-to-date MFP projection methodology is available on the CMS website at
As a result of these provisions, the proposed CY 2020 ESRD market basket adjusted for MFP was 1.7 percent. This market basket increase is calculated by starting with the proposed CY 2020 ESRDB market basket percentage increase factor of 2.1 percent and reducing it by the proposed MFP adjustment (the 10-year moving average of MFP for the period ending CY 2020) of 0.4 percent.
The comments and our responses to the comments on the proposed productivity-adjusted market basket annual update and MFP adjustment for CY 2020 are set forth below.
The March 2019 MedPAC Report to Congress finds, “Most of our indicators of payment adequacy are positive, including beneficiaries' access to care, the supply and capacity of providers, volume of services, quality of care, and access to capital. Providers have become more efficient in the use of dialysis drugs under the PPS.” (
While we understand that the kidney care community is interested in an adjustment more specific to ESRD facilities, we encourage commenters to discuss the feasibility of such measures with the BLS, the agency that produces and publishes industry-level MFP. CMS is unable to estimate MFP for ESRD facilities since the publicly available data for the NAICS 621492 Kidney Dialysis Centers is insufficient to develop an estimate using a similar methodology used to estimate Hospital sector MFP in the November 2006 Health Care Financing Review article, “ `Hospital Multifactor Productivity: A Presentation and Analysis of Two Methodologies' ”. We would also encourage the kidney care community to make available to CMS any research into alternative methods and data sources that could be used to estimate ESRD-specific MFP. Specifically, we would be interested in any information on how cost report data submitted to CMS could be utilized to better understand the operating conditions facing ESRD facilities.
Based on public comments and in accordance with section 1881(b)(14)(F)(i) of the Act, we are finalizing the CY 2020 update to the ESRD facilities as proposed. Also, as noted in the proposed rule and consistent with CMS general practice, if more recent data are subsequently available (for example, a more recent estimate of the market basket update or MFP adjustment), we proposed to use such data to determine the final CY 2020 market basket update and/or MFP adjustment. Therefore, using the IGI third quarter 2019 forecast of the CY 2016-based ESRDB market basket (with historical data through the second quarter of 2019), the final CY 2020 ESRDB market basket increase factor is projected to be 2.0 percent. The final MFP adjustment for CY 2020 (the 10-year moving average of MFP for the period ending CY 2020) is projected to be 0.3 percent. The final CY 2020 ESRD market basket adjusted for MFP is projected to be 1.7 percent. This market basket increase is calculated by starting with the CY 2020 ESRDB market basket percentage increase factor of 2.0 percent and reducing it by the MFP adjustment (the 10-year moving average of MFP for the period ending CY 2020) of 0.3 percent.
For the CY 2020 ESRD payment update, we proposed to continue using a labor-related share of 52.3 percent for the ESRD PPS payment, which was finalized in the CY 2019 ESRD PPS final
Section 1881(b)(14)(D)(iv)(II) of the Act provides that the ESRD PPS may include a geographic wage index payment adjustment, such as the index referred to in section 1881(b)(12)(D) of the Act, as the Secretary determines to be appropriate. In the CY 2011 ESRD PPS final rule (75 FR 49200), we finalized an adjustment for wages at § 413.231. Specifically, CMS adjusts the labor-related portion of the base rate to account for geographic differences in the area wage levels using an appropriate wage index which reflects the relative level of hospital wages and wage-related costs in the geographic area in which the ESRD facility is located. We use the Office of Management and Budget's (OMB's) core-based statistical area (CBSA)-based geographic area designations to define urban and rural areas and their corresponding wage index values (75 FR 49117). OMB publishes bulletins regarding CBSA changes, including changes to CBSA numbers and titles. The bulletins are available online at
For CY 2020, we updated the wage indices to account for updated wage levels in areas in which ESRD facilities are located using our existing methodology. We used the most recent pre-floor, pre-reclassified hospital wage data collected annually under the inpatient PPS. The ESRD PPS wage index values are calculated without regard to geographic reclassifications authorized under sections 1886(d)(8) and (d)(10) of the Act and utilize pre-floor hospital data that are unadjusted for occupational mix. The final CY 2020 wage index values for urban areas are listed in Addendum A (Wage Indices for Urban Areas) and the final CY 2020 wage index values for rural areas are listed in Addendum B (Wage Indices for Rural Areas). Addenda A and B are located on the CMS website at
We have also adopted methodologies for calculating wage index values for ESRD facilities that are located in urban and rural areas where there is no hospital data. For a full discussion, see the CY 2011 and CY 2012 ESRD PPS final rules at 75 FR 49116 through 49117 and 76 FR 70239 through 70241, respectively. For urban areas with no hospital data, we compute the average wage index value of all urban areas within the state and use that value as the wage index. For rural areas with no hospital data, we compute the wage index using the average wage index values from all contiguous CBSAs to represent a reasonable proxy for that rural area. We apply the statewide urban average based on the average of all urban areas within the state to Hinesville-Fort Stewart, Georgia (78 FR 72173), and we apply the wage index for Guam to American Samoa and the Northern Mariana Islands (78 FR 72172). As we discussed in the CY 2020 ESRD PPS proposed rule (84 FR 38359), beginning in CY 2020, the statewide urban average based on the average of all urban areas within the state also will be applied to the Carson City, Nevada CBSA.
A wage index floor value is applied under the ESRD PPS as a substitute wage index for areas with very low wage index values. Currently, all areas with wage index values that fall below the floor are located in Puerto Rico. However, the wage index floor value is applicable for any area that may fall below the floor.
In the CY 2011 ESRD PPS final rule (75 FR 49116 through 49117), we finalized a policy to reduce the wage index floor by 0.05 for each of the remaining years of the ESRD PPS transition, that is, until CY 2014. We applied a 0.05 reduction to the wage index floor for CYs 2012 and 2013, resulting in a wage index floor of 0.5500 and 0.5000, respectively (CY 2012 ESRD PPS final rule, 76 FR 70241). We continued to apply and reduce the wage index floor by 0.05 in CY 2013 (77 FR 67459 through 67461). Although we only intended to provide a wage index floor during the 4-year transition in the CY 2014 ESRD PPS final rule (78 FR 72173), we decided to continue to apply the wage index floor and reduce it by 0.05 per year for CY 2014 and for CY 2015.
In the CY 2016 ESRD PPS final rule (80 FR 69006 through 69008), however, we decided to maintain a wage index floor of 0.4000, rather than further reduce the floor by 0.05. We stated that we needed more time to study the wage indices that are reported for Puerto Rico to assess the appropriateness of discontinuing the wage index floor (80 FR 69006).
In the CY 2017 ESRD PPS proposed rule (81 FR 42817), we presented the findings from analyses of ESRD facility cost report and claims data submitted by facilities located in Puerto Rico and mainland facilities. We solicited public comments on the wage index for CBSAs in Puerto Rico as part of our continuing effort to determine an appropriate policy. We did not propose to change the wage index floor for CBSAs in Puerto Rico, but we requested public comments in which stakeholders could provide useful input for consideration in future decision-making. Specifically, we solicited comment on the suggestions that were submitted in the CY 2016 ESRD PPS final rule (80 FR 69007). After considering the public comments we received regarding the wage index floor, we finalized a wage index floor of 0.4000 in the CY 2017 ESRD PPS final rule (81 FR 77858).
In the CY 2018 ESRD PPS final rule (82 FR 50747), we finalized a policy to permanently maintain the wage index floor of 0.4000, because we believed it was appropriate and provided additional payment support to the lowest wage areas. It also obviated the need for an additional budget-neutrality adjustment that would reduce the ESRD PPS base rate, beyond the adjustment needed to reflect updated hospital wage data, in order to maintain budget neutrality for wage index updates.
In the CY 2019 ESRD PPS final rule (83 FR 56964 through 56967), we finalized an increase to the wage index floor from 0.4000 to 0.5000 for CY 2019 and subsequent years. We explained that we revisited our evaluation of payments to ESRD facilities located in the lowest wage areas to be responsive to stakeholder comments and to ensure payments under the ESRD PPS are appropriate. We provided statistical analyses that supported a higher wage index floor and finalized an increase from 0.4000 to 0.5000 to safeguard access to care in those areas. We further explained that we believe a wage index floor of 0.5000 strikes an appropriate balance between providing additional payments to areas that fall below the wage floor while minimizing the impact on the ESRD PPS base rate. Currently, all areas with wage index values that fall below the floor are located in Puerto Rico. However, the wage index floor value is applicable for any area that may fall below the floor.
A facility's wage index is applied to the labor-related share of the ESRD PPS base rate. In the CY 2019 ESRD PPS final rule (83 FR 56963), we finalized a labor-related share of 52.3 percent, which is based on the 2016-based ESRDB market basket. Thus, for CY 2020, the labor-related share to which a facility's wage index would be applied is 52.3 percent.
As discussed in the CY 2020 ESRD PPS proposed rule (84 FR 38360), we were made aware of a minor calculation
CMS received several comments on the wage index. The comments and our responses are set forth below.
They expressed concern that CMS has not published information to inform stakeholders about the impact of the updated ESRD wage index values on the ESRD PPS base rate. They stated that they believe a revised wage index budget neutrality factor, based on the revised wage indices, may result in a downward effect on the proposed base rate. As the labor-related share represents such a significant component of facility payment, they noted the importance of transparency and accuracy in proposed rates published by CMS so that providers and other stakeholders can understand the impact of proposed policy changes and provide input during the regulatory comment period. They recommended that CMS retain the prior year's wage indices to ensure consistency and transparency for stakeholders.
While the national dialysis association stated that it was able to run the complex calculations to determine the likely, corrected base rate and associated reimbursement factors, other stakeholders may not be able to utilize the technical files and available methodological information to re-run calculations and derive a corrected base rate. The association stated that independent analysis indicates that the wage index error published in the CY 2020 ESRD PPS proposed rule understated the wage adjustment amount by 0.84 percent across all calculations. The association stated that in the final rule, CMS should correct this error and simultaneously apply a corresponding, corrected budget neutrality factor that will reduce the proposed base rate by approximately $1 per treatment, resulting in approximately $41 million less for dialysis care in CY 2020 than was indicated in the CY 2020 ESRD PPS proposed rule.
The commenter suggested that if CMS discovers an error in the wage indices after publication of the proposed rule, the agency should provide the public with complete information, including the corrected wage indices, wage index budget neutrality factor, and revised ESRD PPS base rate.
We also note that it is not uncommon for the ESRD PPS wage index values to change between the proposed and final rules. In this specific case, the proposed rule correction resulted in a wage index budget neutrality adjustment factor that lowered the base rate, but in the time between the proposed and final rule with updated wage index data, the wage index budget neutrality adjustment factor changed and the ESRD PPS base rate was increased. We make every effort to be fully transparent in our calculations and will continue to do so in the future.
The commenters asserted that a wage index floor of 0.70 would result in rates that more accurately reflect actual cost per treatment based on costs after Hurricane Maria for the years 2018 and 2019. They believe that the average in-center hemodialysis costs for independent facilities in Puerto Rico is $232.25 per treatment using CMS data from 2017. They asserted that this number is significantly higher than the average FFS payment rate for Puerto Rico and significantly lower than the rates contracted by Medicare Advantage companies for the same service. They noted that in-center hemodialysis represents the majority of the treatments for Puerto Rico ESRD patients. In future reforms to the ESRD PPS wage index system, they suggested that CMS should use adjusted inpatient facility (Part A) wage index values to reverse the wage index “downward spiral” consistently across all Medicare payment systems. In addition, they stated that CMS should consider basing the ESRD PPS wage index on a new survey of ESRD outpatient facility wage costs. Finally, they recommended that CMS assure that the corresponding adjustment in Medicare Advantage benchmarks for ESRD is made to reflect any adjustments in FFS ESRD payments.
Section 1881(b)(14)(D)(ii) of the Act requires that the ESRD PPS include a payment adjustment for high cost outliers due to unusual variations in the type or amount of medically necessary care, including variability in the amount of ESAs necessary for anemia management. Some examples of the patient conditions that may be reflective of higher facility costs when furnishing dialysis care would be frailty, obesity, and comorbidities, such as cancer. The ESRD PPS recognizes high cost patients, and we have codified the outlier policy and our methodology for calculating outlier payments at § 413.237. The policy provides that the following ESRD outlier items and services are included in the ESRD PPS bundle: (1) ESRD-related drugs and biologicals that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B; (2) ESRD-related laboratory tests that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B; (3) medical/surgical supplies, including syringes, used to administer ESRD-related drugs that were or would
In the CY 2011 ESRD PPS final rule (75 FR 49142), we stated that for purposes of determining whether an ESRD facility would be eligible for an outlier payment, it would be necessary for the facility to identify the actual ESRD outlier services furnished to the patient by line item (that is, date of service) on the monthly claim. Renal dialysis drugs, laboratory tests, and medical/surgical supplies that are recognized as outlier services were originally specified in Attachment 3 of Change Request 7064, Transmittal 2033 issued August 20, 2010, rescinded and replaced by Transmittal 2094, dated November 17, 2010. Transmittal 2094 identified additional drugs and laboratory tests that may also be eligible for ESRD outlier payment. Transmittal 2094 was rescinded and replaced by Transmittal 2134, dated January 14, 2011, which included one technical correction.
Furthermore, we use administrative issuances and guidance to continually update the renal dialysis service items available for outlier payment via our quarterly update CMS Change Requests, when applicable. We use this separate guidance to identify renal dialysis service drugs that were or would have been covered under Medicare Part D for outlier eligibility purposes and in order to provide unit prices for calculating imputed outlier services. In addition, we also identify through our monitoring efforts items and services that are either incorrectly being identified as eligible outlier services or any new items and services that may require an update to the list of renal dialysis items and services that qualify as outlier services, which are made through administrative issuances.
Under § 413.237, an ESRD facility is eligible for an outlier payment if its actual or imputed MAP amount per treatment for ESRD outlier services exceeds a threshold. The MAP amount represents the average incurred amount per treatment for services that were or would have been considered separately billable services prior to January 1, 2011. The threshold is equal to the ESRD facility's predicted ESRD outlier services MAP amount per treatment (which is case-mix adjusted and described in the following paragraphs) plus the FDL amount. In accordance with § 413.237(c) of our regulations, facilities are paid 80 percent of the per treatment amount by which the imputed MAP amount for outlier services (that is, the actual incurred amount) exceeds this threshold. ESRD facilities are eligible to receive outlier payments for treating both adult and pediatric dialysis patients.
In the CY 2011 ESRD PPS final rule and at § 413.220(b)(4), using 2007 data, we established the outlier percentage, which is used to reduce the per treatment base rate to account for the proportion of the estimated total payments under the ESRD PPS that are outlier payments, at 1.0 percent of total payments (75 FR 49142 through 49143). We also established the FDL amounts that are added to the predicted outlier services MAP amounts. The outlier services MAP amounts and FDL amounts are different for adult and pediatric patients due to differences in the utilization of separately billable services among adult and pediatric patients (75 FR 49140). As we explained in the CY 2011 ESRD PPS final rule (75 FR 49138 through 49139), the predicted outlier services MAP amounts for a patient are determined by multiplying the adjusted average outlier services MAP amount by the product of the patient-specific case-mix adjusters applicable using the outlier services payment multipliers developed from the regression analysis to compute the payment adjustments.
For CY 2020, we proposed that the outlier services MAP amounts and FDL amounts would be derived from claims data from CY 2018. Because we believe that any adjustments made to the MAP amounts under the ESRD PPS should be based upon the most recent data year available in order to best predict any future outlier payments, we proposed the outlier thresholds for CY 2020 would be based on utilization of renal dialysis items and services furnished under the ESRD PPS in CY 2018. We stated in the CY 2020 ESRD PPS proposed rule (84 FR 38361) that we recognize that the utilization of ESAs and other outlier services have continued to decline under the ESRD PPS, and that we have lowered the MAP amounts and FDL amounts every year under the ESRD PPS.
For this final rule, the outlier services MAP amounts and FDL amounts were updated using 2018 claims data. In the CY 2020 ESRD PPS proposed rule (84 FR 38361), we noted that, beginning in CY 2020, the total expenditure amount includes add-on payment adjustments made for calcimimetics under the TDAPA policy (calculated to be $21.15 per treatment). For this final rule, we project that for each dialysis treatment furnished, the average amount attributed to the TDAPA is $21.03.
The impact of the final rule update is shown in Table 2, which compares the outlier services MAP amounts and FDL amounts used for the outlier policy in CY 2019 with the updated estimates for this final rule. The estimates for the final CY 2020 outlier policy, which are included in Column II of Table 2, were inflation adjusted to reflect projected 2020 prices for outlier services.
As demonstrated in Table 2, the estimated FDL amount per treatment that determines the CY 2020 outlier threshold amount for adults (Column II; $48.33) is lower than that used for the CY 2019 outlier policy (Column I; $65.11). The lower threshold is accompanied by a decrease in the adjusted average MAP for outlier services from $38.51 to $35.78. For pediatric patients, there is a decrease in the FDL amount from $57.14 to $41.04. There is a corresponding decrease in the adjusted average MAP for outlier services among pediatric patients, from $35.18 to $32.32.
We estimate that the percentage of patient months qualifying for outlier payments in CY 2020 will be 10.38 percent for adult patients and 11.35 percent for pediatric patients, based on the 2018 claims data. The pediatric outlier MAP and FDL amounts continue to be lower for pediatric patients than adults due to the continued lower use of outlier services (primarily reflecting lower use of ESAs and other injectable drugs).
In the CY 2011 ESRD PPS final rule (75 FR 49081) and under § 413.220(b)(4), we reduced the per treatment base rate by 1 percent to account for the proportion of the estimated total payments under the ESRD PPS that are outlier payments as described in § 413.237. For this final rule and based on the 2018 claims, outlier payments represented approximately 0.5 percent of total payments, which is below the 1 percent target due to declines in the use of outlier services. Recalibration of the thresholds using 2018 data is expected to result in aggregate outlier payments close to the 1 percent target in CY 2020.
We believe the update to the outlier MAP and FDL amounts for CY 2020 would increase payments for ESRD beneficiaries requiring higher resource utilization and move us closer to meeting our 1 percent outlier policy because we are using more current data for computing the MAP and FDL which is more in line with current outlier services utilization rates. We note that recalibration of the FDL amounts in this final rule would result in no change in payments to ESRD facilities for beneficiaries with renal dialysis items and services that are not eligible for outlier payments, but would increase payments to ESRD facilities for beneficiaries with renal dialysis items and services that are eligible for outlier payments, as well as co-insurance obligations for beneficiaries with renal dialysis services eligible for outlier payments.
The comments and our responses to the comments on our proposed updates to the outlier policy are set forth below.
MedPAC stated that given that CMS has said that total ESRD expenditure amounts for 2020 include TDAPA expenditures for calcimimetics, they believe CMS proposed to target 1 percent of total expenditures, including TDAPA expenditures in 2020, when establishing the FDL amount. However, MedPAC noted, the outlier pool has been funded through a 1 percent reduction in the base rate (that was applied in 2011 and has remained in effect in each subsequent year by applying all annual updates to the reduced base rate) and therefore does not account for the TDAPA expenditures for calcimimetics, which are currently an add-on payment adjustment to the base rate. MedPAC stated that CMS has not proposed a budget-neutral method for funding the outlier policy in 2020 that accounts for the additional ESRD expenditures from add-on payment adjustments for calcimimetics under the TDAPA policy. MedPAC suggested that CMS should maintain a budget-neutral outlier policy either by excluding the TDAPA expenditures for calcimimetics from the total ESRD expenditures so that the 1 percent outlier payment target does not include the TDAPA expenditures (that is, the policy applied to the TDAPA payments for calcimimetics in 2018 and 2019), or by reducing the TDAPA expenditures by 1 percent so that funding for the outlier policy accounts for the TDAPA expenditures for calcimimetics. One national dialysis association expressed support for MedPAC's analysis, but did not support MedPAC's alternative recommendation that CMS consider reducing the TDAPA payments by 1 percent so that funding for the outlier policy accounts for the TDAPA expenditures for calcimimetics.
Several commenters expressed concern that CMS has proposed to include the TDAPA costs for calcimimetics in the outlier calculation, even though the drugs eligible for the TDAPA are not eligible for an outlier payment. A national dialysis stakeholder organization noted that while the statute requires CMS to include as part of the single payment amount for the ESRD PPS a payment adjustment for high cost outliers due to unusual variations in the type or amount of medically necessary care, it does not provide specifics as to how the outlier pool is determined or paid out. The organization acknowledged CMS's position that the TDAPA is part of the ESRD PPS single payment amount but expressed concerned that the calcimimetics should be included in the outlier pool. The organization noted that the CY 2020 ESRD PPS proposed rule estimated that more than $21 per treatment is removed from the base rate by including these drugs in the outlier calculations; yet, there is no ability to recover the dollars and they are permanently removed from the program. The organizations further commented that Congress established an outlier pool so that ESRD facilities treating extraordinarily costly patient are not disincentivized from doing so, but interpreting the statute to incorporate an add-on payment adjustment into the outlier calculation is inconsistent with this intent.
Another LDO and a national dialysis association expressed concern with CMS' proposal to include TDAPA spending on calcimimetics in the outlier pool for CY 2020. They stated that they see no justification in the rule for CMS to significantly increase the outlier target for CY 2020 by including calcimimetics when it is not statutorily required to do so and when the outlier target has not been achieved under the ESRD PPS in any year since implementation. The commenters stated that this has a decreasing effect on the base rate while increasing the likelihood that CMS will not actually spend these additional dollars on high cost cases, given that calcimimetics do not even qualify for outlier payments in CY 2020. They further stated that it seems incongruous to include calcimimetics expenditures in the outlier pool, given what they called the separate treatment of calcimimetics outside the base rate under the TDAPA and the fact that, under Medicare regulations, these drugs do not qualify toward the outlier calculation while they are eligible for the TDAPA. They recommended that rather than increasing the amount of funding withheld from providers that they are unlikely to see in outlier payments, CMS should exclude calcimimetics (which are not eligible for outlier payment during the TDAPA) from the target percentage for CY 2020.
One national dialysis association opposed CMS' methodology described in the proposed rule to include the TDAPA expenditures for calcimimetics in the calculation for the outlier pool, noting that CMS proposed to add more than $21 per treatment to the ESRD PPS base rate and then withhold 1 percent of this for the outlier pool. They stated this will result in CMS withholding an even greater amount of dollars from the ESRD PPS that, based on the long history of poor performance in the outlier pool, will not be repaid to facilities. The association stated that CMS's proposal is particularly concerning because drugs paid through the TDAPA (including calcimimetics) and devices paid through the proposed TPNIES are not eligible for the outlier pool. Therefore, the association stated, any increase in the withhold for the outlier pool as a result of the TDAPA and the proposed TPNIES will have no correlation to utilization of the outlier pool. The association objected to CMS increasing the withhold for the outlier pool knowing that the withheld dollars will not be returned to the system for patient care.
The association does not believe that CMS should finalize the proposed outlier methodologies that would include expenditures for the TDAPA or the proposed TPNIES in the outlier calculation. The association stated that CMS has sufficient statutory authority to exclude both the TDAPA and the proposed TPNIES from the outlier pool calculation and should do so in the final rule for CY 2020 and beyond. The association noted that there is no statutory requirement that the outlier pool include the ESRD PPS base rate plus the TDAPA or TPNIES. Nor does the ESRD PPS statute require the outlier pool to be based on the total payments made under the ESRD PPS.
Some commenters also suggested that CMS adjust the outlier percentage to more accurately represent the percentage of total payments that have been historically paid under the outlier policy or otherwise address what appears to be weakness in CMS' approach. Finally, they recommended that CMS establish a mechanism in the ESRD PPS to return unpaid amounts withheld from providers as part of the target percentage when it does not achieve the 1 percent outlier policy in a given year.
In the CY 2011 ESRD PPS final rule (75 FR 49071 through 49083), we established the methodology for calculating the ESRD PPS per-treatment base rate, that is, ESRD PPS base rate, and the determination of the per-treatment payment amount, which are codified at § 413.220 and § 413.230. The CY 2011 ESRD PPS final rule also provides a detailed discussion of the methodology used to calculate the ESRD PPS base rate and the computation of factors used to adjust the ESRD PPS base rate for projected outlier payments and budget neutrality in accordance with sections 1881(b)(14)(D)(ii) and 1881(b)(14)(A)(ii) of the Act, respectively. Specifically, the ESRD PPS base rate was developed from CY 2007 claims (that is, the lowest per patient utilization year as required by section 1881(b)(14)(A)(ii) of the Act), updated to CY 2011, and represented the average per treatment MAP for composite rate and separately billable services. In accordance with section 1881(b)(14)(D) of the Act and our regulation at § 413.230, the per-treatment payment amount is the sum of the ESRD PPS base rate, adjusted for the patient specific case-mix adjustments, applicable facility adjustments, geographic differences in area wage levels using an area wage index, and any applicable outlier payment, training adjustment add-on, and the TDAPA (as finalized in section II.B.1.e of this final rule). Beginning in CY 2020 the per-treatment payment amount also will be adjusted for any applicable TPNIES (as finalized in section II.B.3.b.iii of this final rule).
The ESRD PPS base rate for CY 2020 is $239.33. This update reflects several factors, described in more detail as follows:
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The final CY 2020 wage index budget-neutrality adjustment factor is 1.000244, based on the updated wage index data. This application would yield a final CY 2020 ESRD PPS base rate of $239.33 ($239.27 × 1.000244 = $239.33).
The comments and our responses to the comments on our proposals to update the ESRD PPS base rate for CY 2020 are set forth below.
For these reasons, we believe that the CY 2020 ESRD PPS base rate is appropriate despite the challenges some ESRD facilities experience. We also continue to believe that the payment adjustments help mitigate the challenges faced by those facilities that are eligible for the adjustments. We note that the ESRDB market basket for CYs 2015 through 2018 was reduced in accordance with section 217(b)(2) of PAMA but for CY 2019 and CY 2020, ESRD facilities are getting the full productivity-adjusted ESRDB market basket update, which results in increased per treatment payments.
We received many comments from beneficiaries, physicians, professional organizations, renal organizations, and manufacturers related to issues that were not the subject of proposals and therefore, were out of scope of the CY 2020 ESRD PPS proposed rule. These comments and our responses are summarized below:
MedPAC noted that in the CY 2019 ESRD PPS final rule, CMS said that the audit process is complete and the audit staff are reviewing the findings. MedPAC emphasized the importance of auditing the cost reports that ESRD facilities submit to CMS to ensure that the data are accurate. First, inaccurate cost report data could affect the ESRD PPS's payment adjustment factors and ESRD market basket index, which are derived from this data source. Second, accurate accounting of costs is essential for assessing facilities' financial performance under Medicare. The Medicare margin is calculated from this data source, and policymakers consider the margin (and other factors) when assessing the adequacy of Medicare's payments for dialysis services. MedPAC noted that if costs are overstated, then the Medicare margin is understated. Third, it has been more than 15 years since cost reports were audited, and in 2011, the outpatient dialysis payment system underwent a significant change, which might have affected how facilities report their costs. Fourth, historically, facilities' cost reports have included costs that Medicare does not allow.
An LDO commented on the shortcomings of the case-mix adjusters. The LDO provided a detailed analysis of internal treatment run time data, showing that costs comprising nearly 40 percent of the market basket rate, wages, salaries, and benefits, had virtually no correlation to age. The LDO stated that it focused on these costs because there is no patient-level variation in housekeeping and operations, administration, and capital expenses, and thus no age correlation. Although costs for pharmaceuticals and laboratory services do vary minimally by patient, their correlation to age is ambiguous due to confounding with the BSA, BMI, and outlier adjustments. Given the consistency in treatment run times across age groups, the LDO noted that it was difficult to understand the nearly 15 percent swing in relative costs between patients aged 45 to 59 and patients aged 70 to 79 under the 2011 and 2016 models. The LDO further noted that it, along with other members of the kidney care community, and MedPAC have consistently raised concerns about the use of facility cost report data in developing patient-level adjusters. The LDO stated that the mean treatment run time analysis may not be achieving the intended purpose.
A professional association noted that during the December 8, 2018 ESRD PPS Technical Expert Panel (TEP) meeting convened by CMS, the panelists shared the same concerns as the LDO about alignment of resource use with payment with regard to patient-level adjusters.. The association stated that even when pressed to try to identify additional new adjusters, the vast majority indicated that very few adjusters are truly necessary for the ESRD population.
Some commenters noted concern with the low-volume and rural adjustments, and referenced MedPAC's concern about the overlapping nature of the low-volume and rural adjusters in its most recent Commission meetings. Commenters described MedPAC's April 2019 meeting, in which the staff presented an example of a single low-volume and isolated (LVI) facility adjuster that would better target payments. Some professional associations stated that they conceptually support such an approach. The structure of the low-volume payment adjustment (LVPA) and rural payment adjuster resulted in more than 50 percent of ESRD facilities that received the LVPA also claiming the rural adjuster. Commenters noted that MedPAC's analysis to date supports a conclusion that these adjusters have not led to an efficient distribution of resources or had much impact in improving a low-volume or rural ESRD facility's financial position. An LDO said CMS should explore modifying the low-volume and rural adjusters, such as creating a 2-tiered low-volume adjuster as MedPAC has discussed, and by considering a rural ESRD facility's coverage mix. One healthcare provider urged CMS to consider additional ways to appropriately reimburse low volume, rural facilities. The healthcare provider noted CMS should be aware of several closures of small rural facilities in the Midwest and stated that these closures are directly related to operational losses sustained by the ESRD facilities over a period of several years. The healthcare provider urged CMS to evaluate the base rate and rural and low volume adjusters to ensure ESRD facilities are reimbursed at a rate that covers the cost of care in rural communities. The healthcare provider stated that appropriate reimbursement rates will allow facilities to maintain high quality care and maintain local access to dialysis services.
A national dialysis stakeholder organization commented on the overall underfunding of ESRD facilities due to patient-level, facility level, add-on payment and outlier adjustments. The organization asserted that the application of these current policies results in the actual dollars CMS pays out for ESRD care to be significantly less than what the Congress had indicated it should be. The organization stated that while sequestration continues to be a driving source of underpayments, the underpayment amount attributable to other factors, which are due to a mismatch among adjusters frequencies assumed by the standardization factor compared to actual payment increased substantially in 2018, remains high. The organization noted that estimations indicate that, taken together, the total underpayment for the PPS per treatment in 2018 was $11.11. The organization further stated that the underpayment due to the outlier pool was $1.54 per treatment. Sequestration accounted for $4.45 per treatment, with the ESRD QIP taking out 25 cents per treatment. The organization stated that the remainder of the underpayment appears to be due to the fact that CMS has incorporated the expenditures for calcimimetics into the outlier pool calculation. The commenter strongly objected to this inclusion. The commenter stated that given the
The LDO suggested that, rather than a work-around through the outlier policy, CMS should take steps to ensure that the comorbidity adjusters perform as intended. The LDO stated that without an explicit requirement to do so, some providers rarely, if ever, make the necessary information available to ESRD facilities. The LDO recommended that CMS should require hospitals, particularly those using certified health information technology, to send the following information to other providers involved in an ESRD patient's care: (1) Discharge instructions and discharge summary within 48 hours; (2) pending test results within 72 hours of their availability; and (3) all other necessary information specified in the “transfer to another facility” requirements.
Several commenters provided suggestions on the incorporation of calcimimetics into the ESRD PPS base rate. Commenters urged CMS to work with stakeholders when developing a mechanism that does not result in facilities that provide the drugs used by only a small percentage of dialysis patients do so at a significant loss, while facilities that do not provide these drugs receive additional payments because the amount added to the base rate is distributed evenly across all payments. Commenters requested that before CMS incorporates costs for these drugs into the ESRD PPS base rate, it consider how their limited utilization will impact the distribution of dollars that will be added.
One drug manufacturer suggested that CMS should have the option to lengthen the duration of the TDAPA payment period for new renal dialysis drugs and biological products in existing ESRD PPS functional categories beyond 2 years, and use the language “at least 2 years” for these products similar to the language for products in new ESRD PPS functional categories. An LDO and a national dialysis association commented that CMS should ensure accurate expense accounting by including the ESRD network fee on cost reports. The association noted that the composite rate has been replaced by the ESRD PPS, but the 50 cents reduction has remained intact. The commenters noted that when Congress first created the ESRD Networks in 1978, the programs were funded through the appropriations process, with the goal of establishing funding for the programs through a network fee that reduced payments to dialysis facilities was to ensure stable funding for these programs. They noted that the history is silent as to whether this ESRD network fee should be accounted for on the ESRD cost reports. The association recommended CMS account for the ESRD network fee as a “revenue reduction” on the Cost Report. This addition could influence policymakers to increase the payment rate over time, better aligning cost reporting with the basis of payment. However, they do not think adding this information will affect the payment rate directly. They noted that since Medicare based rates on total historic payments, then use of actual historic payments means the reduction has already been included in its data. The association maintained that the cost reports (1) have not been used in calculating payment rates in a way that would affect the payment rates, and (2) have been used in the regression analysis to estimate adjuster values, but this change should not affect these analyses as the revenue reductions do not vary with any patient, facility or modality characteristic.
A dialysis organization encouraged CMS to include the $0.50 ESRD network fee in dialysis facilities' cost reports, noting that the fee's exclusion understated facilities' costs by more than $20 million in 2017. The organization asserted that since neither the Omnibus Budget Reconciliation Act of 1986 (OBRA 86), which established the network fee, nor accompanying House report address the fee's inclusion or exclusion, CMS has the necessary authority to implement this policy change, and the organization encouraged CMS to explore other policy guidance avenues to add the network fee as a revenue reduction on Worksheet D effective with CY 2020 ESRD facility cost reports.
Two LDOs and a national dialysis organization requested CMS change its TDAPA billing guidance for ESRD facilities to report oral drugs on a claim
The commenters noted that this creates a significant challenge for ESRD facilities. Over the course of a treatment, a lower or higher dose than initially recommended may be needed due to changes in a patient's condition. Other practical matters, such as a patient's relocation that necessitates the delivery of services at a different, geographically closer facility, make the requirement even more complicated and impractical. The commenters noted that the policy leads to losses for facilities that are not incurred by other provider types or Part D pharmacies and also makes facilities unfairly financially responsible for the entire amount dispensed. For oral drugs delivered through the ESRD PPS, the commenters stated, there is a disconnect between oral drugs prescribed for daily use, including days that do not include a dialysis treatment, and the “per treatment” payment methodology. This disconnect can result in ESRD facilities being unable to report oral drug utilization on days without a dialysis treatment. The commenters noted that current CMS policies require providers to attest in good faith on claims the amount of certain oral drugs consumed by beneficiaries, but this is not possible for dialysis providers, who cannot track beneficiary conduct in their homes on non-treatment days. The commenters therefore urged CMS to allow the reporting of the amount of dispensed but not consumed by beneficiaries as a more accurate and fair representation of what is under the control of the facility.
The commenters stated that this change would align the reporting requirement with those applied to other sectors including a skilled nursing facility (SNF) providing immunosuppressants and a hospital outpatient department providing patients with more than a 1-day supply of an anti-cancer drug. The commenters maintained that this modification also would ensure that CMS remains neutral with respect to providers' prescribing decisions and that patients have good access to the formulation that best meets their clinical needs. They also suggested that CMS provide guidance and appropriate reimbursement for a pharmaceutical product that must be discarded due to patient death, prescription change, facility transfer, hospitalization, transplantation or other circumstances that are outside the control of the ESRD facility. The commenters suggested that CMS provide guidance for product that, despite best efforts, has been lost in delivery, or misplaced by the beneficiary, and allow the facility to submit, and be reimbursed for, the second supply, perhaps through use of a modifier or similar system.
One national dialysis stakeholder organization and 1 drug manufacturer urged CMS in the coming year to work with the industry to find a better price proxy for non-ESAs that are not over the counter (OTC) vitamins. Specifically, they recommended that CMS use the BLS Series ID: WPS063 Series Title: PPI Commodity data for Chemicals and allied products—Drugs and pharmaceuticals, seasonally adjusted. They noted that the current category references “vitamins,” in a way that does not appropriately capture the price of drugs that fall within this category. Currently, the drugs in this category represent a small portion of the overall cost of providing dialysis services; however, the need for a more accurate and appropriate price proxy for oral and non-ESA drugs should be addressed now. Vitamin D analogs in this category, such as doxercalciferol and paricalcitol, are synthesized hormones that suppress PTH without inducing severe hypercalcemia, distinguishing them from OTC vitamins. They stated that these products are all unique chemical entities, FDA-approved, available by prescription only, and indicated for the treatment of secondary hyperparathyroidism (SHPT) which contributes to the development of bone disease. Moreover, these prescription drugs are classified by the U.S. Pharmacopeia in the Medicare Model Guidelines, a classification system that supports drug formulary development by Medicare Part D prescription drug plans, as “Metabolic Bone Disease Agents,” not vitamins.
The commenters stated that the creation of the TDAPA for new renal dialysis drugs and biological products will likely result in a shift in drug mix within the bundle, as well as introduce new oral products that deserve an accurate price proxy for updating. They noted that there are new drugs in the pipeline currently that, if the ESRD PPS does not create disincentives for their continued development, will likely be added to the ESRD PPS bundled payment during the next 2 to 3 years. The association recommended that CMS establish an alternative price proxy for these other drugs that is based on prescription drugs rather than vitamins and that would include fewer OTC drugs.
A drug manufacturer asked CMS to clarify how it will evaluate new products to determine whether they will fall within the definition of a “renal dialysis service.”
An LDO commented that the absence of adequate and sustained payments in the ESRD PPS bundled payment for new treatments will not just affect ESRD beneficiaries in Medicare FFS, but will also flow into, and lower, Medicare Advantage (MA) ESRD payments. The LDO urged CMS to consider this impact and how it will affect ESRD beneficiaries, who will have the opportunity starting in 2021 to enroll in an MA plan just like other beneficiaries.
A physician association stated that it continued to have significant concerns about the pediatric case mix adjuster and the undervaluation of pediatric ESRD supplies and services. The association noted that it has previously requested that CMS evaluate pediatric facility Medicare cost reports and ensure that the Medicare claims forms and CROWNWeb data accurately reflect what is required to deliver quality care to pediatric patients. The association stated that the data CMS is using fail to reflect the necessary resources and associated costs of delivering pediatric ESRD care. In particular, the association stated that there is not a good mechanism to report some of the costs uniquely associated with pediatric patients, such as costs associated with the allied health team. The association recommended that CMS look beyond the currently required report data and consider what expenses unique to pediatric dialysis should be included to appropriately reflect the costs of pediatric ESRD care, and to improve the completeness and accuracy of pediatric data being reported.
The association listed certain unique expenses related to pediatric dialysis care that should be reflected in any pediatric ESRD facility payment formula, including: (1) Increased reliance on registered nurses to provide dialysis care; (2) developmental/behavioral specialists; (3) more frequent assessment by pediatric dieticians; (4) social workers, teachers, and designated liaisons to interface regularly with schools; and, (5) a broad array of dialysis supplies.
The commenter noted that without accurate reimbursement to pediatric facilities, those who are specially trained to care for this unique patient population, as well as pediatric ESRD patients themselves, face an uncertain future. The commenter stated there is already a shortage of pediatric
The Trade Preferences Extension Act of 2015 (TPEA) (Pub. L. 114–27) was enacted on June 29, 2015, and amended the Act to provide coverage and payment for dialysis furnished by an ESRD facility to an individual with acute kidney injury (AKI). Specifically, section 808(a) of the TPEA amended section 1861(s)(2)(F) of the Act to provide coverage for renal dialysis services furnished on or after January 1, 2017, by an ESRD facility or a provider of services paid under section 1881(b)(14) of the Act to an individual with AKI. Section 808(b) of the TPEA amended section 1834 of the Act by adding a new paragraph (r) to provide payment, beginning January 1, 2017, for renal dialysis services furnished by renal dialysis facilities or providers of services paid under section 1881(b)(14) of the Act to individuals with AKI at the ESRD PPS base rate, as adjusted by any applicable geographic adjustment applied under section 1881(b)(14)(D)(iv)(II) of the Act and adjusted (on a budget neutral basis for payments under section 1834(r) of the Act) by any other adjustment factor under section 1881(b)(14)(D) of the Act that the Secretary elects.
In the CY 2017 ESRD PPS final rule, we finalized several coverage and payment policies in order to implement subsection (r) of section 1834 of the Act and the amendments to section 1881(s)(2)(F) of the Act, including the payment rate for AKI dialysis (81 FR 77866 through 77872, and 77965). We interpret section 1834(r)(1) of the Act as requiring the amount of payment for AKI dialysis services to be the base rate for renal dialysis services determined for a year under the ESRD base rate as set forth in § 413.220, updated by the ESRD bundled market basket percentage increase factor minus a productivity adjustment as set forth in § 413.196(d)(1), adjusted for wages as set forth in § 413.231, and adjusted by any other amounts deemed appropriate by the Secretary under § 413.373. We codified this policy in § 413.372 (81 FR 77965).
The proposed rule, titled “Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule Amounts, DMEPOS Competitive Bidding Program (CBP) Proposed Amendments, Standard Elements for a DMEPOS Order, and Master List of DMEPOS Items Potentially Subject to a Face-to-Face Encounter and Written Order Prior to Delivery and/or Prior Authorization Requirements” (84 FR 38330 through 38421), hereinafter referred to as the “CY 2020 ESRD PPS proposed rule,” was published in the
In this final rule, we provide a summary of the proposed provisions, a summary of the public comments received and our responses to them, and the policies we are finalizing for CY 2020 payment for renal dialysis services furnished to individuals with AKI.
The payment rate for AKI dialysis is the ESRD PPS base rate determined for a year under section 1881(b)(14) of the Act, which is the finalized ESRD PPS base rate, including market basket adjustments, wage adjustments and any other discretionary adjustments, for such year. We note that ESRD facilities have the ability to bill Medicare for non-renal dialysis items and services and receive separate payment in addition to the payment rate for AKI dialysis.
As discussed in section II.B.5.d of the CY 2020 ESRD PPS proposed rule (84 FR 38362), the CY 2020 proposed ESRD PPS base rate was $240.27, which reflected the proposed market basket, multifactor productivity adjustment, and CY 2020 wage index budget-neutrality adjustment factor. Therefore, we proposed a CY 2020 per treatment payment rate of $240.27 for renal dialysis services furnished by ESRD facilities to individuals with AKI. This payment rate is further adjusted by the wage index as discussed below.
Under section 1834(r)(1) of the Act and § 413.372, the amount of payment for AKI dialysis services is the base rate for renal dialysis services determined for a year under section 1881(b)(14) of the Act (updated by the ESRD bundled market basket and multifactor productivity adjustment), as adjusted by any applicable geographic adjustment factor applied under section 1881(b)(14)(D)(iv)(II) of the Act. Accordingly, we apply the same wage index under § 413.231 that is used under the ESRD PPS and discussed in section II.B.5.b of the CY 2020 ESRD PPS proposed rule (84 FR 38359 through 38360). The AKI dialysis payment rate is adjusted by the wage index for a particular ESRD facility in the same way that the ESRD PPS base rate is adjusted by the wage index for that facility (81 FR 77868). Specifically, we apply the wage index to the labor-related share of the ESRD PPS base rate that we utilize for AKI dialysis to compute the wage adjusted per-treatment AKI dialysis payment rate. We proposed a CY 2020 AKI dialysis payment rate of $240.27, adjusted by the ESRD facility's wage index.
The comments and our responses to the comments regarding the AKI dialysis payment proposal are set forth below.
For a detailed discussion of the ESRD QIP's background and history, including a description of the Program's authorizing statute and the policies that we have adopted in previous final rules, we refer readers to the following final rules: 75 FR 49030, 76 FR 628, 76 FR 70228, 77 FR 67450, 78 FR 72156, 79 FR 66120, 80 FR 68968, 81 FR 77834, 82 FR 50738, and 83FR 56922. We have also codified many of our policies for the ESRD QIP at 42 CFR 413.177 and 413.178.
The proposed rule, titled “Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule Amounts, DMEPOS Competitive Bidding Program (CBP) Proposed Amendments, Standard Elements for a DMEPOS Order, and Master List of DMEPOS Items Potentially Subject to a Face-to-Face Encounter and Written Order Prior to Delivery and/or Prior Authorization Requirements” (84 FR 38330 through 38421), hereinafter referred to as the “CY 2020 ESRD PPS proposed rule,” was published in the
The comments and our responses to the comments on the ESRD QIP are set forth below.
We proposed to revise the requirements at § 413.178 by redesignating paragraphs (d) through (f) as paragraphs (e) through (g), respectively. In addition, we proposed to add a new paragraph (d) to specify the data submission requirements for calculating measure scores. Specifically, we proposed to codify the requirement that facilities must submit measure data to CMS on all measures. We stated that this proposed regulation text would codify previously finalized policies and would make it easier for the public to locate and understand the Program's quality data submission requirements.
Additionally, we stated that the proposed text in new paragraph (d)(2) would codify our proposed policy (discussed more fully in section IV.E.2 of this final rule) to adopt the performance period and baseline period for each payment year automatically by advancing 1 year from the previous payment year. At § 413.178(d)(3) through (d)(7), we proposed to codify requirements for the Extraordinary Circumstances Exception (ECE) process, including a new option for facilities to reject an extraordinary circumstance exception granted by CMS under certain circumstances. We stated that this new option would provide facilities with flexibility under the ECE process. We also proposed this provision to provide clear guidance to the public on the scope of our ECE process. We invited public comments on these proposals.
The comments and our responses regarding the proposed regulation text are set forth below.
The PY 2022 ESRD QIP measure set includes 14 measures, which are described in Table 3. For more information on these measures, including the two measures that are new beginning with PY 2022 (the Percentage of Prevalent Patients Waitlisted (PPPW) clinical measure and the Medication Reconciliation for Patients Receiving Care at Dialysis Facilities (MedRec) reporting measure), please see the CY 2019 ESRD QIP final
The comments and our response to the comments regarding our continuing measures are set forth below.
Section 1881(h)(4)(A) of the Act requires the Secretary to establish performance standards with respect to the measures selected for the ESRD QIP for a performance period with respect to a year. The performance standards must include levels of achievement and improvement, as required by section 1881(h)(4)(B) of the Act, and must be established prior to the beginning of the performance period for the year involved, as required by section 1881(h)(4)(C) of the Act. We refer readers to the CY 2013 ESRD PPS final rule (76 FR 70277) for a discussion of the achievement and improvement standards that we have established for clinical measures used in the ESRD QIP. We recently codified definitions for the terms “achievement threshold,” “benchmark,” “improvement threshold,” and “performance standard” in our regulations at § 413.178(a)(1), (3), (7), and (12), respectively.
In the CY 2019 ESRD PPS final rule (83 FR 57010), we set the performance period for the PY 2022 ESRD QIP as CY 2020 and the baseline period as CY 2018. In the CY 2020 ESRD PPS proposed rule (84 FR 38364), we estimated the achievement thresholds, 50th percentiles of the national performance, and benchmarks for the PY 2022 clinical measures using data from 2016 and 2017, as shown in Table 4. We also stated that we had proposed in the CY 2020 ESRD PPS proposed rule to convert the STrR measure from a clinical measure to a reporting measure and that if that proposal was finalized, we would not update these standards for the STrR measure.
We are now updating the achievement thresholds, 50th percentiles of the national performance, and benchmarks for the PY 2022 clinical measures as shown in Table 5, using the most recently available data, which includes CY 2018 data.
In addition, we have summarized in Table 6 our finalized performance standards for the reporting measures in the PY 2022 ESRD QIP.
We stated in the CY 2020 ESRD PPS proposed rule that there were two similar measures in the ESRD QIP that assess dialysis events: (1) The National Healthcare Safety Network (NHSN) Bloodstream Infection (BSI) clinical measure, and (2) the NHSN Dialysis Event reporting measure. We stated that for the NHSN BSI clinical measure, facilities must be eligible to report 12 months of data to the NHSN on a
We stated in the CY 2020 ESRD PPS proposed rule (84 FR 38365) that as we have accumulated experience with this policy, we were concerned that new facilities and facilities for which CMS grants an ECE for part of the performance period that applies for a payment year were not eligible to receive a score on the NHSN Dialysis Event reporting measure because they were not eligible to report data for the full 12-month period. We stated that as a result, we did not believe that this policy appropriately accounted for the effort made by these facilities to report these data for the months in which they were eligible to report. For example, for PY 2020, the number of new facilities certified during the performance year (CY 2018) was 390 and the number of facilities granted an ECE during CY 2018 was 31, but none of those facilities was eligible to receive a score on the measure. We also stated our concern that if a facility was aware that it would not be eligible to receive a score on the NHSN Dialysis Event reporting measure, the facility would not be incentive to report data at all for that payment year.
We stated that as a result of these concerns, we reconsidered our policy. We proposed to remove the NHSN Dialysis Event reporting measure's exclusion of facilities with fewer than 12 eligible reporting months. Beginning with the PY 2022 ESRD QIP, we also proposed to assess successful reporting based on the number of months facilities are eligible to report the measure. Under this proposal, facilities would receive credit for scoring purposes based on the number of months they successfully report data out of the number of eligible months. For example, if a facility had 10 eligible reporting months because it was granted an ECE for 2 months of the performance period, and reported data for those 10 eligible months, the facility would receive a score, whereas under the current policy, the facility would not receive a score. To accommodate this proposed change and to ensure that our scoring methodology appropriately incentive facilities to report data on the NHSN Dialysis Event reporting measure, even if they are not eligible to report data for all 12 months of a performance period, we also proposed to assign scores for reporting different quantities of data as summarized in Table 8.
We stated our belief that it was important to encourage new facilities and facilities with an approved ECE to report complete and accurate dialysis event data to the NHSN for all the months in which they are eligible to submit data so that we would have as comprehensive as possible a view of these facilities' performance on this important clinical topic. We stated our belief that complete and accurate reporting of NHSN data was critical to maintaining the integrity of the NHSN surveillance system, enabled facilities to implement their own quality improvement initiatives, and enabled the Centers for Disease Control and Prevention (CDC) to design and disseminate prevention strategies. We stated our belief that the fairest way to balance these goals was to adopt a new NHSN Dialysis Event reporting measure policy focused more specifically on considering reporting successful based
The comments and our responses to the comments on the proposed updates to the NHSN Dialysis Event reporting measure's scoring methodology are set forth below.
In the CY 2015 ESRD PPS final rule (79 FR 66192 through 66197) we finalized the adoption of the Standardized Transfusion Ratio (STrR) clinical measure to address gaps in the quality of anemia management, beginning with the PY 2018 ESRD QIP. We also finalized policies to score facility performance on the STrR clinical measure based on achievement and improvement in the PY 2018 ESRD QIP final rule (79 FR 66209). We finalized identical scoring policies for the STrR clinical measure in the PY 2019 ESRD QIP and the PY 2020 ESRD QIP in the CY 2016 ESRD PPS final rule (80 FR 69060 through 69061) and the CY 2017 ESRD PPS final rule (81 FR 77916), respectively.
After finalizing the STrR clinical measure in the CY 2015 ESRD PPS final rule, we submitted the measure to the NQF for consensus endorsement, but the Renal Standing Committee did not recommend it for endorsement, in part due to concerns that variability in hospital coding practices with respect to the use of 038 and 039 revenue codes might unduly bias the measure rates. Upon reviewing the committee's feedback, we revised the STrR clinical measure's specifications to address those concerns. The updated measure specifications for the STrR clinical measure contain a more restricted definition of transfusion events than was previously used in the STrR clinical measure. Specifically, the revised definition excludes inpatient transfusion events for claims that include only 038 or 039 revenue codes without an accompanying International Statistical Classification of Diseases and Related Health Problems—9 (ICD–9) or ICD–10 procedure code or value code. As a result, the measure can identify transfusion events more specifically and with less bias related to regional coding variation, which means that the measure assesses a smaller number of events as well as a smaller range of total events.
Following this revision, we resubmitted the STrR clinical measure (NQF #2979) to NQF for consensus endorsement. The NQF endorsed the revised STrR clinical measure in 2016, and in the CY 2018 ESRD PPS final rule (82 FR 50771 through 50774), we finalized changes to the STrR clinical measure that aligned the measure specifications used for the ESRD QIP with the measure specifications that NQF endorsed in 2016 (NQF #2979), beginning with the PY 2021 ESRD QIP. We also finalized policies to score facility performance on the revised STrR clinical measure based on achievement and improvement (82 FR 50779 through 50780), and we subsequently finalized that those policies would continue for PY 2022 and in subsequent payment years (83 FR 57011).
Commenters to the CY 2019 ESRD PPS proposed rule raised concerns about the validity of the modified STrR measure (NQF #2979) finalized for adoption beginning with PY 2021. Commenters specifically stated that due to the new level of coding specificity required under the ICD–10–CM/PCS coding system, many hospitals are no longer accurately coding blood transfusions. The commenters further stated that because the STrR measure is calculated using hospital data, the rise of inaccurate blood transfusion coding by hospitals has negatively affected the validity of the STrR measure (83 FR 56993 through 56994).
In the CY 2020 ESRD PPS proposed rule (84 FR 38366), we stated that we are in the process of examining the concern raised by commenters about the validity of the modified STrR measure, and we stated that we had considered three alternatives for scoring the measure until we complete that process: (1) Assign the score that a facility would need to earn if it performed at the 50th percentile of national ESRD performance during the baseline year to every facility that would otherwise earn a score during the performance period below that median score, (2) align the measure specifications with those used for the measure prior to the PY 2021 ESRD QIP, and (3) convert the STrR clinical measure to a reporting measure.
We stated that we had considered the second alternative because the previously adopted measure
We stated that under the third policy alternative, we would be using a reporting measure that is based on an NQF-endorsed measure, but we would not be scoring facilities on the measure based on their performance. While the concerns regarding measure validity might call into question the capacity for current data to adequately capture transfusion rates attributable to facilities, we stated our belief that the transfusions captured by the measure are a conservative estimate of the number of events that actually occur, and that those events represent an undesirable health outcome for patients that is potentially modifiable by the dialysis facility through appropriate anemia management.
In light of the concerns raised about the validity of the STrR clinical measure, we stated that we are continuing to examine this issue. We stated our desire to ensure that the Program's scoring methodology results in fair and reliable STrR measure scores because those scores are linked to dialysis facilities' TPS and possible payment reductions. We stated our belief that the most appropriate way to continue fulfilling the statutory requirement to include a measure of anemia management in the Program while ensuring that dialysis facilities are not adversely affected during our continued examination of the measure is to convert the STrR clinical measure to a reporting measure for the reasons discussed above.
We also proposed that, beginning with PY 2022, we would score the STrR reporting measure as follows: Facilities that meet previously finalized minimum data and eligibility requirements would receive a score on the STrR reporting measure based on the successful reporting of data, not on the values actually reported. We proposed that in order to receive 10 points on the measure, a facility would need to report the data required to determine the number of eligible patient-years at risk and have at least 10 eligible patient-years at risk. We stated that a patient-year at risk was a period of 12-month increments during which a single patient is treated at a given facility. A patient-year at risk can be comprised of more than 1 patient if, when added together, their time in treatment equals a year. For example, if 1 patient is treated at the same facility for 4 months and a second patient is treated at a facility for 8 months, then the two patients would combine to form a full patient year.
We stated our belief that this scoring adjustment policy would enable us to retain an anemia management measure in the ESRD QIP measure set while we continue to examine the measure's validity concerns raised by stakeholders.
The comments and our responses to the comments on the proposal to convert the STrR measure from a clinical measure to a reporting measures are set forth below.
1. Patients are less than 18 years old.
2. Patients are on ESRD treatment for fewer than 90 days.
3. Patients are on dialysis at the facility for fewer than 60 days.
4. Time during which patients have a functioning kidney transplant (exclusion begins 3 days prior to the date of transplant).
5. Patients have not been treated by any facility for a year or longer.
6. Patients with a Medicare claim (Part A inpatient, home health, hospice, and skilled nursing facility claims; Part B outpatient and physician supplier) for one of the following conditions in the past year: Hemolytic and aplastic anemia, solid-organ cancer (breast, prostate, lung, digestive tract and others), lymphoma, carcinoma in situ, coagulation disorders, multiple myeloma, myelodysplastic syndrome and myelofibrosis, leukemia, head and neck cancer, other cancers (connective tissue, skin, and others), metastatic cancer, or sickle cell anemia.
7. Patient-months not within two months of a month in which a patient has $900 of Medicare-paid dialysis claims or at least one Medicare inpatient claim.
8. Patients beginning 60 days after they recover renal function or withdraw from dialysis.
We also thank the commenter for its recommendation to include only patients who receive CKD anemia-related transfusions in the STrR clinical measure. We will assess the feasibility of this recommendation during our review of the STrR clinical measure.
In the CY 2019 ESRD PPS final rule (83 FR 57011), we finalized a policy to score the MedRec reporting measure using the following equation, beginning with the PY 2022 ESRD QIP.
We stated that the use of facility-months for the MedRec reporting measure is also consistent with the scoring methodology we have used for all other reporting measures which require monthly reporting, including the Anemia Management reporting measure (finalized for removal beginning with the PY 2021 ESRD QIP), the Serum Phosphorus reporting measure (finalized for removal beginning with the PY 2021 ESRD QIP measure), and the Ultrafiltration reporting measure.
We therefore proposed to revise the scoring equation for the MedRec reporting measure so that the scoring methodology accurately describes our intended policy. We proposed to score the MedRec reporting measure using the following equation, beginning with the PY 2022 ESRD QIP. We solicited public comments on this proposal.
Additionally, we stated that in section IV.B.4 of the CY 2019 ESRD PPS final rule, we had finalized a requirement for PY 2021 and beyond for facilities to begin collecting data for purposes of the ESRD QIP beginning with services furnished on the first day of the month that is 4 months after the month in which the CMS Certification Number (CCN) becomes effective (83 FR 56999 through 57000). In section IV.C.4.c of the CY 2019 ESRD PPS final rule, we also finalized a policy for the MedRec reporting measure to begin scoring facilities with a CCN Open Date before the January 1st of the performance period (83 FR 57011). In section IV.C.6 of the CY 2019 ESRD PPS final rule (83 FR 57013 through 57014), we applied the updated reporting requirement for new facilities finalized in section IV.B.4 of the CY 2019 ESRD PPS final rule to the MedRec reporting measure eligibility requirements finalized in section IV.C.4.c of the CY 2019 ESRD PPS final rule. We specified in Table 23 of the CY 2019 ESRD PPS final rule that facilities with a CCN Open Date before October 1, 2019 would meet the
In order to ensure that there is no confusion regarding these requirements, we clarified in the CY 2020 ESRD PPS proposed rule (84 FR 38367) that for the MedRec reporting measure, facilities with a CCN Open Date before the October 1st prior to the performance period (which, for the PY 2022 ESRD QIP, would be a CCN Open Date before October 1, 2019) must begin collecting data on that measure.
The comments and our responses regarding the MedRec reporting measure's scoring methodology updates are set forth below.
In the CY 2019 ESRD PPS final rule, we finalized a policy where, with respect to the NHSN Dialysis Event reporting measure, facilities are required to have a CCN Open Date on or before the October 1 prior to the performance period to be eligible to receive a score, beginning with the PY 2021 ESRD QIP (83 FR 56999 through 57000). In section IV.B.3.a of the CY 2020 ESRD PPS proposed rule, we proposed to remove the NHSN Dialysis Event reporting measure's exclusion of facilities with fewer than 12 eligible reporting months and to assess successful reporting based on the number of months facilities were eligible to report the measure, beginning with the PY 2022 ESRD QIP. To accommodate this proposed policy, we proposed to remove the requirement that, to be eligible to receive a score on the NHSN Dialysis Event reporting measure, new facilities must have a CCN Open Date before October 1 prior to the performance period that applies to the payment year. We stated that Table 9 summarized the ESRD QIP's minimum eligibility requirements for scoring, including the proposed change to the eligibility requirement for the NHSN Dialysis Event reporting measure.
The comments and our responses regarding the minimum eligibility requirements are set forth below.
We stated in the CY 2020 ESRD PPS proposed rule that under our current policy, a facility will not receive a payment reduction in connection with its performance in the ESRD QIP for a payment year if it achieves a TPS that is at or above the minimum TPS that we establish for the payment year. We have defined the minimum TPS in our regulations at § 413.178(a)(8) as, with respect to a payment year, the TPS that an ESRD facility would receive if, during the baseline period, it performed at the 50th percentile of national performance on all clinical measures and the median of national ESRD
We also stated that our current policy, which is codified at § 413.177 of our regulations, is also to implement the payment reductions on a sliding scale using ranges that reflect payment reduction differentials of 0.5 percent for each 10 points that the facility's TPS falls below the minimum TPS (76 FR 634 through 635).
For PY 2022, we estimated using available data that a facility must meet or exceed a minimum TPS of 53 in order to avoid a payment reduction. We noted that the mTPS estimated in the CY 2020 ESRD PPS proposed rule was based on data from CY 2017 instead of the PY 2022 baseline period (CY 2018) because CY 2018 data were not yet available.
We referred the reader to Table 4 for the estimated values of the 50th percentile of national performance for each clinical measure. We stated in the CY 2020 ESRD PPS proposed rule that under our current policy, a facility that achieves a TPS below 53 would receive a payment reduction based on the TPS ranges indicated in Table 10.
We stated our intention to update the minimum TPS for PY 2022, as well as the payment reduction ranges for that payment year, in the CY 2020 ESRD PPS final rule.
The comments and our responses regarding the mTPS and payment reduction scale are set forth below.
Finally, payment reductions are estimated using the mTPS that we calculate using the performance standards published in the previous year's final rule. Oftentimes the simulated mTPS is the same as the final mTPS proposed in the current rule, but we use an estimated simulated mTPS in order to simulate the differences in performance in prior years. Additionally, the methodology used to estimate performances scores is consistent with how the actual facility payment reductions are determined,
At the time the proposed rule was published, the most recently available data for a complete year was CY 2017. We have now updated the payment reductions that will apply to the PY 2022 ESRD QIP using CY 2018 data. The mTPS for PY 2022 will be 54, and the updated payment reduction scale is shown in Table 11.
In the CY 2020 ESRD PPS proposed rule (84 FR 38368), we stated that one of the critical elements of the ESRD QIP's success is ensuring that the data submitted to calculate measure scores and TPSs are accurate. We stated that the ESRD QIP includes two validation studies for this purpose: The CROWNWeb data validation study (OMB Control Number 0938–1289) and the NHSN validation study (OMB Control Number 0938–1340). In the CY 2019 ESRD PPS final rule, we adopted the CROWNWeb data validation study as a permanent feature of the Program (83 FR 57003). We stated that under that policy, we will continue validating CROWNWeb data in PY 2022 and subsequent payment years, and we will deduct 10 points from a facility's TPS if it is selected for validation but does not submit the requested records.
We also adopted a methodology for the PY 2022 NHSN validation study, which targets facilities for NHSN validation by identifying facilities that are at risk for under-reporting. A sample of 300 facilities will be selected, and each facility will be required to submit 20 patient records covering 2 quarters of data reported in the performance year (for PY 2022, this would be CY 2020). For additional information on this methodology, we referred readers to the CY 2018 ESRD PPS final rule (82 FR 50766 through 50767).
In the CY 2020 ESRD PPS proposed rule, we proposed to continue using this methodology for the NHSN validation study for PY 2023 and subsequent years because based on a recent statistical analysis conducted by the CDC, we have concluded that to achieve the most reliable results for a payment year, we would need to review approximately 6,072 charts submitted by 303 facilities. We stated that this sample size would produce results with a 95 percent confidence level and a 1 percent margin of error. Based on those results and our desire to ensure that dialysis event data reported to the NHSN for purposes of the ESRD QIP are accurate, we proposed to continue use of this methodology in the PY 2023 NHSN validation study and for subsequent years.
Additionally, as we finalized for CROWNWeb validation, we proposed to adopt NHSN validation as a permanent feature of the ESRD QIP with the methodology we first finalized for PY 2022 and proposed to continue for PY 2023 and subsequent years. We stated our belief that the purpose of our validation programs is to ensure the accuracy and completeness of data that are scored under the ESRD QIP and that validating NHSN data using this methodology achieves that goal. Now that we have adopted a larger sample size of 300 facilities for the NHSN validation study and have thus ensured enough precision within the study, we believe that making the validation study permanent will show our commitment to accurate reporting of the important clinical topics covered by the NHSN measures that we have adopted. We welcomed public comments on these proposals.
The comments and our responses to the comments on our data validation proposals are set forth below.
In the CY 2020 ESRD PPS proposed rule (84 FR 38369), we stated that, under our previously adopted policy, we were continuing all measures from the PY 2022 ESRD QIP for PY 2023. We did not propose to adopt any new measures beginning with the PY 2023 ESRD QIP.
In the CY 2020 ESRD PPS proposed rule (84 FR 38369), we stated our continued belief that 12-month performance and baseline periods would provide us sufficiently reliable quality measure data for the ESRD QIP. We therefore proposed to establish CY 2021 as the performance period for the PY 2023 ESRD QIP for all measures. Additionally, we proposed to establish CY 2019 as the baseline period for the PY 2023 ESRD QIP for all measures for purposes of calculating the achievement threshold, benchmark, and minimum TPS, and CY 2020 as the baseline period for the PY 2023 ESRD QIP for purposes of calculating the improvement threshold. Beginning with PY 2024, we proposed to adopt automatically a performance and baseline period for each year that is 1-year advanced from those specified for the previous payment year. For example, under this policy, we would automatically adopt CY 2022 as the performance period for the PY 2024 ESRD QIP. We would also automatically adopt CY 2020 as the baseline period for purposes of calculating the achievement threshold, benchmark, and minimum TPS and CY 2021 as the baseline period for purposes of calculating the improvement threshold, for the PY 2024 ESRD QIP. We welcomed public comments on these proposals.
The comments and our responses to the comments on our proposals for establishing the performance and baseline periods are set forth below.
Section 1881(h)(4)(A) of the Act requires the Secretary to establish performance standards with respect to the measures selected for the ESRD QIP for a performance period with respect to a year. The performance standards must include levels of achievement and improvement, as required by section 1881(h)(4)(B) of the Act, and must be established prior to the beginning of the performance period for the year involved, as required by section 1881(h)(4)(C) of the Act. In the CY 2020 ESRD PPS proposed rule (84 FR 38369), we referred readers to the CY 2013 ESRD PPS final rule (76 FR 70277) for a discussion of the achievement and improvement standards that we have established for clinical measures used in the ESRD QIP. We stated that we recently codified definitions for the terms “achievement threshold,” “benchmark,” “improvement threshold,” and “performance standard” in our regulations at § 413.178(a)(1), (3), (7), and (12), respectively.
In the CY 2020 ESRD PPS proposed rule (84 FR 38369), we stated that at that time, we did not have the necessary data to assign numerical values to the achievement thresholds, benchmarks, and 50th percentiles of national performance for the clinical measures because we did not have CY 2019 data. We stated our intention to publish these numerical values, using CY 2019 data, in the CY 2021 ESRD PPS final rule.
In the CY 2019 ESRD PPS final rule, we finalized the continued use of existing performance standards for the Screening for Clinical Depression and Follow-Up reporting measure, the Ultrafiltration Rate reporting measure, the NHSN Dialysis Event reporting measure, and the MedRec reporting measure (83 FR 57010 through 57011). In the CY 2020 ESRD PPS proposed rule (84 FR 38369), we stated that we would continue use of those performance standards in PY 2023.
In the CY 2014 ESRD PPS final rule, we finalized policies for scoring performance on clinical measures based on achievement and improvement (78 FR 72215 through 72216). In the CY 2019 ESRD PPS final rule, we finalized a policy to continue use of this methodology for future payment years (83 FR 57011) and we codified these scoring policies at § 413.178(d).
In the CY 2020 ESRD PPS proposed rule (84 FR 38369), we stated that we were not proposing to change these scoring policies.
In the CY 2019 ESRD PPS final rule, we codified our policy for scoring performance on reporting measures at § 413.178(d),
In the CY 2020 ESRD PPS proposed rule (84 FR 38369), we stated that under our current policy, we have assigned the Patient & Family Engagement Measure Domain a weight of 15 percent of the TPS, the Care Coordination Measure Domain a weight of 30 percent of the TPS, the Clinical Care Measure Domain a weight of 40 percent of the TPS, and the Safety Measure domain a weight of 15 percent of the TPS, for the PY 2022 ESRD QIP (83 FR 57011 through 57012).
In the CY 2019 ESRD PPS final rule, we finalized a policy to assign weights to individual measures and a policy to redistribute the weight of unscored measures in the PY 2022 ESRD QIP (83 FR 57011 through 57012). In the CY 2020 ESRD PPS proposed rule (84 FR 38370), we proposed to continue use of
We also noted that under our current policy, a facility must be eligible to be scored on at least one measure in two of the four measures domains in order to be eligible to receive a TPS (83 FR 57012).
The comments and our responses to the comments on our measure weight assignments and weight redistribution proposals are set forth below.
Section 1834(a) of the Act mandates payment based on the lesser of the supplier's actual charge or a fee schedule amount for DME other than customized items defined at 42 CFR 414.224 and items included in a competitive bidding program and furnished in a competitive bidding area under section 1847(a) of the Act. Section 1834(h) of the Act mandates payment based on the lesser of the supplier's actual charge or a fee schedule amount for most prosthetic
The statute does not specify how to calculate fee schedule amounts when the base reasonable charge data does not exist. As discussed later on, since 1989, we have used a process referred to as “gap-filling” to fill the gap in the reasonable charge data for new DMEPOS items, which are newly covered items or technology. The gap-filling process is used to estimate what Medicare would have paid for the item under the reasonable charge payment methodology during the period of time from which reasonable charge data is used to calculate the fee schedule amounts, or the fee schedule “base period” (for example, 1986 and 1987 for DME). Various methods have been used by CMS and its contractors to gap-fill DMEPOS fee schedule amounts including use of fees for comparable items, supplier prices, manufacturer's suggested retail prices (MSRPs), wholesale prices plus a markup percentage to convert the prices to retail prices, or other methods. In any case where prices are used for gap-filling, the prices are deflated to the fee schedule base period by the percentage change in the consumer price index for all urban consumers (CPI–U) from the mid-point of the year the price is in effect to the mid-point of the fee schedule base period. Program guidance containing instructions for contractors (mainly for use by the Durable Medical Equipment Medicare Administrative Contractors (DME MACs)) for gap-filling DMEPOS fee schedule amounts is found at section 60.3 of chapter 23 of the Medicare Claims Processing Manual (Pub. L. 100–04). The instructions indicate that the DMEPOS fee schedule for items for which reasonable charge data were unavailable during the fee schedule base period are to be gap-filled using the fee schedule amounts for comparable items or supplier price lists with prices in effect during the fee schedule base period. The instructions specify that supplier price lists include catalogs and other retail price lists (such as internet retail prices) that provide information on commercial pricing for the item. Potential appropriate sources for such commercial pricing information can also include verifiable information from supplier invoices and non-Medicare payer data (for example, fee schedule amounts comprised of the median of the commercial pricing information adjusted as described below). Mail order catalogs are suitable sources of routinely available price information for items such as urological and ostomy supplies which require frequent replacement. We issued Transmittal 4130, Change Request 10924 dated September 14, 2018 which updated the manual instruction to clarify that supplier price lists can include internet retail prices or verifiable information from supplier invoices and non-Medicare payer data. Prior to 2018, non-Medicare payer data had not been included to establish gap-filled DMEPOS fee schedule amounts. CMS and its contractors have used internet retail prices in the past in addition to catalog prices, as well as wholesale prices plus a retail price mark up, and on one occasion hospital invoices plus a 10 percent markup as a source for commercial pricing information.
In 2015, when revising the DME MAC statement of work, CMS clarified to the DME MACs that MSRP should not be used for gap-filling due to CMS's concerns that MSRPs may not represent routinely available supplier price lists, which are incorporated for supplier charges in calculating fee schedule amounts that the statute mandates be based on historic reasonable charges. Although MSRPs were used in certain cases in the past to gap-fill DMEPOS fee schedule amounts, our experience has revealed the retail prices suggested by manufacturers often are inflated and do not reflect commercial competitive pricing, or a price that is paid to a supplier for furnishing items and services. Using MSRPs to gap-fill DMEPOS fee schedule amounts led to excessive fee schedule amounts compared to fees established for other DMEPOS items paid for in 1986, 1987, 1992, 2001, or other fee schedule base periods. In some cases, a single manufacturer may produce a new item, and pricing information may therefore be limited to the MSRP. In these cases, unlike other items and services paid for under Medicare, there is not yet independently substantiated pricing information. In addition, similar items may not be available to create competition and to potentially limit the price a sole source manufacturer charges for the new item. We believe the MSRP may represent the amount the manufacturer charges to Medicare and other health insurance payers before pricing is established in a competitive market by suppliers furnishing the product and competitor products.
Currently, when we release our program instruction announcing
If a HCPCS code for a new item is added and takes effect, and the fee schedule amounts for the new code have not yet been added to the DMEPOS fee schedule file, our contractors establish payment on an interim basis using local fee schedule amounts gap-filled in accordance with the program instructions at section 60.3 of chapter 23 of the Medicare Claims Processing Manual until the fee schedule amounts on the national files are available.
The HCPCS is a standardized coding system used to process claims submitted to Medicare, Medicaid, and other health insurance programs. Level I of the HCPCS codes is comprised of Current Procedural Terminology (CPT) codes identifying primarily medical services and procedures furnished by physicians and other health care practitioners, published and maintained by the American Medical Association. Level II of the HCPCS codes primarily identifies items, supplies, services and certain drugs used outside the practitioner setting. Assignment of a HCPCS code is not a coverage determination and does not imply that any payer will cover the items in the code category.
In 2001, section 531(b) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106–554) mandated the establishment of procedures for coding and payment determinations for new DMEPOS items under Medicare Part B that permit public consultation in a manner consistent with the procedures established for implementing ICD–9–CM coding modifications. As a result, beginning in 2002, after the HCPCS Workgroup has developed its preliminary decision, these preliminary decisions are made available to the public via our website and public meetings are scheduled to receive public comment on the preliminary decisions.`
Following the HCPCS public meetings, we make a final decision on each new DMEPOS code request and payment category. Then, we prepare and release the HCPCS and DMEPOS fee schedule files and program instructions for the next update (annual or quarterly) to our contractors and via our website for public access. Also, a summary of the final coding and payment category decisions is made available on our website. See the following websites for more information:
• HCPCS Files:
• DMEPOS Fee Schedule Files:
• Program Instructions:
• Public Meeting Summaries:
Typically, more than 100 applications are submitted to the CMS HCPCS Workgroup each year, with approximately one-third requesting new or revised DMEPOS codes. The list of approved new DMEPOS codes is not finalized until shortly before the release of the updated HCPCS file, which in some cases, leaves very short timeframes to prepare and release the updated DMEPOS fee schedule.
Instructions for contractors addressing how to establish DMEPOS payment amounts following updates to HCPCS codes are contained at section 60.3.1 of chapter 23 of the Medicare Claims Processing Manual. When an item receives a new HCPCS code, it does not necessarily mean that Medicare payment on a fee schedule basis has never been made for the item described by the new code. If a new code is established, CMS and our contractors follow the instructions in section 60.3.1 to make every effort to determine whether the item has a pricing history. If there is a pricing history, that is, the item(s) and services described by the new code were paid for in the past under existing codes based on the fee schedule amounts for these codes, the fee schedule amounts previously used to pay for the item are mapped or cross walked to the new code(s) for the item to ensure continuity of pricing. Since there are different kinds of coding changes, there are various ways pricing is cross walked from old codes to new codes, which are addressed in our program instructions at section 60.3.1 of chapter 23 of the Medicare Claims Processing Manual. For example, when the code for an item is divided into multiple codes for the components of that item, the total of the separate fee schedule amounts established for the components must not be higher than the fee schedule amount for the original item. However, when there is a single code that describes two or more distinct complete items (for example, two different but related or similar items), and separate codes are subsequently established for each item, the fee schedule amounts for the single code are applied to each of the new codes. Conversely, when the codes for the components of an item are combined in a single global code, the fee schedule amount for the new code is established by totaling the fee schedule amounts used for the components (that is, the total of the fee schedule amounts for the components is used to determine the fee schedule amount for the global code). However, when the codes for several different items are combined into a single code, the fee schedule amounts for the new code are established using the average (arithmetic mean), weighted by allowed services, of the fee schedule amounts for the formerly separate codes. These instructions are used to ensure continuity of pricing under the Medicare program, but do not apply to items when a pricing history does not exist, that is, in situations where an item was not paid for under a HCPCS code or codes with an established DMEPOS fee schedule amount(s). The gap-filling process only applies to items not assigned to existing HCPCS codes with established fee schedule amounts and items that were not previously paid for by Medicare under either a deleted or revised HCPCS code.
Section 1842(b)(8) of the Act authorizes CMS to adjust payment amounts if, subject to the factors described in the statute and the regulations, CMS determines that such payment amounts are grossly excessive or grossly deficient, and therefore are not inherently reasonable. CMS may make a determination that would result in an increase or decrease of more than 15 percent of the payment amount for a year only if it follows all of the requirements under paragraphs (B), (C), and (D) of section 1842(b)(8) of the Act. Under these requirements, CMS must take certain factors into account, such as whether the payment amount does not reflect changing technology. In addition, section 1842(b)(9) of the Act mandates a specific process that CMS must follow when using this “inherent reasonableness” authority (IR authority) to adjust payment amounts by more
Examples of factors that may result in grossly excessive or grossly deficient payment amounts are set forth at § 405.502(g)(1)(vii) and include, but are not limited to, the following:
• The market place is not competitive.
• Medicare and Medicaid are the sole or primary sources of payment for a category of items and services.
• The payment amounts for a category of items and services do not reflect changing technology, increased facility with that technology, or changes in acquisition, production, or supplier costs.
• The payment amounts for a category of items or services in a particular locality are grossly higher or lower than payment amounts in other comparable localities for the category of items or services.
• Payment amounts for a category of items and services are grossly higher or lower than acquisition or production costs for the category of items and services.
• There have been increases in payment amounts for an item or service that cannot be explained by inflation or technology.
• Payment amounts for a category of items or services are grossly higher or lower than payments made for the same category of items or services by other purchasers in the same locality.
• A new technology exists which is not reflected in the existing payment allowances.
Prior to making a determination pursuant to section 1842(b)(8) of the Act that would result in an increase or decrease of more than 15 percent in a payment amount for a year, CMS is required to consult with representatives of suppliers or other individuals who furnish an item or service. In addition, section 1842(b)(8)(D) of the Act mandates that CMS consider the potential impact of a determination pursuant to section 1842(b)(8) that would result in a payment amount increase or decrease of more than 15 percent for a year on quality, access, beneficiary liability, assignment rates, and participation of suppliers. In establishing a payment limit for a category of items or services, we consider the available information relevant to the category of items or services in order to establish a payment amount that is realistic and equitable. Under § 405.502(g)(2), the factors we may consider in establishing a payment limit include the following:
• Price markup. The relationship between the retail and wholesale prices or manufacturer's costs of a category of items and services. If information on a particular category of items and services is not available, we may consider the price markup on a similar category of items and services and information on general industry pricing trends.
• Differences in charges. The differences in charges for a category of items and services made to non-Medicare and Medicare patients or to institutions and other large volume purchasers.
• Costs. Resources (for example, overhead, time, acquisition costs, production costs, and complexity) required to produce a category of items and services.
• Use. Imputing a reasonable rate of use for a category of items or services and considering unit costs based on efficient use.
• Payment amounts in other localities. Payment amounts for a category of items and services furnished in another locality.
In determining whether a payment amount is grossly excessive or grossly deficient, and in establishing an appropriate payment amount, we use valid and reliable data. To ensure the use of valid and reliable data, we must meet the criteria set forth at § 405.502(g)(4), to the extent applicable. This includes, but is not limited to, considering the cost of the services necessary to furnish a product to beneficiaries if wholesale costs are used.
If we make a determination that a special payment limit is warranted to adjust a grossly excessive or grossly deficient payment amount for a category of items and services by more than 15 percent within a year, we must publish in the
On May 1, 2006, we published several proposed changes for the gap-filling process in our rule titled “Medicare Program; Competitive Acquisition for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) and Other Issues” (71 FR 25687 through 25689). The May 2006 proposed rule discussed the existing gap-filling process and the results of pilot assessments conducted by two CMS contractors to assess the benefits, effectiveness, and costs of several products. The purpose of the pilot assessments was to compile the technical information necessary to evaluate the technologies of the studied products with the objective of making payment and HCPCS coding decisions for new items. The contractors evaluated the products based on: (1) A functional assessment; (2) a price comparison analysis; and (3) a medical benefit assessment. The functional assessment involved evaluating a device's operations, safety, and user documentation relative to the Medicare population. The price comparison analysis involved determining how the cost of the product compared with similar products on the market or alternative treatment modalities. The medical benefit assessment focused on the effectiveness of the product in doing what it claims to do.
As a result of the pilot studies, we proposed to use what we referred to as the “functional technology assessment” process, in part or in whole, to establish payment amounts for new items (71 FR 25688). We also suggested that we would make every effort to use existing fee schedule amounts or historic Medicare payment amounts for new HCPCS codes; that we would retain the method of using payment amounts for comparable items (properly calculated fee schedule amounts, or supplier price lists); but that we would discontinue the
In our CY 2019 ESRD PPS proposed rule titled “Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals With Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding Program (CBP) and Fee Schedule Amounts, and Technical Amendments To Correct Existing Regulations Related to the CBP for Certain DMEPOS”, we issued a request for information on the gap-filling process for establishing fees for newly covered DMEPOS items paid on a fee schedule basis. We solicited comments for information on how the gap-filling process could be revised in terms of what data sources or methods could be used to estimate historic allowed charges for new items' technologies in a way that satisfies the payment rules for DMEPOS items and services, while preventing excessive overpayments or underpayments for new technology items and services. In the final rule, we summarized the comments received and stated we would consider these comments carefully as we contemplate future policies (83 FR 57046 through 57047). The majority of the comments focused on the aspects of transparency, sources of information, and comparable items in the gap filling process. Overall, the commenters recommended that CMS increase transparency for stakeholders during the gap-filling process for establishing fees for new DMEPOS items and revise the process for filling the gap in the data due to the lack of historic reasonable charge payments by estimating what the historic reasonable charge payments would have been for the items from a base year of 1986 and 1987 and inflating to the current year. Also, some commenters did not want CMS to include internet or catalog pricing in the gap‐filling process unless there is evidence that the price meets all Medicare criterion and includes all Medicare required services. The commenters stated that internet and catalog prices do not reflect the costs to suppliers of compliance with the many Medicare requirements such as supplier accreditation, in‐the‐home assessment, beneficiary training, and documentation, and thereby do not contribute to a reasonable payment level. Furthermore, commenters suggested developing additional guidelines and definitions for determining whether a Medicare covered DMEPOS item is comparable to a new item for the purpose of assigning a fee schedule amount to a new item. The commenters elaborated that in order for an item to be comparable to another item, both should have similar features and function, should be intended for the same patient population, for the same clinical indicators, and to fill the same medical need. In addition, some commenters endorsed the addition of a weighting calculation to apply to a median price that would factor in the existing market demand/share/utilization of each product and price included in the array of retail prices used for gap-filling using supplier price lists. Also, the commenters expressed concern that the current gap‐filling methodology does not always incorporate comparability analysis and assumes that all products within a given HCPCS code have equal characteristics, minimum specifications, and the gap-filling method does not account for relative quality, durability, clinical preference, and overall market demand.
In the CY 2020 DMEPOS proposed rule (84 FR 38373–38375), we discussed that concerns have been raised by manufacturers and stakeholders about CMS' processes for establishing fees for new DMEPOS items. In particular, our process for reviewing information and data when establishing fee schedule amounts for new DMEPOS items in some instances has led to confusion among some stakeholders. For example, some manufacturers have been confused in the past about why fee schedule amounts for comparable items are sometimes used to establish fee schedule amounts for new items and how CMS determines that new items are comparable to other DMEPOS items. Some have asked for a process that is more predictable in determining the sources of data CMS would use to establish fee schedule amounts for new DMEPOS items and services, given the amount of time and money associated with investing in the development of new technology for DMEPOS items and services.`
Major stakeholder concerns related to gap-filling DMEPOS fee schedule amounts have been: (1) How CMS determines that items and services are comparable; (2) sources of pricing data other than fees for comparable items; (3) timing of fee schedule calculations and use of interim fees; (4) public consultation; (5) pricing data and information integrity; and (6) adjustment of newly established fees over time.
A major stakeholder concern that we have heard frequently from manufacturers is that they do not agree that their newly developed DMEPOS item is comparable to older technology DMEPOS items and services (84 FR 38374). Our program instructions set forth a process to establish DMEPOS payment amounts following updates to HCPCS codes in section 60.3.1 of chapter 23 of the Medicare Claims Processing Manual. Under this process, using fee schedule amounts for comparable items to establish fee schedule amounts for new items can involve a number of pricing combinations including, but not limited to: (1) A one to one mapping where the fees for one code are used to establish the fees for a new code, (2) the use of fees for a combination of codes with established fee schedule amounts; (3) the use of fees for one or more codes minus the fees for one or more other codes identifying a missing feature(s) the newer item does not include; or (4) the use of one or more codes plus additional amounts for the costs of an additional feature(s) the newer items has that the older item(s) does not include. The benefit of using fee schedule amounts for comparable items, especially items that CMS paid for during the fee schedule base period, is that average reasonable charge data or pricing data that is closer to the fee schedule base period is used in establishing the fee schedule amounts, and this better reflects the requirements of the statute than using more recent supplier prices as a proxy for reasonable charge data from the past. In addition, establishing fees for a new item that are significantly higher than fees for
As explained in the CY 2020 DMEPOS proposed rule (84 FR 38374), in an effort to consider the concerns about our process for establishing payment amounts for new DMEPOS item and services, we undertook a review of the major components and attributes of DMEPOS items that we evaluate when determining whether items are comparable in order to develop and propose a standard for when and how fees for comparable items would be used to establish fees for new items. We identified five main categories upon which new DMEPOS items can be compared to older DMEPOS items: Physical components; mechanical components; electrical components (if applicable); function and intended use; and additional attributes and features.
As shown in Table 12, a comparison can be based on, but not limited to, these five main components and various attributes falling under the five main components. When examining whether an item is comparable to another item, the analysis can be based on the items as a whole or its subcomponents. A new product does not need to be comparable within each category, and there is no prioritization of the categories. The attributes listed in Table 12 under the five main components are examples of various attributes CMS evaluates within each category. We believe that establishing a framework and basis for identifying comparable items in regulation would improve the transparency and predictability of establishing fees for new DMEPOS items.
We believe that by establishing a basis for comparability, stakeholders would be better informed on how these analyses are performed, creating a more transparent process that stakeholders would better understand and which would facilitate a more efficient exchange of information between stakeholders and CMS on the various DMEPOS items and services, both old and new. We believe this would also help avoid situations where comparable DMEPOS items have vastly different fee schedule amounts or where items that are not comparable have equal fee schedule amounts.
We also reviewed the concerns about our process for establishing payment amounts for new DMEPOS item and services when CMS is establishing the fee schedule amount for a new item that lacks a Medicare pricing history and CMS is unable to identify comparable items with existing fee schedule amounts (84 FR 38374). In these cases, other sources of pricing data must be used to calculate the DMEPOS fee schedule amount for the new item.
Current program instructions in section 60.3 of chapter 23 of the Medicare Claims Processing Manual set forth a process for obtaining the main source of pricing data when establishing the fee schedule amount for a new item that lacks a Medicare pricing history. The instructions at section 60.3 of chapter 23 of the Medicare Claims Processing Manual specify that supplier price lists may be used in these cases, and that supplier price lists can include catalogs and other retail price lists (such as internet retail prices) that provide information on commercial pricing for the item. In 2018, we clarified in the instructions in section 60.3 of chapter 23 of the Medicare Claims Processing Manual that potential appropriate sources for such commercial pricing information can also include verifiable information from supplier invoices and non-Medicare payer data. Our rationale for using supplier price lists for gap-filling purposes is that supplier price lists provide the best estimate of what suppliers would have routinely charged for furnishing DMEPOS items during the fee schedule base period (if reasonable charge data for the new item is not available and comparable items with existing fee schedule amounts are not identified). When using supplier price lists to estimate what reasonable charge amounts would have been during the base period, CMS deflates the prices listed in supplier price lists to the fee schedule base period. For example, section 1834(a)(2)(B) of the Act mandates fee schedule amounts for inexpensive DME items based on the average reasonable charges for the item(s) from July 1, 1986 through June 30, 1987. If supplier price lists are used to estimate what these average reasonable charges would have been during the base period of 1986/87, the 2018 (for example) prices listed in the supplier price lists are converted to 1986/87 dollars by multiplying the 2018 prices by a deflation factor (.439 in this example) that is listed in section 60.3 of chapter 23 of the Medicare Claims Processing Manual. The deflation factor is equal to the percentage change in the consumer price index for all urban consumers (CPI–U) from the mid-point of the year the price is in effect (June of 2018 in this example) to the mid-point of the fee schedule base period (December of 1986 in this example). So, if the 2018 price is $100, this price is multiplied by .439 to compute a 1986/87 price of $43.90. CMS then applies the covered items update factors mandated by section 1834(a)(14) of the Act for use in updating the data from the base period to establish current fee schedule amounts. In the example above, the $43.90 base fee is updated to $66.80 for 2019 if the device is a class II device or
In the CY 2020 DMEPOS proposed rule (84 FR 38375), we noted that another source of information is a technology assessment. We proposed that technology assessments would be used whenever we believe it is necessary to determine the relative cost of a new DMEPOS item compared to DMEPOS items that CMS paid for during the fee schedule base period. CMS would use these technology assessments to gap-fill fees for the new DMEPOS item when supplier or commercial price lists are not available or verifiable or do not appear to represent a reasonable relative difference in supplier costs of furnishing the new DMEPOS item relative to the supplier costs of furnishing DMEPOS items from the fee schedule base period.
As a result of our review of the major stakeholder concerns about our process for establishing payment amounts for new DMEPOS items and services involving code or item comparability determinations, we proposed to add provisions to the regulations at §§ 414.110 and 414.236 to codify how CMS and our contractors will make efforts to determine when a new or existing DMEPOS item is comparable and the application of continuity of pricing when items are re-designated from one HCPCS code to another (84 FR 38375). Also as a result of our review of the major stakeholder concerns about our process for establishing payment amounts for new DMEPOS items and services without a fee schedule pricing history, we proposed to add a provision to the regulations at §§ 414.112 and 414.238 to establish main categories of components or attributes of DMEPOS items that would be evaluated to determine if a new item is comparable to older existing item(s) for gap-filling purposes. If it is determined that the new item is comparable to the older existing item(s), we proposed to use the fee schedule amounts for the older existing item(s) to establish the fee schedule amounts for the new item. We also proposed that if it is determined that there are no comparable items to use for gap-filling purposes and other sources of pricing data must be used to calculate the DMEPOS fee schedule amount for the new item, the fee schedule amounts for a new item would generally be based on supplier or commercial price lists, deflated to the fee schedule base period and updated by the covered item update factors. If supplier or commercial price lists are not available or verifiable or do not appear to represent a reasonable relative difference in supplier costs of furnishing the new DMEPOS item relative to the supplier costs of furnishing DMEPOS items from the fee schedule base period, we proposed to use technology assessments that determine the relative costs of the newer DMEPOS items compared to older DMEPOS item(s) to establish the fee schedule amounts for the newer DMEPOS items (84 FR 38375).
In some cases, HCPCS codes for new DMEPOS items may take effect before the DMEPOS fee schedule amounts have been calculated and added to the national DMEPOS fee schedule files. In these cases, the DME MACs and other contractors establish interim local fee schedule amounts in order to allow for payment of claims in accordance with fee schedule payment rules. Also, instructions for the implementation of interim fees may be released along with other updates to the national DMEPOS fee schedule files on a quarterly basis, along with any corrections of errors made in calculating fee schedule amounts (see section 60.2 of chapter 23 of the Medicare Claims Processing Manual). Changes to fee schedule amounts are generally implemented on a quarterly basis to permit preparation and testing of the fee schedule files and claims processing edits and systems.
Also, as explained in section V.B.4 of this final rule, the time period that an interim local fee may be effective for claims payment could be affected by the process used to obtain public consultation and feedback from stakeholders on the establishment of a fee schedule amount for a new item.
Consistent with section 531(b) of BIPA, CMS obtains public consultation on preliminary coding and payment determinations for new DME items and services each year at public meetings held at CMS headquarters in Baltimore, Maryland. These meetings are also held to obtain public consultation on preliminary coding and payment determinations for other DMEPOS items in addition to DME. The public meetings for preliminary coding and payment determinations could be used to obtain public consultation on gap-filling issues such as the comparability of new items versus older items, the relative cost of new items versus older items, and additional information on the pricing of new DMEPOS items. In addition, manufacturers of new items often request meetings with CMS to provide information about their products, and CMS can reach out to manufacturers and other stakeholders for additional information that may be necessary in the future for pricing new DMEPOS items.
Our concerns about the integrity of the data and information submitted by manufacturers for the purpose of assisting CMS to establish new DMEPOS fee schedule amounts have led CMS to review our process for establishing fee schedule amounts for new DMEPOS items. We have concerns with using supplier invoices and information for commercial pricing such as internet and manufacturer-submitted pricing. Our experience with reviewing manufacturer submitted prices and available information on the internet for new DMEPOS has caused CMS to have the following concerns about using invoices and information for commercial pricing:
• Internet prices may not be available or reliable, especially if the posted price is the manufacturer's suggested price or some other price that does not represent prices that are actually paid in the commercial markets.
• New products are often only available from one manufacturer that controls the market and price.
• Current invoices from suppliers may not represent the entire universe of prices and typically do not reflect volume discounts, manufacturer rebates, or other discounts that reduce the actual cost of the items.
• Prices from other payers may not reflect the unique costs and program requirements applicable to Medicare payment for DMEPOS and may be excessive if they represent the manufacturer suggested retail prices rather than negotiated lower rates.
• If the prices result in excessive payment amounts, it may be difficult to determine a realistic and equitable payment amount using the inherent reasonableness authority or lower the payment amounts by, for example, including the items in a competitive bidding program.
• Using excessive prices to calculate fee schedule amounts for new items would be unfair to manufacturers and suppliers of older, competitor products not priced using the same inflated commercial prices.
Numerous challenges exist including the significant number of sources of pricing information: Medicare Advantage (MA) plans, private insurers, the Veterans Benefits Administration, Tricare, Federal Employee Health Plans,
We have been consistent in applying the following guidelines once fee schedule amounts have been established using the gap-filling process and included in the DMEPOS fee schedule: (1) Fee schedule amounts are not changed by switching from one gap-filling method (such as using supplier price lists) to another gap-filling method (such as using fees for comparable items); and (2) fee schedule amounts are not changed as new items falling under the same HCPCS code. However, we have revised fee schedule amounts established using the gap-filling process when we determined that an error was made in the initial gap-filling of the fee schedule amounts or when adjustments were made to the fee schedule amounts based on the payments determined under the DMEPOS competitive bidding program. If fee schedule amounts were gap-filled using supplier price lists, and the prices subsequently decrease or increase, the gap-filled fee schedule amounts are not revised to reflect the changes in the prices.
However, we recognize that this gap-filling method of using supplier prices could result in excessive fee schedule amounts in cases where the market for the new category of items is not yet competitive due to a limited number of manufacturers and suppliers. We now believe that if supplier or commercial prices are used to establish fee schedule amounts for new items, and the prices decrease within 5 years (once the market for the new items is more established), that CMS should gap-fill those prices again in an effort to reflect supplier prices from a market that is more established, stable, and competitive than the market and prices for the item at the time CMS initially gap-filled the fee schedule amounts. For example, most DME items furnished during the applicable 1986/87 fee schedule base period, such as wheelchairs, hospital beds, ventilators, and oxygen equipment, were covered by Medicare in 1986/87 and paid for on a reasonable charge basis for many years (20 years in many cases). Thus the fee schedule amounts calculated using average reasonable charges from the 1986/87 fee schedule base period(s) reflected prices from stable, competitive markets. In contrast, new items that are not comparable to older items are often made by one or a few manufacturers, so the market for a new item is not yet stable or competitive, especially as compared to the market for most DMEPOS items that have fee schedule amounts that were established based on reasonable charges during the fee schedule base period. During the various fee schedule base periods such as 1986/87 for DME, prosthetic devices, prosthetics and orthotics, most items had been on the market for many years, were made by multiple competing manufacturers, and were furnished by multiple competing suppliers in different localities throughout the nation. Therefore, the average reasonable charges from the fee schedule base period generally reflect supplier charges for furnishing items in a stable and competitive market.
We believe that if supplier or commercial prices used to gap-fill fee schedule amounts for a new item decrease within 5 years of the initial gap-filling exercise, that the new, lower prices likely represent prices from a more stable and competitive market. We also believe that supplier prices from a stable and competitive market better represent the prices in the market for DMEPOS items covered during the fee schedule base period and therefore are a better proxy for average reasonable charges from a fee schedule base period (as specified in the statute) as compared to supplier or commercial prices when an item is brand new to the market. We believe that gap-filling a second time once the market for the item has become more stable and competitive would result in fee schedule amounts that are more reflective of average reasonable charges for DMEPOS items from the fee schedule base period. We believe CMS should conduct gap-filling the second time within a relatively short period of time after the fees are initially established (5 years) and only in cases where the result of the second gap-filling is a decrease in the fee schedule amounts of less than 15 percent. Thus, if the supplier or commercial prices used to establish fee schedule amounts for a new DMEPOS item decrease by any amount below 15 percent within 5 years of establishing the initial fee schedule amounts, and fee schedule amounts calculated using the new supplier or commercial prices would be no more than 15 percent lower than the initial fee schedule amounts, we believe gap-filling should be conducted a second time to reduce the fee schedule amounts by up to 14.99 percent as a result of using new, lower prices from a more stable and competitive market. We do not believe that a similar adjustment is necessary to account for increases in supplier or commercial prices within 5 years of establishing initial fee schedule amounts since the fee schedule calculation methodology already includes an annual covered item update to address increases in costs of furnishing items and services over time.
Thus we proposed a one-time adjustment to gap-filled fee schedule amounts based on decreases in supplier or commercial prices. The statute requires CMS to establish fee schedule amounts for DMEPOS items and services based on average reasonable charges from a past period of time, generally when the market for most items was stable and competitive. In many cases, fee schedule amounts may be gap-filled using manufacturer prices or prices from other payers for new technology items that may only be made by one manufacturer with limited competition. In these situations, competition from other manufacturers or increases in the volume of items paid for by Medicare and other payers could bring down the market prices for the item within a relatively short period of time after the initial fee schedule amounts are established, creating a more stable and competitive market for the item, we believe that gap-filling using prices from a stable, competitive market is a better reflection of average reasonable charges for the item from the fee schedule base period. While the fee schedule covered item update as described in sections 1834(a)(14), 1834(h)(4), 1834(i)(1)(B), and 1842(s)(1)(B)(ii) of the Act allow for increases to the fees schedule amounts that can address increases in cost of furnishing items and services over time or track increases in supplier or commercial prices, there is no corresponding covered item update that
We do not believe gap-filling fee schedule amounts for new items should be conducted a second time in situations where the prices decrease by 15 percent or more within 5 years of the initial gap-filling of the fee schedule amounts. In cases where supplier or commercial prices used to establish original gap-filled fee schedule amounts increase or decrease by 15 percent or more after the initial fee schedule amounts are established, this would generally mean that the fee schedule amounts would be grossly excessive or deficient within the meaning of section 1842(b)(8)(A)(i)(I) of the Act. In such circumstances we believe that CMS could consider making an adjustment to the fee schedule amounts in accordance with regulations at § 405.502(g). We can also consider whether changes to the regulations at § 405.502(g) should be made in the future to specifically address situations where supplier or commercial prices change by 15 percent or more and how this information could potentially be used to adjust fee schedule amounts established using supplier or commercial prices.
The proposed rule, titled “Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule Amounts, DMEPOS Competitive Bidding Program (CBP) Proposed Amendments, Standard Elements for a DMEPOS Order, and Master List of DMEPOS Items Potentially Subject to a Face-to-Face Encounter and Written Order Prior to Delivery and/or Prior Authorization Requirements” (84 FR 38330 through 38421), hereinafter referred to as the “CY 2020 DMEPOS proposed rule,” was published in the
In the CY 2020 DMEPOS proposed rule, we proposed a gap-filling methodology for establishing payment amounts for new DMEPOS items and services and one-time adjustment to gap-filled payment amounts for DMEPOS items and services using supplier or commercial prices in cases where such prices decrease within 5 years. We solicited comments on our proposals and we summarize the comments that we received below. We received approximately 30 comments on these topics from suppliers, manufacturers, and associations or organizations representing suppliers and manufacturers. In this final rule, we provide a summary of each proposed provision, a summary of the public comments received and our responses to them, and the DMEPOS provisions we are finalizing.
The comments and our responses to those comments are set forth below.
The gap-filling methodology that we proposed is a multi-step process. The proposed regulations at §§ 414.110 and 414.236 address the continuity of pricing when items are re-designated from one HCPCS code to another and for new items without a pricing history. The proposed regulations at §§ 414.112 and 414.238 set forth main categories of components or attributes of DMEPOS items that would be evaluated to determine if a new item is comparable to older existing item(s) for gap-filling purposes. The gap-filling methodology ensures a case by case review is conducted of each item that is assigned a new HCPCS code. Furthermore, as discussed in our proposal (84 FR 38373), we have repeatedly solicited feedback from our stakeholders through past rulemaking (71 FR 25687 through 25689 and 83 FR 57046 through 57047, and in our CY 2020 DMEPOS proposed rule (84 FR 38379)). Our proposed gap-filling methodology enhances predictability of pricing for new items and services and improves transparency as compared to the existing program guidance. We also believe it is important to have regulations addressing the pricing of new DMEPOS to create a firm basis for establishing fee schedule amounts in accordance with the statute. We can consider additional updates through future rulemaking if necessary.
We proposed to add § 414.110 under subpart C for fee schedule amounts for PEN and medical supplies, including splints and casts and intraocular lenses inserted in a physician's office, and § 414.236 under subpart D for DME, prosthetic devices, prosthetics, orthotics, surgical dressings, and therapeutic shoes and inserts to address the continuity of pricing when HCPCS codes are divided or combined. If a DMEPOS item is assigned a new HCPCS code, it does not necessarily mean that Medicare payment on a fee schedule basis has never been made for the item and service described by the new code. For example, Medicare payment on a fee schedule basis may have been made for the item under a different code. We proposed that if a new code is added, CMS or contractors would make every effort to determine whether the item and service has a fee schedule pricing history. If there is a fee schedule pricing history, the previous fee schedule amounts for the old code(s) would be mapped to, or cross walked to the new code(s), to ensure continuity of pricing. Since there are different kinds of coding changes, the way the proposed rule would be applied varies. For example, when the code for an item is divided into several codes for the components of that item, the total of the separate fee schedule amounts established for the components would not be higher than the fee schedule amount for the original item. However, when there is a single code that describes two or more distinct complete items (for example, two different but related or similar items), and separate codes are subsequently established for each item, the fee schedule amounts that applied to the single code would continue to apply to each of the items described by the new codes. When the codes for the components of a single item are combined in a single global code, the fee schedule amounts for the new code would be established by adding the fee schedule amounts used for the components (that is, the total of the fee schedule amounts for the components as the fee schedule amount for the global code). However, when the codes for several different items are combined into a single code, the fee schedule amounts for the new code would be established using the average (arithmetic mean), weighted by allowed services, of the fee schedule amounts for the formerly separate codes.
We solicited comments on these proposals. The comments and our responses to the comments are set forth below.
Some commenters stated the methodology may discourage manufacturers from innovating and investing in technology that would result in improved patient outcomes and satisfaction. Another commenter representing rehabilitation technology suppliers stated consolidating and splitting codes will have a negative effect on access to necessary technology. The commenter stated the long-term effects for individuals who rely on complex technology requires an increase recognizing that new technology items can result in decreases in hospitalizations, pressure wounds, and other secondary health issues. Thus, the commenter suggested that CMS should instead establish more codes that have a more focused description.
We proposed to add § 414.112 under subpart C for fee schedule amounts for PEN and medical supplies, including splints and casts and intraocular lenses inserted in a physician's office, and § 414.238 under subpart D for DME, prosthetic devices, prosthetics, orthotics, surgical dressings, and therapeutic shoes and inserts to address the calculation of fee schedule amounts for new HCPCS codes for items and services without a fee schedule pricing history. We proposed that if a HCPCS code is new and describes items and services that do not have a fee schedule pricing history, the fee schedule amounts for the new code would be established whenever possible using fees for comparable items with existing fee schedule amounts. We proposed that items with existing fee schedule amounts are determined to be comparable to the new items and services based on a comparison of: Physical components; mechanical components; electrical components; function and intended use; and additional attributes and features. We proposed that if there are no items with existing fee schedule amounts that are comparable to the items and services under the new code, the fee schedule amounts for the new code would be established using supplier or commercial price lists or technology assessments if supplier or commercial price lists are not available or verifiable or do not appear to represent a reasonable relative difference in supplier costs of furnishing the new DMEPOS item relative to the supplier costs of furnishing DMEPOS items from the fee schedule base period.
We proposed that if items with existing fee schedule amounts that are comparable to the new item are not identified, the fee schedule amounts for the new item would be established using supplier or commercial price lists. However, we proposed that if the supplier or commercial price lists are not available or verifiable or do not appear to represent a reasonable relative difference in supplier costs of furnishing the new DMEPOS item relative to the supplier costs of furnishing DMEPOS items from the fee schedule base period, we propose that the fee schedule amounts for the new item would be established using technology assessments. We proposed that supplier or commercial price lists would include catalogs and other retail price lists (such as internet retail prices) that provide information on commercial pricing for the item, which could include payments made by Medicare Advantage plans, as well as verifiable information from supplier invoices and non-Medicare payer data. We proposed that if the only available price information is from a period other than the fee schedule base period, deflation factors would be applied against current pricing in order to approximate the base period price. We proposed that the annual deflation factors would be specified in program instructions and would be based on the percentage change in the CPI–U from the mid-point of the year the prices are in effect to the mid-point of the fee schedule base
The deflated amounts would then be considered an approximation to average reasonable charges from the fee schedule base period and would be increased by the annual covered item update factors specified in statute for use in updating average reasonable charges from the fee schedule base period, such as the covered item update factors specified for DME at section 1834(a)(14) of the Act. We proposed that, if within 5 years of establishing fee schedule amounts using supplier or commercial prices, the supplier or commercial prices decrease by less than 15 percent, a one-time adjustment to the fee schedule amounts would be made using the new prices. As a result of the market for the new item becoming more established over time, the new prices would be used to establish the new fee schedule amounts in the same way that the older prices were used, including application of the deflation formula. Again, supplier price lists can include catalogs and other retail price lists (such as internet retail prices) that provide information on commercial pricing for the item. Potential appropriate sources for such commercial pricing information can also include verifiable information from supplier invoices and non-Medicare payer data. We did not propose a similar adjustment if supplier or commercial prices increase by less than 15 percent, but we invited comments on this issue.
We proposed that fee schedule amounts for items and services described by new HCPCS codes without a fee schedule pricing history that are not comparable to items and services with existing fee schedule amounts may also be established using technology assessments performed by CMS and experts who could help determine the relative cost of the items and services described by the new codes to items and services with existing fee schedule amounts. We proposed that a pricing percentage would be established based on the results of the technology assessment and would be used to establish the fee schedule amounts for the new code(s) based on the fee schedule amounts for existing codes. We proposed that technology assessments would be used when we believe it is necessary to determine the relative cost of a new item compared to items that were available during the fee schedule base period and had established fee schedule amounts. We proposed that we would use technology assessments in order to gap-fill fees for the new item when supplier or commercial price lists are not available or verifiable or do not appear to represent a reasonable relative difference in supplier costs of furnishing the new DMEPOS item relative to the supplier costs of furnishing DMEPOS items from the fee schedule base period.
We solicited comments on these proposals.
However, some commenters supported CMS using the current inherent reasonableness process to adjust pricing—either downward or upward—if the fee schedule level for a particular DMEPOS item or service is found excessive or grossly deficient compared with supplier or commercial prices.
A few commenters stated that CMS should not presume that a short term pricing decrease is appropriate for all new HCPCS codes, and that CMS should first conduct an analysis and use statistically valid and reliable data to substantiate any reduction of up to 15 percent for a particular item. The commenters stated that statistically valid data means obtaining pricing data from at least three independent sources, and ensuring the process is transparent by disclosing what data it proposes to use to substantiate any pricing decrease, and obtaining public input on whether the data it proposes to use to support a payment decrease is appropriate.
The Comprehensive Error Rate Testing (CERT) program measures improper payments in the Medicare Fee-For-Service (FFS) program. CERT is designed to comply with the Improper Payments Information Act of 2002 (IPIA) (Pub. L. 107–300), as amended by the Improper Payments Elimination and Recovery Act of 2010 (IPERA) (Pub. L. 111–204), as updated by the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA) (Pub. L. 112–248). As stated in the CERT 2018 Medicare FFS Supplemental Improper Payment Data report, Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) claims had an improper payment rate of 35.5 percent, accounting for approximately 8.2 percent of the overall Medicare FFS improper payment rate.
The Department of Health and Human Services Office of Inspector General (HHS–OIG) provides independent and objective oversight that promotes economy, efficiency, and effectiveness in the programs and operations of the HHS. HHS–OIG's mission is to protect the integrity of HHS programs and is carried out through a network of audits, investigations, and inspections.
The Government Accountability Office (GAO) audits the Centers for Medicare & Medicaid Services' (CMS') operations to determine whether federal funds are being spent efficiently and effectively, as well as to identify areas where Medicare and other CMS programs may be vulnerable to fraud and/or improper payments.
A number of HHS–OIG and GAO reports have focused on waste, fraud, and abuse within the DMEPOS sector. In an effort to reduce improper payments, CMS has issued regulations and sub-regulatory guidance to clarify the payment rules for Medicare DMEPOS suppliers rendering items and submitting claims for payment.
Currently, the scope of payment for medical supplies, appliances, and
The purpose of this rule is to simplify and revise conditions of payment aimed at reducing unnecessary utilization and aberrant billing for items described in § 410.36(a) and § 410.38. To avoid differing conditions of payment for different items paid under the DMEPOS Fee Schedule, we proposed the conditions of payment described in proposed § 410.38(d), would also be applied to items specified under § 410.36(a).
Section 302(a)(2) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173), in part, added conditions of coverage specific to power mobility devices (PMDs) in section 1834(a)(1)(E)(iv) of the Social Security Act (the Act), that specify payment may not be made for a covered item consisting of a motorized or power wheelchair unless a physician (as defined in section 1861(r)(1) of the Act), physician assistant (PA), nurse practitioner (NP), or clinical nurse specialist (CNS) (as such non-physician practitioners are defined in section 1861(aa)(5) of the Act) has conducted a face-to-face examination of the individual and written a prescription for the item.
On April 5, 2006, we published a final rule in the
Section 6407 of the Patient Protection and Affordable Care Act of 2010 (Pub. L. 111–148) amended section 1834(a)(11)(B) of the Act, which already required a written order, to also require that a physician, PA, NP, or CNS have a face-to-face encounter with the beneficiary within a 6-month period preceding the written order for certain DMEPOS, or other reasonable timeframe as determined by the Secretary of the Department of Health and Human Services (the Secretary).
On November 16, 2012, we published a final rule with comment period in the
Section 504 of the Medicare Access and Children's Health Insurance Program (CHIP) Reauthorization Act of 2015 (MACRA) (Pub. L. 114–10) amended section 1834(a)(11)(B)(ii) of the Act to eliminate the requirement that only physicians could document face-to-face encounters, including those conducted by NPs, PAs, or CNSs. In effect, this change in the law permits NPs, PAs, or CNSs to document their face-to-face encounter, without the co-signature of a physician. For the purpose of this rule, we use the term “practitioner” as an all-inclusive term to capture physicians and non-physician practitioners (that is, NPs, PAs, and CNSs).
Section 1834(a)(11)(B)(ii) of the Act, as amended by section 504 of MACRA, mandates that the Secretary require for certain items of DMEPOS (as identified by the Secretary) a written order pursuant to a physician, a PA, an NP, or a CNS (as these three terms are defined in section 1861 of the Act) documenting that such a physician, PA, NP, or CNS has had a face-to-face encounter (including through use of telehealth under section 1834 (m) of the Act and other than with respect to encounters that are incident to services involved) with the individual involved during the 6-month period preceding such written order, or other reasonable timeframe as determined by the Secretary.
Prior to this rule, the regulation at § 410.38(g)(4) required written orders for certain specified covered items, as selected per the regulatory instruction in § 410.38(g)(2), to contain 5 elements: (1) The beneficiary's name; (2) the item of DME ordered; (3) the signature of the prescribing practitioner; (4) the prescribing practitioner National Provider Identifier (NPI); and (5) the date of the order.
CMS through subregulatory guidance developed standards for orders for DMEPOS items not included on the list of specified covered items requiring a written order prior to delivery and a face-to-face encounter. In addition, certain items of DMEPOS require face-to-face encounters in item-specific coverage requirements, such as those in the MAC-developed local coverage determinations.
The Medicare Prior Authorization of PMDs Demonstration was initially implemented in 2012 in 7 states and subsequently extended in 2014 to 12
Based on early signs of the demonstration's promising results, on December 30, 2015 we published a final rule in the
We noted in the proposed rule (84 FR 38380) that burden estimates associated with prior authorization are related to the time and effort necessary for the submitter to locate and obtain the supporting documentation for the prior authorization request and to forward the materials to the contractor for medical review. Prior authorization does not change documentation requirements specified in policy or who originates the documentation. The associated information collection (OMB Control number 0938–1293) was revised and OMB approved the revision on March 6, 2019.
Over time, the implementation of the aforementioned overlapping rules and guidance may have created unintended confusion for some providers and suppliers and contributed to unintended noncompliance. We continue to believe that practitioner involvement in the DMEPOS ordering process, through the face-to-face and written order requirements, assists in limiting waste, fraud, and abuse. We believe practitioner involvement also helps to ensure that beneficiaries can access DMEPOS items to meet their specific needs. In addition, we maintain that the explicit identification of information to be included in a written order/prescription, for payment purposes, promotes uniformity among practitioners and precision in rendering intended items. It also supports our program integrity goals of limiting improper payments and fraudulent or abusive activities by having documentation of practitioner oversight and standardized ordering requirements. Likewise, prior authorization supports ongoing efforts to safeguard beneficiaries' access to medically necessary items and services, while reducing improper Medicare billing and payments. This is important because documentation of practitioner involvement, including their orders for DMEPOS items and documented medical necessity (as assessed under prior authorization), are all used to support proper Medicare payment for DMEPOS items.
This final rule streamlines the existing requirements and reduces provider or supplier confusion, while maintaining the concepts of practitioner involvement, order requirements, and a prior authorization process. We believe streamlining our requirements furthers our efforts to reduce waste, fraud, and abuse by promoting a better understanding of our conditions of payment, which may result in increased compliance.
The proposed rule, titled “Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule Amounts, DMEPOS Competitive Bidding Program (CBP) Proposed Amendments, Standard Elements for a DMEPOS Order, and Master List of DMEPOS Items Potentially Subject to a Face-to-Face Encounter and Written Order Prior to Delivery and/or Prior Authorization Requirements” (84 FR 38330 through 38421), hereinafter referred to as the “CY 2020 DMEPOS proposed rule,” was published in the
In this final rule, we provide a summary of each proposed provision, a summary of the public comments received and our responses to them, and the policies we are finalizing.
We proposed to make technical changes to § 410.38 by adding headings for paragraphs (a) and (b), and to update obsolete language under paragraph (a). For paragraphs (a) and (b), we proposed the headings as “General scope” and “Institutions that may not qualify as the patient's home,” respectively. Paragraph
We received comments on the technical corrections to § 410.38(a) and (b), and our responses are below.
We proposed to update § 410.38(c) to include definitions related to certain requirements for the DMEPOS benefit.
We proposed to add new definitions, redesignate existing definitions within the regulatory text, and amend existing definitions. We shared our belief that these changes would promote transparency and create uniform definitions applicable across the DMEPOS benefit and consequently, increase understanding of DMEPOS payment requirements, and may result in increased compliance.
We proposed at § 410.38(c) to include the following terms:
• Physician means a practitioner defined in section 1861(r)(1) of the Act. We proposed this definition as paragraph (c)(1) and we noted that it is the same as our current definition of “physician” in § 410.38.
• Treating practitioner means both physicians, as defined in section 1861(r)(1) of the Act, and non-physician practitioners (that is, PAs, NPs, and CNSs) defined in section 1861(aa)(5) of the Act. This definition is consistent with the practitioners permitted to perform and document the face-to-face encounter pursuant to section 1834(a)(11)(B) of the Act. We proposed this definition as paragraph (c)(2).
• We proposed that a DMEPOS supplier means an entity with a valid Medicare supplier number that furnishes durable medical equipment prosthetics orthotics and/or supplies including an entity that furnishes these items through the mail. We proposed this definition as paragraph (c)(3).
• We proposed that a written order/prescription means an order/prescription that is a written communication from a treating practitioner that documents the need for a beneficiary to be provided an item of DMEPOS. We proposed that all DMEPOS items require a written order/prescription to be communicated to the supplier prior to claim submission. In the case of items appearing on the Required Face-to-Face Encounter and Written Order Prior to Delivery List, we proposed that the written order/prescription must additionally be communicated to the supplier before the delivery of the item. As discussed further below, we also noted our intent to standardize the elements of written orders/prescriptions provided for DMEPOS. We proposed this definition as paragraph (c)(4).
• We proposed that a face-to-face encounter means an in-person or telehealth encounter between the treating practitioner and the beneficiary. As discussed further below, we also noted our intent that the face-to-face encounter be used for the purpose of gathering subjective and objective information associated with diagnosing, treating, or managing a clinical condition for which the DMEPOS is ordered. We also noted our intent to standardize the face-to-face and documentation requirements for certain DMEPOS. We proposed this definition as paragraph (c)(5).
• We proposed to maintain the definition of a Power Mobility Device (PMD), which is a covered item of DME that is in a class of wheelchairs that includes a power wheelchair (a four-wheeled motorized vehicle whose steering is operated by an electronic device or a joystick to control direction and turning) or a power-operated vehicle (a three or four-wheeled motorized scooter that is operated by a tiller) that a beneficiary uses in the home. Section 410.38(c)(1) required reformatting to accommodate the proposed unified conditions of payment and therefore, we proposed this definition as paragraph (c)(6).
• We proposed that the Master List of DMEPOS Items Potentially Subject to Face-To-Face Encounter and Written Orders Prior to Delivery and/or Prior Authorization Requirements, referred to as the “Master List,” means items of DMEPOS that CMS has identified in accordance with sections 1834(a)(11)(B) and 1834(a)(15) of the Act. The criteria for this list were specified in proposed § 414.234(b). We stated the Master List shall serve as a library of DMEPOS items from which items may be selected for inclusion on the Required Face-to-Face Encounter and Written Order Prior to Delivery List and/or the Required Prior Authorization List. We proposed this definition as paragraph (c)(7).
• We proposed that the Required Face-to-Face Encounter and Written Order Prior to Delivery List means a list of DMEPOS items selected from the Master List and subject to the requirements of a Face-to-Face Encounter and Written Order Prior to Delivery, and communicated to the public via a 60-day
We received comments regarding our proposal to update § 410.38(c) to include definitions related to certain requirements for the DMEPOS benefit. The comments and our responses are set forth below.
In the April 2006 final rule, we established face-to-face examination and written order prior to delivery requirements for PMDs.
In the November 2012 final rule (77 FR 68892), we created a list of Specified Covered Items always subject to face-to-face encounter and written order prior to delivery requirements based on separate inclusion criteria outlined in § 410.38.
In the December 2015 final rule (80 FR 81674), we created a “Master List of Items Frequently Subject to Unnecessary Utilization” based on inclusion criteria found at § 414.234 that would potentially be subject to prior authorization upon selection. In the CY 2020 DMEPOS proposed rule, we proposed to create one list of items known as the “Master List of DMEPOS Items Potentially Subject to Face-To-Face Encounter and Written Order Prior to Delivery and/or Prior Authorization Requirements,” or the “Master List,” and specified the criteria for this list in § 414.234.
In the CY 2020 DMEPOS proposed rule, we shared our belief that our proposed changes would harmonize the resultant three lists created by the former rules and develop one master list of items potentially subject to prior authorization and/or the face-to-face encounter and written order prior to delivery requirement. We further explained, in determining DMEPOS appropriate for inclusion in the Master List, our belief that there are inherent similarities in those items posing vulnerabilities mitigated by additional practitioner oversight (face-to-face encounters and written orders prior to delivery) and those items posing vulnerabilities mitigated by prior authorization. Therefore, we proposed that the Master List would include both those items that may potentially be subject to the face-to-face encounter and written order prior to delivery requirements as conditions of payment upon selection, and those items that may potentially be subject to prior authorization as a condition of payment upon selection. (See Table 13: Master List Of DMEPOS Items Potentially Subject to a Face-To-Face Encounter and Written Order Prior To Delivery and/or Prior Authorization Requirements.) We noted that prosthetic devices and orthotic and prosthetic items have the same requirements under section 1834(a)(11) of the Act as other items of DME have in statute. Section 1834(h)(3) of the Act requires that section 1834(a)(11) of the Act apply to prosthetic devices, orthotics, and prosthetics in the same manner as it applies to items of DME. Therefore, we proposed the items identified in § 410.36(a) would be subject to the requirements identified in proposed § 410.38.
While the regulatory requirements used to create the resultant three lists (outlined in the April 2006, November 2012, and December 2015 final rules) were inherently distinct and conformed to different statutory mandates, we nonetheless assessed the items captured by those individual lists to determine whether the items are included in the new proposed inclusion criteria and resultant Master List. We compared the proposed Master List to both those items of DME that require a face-to-face encounter and written order prior to delivery due to (i) the statutory requirements for all PMDs or (ii) the list of specified covered items of DME that was established in accordance with section 1834(a)(11)(B) of the Act and the November 2012 final rule. We found that 103 items currently captured as either a PMD or included in the list published in the November 2012 rule would not be included in the proposed Master List. We further identified that there are 306 items potentially subject to a face-to-face encounter and a written order prior to delivery under the proposed Master List that did not require it under the conditions of payment that preceded this regulation. The remainder of items on the proposed Master List were both subject to a face-to-face encounter and a written order prior to delivery under the conditions of payment that preceded this regulation, and are potentially subject to these conditions of payment per this final rule. All 135 items that were potentially subject to prior authorization under the conditions of payment that preceded this regulation are also included in our proposed Master List. We outlined the inclusion criteria that developed the proposed Master List of 413 items potentially subject to these conditions of payment.
We shared that while the Master List created by the CY 2020 DMEPOS proposed rule (84 FR 38382) would increase the number of DMEPOS items potentially eligible to be selected and added to the Required Prior Authorization list (which requires a technical update to Paperwork Reduction Act Information Collection CMS–10524; OMB–0938–1293,) there is no newly identified burden, no change in the required documentation associated with prior authorization and no plans to exponentially increase the number of items subject to required prior authorization in the near future.
We proposed at § 414.234(b)(1) that items that meet the following criteria would be added to the Master List:
• Any DMEPOS items included in the DMEPOS fee schedule that have an average purchase fee of $500 (adjusted annually for inflation using CPI–U, and reduced by the 10-year moving average of changes in annual economy-wide private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable fiscal year (FY), year, cost reporting period, or other annual period)) or greater, or an average monthly rental fee schedule of $50 (adjusted annually for inflation using CPI–U, and reduced by the 10-year moving average of changes in annual economy-wide private nonfarm business MFP (as projected by the Secretary for the 10-year period ending with the applicable FY, year, cost reporting period, or other annual period)) or greater, or are identified as accounting for at least 1.5 percent of Medicare expenditures for all DMEPOS items over a recent 12-month period, that are:
++ Identified as having a high rate of potential fraud or unnecessary utilization in an OIG or GAO report that is national in scope and published in 2015 or later, or
++ Listed in the CERT 2018 or later Medicare FFS Supplemental Improper Payment Data report as having a high improper payment rate.
• The annual Master List updates shall include any items with at least 1,000 claims and 1 million dollars in payments during a recent 12-month period that are determined to have aberrant billing patterns and lack explanatory contributing factors (for example, new technology or coverage policies). Items with aberrant billing patterns would be identified as those items with payments during a 12-month timeframe that exceed payments made during the preceding 12-months, by the greater of:
++ Double the percent change of all DMEPOS claim payments for items that meet the above claim and payment
++ exceeding a 30 percent increase in payments for the item from the preceding 12-month period.
• Any item statutorily requiring a face-to-face encounter, a written order prior to delivery, or prior authorization.
We provided the following hypothetical data patterns, which are not factual, to demonstrate how data would be assessed in coordination with our new criteria for identifying items, subject to aberrant billing patterns and having a lack of explanatory contributing factors, that would be appropriate for inclusion in the Master List:
The proposed criteria adheres to the statutory language in section 1834(a)(11)(B) of the Act, which allows us to specify covered items for the face-to-face and written order prior to delivery requirements, and section 1834(a)(15) of the Act, which provides discretion for the Secretary to develop and periodically update a list of items that on the basis of prior payment experience, are frequently subject to unnecessary utilization.
We noted that under our proposal, any item that by statute requires a face-to-face encounter, a written order prior to delivery, or prior authorization would be added to the Master List and potentially subject to any of these requirements. For example, in accordance with section 1834(a)(1)(E)(iv) of the Act, payment may not be made for motorized or power wheelchairs unless there is a face-to-face encounter and a written order prior to delivery. We stated that motorized and power wheelchairs would therefore also potentially be subject to the prior authorization requirement. We shared our belief that this is appropriate because any item statutorily subject to additional program integrity measures can reasonably be assumed to be “frequently subject to unnecessary utilization” (the standard for prior authorization in section 1834(a)(15)) and therefore should be included on the Master List.
In addition, we expressed that proposing criteria based on (1) cost, (2) spending thresholds, and (3) data conveying possible overutilization and/or abuse allows us to more effectively focus our program integrity efforts. While the November 2012 and December 2015 final rules included higher cost thresholds ($1,000 purchase/$100 rental thresholds), we noted that programmatic changes, including competitive bidding, had the overall impact of lowering the payment amount for certain items, which is the reason we proposed to lower these cost thresholds. We proposed the $500 purchase/$50 rental thresholds based on analysis of the current fee schedule cost of DMEPOS items when compared with known vulnerabilities. This threshold captures items of known vulnerability, as previously identified and included in the Master List of items potentially subject to prior authorization, while remaining cognizant of the overall impact to DMEPOS items. To select the cumulative threshold, we identified low cost items with a significant cumulative impact on the Trust Fund. We then found that approximately the top 10 items individually account for at least 1.5 percent of DMEPOS allowed costs. We accordingly proposed 1.5 percent to capture the items with the highest allowed amounts, while not creating an overly inclusive list. However, we recognized that item(s) may fail to meet the $500 purchase, $50 rental, or cumulative cost thresholds identified in the CY 2020 DMEPOS proposed rule (84 FR 38383); nonetheless, such items may demonstrate aberrant billing patterns inconsistent with predictable claim volumes.
We proposed to use the CERT Medicare FFS Supplemental Improper Payment Data to identify DMEPOS service-specific rates of improper payments; and the OIG and GAO reports to identify DMEPOS items as having a high rate of fraud or unnecessary utilization. Inclusion of an item in these reports are indications that the item is frequently subject to unnecessary utilization. We recognize that there are inherent delays from the time aberrant billing patterns are identified and the publication of CERT, OIG, and GAO reports. Under our prior regulations, we captured reports dating as far back as 2007; however, we have learned that billing practices may be subject to imminent shifts as a result of changed policies from CMS, new technologies and other emerging trends.
Our objective is to focus on more current data, and in the CY 2020 DMEPOS proposed rule (84 FR 38383), we redefined the timeframe for identifying items in OIG and GAO reports to 2015 or later, in CERT Medicare FFS Supplemental Improper Payment Data reports to 2018 or later, and added a new Master List inclusion criteria to capture current aberrant billing patterns. We believe the Master List is a good representation of those items that may pose risk to the Medicare Trust Funds. In future years, we would apply the new criteria on billing patterns occurring over a 12-month period to allow CMS to be nimble to industry change.
We proposed the identification of aberrant billing patterns to be limited to
We summarize the comments and our responses for the Master List section of this final rule along with our final decisions applicable to this section.
We encourage open communication between the beneficiaries and the practitioners, as well as between practitioners and suppliers to ensure that beneficiaries receive medically necessary items in a timely fashion. If beneficiaries, practitioners, or suppliers are observing or experiencing significant delays in beneficiary access to DMEPOS items, they are advised to call 1–800–MEDICARE to report their specific concerns. We note that this rule requires CMS to consider multiple factors prior to subjecting DMEPOS items to conditions of payment, and grants CMS the authority to suspend such condition of payment or remove DMEPOS items from the required list, as needed.
We have confirmed the appropriateness of including the HCPCS on the Master List, including those questioned by commenters, based on the list inclusion criteria. For example, commenters questioned the inclusion of HCPCS A4351-intermittent urinary catheter on the Master List. Urological supplies appears on the 2018 CERT Medicare FFS Supplemental Improper Payment Data report chart titled “Top 20 Service Types with Highest Improper Payments: DMEPOS.” Thus, HCPCS A4351 meets the Master List inclusion criteria both based on cost (1.5 percent of DMEPOS fee schedule expenditure) and based on its identification in a CERT Medicare FFS Supplemental Improper Payment Data report as an item subject to high improper payments.
In § 414.234(b)(2), we proposed that the Master List would be self-updating, at a minimum, annually. We highlighted in our proposal that the “self-updating” process would remain unchanged from the prior regulation and would include applying the criteria to items that appear on the DMEPOS FFS payment schedule. That is, items on the DMEPOS Fee Schedule that meet the payment threshold (for monthly rentals, purchases, or cumulative impacts) will be added to the list when the item is also listed in a future CERT, OIG, or GAO reports, and items not meeting the cost thresholds will be added based on findings of aberrant billing patterns (meeting the inclusion criteria in section VI.B.3.a of this final rule) that are not otherwise explained. We noted that we believe the inclusion criteria are capable of capturing more current vulnerabilities. We also noted that the current standard process in which items on the list, expire after 10 years if they have not otherwise been removed. We believe this is an appropriate representation of the time needed to achieve behavioral change (such as compliance with Medicare coverage instructions and the correction of behaviors previously resulting in improper payments) and protect the Medicare Trust Funds. We also clarified that if we identify any item currently on the Master List as being included in a subsequent OIG or GAO report, as having a high rate of fraud or unnecessary utilization, or as having a high improper payment rate in the CERT Medicare FFS Supplemental Improper Payment Data report, the item would be maintained on the Master List for 10 years from the date of the most recent report's publication.
We proposed that all other list maintenance processes specified in § 414.234(b) would be maintained with two exceptions: (1) We proposed to allow the Master List to be updated as needed and more frequently than annually (for example, to address emerging billing trends), and (2) we proposed to make technical changes to the language in § 414.234(b) to reflect the new cost thresholds and report years. We proposed to maintain the process outlined in the December 2015 final rule (80 FR 81674) and publish any additions or deletions to the Master List, for any of the reasons and conditions discussed, in a
We did not receive any comments in regards to the maintenance of the Master List section of the final rule, and we are finalizing this section as proposed.
Section 1834(a)(1)(E)(iv) of the Act prohibits payment for motorized or power wheelchairs unless a practitioner conducts a face-to-face examination and writes an order for the item. Section 1834(a)(11)(B) of the Act requires that a practitioner have a face-to-face encounter and written order communicated to the supplier prior to delivery for other specified covered items of DMEPOS, as identified by the Secretary. In the CY 2020 DMEPOS proposed rule (84 FR 38384), we noted the analysis of a 1-year snapshot of claims indicated that approximately 97 percent of beneficiaries receiving DMEPOS had a recent face-to-face encounter (either before or after the DMEPOS date of service). This data was drawn without regard for the item's presence on the DME List of Specified Covered Items (stemming from the November 2012 final rule), which required a face-to-face encounter and a written order prior to delivery. While we believe this information helped to provide important context, we noted that this final rule requires that face-to-face encounters occur prior to the delivery of DMEPOS for those items selected for inclusion on the Required Face-to-Face Encounter and Written Order Prior to Delivery List. We proposed to revise § 410.38(d)(1) and § 410.38(d)(2) to limit the face-to-face encounter and written order prior to delivery conditions of payment to only those items selected from the Master List and included on the “Required Face-to-Face Encounter and Written Order Prior to Delivery List.” We noted in the CY 2020 DMEPOS proposed rule (84 FR 38384) that this provides us with a broader list of potential items that could be selected, but expect only a subset of items from the Master List to be subject to the face-to-face encounter and written order prior to delivery requirements, based on those items identified to be of highest risk. We believe tailoring the lists this way significantly reduces any potential supplier/provider impact and may decrease the number of items affected.
We also noted in the CY 2020 DMEPOS proposed rule (84 FR 38384) that since the face-to-face encounter and written order are statutorily required for PMDs, they would be included on the Master List and the Required Face-to-Face Encounter and Written Order Prior Delivery List in accordance with our statutory obligation, and would remain there. In addition, the Master List would include statutorily-identified items, as well as any other items posing potential vulnerability to the Trust Fund, as identified via the proposed Master List inclusion criteria.
We proposed at § 410.38(c), in the definition of the Required Face-to-Face Encounter and Written Order Prior to Delivery List, the factors that we may consider when determining which items may be appropriate to require a face-to-face encounter and written order prior to delivery. Specifically, we proposed to consider: Operational limitations, item utilization, cost-benefit analysis, emerging trends, vulnerabilities identified in official agency reports, or other analysis. We developed factors that we believe to be indicative of the need for the face-to-face encounter and written order prior to delivery requirements, but noted this list is not exhaustive. We also noted that we did not propose an all-inclusive list of factors to account for the fluidity of program operations and associated vulnerabilities, and we believe this is critical to protect beneficiaries, the program, and industry.
We solicited comments on both our underlying presumption that the list should not be exhaustive, as well as the factors we should consider when selecting an item from the Master List and including it on the Required Face-to-Face Encounter and Written Order Prior to Delivery List.
We proposed at § 410.38(c)(5) to define the term “face-to-face encounter” as an in-person or telehealth encounter between the treating practitioner and the beneficiary. We further proposed at § 410.38(d)(2) that any telehealth encounter must meet the existing telehealth requirements of § 410.78 and § 414.65. We noted in the CY 2020 DMEPOS proposed rule (84 FR 38384) that under the November 2012 final rule, telehealth services were permitted to be used to satisfy the DME face-to-face encounter requirements. We emphasized in the CY 2020 DMEPOS proposed rule at § 410.38(d)(2) that telehealth services used to meet DMEPOS face-to-face encounter requirements must meet the requirements found at § 410.78 and § 414.65 to support payment of the DMEPOS claim.
Additionally, we specified that the face-to-face encounter must be used for the purpose of gathering subjective and objective information associated with diagnosing, treating, or managing a clinical condition for which the DMEPOS is ordered and must occur within the 6 months preceding the date of the order/prescription. We proposed to codify at § 410.38(d)(3) that the documentation necessary to support the face-to-face encounter and associated claims for payment includes the written order/prescription and documentation to support medical necessity, which may include the beneficiary's medical history, physical examination, diagnostic tests, findings, progress notes, and plans for treatment. We believe this is reflective of clinical practice and the information necessary to demonstrate medical necessity and the appropriateness of claim payment.
Section 1834(h)(5) of the Act states that for purposes of determining the reasonableness and medical necessity of orthotics and prosthetics, documentation created by orthotists and prosthetists shall be considered part of the individual's medical record to support documentation created by eligible professionals as described in section 1848(k)(3)(B) of the Act. Documentation from a face-to-face encounter conducted by a treating practitioner, as well as documentation created by an orthotist or prosthetist becomes part of the medical records and if the orthotist or prosthetist notes support the documentation created by eligible professionals described in section 1848(k)(3)(B), they can be used together to support medical necessity of an ordered DMEPOS item. In the event the orthotist or prosthetist documentation does not support the documentation created by the eligible professional, CMS may deny payment.
Our regulations currently require that the written order be communicated prior to delivery for certain specified covered items, within 6 months of the face-to-face encounter, and for PMDs, within 45 days of the face-to-face examination. We proposed to revise § 410.38 to apply the 6-month timeframe to all items on the Required Face-to-Face Encounter and Written Order Prior to Delivery List (including PMDs, which previously required a 45-day timeframe) for uniformity purposes. We believe the 6-month timeframe is relevant, and changing it would create unnecessary confusion since the industry has become accustomed to it.
We noted that the 6-month timing requirement does not supplant other policies that may require more frequent face-to-face encounters for specific items. For example, the National Coverage Determination 240.2 titled “Home Use of Oxygen” requires a face-to-face examination within a month of starting home oxygen therapy.
We also noted in the CY 2020 DMEPOS proposed rule (84 FR 38385) that we do not believe the requirements for the face-to-face encounter and written order prior to delivery would create any new burdens for the medical review process. The Paperwork Reduction Act Record of Information Collection for medical review (CMS–10417; OMB–0938–0969) covers the burden for responding to documentation requests, generally. Medical review requests require the provider or supplier to submit all documentation necessary to demonstrate compliance with coverage and payment requirements, including the face-to-face encounter.
The comments with regard to the Required Face-to-Face Encounter and Written Order Prior to Delivery List and associated burden, and our responses are set forth below.
We proposed at § 410.38(c)(8) that CMS would publish a 60-day
We proposed at § 410.38(e) to allow the face-to-face encounter and written order prior to delivery requirements to be nationally suspended by CMS for any items at any time, without undertaking a separate rulemaking, except for those items whose inclusion on the Master List (and subsequently, the Required Face-to-Face Encounter and Written Order Prior to Delivery List) was required by statute. For example, we may need to suspend or cease the face-to-face encounter and written order prior to delivery requirements for a particular item(s) for which we determine the face-to-face encounter and written order prior to delivery requirements are unnecessary to meet our previously described objective of limiting waste, fraud, and abuse. We stated that should we suspend or cease the face-to-face encounter and the written order prior to delivery requirement for any item(s), we would provide stakeholder notification of the suspension on the CMS website.
The comments with regard to the Notice and Application of the Required Face-to-Face Encounter and Written Order Prior to Delivery List, and our responses are set forth below.
If beneficiaries, practitioners, or suppliers are observing or experiencing significant delays in beneficiary access to DMEPOS due to the imposition of the face-to-face encounter requirement, they are advised to call 1–800–MEDICARE to report their specific concerns.
This rule allows the face-to-face encounter and written order prior to delivery requirements to be nationally suspended by CMS for any items at any time, without undertaking a separate rulemaking, except for those items whose inclusion on the Master List (and subsequently, the Required Face-to-Face Encounter and Written Order Prior to Delivery List) was required by statute. We note that the inclusion of items on the Required Face-to-Face Encounter and Written Order Prior to Delivery List will be monitored for unintended consequences (including beneficiary access concerns).
In order to balance minimizing provider and supplier burden with our need to protect the Medicare Trust Funds, we proposed to continue to limit prior authorization to a subset of items on the Master List as currently specified at § 414.234(a)(4). The subset of items requiring prior authorization are referred to as the Required Prior Authorization List.
OIG and GAO reports, as well as the CERT Medicare FFS Supplemental Improper Payment Data reports, provide national summary data and also often include regional data. Utilization trends within Medicare Contractor localities may show aberrant billing patterns or other identifiable vulnerabilities. At times, claims data analysis shows that unnecessary utilization of the selected item(s) is concentrated among certain suppliers or in certain locations or regions. We proposed to select and implement prior authorization of an item(s) nationally or, in collaboration with the medical review contractors locally. We proposed to revise § 414.234(c)(1)(ii) to state that all suppliers (either nationally or within a contractor jurisdiction) would initially be subject to prior authorization for items identified through a
In § 414.234, we proposed that we may consider factors such as geographic location, item utilization or cost, system capabilities, emerging trends,
We solicited comments on the proposed factors to be considered when selecting an item from the Master List and including it on the Required Prior Authorization List, such as whether the factors could be over-inclusive or under-inclusive.
We noted in the CY 2020 DMEPOS proposed rule (84 FR 38385) that despite the proposed changes in the Master List inclusion criteria, the prior authorization program would continue to apply in all competitive bidding areas because CMS conditions of payment apply under the Medicare DMEPOS Competitive Bidding Program.
We also noted that we recognize that there may be accessories for which stakeholders would like to request prior authorization that may not always appear on the Master List and would not be eligible to include on the Required Prior Authorization List. In addition, we discussed our intent to update the program so that any accessory included on a prior authorization request submitted for an item on the Required Prior Authorization List may nonetheless receive a prior authorization decision for operational simplicity, even if the accessory is not on the Required Prior Authorization List. We stated that the inclusion of such items is voluntary and does not create a condition of payment for items not present on the Required Prior Authorization List. An example of when this occurs is accessories for certain PMDs subject to prior authorization. We stated that the effective date of the final rule may precede shared systems changes that are required to support the addition of accessories that are not on the Master List and the Required Prior Authorization List. Accordingly, there may be a delay in the adoption of this proposed operational change from the date of publication.
We also discussed that historically, we received positive feedback related to the DMEPOS prior authorization process and the majority of comments have been from suppliers. We encouraged all stakeholders, including those representing beneficiaries and Medicare consumer advocacy organizations, to submit their comments about prior authorization during the public comment period.
We proposed that the items currently subject to prior authorization would be grandfathered into the prior authorization program until the implementation of the first Required Prior Authorization List published subsequent to this rule. This proposal would avoid the administrative and stakeholder burdens associated with the termination of the current prior authorization program and the implementation of a revised program created under this rule.
We proposed to retain the documentation requirements for submitting prior authorization requests at § 414.234(d); however, we proposed to cross reference the payment requirements proposed at § 410.38. In addition, we proposed to retain the process for submitting prior authorization requests and receiving responses, but proposed to restructure § 414.234(e) to conform to the formatting of the preceding paragraphs.
We proposed to maintain the authority to suspend or cease the prior authorization requirement generally or for a particular item or items at any time without undertaking a separate rulemaking. For example, we may need to suspend or cease the prior authorization program due to new payment policies, which may render the prior authorization requirement obsolete or remove the item from Medicare coverage. If we suspend or cease the prior authorization requirement, we would publish a notice in the
The comments with regard to The Required Prior Authorization List, and our responses are set forth below.
Section § 414.234 currently requires us to inform the public of items included on the Required Prior Authorization List in the
We believe that it is important that CMS have the authority to require prior authorization for an eligible item(s) (that is, on the Master List) locally to encourage immediate response to shifts in billing patterns, which may be related to potential fraud or abuse, or nationally, as the situation may so dictate. We proposed to maintain our current process, as outlined in § 414.234, and publish a
The comments with regard to the Notice of the Required Prior Authorization List, and our responses are set forth below.
We note that through subregulatory guidance and the implementation of several regulations, we have adopted different requirements for orders for different items of DMEPOS. To simplify order/prescription requirements and to reduce confusion, we proposed at § 410.38(d)(1) to adopt one set of required written order/prescription elements for all DMEPOS items.
We believe that the process to obtain DMEPOS items is sufficiently similar across the healthcare environment, and that a standardized order requirement is appropriate and would help promote compliance and reduce the confusion associated with complying with multiple, different order/prescription requirements for DMEPOS items. However, we note that the required timing for the order to be provided (from the treating practitioner to the supplier) would continue to vary for DMEPOS items. We proposed at § 410.38(d) that for those items on the Required Face-to-Face Encounter and Written Order Prior to Delivery List, the written order/prescription must be communicated to the supplier prior to delivery of the item (per statutory requirement); for all other DMEPOS items, a written order/prescription must be communicated to the supplier prior to claim submission.
We believe the proposed requirements of the standardized DMEPOS orders/prescriptions are commonly included in orders/prescriptions rendered in clinical practice. We believe consistent requirements for all items would prove useful as electronic vendors develop programs in support of electronic records for provider and supplier use. We proposed at § 410.38(d)(1)(i) that the standardized order/prescription require the elements listed here:
• Beneficiary Name or Medicare Beneficiary Identifier (MBI).
• General Description of the item.
• Quantity to be dispensed, if applicable.
• Date.
• Practitioner Name or National Provider Identifier.
• Practitioner Signature.
Traditionally, these required standardized order elements are written on a prescription/order; however, we recognize that these required elements may be found in the beneficiary's medical record. We proposed at § 410.38(d)(1) that CMS' medical review contractors shall consider the totality of the medical records when reviewing for compliance with standardized order/prescription elements.
While the above standardized elements are conditions of payment, we recognize that additional information might be helpful on the order/prescription for clinical practice and quality of care. Information may be added to the order/prescription or found in the beneficiary's medical records but are not conditions of payment. For example, route of administration—such as whether oxygen is delivered via nasal cannula or face mask is not required as a condition of payment, but may be indicated for good clinical practice.
Current § 410.38(d), (e) and (f) contain written order and documentation requirements specific to equipment that is used for treatment of decubitus ulcers, seat-lifts, and transcutaneous electrical nerve stimulator units. We believe the requirements found at § 410.38(d), (e) and (f) are appropriate for inclusion in the standardized written order/prescription and medical record documentation requirements outlined in the CY 2020 DMEPOS proposed rule. In addition, we believe item-specific coverage requirements may be included in national or local coverage documents, as appropriate. Therefore, we proposed to delete the coverage requirements outlined in § 410.38(d), (e) and (f), and to replace sections § 410.38(d) and (e), with our proposed conditions of payment and process for suspending the face-to-face encounter and written order prior to delivery requirements, respectively.
The comments with regard to standardizing the written order/prescription, and our responses are set forth below.
We received several comments that were outside the scope of the CY 2020 DMEPOS proposed rule. While some of these comments were related to prior authorization topics, they were not the issues we addressed in detail in the proposed rule. In the following discussion, we summarize and respond to the comments.
Medicare pays for certain DMEPOS items and services furnished within competitive bidding areas based on the payment rules that are set forth in section 1847 of the Social Security Act (the Act) and 42 CFR part 414, subpart F. We proposed to revise the existing DMEPOS Competitive Bidding Program (CBP) change of ownership (CHOW) regulations in § 414.422(d) in recognition of the fact that CHOWs may occur on shorter timeframes than our regulations previously contemplated. We also proposed to revise § 414.423(f) for the submission of a hearing request in notices of breach of contract.
We proposed to revise the following amendments in § 414.422(d) as follows:
• We proposed to add the acronym “CHOW” after the title of the paragraph and use the acronym throughout the section where we previously wrote out in full text “change of ownership”.
• We proposed to remove the notification requirement at paragraph (d)(1) because we no longer believe it is necessary for CMS to be notified 60 days in advance when a contract supplier is negotiating a CHOW. In past rounds of the CBP, there have been situations in which contract suppliers have undergone CHOWs within the 60-day timeframe and they were unable to meet the 60-day notice requirement due to circumstances that were not fully within their control. We recognize that the 60-day notice requirement is a bit onerous and as such we proposed to remove paragraph (d)(1) in its entirety. We also proposed to redesignate and reorganize the remaining text of paragraph (d).
• We proposed to remove the distinction of a “new entity” from paragraph (d)(2)(ii) in its entirety, and retain the successor entity requirements in paragraph (d)(2)(i) with changes, as we are aligning the CHOW requirements for all entities, regardless of whether a “new” entity is formed as a result of the CHOW. We also proposed to revise the requirement to submit the documentation described in § 414.414(b) through (d) from 30 days prior to the anticipated effective date of the CHOW to instead require submission prior to the effective date of the CHOW. We further proposed to change the requirement on submission of a signed novation agreement 30 days before the CHOW to instead require that the novation agreement be submitted by the successor entity no later than 10 days after the effective date of the CHOW. We want to allow flexibility for the timing of submission of documents since it may not always be possible for the successor entity to submit the applicable documentation 30 days before the anticipated effective date of the CHOW. Through our education and outreach efforts, we will encourage the successor entity to work with CMS to submit draft documentation as far in advance as possible for CMS to review to ensure that the novation agreement is acceptable to CMS. We believe shortening the timeframe for submission from 30 days to 10 days will expedite CMS's determination on whether to allow transfer of the contract to the successor entity. We also proposed that the successor entity must submit a novation agreement that states that it assumes all obligations under the contract.
• We proposed to remove the phrase “new qualified” before “entity” and replace it with the term “successor” in paragraph (d)(3) as this is applicable to all successor entities. We also proposed to add the term “may” to make it clear that the transfer of the entire contract to a successor entity is at CMS' discretion upon CMS' review of all required documentation. The revision will align with existing language in paragraph (d)(4), which specifies that CMS may transfer the portion of the contract if certain conditions are met.
• We proposed to revise paragraph (d)(4) by removing the “
In § 414.423(f)(2), we require that a request for a hearing be “received by” the Competitive Bidding Implementation Contractor (CBIC) within 30 days from the date of the notice of breach of contract. We proposed to revise paragraph (f)(2) to specify that the request for a hearing
We solicited public comments on these amendments. We received comments in support of our CHOW proposal to remove the 60-day requirement and require submission of the novation agreement within 10 days of the effective date of the CHOW. We did not receive any comments on our other proposals for CHOWs or on our proposal for submission of a hearing request in a notice of a breach of contract appeal. We are finalizing our DMEPOS CBP proposals without change.
As we discussed in the CY 2020 ESRD PPS proposed rule (84 FR 38396 through 38400), a Technical Expert Panel (TEP) was held on December 6, 2018 to discuss options for improving data collection to refine the ESRD PPS case-mix adjustment model. CMS contracted with a data contractor to convene this TEP and conduct research and analysis to refine the case-mix adjustment model. This TEP represented the first step in acquiring stakeholder and expert input to inform these refinements. The final TEP report and other materials can be found at:
The TEP was comprised of 16 expert stakeholders, including ESRD facilities, representatives of professional associations, independent academic clinical researchers, and patient advocates. In addition, a select number of observers attended, including representatives of governmental agencies and independent policy advisory groups. The TEP was organized into seven sessions, including an overview of the ESRD PPS and the cost components of dialysis treatment, four topical sessions corresponding to potential data collection strategies, and a final summary session.
The data contractor's pre-TEP analysis of CY 2016 cost report data showed that composite rate costs comprise nearly 90 percent of average total treatment costs, with capital, direct patient care labor, and administrative costs representing approximately 88 percent of total average composite rate cost per treatment. Nevertheless, under current reporting practices, there are no data on the patient- and treatment-level variation in the cost of composite rate items and services. These findings underscore the importance of identifying variation in these costs to inform the development of a refined case-mix adjustment model.
The data contractor presented the participants in the TEP with several options for optimizing data collection on composite rate items and services, and each option was specifically formulated to minimize reporting burden for ESRD facilities where possible. Feedback on these options and input on alternative approaches, as provided by the participants, would be used to further develop practical approaches for more accurate data collection.
Among the options presented for optimizing the collection of composite rate cost data were (1) improving the accuracy of charges and/or itemizing the use of composite rate services on claims; (2) reporting duration of each dialysis treatment session on claims (3) identifying and allocating costs to discrete categories of patients or patient characteristics that are associated with high cost of treatment; and (4) improving the reporting of facility-level costs. Each of these options is described in the following sections. The TEP participants' responses to these approaches are summarized in the Key Findings section at the end of this section. We note that our summary of the key findings is based on a review of the individual comments and is not meant to represent a consensus view shared by all TEP participants, but rather to consolidate related suggestions made by one or more participant.
The data contractor presented two approaches for directly collecting data on the utilization of composite rate items and services. The first was to require more accurate reporting of charges for each dialysis session. Recent analysis of charge data revealed little variation in charges for any given revenue center code associated with a dialysis treatment, indicating that facilities are using standardized charges. The second approach was to require itemized reporting of all or a limited number of high cost composite rate items and services. Beginning in 2015,
A singular option that would provide sufficient data to develop a refined case-mix adjustment model is the collection of dialysis treatment duration for each session. If dialysis session time were reported for each dialysis treatment, cost report and treatment-level data could be integrated to infer differences in composite rate costs across patients. In this paradigm, patient-level differences in composite rate costs could be attributed to two discrete categories: Differences due to dialysis treatment duration (measured in units of time) and differences unrelated to treatment duration. Treatment duration would not be used to directly adjust payment, rather, it would be used to apportion composite rate costs that are currently only observable at the facility level to the patient or treatment level for use in the case-mix adjustment. Data on the duration of dialysis session would allow for a proportionately higher proportion of composite rate costs to be allocated to patients with longer dialysis treatment times.
The data contractor provided examples of ways that longer duration of dialysis time might be associated with increased treatment costs, including utility costs, accelerated depreciation on equipment, and lower daily census counts, which, among other things, would result in increased
The data contractor proposed two approaches to collect treatment duration data: (1) Use existing data from Consolidated Renal Operations in a Web-Enabled Network (CROWNWeb) on delivered dialysis minutes during the monthly session when a laboratory specimen is drawn to measure blood urea nitrogen (BUN) or (2) have ESRD facilities report treatment duration on Medicare claims. For the latter, treatment duration data could be reported by using a new HCPCS or revenue center code to indicate units of treatment time for each dialysis treatment or by updating the definition of the existing revenue center code for dialysis treatments so that the units correspond to treatment time instead of the number of treatments. ESRD facilities already report to CMS a single monthly treatment time in CROWNWeb for in-facility treatments, indicating that facilities currently collect treatment duration.
Participants on the TEP also discussed the variation in composite rate costs that is independent of treatment duration and associated with severity of illness or disability in the dialysis patient population. In preparation for the TEP, the data contractor interviewed a number of ESRD facilities to identify sources of composite rate cost variation associated with the provision of care to more complex patients. Patient level-factors identified during the course of these interviews and during the TEP included seven points: (1) Maintenance of isolation rooms and use of dedicated nurses to attend patients with active hepatitis B infection; (2) treatment and care for incident dialysis patients (first 120 days); (3) treatment and care for catheterized patients; (4) pre- and post-dialysis session care for non-ambulatory patients; (5) treatment and care for pediatric patients; (6) treatment of patients exhibiting behavioral problems related to mental illness/drug dependency; and (7) treatment and care for home dialysis patients.
During the TEP, participants identified additional factors associated with higher treatment costs. These included hemodynamic instability, dual eligibility for Medicare and Medicaid, depression or mental illness, poor functional status, no primary caregiver, and institutionalized status or incarcerated or residence in a skilled nursing facility.
A common thread among these factors is that they all require more intense use of labor, especially direct patient care staff and highly specialized nursing or social work care or other intervention, such as would be provided by staff to assist in transfer for non-ambulatory patients.
The data contractor described alternative approaches for collecting sufficient data on these composite rate costs to inform a refined case-mix adjustment model. The first would entail reporting such items and services as line items on the claim. The second would involve grouping patients into a set of “high-risk” or “high-cost” patient types, in a hierarchical fashion and apportioning costs to each patient grouping based on known use of services.
The TEP also included discussion of facility-level costs, identifying drivers of these costs, and the ESRD facility characteristics that may result in cost differences across facility types and potential revisions to the cost reports to better capture these costs. Participants on the TEP indicated that drivers of facility-level costs include: (1) Facility size (treatment volume and treatment capacity), which affects economies of scale; (2) geographic location, which affects both input prices and wages; (3) hospital versus freestanding status; (4) ownership type; and (5) whether the facility offers specialized services, such as pediatric or home dialysis treatment. These facility characteristics can affect both capital and labor costs, as well as the costs for drugs, laboratory tests and supplies.
Based on a review of the individual participant responses to each of the data collection options, CMS has summarized key conclusions in the following sections. The sections are arranged in the order of the topical sessions, as they were presented earlier.
During this session, the participants agreed that capital, labor, and administrative costs make up the majority of composite rate costs. They stated that the level of complexity of dialysis patients has been increasing over time, and noted some costs at the margins (for example, information technology costs) that are not reflected in cost reports. Participants were averse to reporting individualized charges to reflect treatment-level variation in the items and services provided, unless this reporting was somehow linked to payment.
To record time on dialysis, participants preferred that the data be collected on Medicare claims. They did not support using existing CROWNWeb data on treatment duration, as there were too many questions about its completeness and timeliness. They agreed that if duration of dialysis treatment time is collected on claims that it should be reported in actual minutes dialyzed and not, for example, in 15-minute increments. The participants cautioned that reporting time on dialysis on the claims would place additional burden on facilities, but for facilities with EHRs, the burden associated with the collection of dialysis treatment time is expected to be small and temporary because the information is already collected. Collecting time on dialysis could be difficult to accomplish for ESRD facilities that do not use EHRs. Some participants maintained that certain factors related to patient complexity—such as comorbidities and mental health status—that are associated with treatment costs are unrelated to treatment duration.
The participants expressed support for improving consistency in cost reporting across facilities. They recommended clarifying cost report instructions to ensure comparable reporting across facilities. They agreed that labor is the major source of patient-level cost variation, but expressed concern that allocating labor costs to the patient level or even the patient type would pose significant challenges. The participants noted that certain high-cost items and services used to treat complex patients, such as isolation rooms or lifts, could be easily itemized on claims and
The participants stated that there are differences in cost at the facility level associated with the characteristics presented in the Facility-level Drivers of Cost session. They noted EHR practices are also associated with variation in facility-level cost. In addition, they emphasized that treatment volume relative to capacity has a significant financial impact on dialysis facilities; however, these costs currently are not reflected in cost reports. They also suggested that it might be beneficial to reflect missed treatments through a capacity utilization measure on the cost report and this could distinguish between more costly missed treatments and less costly planned absences, as the latter can be adjusted so that the facility chair is filled. The participants also indicated that rural facilities have costs not incurred by non-rural facilities, even among facilities with similar treatment volume, and do not believe the low volume payment adjustment and rural adjuster to be redundant.
This TEP focused on data collection on composite rate costs to inform the development of a more refined case-mix adjustment model for the ESRD PPS. Currently two equations are used to calculate the base rate for payment: (1) One at the facility level and, (2) one at the patient or treatment level—because items in the composite rate are not collected at the patient level.
While formerly separately billable items and services are itemized at the treatment level on claims and also reflected in cost reports, composite rate services, which comprise the bulk of the total costs for dialysis treatment are not itemized and can only be estimated at the facility level from cost reports. Charges for these services, as reported on claims, show little variation across facilities and cannot be used for estimating patient- or treatment-level variation in cost. Solutions for optimizing data collection on individual use of composite rate services were proposed by the data contractor and discussed by the participants. CMS' current goal, as emphasized throughout the TEP, is to explore options to improve the identification of per-treatment composite rate costs, and we invite comment on all of the options proposed during this TEP and discussed as part of this comment solicitation. We agree with the participants on the TEP that the benefits of improving the ESRD PPS case-mix adjustment model must be weighed against any additional ESRD facility burden that could result from changes to claims and cost reporting.
In the CY 2020 ESRD PPS proposed rule (84 FR 38398), CMS solicited input on options for improving the reporting of composite rate costs for the ESRD PPS. We explained that we believed improved reporting of both patient level costs, as reported on claims, and facility level costs, as reported on cost reports, is needed in order to obtain sufficient, high quality data to inform a refined case mix adjusted model for the ESRD PPS. We solicited comments on, or elaborations of, the options presented and discussed during the TEP, described in the CY 2020 ESRD PPS proposed rule (84 FR 38396) and also in section VIII.A.1.b.ii of this final rule, as well as novel approaches for improving the reporting of patient-level and facility-level costs that are not described here. We stated that CMS will consider new input from stakeholders as we develop methodologies for implementing select changes to claims and cost reports that serve to elucidate composite rate costs. We noted that CMS has not endorsed any particular method or option at this time.
During the TEP, the data contractor identified six cost components comprising composite rate costs for the ESRD PPS. These include: (1) Capital, (2) administrative, (3) labor, (4) drug, (5) laboratory and, (6) supply costs. Options were presented to improve the precision and accuracy of reporting costs for each component. Data on costs of some components, including capital, administrative and labor, are found chiefly in facility cost reports and reflect spending at the facility level. These facility-level costs, in combination with treatment counts can be used to estimate patient or treatment level composite rate costs. Data on other cost components, including drugs, laboratory tests and supplies, can be found both on the cost reports and on claims, however composite rate laboratory and supply costs are not specified on the cost report. Basic treatment charges are seen to vary little across patients or across facilities. Cost report data were questioned by the participants with regard to their accuracy and reliability.
Therefore, in the CY 2020 ESRD PPS proposed rule (84 FR 38398 through 38399), CMS solicited further input on ways to improve (1) the accuracy of charges and (2) the precision and reliability with which cost composite rate costs are identified and reported in cost reports.
We invited commenters to submit their responses to the following questions and requests:
• Do the six cost components include all aspects of dialysis treatment costs covered by Medicare?
++ If not, please describe any further component costs within each component?
++ Within each component, are there significant costs that are not currently captured in cost reports?
• The data contractor found that most composite rate costs are embedded in the capital, administrative and labor components. Given the relatively small contribution of drugs, laboratory tests, and supplies to composite rate costs, is there a justification for any further consideration of composite rate costs from capital, labor and administrative components?
• Why is there such limited variation in reported charges? Would it be useful to focus on improving reporting of these charges instead of collecting new information on cost reports or claims? Why is there such limited reporting of costs for items and services included in the CBL? Are there subsets of composite rate items and services that could be successfully reported on claims?
During the TEP, the data contractor proposed a paradigm by which to consider select changes to cost reporting that would reveal patient-level variation in costs, differentiating costs by those which can be attributed to dialysis treatment duration and those unrelated to treatment duration. Capturing data on these two types of differences was the thrust of the discussion during much of the TEP. In the CY 2020 ESRD PPS proposed rule (84 FR 38399), CMS solicited further input on these two elements of cost differential.
Dialysis session duration data could be used to refine calculations of per-treatment costs by increasing specificity in the allocation of composite rate costs. Applying this change only to current data collection practices would suffice to account for treatment level differences in costs due to length of
We invited comments on the option of collecting duration of treatments data, including responses to the following questions:
• Which of the six composite rate cost components (capital, administrative, labor, drug, laboratory, and supply costs) are most likely to vary with treatment duration?
• Should new information for these cost components be collected on cost reports, for use in better inferring the composite rate costs associated with treatment duration? If yes, please describe the additional information that would be needed and how this information could be used.
• Describe any challenges that would be encountered by ESRD facilities in reporting treatment duration, using a line item corresponding to units of time as a new revenue center code on the claim.
• Describe any alternatives to the use of dialysis treatment duration that could be used as a proxy for intensity of resource utilization and which can be reported at the patient/treatment level.
• Do facilities record the total time the patient spends in the facility before and after the actual dialysis treatment time, as well as the duration of the actual dialysis treatment? If so, please describe any obstacles to reporting this information on the claim.
The data contractor presented a list of conditions, identified during pre-TEP interviews with ESRD facilities, associated with higher cost treatment for dialysis patients. During the TEP, the participants added to this list. The combined list of these conditions was described in the CY 2020 ESRD PPS proposed rule (84 FR 38397) and in section VIII.A.1.b.v of this final rule.
The data contractor also presented alternative approaches for collecting sufficient data on these composite rate costs so as to inform a refined case-mix model. One approach would entail reporting such items and services as line items on the claim. The second would involve grouping patients into a set of “high risk” or “high cost” patient types, in a hierarchical fashion, and apportioning costs to each patient grouping based on known use of services. There was no consensus among participants with regard to the best way to capture these costs.
In the CY 2020 ESRD PPS proposed rule (84 FR 38399), CMS solicited comments and suggestions about how to best capture these costs. In the proposed rule we provided the following questions to consider: First, to the extent labor is the dominant source of variation in cost in providing dialysis services to complex patients, please describe the amount and type of labor required to care for patients with the conditions described above or any other conditions which complicate the provision of basic dialysis treatment. Second, please describe other dimensions of dialysis care and treatment for which composite rate costs vary independent of treatment duration. Third, are there discrete, high-cost composite rate items and services that vary at the patient level that could be feasibly itemized on claims? Fourth, how could a set of mutually exclusive, exhaustive patient groups be constructed to incorporate patients with common patterns of resource use? Fifth, what challenges might be faced in implementing the proposed reporting solutions (a) on claims and (b) on cost reports? Sixth, are pediatric and home dialysis costs accurately apportioned across cost components in cost reports? If not, please describe.
During the TEP the data contractor presented a framework for considering facility-level drivers of cost, which meet two criteria: (i) They are independent of patient-level factors, and (ii) they affect the cost of dialysis treatment. The TEP debated each criterion for facility-level cost drivers, including facility size and realized treatment capacity. Geographic location affects wages and prices of goods and services. While some commenters have suggested that rural ESRD facilities incur higher costs, the data contractor's analysis of 2016 cost report data for the December 2018 TEP indicates that overall composite rate costs for rural facilities may be lower than for urban facilities. Further analysis by cost component suggests that with the exception of drug costs, urban facilities incur higher costs for each composite rate cost component. Ownership and other organizational factors, such as whether the facility administers a home dialysis program or serves the pediatric population also have a bearing on cost.
In the CY 2020 ESRD PPS proposed rule (84 FR 38399 through 38400), CMS solicited input from stakeholders regarding the further identification of facility-level drivers of cost, especially those that affect the cost of composite rate services. We asked commenters to consider the following questions: First, what facility level factors should be added or further specified in the cost report to better reflect actual facility costs for the provision of composite rate items and services? Second, what are costs incurred by pediatric dialysis units that do not vary at the patient-level? Third, what types of costs do facilities providing home dialysis services incur that do not vary at the patient-level? Fourth, how do variations in drivers of facility costs affect composite rate costs at the facility level? Fifth, to what extent are these composite rate costs outside the facility's control? Sixth, what are the challenges or barriers to reporting missed treatments on claims and/or cost reports?
In the CY 2020 ESRD PPS proposed rule (84 FR 38400), we also solicited responses to the following questions that arose during the TEP. We noted that answers to these questions from the stakeholder community will help us to develop and refine reporting options for composite rate costs.
Beginning January 1, 2015, ESRD facilities have been required to itemize on claims the use of composite rate drugs listed on the CBL.
The participants mentioned that Medicare Advantage and other secondary payers will sometimes reject claims that include billing for certain items and services, such as oral medications. We requested comments on the specific billing practices that lead to such claims being rejected, along with the specific items and services that are rejected by payers.
The participants expressed reservations about the reliability of cost report data and also about the comparability of cost reports between freestanding and hospital-based ESRD facilities.
We also solicited comments regarding suggested specific changes to the cost reports or cost report instructions that would be most useful to improve the consistency of reporting across facilities.
We received extensive comments on these issues from approximately 9 stakeholders and an additional 35 comments that indirectly addressed the request for information (RFI) for data collection. Below we provide a short synopsis of the findings for each of the topics discussed in the TEP and solicited for comment in the CY 2020 ESRD PPS proposed rule. We will provide a more detailed summary of the comments received on this RFI on the CMS website
Some commentators expressed the opinion that use of composite rate components to price the cost of dialysis treatment was outmoded and counter to the objective of the bundled system instituted with the ESRD PPS in 2011. Although the RFI directed stakeholders to consider and comment on improving data collection for the determination of composite rate (CR) costs, the CR was not at the heart of their concerns. In fact, some commenters stated that the CR was an outmoded and unnecessary concept, dating back to the time before the implementation of the ESRD PPS in 2011, and attempts to discern individual cost components of the CR essentially served to “unbundle” the PPS. However, there was general support for improved reporting of patient level costs on claims and facility level costs on cost reports.
Several commenters objected to CMS' continued use of the two-equation payment model. They claimed the two equation model is flawed insofar as it uses facility level regression analysis of cost report data to determine the cost per treatment for CR services and the results from patient level regression analysis from data derived from claims to determine the average payment per patient for drugs, laboratory services and supplies. Multiplying factors from each regression model “with different bases” diminishes the accuracy of the model.
Commenters claimed that charges for individual treatments were hard, if not impossible, to capture and that doing so would represent an undue burden for facilities.
CMS' contractor analyzed charges for basic dialysis services, as they are reported on claims, and found little variation in charges either across patients within facilities or across facilities. Stakeholders were asked to comment on this phenomenon and provide explanation. Commenters responded by stating that variations in charges are inconsistent and [their occurrence is non-systematic] making it difficult to focus on assessing charges for the purposes of itemizing composite rate costs. Examples were provided for items and services that could vary by treatment, but which would be difficult to capture in charges. These included nurse training and the difficulty of separating nurse training hours from other hours worked. Others commented that it is not possible to assess specific items to include in charges for each dialysis treatment.
With regard to patient-level factors contributing to high costs of care, commenters opined that patient-level adjusters should be based on sound, empirical evidence of their contribution to cost of care. There was general agreement that adjustments for the use of isolation rooms for patients with active HBV infection and for patients in their initial months of dialysis treatment were warranted. Commenters opposed the use of dialysis treatment duration maintaining that other factors were more directly related to cost of treatment.
Commenters expressed the opinion that the cost report data was an inappropriate source from which to derive accurate patient-level adjusters from aggregated facility data, such as is recorded in the cost reports.
Commenters also asked to eliminate or significantly revise the current case mix adjusters. Commenters repeatedly expressed concerns that the methodology that was used to derive the case mix adjusters was flawed and not empirically based. Some commenters recommended the elimination of all the current case mix adjusters. Others suggested revisions, including removal of some adjusters. Some stated that case mix adjusters were not necessary and that they defeated the purpose of the bundled payment, effectively unbundling it. Others believed that the use of multiple adjusters that were highly correlated was problematic.
Another objection to the use of too many patient level adjusters related to the difficulty of obtaining accurate comorbidity data. Commenters stated that these diagnoses are made by medical providers, not by ESRD facility staff, and are contained in medical records which are not readily accessible by the ESRD facility. They claimed that the operational costs of claiming comorbidity payment adjustment exceeded the value of the adjustment.
In particular the use of age, BMI, and BSA was challenged. Commenters stated that there was no correlation between these factors and cost of dialysis treatment. Some commenters supported the use of patient-level cost factors that were presented at the 2019 TEP, including use of a catheter, non-ambulatory status, and some combined measure indicating behavioral, drug addiction or mental health problems, while others did not. Commenters endorsed the use of isolation rooms for patients with active HBV infection and an adjustment for patients in their initial period of dialysis.
The proposed use of duration of dialysis treatment time as a single, patient-level factor to estimate variation in CR costs was opposed. There was some indication that commenters thought that this method was being proposed in lieu of taking into account factors unrelated to treatment duration that made some patients more expensive to treat. Some commenters voiced the objection that use of this measure would not be productive because there was great homogeneity in treatment times across patients. Other commenters claimed that many subgroups of patients are challenged to stay on dialysis for the prescribed treatment time because of their physical status or other limitations, leading to more frequent treatment and/or higher costs and that these higher costs are related to patients' special circumstances and comorbidities and not to treatment duration.
With regard to facility-level factors driving costs, commenters agreed that the LVPA and rural adjustments needed refinement. They also were in agreement in calling for ESRD network fees and all bad debt to be added to cost reports as revenue reductions. Finally there was generally agreement that cost
Commenters agreed that current cost reports omit several key cost components and that more could be done to clarify reporting requirements in the cost report instructions. In particular, the ESRD network fee and bad debt were mentioned by several stakeholders as factors missing from the cost reports. Virtually all commenters who addressed this issue urged the inclusion of the ESRD network fee as a revenue reduction in Worksheet D of the cost report. They claimed that facilities were losing millions of dollars in reimbursable costs due to the omission of the ESRD network fee.
Bad debt was another facility-level cost that commenters strongly believed should be included in the cost report. Bad debt was characterized by contractors as pervasive problem that results when beneficiaries who face financial challenges cannot meet their cost sharing obligations. Presently, CMS only reimburses for 65 percent of bad debt liability (or 98 percent of 65 percent, if sequestration is taken into account). Commenters requested that 100 percent of bad debt be reimbursed. Commenters expressed that this problem will be exacerbated as new, more expensive treatments and devices come on the market. Commenters expressed the opinion that omission of unrecoverable bad debt results in a distorted representation of ESRD facility economics.
Several stakeholders also suggested that other revenue reductions should be allowed on the cost reports, including costs related to the ESRD QIP and losses related to budget sequestration. Finally, commenters requested that the cap on reporting of administrative salaries be removed.
The Low Volume Payment Adjuster (LVPA) and the Rural Adjuster were mentioned by several commenters as being problematic. First, some commenters expressed the opinion that the two adjusters were “overlapping” and suggested that a single, tiered low volume and “isolated facility” adjusters would serve better to target supplemental payments where they were most needed. Others commented that the LVPA should be targeted at small and independent facilities, whose treatment costs were higher, rather than go to large dialysis organizations which are better able to absorb any excess costs in isolated less populated facilities and whose treatment costs in such facilities were lower than those incurred by independent facilities.
Home dialysis costs were mentioned by commenters as representing a cost component that has risen significantly in recent years. Commenters maintained that current allocation for facility level costs for home dialysis is not adequate due to higher costs for supplies and equipment and limited competition among vendors. Commenters stated that exacerbating this problem are training costs for the more highly skilled nurses required to train and attend to home dialysis beneficiaries, as well as survey and certification requirements.
Finally, hospital and freestanding facility costs are seen by commenters to be vastly different with hospitals incurring higher costs due to a “more intensive cost structure and/or clinically complex patient population” compared to freestanding facilities. Additionally higher costs may be an artifact of the peculiar structure of the hospital based ESRD cost report. Commenters suggested that revisions be made to correct data reporting and structural problems in the cost report. Commenters also expressed support for more granular reporting of costs in cost reports.
Commenters expressed that the lack of availability of HCPCS codes for oral drugs prevent their reporting on claims.
Stakeholders were asked to comment on why so few facilities reported on the use of composite rate drugs that appeared on the Consolidated Billing List, as has been required since 2015. Responders stated that many oral medications do not have HCPCS codes that would allow them to be itemized on claims and if claims are submitted to Medicare Advantage, including these items, the entire claim is rejected. Please see the Billing Practices section below for a further explanation of the consequences faced when such items are included on claims.
Commenters stated that Medicare Advantage and some other secondary payers rejected claims if they included certain items, including oral medications which did not have a HCPCS code.
Commenters mentioned several problems with Medicare Advantage (MA) billing practices for dialysis services. They stated that some MA plans will reject certain claims for a variety of reasons. Commenters reiterated the case made by panelists at the 2019 TEP that claims would be rejected by Medicare Advantage and other secondary payers if they contained certain drugs, including those that do not have HCPCS codes, as mentioned above, and in certain cases will not make separate payment to facilities for their provision of the TDAPA-eligible drugs. Commenters also stated that Medicare Advantage plans will reject claims that include more than 13 treatments per month, even when medically justified. This includes both in-center and home dialysis treatments. Commenters claimed that these practices discourage providers from offering home dialysis as a treatment option because of substantial increases in supply costs in recent years. Commenters also mentioned that MA plans often reject claims for dialysis treatments for beneficiaries traveling outside of the plan's network, having the unintentional result of restricting beneficiaries' ability to travel. Finally, commenters noted that Medicare Advantage plans do not always pay applicable payment adjustments for patients whose care otherwise is eligible for such adjustments. For example, MA plans do not always provide for the additional costs attendant to caring for patients in their first months of dialysis treatment, nor for the extra care required for patients with complex comorbidities.
Commenters highlighted that pediatric dialysis facilities are a special case, that a pediatric case mix adjuster is warranted, and that significant revisions to cost reports should be made to allow for the true cost of providing care to this special population to be adequately reported.
The 2019 ESRD PPS TEP identified treatment and care for pediatric patients as a source of composite rate cost variation associated with providing care to more complex patients and called for further input on those costs. In response to the RFI, commenters itemized exceptional costs that were incurred by pediatric dialysis facilities, including the need for specialized staff, such as behavioral specialists, school liaisons and child life specialists. Additional expenses include a broad array of supplies and devices to accommodate a range of patient sizes. Commenters recommended that in addition to a pediatric case mix adjuster, CMS consider the additional capital and labor costs associated with pediatric patients and use these to formulate a more robust pediatric ESRD facility payment formula. Finally, they suggested that CMS consider alternative billing practices for pediatric facilities. They stated that these facilities are usually housed in children's hospitals which do
As discussed in the CY 2020 ESRD PPS proposed rule (84 FR 38359 through 38360) and in section II.B.5.b of this final rule, historically, we have calculated the ESRD PPS wage index values using unadjusted wage index values from another provider setting. Stakeholders have frequently commented on certain aspects of the ESRD PPS wage index values and their impact on payments. In the CY 2020 ESRD PPS proposed rule (84 FR 38400), we solicited comments on concerns stakeholders may have regarding the wage index used to adjust the labor-related portion of the ESRD PPS base rate and suggestions for possible updates and improvements to the geographic wage index payment adjustment under the ESRD PPS.
We received comments on this topic from approximately 6 stakeholders. Below we provide summaries of the comments received in response to the solicitation in the CY 2020 proposed rule. While we will not respond to these comments here, we will take them into consideration during future policy development. We thank the commenters for their detailed and thoughtful comments. We will consider these recommendations for future rulemaking.
Several commenters addressed the impact of data lag issues that they believe undermine the accuracy of the ESRD PPS wage indices. Under the current wage index methodology, CMS applies the most recent pre-floor, pre-classified hospital wage data collected annually under the Hospital IPPS. While commenters generally continue to support the methodology for determining the wage indices and the continued application of the wage index floor, they asked that CMS consider how the current policy could be modified to adjust wage index values to take into account laws requiring wage increases. They expressed that the wage index calculation data lag is particularly troublesome given higher wages due to state and municipality minimum wage actions and overall economic growth. They asserted that the current methodology will not capture these wage increases until years after their effect. They also noted that wage indices that do not reflect ESRD facilities' actual, current experience or the labor resources necessary to fulfill obligations under the Five-Star Quality Rating System and QIP will devalue the labor-related portion of the ESRD PPS base rate and inappropriately constrain ESRD PPS payments.
Commenters noted that under the current methodology, there can be a several year lag with the wage index recognizing these changes. They urged CMS to work to minimize the data lag and ensure the expeditious incorporation of current state and municipality minimum wage requirements and overall labor market trends that influence labor costs into the wage indices' calculation.
One healthcare organization commented on CMS' proposal, in section II.B.5.b of the CY 2020 ESRD PPS proposed rule, to continue to use the pre-floor, pre-reclassified hospital wage index for ESRD services in CY 2020. The healthcare organization said that it understood that, until CMS is able to develop a wage index system for ESRD, CMS will need to use a proxy such as the hospital wage index. However, the organization does not agree with using the pre reclassified wage index values. Hospitals are regularly allowed to reclassify to higher wage index areas which results in higher payment rates. Because ESRD providers compete with local hospitals for staff, the payment differentials allow hospitals to offer higher compensation than can be maintained in a nonhospital setting. As a result, the healthcare organization stated, other providers such as ESRD facilities are at a disadvantage when competing for nursing staff. Rather than contributing to the disparities between facilities, the healthcare organization recommended that CMS equalize the wage index rates between hospitals and ESRD providers that utilize the hospital wage index by using the post floor, post-reclassification wage index for each CBSA.
A national dialysis association stated that CMS should not apply any wage index changes associated with the IPPS final rule without undergoing notice-and-comment rulemaking in an ESRD PPS proposed rule. The association explained that the wage index promulgated in the IPPS impacts the base rate for the ESRD PPS since the labor-related portion of the ESRD PPS base rate is adjusted to account for geographic differences in the area wage levels. The association noted that the ESRD wage-index is based on the hospital index and utilizes pre-floor hospital data that are unadjusted for occupational mix. In addition to the hospital wage index being a critical component of the ESRD PPS base rate calculation, it also influences some of the facility-level adjusters, including the low-volume payment adjustment and the rural adjustment.
A professional association requested that CMS consider any such wage index changes in connection with any potential broad refinements to the ESRD PPS. The professional association recommended using a similar approach as the RFI for Data Collection because experiences of its members indicate that cost of care varies most by the patient's individual characteristics, comorbidities and psychosocial factors—as well as the relative severity of those individual comorbidities and psychosocial factors.
The association also noted that small and independent ESRD facilities typically have higher labor costs than larger dialysis organizations because of the generally higher proportion of skilled labor used in care delivery. The association urged CMS to formally recognize in the ESRD PPS the disproportionately higher labor costs borne by small and independent facilities as it considers possible changes to the ESRD PPS wage index.
The association also expressed that rural regions tend to experience higher labor costs than facilities in non-rural areas due to their difficulty in attracting labor. It noted that challenges in attracting qualified labor to care for the highly vulnerable ESRD patient population in rural areas are particularly acute given the overall shortage of nursing supply available and such issues have become even more critical with respect to attracting registered nurses and other clinical staff with experience in the provision of home dialysis—an expertise clearly sought after with the Administration's important initiatives to increase rates of home dialysis in ESRD treatment. Moreover, the association stated, if rural facilities are not able to find permanent staff locally, they must pay the associated travel costs and wages for travel time for staff traveling from units outside of the area qualified to treat patients. The association noted that these staffing challenges raise labor costs for rural providers, increasing their overall costs to provide high-quality care for patients. The association therefore asked CMS to formally account for the additional financial burden rural providers face in securing qualified labor to meet ESRD patient care needs in any changes considered for the ESRD PPS wage index.
The association further suggested that as CMS considers possible changes to the ESRD PPS wage index, CMS examines how and why these two approaches of calculating the labor-related share have varied over time. The association stated that such examination may provide useful information about the specific approach to measurement
Section 1847(a)(2)(A) of the Act mandates competitive bidding programs for “covered items” and supplies used in conjunction with DME such as blood glucose monitors used by beneficiaries with diabetes. The supplies used with these blood glucose monitors (such as blood glucose test strips and lancets) are referred to under the DMEPOS CBP as diabetic supplies or diabetic testing supplies. In the April 10, 2007 final rule published in the
On January 16, 2009, we published an interim final rule in the
On July 13, 2010 we published a proposed rule in the
Section 154(d) of MIPPA modified section 1847(b)(10) of the Act to prohibit CMS from awarding a contract to a supplier of diabetes test strips if the supplier's bid does not cover at least 50 percent, by volume, of all types of diabetes test strips on the market. With respect to any competition for diabetic testing strips after the first round of competition, a supplier must demonstrate that its bid to furnish diabetic testing strips covers the types of diabetic testing strip products that, in the aggregate and taking into account volume for the different products, cover at least 50 percent of all such types of products on the market. CMS and the CBIC refer to this rule as the “50 percent rule.”
Section 1847(b)(10)(B) of the Act mandated that the Office of Inspector General (OIG) conduct a study before 2011 to determine the types of diabetic testing strips by volume that could be used by CMS for the purpose of evaluating bidders in the national mail order CBP for diabetic testing supplies. Under the DMEPOS CBP, bidding suppliers are required to provide information on the products they plan to furnish if awarded a contract. We proposed in the July 2010 proposed rule (75 FR 40211) to use information submitted by bidding suppliers and information on the market share (volume) of the various diabetic testing strip products to educate suppliers on meeting the requirements of this special 50 percent rule. We noted that it may be necessary to obtain additional information from suppliers such as invoices or purchase orders to verify that the requirements in the statute have been met (75 FR 40214). We proposed that suppliers be required to demonstrate that their bids cover the minimum 50-percent threshold provided in the statute, but we invited comments on whether a higher threshold should be used (75 FR 40214). We proposed the 50 percent threshold in part because we believed that all suppliers have an inherent incentive to furnish a wide variety of types of diabetic testing products to generate a wider customer referral base (75 FR 40214). The 50 percent threshold would ensure that beneficiaries have access to mail order delivery of the top-selling diabetic test strip products (75 FR 40214). In addition, we proposed an “anti-switching provision” that we said would obviate the need to establish a threshold of greater than 50 percent for the purpose of implementing this special rule because the contract suppliers would not be able to carry a limited variety of products and switch beneficiaries to those products (75 FR 40214). For purposes of implementing the special rule in section 1847(b)(10)(A) of the Act, we proposed to define “diabetic testing strip product” as a specific brand and model of test strip, as we said that was the best way to distinguish among different products (75 FR 40214). Therefore, we planned to use market based data for specific brands and models of diabetic test strips to determine the relative market share or volume of the various products on the market that are available to Medicare beneficiaries (75 FR 40214). We stated we would apply this rule to non-mail order competitions and/or local competitions conducted for diabetic testing strips after Round One of the DMEPOS CBP (75 FR 40214).
In the November 29, 2010 final rule with comment period published in the
The OIG released its study in 2010, and the OIG has since determined the market shares of the types of diabetes test strips before each round of competitive bidding. The data from this series of reports informs CMS about the types of diabetes test strips that suppliers provide to Medicare beneficiaries via mail order.
The Bipartisan Budget Act of 2018 (BBA) was enacted on February 9, 2018, and section 50414 of the BBA amended section 1847(b)(10)(A) of the Act to establish additional rules for the competition for diabetic testing strips. Section 1847(b)(10)(A) of the Act now requires that for bids to furnish diabetic testing strips on or after January 1, 2019, the volume for such products be determined by the Secretary through the use of multiple sources of data (from mail order and non-mail order Medicare markets), including market-based data measuring sales of diabetic testing strip products that are not exclusively sold by a single retailer from such markets.
The OIG reports to CMS the Medicare Part B market share of mail order diabetic test strips before each round of the Medicare national mail order CBP, and pursuant to section 1847(b)(10)(A) of the Act, the OIG will now report on the non-mail order diabetic test strip Medicare Part B market. On January 19, 2019, the OIG released a report that documented the Medicare Part B market share of mail order diabetic test strips for the 3-month period of April through June 2018.
Because section 1847(b)(10)(A) of the Act now requires the use of “multiple sources of data,” we requested public comments on other potential sources of data (sources other than the OIG), that fulfill the data requirements set forth in section 1847(b)(10)(A) of the Act. We requested comments on other potential sources of data because the word “multiple” in the phrase “multiple sources of data” could mean that we should use more than one source of data, and that the OIG is one source of data. We therefore requested comments from the public on other potential sources of data regarding the mail order and non-mail order Medicare markets for diabetic testing strips through this request for information. In particular, we sought data that:
• Has a sufficient sample size, and is unbiased and credible;
• Separately provides the market shares of the mail-order Medicare Part B market, and the non-mail order Medicare Part B market (does not combine the two markets into one); and
• Includes market-based data measuring sales of diabetic testing strip products that are not exclusively sold by a single retailer from such markets.
We received 6 comments from suppliers, industry representative groups, and others in response to this Comment Solicitation on Sources of Market-Based Data Measuring Sales of Diabetic Testing Strips to Medicare Beneficiaries. Of the comments we received, none included data, or readily available sources of data, and were otherwise outside the scope of the request for information.
The comments received in response to the Comment Solicitation on Sources of Market-Based Data Measuring Sales of Diabetic Testing Strips to Medicare Beneficiaries are set forth below.
A few commenters recommended that CMS require suppliers to bill as they do for Medicare Part D. The commenters said that Part D billing allows for on-line claim adjudication, requiring that suppliers bill with a National Drug Code (NDC) product number so CMS can collect that data (the commenter recognized that there may be Paperwork Reduction Act issues). The commenters said that any survey of current Medicare Part B claims for diabetic testing strips would not accurately represent the overall market because reduced payment rates have caused suppliers to offer beneficiaries fewer product options. The commenters went on to say that the challenge with requesting this utilization information from manufacturers is that manufacturers do not know who will be paying for the product, and that manufacturer sales data is therefore not representative of products provided to Medicare beneficiaries.
One commenter said that CMS should only consider data for brands obtained under Medicare Part B, and that CMS should not consider diabetic testing supplies obtained through Part C or D because many of the supplies provided under Part C or Part D are on the formulary of the private insurance company. The commenter also stated that providers in the previous national mail order CBP did not have contracts with certain test strip manufacturers, as these manufacturers shut out the mail order providers in an attempt to drive patients to a pharmacy where they were able to work within the pharmacy benefit manager rebate programs. Another commenter said that information about access to certain test strip brands are potentially inaccurate, because some brands only contracted with certain national mail order CBP providers.
We appreciate the range of the comments we received. We will consider these comments carefully as we contemplate future policies.
Under the Paperwork Reduction Act of 1995, we are required to provide 60-day notice in the
This final rule does not impose any new information collection requirements in the regulation text. However, this final rule does make reference to several associated information collections that are not discussed in the regulation text contained in this document. The following is a discussion of these information collections.
To derive wages estimates, we used data from the U.S. Bureau of Labor Statistics' May 2018 National Occupational Employment and Wage Estimates. In the CY 2016 ESRD PPS final rule (80 FR 69069), we stated that it was reasonable to assume that Medical Records and Health Information Technicians, who are responsible for organizing and managing health information data, are the individuals tasked with submitting measure data to CROWNWeb and NHSN, as well as compiling and submitting patient records for purpose of the data validation studies, rather than a Registered Nurse, whose duties are centered on providing and coordinating care for patients. The mean hourly wage of a Medical Records and Health Information Technician is $21.16 per hour.
We used this updated wage estimate, along with updated facility and patient counts as well as a refined estimate of the time spent completing data entry for reporting data, to re-estimate the total information collection burden in the ESRD QIP for PY 2022 that we discussed in the CY 2019 ESRD QIP final rule (83 FR 57050 through 57052) and to estimate the total information collection burden in the ESRD QIP for PY 2023. We provide the re-estimated information collection burden associated with the PY 2022 ESRD QIP and the newly estimated information collection burden associated with the PY 2023 ESRD QIP in sections IV.C.2 and IV.C.3 of this final rule.
In the CY 2019 ESRD PPS final rule, we finalized a policy to adopt the CROWNWeb data validation methodology that we previously adopted for the PY 2016 ESRD QIP as the methodology we would use to validate CROWNWeb data for all payment years, beginning with PY 2021 (83 FR 57001 through 57002). Under this methodology, 300 facilities would be selected each year to submit to CMS not more than 10 records, and we would reimburse these facilities for the costs associated with copying and mailing the requested records. The burden associated with these validation requirements is the time and effort necessary to submit the requested records to a CMS contractor. We estimated that the aggregate cost of the CROWNWeb data validation each year will be approximately $30,885 (750 hours × $41.18), or an annual total of approximately $103 ($30,885/300 facilities) per facility in the sample. In this final rule, we are updating these estimates using a newly available wage estimate of a Medical Records and Health Information Technician and have made no other changes to our methodology for calculating the annual burden associated with the CROWNWeb validation study. We estimate that it will take each facility approximately 2.5 hours to comply with this requirement. If 300 facilities are asked to submit records, we estimate that the total combined annual burden for these facilities will be 750 hours (300 facilities × 2.5 hours). Since we anticipate that Medical Records and Health Information Technicians or similar administrative staff would submit these data, we estimate that the aggregate cost of the CROWNWeb data validation each year will be approximately $31,740 (750 hours × $42.32), or an annual total of approximately $105.80 ($31,740/300 facilities) per facility in the sample. The increase in our burden estimate is due to an updated wage estimate for Medical Records and Health Information Technicians or similar staff and is not the result of any policies finalized in this final rule. The burden associated with these requirements is captured in an information collection request (OMB control number 0938–1289).
In section IV.D.5 of this final rule, we are finalizing that we will continue in PY 2023 and subsequent payment years the NHSN data validation study using the methodology finalized in the CY 2019 ERD PPS final rule for PY 2022 (83 FR 57001 through 57002) and adopt the NHSN validation study as a permanent feature of the ESRD QIP. Under this methodology, we will select 300 facilities for participation in the PY 2023 validation study. A CMS contractor will send these facilities requests for 20 patients' records for each of the first 2 quarters of CY 2021 (for a total of 40 patient records per facility). The burden associated with these data validation requirements is the time and effort necessary to submit the requested records to a CMS contractor. Using the newly available wage estimate of a Medical Records and Health Information Technician, we estimate that it will take each facility approximately 10 hours to comply with this requirement. If 300 facilities are asked to submit records, we estimate that the total combined annual burden for these facilities would be 3,000 hours (300 facilities × 10 hours). Since we anticipate that Medical Records and Health Information Technicians or similar staff will submit these data, we estimate that the aggregate cost of the NHSN data validation each year will be approximately $126,960 (3,000 hours × $42.32), or a total of approximately $423.20 ($126,960/300 facilities) per facility in the sample. The increase in our burden estimate is due to an updated wage estimate for Medical Records and Health Information Technicians or similar staff and is not the result of any policies finalized in this final rule. The burden associated with these requirements is captured in an information collection request (OMB control number 0938–1340).
To determine the burden associated with the CROWNWeb reporting requirements, we look at the total number of patients nationally, the number of data elements per patient-year that the facility would be required to submit to CROWNWeb for each measure, the amount of time required for data entry, the estimated wage plus benefits applicable to the individuals within facilities who are most likely to be entering data into CROWNWeb, and the number of facilities submitting data to CROWNWeb. In the CY 2019 ESRD
We have examined the impacts of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96–354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104–4), Executive Order 13132 on Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C. 804(2)) and Executive Order 13771 on Reducing Regulation and Controlling Regulatory Costs (January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule: (1) Having an annual effect on the economy of $100 million or more in any 1 year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as “economically significant”); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.
A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). We estimate that this rulemaking is “economically significant” as measured by the $100 million threshold, and hence also a major rule under the Congressional Review Act. Accordingly, we have prepared a RIA that to the best of our ability presents the costs and benefits of the rulemaking.
We solicited comments on the regulatory impact analysis provided. With regard to the ESRD PPS, we did not receive any comments on the RIA.
This rule finalizes a number of routine updates and several policy changes to the ESRD PPS in CY 2020. The finalized routine updates include the CY 2020 wage index values, the wage index budget-neutrality adjustment factor, and outlier payment threshold amounts. Failure to publish this final rule will result in ESRD facilities not receiving appropriate payments in CY 2020 for renal dialysis services furnished to ESRD patients.
This rule also finalizes routine updates to the payment for renal dialysis services furnished by ESRD facilities to individuals with AKI. Failure to publish this final rule will result in ESRD facilities not receiving appropriate payments in CY 2020 for renal dialysis services furnished to patients with AKI in accordance with section 1834(r) of the Act.
This rule finalizes updates to the ESRD QIP, including a modification to the scoring methodology for the NHSN Dialysis Event reporting measure beginning with the PY 2022 ESRD QIP; the conversion of the STrR clinical measure to a reporting measure; and the adoption of the NHSN validation study as a permanent feature of the program using the methodology finalized for the PY 2022 NHSN validation study. In addition, we finalized that for all clinical measures in PY 2023 ESRD QIP, CY 2021 would be the performance period, CY 2020 would be the baseline period used to establish the improvement thresholds, and CY 2019 would be used for establishing the achievement thresholds, benchmarks, and minimum TPS. For future ESRD QIP payment years, we finalized that we would adopt automatically a performance and baseline period for each year that is 1 year advanced from those specified for the previous payment year.
This rule finalizes a gap-filling methodology for new DMEPOS items and services.
This rule finalizes a method for making a one-time adjustment to the gap-filled fee schedule amounts in cases where prices decrease by less than 15 percent within 5 years of establishing the initial fee schedule amounts.
This final rule will streamline the requirements for ordering DMEPOS items. It would also develop one Master List of DMEPOS items potentially subject to a face-to-face encounter, written orders prior to delivery and/or prior authorization requirements under the authority provided under sections 1834(a)(1)(E)(iv), 1834(a)(11)(B), and 1834(a)(15) of the Act.
We estimate that the final revisions to the ESRD PPS will result in an increase of approximately $210 million in payments to ESRD facilities in CY 2020, which includes the amount associated with updates to the outlier thresholds, payment rate update, updates to the wage index, and the change in the basis of payment for the TDAPA for calcimimetics from ASP+6 percent to
We are estimating approximately $40 million that will now be paid to ESRD facilities for dialysis treatments provided to AKI beneficiaries.
For PY 2022, we have re-estimated the costs associated with information collection requirements under the Program with updated estimates of the total number of dialysis facilities, the total number of patients nationally, wages for Medical Records and Health Information Technicians or similar staff, and a refined estimate of the number of hours needed to complete data entry for CROWNWeb reporting. We have made no other changes to our methodology for calculating the annual burden associated with the information collection requirements for with the CROWNWeb validation study, the NHSN validation study, and CROWNWeb reporting. None of the policies finalized in this final rule will affect our estimates of the annual burden associated with the Program's information collection requirements.
We also re-estimated the payment reductions under the ESRD QIP to correct an error in the way the weights were redistributed when estimating the PY 2022 payment reductions for the CY 2019 ESRD PPS final rule (83 FR 57060) and in accordance with the finalized policy changes described earlier, including the changes to the scoring methodology for the NHSN Dialysis Event reporting measure and the conversion of the STrR measure from a clinical measure to a reporting measure. We also updated the payment reduction estimates using newly available data for the PPPW clinical measure and the Ultrafiltration reporting measure and more recent data for the other measures in the ESRD QIP measure set. We estimate that these updates will result in an overall impact of $229 million as a result of the policies we have previously finalized and the policies we have finalized in this final rule, which includes an estimated $211 million in information collection burden and an additional $18 million in estimated payment reductions across all facilities, for PY 2022.
For PY 2023, we estimate that the finalized revisions to the ESRD QIP will result in an overall impact of $229 million as a result of the policies we have previously finalized and the policies we have finalized in this final rule, which includes an $18 million in estimated payment reductions across all facilities.
This final rule establishes a gap-filling methodology for new items and services. The fiscal impact of the gap-filling methodology cannot be determined due to the uniqueness of potential new DMEPOS items and their costs.
While these adjustments will decrease fee schedule amounts that have been established using supplier or commercial prices by less than 15 percent, the savings are considered a small offset to the potential increase in costs of establishing fee schedule amounts based on supplier invoices or prices from commercial payers. The fiscal impact for this provision is therefore considered negligible.
This rule finalizes to streamline the requirements for ordering DMEPOS items, and to identify the process for subjecting certain DMEPOS items to a face-to-face encounter and written order prior to delivery and/or prior authorization requirements as a condition of payment. The fiscal impact of these requirements cannot be estimated as this rule only identifies all items that are potentially subject to the face-to-face encounter and written order prior to delivery requirements and/or prior authorization.
If regulations impose administrative costs on private entities, such as the time needed to read and interpret this final rule, we should estimate the cost associated with regulatory review. Due to the uncertainty involved with accurately quantifying the number of entities that will review the rule, we assume that the total number of unique commenters on last year's final rule will be the number of reviewers of this final rule. We acknowledge that this assumption may understate or overstate the costs of reviewing this rule. It is possible that not all commenters reviewed last year's rule in detail, and it is also possible that some reviewers chose not to comment on the proposed rule. For these reasons we thought that the number of past commenters would be a fair estimate of the number of reviewers of this rule. We welcomed comments on the approach in estimating the number of entities, which will review this final rule. We did not receive any comments on this section on the rule.
We also recognize that different types of entities are in many cases affected by mutually exclusive sections of this final rule, and therefore for the purposes of our estimate we assume that each reviewer reads approximately 50 percent of the rule. We sought comments on this assumption. We did not receive any comments on this section on the rule.
Using the wage information from the Bureau of Labor Statistics (BLS) (
For manufacturers of DMEPOS products, DMEPOS suppliers, and other DMEPOS industry representatives, we calculate a different cost of reviewing this rule. Assuming an average reading speed, we estimate that it would take approximately 1 hour for the staff to review this final rule. For each entity that reviews this final rule, the estimated cost is $110.00. Therefore, we estimate that the total cost of reviewing this rule is $71,500 ($110.00 × 650 reviewers).
To understand the impact of the changes affecting payments to different categories of ESRD facilities, it is necessary to compare estimated payments in CY 2019 to estimated payments in CY 2020. To estimate the impact among various types of ESRD facilities, it is imperative that the
For this final rule, we used CY 2018 data from the Part A and Part B Common Working Files as of September 18, 2019, as a basis for Medicare dialysis treatments and payments under the ESRD PPS. We updated the 2018 claims to 2019 and 2020 using various updates. The updates to the ESRD PPS base rate are described in section II.B.5.d of this final rule. Table 14 shows the impact of the estimated CY 2020 ESRD payments compared to estimated payments to ESRD facilities in CY 2019.
Column A of the impact table indicates the number of ESRD facilities for each impact category and column B indicates the number of dialysis treatments (in millions). The overall effect of the final changes to the outlier payment policy described in section II.B.5.c of this final rule is shown in column C. For CY 2020, the impact on all ESRD facilities as a result of the changes to the outlier payment policy would be a 0.4 percent increase in estimated payments. All ESRD facilities are anticipated to experience a positive effect in their estimated CY 2020 payments as a result of the final outlier policy changes.
Column D shows the effect of the final CY 2020 wage indices. The categories of types of facilities in the impact table show changes in estimated payments ranging from a 0.8 percent decrease to a 0.5 percent increase due to these final updates.
Column E shows the effect of the final CY 2020 ESRD PPS payment rate update. The final ESRD PPS payment rate update is 1.7 percent, which reflects the final ESRDB market basket percentage increase factor for CY 2020 of 2.0 percent and the final MFP adjustment of 0.3 percent.
Column F reflects the change in the payment of the TDAPA from ASP+6 percent to ASP+0 percent.
Column G reflects the overall impact, that is, the effects of the final outlier policy changes, the final wage index, payment rate update, and final TDAPA payment changes. We expect that overall ESRD facilities would experience a 1.6 percent increase in estimated payments in CY 2020. The categories of types of facilities in the impact table show impacts ranging from an increase of 1.2 percent to 2.2 percent in their CY 2020 estimated payments.
Under the ESRD PPS, Medicare pays ESRD facilities a single bundled payment for renal dialysis services, which may have been separately paid to other providers (for example, laboratories, durable medical equipment suppliers, and pharmacies) by Medicare prior to the implementation of the ESRD PPS. Therefore, in CY 2020, we estimate that the final ESRD PPS would have zero impact on these other providers.
We estimate that Medicare spending (total Medicare program payments) for ESRD facilities in CY 2020 would be approximately $10.3 billion. This estimate takes into account a projected increase in fee-for-service Medicare dialysis beneficiary enrollment of 1.4 percent in CY 2020.
Under the ESRD PPS, beneficiaries are responsible for paying 20 percent of the ESRD PPS payment amount. As a result of the projected 1.6 percent overall increase in the final CY 2020 ESRD PPS payment amounts, we estimate that there would be an increase in beneficiary co-insurance payments of 1.6 percent in CY 2020, which translates to approximately $40 million.
In section II.B.1 of this final rule, we finalized revisions to the drug designation process regulation for new renal dialysis drugs and biological products that fall within an existing ESRD PPS functional category. In an effort to support innovation in the renal dialysis space, while simultaneously considering the cost to Medicare, for the refinement of the TDAPA eligibility we considered limiting it to only the Type 1 NDA Classification Code, section 351(a) biological products and section 351(k) biosimilar or interchangeable biological products. However, we wanted to support other innovative changes of drugs and biological products in the renal dialysis space and acknowledge that innovation may occur incrementally.
In section II.B.3 of this final rule, we finalized to provide a transitional add-on payment adjustment to support the use of certain new and innovative renal dialysis equipment and supplies by ESRD facilities. With regard to pricing mechanisms for equipment and supplies, we considered alternatives such as those used in the DMEPOS program and consultation with the Pricing, Data, and Analysis Contractor. However, methodologies such as reasonable charges and use of fee schedules were lacking for many items and did not address the new and innovative renal dialysis equipment and supplies that we expect to be forthcoming with the KidneyX initiative.
To understand the impact of the changes affecting payments to different categories of ESRD facilities for renal dialysis services furnished to individuals with AKI, it is necessary to compare estimated payments in CY 2019 to estimated payments in CY 2020. To estimate the impact among various types of ESRD facilities for renal dialysis services furnished to individuals with AKI, it is imperative that the estimates of payments in CY 2019 and CY 2020 contain similar inputs. Therefore, we simulated payments only for those ESRD facilities for which we are able to calculate both current payments and new payments.
For this final rule, we used CY 2018 data from the Part A and Part B Common Working Files as of September 18, 2019, as a basis for Medicare for renal dialysis services furnished to individuals with AKI. We updated the 2018 claims to 2019 and 2020 using various updates. The updates to the AKI payment amount are described in section III.B of this final rule. Table 15 shows the impact of the estimated CY 2020 payments for renal dialysis services furnished to individuals with AKI compared to estimated payments for renal dialysis services furnished to individuals with AKI in CY 2019.
Column A of the impact table indicates the number of ESRD facilities for each impact category and column B
Column C shows the effect of the final CY 2020 wage indices. The categories of types of facilities in the impact table show changes in estimated payments ranging from a 1.8 percent decrease to a 0.7 percent increase due to these final updates.
Column D shows the effect of the final CY 2020 ESRD PPS payment rate update. The final ESRD PPS payment rate update is 1.7 percent, which reflects the final ESRDB market basket percentage increase factor for CY 2020 of 2.0 percent and the final MFP adjustment of 0.3 percent.
Column E reflects the overall impact, that is, the effects of the final wage index and payment rate update. We expect that overall ESRD facilities would experience a 1.7 percent increase in estimated payments in CY 2020. The categories of types of facilities in the impact table show impacts ranging from a 0.1 percent decrease to a 2.4 percent increase in their CY 2020 estimated payments.
Under section 1834(r) of the Act, as added by section 808(b) of TPEA, we are updating the payment rate for renal dialysis services furnished by ESRD facilities to beneficiaries with AKI. The only two Medicare providers and suppliers authorized to provide these outpatient renal dialysis services are hospital outpatient departments and ESRD facilities. The decision about where the renal dialysis services are furnished is made by the patient and his or her physician. Therefore, this update will have zero impact on other Medicare providers.
We estimate approximately $40 million would be paid to ESRD facilities in CY 2020 as a result of AKI patients receiving renal dialysis services in the ESRD facility at the lower ESRD PPS base rate versus receiving those services only in the hospital outpatient setting and paid under the outpatient prospective payment system, where services were required to be administered prior to the TPEA.
Currently, beneficiaries have a 20 percent co-insurance obligation when they receive AKI dialysis in the hospital outpatient setting. When these services are furnished in an ESRD facility, the patients would continue to be responsible for a 20 percent co-insurance. Because the AKI dialysis payment rate paid to ESRD facilities is lower than the outpatient hospital PPS's payment amount, we would expect beneficiaries to pay less co-insurance when AKI dialysis is furnished by ESRD facilities.
As we discussed in the CY 2017 ESRD PPS proposed rule (81 FR 42870), we considered adjusting the AKI payment rate by including the ESRD PPS case-mix adjustments, and other adjustments at section 1881(b)(14)(D) of the Act, as well as not paying separately for AKI specific drugs and laboratory tests. We ultimately determined that treatment for AKI is substantially different from treatment for ESRD and the case-mix adjustments applied to ESRD patients may not be applicable to AKI patients and as such, including those policies and adjustment would be inappropriate. We continue to monitor utilization and trends of items and services furnished to individuals with AKI for purposes of refining the payment rate in the future. This monitoring will assist us in developing knowledgeable, data-driven proposals.
The ESRD QIP is intended to prevent possible reductions in the quality of ESRD dialysis facility services provided to beneficiaries. We are finalizing in this final rule that we will convert the STrR clinical measure to a reporting measure, and also change the way the NHSN Dialysis Event reporting measure is scored. The general methodology that we are using to determine a facility's TPS is described in our regulations at § 413.178(d).
Any reductions in the ESRD PPS payments as a result of a facility's performance under the PY 2022 ESRD QIP will apply to the ESRD PPS payments made to the facility for services furnished in CY 2022, as codified in our regulations at § 413.177.
For the PY 2022 ESRD QIP, we estimate that, of the 7,386 dialysis facilities (including those not receiving a TPS) enrolled in Medicare, approximately 26.1 percent or 1,871 of the facilities that have sufficient data to calculate a TPS would receive a payment reduction for PY 2022. The total payment reductions for all the 1,871 facilities expected to receive a payment reduction is approximately $18,247,083.76. Facilities that do not receive a TPS do not receive a payment reduction.
Table 16 shows the overall estimated distribution of payment reductions resulting from the PY 2022 ESRD QIP.
To estimate whether a facility would receive a payment reduction for PY 2022, we scored each facility on achievement and improvement on several clinical measures we have previously finalized and for which there
For all measures except SHR, clinical measure topic areas with less than 11 cases for a facility were not included in that facility's TPS. For SHR, facilities were required to have at least 5 at risk patients, in order to be included in the facility's TPS. Each facility's TPS was compared to an estimated minimum TPS and an estimated payment reduction table that were consistent with the proposals outlined in section IV.D of this final rule. Facility reporting measure scores were estimated using available data from CY 2018. Facilities were required to have at least one measure in at least two domains to receive a TPS.
To estimate the total payment reductions in PY 2022 for each facility resulting from this final rule, we multiplied the total Medicare payments to the facility during the 1-year period between January 2018 and December 2018 by the facility's estimated payment reduction percentage expected under the ESRD QIP, yielding a total payment reduction amount for each facility.
Table 18 shows the estimated impact of the ESRD QIP payment reductions to all ESRD facilities for PY 2022. The table details the distribution of ESRD facilities by size (both among facilities considered to be small entities and by number of treatments per facility), geography (both rural and urban and by region), and by facility type (hospital based and freestanding facilities). Given that the performance period used for these calculations differs from the performance period we are using for the PY 2022 ESRD QIP, the actual impact of the PY 2022 ESRD QIP may vary significantly from the values provided here.
For the PY 2023 ESRD QIP, we estimate that, of the 7,386 dialysis facilities (including those not receiving a TPS) enrolled in Medicare, approximately 26.1 percent or 1,871 of the facilities that have sufficient data to calculate a TPS would receive a payment reduction for PY 2023. The total payment reductions for all the 1,871 facilities expected to receive a payment reduction is approximately $18,247,083.76. Facilities that do not receive a TPS do not receive a payment reduction.
Table 19 shows the overall estimated distribution of payment reductions resulting from the PY 2023 ESRD QIP.
To estimate whether a facility would receive a payment reduction in PY 2023, we scored each facility on achievement and improvement on several clinical measures we have previously finalized and for which there were available data from CROWNWeb and Medicare claims. Payment reduction estimates are calculated using the most recent data available (specified in Table 19) in accordance with the policies finalized in this final rule. Measures used for the simulation are shown in Table 20. We also note that because we are finalizing in section IV.D.2.b of this final rule that we will convert the STrR measure from a clinical measure to a reporting measure, the STrR measure is no longer listed in Table 20.
For all measures except SHR, clinical measure topic areas with less than 11 cases for a facility were not included in that facility's TPS. For SHR, facilities were required to have at least 5 at-risk patients, in order to be included in the facility's TPS. Each facility's TPS was compared to an estimated minimum TPS and an estimated payment reduction table that were consistent with the policies finalized in section IV.D and IV.E of this final rule. Facility reporting measure scores were estimated using available data from CY 2018. Facilities were required to have at least one measure in at least two domains to receive a TPS.
To estimate the total payment reductions in PY 2023 for each facility resulting from this final rule, we multiplied the total Medicare payments to the facility during the 1-year period between January 2018 and December 2018 by the facility's estimated payment reduction percentage expected under the ESRD QIP, yielding a total payment reduction amount for each facility.
Table 21 shows the estimated impact of the ESRD QIP payment reductions to all ESRD facilities for PY 2023. The table details the distribution of ESRD facilities by size (both among facilities considered to be small entities and by
The ESRD QIP is applicable to dialysis facilities. We are aware that several of our measures impact other providers. For example, with the introduction of the SRR clinical measure in PY 2017 and the SHR clinical measure in PY 2020, we anticipate that hospitals may experience financial savings as dialysis facilities work to reduce the number of unplanned readmissions and hospitalizations. We are exploring various methods to assess the impact these measures have on hospitals and other facilities, such as through the impacts of the Hospital Readmission Reduction Program and the Hospital-Acquired Conditions Reduction Program, and we intend to continue examining the interactions between our quality programs to the greatest extent feasible.
For PY 2023, we estimate that the ESRD QIP will contribute approximately $18,247,083.76 in Medicare savings. For comparison, Table 19 shows the payment reductions that we estimate will be applied by the ESRD QIP from PY 2018 through PY 2023. We note that Table 22 contains a lower estimated payment reduction for PY 2022 than we included in Table 49 of the CY 2019 ESRD PPS final rule (83 FR 57061).
The ESRD QIP is applicable to dialysis facilities. Since the Program's inception, there is evidence on improved performance on ESRD QIP measures. As we stated in the CY 2018 ESRD PPS final rule, one objective measure we can examine to demonstrate the improved quality of care over time is the improvement of performance standards (82 FR 50795). As the ESRD QIP has refined its measure set and as facilities have gained experience with the measures included in the Program, performance standards have generally continued to rise. We view this as evidence that facility performance (and therefore the quality of care provided to Medicare beneficiaries) is objectively improving. We are in the process of monitoring and evaluating trends in the quality and cost of care for patients under the ESRD QIP, incorporating both existing measures and new measures as they are implemented in the Program. We will provide additional information about the impact of the ESRD QIP on beneficiaries as we learn more. However, in future years we are interested in examining these impacts through the analysis of available data from our existing measures.
In response to the concern raised by commenters about the validity of the modified STrR measure, we considered aligning the STrR measure's specifications with those used for the measure prior to the PY 2021 ESRD QIP. However, that version of the STrR clinical measure was not endorsed by the NQF due to the concern expressed by the Renal Standing Committee about variability in hospital coding practices.
We believe that establishing payment amounts for new DMEPOS items and services will have a positive economic impact on suppliers by making the pricing of new items more easily understood and encourage innovation. The cost cannot be estimated as these new items are not identified.
This final rule has an indeterminable cost to the Medicare program associated with it due to the unpredictable nature of future new items.
This final rule has an indeterminable cost to the Medicare beneficiary due to the unpredictable nature of future new items. This rule also has an indeterminable cost to the dual-eligible beneficiary who is enrolled in the Medicare and the Medicaid programs for the same reason as indicated above.
One alternative we considered but did not propose was to continue the process for establishing payment amounts for new items on a sub-regulatory basis. This would have no economic impact on the Medicare program or its beneficiaries.
We believe that adjusting payment amounts for new DMEPOS items and services when initially set based on supplier or commercial prices will have a negative economic impact on suppliers by lowering fees. The savings cannot be estimated as these new items are not identified.
We believe that adjusting payment amounts for new DMEPOS items and services when initially set based on supplier or commercial prices will have a positive economic impact on the Medicare Program by lowering fees and achieving savings. The savings cannot be estimated as these new items are not identified.
We believe that adjusting payment amounts for new DMEPOS items and services when initially set based on supplier or commercial prices will have a positive economic impact on Medicare beneficiaries by lowering fees, therefore resulting in lower coinsurance for such items. The savings cannot be estimated as these new items are not identified.
An alternative we considered but did not propose was to continue not adjusting payment amounts for new items based on revised supplier and commercial price lists. This would have resulted, in some cases, in what we
This rule streamlines the requirements for ordering DMEPOS items, and to identify the process for subjecting certain DMEPOS items to a face-to-face encounter and written order prior to delivery and/or prior authorization requirements as a condition of payment. The fiscal impact of these requirements cannot be estimated as this rule only identifies all items that are potentially subject to the face-to-face encounter and written order prior to delivery requirements and/or prior authorization.
As required by OMB Circular A–4 (available at
In accordance with the provisions of Executive Order 12866, this final rule was reviewed by the Office of Management and Budget.
The Regulatory Flexibility Act (September 19, 1980, Pub. L. 96–354) (RFA) requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Approximately 11 percent of ESRD dialysis facilities are considered small entities according to the Small Business Administration's (SBA) size standards, which classifies small businesses as those dialysis facilities having total revenues of less than $41.5 million in any 1 year. Individuals and states are not included in the definitions of a small entity. For more information on SBA's size standards, see the Small Business Administration's website at
We do not believe ESRD facilities are operated by small government entities such as counties or towns with populations of 50,000 or less, and therefore, they are not enumerated or included in this estimated RFA analysis. Individuals and states are not included in the definition of a small entity.
For purposes of the RFA, we estimate that approximately 11 percent of ESRD facilities are small entities as that term is used in the RFA (which includes small businesses, nonprofit organizations, and small governmental jurisdictions). This amount is based on the number of ESRD facilities shown in the ownership category in Table 14. Using the definitions in this ownership category, we consider 502 facilities that are independent and 304 facilities that are shown as hospital-based to be small entities. The ESRD facilities that are owned and operated by Large Dialysis Organizations (LDOs) and regional chains would have total revenues of more than $41.5 million in any year when the total revenues for all locations are combined for each business (individual LDO or regional chain), and are not, therefore, included as small entities.
For the ESRD PPS updates finalized in this rule, a hospital-based ESRD facility (as defined by type of ownership, not by type of ESRD facility) is estimated to receive a 2.2 percent increase in payments for CY 2020. An independent facility (as defined by ownership type) is estimated to receive a 1.7 percent increase in payments for CY 2020.
For AKI dialysis, we are unable to estimate whether patients would go to ESRD facilities, however, we have estimated there is a potential for $40 million in payment for AKI dialysis treatments that could potentially be furnished in ESRD facilities.
For the ESRD QIP, we estimate that of the 1,871 ESRD facilities expected to receive a payment reduction as a result of their performance on the PY 2023 ESRD QIP, 314 are ESRD small entity facilities. We present these findings in Table 16 (“Estimated Distribution of PY 2023 ESRD QIP Payment Reductions”) and Table 18 (“Impact of QIP Payment Reductions to ESRD Facilities for PY
The DMEPOS provisions in this final rule, Establishing Payment Amounts for New DMEPOS Items and Services and Gap-Filling and Adjusting Payment Amounts for DMEPOS Items and Services Gap-Filled Using Supplier or Commercial Prices in section V of this final rule, are not considered to have a significant impact on a number of small suppliers. We note that the fiscal impact of the Conditions of Payment to be applied to Certain DMEPOS Items in section VI of this final rule cannot be estimated as this rule only identifies all items that are potentially subject to the face-to-face encounter and written order prior to delivery requirements and/or prior authorization.
Therefore, the Secretary has determined that these final rules would not have a significant economic impact on a substantial number of small entities. The economic impact assessment is based on estimated Medicare payments (revenues) and HHS's practice in interpreting the RFA is to consider effects economically “significant” only if greater than 5 percent of providers reach a threshold of 3 to 5 percent or more of total revenue or total costs.
We solicited comment on the RFA analysis provided. We received no comments on this section.
In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. Any such regulatory impact analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. We do not believe this final rule would have a significant impact on operations of a substantial number of small rural hospitals because most dialysis facilities are freestanding. While there are 126 rural hospital-based dialysis facilities, we do not know how many of them are based at hospitals with fewer than 100 beds. However, overall, the 126 rural hospital-based dialysis facilities will experience an estimated 2.2 percent increase in payments.
Therefore, the Secretary has determined that these final rules would not have a significant impact on the operations of a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2019, that threshold is approximately $154 million. These final rules do not include any mandates that would impose spending costs on state, local, or Tribal governments in the aggregate, or by the private sector, of $154 million. Moreover, HHS interprets UMRA as applying only to unfunded mandates. We do not interpret Medicare payment rules as being unfunded mandates, but simply as conditions for the receipt of payments from the federal government for providing services that meet federal standards. This interpretation applies whether the facilities or providers are private, state, local, or tribal.
Executive Order 13132 on Federalism (August 4, 1999) establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on state and local governments, preempts state law, or otherwise has Federalism implications. We have reviewed these final rules under the threshold criteria of Executive Order 13132, Federalism, and have determined that it would not have substantial direct effects on the rights, roles, and responsibilities of states, local or Tribal governments.
Executive Order 13771, entitled Reducing Regulation and Controlling Regulatory Costs (82 FR 9339), was issued on January 30, 2017. It has been determined that this is a transfer rule, which imposes no more than de minimis costs. As a result, this rule is not considered a regulatory or deregulatory action under Executive Order 13771.
These final rules are subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801
The Addenda for the annual ESRD PPS proposed and final rulemakings will no longer appear in the
Federal health insurance for the aged and disabled, Administrative practice and procedure, Diseases, Health facilities, Health professions, Medical devices, Medicare, Reporting and recordkeeping requirements, Rural areas, X-rays.
Health facilities, Health professions, Diseases, Laboratories, Medicare, Reporting and recordkeeping requirements, Rural areas, X-rays.
Health facilities, Diseases, Medicare, Reporting and recordkeeping requirements.
Administrative practice and procedure, Biologicals, Drugs, Health facilities, Health professions, Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR chapter IV as follows:
42 U.S.C. 1302, 1395m, 1395hh, 1395rr, and 1395ddd.
(b) The conditions of payment described in § 410.38(d) also apply to medical supplies, appliances, and devices.
The revisions and addition read as follows:
(a)
(b)
(c)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(d)
(1)
(i)
(A) Beneficiary Name or Medicare Beneficiary Identifier (MBI).
(B) General Description of the item.
(C) Quantity to be dispensed, if applicable.
(D) Order Date.
(E) Treating Practitioner Name or National Provider Identifier (NPI).
(F) Treating Practitioner Signature.
(ii)
(A) For PMDs and other DMEPOS items selected for inclusion on the Required Face-to-Face Encounter and Written Order Prior to Delivery List, the written order/prescription must be communicated to the supplier prior to delivery.
(B) For all other DMEPOS, the written order/prescription must be communicated to the supplier prior to claim submission.
(2)
(i) The encounter must be used for the purpose of gathering subjective and objective information associated with diagnosing, treating, or managing a clinical condition for which the DMEPOS is ordered.
(ii) If it is a telehealth encounter, the requirements of §§ 410.78 and 414.65 of this chapter must be met.
(3)
(i) Upon request by CMS or its agents, a supplier must submit additional documentation to CMS or its agents to support and/or substantiate the medical necessity for the DMEPOS item.
(ii) The face-to-face encounter must be documented in the pertinent portion of the medical record (for example, history, physical examination, diagnostic tests, summary of findings, progress notes, treatment plans or other sources of information that may be appropriate). The supporting documentation must include subjective and objective beneficiary specific information used for diagnosing, treating, or managing a clinical condition for which the DMEPOS is ordered.
(e)
42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww.
The revisions and additions read as follows:
(d)
(2) For purposes of paragraph (d)(1) of this section, the baseline period that applies to the 2023 payment year is calendar year 2019 for purposes of calculating the achievement threshold, benchmark and minimum total performance score, and calendar year 2020 for purposes of calculating the improvement threshold, and the performance period that applies to the 2023 payment year is calendar year 2021. Beginning with the 2024 payment year, the performance period and corresponding baseline periods are each advanced 1 year for each successive payment year.
(3) A facility may request and CMS may grant exceptions to the reporting requirements under paragraph (d)(1) of this section for one or more calendar days, when there are certain extraordinary circumstances beyond the control of the facility.
(4) A facility may request an exception within 90 days of the date that the extraordinary circumstances occurred by submitting the Extraordinary Circumstances Exception request form, which is available on the QualityNet website (
(i) Facility CCN.
(ii) Facility name.
(iii) CEO name and contact information.
(iv) Additional contact name and contact information.
(v) Reason for requesting an exception.
(vi) Dates affected.
(vii) Date the facility will start submitting data again, with justification for this date.
(viii) Evidence of the impact of the extraordinary circumstances, including but not
limited to photographs, newspaper, and other media articles.
(5) CMS will not consider an exception request unless the facility requesting such exception has complied with the requirements in paragraph (d)(4) of this section.
(6) CMS may grant exceptions to facilities without a request if it determines that one or more of the following has occurred:
(i) An extraordinary circumstance affects an entire region or locale.
(ii) An unresolved issue with a CMS data system affected the ability of a facility to submit data in accordance with paragraph (d)(1) of this section and CMS was unable to provide the facility with an alternative method of data submission.
(7) A facility that has been granted an exception to the data submission requirements under paragraph (d)(6) of this section may notify CMS that it will continue to submit data under paragraph (d)(1) of this section by sending an email signed by the CEO or another designated contact to the ESRD QIP mailbox at
The revision and additions read as follows:
(b) Any outlier payment under § 413.237;
(c) Any training adjustment add-on under § 413.235(c);
(d) Any transitional drug add-on payment adjustment under § 413.234(c); and
(e) Any transitional add-on payment adjustment for new and innovative equipment and supplies under § 413.236(d).
The revisions and addition read as follows:
(a) * * *
(b) * * *
(1) * * *
(ii) Except as provided in paragraph (e) of this section, the new renal dialysis drug or biological product is paid for using the transitional drug add-on payment adjustment described in paragraph (c)(1) of this section.
(c)
(e)
(1) Type 3 NDA—New Dosage Form.
(i) A
(ii) [Reserved]
(2) Type 5 NDA—New Formulation or Other Differences.
(i) A
(A) The product involves changes in inactive ingredients that require either bioequivalence studies or clinical studies for approval and is submitted as an original NDA rather than as a supplement by the applicant of the approved product;
(B) The product is a duplicate of a drug product by another applicant (same active ingredient, same dosage form, same or different indication, or same combination), and
(
(
(
(
(
(
(
(
(C) The product contains an active ingredient or active moiety that has been previously approved or marketed in the U.S. only as part of a combination. This applies to active ingredients previously approved or marketed as part of a physical or chemical combination, or as part of a mixture derived from recombinant deoxyribonucleic acid technology or natural sources.
(D) The product is a combination product that differs from a previously marketed combination by the removal of one or more active ingredients or by substitution of a new ester or salt or other noncovalent derivative of an active ingredient for one or more of the active ingredients. In the latter case, the NDA would be classified as a combination of a
(E) The product contains a different strength of one or more active ingredients in a previously approved or marketed combination. A
(F) The product differs in bioavailability (for example, superbioavailable or different controlled-release pattern) and, therefore, is ineligible for submission as an abbreviated new drug application (ANDA) under section 505(j) of the FD&C Act.
(G) The product involves a new plastic container that requires safety studies beyond limited confirmatory testing (see 21 CFR 310.509,
(ii) [Reserved]
(3) Type 7 NDA—Previously Marketed But Without an Approved NDA.
(i) A
(A) The first post-1962 application for an active moiety marketed prior to 1938.
(B) The first application for an active moiety first marketed between 1938 and 1962 that is identical, related or similar (IRS) to a drug covered by a Drug Efficacy Study Implementation notice. Regulation at 21 CFR 310.6(b)(1) states that an identical, related, or similar drug includes other brands, potencies, dosage forms, salts, and esters of the same drug moiety as well as any of drug moiety related in chemical structure or known pharmacological properties.
(C) The first application for an IRS drug product first marketed after 1962.
(D) The first application for an active moiety that was first marketed without an NDA after 1962.
(ii) [Reserved]
(4) Type 8 NDA—Prescription to Over-the-Counter (OTC).
(i) A
(ii) If the proposed OTC switch will apply to all indications, uses, and strengths of an approved prescription dosage form (leaving no prescription-only products of that particular dosage form on the market), the application holder should submit the change as a supplement to the approved application. If the applicant intends to switch only some indications, uses, or strengths of the dosage form to OTC status (while continuing to market other indications, uses, or strengths of the dosage form for prescription-only sale), the applicant should submit a new NDA for the OTC products, which would be classified as a
(5)
(i) Type 2 NDA—New Active Ingredient.
(A) A
(B) If the active ingredient is a single enantiomer and a racemic mixture containing that enantiomer has been previously approved by FDA or marketed in the U.S., or if the active ingredient is a racemic mixture containing an enantiomer that has been previously approved by FDA or marketed in the U.S., the NDA will be classified as a
(ii) Type 4 NDA—New Combination.
(A) A
(B) A new
(
(
(
(
(
(
(C) An NDA for an active ingredient that is a
(6)
(7)
(i) Type 9 NDA—New Indication or Claim, Drug Not to be Marketed under Type 9 NDA after Approval.
(A) A
(B) When the
(ii) [Reserved]
(a)
(b)
(1) Has been designated by CMS as a renal dialysis service under § 413.171;
(2) Is new, meaning it is granted marketing authorization by the Food
(3) Is commercially available by January 1 of the particular calendar year, meaning the year in which the payment adjustment would take effect;
(4) Has a Healthcare Common Procedure Coding System (HCPCS) application submitted in accordance with the official Level II HCPCS coding procedures by September 1 of the particular calendar year;
(5) Is innovative, meaning it meets the criteria specified in § 412.87(b)(1) of this chapter and related guidance; and
(6) Is not a capital-related asset that an ESRD facility has an economic interest in through ownership (regardless of the manner in which it was acquired).
(c)
(d)
(1) The transitional add-on payment adjustment for new and innovative equipment and supplies is paid for 2-calendar years.
(2) Following payment of the transitional add-on payment adjustment for new and innovative equipment and supplies, the ESRD PPS base rate will not be modified and the new and innovative renal dialysis equipment or supply will be an eligible outlier service as provided in § 413.237.
(e)
(i) The invoice amount, facility charges for the item, discounts, allowances, and rebates;
(ii) The price established for the item by other MACs and the sources of information used to establish that price;
(iii) Payment amounts determined by other payers and the information used to establish those payment amounts; and
(iv) Charges and payment amounts required for other equipment and supplies that may be comparable or otherwise relevant.
(2) [Reserved]
The revisions and addition read as follows:
(a) * * *
(1) * * *
(i) Renal dialysis drugs and biological products that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B;
(ii) Renal dialysis laboratory tests that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B;
(iii) Renal dialysis medical/surgical supplies, including syringes, used to administer renal dialysis drugs and biological products that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B;
(iv) Renal dialysis drugs and biological products that were or would have been, prior to January 1, 2011, covered under Medicare Part D, including renal dialysis oral-only drugs effective January 1, 2025; and
(v) Renal dialysis equipment and supplies that receive the transitional add-on payment adjustment as specified in § 413.236 after the payment period has ended.
(vi) As of January 1, 2012, the laboratory tests that comprise the Automated Multi-Channel Chemistry panel are excluded from the definition of outlier services.
42 U.S.C. 1302, 1395hh, and 1395rr(b)(l).
(a)
(b)
(a)
(b)
(c)
(i) The annual deflation factors are specified in program instructions and are based on the percentage change in the consumer price index for all urban consumers (CPI–U) from the mid-point of the year the prices are in effect to the mid-point of the fee schedule base period, as calculated using the following formula: ((base CPI–U minus current CPI–U) divided by current CPI–U) plus one.
(ii) The deflated amounts are then increased by the update factors specified in § 414.102(c).
(2) If within 5 years of establishing fee schedule amounts using supplier or commercial prices, the supplier or commercial prices decrease by less than 15 percent, a one-time adjustment to the fee schedule amounts is made using the new prices. The new supplier or commercial prices would be used to establish the new fee schedule amounts in the same way that the older prices were used, including application of the deflation formula in paragraph (c)(1) of this section.
The revisions and addition read as follows:
(a) * * *
(b)
(1) Master List Inclusion Criteria are as follows:
(i) Any DMEPOS items included in the DMEPOS Fee Schedule that have an average purchase fee of $500 (adjusted annually for inflation using consumer price index for all urban consumers (CPI–U), and reduced by the 10-year moving average of changes in annual economy-wide private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable FY, year, cost reporting period, or other annual period)) or greater, or an average monthly rental fee schedule of $50 (adjusted annually for inflation using consumer price index for all urban consumers (CPI–U), and reduced by the 10-year moving average of changes in annual economy-wide private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable FY, year, cost reporting period, or other annual period)) or greater, or are identified as accounting for at least 1.5 percent of Medicare expenditures for all DMEPOS items over a 12-month period that are:
(A) Identified as having a high rate of potential fraud or unnecessary utilization in an Office of Inspector General (OIG) or Government Accountability Office (GAO) report that is national in scope and published in 2015 or later, or
(B) Listed in the 2018 or later Comprehensive Error Rate Testing (CERT) Medicare Fee-for-Service (FFS) Supplemental Improper Payment Data report as having a high improper payment rate, or
(ii) The annual Master List updates shall include any items with at least 1,000 claims and 1 million dollars in payments during a recent 12-month period that are determined to have aberrant billing patterns and lack explanatory contributing factors (for example, new technology or coverage policies). Items with aberrant billing patterns would be identified as those items with payments during a 12-month timeframe that exceed payments made during the preceding 12-months, by the greater of:
(A) Double the percent change of all DMEPOS claim payments for items that meet the above claim and payment criteria, from the preceding 12-month period, or
(B) Exceeding a 30 percent increase in payment, or
(iii) Any item statutorily requiring a face-to-face encounter, a written order prior to delivery, or prior authorization.
(2) The Master List is self-updating at a minimum annually, and is published in the
(3) * * *
(i) OIG reports published after 2020.
(ii) GAO reports published after 2020.
(iii) Listed in the CERT Medicare FFS Supplemental Improper Payment Data report(s) published after 2020 as having a high improper payment rate.
(4) Items are removed from the Master List after 10 years from the date the item was added to the Master List, unless the item was identified in an OIG report, GAO report, or having been identified in the CERT Medicare FFS Supplemental Improper Payment Data report as having a high improper payment rate, within the 5-year period preceding the anticipated date of expiration.
(6) An item is removed from the list if the cost drops below the payment threshold criteria set forth in paragraph (b)(1)(i) of this section.
(c) * * *
(1) * * *
(i) The Required Prior Authorization List specified in paragraph (c)(1) of this section is selected from the Master List. CMS may consider factors such as geographic location, item utilization or cost, system capabilities, emerging trends, vulnerabilities identified in
(ii) CMS may elect to limit the prior authorization requirement to a particular region of the country if claims data analysis shows that unnecessary utilization of the selected item(s) is concentrated in a particular region. CMS may elect to exempt suppliers from prior authorization upon demonstration of compliance with Medicare coverage, coding, and payment rules through such prior authorization process.
(d) * * *
(1) Include all relevant documentation necessary to show that the item meets applicable Medicare coverage, coding, and payment rules, including those outlined in § 410.38 and all of the following:
(i) Written order/prescription.
(e) * * *
(3) If applicable Medicare coverage, coding, and payment rules are not met, CMS or its contractor issues a non-affirmation decision to the requester.
(4) If the requester receives a non-affirmation decision, the requester may resubmit a prior authorization request before the item is furnished to the beneficiary and before the claim is submitted for processing.
(5) A prior authorization request for an expedited review must include documentation that shows that processing a prior authorization request using a standard timeline for review could seriously jeopardize the life or health of the beneficiary or the beneficiary's ability to regain maximum function. If CMS or its contractor agrees that processing a prior authorization request using a standard timeline for review could seriously jeopardize the life or health of the beneficiary or the beneficiary's ability to regain maximum function, then CMS or its contractor expedites the review of the prior authorization request and communicates the decision following the receipt of all applicable Medicare required documentation.
(a)
(b)
(a)
(b)
(c)
(i) The annual deflation factors are specified in program instructions and are based on the percentage change in the consumer price index for all urban consumers (CPI–U) from the mid-point of the year the prices are in effect to the mid-point of the fee schedule base period, as calculated using the following formula: ((base CPI–U minus current CPI–U) divided by current CPI–U) plus one.
(ii) The deflated amounts are then increased by the update factors specified in section 1834(a)(14) of the Act for DME, section 1834(h)(4) of the Act for prosthetic devices, prosthetics, orthotics, and therapeutic shoes and inserts, and section 1834(i)(1)(B) of the Act for surgical dressings.
(2) If within 5 years of establishing fee schedule amounts using supplier or commercial prices, the prices decrease by less than 15 percent, a one-time adjustment to the fee schedule amounts is made using the new prices. The new prices would be used to establish the new fee schedule amounts in the same way that the older prices were used, including application of the deflation formula in paragraph (c)(1) of this section.
(d)
(i) Meets all requirements applicable to contract suppliers for the applicable competitive bidding program;
(ii) Submits to CMS the documentation described under § 414.414(b) through (d) if documentation has not previously been submitted by the successor entity or if the documentation is no longer sufficient for CMS to make a financial determination. A successor entity is not required to duplicate previously submitted information if the previously submitted information is not needed to make a financial determination. This documentation must be submitted prior to the effective date of the CHOW; and
(iii) Submits to CMS a signed novation agreement acceptable to CMS stating that it assumes all obligations under the contract. This documentation must be submitted no later than 10 days after the effective date of the CHOW.
(2) Except as specified in paragraph (d)(3) of this section, CMS may transfer the entire contract, including all product categories and competitive bidding areas, to a successor entity.
(3) For contracts issued in the Round 2 Recompete and subsequent rounds in the case of a CHOW where a contract supplier sells a distinct company (for example, a subsidiary) that furnishes a specific product category or services a specific CBA, CMS may transfer the portion of the contract performed by that company to a successor entity, if the following conditions are met:
(i) Every CBA, product category, and location of the company being sold must be transferred to the successor entity that meets all competitive bidding requirements; that is, financial, accreditation, and licensure;
(ii) All CBAs and product categories in the original contract that are not explicitly transferred by CMS remain unchanged in that original contract for the duration of the contract period unless transferred by CMS pursuant to a subsequent CHOW;
(iii) All requirements of paragraph (d)(1) of this section are met;
(iv) The sale of the distinct company includes all of the contract supplier's assets associated with the CBA and/or product category(s); and
(v) CMS determines that transfer of part of the original contract will not result in disruption of service or harm to beneficiaries.
(f) * * *
(2) A supplier that wishes to appeal the breach of contract action(s) specified in the notice of breach of contract must submit a written request to the CBIC. The request for a hearing must be submitted to the CBIC within 30 days from the date of the notice of breach of contract.