Att E3 - CMS reporting requirements - dialysis facilities

Vol. 77

Friday,

No. 218

November 9, 2012

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services
42 CFR Parts 413 and 417
Medicare Program; End-Stage Renal Disease Prospective Payment
System, Quality Incentive Program, and Bad Debt Reductions for All
Medicare Providers; Final Rule

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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations

DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Parts 413 and 417
[CMS–1352–F]
RIN 0938–AR13

Medicare Program; End-Stage Renal
Disease Prospective Payment System,
Quality Incentive Program, and Bad
Debt Reductions for All Medicare
Providers
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule.
AGENCY:

This final rule updates and
makes revisions to the end-stage renal
disease (ESRD) prospective payment
system (PPS) for calendar year (CY)
2013. This rule also sets forth
requirements for the ESRD quality
incentive program (QIP), including for
payment year (PY) 2015 and beyond. In
addition, this rule implements changes
to bad debt reimbursement for all
Medicare providers, suppliers, and
other entities eligible to receive
Medicare payment for bad debt and
removes the cap on bad debt
reimbursement to ESRD facilities. (See
the Table of Contents for a listing of the
specific issues addressed in this final
rule.)
DATES: Effective Date: These regulations
are effective on January 1, 2013.
Applicability Date: The regulations
setting forth the reductions in Medicare
bad debt pursuant to section 3201 of the
Middle Class Tax Extension and Job
Creation Act of 2012 (Pub. L. 112–96)
are applicable for cost reporting periods
beginning October 1, 2012.
FOR FURTHER INFORMATION CONTACT:
Michelle Cruse, (410) 786–4533, for
issues related to ESRD.
Heidi Oumarou, (410) 786–7942, for
issues related to the ESRD market
basket.
Anita Segar, (410) 786–4614, for
issues related to the QIP.
Kellie Shannon, (410) 786–0416 for
information regarding Medicare bad
debt.
SUPPLEMENTARY INFORMATION:
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SUMMARY:

Table of Contents
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).

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I. Executive Summary
A. Purpose
1. End-Stage Renal Disease (ESRD)
Prospective Payment System (PPS)
2. ESRD QIP
3. Reductions to Bad Debt Payments for All
Medicare Providers and Elimination of
the Cap on Bad Debt Reimbursement to
ESRD Facilities
B. Summary of Major Provisions
1. ESRD PPS
2. ESRD QIP
3. Reductions to Bad Debt Payments for All
Medicare Providers and Elimination of
the Cap on Bad Debt Reimbursement to
ESRD Facilities
C. Summary of Cost and Benefits
1. Impacts of the Final ESRD PPS
2. ESRD QIP
3. Impacts of Bad Debt Provisions
II. Calendar Year (CY) 2013 End-Stage Renal
Disease (ESRD) Prospective Payment
System (PPS)
A. Background on the End-Stage Renal
Disease (ESRD) Prospective Payment
System (PPS)
B. Summary of the Proposed Provisions
and Responses to Comments on the CY
2013 ESRD PPS
C. Routine Updates and Proposed Policy
Changes to the CY 2013 ESRD PPS
1. Composite Rate Portion of the ESRD PPS
Blended Payment
a. Update to the Drug Add-on to the
Composite Rate Portion of the ESRD
Blended Payment Rate
i. Estimating Growth in Expenditures for
Drugs and Biologicals in CY 2013
ii. Estimating Per Patient Growth
iii. Applying the Growth Update to the
Drug Add-On Adjustment
iv. Update to the Drug Add-On Adjustment
for CY 2013
2. ESRD PPS Base Rate
3. ESRD Bundled Market Basket
a. Overview and Background
b. Market Basket Update Increase Factor
and Labor-Related Share for ESRD
Facilities for CY 2013
c. Productivity Adjustment
d. Calculation of the ESRDB Market Basket
Update Adjusted for Multifactor
Productivity for CY 2013
4. Transition Budget-Neutrality
Adjustment for CY 2013
5. Updates to the Wage Index Values and
Wage Index Floor for the Composite Rate
Portion of the Blended Payment and the
ESRD PPS Payment
a. Reduction to the ESRD Wage Index Floor
b. Policies for Areas With No Wage Data
c. Wage Index Budget-Neutrality
Adjustment
d. ESRD PPS Wage Index Tables
6. Drug Policy Changes
a. Daptomycin
b. Alteplase and Other Thrombolytics
c. Part B Drug Pricing
7. Revisions to the Outlier Policy
a. Impact of Changes to the Outlier Policy
b. Outlier Policy Percentage
D. Clarifications Regarding the ESRD PPS
1. Reporting Composite Rate Items and
Services
2. ESRD Facility Responsibilities for ESRDRelated Drugs and Biologicals

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3. Use of AY Modifier
E. Miscellaneous Comments
III. End-Stage Renal Disease (ESRD) Quality
Incentive Program (QIP) for Payment
Year (PY) 2015
A. Background
B. Summary of the Proposed Provisions
and Responses to Comments on the
ESRD QIP for PY 2015
C. Considerations in Updating and
Expanding Quality Measures Under the
ESRD QIP for PY 2015 and Subsequent
PYs
1. Value-Based Purchasing (VBP) Overview
2. Brief Overview of Proposals
3. Measures Application Partnership
Review
4. PY 2014 Mineral Metabolism Measure
D. Proposed Measures for the PY 2015
ESRD QIP and Subsequent PYs of the
ESRD QIP
1. PY 2014 Measures Continuing for PY
2015 and Subsequent PYs
a. Hemoglobin Greater Than 12 g/dL
b. Vascular Access Type (VAT) Measure
Topic
c. In-Center Hemodialysis Consumer
Assessment of Healthcare Providers and
Systems (ICH CAHPS)
2. Expansion of Two PY 2014 Measures for
PY 2015 and Subsequent PYs
a. Expanded National Healthcare Safety
Network (NHSN) Dialysis Event
Reporting Measure
b. Expanded Mineral Metabolism
Reporting Measure
3. New Measures for PY 2015 and
Subsequent PYs of the ESRD QIP
a. Kt/V Dialysis Adequacy Measure Topic
i. Adult Hemodialysis Adequacy
ii. Peritoneal Dialysis Adequacy
iii. Pediatric, In-center Hemodialysis
Adequacy
b. Hypercalcemia
c. Anemia Management Reporting Measure
4. Measures Under Consideration for
Future PYs of the ESRD QIP
a. Standardized Hospitalization Ratio
(SHR)
b. Standardized Mortality Ratio (SMR)
c. Public Reporting of SHR and SMR
Measures
5. Other Potential Future Measures Under
Development
a. Thirty-Day Hospital Readmissions
b. Efficiency
c. Population/Community Health
6. Scoring Background and General
Considerations for the PY 2015 ESRD
QIP
7. Performance Period for the PY 2015
ESRD QIP
8. Performance Standards for the PY 2015
ESRD QIP
a. Clinical Measure Performance Standards
b. Performance Standards
c. Performance Standards for the PY 2015
Reporting Measures
9. Scoring for the PY 2015 ESRD QIP
Measures
a. Scoring Facility Performance on Clinical
Measures Based on Achievement
b. Scoring Facility Performance on Clinical
Measures Based on Improvement
c. Calculating the Reporting Measure
Scores

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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations
10. Weighting the PY 2015 ESRD QIP
Measures and Calculation of the PY 2015
ESRD QIP Total Performance Score
a. Weighting Individual Measures To
Compute Measure Topic Scores for the
Kt/V Dialysis Adequacy Measure Topic
and the Vascular Access Type Measure
Topic
b. Weighting the Total Performance Score
c. Examples of the PY 2015 ESRD QIP
Scoring Methodology
11. Minimum Data for Scoring Measures
for the PY 2015 ESRD QIP
a. Minimum Data for Scoring Clinical
Measures for the PY 2015 ESRD QIP
b. Minimum Data Requirements for
Reporting Measures by New Facilities
12. Payment Reductions for the PY 2015
ESRD QIP
13. Data Validation
14. Scoring Facilities Whose Ownership
has Changed
15. Public Reporting Requirements
IV. Limitation on Payments to All Providers,
Suppliers and Other Entities Entitled to
Bad Debt
A. Background
B. Section 3201 of The Middle Class Tax
Extension and Job Creation Act of 2012
(Pub. L. No. 112–96)
C. Summary of Provisions of This Final
Rule
1. Section 3201 of The Middle Class Tax
Extension and Job Creation Act of 2012
(Pub. L. No. 112–96)
2. ESRD Bad Debt Cap and Remove and
Reserve § 413.178
3. Technical Corrections
D. Changes to Medicare Bad Debt Policy
1. Changes to 42 CFR 413.89(h)
2. Rationale for Removing 42 CFR 413.178
3. Technical Corrections to 42 CFR
417.536(f)(1)
V. Collection of Information Requirements
A. Legislative Requirement for Solicitation
of Comments
B. Requirements in the Regulation Text
C. Additional Information Collection
Requirements
1. ESRD QIP
a. Display of Certificates for the PY 2015
ESRD QIP
b. NHSN Dialysis Event Reporting
Requirement for the PY 2015 ESRD QIP
c. ICH CAHPS Survey Attestation
Requirement for the PY 2015 ESRD QIP
d. Data Validation Requirements
2. Reductions to Bad Debt Payments for All
Medicare Providers
VI. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
2. Statement of Need
3. Overall Impact
B. Detailed Economic Analysis
1. CY 2013 End-Stage Renal Disease
(ESRD) Prospective Payment System
(PPS)
a. Effects on ESRD Facilities
b. Effects on Other Providers
c. Effects on the Medicare Program
d. Effects on Medicare Beneficiaries
e. Alternatives Considered
2. ESRD QIP
a. Effects of the PY 2015 ESRD QIP
b. Alternatives Considered for the PY 2015
ESRD QIP

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3. Reductions to Bad Debt Payments for All
Medicare Providers
C. Accounting Statement
VII. Regulatory Flexibility Act Analysis
VIII. Unfunded Mandates Reform Act
Analysis
IX. Federalism Analysis
X. Files Available to the Public via the
Internet
Regulations Text

Acronyms
Because of the many terms to which
we refer by acronym in this final rule,
we are listing the acronyms used and
their corresponding meanings in
alphabetical order below:
AMCC Automated Multi-Channel
Chemistry
ASP Average Sales Price
AV Arteriovenous
BLS Bureau of Labor Statistics
BMI Body Mass Index
BSA Body Surface Area
CAH Critical Access Hospital
CBSA Core-Based Statistical Area
CCN CMS Certification Number
CDC Centers for Disease Control and
Prevention
CLABSI Central Line Access Bloodstream
Infections
CFR Code of Federal Regulations
CIP Core Indicators Project
CMHC Community Mental Health Center
CMP Competitive Medical Plans
CMS Centers for Medicare & Medicaid
Services
CPM Clinical Performance Measure
CPT Current Procedural Terminology
CROWNWeb Consolidated Renal
Operations in a Web-Enabled Network
CY Calendar Year
DFC Dialysis Facility Compare
DFR Dialysis Facility Report
DME Durable Medical Equipment
ESA Erythropoiesis stimulating agent
ESRD End-Stage Renal Disease
ESRDB End-Stage Renal Disease Bundled
FDA Food and Drug Administration
FI/MAC Fiscal Intermediary/Medicare
Administrative Contractor
FQHC Federally Qualified Health Center
FY Fiscal Year
GDP Gross Domestic Product
HAI Healthcare-associated Infections
HCPCS Healthcare Common Procedure
Coding System
HCPP Health Care Prepayment Plan
HD Hemodialysis
HHD Home Hemodialysis
HMO Health Maintenance Organization
ICD–9–CM International Classification of
Diseases, 9th Edition, Clinical
Modifications
ICH CAHPS In-Center Hemodialysis
Consumer Assessment of Healthcare
Providers and Systems
IGI IHS Global Insight
IPPS Inpatient Prospective Payment System
KDIGO Kidney Disease: Improving Global
Outcomes
KDOQI Kidney Disease Outcome Quality
Initiative
Kt/V A measure of dialysis adequacy where
K is dialyzer clearance, t is dialysis time,
and V is total body water volume

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LDO Large Dialysis Organization
MAP Medicare Allowable Payment
MCP Monthly Capitation Payment
MIPPA Medicare Improvements for Patients
and Providers Act of 2008 (Pub. L. 110–
275)
MMA Medicare Prescription Drug,
Improvement and Modernization Act of
2003
MMEA Medicare and Medicaid Extenders
Act of 2010 Pub. L. 111–309
MFP Multifactor Productivity
NHSN National Healthcare Safety Network
NQF National Quality Forum
PD Peritoneal Dialysis
PFS Physician Fee Schedule
PPS Prospective Payment System
PSR Performance Score Report
PY Payment Year
QIP Quality Incentive Program
REMIS Renal Management Information
System
RFA Regulatory Flexibility Act
RHC Rural Health Clinic
RRF Residual Renal Function
RUL Reasonable Useful Lifetime
SBA Small Business Administration
SHR Standardized Hospitalization Ratio
SIMS Standard Information Management
System
SMR Standardized Mortality Ratio
SNF Skilled Nursing Facility
SSA Social Security Administration
TEP Technical Expert Panel
The Act Social Security Act
The Affordable Care Act The Patient
Protection and Affordable Care Act
URR Urea Reduction Ratio
VAT Vascular Access Type
VBP Value Based Purchasing

I. Executive Summary
A. Purpose
1. End-Stage Renal Disease (ESRD)
Prospective Payment System (PPS)
This final rule updates and makes
revisions to the End-Stage Renal Disease
(ESRD) prospective payment system
(PPS) for calendar year (CY) 2013. In
accordance with 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), the Centers for Medicare &
Medicaid Services (CMS) implemented
a case-mix adjusted bundled PPS for
Medicare outpatient ESRD dialysis
services beginning January 1, 2011. The
ESRD PPS replaced the basic case-mix
adjusted composite payment system and
the methodologies for the
reimbursement of separately billable
outpatient ESRD services.
Also, section 1881(b)(14)(F) of the
Act, as added by section 153(b) of
MIPPA and amended by section 3401(h)
of the Affordable Care Act (Pub. L. 111–
148), established that beginning CY
2012, and each subsequent year, the
Secretary shall reduce the market basket
increase factor by a productivity

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adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act. In
addition, the application of the
productivity adjustment may result in
the increase factor being less than 0.0
percent for a year.
2. End-Stage Renal Disease (ESRD)
Quality Incentive Program (QIP)
This final rule also sets forth
requirements for the ESRD quality
incentive program (QIP), including for
payment year (PY) 2015. The program is
authorized under section 153(c) of
MIPPA, which added section 1881(h) to
the Social Security Act (the Act). The
ESRD QIP is the most recent step in
fostering improved patient outcomes by
establishing incentives for dialysis
facilities to meet performance standards
established by CMS.
3. Reductions to Bad Debt Payments for
all Medicare Providers and Elimination
of the Cap on Bad Debt Reimbursement
to ESRD Facilities
This final rule also implements the
changes to the limitations on payments
for bad debt reimbursement set forth in
section 3201 of The Middle Class Tax
Extension and Job Creation Act of 2012
(Pub. L. 112–96) by revising 42 CFR
413.89, Bad debts, charity, and courtesy
allowances. Additionally, this rule will
remove the cap on bad debt
reimbursement to ESRD facilities.
B. Summary of the Major Provisions

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1. ESRD PPS
• Update to the composite and ESRD
PPS base rate for CY 2013: For CY 2013,
the ESRD PPS base rate is $240.36. This
amount reflects the application of the
ESRD bundled (ESRDB) market basket
reduced by the productivity adjustment,
or 2.3 percent, and the wage index
budget-neutrality adjustment factor of
1.000613 to the CY 2012 ESRD PPS base
rate of $234.81. The base rate is
applicable to both the ESRD PPS portion
of the blended payment under the
transition and payments under the full
PPS. During the transition, we are
required to update the composite rate
for ESRD facilities receiving a blended
payment. For CY 2013, the composite
base rate is $145.20. This amount
reflects the CY 2012 composite rate of
$141.94, increased by the ESRDB market
basket reduced by the productivity
adjustment.
• Update to the composite rate drug
add-on for CY 2013: There are no
changes to the methodology used to
compute the drug add-on for CY 2013;
we are only updating the data used to
calculate the drug add-on for CY 2013.
Using 6 years of average sales price

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(ASP) drug expenditure data and other
data, we estimate a 2.9 percent decrease
in aggregate drug expenditures and a 4.0
percent increase in enrollment. Using
these estimates, we project a 6.6 percent
decrease in per patient growth of drug
expenditures for CY 2013. Thus, we are
projecting that the combined growth in
per patient utilization and pricing for
CY 2013 will result in a decrease to the
drug add-on equal to 0.9 percentage
points. We will apply a zero update to
the drug add-on adjustment and
maintain the $20.33 per treatment drug
add-on amount for CY 2013. Because
the market basket minus productivity
that is applied to the composite rate
increases the composite rate, the add-on
adjustment of 14.3 percent is reduced to
14.0 percent to maintain the drug addon at $20.33.
• Market basket and productivity
adjustment: Under section
1881(b)(14)(F) of the Act, beginning in
CY 2012, ESRD PPS payment amounts
and the composite rate portion of the
transition blended payment amounts
shall be annually increased by an ESRD
market basket percentage increase factor
reduced by a multi-factor productivity
(MFP) adjustment. The CY 2013 ESRDB
market basket increase factor is 2.9
percent. The current forecast of the CY
2013 MFP adjustment is 0.6 percent.
The resulting final CY 2013 MFPadjusted ESRDB market basket update is
equal to 2.3 percent.
• The transition budget-neutrality
adjustment factor: For CY 2013, we are
applying the transition budgetneutrality adjustment methodology
established in CY 2011. This results in
a 0.1 percent adjustment. Therefore, for
CY 2013, a 0.1 percent increase will be
applied to both the blended payments
made under the transition and payments
made under the full ESRD PPS for renal
dialysis services furnished January 1,
2013 through December 31, 2013.
• Updates to the wage index and
wage index floor: We adjust wage
indices on an annual basis using the
most current hospital wage data to
account for differing wage levels in
areas in which ESRD facilities are
located. In CY 2013, we are not making
any changes to the application of the
wage index budget-neutrality
adjustment factor and will continue to
apply the budget-neutrality adjustment
to the pre-floor, pre-reclassified wage
index values for the composite rate
portion of the blended payment and to
the base rate for the ESRD PPS. Over the
past several years, we have been
gradually decreasing the wage index
floor by 0.05 in an effort to gradually
phase out the floor, and in CY 2013 we
will continue to do so. Therefore, in CY

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2013, we are reducing the wage index
floor from 0.550 to 0.500. We also
applied the wage index budgetneutrality adjustment factor to the wage
index floor of 0.500, which results in an
adjusted wage index floor of 0.501
(0.500 × 1.001141) for CY 2013.
• Update to the outlier policy: We are
updating the outlier services fixed
dollar loss amounts and Medicare
Allowable Payments (MAPs) for CY
2013 using 2011 data. Based on the use
of more current data, the fixed dollar
loss amount for pediatric patients will
decrease from $71.64 to $47.32 and the
MAP amount will decrease from $45.44
to $41.39 as compared to CY 2012
values. For adult patients, the fixeddollar loss amount drops from $141.21
to $110.22 and the MAP amount drops
from $78.00 to $59.42. Because of the
decline in utilization associated with
the implementation of the expanded
bundle, the 1 percent target for outlier
payments was not achieved in CY 2011.
Use of 2011 data to recalibrate the
thresholds, reflecting lower utilization
of epoetin and other outlier services, is
expected to result in aggregate outlier
payments close to the 1 percent target in
CY 2013. We believe this update to the
outlier MAPs and fixed dollar loss
amounts for CY 2013 will increase
payments for ESRD beneficiaries
requiring higher resource utilization in
accordance with a 1 percent outlier
policy.
• Policy reiteration (composite rate
drugs and AY modifier): Under the
composite and basic case-mix adjusted
composite rate payment systems, certain
drugs were included in the composite
rate and were not eligible for separate
payment. Our analyses of claims show
that ESRD facilities are continuing to
report composite rate drugs on ESRD
claims. In this rule, we are reiterating
that any item or service included in the
composite rate should not be identified
on ESRD claims. An AY modifier can be
appended to claims for drugs and
laboratory tests that are not ESRDrelated to allow for separate payment.
Our analyses of claims show that there
are ESRD facilities and laboratories that
are appending the AY modifier to drugs
and laboratory tests that we believe are
ESRD-related, resulting in separate
payment. In this rule, we reiterate the
purpose of the AY modifier and
emphasize that we are continuing our
monitoring efforts. We also indicate that
we may consider eliminating the AY
modifier in future rulemaking if we
believe that the AY modifier is not being
used for the purpose intended.

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2. ESRD QIP
This final rule also implements new
requirements for the ESRD QIP. It will
continue some of the previous ESRD
QIP measures, add new measures, and
expand the scope of some of the existing
measures to cover the measure topics as
follows:
• To evaluate anemia management:
Æ Hemoglobin Greater Than 12 g/dL,
a clinical measure.
Æ Anemia Management, a reporting
measure.*
• To evaluate dialysis adequacy:
Æ A clinical Kt/V measure for adult
hemodialysis patients.*
Æ A clinical Kt/V measure for adult
peritoneal dialysis patients. *
Æ A clinical Kt/V measure for
pediatric in-center hemodialysis
patients. *
• To determine whether patients are
treated using the most beneficial type of
vascular access:
Æ Vascular Access Type, a clinical
measure topic comprised of an
arteriovenous fistula and a catheter
measure.
• To address effective bone mineral
metabolism management:
Æ Mineral Metabolism, a reporting
measure.
• To address safety:
Æ National Healthcare Safety Network
(NHSN) Dialysis Event reporting
measure.
• To assess patient and caregiver
experience:
Æ In-Center Hemodialysis Consumer
Assessment of Healthcare Providers and
Systems (ICH CAHPS) survey reporting
measure.
* Denotes that this measure is new to
the ESRD QIP.
This final rule also establishes CY
2013 as the performance period for the
PY 2015 ESRD QIP. It also establishes
performance standards for each measure
and adopts scoring and payment
reduction methodologies that are similar
to those finalized for the PY 2014 ESRD
QIP.

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3. Reductions to Bad Debt Payments for
all Medicare Providers and Elimination
of the Cap on Bad Debt Reimbursement
to ESRD Facilities
This rule also implements the
statutory changes to the limitations on
payments for bad debt reimbursement
by revising 42 CFR 413.89, Bad debts,
charity, and courtesy allowances. We
are also moving 42 CFR 413.178(a) to 42
CFR 413.89(h)(3), and moving 42 CFR
413.178(d)(2) to 42 CFR 413.89(i)(2) and
removing and reserving the remainder
of 42 CFR 413.178. Additionally, we are
making a technical correction to the

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cross reference in 42 CFR 417.536(f)(1)
to Medicare bad debt reimbursement
policy. Finally, this final rule will
eliminate the cap on bad debt
reimbursement to an ESRD facility at its
unrecovered costs.

collection of information are critical to
better understanding the quality of care
beneficiaries receive, particularly a
patient’s experience of care, and will be
used to incentivize improvements in the
quality of care provided.

C. Summary of Costs and Benefits
In section VI.B of this final rule, we
set forth a detailed analysis of the
impacts that the changes will have on
affected entities and beneficiaries. The
impacts include the following:

3. Impacts of Bad Debt Provisions

1. Impacts of the Final ESRD PPS
The impact chart in section VI.B of
this final rule displays the estimated
change in payments to ESRD facilities in
CY 2013 as compared to estimated
payments in CY 2012. The overall
impact of the CY 2013 changes is
projected to be a 3.0 percent increase in
payments. Hospital-based ESRD
facilities have an estimated 3.6 percent
increase in payments compared with
freestanding facilities with an estimated
2.9 percent increase. Urban facilities are
expected to receive an estimated
payment increase of 3.0 percent
compared to an estimated 2.9 percent
increase for rural facilities. We expect a
2.4 percent decrease in estimated
payments as a result of wage index
adjustments for Puerto Rico and the
Virgin Islands. However, this decrease is
offset primarily by the impact of the
market basket increase, resulting in an
estimated 0.6 percent increase in
payment. The estimated 3.0 percent
overall payment increase will result in
a $250 million cost to Medicare and a
$60 million cost to beneficiaries. In
2013, a 2.3 percent market basket
increase will result in a $190 million
cost to Medicare and a $50 million cost
to beneficiaries. The outlier fixed dollar
loss and MAP adjustments in CY 2013
will result in a $30 million cost to
Medicare and a $10 million cost to
beneficiaries. The difference in cost to
Medicare is due to the effects of
changing the blend of payments from
50/50 to 25/75 and the 0.1 percent
transition budget-neutrality adjustment.
2. Impacts for ESRD QIP
The overall economic impact of the
ESRD QIP is an estimated $24.6 million
for PY 2015. We expect the total
payment reductions to be approximately
$12.1 million, and the costs associated
with the collection of information
requirements for certain measures to be
approximately $12.4 million.
The estimated payment reduction will
continue to incentivize facilities to
provide higher quality care to
beneficiaries. The reporting measures
that result in costs associated with the

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We are codifying the provisions of
section 3201 of The Middle Class Tax
Extension and Job Creation Act of 2012
that requires reductions in bad debt
reimbursement to all providers eligible
to receive bad debt reimbursement;
these provisions are specifically
prescribed by statute and thus, are
generally self-implementing. There will
be a $10.92 billion savings to the
program over 10 years resulting from
these self-implementing reductions in
bad debt reimbursement. We are also
removing the cap on reimbursement for
bad debt to ESRD facilities for cost
reporting periods beginning on or after
January 1, 2013, which will result in a
cost to the Medicare program of $170
million over 10 years.
II. Calendar Year (CY) 2013 End-Stage
Renal Disease (ESRD) Prospective
Payment System (PPS)
A. Background on the End-Stage Renal
Disease (ESRD) Prospective Payment
System (PPS)
On August 12, 2010, we published in
the Federal Register a final (75 FR
49030) titled, ‘‘End-Stage Renal Disease
Prospective Payment System’’,
hereinafter referred to as the CY 2011
ESRD PPS final rule. In the CY 2011
ESRD PPS final rule, we implemented a
case-mix adjusted bundled PPS for
Medicare outpatient ESRD dialysis
services beginning January 1, 2011, in
accordance with section 1881(b)(14) of
the Act, as added by section 153(b) of
MIPPA.
On April 6, 2011, we published in the
Federal Register an interim final rule
with comment period (76 FR 18930)
titled, ‘‘Changes in the End-Stage Renal
Disease Prospective Payment System
Transition Budget-Neutrality
Adjustment’’, which revised the ESRD
transition budget-neutrality adjustment
for CY 2011. In the interim final rule,
we revised the 3.1 percent transition
budget-neutrality adjustment reduction
to a zero percent transition budgetneutrality adjustment for renal dialysis
services furnished on April 1, 2011
through December 31, 2011 (76 FR
18933). On November 10, 2011, we
published in the Federal Register, a
final rule (76 FR 70228 through 70316)
titled, ‘‘Medicare Program; End-Stage
Renal Disease Prospective Payment
System and Quality Incentive Program;

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Ambulance Fee Schedule; Durable
Medical Equipment; and Competitive
Acquisition of Certain Durable Medical
Equipment, Prosthetics, Orthotics and
Supplies (hereinafter referred to as the
CY 2012 ESRD PPS final rule). In that
final rule, for the ESRD PPS, we made
a number of routine updates for CY
2012, implemented the second year of
the transition to the ESRD PPS, made
several policy changes, clarifications,
and technical changes. In the CY 2013
ESRD PPS proposed rule (77 FR 40956),
we summarize the updates, changes,
and clarifications that were finalized in
the CY 2012 ESRD PPS final rule (76 FR
70228).
B. Summary of the Proposed Provisions
and Responses to Comments on the CY
2013 ESRD PPS
The proposed rule, titled ‘‘Medicare
Program; End-Stage Renal Disease
Prospective Payment System, Quality
Incentive Program, and Bad Debt
Reductions for All Medicare Providers’’
(77 FR 40952), hereinafter referred to as
the CY 2013 ESRD PPS proposed rule
appeared in the Federal Register on July
11, 2012, with a comment period that
ended on August 31, 2012. In that
proposed rule, for the ESRD PPS, we
proposed to (1) make a number of
routine updates for CY 2013, (2)
implement the third year of the
transition, and (3) make several policy
changes and clarifications. We received
approximately 40 public comments on
the ESRD PPS proposals, including
comments from ESRD facilities; national
renal, nephrologist and patient
organizations; patients; manufacturers;
health care systems; and nurses. 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 for the CY 2013 ESRD
PPS.

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C. Routine Updates and Proposed Policy
Changes to the CY 2013 ESRD PPS
1. Composite Rate Portion of the ESRD
PPS Blended Payment
Section 1881(b)(14)(E)(i) of the Act
requires a 4-year transition under the
ESRD PPS. This final rule implements
the third year of the transition for those
ESRD facilities that did not elect to
receive 100 percent of the payment
amount under the ESRD PPS. For CY
2013, under 42 CFR 413.239(a)(3),
facilities that are transitioning will
receive a blended rate equal to the sum
of 75 percent of the full ESRD PPS
amount and 25 percent of the basic casemix adjusted composite payment
amount. Accordingly, we continue to

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update the composite rate portion of the
blended payment during the transition,
(that is, CY 2011 through 2013), which
includes updates to the drug add-on
adjustment required by section
1881(b)(12)(F) of the Act, discussed in
section II.C.1.a of this final rule, as well
as the wage index values (which
includes a budget-neutrality factor) used
to adjust the labor component of the
composite rate discussed in section
II.C.5 of this final rule. For CY 2013, we
proposed to update the second part of
the transition budget-neutrality
adjustment to reflect updated data. The
transition budget-neutrality adjustment
is applied to both the blended payments
under the transition and payments
under the ESRD PPS. The discussion
regarding the transition budgetneutrality adjustment can be found in
section II.C.4 of this final rule.
As discussed in the CY 2013 ESRD
PPS proposed rule (76 FR 40957),
section II.C.3 of this final rule, and in
section 1881(b)(14)(F)(ii) of the Act, as
added by section 153(b) of MIPPA and
amended by section 3401(h) of the
Affordable Care Act, for the years in
which the transition applies, the
composite base rate shall be annually
increased by the ESRDB market basket
and, for CY 2012 and each subsequent
year, the ESRDB market basket shall be
reduced by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II)
of the Act. In the CY 2013 ESRD PPS
proposed rule (77 FR 40957), we
proposed for CY 2013 a composite rate
of $145.49, which reflected the CY 2012
composite rate of $141.94 increased by
an ESRDB market basket of 3.2 reduced
by the productivity adjustment of 0.7
percent, resulting in an update of 2.5
percent, based on the first quarter 2012
IGI forecast of the ESRDB market basket.
We received four public comments
supporting our proposal to increase the
composite base rate by 2.5 percent for
ESRD services furnished in CY 2013 and
paid under the blended payment
methodology during the transition
period.
In section II.C.3.b of this final rule, we
finalize the CY 2013 ESRDB market
basket update of 2.9 percent, and the
MFP adjustment of 0.6 percent, which
results in a forecasted rate of increase to
the base rate of 2.3 percent. This final
update is based on the third quarter
2012 IGI forecast of the ESRDB market
basket. Consequently for CY 2013, we
are finalizing the composite base rate
under the ESRD PPS payment of
$145.20 for ESRD services furnished
during CY 2013 and paid under the
blended payment methodology. This
amount reflects the CY 2012 composite
rate of $141.94 increased by the CY

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2013 ESRD market basket increase factor
of 2.9 percent reduced by the
productivity adjustment of 0.6 percent.
The resulting CY 2013 MFP-adjusted
ESRD market basket update is 2.3
percent ($141.94 × 1.023 = $ 145.20).
a. Update to the Drug Add-On to the
Composite Rate Portion of the ESRD
Blended Payment Rate
Section 1881(b)(14)(E)(i) of the Act
requires a 4-year transition under the
ESRD PPS. Under 42 CFR 413.239,
ESRD facilities were permitted to make
a one-time election by November 1,
2010, to be excluded from the transition
and receive full payment under the
ESRD PPS. Under § 413.239(a)(3), in CY
2013, ESRD facilities that elected to
receive payment under the transition
will be paid a blended amount
consisting of 25 percent of the basic
case-mix adjusted composite payment
system payment and 75 percent of the
ESRD PPS payment. Thus, we must
continue to update the composite rate
portion of the blended payment amount
during the ESRD PPS transition (CY
2011 through 2013), which includes an
update to the drug add-on.
As required under section 1881(b)(12)
of the Act, the basic case-mix adjusted
composite payment system includes the
services in the composite rate and an
add-on to the composite rate portion of
the blended payment to account for the
difference between pre-Medicare
Modernization Act payments for
separately billed drugs and the revised
drug pricing specified in the statute. For
the drug add-on for CY 2013 (77 FR
40957 through 40959), we did not
propose any changes to the drug add-on
methodology, but merely updated the
data used in computing the drug add-on
as described below.
i. Estimating Growth in Expenditures for
Drugs and Biologicals in CY 2013
Section 1881(b)(12)(F) of the Act
specifies that the drug add-on increase
must reflect ‘‘the estimated growth in
expenditures for drugs and biologicals
(including erythropoietin) that are
separately billable * * *’’. By referring
to ‘‘expenditures’’, we believe the
statute contemplates that the update
would account for both increases in
drug prices, as well as increases in
utilization of those drugs.
As we indicated in the CY 2013 ESRD
PPS proposed rule (77 FR 40957), we
continue to estimate growth in drug
expenditures based on the trends in
available data. To account for increases
in drug prices and utilization for CY
2013 we used the 6 years of available
drug expenditure data based on ASP
pricing. We then removed growth in

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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations
enrollment for the same time period
from the expenditure growth so that the
residual reflects the per patient
expenditure growth (which includes
price and utilization combined).
To estimate drug expenditure growth
using trend analysis, for CY 2013, we
looked at the average annual growth in
total drug expenditures between 2006
and 2011. First, we estimated the total
drug expenditures for all ESRD facilities
in CY 2011. We used the final CY 2006
through CY 2010 ESRD claims data and
the latest available CY 2011 ESRD
facility claims, updated through
December 31, 2011 (that is, claims with
dates of service from January 1 through
December 31, 2011, that were received,
processed, paid, and passed to the
National Claims History File as of
December 31, 2011). We indicated in the
CY 2013 ESRD PPS proposed rule (77
FR 40958) that for the CY 2013 PPS final
rule, we would use additional updated
CY 2011 claims with dates of service for
the same timeframe. This updated CY
2011 data file would include claims
received, processed, paid, and passed to
the National Claims History File as of
June 30, 2012. We further stated that
while the CY 2011 claims file used in
the proposed rule was the most current
available, we recognize that it does not
reflect a complete year, as claims with
dates of service towards the end of the
year have not all been processed. To
more accurately estimate the update to
the drug add-on, completed aggregate
drug expenditures are required.
In the CY 2013 ESRD PPS proposed
rule (77 FR 40958), we inflated the CY
2011 drug expenditures to estimate the
June 30, 2012 update of the 2011 claims
file. We used the relationship between
the December 2010 and the June 2011
versions of 2010 claims to estimate the
more complete 2011 claims that were
available in June 2012 and applied that
ratio to the 2011 claims data from the
December 2011 claims file. The net
adjustment to the CY 2011 claims data
was an increase of 9.7 percent to the
2011 expenditure data. This adjustment
allows us to more accurately compare
the 2010 and 2011 drug expenditure
data to estimate per patient growth.
We further stated in the CY 2013
ESRD PPS proposed rule (77 FR 40958),
that using the completed full-year 2011
drug expenditure figure, we calculated
the average annual change in drug
expenditures from 2006 through 2011.
This average annual change showed a
decrease of 3.0 percent in drug
expenditures from 2006 through 2011.
We used this 3.0 percent decrease to
project drug expenditures for both 2012
and 2013.

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For this CY 2013 final rule, using the
full year 2011 drug expenditure figure
based on the June 2012 update of the CY
2011 National Claims History File, we
calculated the average annual change in
drug expenditure from 2006 through
2011. This average annual change
showed a decrease of 2.9 percent in
drug expenditures from 2006 through
2011. We used this 2.9 decrease to
project drug expenditures for both 2012
and 2013. We note that the decrease in
the drug expenditures percentage is a
result of our use of updated data.
ii. Estimating Per Patient Growth
In the CY 2013 ESRD PPS proposed
rule (77 FR 40958), we explained that
once we had the projected growth in
drug expenditures from 2012 to 2013,
we calculated per patient growth
between CYs 2012 and 2013 by
removing the estimated growth in
enrollment data between CYs 2012 and
2013. We had estimated a 4.6 percent
growth in fee-for-service Medicare
dialysis beneficiary enrollment between
CYs 2012 and 2013. To obtain the perpatient estimated growth in
expenditures, we divided the total drug
expenditure change of a 3 percent
decrease between 2012 and 2013 (0.97)
by enrollment growth of 4.6 percent
(1.046) for the same timeframe. The
result was a per-patient growth factor
equal to 0.927 (0.97/1.046 = 0.927).
Thus, we are projecting a 7.3 percent
decrease (¥7.3% = ¥.073 = 0.927 ¥1)
in per patient growth in drug
expenditures between CYs 2012 and
2013.
For this final rule, we estimate a 4.0
percent estimated growth in enrollment
between CYs 2012 and 2013. To obtain
the per-patient estimated growth in
expenditures, we divided the total drug
expenditure change of a 2.9 percent
decrease between CYs 2012 and 2013
(0.971) by enrollment growth of 4.0
percent (1.04) for the same timeframe.
The result is a per-patient growth factor
equal to 0.934 (.971/1.04=.934). Thus, in
this final rule, for CY 2013 we are
projecting a 6.6 percent decrease
(¥6.6% percent =¥.063=.934¥1) in
per patient growth in drug expenditures
between CYs 2012 and 2013.
iii. Applying the Proposed Growth
Update to the Drug Add-On Adjustment
We explained in the CY 2013 ESRD
PPS proposed rule (77 FR 40958), that
in the CY 2012 ESRD PPS proposed and
final rules, we provided an incorrect
citation to the CY 2006 PFS final rule
with comment in the discussion of the
application of the projected growth
update percentages. The correct citation
to this discussion in the CY 2006 PFS

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final rule with comment is 70 FR 70166
and 70167. In the CY 2006 rule, we
applied the projected growth percentage
to the total amount of drug add-on
dollars established for CY 2005 to
establish a dollar amount for the CY
2006 growth. In addition, we projected
the growth in dialysis treatments for CY
2006 based on the projected growth in
ESRD enrollment. We divided the
projected total dollar amount of the CY
2006 growth by the projected total
dialysis treatments to develop the per
treatment growth update amount. This
growth update amount, combined with
the CY 2005 per treatment drug add-on
amount, resulted in a 14.7 percent
adjustment to the composite rate for CY
2006.
We further explained in the CY 2013
ESRD PPS proposed rule (77 FR 40958),
that subsequent to the publication of the
CY 2006 PFS final rule with comment,
the Deficit Reduction Act (DRA) of 2005
(Pub. L. 109–171) was enacted on
February 8, 2006. Section 5106 of the
DRA amended section 1881(b)(12) of the
Act to require the Secretary to increase
the amount of the composite rate
component of the basic case-mix
adjusted system for dialysis services
furnished on or after January 1, 2006 by
1.6 percent above the amount of the
composite rate for such services
furnished on December 31, 2005. We
issued Change Request 4291,
Transmittal 849, entitled, ‘‘Update to
the ESRD Composite Payment Rates’’ on
February 10, 2006 to instruct contractors
to implement this change. We stated in
Change Request 4291 that because the
drug add-on adjustment is determined
as a percentage of the composite rate, it
was necessary to adjust the drug add-on
percentage to account for the 1.6 percent
increase in the composite payment rate.
Therefore, the total drug add-on
adjustment to the composite payment
rate for 2006 was 14.5 percent instead
of 14.7 percent.
Finally, we explained in the CY 2013
ESRD PPS proposed rule (77 FR 40958)
that in the CY 2007 PFS final rule with
comment period (71 FR 69683 and
69684), we revised our update
methodology by applying the growth
update to the per treatment drug add-on
amount. That is, for CY 2007, we
applied the growth update factor of 4.03
percent to the $18.88 per treatment drug
add-on amount resulting in an updated
per treatment drug add-on amount of
$19.64 per treatment (71 FR 69684). For
CY 2008, the per treatment drug add-on
amount was updated to $20.33. In the
CYs 2009, 2010, and 2011 PFS final rule
with comment period (73 FR 69755
through 69757, 74 FR 61923, and 75 FR
73485, respectively) and the CY 2012

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ESRD PPS final rule (76 FR 70239), we
applied a zero update to the per
treatment drug add-on amount resulting
in a per treatment drug add-on amount
of $20.33. For CY 2013, we did not
make any update to the per treatment
drug add-on amount of $20.33
established in CY 2008.
As discussed in detail below, in this
final rule, for CY 2013, we are finalizing
a zero update to the per treatment drug
add-on amount of $20.33 established in
CY 2008.
iv. Update to the Drug Add-On
Adjustment for CY 2013
As discussed above, in the CY 2013
ESRD PPS proposed rule (77 FR 40958),
we estimated a 3.0 percent decrease in
drug expenditures between CYs 2012
and 2013. Combining this decrease with
a 4.6 percent increase in enrollment, as
described above, we projected a 7.3
percent decrease in per patient growth
of drug expenditures between CYs 2012
and CY 2013. Therefore, in the CY 2013
ESRD PPS proposed rule, we projected
that the combined growth in per patient
utilization and pricing for CY 2013
would result in a decrease to the drug
add-on equal to 1.0 percentage points
(out of the revised 14.0 percent add-on
for 2013). This figure was derived by
applying the 7.3 percent decrease to the
CY 2012 drug add-on of $20.33. This
resulted in a revised drug add-on of
$18.85, which is 13.0 percent of the
proposed CY 2013 base composite rate
of $145.49. We indicated that if we were
to apply no decrease to the drug add-on
of $20.33, this would result in a 14.0
percent drug add-on. However, similar
to last year and as indicated above, we
proposed a zero update to the drug addon adjustment. We believe this
approach is consistent with the
language under section 1881(b)(12)(F) of
the Act, which states in part that ‘‘the
Secretary shall annually increase’’ the
drug add-on amount based on the
growth in expenditures for separately
billed ESRD drugs. Therefore, we
proposed to apply a zero update and
maintain the $20.33 per treatment drug
add-on amount for CY 2013. We sought
comment on our proposed zero update
to the drug add-on.
We further stated in the CY 2013
ESRD PPS proposed rule (77 FR 40959),
that the current $20.33 per treatment
drug add-on reflected a 14.3 percent
drug add-on adjustment to the
composite rate in effect for CY 2012. As
discussed in section II.3.a of the CY
2013 ESRD PPS proposed rule, section
1881(b)(14)(F) of the Act requires that
an ESRDB market basket minus
productivity adjustment be used to
update the composite rate portion of the

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ESRD PPS payment resulting in a
decrease to the CY 2013 drug add-on
adjustment from 14.3 to 14.0 percent, to
maintain the drug add-on at $20.33.
This decrease occurs because the drug
add-on adjustment is a percentage of the
composite rate. Since the proposed CY
2013 composite rate is higher than the
CY 2012 composite rate and since the
drug add-on remains at $20.33, the
percentage decreases. Therefore, we
proposed a drug add-on adjustment to
the composite rate for CY 2013 of 14.0
percent.
We did not receive any comments on
our proposals to use a zero update to the
drug add-on or on the proposed drugadd on adjustment to the composite rate
for CY 2013 of 14.0 percent.
In this final rule, for CY 2013, we
estimate a 2.9 percent decrease in drug
expenditures between CYs 2012 and
2013. Combining this increase with a
4.0 percent increase in enrollment, we
project a 6.6 percent decrease in per
patient growth of drug expenditures
between CYs 2012 and 2013. Therefore,
we project that the combined growth in
per patient utilization and pricing for
CY 2013 results in a decrease to the
drug add-on equal to 0.9 percentage
points. This figure is derived by
applying the 6.6 percent decrease to the
CY 2012 drug add-on of $20.33. This
results in a revised drug add-on of
$18.98, which is 13.1 percent of the
final CY 2013 base composite rate of
$145.20. Applying no decrease to the
drug add-on of $20.33 results in a 14.0
percent drug add-on. Similar to last year
and as discussed above, for CY 2013, we
are finalizing a zero update to the drug
add-on and maintaining the $20.33 per
treatment drug add-on amount.
The current $20.33 per treatment drug
add-on reflected a 14.3 percent drug
add-on adjustment to the composite rate
in effect for CY 2012. Using the latest
ESRDB market basket minus
productivity adjustments to update the
composite rate portion of the ESRD PPS
payment (forecast of 2.3 percent in CY
2013 effective January 1, 2013, as
discussed in section II.C.3 of this final
rule), results in a decrease to the CY
2013 drug add-on adjustment from 14.3
to 14.0 percent in order to maintain the
drug add-on amount of $20.33. This
decrease occurs because the drug addon adjustment is a percentage of the
composite rate. Because the final CY
2013 composite rate is higher than CY
2012 composite rate, and since the drug
add-on remains at $20.33, the
percentage decreases. Therefore, we are
finalizing for CY 2013 the drug add-on
adjustment of 14.0 to the composite rate.

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2. ESRD PPS Base Rate
In the CY 2013 ESRD PPS proposed
rule (77 FR 40959) and CY 2012 ESRD
PPS final rule (76 FR 70231), we
discussed the development of the ESRD
PPS per treatment base rate that is
codified in the Medicare regulations at
42 CFR 413.220 and 413.230. We
explained that the CY 2011 ESRD PPS
final rule (75 FR 49071 through 49082)
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), updated to CY 2011,
and represented the average per
treatment Medicare Allowable Payment
(MAP) for composite rate and separately
billable services. We further explained
that in accordance with 42 CFR 413.230,
the ESRD PPS base rate is adjusted for
the patient-specific case-mix
adjustments, applicable facility
adjustments, geographic differences in
area wage levels using an area wage
index, as well as any outlier payment or
training payments (if applicable). For
CY 2012, the ESRD PPS base rate was
$234.81 (76 FR 70231).
We also indicated in the CY 2013
ESRD PPS proposed rule (77 FR 40959)
that 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, provides that,
beginning in 2012, the ESRD PPS
payment amounts are required to be
annually adjusted by the rate of increase
in the ESRD market basket, reduced by
the productivity adjustment.
Accordingly, in the CY 2013 ESRD PPS
proposed rule, we applied the 2.5
percent increase to the CY 2012 ESRD
PPS base rate of $234.81, which resulted
in a proposed CY 2013 ESRD PPS base
rate of $240.68 ($234.81 × 1.025 =
$240.68). The ESRD PPS base rate is
applicable to both the ESRD PPS portion
of the blended payment under the
transition and payments under the full
ESRD PPS.
In addition, for CY 2013, we proposed
a wage index budget-neutrality
adjustment factor of 1.000826 to be
applied to the CY 2013 ESRD PPS base
rate (that is, $240.68), which yielded a
proposed CY 2013 ESRD PPS wage
index budget-neutrality adjusted base
rate of $240.88 ($240.68 × 1.000826 =
$240.88).

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Comment: All commenters supported
our CY 2013 ESRD PPS wage index
budget-neutrality adjusted base rate.
Two commenters thanked CMS for
providing an update to the base rate,
and one commenter specifically
appreciated the base rate increase at a
time when the Medicare ESRD program
is undergoing significant changes and
noted that it is important to retain
savings where applicable.
Response: We thank the commenters
for their support. In this final rule, using
updated data for CY 2013, we applied
the 2.3 percent increase (ESRDB market
basket update less productivity) to the
CY 2012 ESRD PPS base rate of $234.81,
which results in an ESRD PPS base rate
for CY 2013 of $240.21 ($234.81 × 1.023
= $240.21). In addition, we applied the
wage index budget-neutrality
adjustment factor of 1.000613 to the
updated base rate of $240.21, yielding
an ESRD PPS wage index budgetneutrality adjusted base rate for CY 2013
of $240.36 ($240.21 × 1.000613 =
$240.36).

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3. ESRD Bundled Market Basket
a. Overview and Background
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
bundled payment amounts are required
to be annually increased by an ESRD
market basket increase factor that is
reduced by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II)
of the Act. The application of the
productivity adjustment described 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 further 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. Under section
1881(b)(14)(F)(ii) of the Act, as added by
section 153(b) of MIPPA and amended
by section 3401(h) of the Affordable
Care Act, the ESRDB market basket
increase factor will also be used to
update the composite rate portion of
ESRD payments during the ESRD PPS
transition period from CYs 2011 through
2013; though beginning in CY 2012,
such market basket increase factor will
be reduced by the productivity
adjustment. Therefore, a full market
basket was applied to the composite rate
portion of the blended payment in CY
2011 during the first year of the
transition.

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b. Market Basket Update Increase Factor
and Labor-related Share for ESRD
Facilities for CY 2013
As required under section
1881(b)(14)(F) of the Act, CMS
developed an all-inclusive ESRDB input
price index (75 FR 49151 through
49162). Although ‘‘market basket’’
technically describes the mix of goods
and services used to produce ESRD care,
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 that 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 same
methodology described in the CY 2011
ESRD PPS final rule (75 FR 49151
through 49162) to compute the CY 2013
ESRDB market basket increase factor
and labor-related share based on the
best available data (76 FR 40503).
Consistent with historical practice, we
estimated the ESRDB market basket
update based on IHS Global Insight
(IGI), Inc.’s forecast using the most
recently available data. 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
forecast for the third quarter of 2012 of
the CY 2008-based ESRDB market
basket (with historical data through the
second quarter of 2012), and consistent
with our historical practice of
estimating market basket increases
based on the best available data, the CY
2013 ESRDB market basket increase
factor is 2.9 percent.
For the CY 2013 ESRD payment
update, we will continue to use a laborrelated share of 41.737 percent for the
ESRD PPS payment and the ESRD PPS
portion of the blended payment, which
was finalized in the CY 2011 ESRD final
rule (75 FR 49161). We will also
continue to use a labor-related share of
53.711 percent for the ESRD composite
rate portion of the blended payment for
all years of the transition. This laborrelated share was developed from the
labor-related components of the 1997
ESRD composite rate market basket that
was finalized in the CY 2006 Physician
Fee Schedule (PFS) final rule (70 FR
70168), and is consistent with the mix
of labor-related services paid under the
composite rate, as well as the method
finalized in the CY 2011 ESRD PPS final
rule (75 FR 49116).

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c. Productivity Adjustment
The ESRDB market basket must be
annually adjusted by changes in
economy-wide productivity.
Specifically, under section
1881(b)(14)(F)(i) of the Act, as amended
by section 3401(h) of the Affordable
Care 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
statute defines the productivity
adjustment to be equal to the 10-year
moving average of changes in annual
economy-wide private nonfarm business
multifactor productivity (MFP) (as
projected by the Secretary for the 10year period ending with the applicable
fiscal year, year, cost reporting period,
or other annual period) (the ‘‘MFP
adjustment’’). The Bureau of Labor
Statistics (BLS) is the agency that
publishes the official measure of private
nonfarm business MFP. Please see
http://www.bls.gov/mfp to obtain the
BLS historical published MFP data.
CMS notes that the methodology for
calculating and applying the MFP
adjustment to the ESRD payment update
is similar to the methodology used in
other payment systems, as required by
section 3401 of the Affordable Care Act.
The projection of MFP is currently
produced by IGI. The details regarding
the methodology for forecasting MFP
and how it is applied to the market
basket was finalized in the CY 2012
ESRD PPS final rule (76 FR 70232
through 70234). Using this method and
the IGI forecast for the third quarter of
2012 of the 10-year moving average of
MFP, the CY 2013 MFP factor is 0.6
percent.
d. Calculation of the ESRDB Market
Basket Update, Adjusted for Multifactor
Productivity for CY 2013
Under section 1881(b)(14)(F) of the
Act, beginning in CY 2012, ESRD PPS
payment amounts and the composite
rate portion of the transition blended
payment amounts shall be annually
increased by an ESRD market basket
percentage increase factor reduced by a
productivity adjustment. We proposed
to follow the same methodology for
calculating the ESRDB market basket
updates adjusted for MFP that was
finalized in the CY 2012 ESRD PPS final
rule (76 FR 70234).
Thus, in accordance with section
1881(b)(14)(F)(i) of the Act, the market
basket increase factor for CY 2013 for
the ESRDB market basket is based on
the 3rd quarter 2012 forecast of the CY
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update, which is estimated to be 2.9
percent. This market basket percentage
is then reduced by the MFP adjustment
(the 10-year moving average of MFP for
the period ending CY 2013) of 0.6
percent, which is based on IGI’s 3rd
quarter 2012 forecast. The resulting
MFP-adjusted ESRDB market basket
update for CY 2013 is equal to 2.3
percent, or 2.9 percent less 0.6
percentage point.
We received two comments in
support of the market basket update. We
are finalizing the update to the ESRDB
market basket of 2.3 percent for CY
2013.
4. Transition Budget-Neutrality
Adjustment for CY 2013
Section 1881(b)(14)(E)(i) of the Act
requires the Secretary to provide a 4year phase-in of the payments under the
ESRD PPS for renal dialysis services
furnished on or after January 1, 2011,
with payments under the ESRD PPS
fully implemented for renal dialysis
services furnished on or after January 1,
2014. Although the statute uses the term
‘‘phase-in,’’ we use the term
‘‘transition’’ in our discussions in order
to be consistent with other Medicare
payment systems.
Section 1881(b)(14)(E)(ii) of the Act
permitted ESRD facilities to make a onetime election to be excluded from the
transition. An ESRD facility that elected
to be excluded from the transition
receives payment for renal dialysis
services furnished on or after January 1,
2011, based on 100 percent of the
payment rate under the ESRD PPS
rather than a blended payment based in
part on the payment under the basic
case-mix adjusted composite payment
system and in part on the payment
under the ESRD PPS. Section
1881(b)(14)(E)(iii) of the Act also
requires that we make an adjustment to
payments during the transition so that
the estimated total amount of payments
under the ESRD PPS, including
payments under the transition, equals
the estimated total amount of payments
that would otherwise occur under the
ESRD PPS without such a transition. We
refer to this provision as the transition
budget-neutrality adjustment.
In the CY 2012 ESRD PPS final rule
(76 FR 70235), we discussed the two
parts that comprise the transition
budget-neutrality adjustment factor. For
the first part, we created a one-time
payment adjustment to the composite
rate portion of the blended payment
during the transition to account for the
per treatment costs of ESRD drugs with
an injectable equivalent that were paid
under Part D. We finalized the one-time
addition of the CY 2011 Part D per

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treatment amount of $0.49 to the
composite rate (76 FR 70231). For the
second part, we explained that we
computed a factor that would make the
estimated total amount of payments
under the ESRD PPS, including
payments under the transition, equal to
the estimated total amount of payments
that would otherwise occur without
such a transition.
Given that the transition budgetneutrality adjustment required under
section 1881(b)(14)(E)(iii) of the Act
applies in each year of the transition, we
must update the transition budgetneutrality adjustment for CY 2013, the
third year of the transition. As discussed
in detail below, and in accordance with
section 1881(b)(14)(E)(iii) of the Act, an
adjustment is made to payments so that
estimated total payments under the
transition equal estimated total payment
amounts without such a transition.
In the CY 2013 ESRD PPS proposed
rule, we did not propose to change the
methodology used to calculate either
part of the transition budget-neutrality
adjustment factor. We did, however,
propose to use updated data to calculate
the second part of the transition budgetneutrality adjustment factor. The first
part, which is the Part D payment
amount added to the composite rate, is
updated annually by the ESRDB market
basket reduced by the productivity
adjustment. The second part is updated
as described below.
For CY 2013, we started with 2011
utilization data from claims, as 2011 is
the latest complete year of claims data
available. In the CY 2013 ESRD PPS
proposed rule, we used the December
2011 claims file. In this final rule, we
used the June 2012 claims file. We
updated the CY 2011 utilization data to
CYs 2012 and 2013 payments by using
the price growth factors for CYs 2012
and 2013, as discussed in the impact
analysis in section VI.C of this final
rule. We then took the estimated
payments under the full CY 2013 ESRD
PPS and the blended payments under
the transition based on actual facility
election data and compared these
estimated payments to the total
estimated payments in CY 2013 as if all
facilities had elected to receive payment
under the ESRD PPS. We then
calculated the transition budgetneutrality factor to be 1 minus the ratio
of estimated payments under the ESRD
PPS as if there were no transition to the
total estimated payments under the
transition, which results in a zero
percent reduction factor for CY 2013. In
the CY 2013 ESRD PPS proposed rule,
we proposed a zero percent reduction to
all payments made to ESRD facilities
(that is, the zero percent adjustment

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would be applied to both the blended
payments made under the transition and
payments made under the 100 percent
ESRD PPS) for renal dialysis items and
services furnished January 1, 2013
through December 31, 2013 (77 FR
40957). We solicited comments on the
proposed second part of the CY 2013
transition budget-neutrality adjustment.
We received three comments as set
forth below.
Comment: All of the commenters
supported using updated data and
maintaining a zero percent budgetneutrality transition adjustment for CY
2013.
Response: We thank the commenters
for their support of our proposed use of
updated data and a transition budgetneutrality factor of zero percent for renal
dialysis services furnished during
January 1, 2013 through December 31,
2013. As we indicated above, for the
proposed rule, we used the December
2011 claims file to compute the
transition budget-neutrality adjustment
factor. For this final rule, we used the
June 2012 claims file. As a result of
using the June 2012 claims file, we
calculated the transition budgetneutrality factor to be a reduction of 1
minus the ratio of estimated payments
under the ESRD PPS as if there were no
transition to the total estimated
payments under the transition, which
results in a 0.1 percent increase factor
for CY 2013. We believe the claims data
we used to perform our analysis
resulted in the change in the transition
budget-neutrality adjustment factor from
the zero factor used in previous years to
the 0.1 percent increase factor for CY
2013. We note that in past years, the
transition budget-neutrality factor has
not always been an absolute zero, but
was rounded to zero percent. The June
2012 claims file represents 2011 data,
the first year of the PPS. In 2011, the
utilization for separately billable drugs,
laboratory tests and other items dropped
significantly. For ESRD facilities that are
paid under the transition, the decrease
in utilization contributed to the
payment for the composite rate portion
of the blended payment being lower
than the payment for the ESRD PPS
portion of the blended payment.
Therefore, total payments for all
facilities under the transition were
lower than what payments would have
been under the ESRD PPS, if there were
no transition. This widening difference
resulted in the transition budgetneutrality adjustment rounding to 0.1
for CY 2013. We are finalizing for CY
2013 a transition budget-neutrality
adjustment of 0.1 percent.

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5. Updates to the Wage Index Values
and Wage Index Floor for the Composite
Rate Portion of the Blended Payment
and the ESRD PPS Payment
Section 1881(b)(14)(D)(iv)(II) of the
Act provides that the ESRD PPS may
include such other payment
adjustments as the Secretary determines
appropriate, such as a payment
adjustment by a geographic wage index,
such as the index referred to in section
1881(b)(12)(D) of the Act. In the CY
2011 ESRD PPS final rule (75 FR 49117),
we finalized the use of the OMB’s corebased statistical area (CBSA) based
geographic area designations to define
urban/rural areas and corresponding
wage index values. In the CY 2012
ESRD PPS final rule (76 FR 70241), we
finalized the wage index policy that is
used under the ESRD PPS. Under the
ESRD PPS, we have adopted the same
method and source of wage index values
used previously to compute the wage
index values for the basic case-mix
adjusted composite payment system.
Specifically, we finalized our policies to
continue to utilize the methodology
established under the composite
payment system for updating the wage
index values using the OMB’s CBSAbased geographic area designations to
define urban and rural areas and
corresponding wage index values; the
gradual reduction of the wage index
floor during the transition; and the
policies for areas with no hospital data.
For CY 2013, we did not propose any
changes to the methodology finalized in
the CY 2012 final rule and will update
the wage index values using the FY
2013 Inpatient Prospective Payment
System (IPPS) pre-floor, pre-reclassified
hospital wage data.
In the CY 2012 ESRD PPS final rule
(76 FR 70242), we explained that we
would continue to use the labor-related
share of 53.711 finalized in the 2005
PFS final rule (70 FR 70168) for the
composite rate portion of the blended
payment during the transition and
continue to use a labor-related share of
41.737 for the ESRD PPS payment for
CY 2012. We also discussed that the
wage data used to construct the wage
index under the ESRD PPS is updated
annually, based on the most current
data available and based on the Office
of Management and Budget’s (OMB’s)
urban and rural definitions and
corresponding wage index values.
Additional discussion on the laborrelated share can be found in section
II.c.3 of this final rule. For CY 2013, we
did not propose to change the laborrelated shares, as finalized in the CY
2012 rule, as discussed in section II.C.3
of this final rule.

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In the CY 2012 ESRD PPS final rule
(76 FR 70240), we discussed that during
the transition we would continue to
update the composite rate portion of the
ESRD PPS blended payment, including
adjusting payments for geographic
differences in area wage levels, as noted
above. We also discussed the
application of the wage index budgetneutrality adjustment factor to the area
wage index values for the composite
rate portion of the ESRD PPS blended
payment. In the proposed rule, for CY
2013 we did not propose any changes to
the methodology for the wage index
used to adjust the composite rate
portion of the ESRD PPS blended
payment.
a. Reduction to the ESRD Wage Index
Floor
In the CY 2012 ESRD PPS final rule
(76 FR 70239 through 70241), we
finalized that we will continue to
reduce the wage index floor by 0.05 for
each of the remaining years of the
transition. That is, we finalized the 0.05
reduction to the wage index floor for
CYs 2012 and 2013, resulting in a wage
index floor of 0.550 and 0.500,
respectively. The wage index floor value
is used in lieu of wage index values
below the floor. The wage index floor is
applied to both the composite rate
portion of the blend and to the ESRD
PPS. In the CY 2013 ESRD PPS
proposed rule, we did not propose any
changes to the wage index floor
methodology or reduction.
Consequently, for CY 2013 we indicated
in the proposed rule that we would
continue to reduce the wage index floor
by 0.05, which will reduce the wage
index value for the wage index floor
from 0.550 to 0.500. For CY 2013, the
wage index floor of 0.500 only applies
to areas located in Puerto Rico because
those are the only areas that have wage
index values below the wage index floor
value of 0.500. In the CY 2012 ESRD
PPS final rule (76 FR 70241), we
explained that continuing to artificially
adjust the wage index values after the
transition by substituting a wage index
floor is not an appropriate method to
address low wages in certain geographic
locations. Therefore, we would no
longer apply a wage index floor
beginning January 1, 2014.
b. Policies for Areas With No Wage Data
In the CY 2012 ESRD PPS final rule
(76 FR 70241), we explained that we
adopted the CBSA designations for the
basic case-mix adjusted composite rate
payment system and for the ESRD PPS.
We also discussed and finalized the
methodologies we use to calculate wage
index values for ESRD facilities that are

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located in urban and rural areas where
there are no hospital data. That is, 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. For
rural Puerto Rico, we use the wage
index floor as the wage index value,
since all rural Puerto Rico areas are
below the floor.
We further explained that for rural
Massachusetts, we determined that the
borders of Dukes and Nantucket
Counties are contiguous with Barnstable
and Bristol counties. Under the
methodology, the values for these
counties are averaged to establish the
wage index value for rural
Massachusetts.
After the CY 2012 ESRD PPS final
rule was published, we determined that
for CY 2012 there was a rural hospital
with wage data on which to base an area
wage index for rural Massachusetts. We
note that the wage index value for rural
Massachusetts was correctly identified
on the wage index table for CY 2012
based on the wage data for that rural
hospital. Consequently, in the CY 2013
ESRD PPS proposed rule we corrected
the statement in the CY 2012 final rule
that ‘‘For rural Massachusetts, we
determined that the borders of Dukes
and Nantucket Counties are contiguous
with Barnstable and Bristol counties.
Under the methodology, the values for
these counties are averaged to establish
the wage index value for rural
Massachusetts’’ (76 FR 70241).
Therefore, for CY 2012 and subsequent
years, the area wage index value for
rural Massachusetts is based on wage
data of the rural hospital.
For CY 2013, we will continue to use
the statewide urban average based on
the average of all urban areas within the
state for urban areas without hospital
data. We note that Yuba City, California
now has hospital data to calculate a
wage index. Therefore, the methodology
for computing a wage index for urban
areas without hospital data no longer
applies to that area. The only urban area
without wage index data is HinesvilleFort Stewart, GA.
c. Wage Index Budget-Neutrality
Adjustment
In the CY 2012 ESRD PPS final rule
(76 FR 70241 and 70242), we explained
that we have broad discretion under
section 1881(b)(14)(D)(iv)(II) of the Act
to develop a geographic wage index. We
explained that in addition to being

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given broad discretion, the section cites
the wage index under the basic case-mix
adjusted composite payment system as
an example. We have previously
interpreted the statutory requirement in
section 1881(b)(12)(D) of the Act for the
geographic adjustment for the basic
case-mix adjusted composite payment
system as requiring that the geographic
adjustment be made in a budget-neutral
manner.
In the CY 2012 ESRD PPS final rule
(76 FR 70241 and 70242), we finalized
the policy to apply the wage index in a
budget-neutral manner under the ESRD
PPS using a wage index budgetneutrality adjustment factor. We further
explained that in the first year of the
ESRD PPS, CY 2011, we did not apply
a wage index budget-neutrality
adjustment factor under the ESRD PPS
because budget-neutrality was achieved
through the overall 98 percent budgetneutrality requirement in section
1881(b)(14)(A)(ii) of the Act. In the CY
2012 ESRD PPS final rule (76 FR 70242),
we finalized that for CYs 2012 and 2013
we will apply the wage index budgetneutrality adjustment to the wage index
values for the composite rate portion of
the blended payment and that for CY
2012 and subsequent years we will
apply the wage index budget-neutrality
adjustment to the ESRD PPS base rate
for purposes of the ESRD PPS portion of
the blended payment during the
transition and the ESRD PPS payment.
We did not propose any changes to the
wage index budget-neutrality
adjustment methodology for CY 2013.
In the CY 2012 ESRD PPS final rule
(76 FR 70242), we also finalized the
methodology for computing the wage
index budget-neutrality adjustment
factor for CY 2012 and subsequent
years. For CY 2013, we did not propose
any changes to the methodology.
Consequently, for the CY 2013 wage
index budget-neutrality adjustment
factors, we use the fiscal year (FY) 2013
pre-floor, pre-reclassified, nonoccupational mix-adjusted hospital data
to compute the wage index values, 2011
outpatient claims (paid and processed
as of December 31, 2011), and
geographic location information for each
facility, which can be found through
Dialysis Facility Compare (DFC). The
DFC can be found at the Dialysis
Facility Compare Web page on the
Medicare.gov Web site at www.
Medicare.gov/Dialysis. The FY 2013
hospital wage index data for each urban
and rural locale by CBSA may also be
accessed on the CMS Web site at
http://www.cms.hhs.gov/
AcuteInpatientPPS/WIFN/list.asp. The
wage index data are located in the
section entitled, ‘‘FY 2013 Proposed

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Rule Occupational Mix Adjusted and
Unadjusted Average Hourly Wage and
Pre-Reclassified Wage Index by CBSA’’.
To compute the CY 2013 wage index
budget-neutrality adjustment factor for
this final rule, we used treatment counts
from the 2011 claims and facilityspecific CY 2012 payment rates; we
computed the estimated total dollar
amount that each ESRD facility would
have received in CY 2012. The total of
these payments became the target
amount of expenditures for all ESRD
facilities for CY 2013. Next, we
computed the estimated dollar amount
that would have been paid for the same
ESRD facilities using the final ESRD
wage index for CY 2013. The total of
these payments becomes the new CY
2013 amount of wage-adjusted
expenditures for all ESRD facilities.
After comparing these two dollar
amounts (target amount divided by the
new CY 2013 amount), we calculated
two wage index budget-neutrality
adjustment factors that, when
multiplied by the applicable CY 2013
estimated payments, would result in
aggregate payments to ESRD facilities
that would remain budget-neutral when
compared to the target amount of
expenditures. The first factor was
applied to the ESRD PPS base rate. The
second factor was applied to the wage
index values for the composite rate
portion of the blended payment.
Therefore, in this final rule, we are
finalizing for CY 2013, the wage index
budget-neutrality adjustment factor for
the composite portion of the ESRD PPS
blended payment of 1.001141, which is
applied directly to the ESRD wage index
values. For the ESRD PPS (that is, for
the full ESRD PPS payments and the
ESRD PPS portion of the blended
payments during the transition), we are
finalizing the wage index budgetneutrality adjustment factor of 1.000613
that will be applied to the ESRD PPS
base rate. Because we apply the wage
index budget-neutrality adjustment
factor to the wage index values to
ensure budget-neutrality under the
composite rate portion of the blended
payment, we also apply the wage index
budget-neutrality adjustment factor to
the wage index floor. We note that this
would apply to areas in Puerto Rico,
subject to the floor. Therefore, for the
composite rate portion of the blended
payment, we are finalizing for CY 2013,
to apply the wage index budgetneutrality adjustment factor to the wage
index floor of 0.500 which results in an
adjusted wage index floor of 0.501
(1.001141 × 0.500) because under the
composite rate, the wage index budgetneutrality adjustment is applied to the
wage index value. Under the ESRD PPS,

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the wage index budget-neutrality
adjustment factor is applied to the base
rate.
d. ESRD PPS Wage Index Tables
The CY 2013 ESRD PPS proposed
wage index tables, referred to as
Addendum A (ESRD facilities located in
urban areas), and Addendum B (ESRD
facilities located in rural areas) are
posted on the CMS Web site at http://
www.cms.gov/vESRDPayment/PAY/list.
asp. The wage index tables list two
separate columns of wage index values.
One column represents the wage index
values for the composite rate portion of
the blended payment to which the wage
index budget-neutrality adjustment
factor has been applied. The other
column lists the wage index values for
the ESRD PPS, which does not reflect
the application of the wage index
budget-neutrality adjustment factor,
because we finalized for CY 2012 and
subsequent years that we will apply the
wage index budget-neutrality
adjustment factor to the ESRD PPS base
rate.
We received one comment. The
comment and our response are set forth
below.
Comment: We received a comment
from an LDO that expressed concern
about the negative impact of the wage
index floor on dialysis providers in
Puerto Rico. The commenter expressed
concern that wages for dialysis facilities
in Puerto Rico are not accurately
captured by the current hospital wage
index methodology. The commenter
urged CMS to determine an alternate
basis for calculating the wage index
floor in Puerto Rico, stating that it does
not believe that the wage index as
reported for Puerto Rico is
representative of the wage levels of
dialysis providers in Puerto Rico
relative to a sample of other states.
Specifically, the commenter provided
its own analysis of its random sampling
of cost report salaries comparing ESRD
facilities in Puerto Rico with ESRD
facilities in Florida, Georgia, Ohio,
South Carolina and Virginia. The
commenter recommended that
reimbursement for Puerto Rico be based
on ‘‘some measure other than the
hospital wage index, such as basing the
wage index on cost report salaries
relative to other state salaries.’’ The
commenter further explained that
Puerto Rico requires that only registered
nurses (RN) provide dialysis therapy,
and therefore, in the dialysis setting, the
occupational mix would be weighted
more toward RNs than the mix for
hospital.
Response: We understand that the
commenter is concerned about wage

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index values in Puerto Rico, however, it
is our policy to use wage indices for all
ESRD facilities that are based on the
IPPS pre-floor, pre-reclassified hospital
wage data. We discuss this in detail
above. We believe that this is an
appropriate mechanism for obtaining
wage index values to be used to
geographically adjust the ESRD PPS
base rate for all ESRD facilities. It has
been the same method that we have
used previously for the basic case-mix
adjusted composite rate payment
system. We refer the commenter to the
discussion on the methodology used to
determine wage index values in the CY
2013 IPPS final rule (77 FR 53365
through 55367). We will, however,
consider the commenter’s recommended
approach if we determine in the future
that a change to the methodology for
determining geographic wage index
values is warranted.
In the CY 2012 ESRD PPS proposed
rule (76 FR 40509 and 40510), we
proposed to continue to reduce the wage
index floor by 0.50 for each of the
remaining years of the transition (that is,
CYs 2012 and 2013). We also stated that
‘‘we continue to believe that artificially
adjusting wage index values by
substituting a wage index floor is not an
appropriate method to address low
wages in certain geographic locations’’
and that, accordingly, we will no longer
apply a wage index floor beginning
January 1, 2014 (76 FR 70241). We will
include in the CY 2014 ESRD PPS
proposed rule, the methodology we
propose to use to address wages in rural
Puerto Rico when we no longer apply
the wage index floor.
Therefore, we are finalizing the wage
index floor value of 0.500 for CY 2013.
6. Drug Policy Changes

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a. Daptomycin
In the CY 2011 ESRD PPS final rule
(75 FR 49050 through 49052), we stated
that antibiotics used for the treatment of
vascular access infections and
peritonitis are renal dialysis services
under the ESRD PPS. Payments for antiinfective drugs in injectable forms
(covered under Part B) and oral or other
forms of administration (formerly
covered under Part D) used for the
treatment of ESRD, were included in
computing the final ESRD PPS base rate
and, therefore, would not be separately
paid under the ESRD PPS. We further
stated that any anti-infective drug or
biological used for the treatment of
ESRD-related conditions would be
considered a renal dialysis service and
not eligible for separate payment. We
noted that this policy also applies to any

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drug or biological that may be
developed in the future.
In the CY 2012 ESRD PPS final rule
(76 FR 70243), we explained that
subsequent to the publication of the CY
2011 ESRD PPS final rule, we received
numerous comments indicating that
vancomycin is indicated in the
treatment of both ESRD and non-ESRD
conditions, such as skin infections. In
the CY 2012 ESRD PPS final rule (76 FR
70243), we allowed ESRD facilities to
receive separate payment for
vancomycin when furnished to treat
non-ESRD related conditions. When
ESRD facilities furnish vancomycin to
treat non-ESRD related conditions, they
place the AY modifier on the claim. We
stipulated that in accordance with ICD–
9–CM guidelines as described in the CY
2011 ESRD PPS final rule (75 FR 49107),
an ESRD facility must report on the
claim the diagnosis code for which
vancomycin is indicated. We also
reiterated that treatment of any skin
infection that is related to renal dialysis
access management would be
considered a renal dialysis service paid
under the ESRD PPS, and that no
separate payment would be made (76 FR
70243). Finally, in response to
comments, we stated that we would
consider allowing separate payment for
daptomycin (76 FR 70243).
In the CY 2013 ESRD PPS proposed
rule (77 FR 40963), we explained that
after consultation with our medical
experts, we proposed to allow ESRD
facilities to receive separate payment for
daptomycin when furnished to treat
non-ESRD related conditions for CY
2013 and subsequent years. When ESRD
facilities furnish daptomycin to treat
non-ESRD-related conditions, they
would place the AY modifier on the
claim. We also explained that if ESRD
facilities submitted claims for
daptomycin with the AY modifier, then
the ESRD facility would also be required
to report the diagnosis code for which
the daptomycin is indicated in
accordance with ICD–9–CM diagnostic
coding guidelines. We sought public
comments on our proposal to permit
separate payment for daptomycin when
furnished to treat non-ESRD-related
conditions. As we discussed in the
proposed rule, we will continue to
monitor the use of anti-infectives
furnished by ESRD facilities including
those that are identified as non-ESRD
related (77 FR 40963). The comments
we received and our responses are set
forth below.
Comment: We received eight
comments in support of our proposal to
allow for separate payment for
daptomycin when furnished for nonESRD related conditions. One

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commenter encouraged CMS to consider
the appropriateness of other antiinfective drugs and biologicals which
could be used in the future for both
ESRD and non-ESRD conditions, with
the primary goal to help reduce drug
resistance in this compromised and
susceptible patient population.
Response: We thank the commenters
for their support. We believe that the
commenter is suggesting that CMS
should frequently consider whether
other drugs should be included in the
ESRD PPS. We will consider allowing
separate payment for other anti-infective
drugs and biologicals as we may
determine appropriate.
We are finalizing the proposal to
eliminate the restriction on daptomycin
to allow ESRD facilities to receive
separate payment by placing the AY
modifier on the claim for daptomycin
when furnished to treat non-ESRD
related conditions. In accordance with
ICD–9–CM diagnostic coding guidelines
as described in the CY 2011 ESRD PPS
final rule (75 FR 49107), the ESRD
facility must indicate on the claim the
diagnosis code for which the
daptomycin is indicated.
During our monitoring of claims we
have noted that there are ESRD facilities
that are indicating a type of organism
rather than a diagnosis that would
indicate that the anti-infective was
furnished for non-ESRD-related
conditions. We reiterate that the
diagnosis code for which vancomycin or
daptomycin is used must be indicated
on the claim. We also reiterate that
treatment of any skin infection that is
related to renal dialysis access
management will be considered a renal
dialysis service and will continue to be
paid under the ESRD PPS, and no
separate payment will be made. We will
continue to monitor the use of antiinfectives furnished by ESRD facilities
including those that are identified as
non-ESRD related to ensure proper
billing of these drugs.
b. Alteplase and Other Thrombolytics
In the CY 2012 ESRD PPS final rule
(76 FR 70246 through 70247), we
explained that after the CY 2011 ESRD
PPS final rule was published, our
clinical review of the 2007 ESRD claims
used to develop the ESRD PPS revealed
that dialysis facilities routinely used
alteplase and other thrombolytic drugs
for access management purposes. We
explained that under the Medicare
Benefit Policy Manual, Pub. 100–02,
chapter 11, section 30.4.1, drugs used as
a substitute for any of the listed items
or used to accomplish the same effect
were covered under the composite rate.
We further explained that because

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heparin is a composite rate drug and
could be used for access management,
any drug or biological used for the same
purpose may not be separately paid.
Medicare regulations at 42 CFR
413.237(a)(2) through (a)(6), and (b)
specify the methodology used to
calculate outlier payments. An ESRD
facility is eligible for an outlier payment
if its actual or imputed Medicare
Allowable Payment (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 discussion on the outlier
policy is in section II.C.7 of this final
rule. Section 413.237(a)(1) provides the
definition of ESRD outlier services.
Specifically, § 413.237(a)(1)(i) includes
‘‘ESRD related drugs and biologicals
that were or would have been, prior to
January 1, 2011, separately billable
under Medicare Part B.’’
Because outlier payments are
restricted under § 413.237(a) to those
items or services that were or would
have been separately billable prior to
January 1, 2011, in the CY 2012 ESRD
PPS final rule (76 FR 70249), we
excluded thrombolytic drugs from the
outlier policy and we recomputed the
outlier MAP amounts to reflect this
change. However, we noted in the CY
2012 ESRD PPS final rule (76 FR 70249),
that for CY 2012 we had not proposed
to exclude separate payment of
thrombolytic drugs under the composite
rate portion of the blended payment and
therefore, separate payment would be
made for thrombolytics for the
composite rate portion of the blended
payment in CY 2012.
For CY 2013, we proposed that
thrombolytic drugs would not be
considered eligible for separate payment
under the composite rate portion of the
blended payment for those ESRD
facilities that are receiving a blended
payment under the transition (77 FR
40963). We believe that this is
consistent with the changes we made to
our outlier policy regarding excluding
thrombolytic drugs from outlier
eligibility as discussed above. We note
that these conclusions are specific to
ESRD. We solicited comments on our
proposal to exclude thrombolytic drugs
from separate payment under the
composite rate portion of the blended
payment during the transition.
The comments and our responses are
set forth below.
Comment: We received five comments
pertaining to our proposal to no longer
provide separate payment for
thrombolytic drugs under the composite

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rate portion of the blended payment in
CY 2013. In general, commenters agreed
with CMS that both heparin and
alteplase or other thrombolytic drugs are
used for access management, but a few
commenters disagreed with our
assertion that heparin and alteplase are
used for the same purpose. Some
commenters specifically noted that
CMS’s proposal not to allow separate
payment for alteplase and thrombolytic
drugs under the composite rate portion
of the blended payment during the
transition period for CY 2013 is flawed
because the drugs are used to achieve
different clinical results and utilize
different mechanisms of action. In
particular, the commenters noted that
heparin is used to prevent clotting
whereas alteplase is used to avoid a
poorly functioning catheter. Some
commenters provided examples of the
efficacy of alteplase and thrombolytics,
as compared to heparin. Some
commenters, including a renal
organization and a pharmaceutical
manufacturer, disagreed that heparin
can be used as a substitute for alteplase,
citing the different mechanisms of
action for the two drugs. One
commented that because heparin and
thrombolytics achieve different clinical
results, they should not be treated as
substitutes for payment purposes.
Response: We believe alteplase and
heparin are used for the same renal
dialysis-related purpose, namely,
vascular access management. In the CY
2012 ESRD PPS final rule (76 FR 70246
through 70249), we addressed similar
comments regarding the use of alteplase
and heparin in the context of our
proposal to eliminate thrombolytics
from the outlier policy. We noted that
in the development of the ESRD PPS,
we recognized that alteplase and
heparin were pharmacologically
different (that one is a thrombolytic that
lyses clots and the other is an
anticoagulant that prevents clots,
respectively) (76 FR 70248). We further
stated, however, that we believed that
both drugs enable the catheter or graft
to function either through clot
prevention or clot degradation, thereby
providing effective dialysis vascular
access. We further believe that, for
purposes of payment for renal dialysis
services, it is sufficient that these
products can be used for the purpose of
providing dialysis vascular access.
Consistent with the ESRD Benefit Policy
Manual, Pub. 100–02, chapter 11,
section 30.4.1, drugs used as substitutes
for any of the listed items, or used to
accomplish the same effect, are covered
under the composite rate and are not
separately payable. Because heparin is a

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composite rate drug and thrombolytics
are used to achieve the same renal
dialysis-related clinical outcome, we
believe it is appropriate to exclude
thrombolytic drugs from separate
payment under the composite rate
portion of the blended payment during
the transition.
Comment: One ESRD facility
commented that the high cost of
alteplase compared to heparin would
prevent substitution of alteplase for
heparin. The commenter argued that
CMS’s policy in the ESRD Benefit Policy
Manual, Pub. 100–02, chapter 11,
section 30.4.1 of covering under the
composite rate drugs used as substitutes
for composite rate drugs, or used to
accomplish the same effect, is without
regard to innovation, cost, effectiveness,
and efficiencies, and may result in
increased cost to the Medicare program.
The commenter also noted that the cost
of thrombolytics is included in the
ESRD PPS for those not in the transition
and that elimination of separate
payment for those in the transition
would negatively impact
reimbursement. A pharmaceutical
company stated that the proposed
changes may negatively affect catheter
care because disallowing outlier
payments and separate payment for
thrombolytics creates a financial
incentive for facilities to avoid restoring
patency with alteplase.
Response: In the CY 2012 ESRD PPS
final rule (76 FR 70247), we explained
that the ESRD PPS provides an
opportunity for ESRD facilities to make
decisions based on the medical needs of
patients and not on the basis of financial
gain. We further explained that we are
not implying that thrombolytics or any
access management drug should not be
used when clinically indicated. We
noted that Medicare payment policy is
not intended to dictate, determine, or
influence clinical practice or favor one
course of treatment over another.
Rather, by accounting in the ESRD PPS
base rate for the cost of drugs and
biologicals that had been separately
payable under the composite rate
system, we believe that we provide
adequate payment to maintain patency
of the access site regardless of whether
patency is maintained using heparin or
a thrombolytic. For additional
information regarding this issue, we
refer the commenters to the comment
responses in the CY 2012 ESRD PPS
final rule (76 FR 70247 through 70249).
We disagree with the commenter that
ESRD facilities receiving blended
payments during the transition are
unfairly disadvantaged because they
will not receive separate payment for
thrombolytics for the portion of the

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blended payment based on the
composite rate. Even when the
composite rate system was in place
before the ESRD PPS was implemented,
it was our policy not to pay separately
for drugs that could be used to
accomplish the same effect as composite
rate drugs. Accordingly, it is consistent
with that policy not to provide separate
payment for thrombolytics for the
composite rate portion of blended
payments during the remainder of the
transition.
For all of the reasons stated above, we
continue to believe that alteplase and
other thrombolytics should not be
eligible for separate payment under the
composite rate portion of the blended
payment. After consideration of public
comments, we are finalizing our CY
2013 proposal to exclude alteplase and
other thrombolytics from separate
payment, which we believe is consistent
with the CY 2012 ESRD PPS changes
made to the outlier policy to exclude
thrombolytic drugs from outlier
payments.
c. Part B Drug Pricing
In the CY 2011 ESRD PPS proposed
rule (74 FR 49991), with respect to
estimating the imputed MAP amounts of
ESRD outlier services that are separately
billable under Part B, we proposed to
use Average Sales Price (ASP) data for
Part B ESRD-related drugs (which is
updated quarterly). We did not make
any changes to this proposed
methodology in the CY 2011 final rule.
In the CY 2012 ESRD PPS final rule (76
FR 70243), we explained that ESRD
facilities receiving blended payments
under the transition would receive
payments based on ASP for separately
billable ESRD drugs and biologicals for
the composite rate portion of the blend.
In the CY 2012 ESRD PPS final rule (76
FR 70244), we stated that under the
outlier policy, we will use the ASP
methodology.
In the CY 2013 ESRD PPS proposed
rule (77 FR 40963), we proposed for CY
2013 and subsequent years to continue
to use the ASP methodology, including
any modifications finalized in the PFS
final rules, to compute our outlier MAP
amounts, the drug add-on, and any
other policy that requires the use of
payment amounts for drugs and
biologicals that would be separately
paid absent the ESRD PPS and for the
composite rate portion of the blended
payment during the transition. We
explained that we would use this
methodology for payment analyses that
CMS may perform. We did not receive
public comments on our proposal to
apply the ASP methodology or any
modifications to the ASP for these

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purposes, as updated in the PFS rule or
in updating the ASP pricing. Therefore,
we are finalizing that for CY 2013 and
subsequent years we will continue to
use the ASP methodology, including
any modifications finalized in the
Physician Fee Schedule (PFS) final
rules, to compute outlier MAP amounts,
the drug add-on, and any other policy
that requires the use of payment
amounts for drugs and biologicals that
would be separately paid absent the
ESRD PPS and for the composite rate
portion of the blended payment during
the transition.
7. Revisions to the Outlier Policy
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 erythropoiesis stimulating agents
(ESAs) necessary for anemia
management. Our regulations at 42 CFR
413.237(a)(1) provide that ESRD outlier
services include: (i) ESRD-related drugs
and biologicals that were or would have
been, prior to January 1, 2011,
separately billable under Medicare Part
B; (ii) ESRD-related laboratory tests that
were or would have been, prior to
January 1, 2011, separately billable
under Medicare Part B; (iii) medical/
surgical supplies, including syringes
used to administer ESRD-related drugs,
that were or would have been, prior to
January 1, 2011, separately billable
under Medicare Part B; and (iv) renal
dialysis service drugs that were or
would have been, prior to January 1,
2011, covered under Medicare Part D,
excluding ESRD-related oral-only drugs.
In the CY 2011 ESRD PPS final rule,
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 on the monthly claim (75
FR 49142).
In the CY 2013 ESRD PPS proposed
rule (77 FR 40964), we explained that
drugs, laboratory tests, and medical/
surgical supplies that we would
recognize as outlier services are
specified in Attachment 3 of Change
Request 7064, Transmittal 2033 issued
August 20, 2010 and rescinded and
replaced by Transmittal 2094, dated
November 17, 2010. We also explained
that with respect to the outlier policy,
Transmittal 2094 identified additional
drugs and laboratory tests that may be
eligible for ESRD outlier payment.
Transmittal 2094 was rescinded and
replaced by Transmittal 2134, dated

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67463

January 14, 2011 which was issued to
correct the subject on the Transmittal
page and made no other changes.
In the CY 2012 ESRD PPS final rule
(76 FR 70246), we finalized our
proposal to stop issuing a specific list of
eligible outlier service drugs which
were or would have been separately
billable under Medicare Part B prior to
January 1, 2011. We stated in that rule
that we planned to use separate
guidance to continue to identify renal
dialysis service drugs which were or
would have been covered under Part D
for outlier eligibility purposes in order
to provide unit prices for calculating
imputed outlier services. In the CY 2013
ESRD PPS proposed rule (77 FR 40964),
we explained that we planned to
identify, through our monitoring efforts,
those items and services that are
incorrectly being identified as eligible
outlier services. Any updates to the list
of renal dialysis items and services that
qualify as outlier services will be made
through administrative issuances, if
necessary.
We indicated in the CY 2013 ESRD
PPS proposed rule (77 FR 40964), that
Medicare regulations at 42 CFR
413.237(a)(2) through (a)(6), and (b)
specify the methodology used to
calculate outlier payments. We
explained that an ESRD facility is
eligible for an outlier payment if its
actual or imputed Medicare Allowable
Payment (MAP) amount per treatment
for ESRD outlier services exceeds a
threshold. We further explained that 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. We also stated
that the threshold is equal to the ESRD
facility’s predicted ESRD outlier
services MAP amount per treatment
(which is case-mix adjusted) plus the
fixed dollar loss amount. Finally, we
explained that in accordance with 42
CFR 413.237(c), 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
and that ESRD facilities are eligible to
receive outlier payments for treating
both adult and pediatric dialysis
patients.
In the CY 2011 ESRD PPS final rule,
using 2007 data, we established the
outlier percentage at 1.0 percent of total
payments (75 FR 49142 through 49143).
We also established the fixed dollar loss
amounts that are added to the predicted
outlier services MAP amounts. The
outlier services MAP amounts and fixed
dollar loss amounts are different for
adult and pediatric patients due to

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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 and 49139),
the predicted outlier services MAP
amounts for a patient would be
determined by multiplying the adjusted
average outlier services MAP amount by
the product of the patient-specific casemix adjusters applicable using the
outlier services payment multipliers
developed from the regression analysis
to compute the payment adjustments.
The average outlier services MAP
amount per treatment for CY 2011 was
based on payment amounts reported on
2007 claims and adjusted to reflect
projected prices for 2011. For CY 2012,
the outlier services MAP amounts and
fixed dollar loss amounts were based on
2010 data (76 FR 70250). That is, for
CYs 2011 and 2012, the MAP and fixed
dollar loss amounts were computed

based on pre-ESRD PPS claims data and
utilization.
Comment: Several commenters agreed
that no changes need to be made to the
methodology and commended CMS for
its transparency regarding the data and
methodology used to update the MAP
and fixed dollar loss thresholds. Some
commenters expressed appreciation of
CMS’s clear explanation of eligible
outlier services.
Response: We thank the commenters
for their support. We will continue to
issue guidance regarding the renal
dialysis items and services that could
qualify for outlier payment.
a. Impact of Changes to the Outlier
Policy
In the CY 2013 ESRD PPS proposed
rule (77 FR 40964), we explained that
we did not propose any changes to the
methodology used to compute the MAP
or fixed dollar loss amounts. Rather, we

explained that we were updating the
outlier services MAP amounts and fixed
dollar loss amounts to reflect the
utilization of outlier services reported
on the 2011 claims using the December
2011 claims file. In this final rule, for
CY 2013, we used the June 2012 update
of the CY 2011 National Claims History
File to update the outlier services MAP
amounts and fixed dollar loss amounts.
That is, for CY 2013, the MAP and fixed
dollar loss amounts are based on
utilization data from the 2011 ESRD PPS
claims. For this final rule, the impact of
this update is shown in Table 1, which
compares the outlier services MAP
amounts and fixed dollar loss amounts
used for the outlier policy in CY 2012
with the updated estimates. The
estimates for the CY 2013 outlier policy,
which are included in Column III of
Table 1, were inflation-adjusted to
reflect projected 2013 prices for outlier
services.

TABLE 1—OUTLIER POLICY: IMPACT OF USING UPDATED DATA TO DEFINE THE OUTLIER POLICY
Column I
Outlier policy for CY2012
(based on 2010 data price
inflated to 2012) *
Age
< 18
Average outlier services MAP amount per treatment 1 ...
Adjustments
Standardization for outlier services 2 ........................
MIPPA reduction .......................................................
Adjusted average outlier services MAP amount 3 ....
Fixed dollar loss amount that is added to the predicted
MAP to determine the outlier threshold 4 .....................
Patient months qualifying for outlier payment .................

Age
> = 18

Column II
Updated outlier estimates
based on 2011 data price
inflated to 2012 *
Age
< 18

Age
> = 18

Column III
Final outlier policy for
CY2013 (based on 2011
data price inflated to
2013) *
Age
< 18

Age
> = 18

$46.26

$81.73

$37.84

$59.49

$38.65

$61.38

1.0024
0.98
$45.44

0.9738
0.98
$78.00

1.0927
0.98
$40.52

0.9878
0.98
$57.59

1.0927
0.98
$41.39

0.9878
0.98
$59.42

$71.64
5.7%

$141.21
5.4%

$44.16
7.8%

$103.47
5.2%

$47.32
7.6%

$110.22
5.1%

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* The outlier services MAP amounts and fixed dollar loss amounts were inflation adjusted to reflect updated prices for outlier services (that is,
2012 prices in Columns I and II and projected 2013 prices in Column III).
1 Excludes patients for whom not all data were available to calculate projected payments under an expanded bundle. The outlier services MAP
amounts are based on 2011 data. The medically unbelievable edits of 400,000 units for epoetin and 1,200 mcg for Aranesp that are in place
under the ESA claims monitoring policy were applied.
2 Applied to the average outlier MAP per treatment. Standardization for outlier services is based on existing Case Mix Adjusters for adult and
pediatric patient groups.
3 This is the amount to which the separately billable (SB) payment multipliers are applied to calculate the predicted outlier services MAP for
each patient.
4 The fixed dollar loss amounts were calculated using 2011 data to yield total outlier payments that represent 1% of total projected payments
for the ESRD PPS.

As seen in Table 1, the estimated
fixed dollar loss amounts that determine
the 2013 outlier threshold amounts
(Column III) are lower than those used
for the 2012 outlier policy (Column I).
The main reason for these reductions is
the lower utilization of epoetin and
other outlier services in CY 2011, the
first year of the PPS. This can be seen
by comparing the outlier service MAP
amounts in Column I (which are based
on 2010 data) with the outlier service
MAP amounts in Column II (which are
based on 2011 data).

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The fixed dollar loss amounts which
are added to the predicted MAP
amounts per treatment to determine the
outlier thresholds are being updated
from the CY 2012 amount. Based on the
use of the most recently available data,
the fixed-dollar loss amount for
pediatric patients will decrease from
$71.64 to $47.32 and the MAP amount
will decrease from $45.44 to $41.39 as
compared to CY 2012 values. For adult
patients, the fixed-dollar loss amount
drops from $141.21 to $110.22 and the
MAP amount drops from $78.00 to
$59.42.

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We estimate that the percentage of
patient months qualifying for outlier
payments under the current policy will
be 5.1 percent and 7.6 percent for adult
and pediatric patients, respectively,
based on our use of 2011 data. The
pediatric outlier MAP and fixed dollar
loss amounts continue to be lower for
pediatric patients than adults due to the
continued lower use of outlier services
(primarily reflecting lower use of
epoetin and other injectable drugs).
Comment: All of the commenters
supported CMS’s decision to lower the
threshold for both the fixed dollar loss

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and MAP amounts for pediatric and
adult patients. The commenters stated
that they believed that outlier payment
mechanisms are fundamental to the
long-term success of prospective
payment systems to ensure patients get
the care they need, even when there are
financial disincentives. The commenters
further expressed that it is important for
CMS to ensure that the information it
uses to determine the outlier thresholds
each year is as current as possible and
agreed with CMS in using the 2011
ESRD claims and utilization for CY
2013.
Response: We thank the commenters
for their support.
Comment: Several commenters
expressed concern that some ESRD
facilities may not have the necessary
resources available to identify outlier
services on the claim, and therefore are
not receiving the outlier payments to
which they are entitled. One commenter
suggested that CMS make available data
indicating that the outlier policy is
beneficial to small ESRD facilities. The
commenter further explained that this
policy could be detrimental to small
facilities because, although the facilities’
base rate is reduced by 1 percent to
account for outlier services, the facilities
may be unable recoup this amount
because of resource limitations.
Response: Outlier services are the
items and services that were separately
paid prior to the implementation of the
ESRD PPS and are also separately paid
under the composite rate portion of the
blended payment for those ESRD
facilities under the transition. We do not
believe that it should be difficult for
small facilities to identify outlier
services on claims because these
facilities should have had experience
identifying these items on claims before
the PPS was implemented. Specifically,
the items eligible for outlier payments
under the ESRD PPS are the same items
that had been separately paid under the
basic case-mix adjusted composite rate
system and are separately paid under
the composite rate portion of the
blended payment for ESRD facilities
receiving payment under the transition.
Consequently, we believe that
identifying items eligible for outlier
payment is not an additional burden nor
do we believe that it is difficult for
small ESRD facilities.
In terms of demonstrating that the
outlier policy is beneficial to small
ESRD facilities, we note that the outlier
policy is intended to account for the
cost of beneficiaries with high resource
utilization; it is not intended to account
for facility size. Instead, our low-volume
adjustment accounts for facility size by
adjusting for the cost of treating a low

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volume of ESRD patients. Although we
will continue to monitor the impact of
our outlier policy, as noted above, we
believe that all facilities, regardless of
size, should be able to identify outlier
services on claims and be compensated
for the cost of treating beneficiaries with
high resource utilization.
b. Outlier Policy Percentage
In the CY 2013 ESRD PPS proposed
rule (77 FR 40965), we explained that 42
CFR 413.220(b)(4) stipulates that the per
treatment base rate is reduced by 1
percent to account for the proportion of
the estimated total payments under the
ESRD PPS that are outlier payments. We
further explained that because of the
decrease in utilization associated with
the implementation of the ESRD PPS,
the 1 percent target for outlier payments
was not achieved in CY 2011. For this
final rule, using the June 2012 update of
the CY 2011 National Claims History
File, we found that outlier payments
represented approximately 0.3 percent
of total payments. That is, the historical
data previously used to set the outlier
thresholds for CY 2011 projected greater
use of outlier services than was
observed under the expanded ESRD
PPS, leading to lower outlier payments
than expected. Use of 2011 data to
recalibrate the thresholds, reflecting
lower utilization of epoetin and other
outlier services, will result in aggregate
outlier payments close to the 1 percent
target in CY 2013. We believe this
update to the outlier MAP and fixed
dollar loss amounts for CY 2013 will
increase payments for ESRD
beneficiaries requiring higher resource
utilization in accordance with a 1
percent outlier policy.
We note that recalibration of the fixed
dollar loss amounts in this final rule for
CY 2013 outlier payments results in no
change in payments to ESRD facilities
for beneficiaries with renal dialysis
items and services that are not eligible
for outlier payments, but raises
payments to providers for beneficiaries
with renal dialysis items and services
that are eligible for outlier payments.
Therefore, beneficiary co-insurance
obligations would increase for renal
dialysis services eligible for outlier
services and would remain unchanged
for those not eligible.
Comment: One commenter
recommended that CMS estimate and
publish the amount of the shortfall in
outlier payments paid during CY 2011.
The commenters recommended that
CMS develop a mechanism to return
these funds to the ESRD facilities so that
these funds may be used to offset the
costs associated with numerous
‘‘unfunded mandates’’ imposed on these

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facilities. One commenter suggested that
CMS set less than 1 percent aside for
outliers and allocate the leftover funds
to the ESRD PPS base rate.
Response: We disagree that the
shortfall in outlier payments should be
used to make additional payments to
ESRD facilities to account for not
achieving the 1 percent threshold. The
1 percent outlier policy is a prospective
payment mechanism in which
thresholds are established and adjusted
on a yearly basis based on historical
data. In the FY 1997 Inpatient
Prospective Payment System (IPPS)
final rule (61 FR 46229 and 46230), we
explained that we believe our outlier
policies are consistent with the statute
and the goals of the prospective
payment system. Many of the factors
used to set prospective payment
amounts for a given year are based on
estimates. These factors include not
only the outlier thresholds, but also the
market basket rate of increase, the
update factors and the required budgetneutrality provisions. We do not believe
that Congress intended that the
standardized amounts should be
adjusted (upward or downward) to
reflect differences between projected
and actual outlier payments for a given
year. Moreover, retroactive adjustments
would be extremely difficult or
impracticable (if not impossible) to
administer. We further explained that
the thresholds for a given year reflect
certain levels of costs, so that if costs are
held down, fewer cases qualify for
outlier payments and outlier payments
are lower than expected. We believe that
the same explanation applies to the
ESRD PPS.
D. Clarifications Regarding the ESRD
PPS
1. Reporting Composite Rate Items and
Services
In the CY 2011 ESRD PPS final rule
(75 FR 49036), we explained that
section 1881(b)(14)(B)(i) of the Act
requires that the ESRD PPS payment
bundle include composite rate items
and services. The basic case-mix
adjusted composite payment system
represented a limited PPS for a bundle
of routine outpatient maintenance renal
dialysis services. We defined composite
rate services at § 413.171 as ‘‘items and
services used in the provision of
outpatient maintenance dialysis for the
treatment of ESRD and included in the
composite payment system established
under section 1881(b)(7) [of the Act] and
the basic case-mix adjusted composite
payment system established under
section 1881(b)(12) of the Act.’’ In 42
CFR 413.171 we also defined renal

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dialysis services as including, ‘‘items
and services included in the composite
rate for renal dialysis services as of
December 31, 2010.’’ We further
explained that currently services that
are billed on the ESRD claim do not
provide any detail of the composite rate
items and services that are furnished to
the patient. We indicated that, as we
discussed in the Medicare Claims
Processing Manual, Pub. 100–04,
chapter 8, sections 50.1 and 50.2,
laboratory tests and drugs covered
under the facility’s composite rate may
not be billed separately (75 FR 49173).
We stated in the CY 2013 ESRD PPS
proposed rule that the composite rate
represented the routine items and
services provided to Medicare
beneficiaries for outpatient maintenance
dialysis and therefore was full payment
for those items and services. Therefore,
it would not have been appropriate for
ESRD facilities to bill for items and
services in the composite rate because
this would result in duplicate payments
by Medicare (77 FR 40965).
We also explained in the CY 2011
ESRD PPS final rule (75 FR 49048), that
in our analysis of the ESRD claims we
identified drugs and biologicals that
were included in the composite
payment rate but for which ESRD
facilities received separate payment in
addition to the composite rate payment.
Because these composite rate drugs and
biologicals were listed separately on the
ESRD claims, separate payment was
inadvertently made. We further
explained that we excluded those
inadvertent payments from the final
ESRD PPS base rate calculation. We also
noted that the Medicare Benefit Policy
Manual, Pub. 100–02, chapter 11,
section 30.4.1 lists the drugs and fluids
that were included under the composite
payment system and explicitly states,
‘‘* * * drugs used in the dialysis
procedure are covered under the
facility’s composite rate and may not be
billed separately. Drugs that are used as
a substitute for any of these items, or are
used to accomplish the same effect, are
also covered under the composite rate.’’
The manual further provides that
‘‘administration of these items (both the
staff time and supplies) is covered
under the composite rate and may not
be billed separately’’ (75 FR 49048).
In the CY 2012 ESRD PPS final rule
(76 FR 70243), with regard to
antibiotics, we provided for separate
payment for vancomycin when
furnished to treat non-ESRD related
conditions. We also eliminated the
payment distinction for antibiotics
furnished in an ESRD facility or in the
home used to treat access infections or
peritonitis. We finalized that antibiotics

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furnished in the home to treat access
site infections and peritonitis would be
eligible for outlier payment (76 FR
70246). In the CY 2013 ESRD PPS
proposed rule (77 FR 40963), we
proposed to allow for separate payment
for daptomycin if furnished for nonESRD-related conditions and finalized
in section II.C.6.2 of this final rule.
As described at 42 CFR 413.239, there
are ESRD facilities receiving
reimbursement under the transition,
that is, receiving a blended payment of
the basic case-mix adjusted composite
rate payment system and the ESRD PPS.
If an ESRD facility receives payment
under the transition and reports a drug,
biological, or laboratory test that was
included in the composite rate on the
ESRD claim, it could inadvertently
receive separate payment for that item
or service within the portion of the
blended payment that is based on the
basic case-mix adjusted composite
payment system.
As mentioned above and defined at 42
CFR 413.237, ESRD-related drugs,
biologicals, and laboratory tests that
were or would have been separately
payable under the basic case-mix
adjusted composite payment system
qualify as eligible outlier services. In the
CY 2012 ESRD PPS final rule (76 FR
70246), we finalized that as of CY 2012,
we would no longer issue a specific list
of eligible outlier service drugs which
were or would have been separately
billable under Medicare Part B prior to
January 1, 2011. If an ESRD facility
reports a drug or biological that was
included in the basic case-mix adjusted
composite payment system on the ESRD
claim, it would inappropriately be
applied toward an outlier calculation
because all drugs and biologicals with a
rate available on the ASP pricing file
when the modifier AY is not present
may be eligible for outlier consideration.
We explained in the CY 2013 ESRD
PPS proposed rule, that as a result of
our monitoring efforts, we continue to
find composite rate drugs reported on
ESRD claims and reiterated that
composite rate items and services are
not to be reported on the ESRD facility
claims. We noted that we are instituting
measures to ensure that composite rate
drugs are prevented from being applied
to the outlier payment. These measures
will be discussed through
administrative issuances, as
appropriate. We also noted that we
would continue to monitor the reporting
of composite rate items and services on
ESRD claims and plan to take actions to
recoup inappropriate and duplicative
payments. Finally, we noted that if the
inclusion of composite rate items and
services such as laboratory tests, drugs

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and supplies on claims will be required
to be reported, we will discuss this
requirement in future rulemaking (77 FR
40966).
We received one comment on this
issue. The comment and our response
are set forth below.
Comment: One commenter concluded
that any action to recoup inappropriate
and duplicative payments for reporting
composite rate items and services
should be pursued on a going forward
basis rather than retrospectively.
Response: CMS has a fiduciary
responsibility to ensure that accurate
payments are made. If we were to
identify inappropriate payments that
had been made because composite rate
items and services were reported on
claims for the purpose of receiving
separate payment we would pursue
recoupment of those payments in
accordance with applicable laws and
regulations.
2. ESRD Facility Responsibilities for
ESRD-Related Drugs and Biologicals
In the CY 2013 ESRD PPS proposed
rule (77 FR 40966), we indicated that we
had become aware that some ESRD
facilities are requiring ESRD
beneficiaries to purchase renal dialysis
drugs from the ESRD facility and are
instructing beneficiaries not to use their
Part D plan for their purchases. We
explained that section 1866(a)(1)(A) of
the Act, as codified in regulations at 42
CFR 489.21, prohibits providers from
billing beneficiaries for services for
which the beneficiary would have been
entitled to have payment made under
Medicare if the provider appropriately
filed claims for those services.
Furthermore, section 1881(b)(2)(A) of
the Act states that payments shall be
made to an ESRD facility only if it
agrees to accept such payments as
payment in full for covered services
except for the beneficiary co-insurance
and deductible amounts.
Furthermore, in the CY 2011 ESRD
PPS final rule (75 FR 49045), we
explained that the ESRD PPS bundled
base rate reflects Medicare payment for
the average ESRD patient. We stated that
we had incorporated payments under
the basic case-mix adjusted composite
rate payment system as well as
payments for separately billable items
and services into the ESRD PPS base
rate. As a result, we believe the ESRD
PPS payments are sufficient and reflect
the average cost of providing care to the
average patient with ESRD and
therefore, we expect that, on average,
high cost patients would be offset by
low cost patients. In the CY 2011 ESRD
PPS final rule (75 FR 49045), we also
explained that we had provided for

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higher acuity patients with patient casemix adjusters and outlier payments for
high-cost patients. We further cited 42
CFR 494.90 of the ESRD Conditions for
Coverage which requires the
development of an individualized
patient plan of care to address patient
needs and concluded that we believe
ESRD facilities should make medical
decisions based on patient needs and
not solely on a financial basis.
In the CY 2011 ESRD PPS final rule
(75 FR 49050), we stipulated that any
drug or biological (that is, injectable,
oral or other forms of administration)
furnished for the purpose of access
management, anemia management,
vascular access or peritonitis, cellular
management or bone and mineral
metabolism would be considered renal
dialysis services under the ESRD PPS.
Any drug or biological used as a
substitute for a drug or biological that
was included in the ESRD PPS bundled
base rate would also be a renal dialysis
service and would not be eligible for
separate payment. Antiemetics, antiinfectives, antipruritics, anxiolytic,
excess fluid management, fluid and
electrolyte management and pain
management drugs and biologicals
could be used for dialysis purposes and
therefore, are considered ESRD-related
when used for those purposes. We
indicated that we presumed these drugs
and biologicals to be renal dialysis
services in whatever form they are
furnished, unless indicated on the claim
that they are used for non-ESRD-related
conditions. Drugs and biologicals paid
under Part D that are furnished by an
ESRD facility for ESRD-related purposes
are considered renal dialysis services
(75 FR 49050 and 49051).
In the CY 2013 ESRD PPS proposed
rule, we reiterated that ESRD facilities
are responsible for furnishing renal
dialysis items and services that are
required to meet patient needs. This
would include oral or other forms of
administration of injectable drugs and
biologicals that are furnished for ESRDrelated conditions. We also expect that
ESRD facilities will not restrict access to
necessary drugs for financial purposes
by requiring patients to purchase
medically necessary drugs and
biologicals. We expect that ESRD
facilities will furnish drugs and
biologicals that had been considered
medically necessary prior to the
implementation of the ESRD PPS and
not exclude them because the ESRD
facility is now financially responsible
for these drugs and biologicals. Because
of the reasons cited above, ESRD
facilities may not require, induce or
coerce beneficiaries to purchase any
renal dialysis item or service.

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We received no comments on the
clarification of our policy regarding
ESRD facility responsibilities for ESRDrelated drugs and biologicals.
3. Use of AY Modifier
As we indicated in the CY 2013 ESRD
PPS proposed rule (77 FR 40967), in the
CY 2011 ESRD PPS final rule, we
developed a mechanism to be used by
ESRD facilities to identify and be paid
separately for non-ESRD-related items
and services, such as drugs, biologicals,
and equipment and supplies (75 FR
49052 and 75 FR 49168). We provided
this mechanism in order to support a
Medicare beneficiary’s need for nonESRD-related items and services (that is,
predominantly drugs and laboratory
tests) during a dialysis treatment and to
mitigate the need for the beneficiary to
receive additional injections or health
care visits. We further stated that in the
event that supplies or equipment are not
ESRD-related, ESRD facilities would be
required to place a modifier on the
claim for those supplies and equipment,
signifying that they were used for
services that were not ESRD-related and
eligible for separate payment outside of
the ESRD PPS (75 FR 49168). Change
Request 7064, Transmittal 2033, titled
‘‘End Stage Renal Disease (ESRD)
Prospective Payment System (PPS) and
Consolidated Billing for Limited Part B
Services’’, issued on August 20, 2010,
re-issued November 17, 2010 under
Transmittal 2094, and re-issued January
14, 2011 under Transmittal 2134,
provided instructions on the use of the
modifier. In that Change Request, we
indicated that the claim lines for
laboratory tests and drugs provided to a
beneficiary for reasons other than the
treatment of ESRD must be submitted
with the AY modifier to signal separate
payment outside of the ESRD PPS. In
the CY 2012 ESRD PPS final rule, we
provided for the use of the AY modifier
with vancomycin if used for non-ESRDrelated conditions and with the
requirement that the ESRD facilities
include the diagnosis code of the
condition on the claim (76 FR 70243).
In the CY 2013 ESRD PPS proposed rule
(77 FR 40967), we proposed to allow the
use of the AY modifier for separate
payment when daptomycin is furnished
by an ESRD facility to an ESRD
Medicare beneficiary for non-ESRD
related conditions. We are finalizing
this policy above. ESRD facilities are
required to indicate an appropriate
diagnosis code on the claim that reflects
the condition requiring the use of
daptomycin.
We explained in the CY 2013 ESRD
PPS proposed rule (77 FR 40967) that
our monitoring activities have identified

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that ESRD facilities and clinical
laboratories are appending the AY
modifier for items that we believe are
ESRD-related. We noted in the proposed
rule (77 FR 40967) that some ESRD
facilities and clinical laboratories
appear to be appending the AY modifier
on many items and services reported on
claims. We reiterated in the proposed
rule that the purpose of the AY modifier
is to allow beneficiaries the convenience
to receive non-ESRD-related items (for
example, drugs and laboratory tests)
during their dialysis treatment and to
allow the ESRD facility to receive a
separate payment for furnishing those
items. The AY modifier is also intended
to allow separate payment to
laboratories in the event an ESRDrelated laboratory test is required for
non-ESRD-related conditions. The AY
modifier is not intended to be used to
receive a separate payment for items
that are ESRD-related and therefore
included in the ESRD PPS base rate. We
further stated that we would continue to
monitor the use of the AY modifier and
intend to take steps to recoup
inappropriate payments. In the event
that we believe the AY modifier is not
being used for the purpose intended, we
may be forced to discontinue the AY
modifier and cease to provide separate
payment for any non-ESRD-related drug
or laboratory test furnished.
We received several comments on our
clarification of this policy and our
responses are set forth below.
Comment: We received six comments
regarding the AY modifier. Commenters
supported maintaining the AY modifier
for non-ESRD conditions. Several
commenters provided reasons for
supporting the AY modifier. For
example, some commenters concurred
that the AY modifier is intended to
allow Medicare beneficiaries the
convenience of receiving non-ESRD
related items and services during the
course of dialysis treatment; and to
allow the ESRD facility or laboratory to
receive a separate payment when
furnishing non-ESRD items or services.
It also enables optimal coordinated care
to Medicare beneficiaries by minimizing
their need for additional doctor visits
and duplicative or unnecessary lab tests.
Five commenters largely encouraged
CMS to continue the use of the modifier
for reporting non-ESRD related items or
services for payment and to furnish
supporting data on AY modifier misuse.
A few commenters suggested that CMS
should consider drafting guidance on
the appropriate use of the AY modifier.
A few commenters expressed concern
over the possible elimination of the AY
modifier and identified possible
resulting hardships for Medicare ESRD

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beneficiaries. One commenter noted that
the elimination of the AY modifier
would force facilities to send dialysis
patients to labs or infusion centers to
receive IV medications that would risk
the vascular access and add
transportation and time burdens for the
beneficiary.
Response: We thank commenters for
their support of the use of the AY
modifier. We agree that the elimination
of the AY modifier could result in
additional hardships for ESRD
beneficiaries.
Comment: One commenter suggested
that, rather than eliminating the AY
modifier, CMS should rely upon the
contractors to educate providers, audit
payments for AY items, and request
documentation when appropriate.
Another commenter encouraged CMS to
provide data on the exact abuses or the
scope of modifier misuse noting that
patients should not suffer because of
modifier abuse, but rather CMS should
work with facilities and providers to
ensure policy compliance.
Response: With regard to the
suggestion that the responsibility for AY
modifier monitoring education should
rest on the CMS contractors (that is, the
Medicare Administrative Contractors
(MACs)), we note that we do provide
education and instructions to the A/B
MACs through administrative issuances
and MedLearn articles that they can
then use to educate providers. For
example, CMS Change Request #7064
and subsequent Medicare Learning
Network Matters (MLN) article #
MM7064, published on January 14,
2011, notifies contractors that ESRDrelated laboratory services, drugs and
supplies will be subject to Part B
consolidated billing edits and no longer
separately payable when furnished to
ESRD beneficiaries. However, these
consolidated billing edits do not apply
when the items and services are not
ESRD-related. When items and services
are furnished to an ESRD beneficiary for
conditions other than ESRD, the AY
modifier must be present on the claim
to bypass billing edits and allow for a
separate payment outside of the ESRD
PPS. CMS MLN #MM7064 may be
viewed at http://www.cms.gov/
Outreach-and-Education/MedicareLearning-Network-MLN/
MLNMattersArticles/Downloads/
MM7064.pdf. Finally, we are in the
process of updating the ESRD Benefit
Policy Manual, Pub 100–02, chapter 11,
to reflect the policy requirements under
the ESRD PPS, including the use of the
AY modifier.
With regard to the comment
concerning monitoring the use of the
AY modifier and the suggested

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functions to be performed by the MACs,
as we discussed in the CY 2013 ESRD
PPS proposed rule (77 FR 40967), we
are continuing to monitor the use of the
AY modifier and intend to take steps to
recoup inappropriate payments.
Although we are updating our manual,
we believe that we have provided
adequate instructions as to the
appropriate use of the AY modifier. We
expect that the contractors will convey
information regarding the proper use of
the AY modifier to the ESRD facilities,
and will also audit payments and
request documentation as necessary.
However, CMS has the responsibility to
ensure that payments are made
appropriately. Therefore, we will
continue to monitor the use of the AY
modifier. If we believe that the AY
modifier is not being used as intended,
or it is being used in order to receive
separate payment for renal dialysis
items and services that are in the
bundled payment, we will be forced to
reconsider its use.
E. Miscellaneous Comments
We received thirty-five comments
from Medicare beneficiaries, family
members, ESRD facilities, nurses,
physicians, professional organizations,
renal organizations, and manufacturers
related to issues that were not
specifically addressed in the CY 2013
ESRD PPS proposed rule.
Comment: We received comments
from patients, their families, renal
associations and manufacturers
requesting changes in how CMS pays for
home dialysis and home dialysis
training. Many of these commenters
described the benefits of home dialysis.
Most commenters asked CMS to
increase the number of weekly
allowable dialysis sessions and
eliminate the medical justification
requirement for additional sessions. One
commenter questioned why payment for
in-facility dialysis was the same as for
home dialysis, noting the differences
between staff and supply use between
in-facility and home dialysis. Some
commenters contended that patient
requests for home dialysis are being
denied. Commenters also stated that
beneficiaries with ESRD are not
provided with the same home training
opportunities as beneficiaries whose
care is covered by other payment
sources. Many of the commenters stated
that payment for home dialysis training
is insufficient and does not reflect the
true cost of training. Some commenters
indicated various ranges of time
required for home training in terms of
time per day and number of training
sessions. One home dialysis
organization stated that ESRD facilities

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only receive payment for 18, rather than
25, training sessions for new patients.
Response: CMS developed a
reimbursement mechanism with the
2011 implementation of the ESRD PPS
that we believe supports home-based
dialysis. That is, the ESRD PPS
payment, which includes drugs,
laboratory tests, staff time, supplies,
patient-level adjustments, facility-level
adjustments and outlier payments, is the
same regardless of the location where
the dialysis services are furnished or the
dialysis modality, which we believe
supports beneficiaries’ ability to elect to
receive dialysis at home, where
appropriate. It is not, however, CMS’s
intent to encourage, discourage or
require any particular dialysis modality.
Rather, we believe that decisions
regarding whether to receive dialysis
and which dialysis modality to use
should be made by beneficiaries in
consultation with their physicians. This
includes the decision whether to receive
home hemodialysis or home peritoneal
dialysis, rather than in-facility dialysis.
We believe that the decision to perform
home dialysis includes determining the
beneficiary’s abilities, the beneficiary’s
desire to perform home dialysis and the
beneficiary’s physical and emotional
status.
With regard to the comment asking
why the payment is the same for infacility as home dialysis, we believe that
our policy to pay the same amount,
including the patient-level and facilitylevel adjustments, as well as the outlier
policy for home and in-facility dialysis,
provides adequate payment to account
for the short-term increase in staff time
necessary to train beneficiaries for home
dialysis. Training costs are included in
the ESRD PPS base rate, however, we
also provide an add-on adjustment for
each training session that represents one
hour of nursing time to conduct one-onone training treatments for each training
treatment furnished by a Medicare
certified home dialysis training facility.
The add-on payment for one hour of
training per training session does not
imply that it takes only one hour per
training session to properly educate a
beneficiary to perform home dialysis.
We believe that our payment is adequate
for training and home dialysis.
We have been and will continue to
monitor and analyze trends in home
dialysis and home dialysis training. We
have seen a continuing increase in
overall home dialysis since mid-2009,
including in 2011. In particular, we
have observed an increase in home
hemodialysis and a decline in home
peritoneal dialysis with an overall
higher rate of home peritoneal dialysis.
In addition, our monitoring shows that

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ESRD facilities receive payments for
more treatments for home hemodialysis
than for in-facility hemodialysis. We
also have seen an increase in home
training in 2011, particularly in
retraining. Consequently, we do not
believe that the ESRD PPS and our
training adjustment discourage
beneficiaries from receiving home
dialysis.
Commenters also requested that we
increase the maximum number of
dialysis sessions and eliminate the
medical justification requirement for
dialysis treatments after a beneficiary
has received three sessions in one week.
We note that, although three is the
maximum number of sessions that we
will cover without a showing of medical
necessity, we will cover additional
sessions where those sessions are
medically necessary. We are aware that
there are observational studies that
support additional weekly dialysis
treatments and that there is some
industry support for additional
treatments. We have and will continue
to monitor and analyze the number of
dialysis treatments that Medicare
beneficiaries receive to determine
whether a change in this longstanding
policy is warranted.
In addition, in the CY 2011 ESRD PPS
final rule (75 FR 49064) we stated in
response to a MedPAC comment that we
would consider whether it would be
appropriate to utilize a larger unit of
payment, rather than a per treatment
payment, after the transition period. We
further stated that ‘‘we may evaluate
whether the ERSD PPS has resulted in
improved outcomes, the degree to
which home dialysis has increased, and
whether interested stakeholders would
favor an alternative to the per treatment
approach.’’ We will continue to monitor
the impact of the ESRD PPS and will
take these comments into consideration
if we determine that any changes to the
per treatment payment approach are
warranted.
With regard to the comment that
ESRD facilities receive payment for 18
rather than 25 training treatments for
new patients, we believe that the
commenter is confusing the adjustment
for beneficiaries who are receiving home
dialysis training but are not in their first
four months of dialysis, with
beneficiaries who have been newly
diagnosed with ESRD and are receiving
their first four months of dialysis. The
home dialysis training adjustment
applies to those beneficiaries who are
not in their first four months of dialysis
treatments. This adjustment does not
apply for those beneficiaries newly
diagnosed with ESRD. Instead, facilities
receive the onset of dialysis adjustment

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for these beneficiaries. As we explained
in the CY 2011 ESRD PPS final rule (75
FR 49094), we believe that the costs
associated with the onset of dialysis
adjustment and the training add-on
adjustment overlap (that is, costs for
services could be accounted for in both
adjustments). Accordingly, we finalized
a policy that ESRD facilities will not
receive the home dialysis training
adjustment when they are receiving the
onset of dialysis adjustment. This does
not mean that an ESRD facility may not
furnish home training services during
the onset period. Rather, the onset of
dialysis payment adjustment of 51
percent per treatment accounts for the
administrative and labor costs
associated with new patients, including
the costs to train patients.
We are unable to address the
comment contending that ESRD
beneficiaries are not offered the same
home dialysis training opportunities as
those offered to ESRD beneficiaries
covered by private payers because we
are not familiar with these payment
sources.
Comment: One patient support group
recommended that CMS use revenue
code 0820 when reporting home dialysis
instead of revenue code 0821, which is
currently used to describe both infacility and home dialysis services. The
commenter contends that this will
correctly identify patients on home
dialysis in Medicare claims data.
Response: Our current Medicare
policy for reporting home dialysis
services with revenue code 0821
appended with ESRD condition code 74
(Dialysis in the Home) allows us to
distinguish beneficiaries receiving
dialysis at home from those receiving
treatment in an ESRD facility.
Comment: We received twelve
comments regarding the Agency’s plan
to include oral-only drugs in the ESRD
PPS bundled payment for CY 2014.
Commenters expressed concern about
the administrative burden, compliance
with state laws, and associated costs in
furnishing oral-only drugs within the
scope of the ESRD service. A few
commenters requested that CMS ask for
community input so that the inclusion
of the oral-only drugs will be an
uneventful transition for patients. ESRD
industry associations cautioned that the
inclusion of oral-only drugs into the
ESRD PPS CY 2014 bundled payment
may limit patient access to the most
clinically appropriate drugs and
threaten optimal health outcomes for
ESRD Medicare beneficiaries. Some
commenters recommended that CMS
include patient protections to ensure
patient care is not compromised and
that oral-only drugs continue to be

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furnished at the recommended doses.
Many commenters requested that the
Agency share advance information
about the methodology and data sources
that the Agency will use to calculate the
reimbursement rates for drugs and
therapies and encouraged CMS to use
the most recent year of available data to
establish a payment rate for oral-only
drugs. Other commenters requested that
CMS adopt a methodology that
measures the actual utilization on a per
treatment basis and includes costs
associated with drug administration
when reimbursing oral-only drugs as
part of the ESRD PPS.
Response: We thank the commenters
for their comments. In the CY 2011
ESRD PPS final rule (75 FR 49038
through 49044), we responded to
comparable comments regarding the
inclusion of oral-only drugs in CY 2014.
We received many suggestions from
stakeholders on how oral-only drugs
should be included in the ESRD PPS
bundled payment. We have reviewed
and will continue to review all of the
comments, which we will consider as
we formulate our proposals on this
issue. We intend to address the
inclusion of oral-only drugs in the ESRD
PPS in the CY 2014 ESRD PPS proposed
rule.
Comment: We received three
comments from industry associations
requesting that CMS release the ratesetting file to allow the industry to test
the Agency’s assumptions and complete
its own analysis of the payment policies
set forth in the CY 2013 ESRD PPS
proposed rule. One commenter
encouraged CMS to make data available
to the public generally, not just dialysis
facilities in particular, to allow for a
more complete assessment of the ESRD
PPS program.
Response: We received comparable
requests and comments in response to
the CY 2012 ESRD PPS proposed rule
and responded to those comments in the
CY 2012 ESRD PPS final rule (76 FR
70254 to 70255). We believe that we
have provided and will provide data
sufficient to analyze the payment
policies included in the proposed rule,
by posting the impact file for CY 2012
on the ESRD PPS Payment Web site. We
will also post a provider-level impact
file and the wage index file for CY 2013
shortly after publication of this final
rule. We also explained that we have
not made the rate setting file available
‘‘because the release of patient
identifiable data is not necessary to
accomplish the purpose of analyzing
our proposals. Applicable Federal
privacy laws and regulations, including
the Privacy Act and HIPPA Privacy Rule
only permit us to disclose personal

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identifiable information when it is
necessary to administer the program, or
for health care operations and
payment.’’
Comment: We received 8 comments
requesting modification to the
standardization factor methodology and
calculation for CY 2013. Many of these
commenters encouraged CMS to use the
most current data available in order to
establish the standardization factor,
rather than historical estimates. Some
commenters indicated that because we
had adjusted the outlier fixed dollar loss
and MAP amounts to account for outlier
payments below the 1 percent threshold
in CY 2011, we should provide a
comparable adjustment to the
standardization factor and the ESRD
PPS base rate to account for payments
for patient- and facility-level adjusters
that were not utilized. Some
commenters continue to contend that
the ESRD PPS base rate established in
CY 2011 is incorrect and that CMS
should return the payment amounts
removed from the base rate to account
for the adjusters, thereby increasing the
base rate. Other commenters stated that
the ESRD PPS base rate should be
adjusted to account for payments
allocated for the patient- and facilitylevel adjusters that had not ultimately
been paid to the ESRD facilities. A few
commenters requested that CMS modify
the payment for case-mix and comorbidity adjustments.
Response: In the CY 2011 ESRD PPS
final rule, we described the data sources
that were used in constructing the ESRD
PPS payment bundle, the development
of the ESRD PPS base rate, and the
payment adjusters (75 FR 49064 through
49127). In the CY 2013 ESRD PPS
proposed rule, we proposed to update
the base rate by the rate of increase in
the ESRD market basket, reduced by the
productivity adjustment (77 FR 40959).
The base rate was developed using 2007
claims, in accordance with section
1881(b)(14)(A)(ii) of the Act, which
requires CMS to use the lowest per
patient utilization year. We also
explained the methodology used to
determine the case-mix adjustment
amount, including co-morbidities (75
FR 49087 through 49116). In the CY
2013 ESRD PPS proposed rule, we
stated that we were not proposing any
changes to the methodology used to
compute the MAP or fixed dollar loss
amounts, but were updating the outlier
services MAP amounts and fixed dollar
loss amounts to reflect the utilization of
outlier services reported on the 2011
claims, using the December 2011 claims
file (77 FR 40964). The methodology for
calculating and updating the base rate
was finalized last year through notice

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and comment rulemaking, as were the
methodologies for updating the outlier
threshold. In the CY 2013 ESRD PPS
proposed rule, we did not propose to
change how the base rate is calculated
or updated. We also did not propose in
the CY 2013 ESRD PPS proposed rule to
modify the payment adjusters. We do
not believe that because we lowered the
MAP and fixed dollar loss amounts to
adjust for outlier payment expenditures
that were below the 1 percent target, we
must adjust the standardization factor
for the ESRD PPS base rate. We will,
however, continue to monitor our
payments and consider if any changes
need to be made in the future.
Comment: One commenter requested
clarification when billing Medicare for
Lipid Profile laboratory services
furnished to ESRD beneficiaries.
Another commenter encouraged CMS to
furnish guidance for blood draws and
laboratory collections under the ESRD
PPS.
Response: ESRD-related laboratory
tests may not be billed with the AY
modifier and no separate payment shall
be made when an ESRD facility or
laboratory furnishes ESRD-related
laboratory tests to an ESRD beneficiary.
We discuss laboratory tests furnished
under the PPS in our CY 2011 and CY
2012 ESRD PPS final rules (75 FR 49053
through 49056 and 76 FR 70249 through
70250, respectively). Furthermore, the
Lipid Profile laboratory test is
appropriately included in the ESRD PPS
payment bundle when Lipid
abnormalities result from, or are related
to the beneficiary’s ESRD. For example,
some forms of dialysis, particularly
peritoneal dialysis, are associated with
increased cholesterol and triglyceride
levels, and a Lipid Profile laboratory test
to assess these levels would be included
in the bundled payment. If, however,
the Lipid Profile laboratory test is
furnished for reasons other than for the
treatment of ESRD, the laboratory
services may be billed with the AY
modifier and are eligible for separate
payment. With regard to the comment
requesting guidance for blood draws
and laboratory collections, we refer the
commenter to Change Request 7617,
Transmittal 150, entitled,
‘‘Implementation of Changes in End
Stage Renal Disease Payment for
Calendar Year 2012’’ issued on
November 16, 2011.
Comment: One commenter requested
that CMS consider the implementation
of pediatric co-morbidities to the
pediatric case mix adjustments, while
another commenter requested
consideration of a case-mix adjustment
for race. One association called for CMS
to establish a new technology adjuster

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in a non-budget-neutral manner, stating
that new technologies have the potential
to lead to better diagnosis, treatment,
and patient outcomes.
Response: We thank the commenters
for their suggestions, but note that we
did not propose to implement these
adjusters in the CY 2013 ESRD PPS
proposed rule. We refer the commenters
to the CY 2011 ESRD PPS final rule (75
FR 49128 through 49134; 75 FR 49108
and 49115; 75 FR 49174), in which we
explained the methodology used to
develop the ESRD PPS for the pediatric
population, discussed the reasons for
not including a patient-level case mix
adjuster for race, and responded to
comments suggesting that we provide
separate payment for new and
innovative drugs and technologies.
Comment: Some commenters
requested that the cost reports be
amended to reflect the actual cost of
care. Some of the recommendations
included that the cost report should
provide flexibility to allow for
innovation, eliminate the limitation on
medical director fees, recognize the cost
of supporting the ESRD networks, and
allow immediate recognition on cost
reports of ‘‘new or innovative items/
services,’’
Response: We thank the commenters
for their suggestions. We plan to analyze
the cost reports to determine if there are
any changes required and will consider
the suggestions provided.
We received a number of other
comments on a variety of topics that we
believe are outside the scope of the
proposed rule. The commenters
requested that ESRD beneficiaries be
able to maintain disability benefits
while employed; expressed concern
about the ‘‘corporate practice of
medicine’’ by dialysis facilities; noted
that securing the necessary
documentation for acute co-morbidities
is problematic and urged CMS to
furnish co-morbidity claims data from
the CMS database; advocated for
inclusion of their product in the ESRD
PPS payment; and disputed over
payment changes to its product under
Part D. We appreciate the comments;
however, because these comments were
not in response to any proposals or
discussions in the proposed rule, they
are beyond the scope of this final rule.
We refer the commenters to the CY 2011
ESRD PPS final rule, where we believe
that we addressed many of these issues
(75 FR 49030).

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III. End-Stage Renal Disease (ESRD)
Quality Incentive Program (QIP) for
Payment Year (PY) 2015

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A. Background
For over 30 years, monitoring the
quality of care provided to end-stage
renal disease (ESRD) patients by dialysis
providers or facilities (hereinafter
referred to collectively as ‘‘facility’’ or
‘‘facilities’’) has been an important
component of the Medicare ESRD
payment system. The ESRD quality
incentive program (QIP) is the most
recent step in fostering improved
patient outcomes by establishing
incentives for dialysis facilities to meet
or exceed performance standards
established by CMS. The ESRD QIP is
authorized by section 153(c) of MIPPA,
which added section 1881(h) to the Act.
CMS established the ESRD QIP for PY
2012, the initial year of the program in
which ESRD payment reductions based
on quality performance are being made
to dialysis facilities, in two rules
published in the Federal Register on
August 12, 2010 and January 5, 2011 (75
FR 49030 and 76 FR 628, respectively).
On November 10, 2011, CMS published
a final rule in the Federal Register
outlining the PY 2013 and PY 2014
ESRD QIP (76 FR 70228).
Section 1881(h) of the Act requires
the Secretary to establish an ESRD QIP,
which we have implemented by (i)
selecting measures; (ii) establishing the
performance standards that apply to the
individual measures; (iii) specifying a
performance period with respect to a
year; (iv) developing a methodology for
assessing the total performance of each
facility based on the performance
standards with respect to the measures
for a performance period; and (v)
applying an appropriate payment
reduction to facilities that do not meet
or exceed the established Total
Performance Score. In this final rule, we
describe each of these elements, as
applicable, and our final policies for
their application to PY 2015 and future
payment years of the ESRD QIP.
B. Summary of the Proposed Provisions
and Responses to Comments on the
ESRD QIP for PY 2015
A proposed rule, entitled ‘‘Medicare
Program; End-Stage Renal Disease
Prospective Payment System, Payment
System, Quality Incentive Program, and
Bad Debt Reductions for All Medicare
Providers’’ (77 FR 40952), hereinafter
referred to as the CY 2013 ESRD PPS
proposed rule, appeared in the Federal
Register on July 11, 2012, with a
comment period that ended on August
31, 2012. In that proposed rule, we
made proposals for the ESRD QIP,

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including introducing and expanding
measures, refining the scoring
methodology, modifying the program’s
public reporting requirements,
establishing how the ESRD QIP payment
reduction applies to facilities whose
ownership has changed, and initiating a
data validation pilot program. We
received approximately 55 public
comments on these proposals from
many interested parties including
dialysis facilities, organizations
representing dialysis facilities,
nephrologists, nurses, dietitians, home
health advocacy groups, pharmaceutical
manufacturers, patients, advocacy
groups, and the Medicare Payment
Advisory Commission (MedPAC). In
this section of the final rule, we provide
a summary of each proposed
requirement, a summary of the public
comments received on these
requirements, our responses to these
comments, and the final policies that we
will adopt for the program.
C. Considerations in Updating and
Expanding Quality Measures Under the
ESRD QIP for PY 2015 and Subsequent
PYs
1. Value-Based Purchasing (VBP)
Overview
Throughout the past decade, Medicare
has been transitioning from a program
that pays for healthcare based solely on
the number of services furnished to a
beneficiary to a program that ties
payments to providers and suppliers to
the quality of care of the services they
deliver. By paying for the quality of
care, rather than merely the quantity of
care, we believe we are strengthening
the healthcare system while also
advancing the National Quality Strategy
and the three part aim which promote
(i) better care for the individual thereby
(ii) advancing the health of the entire
population while also (iii) reducing
costs. CMS specifies the domains and
specific measures of quality for our VBP
programs and we are working to link the
aims of the National Quality Strategy
with our payment policies on a national
scale.
There are currently six domains of
measurement for our VBP programs,
based on the six priorities of the
National Quality Strategy: (i) Care
coordination; (ii) population/
community health; (iii) efficiency and
cost reduction; (iv) safety; (v) patientand caregiver-centered experience and
outcomes; and (vi) clinical care.
Together these domains not only
encourage better care at the facility
level, but also encourage different care
settings to interface to comprehensively
improve healthcare overall. Although

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currently none of the VBP programs
measure quality across all of the six
domains, we are working to ensure that
each program considers measures
supporting the six national priorities
where feasible. Furthermore, we are
working in partnership with facilities,
beneficiaries, the National Quality
Forum (NQF), the Measures Application
Partnership, sister agencies in the
Department of Health and Human
Services (HHS), and other stakeholders
to develop new measures where gaps
exist, refine measures requiring
adjustment, and remove measures when
appropriate. We are also working with
stakeholders to ensure that the ESRD
QIP serves the needs of our beneficiaries
and also advances the goals of the
National Quality Strategy.
We believe that the development of an
ESRD QIP that is successful in
promoting the delivery of high quality
healthcare services in dialysis facilities
is paramount. We seek to adopt
measures for the ESRD QIP that promote
high-quality, safer, and more efficient
care. In addition to the priorities of the
National Quality Strategy, our measure
development and selection activities for
the ESRD QIP take into account other
national priorities, such as those
established by the National Priorities
Partnership (http://www.qualityforum.
org/npp/), HHS Strategic Plan (http://
www.hhs.gov/secretary/about/priorities/
priorities.html), the National Strategy
for Quality Improvement in Healthcare
(http://www.healthcare.gov/center/
reports/quality03212011a.html), and the
HHS National Action Plan to Prevent
Healthcare Associated Infections (HAIs)
(http://www.hhs.gov/ash/initiatives/hai/
esrd.html). To the extent practicable, we
have sought to adopt measures that have
been endorsed by a national consensus
organization, recommended by multistakeholder organizations, and
developed with the input of facilities,
purchasers/payers, beneficiaries, and
other stakeholders.
2. Brief Overview of Proposals
For PY 2014, we adopted measures for
the ESRD QIP that fall under three of the
six VBP measure priority domains based
on the National Quality Strategy:
• Safety: National Healthcare Safety
Network (NHSN) Dialysis Event
reporting;
• Patient- and caregiver-centered
experience: In-Center Hemodialysis
Consumer Assessment of Healthcare
Providers and Systems (ICH CAHPS)
survey reporting; and
• Clinical quality of care: (i)
Hemoglobin Greater Than 12 g/dL; (ii)
Hemodialysis Adequacy (Urea
Reduction Ratio (URR)); (iii) Vascular

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Access Type; (iv) and Mineral
Metabolism reporting (76 FR 70228).
For PY 2014, we also proposed to
change the requirements for the Mineral
Metabolism reporting measure.
For PY 2015, we proposed to add new
measures in the clinical quality of care
domain and to expand the scope of the
NHSN Dialysis Event reporting measure
(safety domain) and the Mineral
Metabolism reporting measure (clinical
quality of care domain). We believe that
the PY 2015 ESRD QIP should not only
promote the health of ESRD patients,
but also uphold the goals of the National
Quality Strategy (NQS). To that end, we
proposed to include 11 measures in the
PY 2015 ESRD QIP. We also proposed
to include these measures and measure
topics in subsequent payment years.
The proposed measures would evaluate
facilities on the following topics that fall
under the NQS clinical quality of care
measure domain:
• For purposes of evaluating anemia
management:
Æ Hemoglobin Greater Than 12 g/dL,
a clinical measure.
Æ Anemia Management, a reporting
measure.*
• To evaluate dialysis adequacy:
Æ A clinical Kt/V measure for adult
hemodialysis patients.*
Æ A clinical Kt/V measure for adult
peritoneal dialysis patients.*
Æ A clinical Kt/V measure for
pediatric hemodialysis patients.*
• To determine whether patients are
treated using the most beneficial
type of vascular access:
Æ An arteriovenous fistula measure.
Æ A catheter measure.
• To address effective bone mineral
metabolism management:
Æ Hypercalcemia, a clinical
measure.*
Æ Mineral Metabolism, a reporting
measure (expansion proposed).
Additionally, we proposed to expand
a previously adopted reporting measure
addressing safety:
• NHSN Dialysis Event reporting
measure.
We also proposed to continue using a
previously adopted reporting measure
assessing patient- and caregivercentered experience:
• ICH CAHPS survey reporting
measure.
*Indicates that the measure is new to
the ESRD QIP.
Although we did not propose to adopt
measures that address care
coordination, population/community
health, or efficiency and cost of care, we
solicited comments in the proposed rule
on potential measures that would fall
into each of these areas. We discussed

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the following measures that are under
consideration for possible adoption in
subsequent payment years: a 30-Day
Hospital Readmission measure to
address care coordination; an access to
care measure to address population/
community health; and an efficiency
measure. We also discussed the
Standardized Hospitalization Ratio
Admissions (SHR) measure and the
Standardized Mortality Ratio (SMR)
measure that we are considering for
program adoption in future years. We
welcomed, and continue to welcome,
further comments on these and other
potential measures for future payment
years.
3. Measures Application Partnership
Review
In addition to the considerations
discussed above, in selecting measures
for the PY 2015 ESRD QIP, we
considered input from the multistakeholder group, the Measures
Application Partnership (http://www.
qualityforum.org.map/). Section
1890A(a)(1) of the Act, as added by
section 3014(b) of the Affordable Care
Act, requires the entity with a contract
under section 1890(a) of the Act,
currently NQF, to convene multistakeholder groups to provide input to
the Secretary on the selection of quality
and efficiency measures for use in
certain programs. Section 1890A(a)(2) of
the Act requires the Secretary, not later
than December 1 of each year, to make
available to the public a list of quality
and efficiency measures that are under
consideration for use in certain
programs. Section 1890A(a)(3) of the
Act requires the entity with a contract
under section 1890(a) of the Act to
transmit the input of the multistakeholder groups to the Secretary not
later than February 1 of each year,
beginning in 2012. Section 1890A(a)(4)
of the Act requires the Secretary to take
into consideration the input of the
multi-stakeholder groups in selecting
quality and efficiency measures. The
Measures Application Partnership is the
public-private partnership comprised of
multi-stakeholder groups convened by
NQF for the primary purpose of
providing input on measures as required
by sections 1890A(a)(1) and (3) of the
Act. The Measures Application
Partnership’s input on the quality and
efficiency measures under consideration
for adoption in CY 2012 was transmitted
to the Secretary on February 1, 2012 and
is available at (http://www.qualityforum.
org/WorkArea/linkit.aspx?Link
Identifier=id&ItemID=69885). As
required by section 1890A(a)(4) of the
Act, we considered these
recommendations in selecting quality

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and efficiency measures for the ESRD
QIP.
Four proposed measures for the PY
2015 ESRD QIP (that is, three for
dialysis adequacy and one for
hypercalcemia) were made publicly
available in accordance with section
1890A(a)(2) of the Act and were
reviewed by the Measures Application
Partnership. The Measures Application
Partnership gave support to two of the
proposed measures, NQF #1454:
Proportion of patients with
hypercalcemia and NQF #1423:
Minimum spKt/V for Pediatric
Hemodialysis Patients. The Measures
Application Partnership supported the
direction of a proposed composite
measure comprised of two NQFendorsed measures, NQF #0249:
Hemodialysis Adequacy Clinical
Performance Measure III: Hemodialysis
Adequacy—HD Adequacy—Minimum
Delivered Hemodialysis Dose and NQF
#0318: Peritoneal Dialysis Adequacy
Clinical Performance Measure III—
Delivered Dose of Peritoneal Dialysis
Above Minimum. The Measures
Application Partnership recommended
that the composite measure comprised
of the two NQF dialysis adequacy
measures be tested to ensure feasibility.
We took these comments into
consideration when we proposed
measures for the PY 2015 ESRD QIP.
4. PY 2014 Mineral Metabolism Measure
In the CY 2012 ESRD PPS final rule,
we adopted the Mineral Metabolism
reporting measure for the PY 2014 ESRD
QIP which requires each facility to attest
that it monitored serum calcium and
serum phosphorus at least once a month
for each Medicare ESRD patient (76 FR
70271). We have since realized,
however, that it may be difficult for
some facilities to make this attestation
if, for example, a patient is seen at the
beginning of the month, his or her blood
is not drawn, and then he or she is
hospitalized or transient for the
remainder of the month. While it is our
intention to encourage facilities to put
systems and processes into place to
ensure at least monthly serum calcium
and phosphorus monitoring, we believe
it is reasonable to give consideration to
situations where the monthly blood
draw does not happen within the
dialysis facility given these scenarios.
Therefore, for PY 2014, we proposed to
change the Mineral Metabolism
reporting requirement.
We considered proposing to require
facilities to report the required
information for less than 100 percent of
their patients. There are circumstances,
however, that are beyond a facility’s
control wherein it may not be able to

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draw a sample for this patient.
Therefore, for purposes of scoring the
measure, we proposed to modify the PY
2014 measure to require that, in order
for a facility to receive 10 points on the
PY 2014 Mineral Metabolism measure,
it must attest that it monitored on a
monthly basis the serum calcium and
serum phosphorus levels for every
Medicare ESRD patient provided that:
(i) The patient is alive for the entirety
of the applicable month; (ii) if the
patient is treated in-center, that patient
was treated at that facility at least twice
during the claim month; and (iii) if the
patient receives dialysis at home, a
facility must report this information
regardless of the number of treatments,
provided that a claim is submitted for
that patient. We also proposed that if a
patient is hospitalized or transient
during a claim month, the facility could
monitor the serum calcium and serum
phosphorus readings for that patient for
the month if a patient has labs drawn by
another provider/facility, those labs are
evaluated by an accredited laboratory (a
laboratory that is accredited by, for
example, Joint Commission, College of
American Pathologists, AAB (American
Association of Bioanalysts), or State or
Federal agency), and the dialysis facility
reviews the serum calcium and serum
phosphorus readings. We stated our
belief that these proposals will provide
more flexibility for facilities and will
also prevent facilities from drawing
blood, even when not necessary, each
time a patient visits for fear that he or
she will fail to come to the facility again
during that month. We requested
comment on this proposal.
We also requested comment on our
consideration to lower the attestation to
monthly monitoring of 98 percent of
Medicare ESRD patients. We chose 98
percent in order to encourage
improvement, and to ensure that we do
not undermine the current level of highreporting (based on the CROWNWeb
pilot data). We recognize that 100
percent might not be appropriate due to
some individual cases that may not fit
specified criteria.
Additionally, for purposes of
clarification, we noted that the PY 2014
attestations for both the Mineral
Metabolism and ICH CAHPS measures
will become available in CROWNWeb in
December 2012. As noted in the CY
2012 ESRD PPS final rule, these
attestations must be made before
January 31, 2013 (76 FR 70269, 70271).
We received the following comments
on these proposals:
Comment: Many commenters were
appreciative of our willingness to revisit
our requirements for the PY 2014
Mineral Metabolism attestation. Some

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commenters suggested that we modify
the exclusion to include the following
patients: (i) Beneficiaries who are
regularly treated at the facility and who
fit into one of these categories: (a)
Beneficiaries who die within the
applicable month; (b) beneficiaries that
receive fewer than 7 treatments in a
month; and (c) beneficiaries receiving
home dialysis therapy who miss their
in-center appointments when there is a
documented, good faith effort to have
them participate in such a visit during
the applicable month; (ii) transient
dialysis patients; (iii) pediatric patients
(unless the measure is specific to this
population); and (iv) kidney transplant
recipients with a functioning graft.
Commenters stated that these exclusions
are consistent with our own measures,
CROWNWeb, and the URR reporting
specifications; additionally, these
exclusions seek to hold facilities
accountable only for those beneficiaries
to whom they regularly give care and for
whose care they can affect. One
commenter believed that home dialysis
patients should only be included if they
attend their monthly visit. One
commenter requested that we use NQF
inclusion criteria for purposes of
defining the exclusions of the Mineral
Metabolism reporting measure.
Response: Upon further review, we
agree with commenters who believe that
the exclusions should be modified. We
recognize that treating a patient twice
may not provide enough time to
effectuate quality patient care. We agree
with the commenters who suggested
that an in-center hemodialysis patient
should be excluded if treated by a
facility fewer than seven times during
the month, regardless of whether the
patient is officially admitted to that
facility. With seven treatments, we
believe that a facility should have had
adequate opportunities to draw blood
necessary to measure serum calcium
and phosphorus levels. We also believe
that the threshold of seven will
discourage unnecessary testing of incenter hemodialysis patients by
facilities because they will know that,
since in-center patients are typically
treated three times per week, a patient
must have been treated by the facility
for at least two weeks to be included;
thus, the facility need not feel pressure
to draw blood for every in-center patient
during the first few visits of the month.
Based on these considerations, we will
not finalize our proposal to exclude
only in-center patients who have been
treated fewer than two times by the
facility during the claim month. Instead,
we will exclude any patient who is

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treated by the facility fewer than seven
times during the reporting month.
We do not believe that it is necessary
to specifically exclude transient patients
from this measure because, as noted,
any patient that is treated by the facility
at least seven times during the
applicable reporting month is present at
the facility for enough time that the
facility should be held accountable for
that patient. Likewise, for the same
reasons mentioned above, we do not
believe we need to separately exclude
patients who are deceased at the end of
the reporting month. Provided that the
patient is treated by the facility at least
seven times during that month, the
facility should be able to draw blood
necessary to monitor serum calcium and
serum phosphorus levels even if the
patient is deceased at the end of the
month.
We continue to believe that facilities
should be required to attest that they
monitored the serum calcium and
phosphorus levels of home dialysis
patients irrespective of whether those
patients attend a monthly appointment.
We believe that it is incumbent upon a
facility to make home dialysis patients
aware that they must attend monthly
appointments to be properly treated. In
addition, since the mechanisms that
cause cardiovascular and bone disease
do not differ between home and incenter hemodialysis patients, we believe
that the inclusion of home dialysis
patients in the Mineral Metabolism
reporting measure is appropriate.
Therefore we will finalize our proposal
that we will include any home
hemodialysis patient for which a facility
submits a claim with respect to the
reporting month in this measure.
We also believe it is important to
include transplant patients until they
are officially discharged from a facility;
regular monitoring can help ensure that
a transplant remains effective and that
the facility is continuing to provide the
best care possible.
We believe it is important to monitor
serum calcium and serum phosphorus
levels in adult and pediatric patients
alike because improper bone mineral
metabolism management can lead to
serious, negative outcomes, including
death, in both populations. Although we
are aware that specific target values for
calcium and phosphorus have not been
set for the pediatric population, we still
believe that this measure will lead to
better observation of mineral
metabolism in these patients if one or
both of these values are unusually high
or low. Additionally, we believe that the
inclusion of pediatric patients in this
measure is consistent with current
guidelines on the frequency of mineral

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metabolism testing as reported in
KDIGO guidelines chapter 3 ‘‘Diagnosis
of CKD–MBD: biochemical
abnormalities.’’ Thus, we believe that
this measure is appropriate for both
adult and pediatric patients.
Finally, we do not believe that we
must use NQF inclusion criteria for this
measure. Although we seek to align our
measures and our selection criteria with
NQF as much as possible, as we stated
in the CY 2011 ESRD PPS Final Rule,
we believe it is appropriate, at this time
to employ a measure that has not been
NQF-endorsed (76 FR 70271 through
72).
For the reasons stated above, we are
finalizing that to earn 10 points on the
Mineral Metabolism reporting measure,
facilities must attest in CROWNWeb
that they have monitored the serum
calcium and serum phosphorus levels
on a monthly basis for (i) in-center
Medicare patients who have been
treated at least seven times by the
facility; and (ii) home hemodialysis
Medicare patients for whom the facility
submits a claim.
Comment: Several commenters
encouraged us to not adopt a percentage
reporting threshold because it does not
distinguish between beneficiaries
legitimately excluded and those that
were merely missed. Other commenters
requested that we use both exclusions
and a threshold, recognizing that there
are some circumstances preventing
blood draws that facilities cannot
control; one commenter suggested a
threshold of 90 percent or an allowance
of two patients to ensure that small
facilities are not disproportionally
affected. Another commenter
recommended that we use a threshold of
95 percent. Another commenter stated
that requiring 98 percent reporting may
make it difficult for patients to travel
because dialysis facilities may
encourage them otherwise to ensure
compliance with the measure.
Response: We agree with the
commenters who argued that, even with
exclusions, there are circumstances in
which facilities cannot attest to
monitoring the serum calcium and
serum phosphorus levels for every
patient at least once per month. For
example, a facility may wait until later
to draw blood from a patient because it
believes that patient will be treated by
the facility for the entirety of the month,
but learns that the patient has been
hospitalized unexpectedly for all or part
of the applicable month. Therefore, we
believe that we should not require an
attestation of 100 percent monitoring.
Based on data from the CROWNWeb
pilot, we believe that facilities report
serum calcium and serum phosphorus

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levels for approximately 96 percent of
their patients. Therefore, we will
finalize that facilities must attest to
monitoring calcium and phosphorus on
a monthly basis for at least 96 percent,
in total, of (i) in-center Medicare
patients who have been treated at least
seven times by the facility; and (ii)
home hemodialysis Medicare patients
for whom the facility submits a claim.1
We are concerned that small facilities
may be disproportionately impacted by
this 96 percent reporting threshold
because, for example, a facility with 10
patients could miss monitoring for only
one patient and fail to meet the
threshold. We have previously stated
that, to disincentivize cherry picking,
we seek to ensure that one patient does
not skew a facility’s score. We do,
however, seek to ensure the highest
quality of care regardless of the facility
size. Taking these two competing
interests into consideration, we believe
that it is appropriate to allow facilities
that treat less than 11 Medicare patients
during the performance period to attest
that they have met the requirements for
this measure if they monitored the
serum calcium and serum phosphorus
levels on a monthly basis for at least all
but one of its (i) in-center Medicare
patients who have been treated at least
seven times by the facility; and (ii)
home hemodialysis Medicare patients
for whom the facility submits a claim.
We believe 11 is the appropriate cut-off
because, as we explain below, a case
minimum of 11 allows us to include as
many facilities as possible while also
taking into account privacy and
reliability. We believe that one is the
appropriate number because, as noted
above, although we seek to ensure the
highest quality of care regardless of
facility size, we also seek to mitigate
cherry-picking by ensuring that one
patient does not skew a facility’s score.
Comment: Many commenters noted
that it is impractical for facilities to
obtain labs from other providers because
other providers are not required to
measure these data, do not share data
with dialysis facilities, and, even if
facilities could obtain these data, they
could not be sure that the labs were
consistent or reported under the same
standards.
Response: We recognize that it may be
difficult for facilities to coordinate with
hospitals and other care providers in
order to obtain lab values. Accordingly,
we are not mandating facilities to do so.
In the proposed rule (77 FR 40969), we
1 We note that the reporting requirements are
somewhat different for CROWNWeb. All patients
must be reported for CROWNWeb purposes, even
if those patients would not be included in the
measure for purposes of the ESRD QIP.

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stated that facilities may obtain lab
values from other providers. This
proposal was specifically designed to
afford facilities more flexibility in
acquiring serum calcium and
phosphorus values. Facilities are highly
encouraged to coordinate with other
providers, but this measure does not
mandate them to do so. We believe that
the commenters’ concerns about
inconsistent lab data are mitigated by
the requirement that the lab must be
accredited. Facilities can use these
values for the purpose of monitoring the
serum calcium and phosphorus levels of
their patients; additionally, collecting
these data may encourage providers to
engage one another about the patient’s
conditions and care.
Comment: Several commenters asked
for clarification on the following points:
(1) Are only Medicare patients included
in the denominator, (2) are Medicare
Railroad and Medicare Advantage (MA)
patients included in the denominator,
(3) could CMS give an example of an
accurate application of the exclusions
and/or threshold, (4) if CMS institutes a
threshold, would it be rounded, (5) if a
patient is excluded from the measure for
attestation purposes, must his or her
values still be reported in CROWNWeb,
and (6) how does CMS plan on counting
the number of treatments for home
patients.
Response: We will address these
questions in turn.
First, a facility treating at least 11
Medicare patients during the
performance period is required to
monitor serum calcium and serum
phosphorus on a monthly basis for all
(i) in-center Medicare patients who have
been treated at least seven times by the
facility; and (ii) home hemodialysis
Medicare patients for whom the facility
submits a claim. These patients include
Medicare Advantage and Medicare
Railroad beneficiaries.
As an example of the application of
the exclusions and threshold, assume
the following: (i) A facility treats 30
Medicare patients in month X; (ii)
patient A is an in-center hemodialysis
patient who was treated by the facility
seven times during the first two weeks
of month X, but the facility failed to
obtain a blood draw during this period,
and the patient is in the hospital for the
next two weeks of month X but the
facility monitors the patient’s serum
phosphorus and calcium by obtaining
these values from the hospital; (iii)
patient B and C are both in-center
hemodialysis patients who were treated
by the facility at least seven times
during month X, but the facility fails to
monitor the serum calcium and serum
phosphorus of these patients during

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month X; (iv) patient D was visiting the
facility and was treated by the facility
only 4 times during month X; and (v)
the facility monitors the serum calcium
and serum phosphorus on a monthly
basis for every other (i) in-center
Medicare patient who had been treated
at least seven times by the facility
during month X; and (ii) home
hemodialysis Medicare patient for
whom the facility submitted a claim
during month X. The facility is
considered to have monitored the serum
calcium and serum phosphorus during
month X for every patient except B and
C because patient D was only treated
four times during the month and the
facility obtained the values for patient A
from another provider. The facility’s
monitoring rate for month X is 27/29, or
93.1 percent (rounded to 93 percent). A
facility with 30 patients must attest that
it monitored on a monthly basis the
serum calcium and serum phosphorus
for all (i) in-center Medicare patients
who have been treated at least seven
times by the facility; and (ii) home
hemodialysis Medicare patients for
whom the facility submits a claim.
Therefore, this facility could not attest
that it successfully monitored the serum
calcium and serum phosphorus in total
for at least 96 percent of its (i) in-center
Medicare patients who had been treated
at least 7 times by the facility; and (ii)
home hemodialysis Medicare patients
for whom the facility submitted a
claim.2 For purposes of this measure,
facilities may round up to a whole
percentage point when calculating
whether they met the 96 percent
threshold.
Finally, for the reasons discussed
above, facilities will be required to
monitor the serum calcium and serum
phosphorus at least once per month for
every home hemodialysis patient for
whom it submits a claim regardless of
the number of treatments during that
month.
Comment: Many commenters
requested that we revisit various aspects
of the PY 2014 ESRD QIP.
Response: The PY 2014 ESRD QIP
was finalized on November 1, 2011 (76
FR 70228). Although we requested
comment regarding the PY 2014 Mineral
Metabolism reporting measure in the
proposed rule, we did not propose to
reconsider any other elements of the PY
2 Note that, for ease, we provided an example for
only one month. However, to make the attestation,
a facility must monitor for the duration of the
performance period the serum calcium and serum
phosphorus levels on a monthly basis for all (i) incenter Medicare patients who have been treated at
least seven times by the facility; and (ii) home
hemodialysis Medicare patients for whom the
facility submits a claim.

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2014 program. Therefore, we consider
these comments to be outside the scope
of the proposed rule. We refer readers to
the 2012 ESRD PPS final rule for more
information on the finalized PY 2014
ESRD QIP (76 FR 70228).
For the reasons stated above, we
finalize that a facility treating at least 11
Medicare patients during the
performance period can attest to
meeting the requirements of the PY
2014 Mineral Metabolism reporting
measure if it monitors on a monthly
basis the serum calcium and serum
phosphorus for at least 96 percent in
total of all (i) in-center Medicare
patients who have been treated at least
seven times by the facility; and (ii)
home hemodialysis Medicare patients
for whom the facility submits a claim.
We also finalize that a facility treating
fewer than 11 Medicare patients during
the performance period can attest to
meeting the requirements of the PY
2014 Mineral Metabolism reporting
measure if it monitors on a monthly
basis the serum calcium and serum
phosphorus levels for at least all but one
of its (i) in-center Medicare patients
who have been treated at least seven
times by the facility; and (ii) home
hemodialysis Medicare patients for
whom the facility submits a claim.
D. Proposed Measures for the PY 2015
ESRD QIP and Subsequent PYs of the
ESRD QIP
Similar to our other quality reporting
and pay for performance programs, we
proposed that once a quality measure is
selected and finalized for the ESRD QIP
through rulemaking, the measure would
continue to remain part of the program
for all future years, unless we remove or
replace it through rulemaking or
notification (if the measure raises
potential safety concerns). We believe
that this will streamline the rulemaking
process, provide continuity of quality
measurement, and allow ESRD facilities
to plan both quality reporting and
quality improvement activities. In
general, we anticipate considering
quality measures for removal or
replacement if: (1) Measure performance
among the majority of ESRD facilities is
so high and unvarying that meaningful
distinctions in improvements or
performance can no longer be made; (2)
performance or improvement on a
measure does not result in better or the
intended patient outcomes; (3) a
measure no longer aligns with current
clinical guidelines or practice; (4) a
more broadly applicable (across settings,
populations, or conditions) measure for
the topic becomes available; (5) a
measure that is more proximal in time
to desired patient outcomes for the

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particular topic becomes available; (6) a
measure that is more strongly associated
with desired patient outcomes for the
particular topic becomes available; or
(7) collection or public reporting of a
measure leads to negative unintended
consequences. If there is reason to
believe that a measure raises potential
safety concerns, we proposed that we
would take immediate action to remove
the measure from the ESRD QIP and not
wait for the annual rulemaking cycle.
We proposed that such measures would
be promptly removed from the measure
set, and we would confirm the removal
in the next ESRD QIP rulemaking cycle.
ESRD facilities and the public would be
immediately notified of our decision to
remove a measure that raises potential
safety concerns through the usual ESRD
program communication channels,
including memos, email notification,
and web postings.
Many of the quality measures used in
different Medicare and Medicaid
reporting programs are endorsed by
NQF. As part of its regular maintenance
process for endorsed performance
measures, the NQF requires measure
stewards to submit annual measure
maintenance updates and undergo
maintenance of endorsement review
every 3 years. Under the measure
maintenance process, the measure
steward (owner/developer) is
responsible for updating and
maintaining the currency and relevance
of the measure and confirming
specification changes to NQF on an
annual basis. NQF solicits information
from measure stewards for annual
reviews in order to review measures for
continued endorsement in a specific 3year cycle. Non-NQF-endorsed
measures may also go through similar
maintenance by their measure stewards;
such maintenance includes reviewing
and updating measures.
Through the measure maintenance
process, measures are sometimes
updated to incorporate changes that we
believe do not substantially change the
nature of the measures. Examples could
be changes to exclusions to the patient
population, changes to definitions, or
extension of the measure endorsement
to apply to other settings. We believe
these types of maintenance changes are
distinct from more substantive changes
to measures that result in what are
considered new or different measures,
and that they do not trigger the same
agency obligations under the
Administrative Procedure Act.
We proposed that if a measure that we
have adopted for the ESRD QIP is
updated in a manner that we consider
to not substantially change the nature of
the measure, we would use a

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subregulatory process to incorporate
those updates to the measure
specifications that apply to the program.
Specifically, we would revise our
previously adopted measure
specifications to clearly identify the
updates made by the NQF or other
measure steward and either post the
updates directly on the CMS Web site or
provide links to where the updates can
be found. We would also provide
sufficient lead time for facilities to
implement the changes where changes
to the data collection systems would be
necessary.
We proposed to continue to use the
rulemaking process to adopt changes to
a measure that we consider to
substantially change the nature of the
measure. We stated our belief that this
proposal adequately balances our need
to incorporate updates to ESRD QIP
measures in the most expeditious
manner possible, while preserving the
public’s ability to comment on updates
that so fundamentally change an
endorsed measure that it is no longer
the same measure that we originally
adopted. We invited public comment on
this proposal and on our proposal that
once a quality measure is adopted, it is
retained for use in the subsequent ESRD
QIP payment years unless we remove or
replace it as discussed above.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Commenters requested
clarification regarding the removal or
replacement criteria for measures,
specifically the criteria listed in (2) and
(5) and the process for removal or
replacement. Commenters suggested
that CMS provide illustrative scenarios
and consider convening an emergency
technical expert panel (TEP) to identify
and analyze removal or replacement
issues. Commenters also encouraged us
to add two criteria for removal or
replacement: (i) Negative unintended
consequences to the Medicare ESRD
system as a whole; and (ii) if data for a
measure cannot be collected reliably
and accurately or if collecting the data
places an undue burden on facilities.
One commenter asked that CMS confirm
that we will use rulemaking to retire or
remove measures from the ESRD QIP.
Finally, the commenters stated that
some of the measures proposed meet the
replacement and removal criteria and
suggested that CMS implement only
new measures that meet the proposed
criteria.
Response: We thank those
commenters who provided suggestions
regarding the criteria and process for
measure replacement or removal from
the ESRD QIP. We concur with those

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commenters who argue in favor of
implementing measures that meet the
proposed criteria. We do not believe
that an emergency technical expert
panel (TEP) is an appropriate part of the
removal process, as we typically
convene TEPs in order to obtain expert
stakeholder input as part of the measure
development process. These TEPs are
convened as needed during the measure
maintenance cycle and can provide any
necessary comment regarding the
clinical appropriateness of implemented
measures. Emergency TEPs would also
be difficult and expensive to employ
quickly, such as in response to public
comments in support of measure
removal. We will consider the inclusion
of additional removal criteria such as
those suggested by commenters through
future rulemaking, but will finalize the
proposed criteria to remain consistent
with similar criteria implemented for
other quality reporting and pay-forperformance programs, such as the
Hospital Inpatient Quality Reporting
Program and Hospital Outpatient
Quality Reporting Program. The second
criterion we proposed, the availability
of alternative measures with a stronger
relationship to patient outcomes, is
intended to allow us to implement new
measures in the ESRD QIP that have a
stronger association with relevant health
outcomes. Such measures may better
assess the quality of care provided by
dialysis facilities and in such cases, we
believe it would be appropriate to
reflect this in the ESRD QIP. Our use of
the fifth criterion is consistent with this
principal, and would be applied in
those circumstances where we believe
existing measures are not as temporally
proximal to health outcomes of interest
as are newly available measures. We
believe that in such cases, it would be
appropriate to remove these measures,
rather than simply increase the volume
of quality measures for which dialysis
facilities are responsible under the
ESRD QIP.
Except for measures that raise
potential safety concerns, any decisions
to remove or replace measures under the
ESRD QIP will be made through the
rulemaking process. Each year, we will
assess whether any measures should be
removed or replaced under the ESRD
QIP, and we will make appropriate
proposals during the rulemaking cycle.
Stakeholders will then have the
opportunity to provide feedback
regarding the proposed removal or
replacement of these measures, and the
rationale behind our proposals. Any
measure removal will then be finalized
as part of the ESRD PPS final rule.
We take the suggestion that we
implement only new measures that meet

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the proposed criteria to mean that we
should implement only measures that
do not meet the proposed removal
criteria. We recognize the potential
value in taking these criteria into
consideration for measure
implementation, and believe we do so to
the extent practicable. However, we
believe that we must take into
consideration additional criteria, such
as statutory requirements governing the
ESRD QIP and emergent public health
and safety issues, when determining
what measures to propose and finalize
for the program. In some cases, it is
possible that these issues will take
precedence over the criteria proposed
for measure removal.
Comment: Several commenters urged
us to adopt measure specifications and
data definitions that are clear,
modifying this information through
rulemaking alone. Commenters argued
that it is only appropriate to use subregulatory processes to aid facilities in
interpreting the specifications and
definitions, and suggested that we
develop a regular and transparent
process for collecting and responding to
these questions, ideally on a quarterly
basis with a schedule set forth in rules.
Response: We thank those
commenters who provided feedback to
our proposal to update NQF-endorsed
measures using a subregulatory process.
We concur that measure specifications
and data definitions should be clear.
However, we believe that using a
subregulatory process to make certain
types of updates to measures is
appropriate. The NQF regularly
maintains its endorsed measures
through annual and triennial reviews,
which may result in the NQF making
updates to the measures. We believe
that it is important to have in place a
subregulatory process to incorporate
non-substantive updates made by the
NQF to the measure specifications we
have adopted for the ESRD QIP so that
these measures remain up-to-date and
clinically relevant. We also recognize
that some changes the NQF might make
to its endorsed measures are substantive
in nature and might not be appropriate
for adoption using a subregulatory
process. Therefore, we are finalizing a
policy under which we will use a
subregulatory process to make nonsubstantive updates to NQF-endorsed
measures used for the ESRD QIP. With
respect to what constitutes substantive
versus non-substantive changes, we
expect to make this determination on a
case-by-case basis. Examples of nonsubstantive changes might include
updated diagnosis or procedure codes,
medication updates for categories of
medications, broadening of age ranges,

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and exclusions for a measure (such as
the addition of a hospice exclusion to
the 30-day mortality measures used in
the Hospital IQR Program). We believe
that non-substantive changes may
include updates to NQF-endorsed
measures based upon changes to
guidelines upon which the measures are
based.
We will continue to use rulemaking to
adopt substantive updates made by the
NQF to the endorsed measures we have
adopted for the ESRD QIP. Examples of
changes that we might consider to be
substantive would be those in which the
changes are so significant that the
measure is no longer the same measure,
or when a standard of performance
assessed by a measure becomes more
stringent (for example, changes in the
acceptable timing of medication,
procedure/process, or test
administration). Another example of a
substantive change would be where the
NQF has extended its endorsement of a
previously endorsed measure to a new

setting, such as extending a measure
from the inpatient setting to hospice.
These policies regarding what is
considered substantive versus nonsubstantive would apply to all ESRD
QIP measures. We also note that the
NQF process incorporates an
opportunity for public comment and
engagement in the measure maintenance
process.
We aim to be as transparent as
possible in implementing the ESRD QIP.
Occasionally, questions arise related to
measures that have been adopted. We
plan to publish these questions and
answers on a publicly available Web
site. We will consider standardizing a
timeline for submission of and answers
to these questions as the program
evolves.
For the reasons discussed above, we
are finalizing our proposal regarding
continued use of measures in the ESRD
QIP unless we remove or replace them.
We are also adopting a policy under
which we will use a subregulatory

67477

process to make non-substantive
updates to measures, and will use the
rulemaking process to make substantive
updates to measures.
1. PY 2014 Measures Continuing for PY
2015 and Subsequent PYs
We previously finalized six measures
including one measure with two
measure sub-components (see Table 2
below) for the PY 2014 ESRD QIP (76 FR
70228). We proposed to continue to use
five of these measures for the PY 2015
ESRD QIP; however, we also proposed
to augment two (NHSN Dialysis Event
reporting and Mineral Metabolism
reporting) of these five measures used in
PY 2014 to continue to promote
improvement in the PY 2015 ESRD QIP.
We proposed to remove the PY 2014
URR Dialysis Adequacy measure. In
addition, we proposed to add three new
measures of dialysis adequacy, an
anemia management reporting measure,
and a hypercalcemia clinical measure
(Table 3).

TABLE 2—MEASURES ADOPTED FOR THE PY 2014 ESRD QIP
NQF No.

Measure title

N/A .......................................

Percent of Patients with Hemoglobin Greater Than 12 g/dL*

N/A .......................................

URR Hemodialysis Adequacy

N/A for composite measure

Vascular Access Type ........

N/A1 ......................................

NHSN Dialysis Event Reporting*+
Enroll and report 3 months of dialysis event data.

Hemodialysis Vascular Access-Maximizing Placement of Arterial Venous Fistula
(AVF)* (NQF#0257).
Hemodialysis Vascular Access-Minimizing use of Catheters as Chronic Dialysis
Access* (NQF#0256).

N/A2 ......................................

In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) Survey Reporting*
Facilities are required to attest that they administered the ICH CAHPS survey via a
third party during the performance period.

N/A3 ......................................

Mineral Metabolism Reporting
Facilities are required to attest that they have monitored each of their Medicare patient’s phosphorus and calcium levels monthly throughout the performance period.*+

1 We note that an NQF-endorsed bloodstream infection measure (NQF#1460) exists, and data for this measure is collected as part of dialysis
event reporting in NHSN. It is our intention to use this measure in future years of the ESRD QIP. We believe that a reporting measure is a necessary step in reaching our goal to use NQF#1460.
2 We note that a related measure utilizing the results of this survey has been NQF-endorsed (#0258), and it is our intention to use this measure in future years of the ESRD QIP. We believe that a reporting measure is a necessary step in reaching our goal to use NQF#0258.
3 We note that the NQF has previously endorsed phosphorus and calcium monitoring measures (#0261 and #0255) upon which this measure
is based. NQF has since withdrawn its endorsement of the calcium measure.
* Indicates a measure we are proposing for PY 2015 and future years of the ESRD QIP.
+ Indicates a measure we are proposing to augment for PY 2015 and future years of the ESRD QIP.

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TABLE 3—NEW MEASURES PROPOSED FOR THE ESRD QIP PY 2015 AND FUTURE YEARS OF THE PROGRAM
NQF No.

Measure title

N/A ..............
0249 ............

Anemia Management Reporting.
Hemodialysis Adequacy Clinical Performance Measure III: Hemodialysis Adequacy—HD Adequacy—Minimum Delivered Hemodialysis Dose.
Peritoneal Dialysis Adequacy Clinical Performance Measure III—Delivered Dose of Peritoneal Dialysis Above Minimum.
Minimum spKt/V for Pediatric Hemodialysis Patients.
Proportion of Patients with Hypercalcemia.

0318 ............
1423 ............
1454 ............

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We proposed to continue using two
measures and one measure topic
adopted in PY 2014 for the PY 2015
ESRD QIP and subsequent payment
years of the program. For the reasons
stated in the CY 2012 ESRD PPS final
rule (76 FR 70262, 70264 through 65,
70269), we proposed to continue using:
(i) The Hemoglobin Greater than 12 g/
dL measure; (ii) the Vascular Access
Type measure topic comprised of two
measures, (a) the Hemodialysis Vascular
Access-Maximizing Placement of AVF
(NQF #0257) measure, and (b) the
Hemodialysis Vascular AccessMinimizing use of Catheters as Chronic
Dialysis Access (NQF #0256) measure;
and (iii) the ICH CAHPS survey
reporting measure. The technical
specifications for these measures can be
found at http://www.dialysisreports.org/
pdf/esrd/public-measures/Anemia
Management-HGB-2015-NPRM.pdf;
http://www.dialysisreports.org/pdf/esrd/
public-measures/VascularAccessCatheter-2015-NPRM.pdf; http://www.
dialysisreports.org/pdf/esrd/publicmeasures/VascularAccess-Fistula-2015NPRM.pdf; and http://www.dialysis
reports.org/pdf/esrd/public-measures/
ICHCAHPS-2015-NPRM.pdf. We
requested comment on the proposed
continuation of these measures.
The comments we received on these
proposals and our responses are set
forth below. We will separately discuss
each of the measures and the comments
received on these measures.
a. Hemoglobin Greater Than 12 g/dL
Comment: Many commenters strongly
supported the continuation of this
measure, specifically because proper
anemia management can prevent
patients from developing serious, life
threatening conditions. Other
commenters, however, asked that we
consider removing the measure or
reducing its weight since high
hemoglobin and ESA overuse no longer
pose a realistic concern because of the
economic incentives of the ESRD PPS
payment bundle and the new clinical
evidence and FDA-approved label for
ESAs (http://www.fda.gov/Drugs/
DrugSafety/ucm259639.htm). One
commenter noted that the TREAT study
and its own research indicate that large
ESA doses, rather than high hemoglobin
levels, result in adverse effects. Finally,
one commenter believes that the
Hemoglobin Greater Than 12 g/dL
measure leads to confusion because
physicians begin increasing ESA dosage
only after hemoglobin levels have fallen
far below 12 g/dL, resulting in an
increase in patients with low
hemoglobin levels. The same
commenter noted that it is difficult to

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incentivize clinics to provide proper
ESA dosage with the ESRD PPS
payment bundle and the Hemoglobin
Greater than 12 g/dL measure combined.
Finally, one commenter urged us to
individualize anemia management
measures.
Response: We appreciate feedback
relating to the use of the Hemoglobin
Greater Than 12 g/dL measure in the
ESRD QIP. We recognize that changes in
the incentive structure for ESA therapy
may have consequences for ESA
utilization. We feel, however, that
because of the negative clinical
outcomes that can result from high
hemoglobin levels in the ESRD
population, this measure is still
important in ensuring that facilities
provide quality care.
We also appreciate the need to
consider dosage and clinical practice
when ascertaining the potential adverse
effects of ESA therapy. We have begun
to develop additional anemia
management measures that account for
ESA dose. These measures are focused
on utilization of ESAs and transfusion
avoidance to further incentivize proper
care. We intend to propose to adopt one
or more of these measures for the ESRD
QIP in future rulemaking.
Finally, we agree that it is important
to individualize care for each
beneficiary. We believe that the
Hemoglobin Greater than 12 g/dL
measure both allows facilities discretion
to properly manage hemoglobin levels
in each patient and prevents adverse
patient outcomes associated with
hemoglobin levels that are too high.
However, we recognize that greater
individualization may be possible and
are currently working to develop
additional anemia management
measures that will enhance this aspect
of the ESRD QIP.
Comment: Several commenters
supported the measure, generally, but
asked us to make refinements. One
commenter suggested that we measure
hemoglobin on a three or 6-month
rolling basis rather than monthly
because monthly measurement does not
provide a comprehensive assessment of
the care patients are receiving; studies
show that although hemoglobin levels
can fluctuate greatly within short
periods of time, the mean hemoglobin
level can remain in the measure target
range. Another commenter stated that,
as the measure is currently conceived,
facilities cannot act on its results.
Because it takes time for hemoglobin
levels to change, one commenter
recommended excluding patients who
have been on ESA therapy for one
month or less and patients whose ESA
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once the facility became aware that their
hemoglobin levels were over 12 g/dL.
Finally, one commenter noted that
hemoglobin levels at high altitude
facilities are more likely to be greater
than 12 g/dL.
Response: We thank the commenters
who made suggestions regarding the
refinement of the Hemoglobin Greater
Than 12 g/dL measure. Addressing the
concern commenters raised with the
high degree of variability in hemoglobin
from month to month, the measure rate
is calculated using the average
hemoglobin of a patient over 4–12
months. For example, if a patient is
treated for 4 months, then we use the
average of the 4-month period to
calculate the measure rate. If a patient
is treated for 5 months, we use the
average from that 5-month period and so
on. Relevant to concerns raised about
the exclusion of patients who have just
begun ESA therapy, the measure
currently excludes new patients (less
than 90 days since ESRD onset), and
excludes claims for which there is no
evidence of ESA use. We believe these
exclusions address the commenters’
concerns. Regarding the comment that
hemoglobin levels at high altitude
facilities are more likely to reach the
measure threshold, we do not currently
employ risk adjustment for the measure
for this or other environmental factors
that could conceivably have similar
impacts. However, we plan to conduct
monitoring and surveillance of our
quality measures for issues such as
geographical variation.
Comment: One commenter argued
that using patients’ yearly averages for
measures fails to test the actionability of
the measures because it is difficult to
identify areas of improvement until the
end of the year. Instead, the commenter
suggests ‘‘per-facility averaging,’’—
averaging of end-of-month hemoglobin
results for each facility’s patients, each
month, then averaging up to 12 of those
facility monthly averages, which this
commenter argued allows facilities to
know their year-to-date numerators and
denominators, fostering ongoing quality
incentive and process improvement.
Response: We appreciate the
commenter’s suggestion regarding perfacility averaging and all feedback to
improve the usefulness of our quality
measures to facilities. However, we
believe that averaging hemoglobin over
multiple patients in a facility would be
inconsistent with medical guidance,
which deals with patient specific
situations. We believe that facilities
should strive to provide the best care to
each patient treated by the facility.
Comment: One commenter requested
confirmation that patients who are not

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on ESA therapy are not included in the
Hemoglobin Greater than 12 g/dL
measure.
Response: The measure rate is
calculated using claims that include a
hemoglobin level and ESA dosing
information.
Comment: Several commenters
requested that we include a measure in
the ESRD QIP that establishes a floor for
hemoglobin, specifically noting that,
because of the bundle, there may be a
perceived financial incentive to
underutilize ESAs. They argued that
studies have shown that as hemoglobin
drops below 10, mortality and
hospitalization increase, and that
hemoglobin levels affect a patient’s
quality of life (both empirically and
anecdotally). Some commenters stated
that we should reinstate the Hemoglobin
Greater than 10 g/dL measure that we
used in the PY 2012 ESRD QIP, arguing
that the measure is reliable and is
consistent with the FDA-approved
labeling which recognizes the
importance of transfusion avoidance
and recommends that initiation of ESA
therapy be considered when the
hemoglobin level falls below 10 g/dL.
One commenter argued that patients
should be allowed to make decisions
about their quality of life and safety,
even if that means keeping the
hemoglobin level higher than
recommended. Other commenters noted
that patients with hemoglobin less than
10 g/dL are increasing, as are the rate of
transfusions, and increased transfusions
can decrease the chances of a successful
transplant; in turn, failed transfusions
can increase the cost of care since
patients with transplants cost less than
those on dialysis. One commenter stated
that we should specifically consider
reinstituting a hemoglobin floor if the
United States Renal Data Service
information shows that transfusion rates
have risen significantly. Other
commenters suggested that even if we
do not adopt a measure for low
hemoglobin, we report hemoglobin
levels, transfusion rates, and ESA
dosage on DFC and include the
Hemoglobin Less than 10 g/dL measure
on DFC. Finally, other commenters
urged us to continue to monitor and
support metrics such as transfusions,
quality of life, reactivity to antibodies
preventing transfusions, and
underutilization of ESAs.
Response: We thank the commenters
for bringing to us their concerns about
the ESRD PPS payment bundle
potentially increasing the risk for
underutilization of ESA therapy. As
noted in the CY 2012 ESRD PPS final
rule (76 FR 70257), we could not at the
time identify a specific hemoglobin

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lower bound level that has been proven
safe for all patients treated with ESAs,
and the state of evidence supporting
such a lower bound remains weak. For
these reasons, we believe that the
rationale for removing the Hemoglobin
Less Than 10 g/dL measure from the
ESRD QIP measure set remains valid.
However, we recognize that the
potential for ESA underutilization is an
important issue. As noted in the CY
2012 ESRD PPS final rule (76 FR 70257),
we will continue to monitor the
Medicare ESRD population for evidence
of underutilization of ESAs, a rise in
blood transfusions, and the replacement
of ESA therapy with transfusions.
Although we are no longer including the
Hemoglobin Less than 10 g/dL measure
in the ESRD QIP (and will no longer be
publicly reporting it on DFC beginning
January 2013), the results will be
available via a downloadable file for
facilities to provide for continued
monitoring of the measure. Finally, we
continue to work with stakeholders
through a consensus-based measure
development process to produce
measures capable of addressing ESA
underutilization and blood transfusions,
while remaining consistent with the
existing relevant guidelines and
evidence base.
We also appreciate comments
encouraging us to move toward
implementing quality of life and other
patient-centered measures that address
anemia management. These
measurement domains are important to
us and we plan to develop appropriate
measures to be implemented in the
ESRD QIP during future rulemaking.
For the reasons stated above, we will
continue to use the Hemoglobin Greater
than 12 g/dL measure for PY 2015 and
future years of the ESRD QIP. The
technical specifications for this
finalized measure can be found at
http://www.dialysisreports.org/pdf/esrd/
public-measures/AnemiaManagementHGB-2015-FR.pdf
b. Vascular Access Type (VAT) Measure
Topic
Comment: Many commenters strongly
supported our continued inclusion of
the VAT measure topic in the PY 2015
ESRD QIP. Many commenters, however,
also expressed concern that the
composite measure over-emphasizes
fistulae, underemphasizes grafts, and,
therefore, promotes inappropriate care
in some cases. Commenters noted that
fistulae are not suitable for some
patients, fistulae take time to mature,
and grafts are sometimes the most
clinically appropriate. Several
commenters asked us to decrease the
emphasis on fistulae by developing a

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graft measure and, in the meantime,
weight the catheter measure at 2⁄3 of the
VAT measure topic and the fistula
measure at 1⁄3 of the VAT measure topic.
Other commenters urged us to take a
‘‘fistula first, catheter last’’ approach
that would award some points for
patients with grafts. Commenters were
also concerned that the fistula standards
are too stringent and could cause
unintended consequences such as
‘‘cherry-picking’’ patients who are not
eligible for a fistula. Commenters
suggested that we exclude or allow
doctors to exclude certain patients from
the measure’s denominator providing
for more individualized care, noting that
studies show that facilities are unlikely
to ‘‘game’’ such an exception.
Response: As discussed in the CY
2011 ESRD PPS Final Rule, we continue
to believe that the VAT measure topic
and its respective weights incentivize
the best care for ESRD beneficiaries (76
FR 70265, 70275). Catheters are
undesirable due to their high rate of
complications, such as infections, and
we discourage their use through the
catheter measure. We believe that the
preferred type of vascular access is an
AV fistula due to lower rates of
complications, which we promote
through the fistula measure. Although
grafts do decrease the risk of infections
and complications when compared to
catheters, grafts do not decrease these
risks as much as fistulae. We, therefore,
do not believe that grafts are either
beneficial enough to be specifically
rewarded or harmful enough to be
specifically penalized. Furthermore, we
do not believe it is in the best interest
of patients to weight the fistula measure
more than the catheter measure because
our primary goal is to promote fistula
use; we believe that both measures are
equally important in promoting the best
clinical practices with respect to VAT.
We recognize that the catheter
measure could incentivize ‘‘cherrypicking’’ of patients, leading to access to
care issues for patients with catheters.
We are actively monitoring access to
care and other potential issues
associated with ‘‘cherry-picking,’’ and it
is our intent to engage the community
as we monitor these issues.
Comment: One commenter
encouraged us to promote fistulae in
pediatric patients as well as adults.
Response: We thank the commenter
who encouraged the promotion of
fistulae use in pediatric patients. The
NQF-endorsed fistula measure excluded
pediatric patients. Children on chronic
dialysis have a fundamentally different
psychosocial profile than adults. Fistula
use, with its attendant frequent painful
needle sticks are less commonly used in

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children than adults. In addition, there
are technical issues that make fistula
creation more difficult in children. We
will continue to investigate whether
there are measures in existence or that
could be developed for the purpose of
appropriately addressing vascular
access among pediatric patients and
may propose to adopt one or more of
these measures in future rulemaking.
For the reasons listed above, we will
continue to use the VAT measure topic
for PY 2015 and future years of the
ESRD QIP. The technical specifications
for the finalized measures in this
measure topic can be found at http://
www.dialysisreports.org/pdf/esrd/
public-measures/VascularAccessCatheter-2015-FR.pdf and http://
www.dialysisreports.org/pdf/esrd/
public-measures/VascularAccessFistula-2015-FR.pdf.
c. In-center Hemodialysis Consumer
Assessment of Healthcare Providers and
Systems (ICH CAHPS)
Comment: Many commenters
supported the measure in its entirety.
Many commenters supported
monitoring patients’ experiences, but
believe the ICH CAHPS survey, with 57
questions, is too burdensome and
lengthy for beneficiaries to complete.
These commenters requested that we
minimize this burden and suggested
that the ICH CAHPS survey be parsed
into three parts, with each patient
receiving one of these parts and a group
of core questions. Commenters also
suggested that CMS allow facilities to
give patients the survey and allow
patients to return surveys via a ‘‘dropbox’’ at the facility or by mail to the
third-party administrator; commenters
believe this approach will improve the
response rate as patients are less likely
to ignore the survey and one commenter
noted that, without such an approach,
the experiences of homeless patients
will not be recorded.
Response: As we noted in the 2012
ESRD PPS Final Rule, we continue to
believe that assessing the experiences of
patients is vital to quality care (76 FR
70269 through 70). Patient surveys can,
and should, draw a facility’s attention to
issues that can only be raised by those
receiving care. Although commenters
may consider the survey to be
burdensome to patients, the CAHPS tool
went through extensive testing during
development including focus groups
and one-on-one patient sessions which
assessed this burden and created
specifications accordingly. Furthermore,
we believe that concerns about patient
burden can be at least partially
mitigated without decreasing the
number of questions on the survey or

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how the survey is administered. For
example, as the specifications indicate,3
patients may take a break during the
administration of the survey or take the
survey in multiple sittings if they feel
that the number of questions is too great
to answer at one time. Finally, we do
not believe that facilities should be
permitted to give patients the survey at
the facility and allow patients to submit
these surveys via a ‘‘drop box’’ or any
other method. We believe that patients
are much more likely to truthfully
respond to the surveys if they are
perceived to be in no way connected to
the facility; providing the surveys at the
facility and allowing patients to return
them by any means may lead to the
patient to believe that his or her answers
can be traced to him or her, and this
thought may bias the surveys. Thus, we
believe that this survey as it is currently
specified is the best method available at
this time to measure patient experience.
We thank commenters for bringing to
our attention the hardships homeless
patients may face in accessing the
survey. Although we believe that the
survey most accurately represents
patients’ experiences of care at this
time, we will continue to evaluate how
we can accurately capture all patient
populations, including the homeless.
Comment: One commenter suggested
that CMS define a threshold for patients
at which a facility would not need to
administer the survey.
Response: We recognize that there are
many small dialysis facilities for which
hiring a third-party administrator to
fulfill the ICH CAHPS survey
requirements is impractical or
prohibitively costly. Therefore,
beginning PY 2015, we will exempt any
facilities that have treated (whether that
patient was visiting the facility or
otherwise) 10 patients during the
performance period or fewer that are
qualified to take the survey. Patients are
qualified to take the survey if they are
adult, in-center hemodialysis patients.
We believe that 11 patients (regardless
of the number of times these patients
were treated) is an appropriate
threshold for applying the measure
because it is consistent with the policy
that we are finalizing for all measures in
which we recognize that facilities with
10 or fewer patients in the denominator
of a measure should be exempt from
that measure. Although we are not
requiring facilities to submit actual ICH
CAHPS data at this time, we are
considering collecting it in the future.
We also intend to use the information
collected from reporting measures for
3 See https://www.cahps.ahrq.gov/content/
products/ICH/PROD_ICH_Intro.asp?p=1022&s=222.

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purposes of scoring clinical measures
based on the same data in subsequent
payment years and want to adopt a
minimum reporting threshold that we
can apply to all measures. For these
reasons, we are finalizing that facilities
must attest to administering the ICH
CAHPS survey if they treat during the
performance period at least 11 adult, incenter hemodialysis patients. We also
finalize that we will consider a facility
to have met the 11 patient threshold
unless it affirmatively attests in
CROWNWeb that it treated 10 or fewer
in-center, adult hemodialysis patients
during the performance period. If a
facility does not affirmatively attest to
having treated 10 or fewer in-center,
adult hemodialysis patients during the
performance period, we will score it on
this measure. Additionally, we are
applying this policy to the NHSN
Dialysis Event reporting measure,
discussed below, because we intend to
use the data from that measure to adopt
a clinical measure in subsequent
payment years. Unlike the ICH CAHPS
measure, the NHSN measure applies to
both adult and pediatric in-center
hemodialysis patients. Therefore, we
finalize that a facility must treat at least
11 in-center hemodialysis patients
(whether adult or pediatric) during the
performance period to be scored on the
NHSN Dialysis Event reporting measure.
To be considered a facility which has
treated 10 or fewer in-center
hemodialysis patients (whether adult or
pediatric) during the performance
period, the facility must make an
attestation in CROWNWeb to this effect.
If a facility does not make this
attestation, we will score it on this
measure.
Comment: One commenter expressed
concern that patients often do not
answer the surveys honestly for fear of
retaliation and the validity of the survey
should be questioned.
Response: We recognize that patients
may feel pressure to answer questions in
the survey favorably. We believe,
however, this concern is mitigated
because under the measure
specifications, a third-party must
administer the survey. These third-party
administrators are not associated with
facilities and do not report patientspecific data to the facilities. Therefore,
the facility would have no knowledge of
patient’s answers.
Comment: Several commenters
expressed concern about CROWNWeb’s
ability to provide an adequate reporting
system for this measure.
Response: CROWNWeb was launched
nationally in June of 2012, and we
recognize that some facilities may still
be familiarizing themselves with the

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new system. As discussed, facilities are
not required to report ICH CAHPS data
to CROWNWeb or any other system;
they are only required to make an
attestation that they administered the
surveys according to the specifications.
The attestations for the ICH CAHPS
measure for PY 2015 are not due until
the end of January 2014. We have no
reason to believe that the attestation
function will not be ready by the end of
January 2013, the PY 2014 deadline. We
believe that by this time, facilities’
transition period should have ended,
and facilities will be able to successfully
submit their attestations. Therefore,
because the attestations should be ready
in CROWNWeb by January 2013 for the
PY 2014 ESRD QIP, they should also be
available in CROWNWeb for the PY
2015 program.
Comment: Many commenters noted
that the ICH CAHPS measure’s thirdparty administration requirement
imposes significant costs on facilities
and that facilities should be allowed to
include these costs in their cost reports.
Response: Facilities may report
allowable operating expenses in their
Medicare cost reports. We believe that it
is consistent with this payment policy
for facilities to include the ICH CAHPS
costs on their cost reports because they
are allowable operating expenses.
Comment: Several commenters urged
us to adopt the ICH CAHPS measure as
an outcome measure rather than a
reporting measure. One commenter
believes that, if we cannot implement
the measure as an outcome measure for
PY 2015, we should do the following in
order to facilitate our adoption of an
ICH CAHPS outcome measure as soon
as possible: (i) Develop a standardized
protocol and quality assurance
guidelines for survey administration
that are more detailed than the AHRQ
requirements; (ii) contract with an
experienced organization that can
provide oversight for the ICH CAHPS
program; and (iii) approve survey
vendors. Another commenter argued
that the survey should be limited to
questions about the facility rather than
the physician.
Response: Currently, we are not able
to include the ICH CAHPS survey as an
outcome measure because we do not
possess data from which we can set
performance standards. We believe that
it is important to adopt an outcomebased measure as soon as possible, and
we are diligently working to ensure that
it is a part of the program as soon as
possible. To that end, we will be
working to set up a survey vendor
approval program; we believe that the
specifications are appropriately
detailed, but we will continue to assess

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whether they should be refined before
we propose to adopt this survey as an
outcome-based measure. Regarding the
survey questions, the majority of the
survey is limited to questions about the
facility. Only seven of the 58 core
questions are about the patients’
nephrologists. There are 22 questions
about the staff at the facility (not
including the doctor), three about the
center, and nine about treatment; the
remaining questions capture
demographic information. The
continuous care received by dialysis
patients makes them keenly aware of
their primary doctors’ involvement. To
the extent that the questions are about
the physician, we believe that they are
appropriate because they are targeted at
the nephrologist who is most involved
in the patient’s dialysis care.
Comment: Commenters requested that
we develop new measures of patient’s
experiences. One commenter argued
that a measure should be developed that
evaluates a patient’s experience during
each dialysis session because each
experience can vary, and further argued
that this type of evaluation would allow
facilities to better assess why patients
do not stay for entire treatments or miss
treatments. Many commenters requested
that we develop a CAHPS measure for
home hemodialysis and peritoneal
dialysis patients. Commenters also
suggested that we make the responses to
the surveys public.
Response: We remain dedicated to
developing and adopting measures of
patient experiences of care in the ESRD
QIP, specifically those patients who are
treated at home. At this time we cannot
operationally make the responses to the
ICH CAHPS survey public because, as
noted above, we do not possess the data;
however, we will consider making these
surveys public in future years if
facilities are required to submit their
ICH CAHPS data to CMS.
For the reasons discussed above, we
are finalizing the ICH CAHPS reporting
measure for use in the PY 2015 ESRD
QIP and future years of the program. We
are also finalizing that the measure
applies to facilities that treat a
minimum of 11 in-center, adult
hemodialysis patients during the
performance period. We will consider a
facility to have met the 11 in-center,
adult hemodialysis patient threshold
unless it affirmatively attests in
CROWNWeb to having treated 10 or
fewer adult, in-center hemodialysis
patients during the performance period.
If a facility does not make the
attestation, we will score it accordingly.
The technical specifications for this
finalized measure can be found at
http://www.dialysisreports.org/pdf/esrd/

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public-measures/ICHCAHPS-2015FR.pdf.
2. Expansion of Two PY 2014 Measures
for PY 2015 and Subsequent PYs
As stated earlier, we believe it is
important to continue using measures
from one payment year to the next
payment year of the program to
encourage continued improvements in
patient care. Therefore, we proposed to
expand the requirements under two
reporting measures that we adopted for
the PY 2014 ESRD QIP. These proposed
expanded requirements would apply to
the measures for PY 2015 and
subsequent payment years of the ESRD
QIP.
a. Expanded National Healthcare Safety
Network (NHSN) Dialysis Event
Reporting Measure
Hospital Acquired Infections (HAIs)
are a leading cause of preventable
mortality and morbidity across different
settings in the healthcare sector,
including dialysis facilities. In a
national effort to reduce HAIs outcome,
HHS agencies, including CMS and the
Centers for Disease Control and
Prevention (CDC) are working together
to encourage facilities to report to the
NHSN as a way to track and facilitate
action intended to reduce HAIs. The
NHSN is currently a secure, internetbased surveillance system that
integrates patient and healthcare
personnel safety surveillance systems
managed by the Division of Healthcare
Quality Promotion at the CDC. NHSN
has been operational since 2006 and
tracks data from acute care hospitals,
long-term care hospitals, psychiatric
hospitals, rehabilitation hospitals,
outpatient dialysis centers, ambulatory
surgery centers, and long term care
facilities. We believe that reporting
dialysis events to the NHSN by all
facilities supports national goals for
patient safety, particularly goals for the
reduction of HAIs.
For the reasons stated above, we
proposed to retain the NHSN Dialysis
Event reporting measure that we
adopted for the PY 2014 ESRD QIP (76
FR 70268 through 70269), but with an
expanded reporting period. For PY
2014, ESRD facilities were required to:
(i) Enroll in the NHSN and complete
any training required by the CDC related
to reporting dialysis events via the
NHSN system; and (ii) submit three or
more consecutive months of dialysis
event data to the NHSN. For the PY
2015 ESRD QIP and future payment
years, we proposed to retain the NHSN
measure and expand the reporting
period to a full 12 months of dialysis
event data. Although we expect most

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facilities to have enrolled and trained in
the NHSN dialysis event system by the
end of CY 2012, we proposed that
facilities that have not done so by
January 1, 2013 or facilities that receive
a CMS certification number (CCN)
during 2013 must enroll and complete
this training before reporting the data in
order to fulfill the requirements of this
reporting measure. The information
reported to NHSN would be provided by
the CDC to CMS for use in the ESRD
QIP.
As discussed in more detail below, we
proposed that the performance period
for the PY 2015 ESRD QIP would be CY
2013. We proposed that facilities must
report dialysis event data monthly to the
NHSN for this measure. We also
proposed that facilities be granted a
‘‘grace period’’ of one month to report
these data. For further information
regarding the NHSN’s dialysis event
reporting protocols, please see http://
www.cdc.gov/nhsn/psc_da_de.html.
This link provides general information
and links to more detailed, specialized
information.
We note that this proposed measure
only applies to facilities treating
patients in-center. For purposes of the
NHSN Dialysis Event reporting measure,
we determine whether a facility treats
patients in-center by referencing the
facility’s information in CMS data
sources (that is, SIMS and
CROWNWeb). Facilities report the types
of patients that they serve in these data
sources. If a facility lists in-center
services, we proposed that the facility
would be required to comply with the
NHSN dialysis event reporting measure.
Section 1881(h)(2)(B)(i) of the Act
requires that, unless the exception set
forth in section 1881(h)(2)(B)(ii) of the
Act applies, the measures specified for
the ESRD QIP under section
1881(h)(2)(A)(iii) of the Act must have
been endorsed by the entity with a
contract under section 1890(a) of the
Act (which is currently NQF). Under the
exception set forth in 1881(h)(2)(B)(ii) of
the Act, in the case of a specified area
or medical topic determined appropriate
by the Secretary for which a feasible and
practical measure has not been endorsed
by the entity with a contract under
section 1890(a) of the Act, the Secretary
may specify a measure that is not so
endorsed so long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
An NQF-endorsed bloodstream
infection measure (NQF#1460) exists
and is collected by the CDC as part of
dialysis event reporting in NHSN. This
measure assesses the number of
hemodialysis patients with positive

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blood cultures. This measure differs
from the dialysis event reporting
measure that we adopted for the PY
2014 ESRD QIP and proposed to expand
beginning with the PY 2015 program
because it evaluates the number of
hemodialysis outpatients with positive
blood cultures over a specified time
period. By contrast, the NHSN Dialysis
Event reporting measure that we
proposed assesses facilities based on
whether they enroll and report dialysis
event data to the NHSN, not based on
what the data reported are. We intend
to propose to adopt NQF #1460 once
facilities have reported enough data to
enable us to compute performance
standards, achievement thresholds,
improvement thresholds, and
benchmarks for the measure.
For the reasons stated in the CY 2012
ESRD PPS final rule (76 FR 70268
through 69), we proposed to retain the
measure and expand the reporting
period for PY 2015 and future payment
years of the program. We requested
comment on this proposal, and noted
that the technical specifications for this
measure are located at http://www.
dialysisreports.org/pdf/esrd/publicmeasures/NHSNDialysisReporting2015-NPRM.pdf.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Many commenters
supported the expansion of the NHSN
Dialysis Event reporting measure,
stating that monitoring the number of
patients with access-related infections
for an entire year will help the
community better understand ways to
reduce infection rates. Some
commenters expressed concern with
certain aspects of the measure. Several
commenters expressed their concern
about the burden of this measure,
specifically highlighting the burden of
manual data-entry and the staff hours
demanded for this entry and oversight;
one commenter noted that NQF criteria
related to feasibility favor electronic
collection and data collected during the
course of care. Commenters argued
further that manual data entry affects
reliability, further affecting the baseline
calculations for future measures. Many
commenters suggested a batch
download system. Some commenters
noted that the CDC intends to make a
Clinical Document Architecture (CDA)
system available for batch entries, but
expressed concern that the CDC CDA
system will be available for individual
facilities only (rather than for an entire
corporation); others stated that they did
not believe the CDA system will be
ready for data entry by the end of CY
2012. Commenters also stated that the

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NHSN system is yet another Web site to
which ESRD facilities must report,
reducing time staff can spend caring for
patients. Finally, some commenters
support the expansion of the measure,
but only if the required monthly
reporting is at the facility rather than the
patient level.
Response: We do not believe that this
measure is unnecessarily burdensome.
Monitoring vascular access infections
following uniform definitions and
utilizing the comparative rate data to
evaluate and improve performance is
part of providing good patient care.
Although enrollment and training can
be time-consuming, approximately 90
percent of all hemodialysis centers have
already enrolled in NHSN. Furthermore,
we believe that any burden a facility
may face is outweighed by the
importance of this measure since
infections can often lead to serious
complications, including death. Further
to help decrease the burden, the CDC
began allowing facilities to report to
NHSN through imported CDA files on
September 14, 2012. Using this
function, any individual with
Administrative Rights for a facility will
be able to import that facility’s specific
CDA files that meet NHSN’s formatting
requirements. This includes large
dialysis organizations that have given
Administrative Rights to a single person
for purposes of the entire (or some
portion of) the organization. However, at
this time each facility’s files must be
submitted separately. Because we are
aware that large dialysis organizations
(as well as many other dialysis
companies) have given Administrative
Rights to a single representative of the
organization, we recognize that they
will eventually be able to submit CDA
data for a number of individual
facilities, from a single central location,
all through a single batch submission
process. This batch data submission
process is expected to be available in
August 2013. Finally, the monthly
reporting required by the NHSN is at the
facility level. Facility-level review of the
data in NHSN is expected, whether the
data are reported by facility staff or by
a corporate representative. We believe
that facilities have a direct role in
preventing infections by collecting the
NHSN Dialysis Event data, actively
assessing their data, and regularly
feeding back this information to clinical
staff to improve practices.
Comment: One commenter argued
that the NHSN Dialysis Event reporting
measure will not improve care because
the system is not efficient and is not
correlated to CROWNWeb. Many
commenters urged us to synchronize
NHSN and CROWNWeb data

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requirements. Commenters also
requested that CMS continue to use the
same reporting schedule for PY 2015 as
it will for PY 2014, allowing facilities to
report quarterly with all data being
required by March 31, 2014.
Commenters noted that quarterly
reporting is important because this
timeframe will allow facilities ample
time to submit data correctly, stating
that some infections take more than a
month to identify and capture. One
commenter recommended that we
modify the requirements of this
provision to allow a facility to report a
full 12 months of data by January 31,
2014. Other commenters urged us to
ensure that the NHSN Dialysis Event
reporting measure allows the NHSN
system to remain a surveillance system.
Response: We disagree with the
comment that the NHSN Dialysis Event
reporting measure will not improve
care. Requiring facilities to report
through the NHSN will allow us to
monitor and better understand the
causes of infections. Additionally, as we
stated in the proposed rule (77 FR 40971
through 72), we intend to use the
information gathered by this reporting
measure to adopt a clinical measure in
future years; this measure will
encourage facilities to decrease the
circumstances which lead to infections.
Although we intend to use data from the
NHSN to adopt a clinical measure, we
will work with the CDC to ensure that
the ESRD QIP does not unnecessarily
limit the surveillance purposes of the
NHSN system.
Commenters are correct in that the
NHSN Dialysis Event reporting measure
data is not correlated to CROWNWeb.
We recognize that CROWNWeb and the
NHSN are two distinct systems which
require reporting. At this time, we do
not require infection reporting in
CROWNWeb. We believe that it is more
beneficial for both facilities and CMS to
require infection reporting through the
NHSN. The NHSN is a well-established
secure, internet-based surveillance
system that integrates patient and
healthcare personnel safety surveillance
systems managed by the Division of
Healthcare Quality Promotion at the
CDC; it is used by many other types of
providers to report infections. We
believe that NHSN’s history and widespread surveillance make it the best
mode of reporting dialysis events at this
time.
We do not agree with commenters’
suggestions to extend the reporting
timeline for the PY 2015 NHSN Dialysis
Event reporting measure. The NHSN
system recommends monthly reporting,
and we believe it is important to adhere
to the NHSN requirements as much as

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possible. However, to maximize data
completeness and accuracy, facilities
will be allowed to add to and modify
the reported data until the performance
period reporting deadline. Data for the
entire performance period must be
reported by April 15, 2014. We chose
April 15, 2014 because this date allows
facilities a full quarter after the
performance period to review their data
for completeness and accuracy. After
consulting with the CDC, we believe
that such a timeframe will maximize the
reliability of the data and allow facilities
to report any infections that developed
during the performance period but that
are identified after the performance
period has ended.
Comment: One commenter is
concerned with the proposed expansion
of this measure if NHSN data is not
validated or audited for completeness.
This commenter expressed specific
concern that there could be surveillance
bias in interpreting submitted data.
Response: We recognize that bias
exists because some facilities may be
more likely to identify and report
dialysis events than others. Varying
degrees of completeness of the data
could lead to inaccurate comparisons
between facilities. The CDC and CMS
are beginning to formulate a strategy to
validate data for purposes of the ESRD
QIP; we are committed to rigorous
validation to identify inaccuracies and
ensure reliability of the data.
Comment: One commenter suggested
that CDC standardize and clarify data
definitions to ensure ‘‘apples-to-apples’’
comparisons and allow corporate
oversight of data entered into the system
for verification and reliability purposes.
Another commenter stated that it does
not support the adoption of a future
NHSN Dialysis Event clinical measure
because facility policies and procedures
and physician practices vary widely
with respect to the circumstances under
which blood cultures are obtained and
results are reported; this commenter
requested that reporting be standardized
before the measure is adopted.
Response: The CDC develops
protocols, definitions, and criteria for
the purposes of standardizing reporting,
and expects that all NHSN users strictly
adhere to the protocol guidance for data
that are reported into NHSN. The
dialysis event surveillance reporting
protocol is available on CDC’s NHSN
Web site and includes data definitions
(http://www.cdc.gov/nhsn/PDFs/
pscManual/
8pscDialysisEventcurrent.pdf). Users
may contact the NHSN help desk
([email protected]) for clarifications to
these data definitions. We will continue
to work with the CDC to monitor these

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concerns while we consider adopting a
measure based on NHSN data for future
years of the program.
Comment: One commenter requested
clarification regarding whether facilities
are required to report infections
occurring in the dialysis unit only,
exempting the facilities for infections
that result from care in other
environments.
Response: The measure specifications,
which are available at (http://
www.cdc.gov/nhsn/PDFs/pscManual/
8pscDialysisEventcurrent.pdf), provide
that positive blood cultures occurring
within one calendar day after a hospital
admission must also be reported. For
further clarification on reportable event
definitions and considerations
surrounding attribution, please contact
the NHSN help desk ([email protected]).
Comment: One commenter asked us
to confirm that, as long as the census
data is reported every month, the
facility may attest to having met the
requirements for the NHSN measure.
Response: For the reasons discussed
above, we finalize that a facility may
attest for purposes of being exempt from
reporting for the NHSN dialysis event
measure if it treats fewer than 11 incenter hemodialysis patients during the
performance period. If a facility treats
11 or more in-center hemodialysis
patients, we will score the facility based
on whether it reported data to the
NHSN.
Comment: One commenter urged us
to develop a measure which targets the
cause of the infections. Another
commenter suggested that CMS consider
adding NHSN dialysis specific
indicators, perhaps in stages, such as
local access site infection, access-related
bloodstream infection, and vascular
access infection to the NHSN
surveillance data.
Response: We thank commenters for
these suggestions. We acknowledge that
preventing and monitoring infections is
crucial to patient care. We will continue
to work with the dialysis community to
include robust infection measures in the
ESRD QIP.
Comment: Many commenters support
our proposed transition of the NHSN
Dialysis Event reporting measure to a
clinical measure using the NQFendorsed measure #1460. Some
commenters urged us to adopt the
clinical measure in PY 2015. Other
commenters, however, suggested that
we allow sufficient time to ensure that
NHSN data can be reported without
additional burden to providers. One
commenter suggested that, once the
measure is adopted as a clinical
measure, we interpret the rate of
positive blood cultures against the

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facility’s rate of empiric antibiotic
treatment, since some facilities treat
empirically rather than through taking
blood cultures.
Response: We thank commenters for
supporting our proposal to adopt the
NQF-endorsed infection measure for
future years of the program. We are
unable to adopt the NQF-endorsed
clinical measure for PY 2015 because
we have not yet gathered data on which
we can base performance standards. For
purposes of the ESRD QIP, facilities
began reporting to the NHSN during
2012; to receive full points on the
measure for PY 2014, facilities need
only to report three months of data. We
do not believe it is appropriate to base
performance standards on three months
of data for purposes of an infection
measure because infections can vary by
season. We believe that using a 12month period for setting these standards
will prove more accurate. Because we
are requiring 12 months of data for the
PY 2015 ESRD QIP, we believe we can
use this information to adopt standards
for a clinical measure in future years.
Additionally, we agree with the
commenters who believe that it may be
necessary for facilities to become more
familiar with the NHSN system before
we adopt a clinical measure.
We thank the commenter who
suggested that we interpret the rate of
positive blood cultures against the
facility’s rate of empiric antibiotic
treatments to account for facilities that
might treat patients empirically for
infection without drawing cultures. The
NHSN collects information on IV
antimicrobial starts, in part, for this
reason. Providers are expected to adhere
to standards of clinical practice, which
include obtaining blood cultures prior
to antibiotic administration for
suspected bloodstream infections.
Comment: One commenter stated its
support for the adoption of an MRSA
standardized infection rate clinical
measure.
Response: We thank the commenter
for providing this suggestion and will
take it into consideration in future
measure development and rulemaking.
For the reasons stated above, we
finalize the NHSN Dialysis Event
reporting measure as proposed except
for the following; a facility must treat at
least 11 in-center hemodialysis patients
(both adult and pediatric) during the
performance period to be scored on the
NHSN Dialysis Event reporting measure,
as noted above. To be considered a
facility which has treated 10 or fewer incenter hemodialysis patients during the
performance period, the facility must
make an attestation in CROWNWeb to
this effect. If a facility does not make

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this attestation, we will score it
accordingly. Additionally, we
recommend that facilities report
monthly to the NHSN. Data for the
entire performance period must be
reported by April 15, 2014. The
technical specifications for this
finalized measure can be found at
http://www.dialysisreports.org/pdf/esrd/
public-measures/
NHSNDialysisReporting-2015-FR.pdf.
b. Expanded Mineral Metabolism
Reporting Measure
Undertreatment of bone mineral
metabolism disease can cause severe
consequences for ESRD patients. For PY
2014, it was not yet feasible for us to
adopt a clinical measure evaluating
facilities based on their patients’ bone
mineral metabolism rates because
facilities did not report serum
phosphorus and serum calcium values
during the baseline and performance
periods that we finalized with respect to
that year. Instead, for PY 2014, we
finalized a measure assessing whether
facilities routinely monitored the serum
calcium and serum phosphorus levels in
their patients. For PY 2015, we
proposed to expand this measure by
requiring facilities to report a serum
calcium and serum phosphorus level for
each qualifying patient each month
according to the requirements in
CROWNWeb. Facilities would be
required to enter these values into
CROWNWeb on a monthly basis.
Facilities would be granted a ‘‘grace
period’’ of one month to enter the data.
For example, we would require a facility
to report serum calcium and serum
phosphorus data for January 2013 on or
before February 28, 2013. The final
month of data from the performance
period would be reported on or before
January 31, 2014.
We do not intend for this measure to
encourage unnecessary testing or
unduly burden a facility. Consequently,
for purposes of scoring the measure, we
considered proposing to require
facilities to report the required
information for less than 100 percent of
their patients. Specifically, we
considered lowering the threshold to
reporting 98 percent of patients for a
month in order to receive credit for that
month. We chose 98 percent in order to
encourage improvement, and to ensure
that we do not undermine the current
level of high-reporting (based on the
CROWNWeb pilot data). We recognize
that 100 percent might not be
appropriate due to some individual
cases that may not fit specified criteria.
We ultimately proposed that a facility
should be required to take and report
these values for every patient at least

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once per month so that each beneficiary
receives the highest standard of care.
We noted, however, that there are
circumstances beyond a facility’s
control wherein it may not be able to
draw a sample for this patient.
Therefore, we did not propose that the
facility itself must draw the serum
phosphorus and serum calcium levels.
If, for example, a patient is hospitalized
or transient during a claim month, we
proposed that the facility may report the
serum calcium and serum phosphorus
readings for the patient for a month if
a patient has labs drawn by another
provider/facility and those labs are
evaluated by an accredited laboratory (a
laboratory that is accredited by, for
example, the Joint Commission, the
College of American Pathologists, the
AAB (American Association of
Bioanalysts), or State or Federal agency),
and the dialysis facility obtains the
serum calcium and serum phosphorus
readings. Additionally, we proposed to
only consider a patient qualified for this
measure (i) if the patient is alive at the
end of the month; (ii) if the patient is
treated in-center, that patient was
treated at that facility at least twice
during the claim month; and (iii) if the
patient receives dialysis at home, a
claim is submitted for that patient. We
stated our belief that that these
proposals will provide more flexibility
for facilities and will also discourage
facilities from drawing blood, even
when not necessary, for fear that the
patient will fail to come to the facility
again during that month. We requested
comment on these proposals. We also
requested comment on whether
facilities should only have to report data
for 98 percent of their patients.
Section 1881(h)(2)(B)(i) of the Act
requires that, unless the exception set
forth in section 1881(h)(2)(B)(ii) applies,
the measures specified for the ESRD QIP
under section 1881(h)(2)(A)(iii) of the
Act must have been endorsed by the
entity with a contract under section
1890(a) of the Act (which is currently
NQF). Under the exception set forth in
1881(h)(2)(B)(ii) of the Act, in the case
of a specified area or medical topic
determined appropriate by the Secretary
for which a feasible and practical
measure has not been endorsed by the
entity with a contract under section
1890(a) of the Act, the Secretary may
specify a measure that is not so
endorsed so long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
An NQF-endorsed measure assessing
hypercalcemia exists (NQF #1454) and
we proposed to adopt this measure for
the PY 2015 ESRD QIP and subsequent

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payment years, as further discussed
below. The NQF-endorsed
hypercalcemia measure, however, does
not score facilities based only on
whether or not that facility reported
serum calcium values. The Mineral
Metabolism reporting measure, unlike
the Hypercalcemia measure, would
assess only whether facilities report
serum calcium and serum phosphorus
values. It would not score facilities
based on the actual values that they
report. We stated our belief that it is
important to continue to encourage
reporting independent of a measure that
scores based on the actual values
reported because we need such values
to monitor aspects of bone mineral
metabolism, for example phosphorus
management, independent of
hypercalcemia; we noted that this
information will allow us to develop
comprehensive bone mineral
metabolism measures for use in future
years of the ESRD QIP.
In the CY 2012 ESRD PPS final rule,
we discussed the basis for the Mineral
Metabolism reporting measure (76 FR
70270 through 71). We stated that ‘‘the
NQF has previously endorsed
phosphorus and calcium monitoring
measures (NQF #0261 and NQF #0255)
and, in 2008, we adopted serum calcium
and serum phosphorus monitoring as
Clinical Performance Measures (http://
www.dialysisreports.org/
ESRDMeasures.aspx).’’ The NQF
measures referenced above call for
monitoring these serum calcium and
serum phosphorus values, but they do
not require actual reporting of these
values, as is the intent of the Mineral
Metabolism reporting measure.
For these reasons, we proposed to
expand the Mineral Metabolism
reporting measure for PY 2015 and
subsequent payment years under
1881(h)(2)(B)(ii) of the Act. The
technical specifications for this measure
can be found at http://
www.dialysisreports.org/pdf/esrd/
public-measures/MineralMetabolismReporting-2015-NPRM.pdf. We further
noted that requiring the reporting of
serum calcium and serum phosphorus
levels for the PY 2015 ESRD QIP will
allow us to develop mineral metabolism
measures based on clinical data in the
future. We requested comment on these
proposals to expand the Mineral
Metabolism reporting measure.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Many commenters
generally supported this measure, but
requested that we make modifications to
our proposed exclusions. These
commenters suggested that we exclude,

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for all of the reporting measures, the
following patients: (i) Beneficiaries who
are regularly treated at the facility and
who fit into one of these categories: (a)
Beneficiaries who die within the
applicable month; (b) beneficiaries that
receive fewer than 7 treatments in a
month; and (c) beneficiaries receiving
home dialysis therapy who miss their
in-center appointments when there is a
documented, good faith effort to have
them participate in such a visit during
the applicable month; (ii) transient
dialysis patients; (iii) pediatric patients
(unless the measure is specific to this
population); and (iv) kidney transplant
recipients with a functioning graft.
Commenters stated that these exclusions
are consistent with our own measures
reported on DFC. Additionally,
commenters stated that these exclusions
seek to hold facilities accountable only
for those beneficiaries to whom they
regularly give care and for whose care
they can affect. Another commenter,
however, stated that we should not
implement other commenters’
suggestions that we exclude
beneficiaries receiving home dialysis
therapy who miss their in-center
appointments when there is a
documented, good faith effort to have
them participate in such a visit during
the applicable month; this commenter
stated that it is the responsibility of the
facilities to educate patients on the
importance of making and keeping
appointments. Additionally the
commenter argued that ‘‘good faith’’ is
too vague; commenter requested that, if
we did adopt this exclusion, we clearly
define a ‘‘good faith effort.’’
Response: Upon further review, we
agree with commenters who believe that
the exclusions should be modified. We
recognize that treating a patient twice
may not provide enough time to
effectuate quality patient care. We agree
with the commenters who suggested
that an in-center hemodialysis patient
should be excluded if treated by a
facility fewer than seven times during
the month, regardless of whether the
patient is officially admitted to that
facility. With seven treatments, we
believe that a facility should have had
adequate opportunities to draw blood
necessary to report serum calcium and
phosphorus levels. We also believe that
the threshold of seven will discourage
unnecessary testing of in-center
hemodialysis patients by facilities
because they will know that, since incenter patients are typically treated
three times per week, a patient must
have been treated by the facility for at
least two weeks to be included; thus, the
facility need not feel pressure to draw

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blood for every patient for the first few
visits of the month. Based on these
considerations, we will not finalize our
proposal to exclude only in-center
patients who have been treated fewer
than two times by the facility during the
claim month. Instead, we will exclude
any in-center patient who is treated by
the facility fewer than seven times
during the reporting month.
We do not believe that it is necessary
to specifically exclude transient patients
from this measure because, as noted,
any patient that is treated by the facility
at least seven times during the
applicable reporting month is present at
the facility for enough time that the
facility should be held accountable for
that patient. Likewise, for the same
reasons mentioned above, we do not
believe we need to separately exclude
patients who are deceased at the end of
the reporting month. Provided that the
patient is treated by the facility at least
seven times during that month, the
facility should be able to draw blood
necessary to report serum calcium and
serum phosphorus levels even if that
patient is deceased at the end of the
month.
We continue to believe that facilities
should be required to report the serum
calcium and phosphorus levels of home
dialysis patients irrespective of whether
those patients attend a monthly
appointment. We believe that it is
incumbent upon a facility to make home
dialysis patients aware that they must
attend monthly appointments to be
properly treated. In addition, since the
mechanisms that cause cardiovascular
and bone disease do not differ between
home and in-center hemodialysis
patients, we believe that the inclusion of
home dialysis patients in the Mineral
Metabolism reporting measure is
appropriate. Therefore we will finalize
our proposal that we will include any
home hemodialysis patient for which a
facility submits a claim with respect to
the reporting month in this measure.
We also believe it is important to
include transplant patients until they
are officially discharged from a facility;
regular monitoring can help ensure that
a transplant remains effective and that
the facility is continuing to provide the
best care possible.
We believe it is important to monitor
serum calcium and serum phosphorus
levels in adult and pediatric patients
alike because improper bone mineral
metabolism management can lead to
serious, negative outcomes, including
death, in both populations. Although we
are aware that specific target values for
calcium and phosphorus have not been
set for the pediatric population, we still
believe that this measure will lead to

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better observation of mineral
metabolism in these patients if one or
both of these values are unusually high
or low. Additionally, we believe that the
inclusion of pediatric patients in this
measure is consistent with current
guidelines on the frequency of mineral
metabolism testing as reported in
KDIGO guidelines chapter 3 ‘‘Diagnosis
of CKD–MBD: biochemical
abnormalities.’’ Thus, we believe that
this measure is appropriate for both
adult and pediatric patients.
For the reasons stated above, we
finalize that facilities must report in
CROWNWeb the serum calcium and
serum phosphorus levels on a monthly
basis for (i) in-center Medicare patients
who have been treated at least seven
times by the facility; and (ii) home
hemodialysis Medicare patients for
whom the facility submits a claim.
Comment: Several commenters
encouraged us to not adopt a percentage
reporting threshold because it would
not distinguish between beneficiaries
legitimately excluded and those that
were merely missed. Other commenters
requested that we use both exclusions
and a threshold; one commenter
suggested a threshold of 90 percent or
an allowance of two patients to ensure
that small facilities are not
disproportionally affected. Another
commenter stated that requiring 98
percent reporting may make it difficult
for patients to travel because dialysis
facilities may encourage them otherwise
to ensure compliance with the measure.
One commenter requested that we
provide guidance regarding the
standardization of blood-draws so that
data can be reliable before we
implement a reporting threshold.
Response: We agree with the
commenters who argued that, even with
exclusions, there are circumstances in
which facilities cannot report the serum
calcium and serum phosphorus levels
for every patient at least once per
month. For example, a facility may wait
to draw blood from a patient because it
believes that the patient will be treated
for the entirety of the month, but learns
that the patient has been hospitalized
unexpectedly for all or part of the
applicable month. Therefore, we believe
that we should not require an attestation
of 100 percent monitoring. Based on
data from the CROWNWeb pilot, we
believe that facilities are generally able
to report serum calcium and serum
phosphorus for approximately 96
percent of their patients. As commenters
have argued, the information in
CROWNWeb, however, was voluntarily
reported which may mean that the data
is biased toward facilities that value
reporting; additionally, the data from

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the CROWNWeb pilot was mainly
supplied by LDOs that may be more
likely to have more resources and
corporate policies that require reporting
compliance. Furthermore, such a high
percentage requirement may
disadvantage small facilities. For
example, if a facility has 10 patients,
failure to report for one patient will
drop that facility’s reporting rate to
below 90 percent.
Taking all of these issues into
consideration, we finalize a normative
reporting threshold for this measure;
facilities will be required to report at the
rate of the 50th percentile of all facilities
in 2013 for each month of the
performance period in order to gain 10
points on the measure. However, if the
50th percentile of all facilities in 2013
is greater than 97 percent, facilities will
only be required to report monthly for
97 percent, in total, of their (i) in-center
Medicare patients who have been
treated at least seven times by the
facility; and (ii) home hemodialysis
Medicare patients for whom the facility
submits a claim. This floor ensures that
facilities are not penalized as long as
they improve by one percent above the
reporting rates in the CROWNWeb pilot;
that is, facilities know that, provided
they reach 97 percent for each month of
the performance period, they will meet
the requirements of the measure. We
believe that it is important to adopt a
reporting rate of 97 percent in PY 2015
to ensure continued improvement. We
believe that this methodology fairly
balances the concerns that the reporting
in CROWNWeb is skewed with our
desire to encourage continued
improvement in the community.
We are concerned that small facilities
may be disproportionately impacted by
the reporting threshold because, for
example, a facility with 10 patients
could fail to report for only one patient
and, therefore, fail to meet the
threshold. As we have stated, we intend
to use the information collected from
reporting measures for purposes of
scoring clinical measures based on the
same data in subsequent payment years.
Therefore, we will not require a facility
to report this measure if it treats fewer
than 11 (i) in-center Medicare patients
who have been treated at least seven
times by the facility; and (ii) home
hemodialysis Medicare patients for
whom the facility submits a claim. If a
facility does not treat at least 11 of these
patients during the performance period,
it will be required to attest to this fact
via CROWNWeb. If a facility does not
make the attestation, we will score it
accordingly.
Comment: Some commenters did not
support including this measure in PY

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2015. One commenter argued that it is
inappropriate to adopt this measure
because it is not-NQF endorsed, nor.
One commenter stated that it is
inappropriate to adopt this measure
under the exception set forth in the
statute for measures which are not NQFendorsed; this commenter stated that
the NQF process ensures that measures
have gone through a rigorous evaluation
process, including reliability and
validity. Some commenters argued that
this measure should be deferred because
we have not articulated the intent of the
data collection or explained the measure
for which we intend to ultimately use
these data. Several commenters do not
support this measure because facilities
already collect these data so the
measure is unlikely to improve care,
and they requested that we adopt a
measure based on outcomes. One
commenter does not support adoption
of this measure because, it contends,
Kidney Disease: Improving Global
Outcomes (KDIGO) has not indicated
that serum calcium and serum
phosphorus must be reported on a
monthly basis. Further, the commenter
argues that although it is customary to
measure serum calcium and phosphorus
monthly, there is no evidence that it
indicates quality care.
Response: KDIGO recommends
monthly measurements (see Table 13 on
internet document titled ‘‘Kidney
Disease Improving Global Outcomes
Clinical Practice Guideline for the
Diagnosis, Evaluation, Prevention, and
Treatment of Chronic Kidney DiseaseMineral and Bone Disorder (CKD–
MBD)’’ at http://www.kdigo.org/
guidelines/mbd/guide3.html#chap31)).
KDIGO also emphasizes the importance
of following trends versus single
measurements, thus supporting
relatively frequent measurements (for
example, monthly). There is evidence
that calcium and phosphorus levels may
be associated with clinical outcomes.
Monthly measurements will serve to
identify elevated levels of serum
calcium and phosphorus and trigger
therapeutic interventions, thus
contributing to high quality care.
Because of these important
considerations, and for the reasons
stated above, we believe that it is
important to adopt this measure even
though it is not NQF-endorsed. We
disagree that it is inappropriate to adopt
a measure not endorsed by NQF under
the exception set forth in the statute. We
believe the exception language was
intended for such a circumstance where
an endorsed measure is not available for
implementation to address key issues
described in the statute, such as mineral

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metabolism. We will continue to work
toward the development and
implementation of appropriate, NQFendorsed measures to support the ESRD
QIP.
Comment: Many commenters noted
that it is impractical for facilities to
obtain lab values from other providers
because other providers are not required
to measure these data, do not share data
with dialysis facilities, and, even if
facilities could obtain these data, they
could not be sure that the lab values
were consistent or reported under the
same standards. Finally, these
commenters stated that CROWNWeb
does not permit facilities to submit data
obtained from other providers if the lab
result is outside the admission or
discharge date.
Response: We recognize that it may be
difficult for facilities to coordinate with
hospitals and other care providers in
order to obtain lab values. Therefore, we
are not mandating facilities to do so. In
the CY 2013 ESRD PPS proposed rule
(77 FR 40969), we stated that facilities
may obtain lab values from other
providers. This proposal was
specifically designed to afford facilities
more flexibility in acquiring and
reporting serum calcium and serum
phosphorus values. As discussed
previously in this preamble, facilities
are highly encouraged to coordinate
with other providers, but the ESRD QIP
does not mandate them to do so. We
believe that the commenters’ concerns
about inconsistent lab data are mitigated
by the requirement that the lab must be
accredited. Finally, the commenter is
right in that CROWNWeb does not allow
facilities to submit data obtained from
other providers if the lab result is
outside the admission or discharge date.
As long as the patient is treated at least
seven times by the facility during the
applicable reporting month, however,
the facility will be required to report the
patient’s serum phosphorus and
calcium levels regardless of whether the
patient also has blood drawn elsewhere
(for example, as a result of a
hospitalization) during the month.
Comment: Many commenters
encouraged us to monitor, in addition to
phosphorus and calcium, serum levels
of parathyroid hormone (PTH), arguing
that proper bone mineral management
must take all three factors into account.
Commenters also encouraged us to
adopt measures in all of these areas.
Response: We thank those
commenters who advocated the
monitoring of PTH. We recognize the
important role played by parathyroid
hormone in mineral metabolism in the
ESRD population, and will pursue
avenues by which we may monitor

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serum levels of parathyroid hormone in
the future.
As explained above, we are modifying
our proposed exclusions and finalizing
that any facility must report serum
calcium and serum phosphorus levels
for all (i) in-center Medicare patients
who have been treated at least seven
times by the facility; and (ii) home
hemodialysis Medicare patients for
whom the facility submits a claim least
once per month via CROWNWeb at the
lesser of the 50th percentile of facilities
in 2013 or 97 percent per month to
receive 10 points on the measure. We
also finalize that we will only apply this
measure to facilities with at least 11 (i)
in-center Medicare patients who have
been treated at least seven times by the
facility; and (ii) home hemodialysis
Medicare patients for whom the facility
submits a claim. Facilities who treat less
than 11 of these patients during the
performance period must attest to this
fact in CROWNWeb. If they do not make
this attestation, we will score them
accordingly. The technical
specifications for this finalized measure
can be found at http://
www.dialysisreports.org/pdf/esrd/
public-measures/MineralMetabolismReporting-2015–FR.pdf.
3. New Measures for PY 2015 and
Subsequent PYs of the ESRD QIP
As the program evolves, we believe it
is important to continue to evaluate and
expand the measures selected for the
ESRD QIP. Therefore, for the PY 2015
ESRD QIP and subsequent payment
years, we proposed to adopt five new
measures. The proposed new measures
include: Three measures of dialysis
adequacy (together comprising one
dialysis adequacy measure topic); one
measure of hypercalcemia; and one
reporting measure related to hemoglobin
and ESA dosages for all patients.
a. Kt/V Dialysis Adequacy Measure
Topic
Section 1881(h)(2)(A)(i) states that the
ESRD QIP must evaluate facilities based
on measures of ‘‘dialysis adequacy.’’ For
PYs 2012 through 2014, the ESRD QIP
included a hemodialysis adequacy
measure evaluating the number of
patients with a URR of at least 65
percent. For the PY 2015 ESRD QIP, and
future payment years, we proposed to
remove the URR Hemodialysis
Adequacy measure. In its place, we
proposed to adopt three measures of
dialysis adequacy (together comprising
one dialysis adequacy measure topic)
based on Kt/V (K = clearance, t =
dialysis time, and V = volume of
distribution) for the PY 2015 ESRD QIP
and future payment years of the

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program. Kt/V is a widely accepted
measure of dialysis adequacy in the
ESRD community because it takes into
account the amount of urea removed
with excess fluid. Further, while the
URR Hemodialysis Adequacy measure
only applies to in-center hemodialysis
patients, we stated that the proposed Kt/
V measures will allow us to evaluate
dialysis adequacy in adult hemodialysis
(HD) patients (in-center and home
hemodialysis (HHD)) receiving three
treatments weekly, adult peritoneal
dialysis (PD) patients, and pediatric HD
patients receiving three to four
treatments weekly. We proposed to
adopt the following NQF-endorsed Kt/V
measures of dialysis adequacy, each one
applicable to a different patient
population:
(i) NQF #0249: Hemodialysis
Adequacy Clinical Performance
Measure III: Hemodialysis Adequacy—
HD Adequacy—Minimum Delivered
Hemodialysis Dose;
(ii) NQF #0318: Peritoneal Dialysis
Adequacy Clinical Performance
Measure III—Delivered Dose of
Peritoneal Dialysis Above Minimum;
and
(iii) NQF #1423: Minimum spKt/V for
Pediatric Hemodialysis Patients. The
proposed measures assess whether
Medicare dialysis patients (PD, HD, and
pediatric hemodialysis) meet the
modality specific Kt/V threshold.
Performance on the measures is
expressed as a proportion of patientmonths meeting the measure threshold.
The technical specifications for these
measures can be found at http://www.
dialysisreports.org/pdf/esrd/publicmeasures/PediatricHemodialysis
Adequacy-ktv-2015-NPRM.pdf; http://
www.dialysisreports.org/pdf/esrd/
public-measures/PeritonealDialysis
Adequacy-ktv-2015-NPRM.pdf; and
http://www.dialysisreports.org/pdf/esrd/
public-measures/Hemodialysis
Adequacy-ktv-2015-NPRM.pdf.
We requested comment on these
proposals. The comments we received
on these proposals and our responses
are set forth below.
i. Adult Hemodialysis Adequacy
Comment: The majority of
commenters strongly supported the
adoption of this measure and the
removal of URR as a measure of dialysis
adequacy, stating that the measure is
more accurate and used more widely by
the dialysis community. Other
commenters, however, stated that URR
is a more appropriate measure of
dialysis adequacy because Kt/V is
dependent upon many factors,
including mid-week sampling, accurate
urine collection, and dialysis

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prescriptions, whereas URR needs only
pre- and post-blood draws. One
commenter did not support a Kt/V
measure because it only promotes
‘‘adequacy’’ rather than optimal health,
urea is not associated with toxicity, it
does not take into account
ultrafiltration, and it is only a point in
time measurement. Some commenters
supported the adoption of Kt/V as a
measure of dialysis adequacy for
hemodialysis patients, but requested
that we delay implementation until PY
2016 so that we can ensure the data we
are using to calculate achievement
thresholds, benchmarks, and
performance standards were calculated
using consistent methodology. One
commenter suggested that we include
Kt/V in PY 2015, but calculate rates for
performance standards, benchmarks,
and thresholds based on data from
January 1, 2012–June 30, 2012 since
these dates would include only data that
were calculated using the NQFendorsed formulae. Finally, one
commenter stated that we should
request raw data from facilities and
calculate Kt/V to ensure consistency.
Response: We thank those
commenters who supported the
implementation of these measures. We
note that the published literature
suggests there is insufficient evidence to
support the superiority of alternative
measures of small solute clearance over
spKt/V. The KDOQI Clinical Practice
Guideline for Methods for Measuring
and Expressing Hemodialysis Dose (CPG
2) also state that ‘‘the delivered Kt/V
determined by single-pool urea kinetic
modeling continues to be preferred as
the most precise and accurate measure
of dialysis’’ (page 12, KDOQI 2006
Update). Furthermore, the minimum
delivered hemodialysis dose for both
adult and pediatric patients, spKt/
V>=1.2, was endorsed by NQF in 2007.
Regarding concerns about the use of
consistent methodology in the
calculation of performance standards,
beginning in January 2012, the measure
specifications for adult and pediatric
hemodialysis Kt/V state that single-pool
Kt/V be measured using Daugirdas II or
Urea Kinetic Modeling. We anticipate
that these specifications will provide
valid and consistent spKt/V values.
We thank the commenter for the
suggestion of utilizing data from January
1, 2012–June 30, 2012 to set
achievement thresholds, benchmarks,
and performance standards. We believe,
however, that whenever possible, these
values should be based on a full year of
data since these data, although not
necessarily calculated using the same
NQF-endorsed methodology, represent
any changes that may occur as a result

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of seasonality. Additionally, utilizing
this timeframe will enable us to post the
numerical values of the performance
standards as soon as they are available
in December 2012 or January 2013.
We thank the commenter for the
suggestion of collecting raw data rather
than calculated spKt/V values. At this
time, we are not operationally able to
request these elements on claims. We
will consider this suggestion in future
years of the program.
Comment: Several commenters
supported the measure but requested
that we refine it to specify that the
calculated spKt/V include estimates of
residual renal function (RRF) to avoid
incentivizing improper, longer dialysis
sessions for these patients; one
commenter recommended that,
consistent with KDOQI guidance, RRF
be included in spKt/V only if the urine
collection used to measure it was within
the previous 90 days. Commenters also
requested that we exclude patients
dialyzing four or more times per week
or overnight and include patients with
Kt/V less than 2.5 since many patients
achieve these values.
Response: Consistent with the 2006
KDOQI Clinical Guidelines for
hemodialysis adequacy, we do not find
published, medical evidence to support
the inclusion of RRF in defining the
minimum target spKt/V. Additionally,
effective January 2012, the Medicare
claims processing instructions
specifically state that the reported spKt/
V should not include RRF. We currently
exclude patients dialyzing four or more
times per week from the adult HD
measure because this exclusion was
NQF-endorsed.
According to the measure
specifications, overnight dialysis
patients are included in the HD spKt/V
measure unless they are dialyzing less
than two or greater than four times per
week, or if they are in the first 90 days
of ESRD treatment. We do not currently
have the ability to identify patients who
are receiving thrice weekly in-center
nocturnal hemodialysis and do not have
a measure specific to this population.
We are currently working with
stakeholders to develop adequacy
measures to address frequent, home,
and nocturnal hemodialysis patients for
future years of the ESRD QIP.
Finally, patients with spKt/V less
than 0.5 or greater than 2.5 are excluded
from the Kt/V adult hemodialysis
dialysis adequacy measure. Patients
with HD spKt/V values greater than 2.5
are excluded from the measure
calculation as these values are
considered implausible for most
hemodialysis patients.

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Comment: Commenter stated that
spKt/V does not reflect patients on short
daily, frequent, and nocturnal dialysis
and should be updated accordingly.
Another commenter requested that we
develop a spKt/V measure for home
dialyzers.
Response: We are currently working
with stakeholders to develop adequacy
measures to address other members of
the ESRD population (i.e. frequent,
home, and nocturnal hemodialysis
patients) for future years of the ESRD
QIP.
Comment: One commenter requested
that we specify that the lab draw for this
measure should be done mid-week to
better reflect patients’ actual conditions.
Response: Under the measure
specifications for the Kt/V adult
hemodialysis adequacy measure,
facilities are required to report the last
spKt/V measurement of the month. The
NQF-endorsed measures for minimum
dialysis adequacy for both pediatric and
adult patients do not adjust for the day
of the week; a minimum target value of
spKt/V greater than or equal to 1.2
should be achieved regardless of when
this is measured. We appreciate your
suggestion and will take it under
consideration during our ongoing
measure maintenance.
Comment: One commenter stated that
‘‘dialysis adequacy’’ is a misnomer
because it does not provide a full
picture of dialysis adequacy. Instead,
the commenter suggests it be called a
measure of ‘‘urea removal,’’ encouraging
stakeholders to develop measures that
are more comprehensive of dialysis
adequacy. Another commenter asked us
to recognize that ‘‘adequacy’’ is not
synonymous with optimal levels.
Response: ‘‘Dialysis adequacy’’ is
used in the ESRD QIP to represent the
quantification of urea removal by
dialysis, one widely accepted
measurement of adequacy of this
treatment. We recognize there are other
aspects of dialysis adequacy, and we are
currently working with stakeholders to
develop additional measures for future
years of the ESRD QIP. Additionally, we
emphasize that these minimum spKt/V
target levels may not be optimal levels
for all patients. Therefore we encourage
clinicians to consider targeting higher
spKt/V targets on an individual patient
basis as clinically indicated.
ii. Peritoneal Dialysis Adequacy
Comment: Many commenters
supported the adoption of this measure
and asked us to finalize the measure
along with the formula and
methodology for its calculation. One
commenter explicitly asked us to
finalize a methodology for obtaining

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dialysate, blood, and urine sampling.
Other commenters, however, did not
support the measure, stating that we
have not yet specified a consistent
reporting methodology. These
commenters suggested that we finalize
this measure as a reporting measure
only for PY 2015, define a methodology
for calculating the values in the final
rule, and use data from CY 2013 for
purposes of adopting this measure as a
clinical measure in future years. One
commenter stated that we should
request raw data from facilities and
calculate Kt/V to ensure consistency.
Finally, some commenters stated that
they did not support the measure.
Response: We thank the commenters
who supported the adoption of this
measure. There is more than one
method that may be used by facilities to
calculate PD Kt/V. Methods for
reporting PD Kt/V on Medicare claims
were specified prior to the start of data
collection in July 2010 and are based on
measure specifications endorsed by the
National Quality Forum in 2007.
Measurement of peritoneal dialysis Kt/
V is based on timed (24 hour) dialysate
collection to measure urea clearance (k).
Time (t) is specified in the definition
(week or per week). The only
component of Kt/V measurement in
peritoneal dialysis that is formula-based
is the estimation of total body water (V).
V is estimated from either of two
formulae (Watson or Hume) predictive
equations that are based on patient
anthropometric and demographic
information. We will consider the
standardization of estimating total body
water as part of our annual ongoing
measure maintenance process, but we
note that we believe it is appropriate to
adopt this measure without this
standardization because the Watson and
Hume formulae yield substantially
similar results. Moreover, NQF
approved the measure with the
specification to use the Watson or Hume
formula to estimate ‘‘V.’’ We choose to
collect reported Kt/V, rather than the
data elements for Kt/V, due to the
limitations of collecting data on
Medicare claims and to minimize
burden on facilities.
Comment: One commenter supported
the use of Kt/V as a measure of dialysis
adequacy for peritoneal dialysis
patients, but suggested that we refine it
in the final rule. This commenter stated
that we need to: (i) Clarify in the
technical measure specifications that a
patient is only included in the measure
population if he/she has been on
peritoneal dialysis for 90 days or more
so that a patient transferring from
hemodialysis to peritoneal dialysis will
not be immediately counted in the

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measure; and (ii) exclude patients in the
first month they are eligible to be
included in the denominator if no Kt/V
measurement is taken until the fourth
month since the measure specifies Kt/V
need only be measured once every 4
months. One commenter noted that a
monthly measurement period for the
measure is problematic because Kt/V is
assessed throughout the month in home
training clinics; this commenter
suggested that there be a 30-day window
from the time of the adequacy measure
to adjust the prescription and repeat the
adequacy measure.
Response: We thank commenters for
their feedback regarding the exclusion
criteria for Kt/V for adult peritoneal
ESRD patients. To the first point,
patients are excluded from this measure
if they are in the first 90 days of
treatment for ESRD. If a patient changes
from hemodialysis to peritoneal dialysis
during a month, the patient would be
included in both the HD and PD Kt/V
measure calculations. The 2006 KDOQI
Clinical Practice Guidelines for
peritoneal dialysis adequacy (Guideline
2.1.2) state ‘‘the total solute clearance
(residual kidney and peritoneal, in
terms of Kt/V) should be measured
within the first month after initiating
dialysis therapy and at least once every
4 months thereafter.’’ While this
measure is consistent with the
guideline, we acknowledge that a
patient may be included in the PD Kt/
V measure calculation in the same
month their modality changed to PD.
However, after switching from
hemodialysis to peritoneal dialysis,
peritoneal dialysis clearance typically is
not measured right away or even in the
same month as the PD catheter
insertion, as the peritoneal membrane is
in a state of flux and its membrane
transport characteristics are unstable for
a few weeks. In several clinical
scenarios it may not be appropriate to
measure PD Kt/V within the first several
weeks after initiation of peritoneal
dialysis. Therefore, we believe that the
PD unit personnel will not have
measured PD adequacy in the 30 days
following the transition from HD to PD.
With regard to the comment on
excluding patients from the
denominator for the first month if no
measurement is taken until the fourth
month, we use the data reported in
conjunction with Medicare dialysis
facility claims value code D5: Result of
last Kt/V reading and occurrence code
51: Date of last Kt/V reading. The claims
reporting instructions indicate that for
PD patients this should be within the
last 4 months of the claim date of
service. All monthly claims with valid

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PD Kt/V values will be used in the
calculation. In response to the monthly
measurement period comment, for PD
patients, facilities are only required to
report Kt/V once every 4 months.
Comment: One commenter urged us
to develop a pediatric peritoneal
dialysis adequacy measure in
collaboration with stakeholders.
Response: We are currently working
with stakeholders to develop a pediatric
peritoneal dialysis adequacy measure as
part of a consensus-based measure
development process, and we will
consider implementing such a measure
through future rulemaking.
iii. Pediatric In-Center Hemodialysis
Adequacy
Comment: Several commenters
supported the adoption of a Kt/V
hemodialysis adequacy measure for
pediatric patients even if we do not
adopt the adult Kt/V measures. Other
commenters, however, argued that we
should not finalize the pediatric incenter hemodialysis adequacy measure
because (i) the measure does not
exclude RRF patients; and (ii) the
measure applies to 4 times per week
hemodialysis. These commenters
believe that adoption of the proposed
measure would, in effect, raise the
pediatric dialysis dose above the adult
dialysis dose in a substantial number of
children who either have a significant
RRF or are treated with dialysis four
days a week; they caution that we
should avoid incentivizing improper,
longer dialysis sessions for these
patients. Some commenters urged us to
harmonize the adult and pediatric spKt/
V hemodialysis adequacy measures,
specifically regarding the required
number of dialysis sessions for
inclusion in the measure and the
inclusion of RRF. Another commenter
stated that we should consider changing
the measure so that it is based on
weekly dose. Other commenters stated,
generally, that spKt/V is not appropriate
for pediatric patients and encouraged us
to work with stakeholders to develop a
suitable pediatric dialysis measure.
Response: We thank the commenters
who supported the implementation of
the spKt/V hemodialysis adequacy
measure for pediatric patients and those
who provided feedback for its
implementation. The measure
methodology was developed through a
consensus-based process incorporating
the input of a Technical Expert Panel
and was endorsed by NQF in 2011. The
pediatric hemodialysis adequacy
measure differs from the corresponding
adult adequacy measure in that the
measure applies to patients receiving
four dialysis treatments a week.

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Analysis of 2007 claims data suggest
that in 5.6 percent of patient-weeks,
dialysis sessions occurred four times per
week for pediatric patients. Given that
this is a significant proportion, the TEP
concluded that these patients should be
included in this measure. As seen in
Table 4 below, there were three or four
dialysis sessions in approximately 88
percent of patient-weeks. Based on these
results, the TEP concluded that by
defining the denominator as
hemodialysis patients receiving dialysis
three or four times weekly, the measure
will be applicable to most pediatric
hemodialysis patients.

http://www.dialysisreports.org/pdf/esrd/
public-measures/
PediatricHemodialysisAdequacy-ktv2015–FR.pdf (pediatric in-center
hemodialysis).

b. Hypercalcemia
Section 1881(h)(2)(A)(iii) of the Act
states that the measures specified for the
ESRD QIP shall include other measures
as the Secretary specifies, including, to
the extent feasible, measures of bone
mineral metabolism. Abnormalities of
bone mineral metabolism are
exceedingly common and contribute
significantly to morbidity and mortality
in patients with advanced Chronic
TABLE 4—DIALYSIS SESSIONS PER PA- Kidney Disease (CKD). Numerous
TIENT WEEK AMONG ALL HD PEDI- studies have associated disorders of
mineral metabolism with morbidity,
ATRIC PATIENTS < 20 YEARS OLD
including fractures, cardiovascular
disease, and mortality. Therefore, we
Sessions
Number of
Percent
believe it is necessary to adopt a clinical
per week
patient-weeks
measure that encourages proper bone
1 ................
211
2.6 mineral metabolism management.
2 ................
614
7.5
One indicator of bone mineral
3 ................
6712
82.2 metabolism management is ensuring
4 ................
533
6.5
normal calcium levels in the blood.
5 ................
60
0.7
6 ................
36
0.4 Therefore, we proposed to use the NQF7 ................
3
0.04 endorsed measure, NQF #1454:
Proportion of patients with
hypercalcemia, to evaluate ESRD
N=312 patients with first Medicare
facilities for the PY 2015 and future
dialysis claim on or before January 1,
payment years of the ESRD QIP. This
2007.
measure assesses the number of patients
With regard to the incorporation of
with uncorrected serum calcium greater
RRF in the calculation of adequacy, the
than 10.2 mg/dL for a 3-month rolling
TEP did not agree that RRF should be
average. ‘‘Uncorrected’’ means not
added to the measure description for
corrected for serum albumin
several reasons: (i) Published studies
concentration. Performance on this
evaluating dialysis adequacy in the
measure is expressed as a proportion of
pediatric population do not include
residual renal function; (ii) RRF changes patient-months for which the 3-month
rolling average exceeds the measure
continuously with age in the pediatric
threshold. Because the NQF-endorsed
population; and (iii) RRF is difficult to
measure calls for a 3-month rolling
measure among pediatric patients.
average, we also proposed that the first
Neither the NQF-endorsed measure
specifications nor the KDOQI guidelines measure rate for this measure would be
calculated using the first 3 months of
support measuring spKt/V in pediatric
data collected during the proposed
patients based on a weekly dose.
performance period (that is, there would
Furthermore there is no evidence to
be no measure rate for the first 2 months
support a minimum target value for a
of the performance period; we would
weekly Kt/V dose. We will continue to
consider other measurements of dialysis calculate the first measure rate for the
performance period using the first 3
adequacy for the pediatric population;
months of data and would then
at this time, we believe that this
calculate a rate each successive month,
measure is the most suitable.
For the reasons stated above, we are
dropping the oldest month and adding
adopting the Kt/V measure topic as
the newest month). Because we
proposed. The technical specifications
proposed to adopt this measure not only
for each of the finalized measures in this for PY 2015, but also subsequent
measure topic can be found at http://
payment years, we also proposed that,
www.dialysisreports.org/pdf/esrd/
beginning with the PY 2016 program,
public-measures/
we would measure hypercalcemia
HemodialysisAdequacy-ktv-2015–
beginning in January of the applicable
FR.pdf (adult hemodialysis), http://
performance period. This would allow
www.dialysisreports.org/pdf/esrd/
us to have a 3-month rolling average for
public-measures/
all months in the performance period.
PeritonealDialysisAdequacy-ktv-2015–
We proposed that the 3-month rolling
FR.pdf (adult peritoneal dialysis), and
average rate for January would be

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calculated using the rates from
November and December of the
previous year as well as January of that
year. Likewise, we proposed that the
rate for February would be calculated
using the rates from December, January
and February to calculate the 3-month
rolling average, and so on. Technical
specifications for this measure can be
found at http://www.dialysisreports.org/
pdf/esrd/public-measures/
MineralMetabolism-Hypercalcemia2015–NPRM.pdf.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Several commenters
supported this measure, noting that it is
consistent with KDIGO guidelines and
is especially necessary given that we
will include oral-only drugs in the
bundle beginning in PY 2014; some
commenters specifically argued that that
there is sufficient validity and reliability
of the data collected in CROWNWeb to
establish an appropriate clinical
measure for PY 2015, and noted that
this measure is in keeping with
Congress’ intent to include a measure of
bone mineral metabolism in the ESRD
QIP. Other commenters, however, stated
their belief that, despite its NQFendorsement, the measure is not aligned
with clinical standards, is contrary to
KDIGO guidelines, and does not
advance the aims of the National
Quality Strategy. Additionally, several
commenters, both those supporting and
opposing the measure, argued that it is
inappropriate to use CROWNWeb data
to define performance standards,
achievement thresholds, and
benchmarks because the data
underrepresents small- and mid-sized
dialysis organizations, does not account
for the differences in reporting which
may exist when data are voluntarily
reported (and data were voluntarily
reported in the CROWNWeb pilot), was
submitted with the understanding that it
was test data and would not be used by
CMS programs, and because it suffers
from serious data collection problems, a
lack of definitions, and a lack of
reporting requirements in CROWNWeb.
Many commenters suggested that we
adopt this measure as a reporting
measure only for PY 2015. Several other
commenters believe that the proposed
hypercalcemia measure is only
appropriate if we include similar
clinical measures for serum phosphorus,
parathyroid hormone (PTH), and other
mineral metrics because a
hypercalcemia measure alone represents
a piecemeal approach to bone and
mineral metabolism that will not be
sufficient to ensure quality care for
ESRD patients and may even incentivize

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inappropriate care. Finally, commenters
recommended that CMS monitor
secondary parathyroid hormone and not
include oral-only drugs in the bundle
until such measures and monitoring are
in place.
Response: Commenters rightly state
that the performance standards,
achievement thresholds, and
benchmarks for the proposed
Hypercalcemia measure were not
calculated using data from all facilities.
Because it is possible that these
calculations could contain a systemic
bias, and we have no effective means of
addressing that bias in the ESRD QIP as
this time, we will not finalize a clinical
measure for hypercalcemia, as discussed
above, until valid data from all facilities
are accessible for the purpose of
establishing performance standards,
achievement thresholds, and
benchmarks. We are not finalizing a
clinical Hypercalcemia measure at this
time. We do, however, continue to
believe that hypercalcemia is an
important indicator of bone mineral
metabolism, and we intend to use this
measure in subsequent payment years.
Comment: One commenter stated that,
generally, we should not use data from
CROWNWeb for the ESRD QIP until the
validity of CROWNWeb data is
confirmed. Commenters also urged us to
find solutions for the CROWNWeb
issues which the community has been
experiencing in order to ensure that, as
measures increasingly rely on
CROWNWeb data, there is no question
as to the data’s validity.
Response: We thank the commenters
who expressed concern regarding the
use of CROWNWeb data for the ESRD
QIP. Given the potential risk to validity
of ESRD QIP clinical measures
calculated using CROWNWeb data, we
will not finalize the proposed clinical
measure for hypercalcemia that depends
on those data, as noted above.
Comment: One commenter urged us
to exclude patients who have
hypercalcemia for reasons other than
ESRD treatment (for example,
medication and malignancy) from the
Hypercalcemia measure. The
commenter requests confirmation that
the Hypercalcemia measure includes all
patients rather than just Medicare
patients, and is concerned with CMS’
move to include the total facility
population in the measure collection
process. One commenter seeks
clarification regarding whether a lower
or higher rate is desirable for the
Hypercalcemia measure.
Response: We thank the commenters
for raising these issues with the
Hypercalcemia measure, and we will
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future rulemaking, when the
Hypercalcemia measure is considered as
a measure for the ESRD QIP in future
payment years.
For the reasons discussed above, we
will not finalize the Hypercalcemia
measure for use in the PY 2015 ESRD
QIP or subsequent years until indicated
otherwise in rulemaking.
c. Anemia Management Reporting
Measure
Section 1881(h)(2)(A)(i) requires
‘‘measures on anemia management that
reflect the labeling approved by the
Food and Drug Administration (FDA)
for such management.’’ Although the
current FDA-approved label for ESAs
only specifically addresses hemoglobin
levels greater than 11 g/dL, previous
FDA-approved labels suggested patients
on ESAs maintain a hemoglobin level of
10–12 g/dL. As we noted in the CY 2012
ESRD PPS final rule, upon further
research, the FDA determined that there
is no evidence suggesting a lower target
level at which hemoglobin does not
cause increased risks of death, serious
adverse cardiovascular reactions, and
stroke and, therefore, changed its
approved label on June 24, 2011 (76 FR
70257).
As a result of the changes in the FDA
approved-label and the implementation
of the ESRD QIP, we are monitoring
trends and indicators of anemia
management for the Medicare ESRD
population. We have found that the
average monthly blood transfusion rate
increased from 2.7 percent in 2010 to
3.2 percent in 2011. We are working
through our ESRD QIP monitoring and
evaluation program to further assess the
effect of the ESRD PPS. We believe that
it is important that we continue
monitoring hemoglobin levels in
patients to ensure that anemia is
properly treated, and we, therefore,
proposed to adopt a measure for PY
2015, and future payment years, which
requires facilities to report ESA dosage
(if applicable) and hemoglobin and/or
hematocrit levels for patients on at least
one monthly claim. In addition to this
measure, proposed below, we plan to
continue to monitor the rate of
transfusions and may consider the
adoption of relevant quality measures
through future rulemaking if necessary.
Since January 1, 2012, facilities have
been required to report hemoglobin or
hematocrit 4 levels for each patient on
every claim (CR 7640). Beginning April
1, 2012, if a hemoglobin or hematocrit
value is not included in the claim, the
4 Hematocrit values are used to calculate
hemoglobin levels by taking the hematocrit value
and dividing by three.

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67491

claim is returned to the facility (CR
7593). If a hemoglobin or hematocrit
value is not available for a patient, a
facility can enter a default value of
99.99 on the claim and the claim will
not be returned, provided the facility is
not billing for an ESA. The default value
is not acceptable when the claim
includes an ESA, in such a case, the
claim will be returned to the facility.
We stated in the proposed rule that
we are concerned that our current
policy of paying claims that include a
default hemoglobin or hematocrit value
of 99.99 could lead to the underreporting of patients’ hemoglobin or
hematocrit levels and ESA dosage by
facilities; we are specifically concerned
that we will not receive complete and
accurate hemoglobin/hematocrit
readings for those patients not receiving
ESAs because a default value of 99.99
can be reported on claims, and these
claims will be paid, if no ESA is
administered to the patient.
Additionally, we believe that facilities
might choose to strategically not report
certain patients’ hemoglobin or
hematocrit levels on certain claims—
those where the patient’s hemoglobin
levels are greater than 12 g/dL—in order
to make the performance rate of their
Hemoglobin Greater Than 12 g/dL
measure seem better and reduce the
likelihood of a payment reduction under
the ESRD QIP.
Because it is possible that facilities
could under-report hemoglobin or
hematocrit levels, we proposed to adopt
an Anemia Management reporting
measure for the PY 2015 ESRD QIP, and
future payment years of the program.
For this measure, we proposed to
require facilities to report a hemoglobin
or hematocrit value and, as applicable,
an ESA dosage for all Medicare patients
at least once per month via claims. We
proposed to consider claims with 99.99
values as not meeting the requirements
of this measure (that is, claims reporting
99.99 will be counted as if the
hemoglobin or hematocrit value were
left blank).
We stated that we do not intend for
this proposed measure to encourage
unnecessary testing or unduly burden a
facility. Consequently, for purposes of
scoring the measure, we considered
proposing to require facilities to report
the required information for less than
100 percent of their patients.
Specifically, we considered lowering
the threshold to reporting 98 percent of
patients for a month in order to receive
credit for that month. We ultimately
proposed that a facility should be
required to take and report these values
for every patient at least once per month
so that each beneficiary receives the

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highest standard of care. We realize,
however, that there are circumstances
beyond a facility’s control wherein it
may not be able to draw a sample for
this patient. Therefore, we did not
propose that the facility itself must draw
blood for each patient. If, for example,
a patient is hospitalized or transient
during a claim month, the facility may
report the hemoglobin/hematocrit
readings and ESA dosage (if applicable)
for the patient for a month if a patient
has labs drawn by another provider/
facility and those labs are evaluated by
an accredited laboratory (a laboratories
that is accredited by, for example, the
Joint Commission, the College of
American Pathologists, the AAB
(American Association of Bioanalysts),
or State or Federal agency), and the
dialysis facility obtains the hemoglobin/
hematocrit readings and ESA dosage.
Additionally, we proposed to only
consider a patient qualified for this
measure (i) if the patient is alive at the
end of the month; (ii) if the patient is
treated in-center, that patient was
treated at that facility at least twice
during the claim month; and (iii) if the
patient receives dialysis at home, a
claim is submitted for that patient. We
believe that these proposals will provide
more flexibility for facilities and will
also discourage facilities from drawing
blood, even when not necessary for fear
that the patient will fail to come to the
facility again during that month. We
requested comment on this proposal.
We also requested comment on whether
facilities should only have to report data
for 98 percent of their patients.
The proposed Anemia Management
reporting measure was not included in
the list of measures under consideration
in accordance with section 1890A(a)(2)
of the Act because we had not yet fully
assessed the impact of the new FDAapproved ESA labeling on the ESRD
population. We have since received and
analyzed more, but still incomplete,
anemia management data; we believe it
is necessary to require facilities to
provide complete data so that we may
fully understand the effect of the
changes to ESA labeling and other
factors. The proposed Anemia
Management reporting measure will
play a critical role in patient safety. As
noted above, our monitoring activities
indicate that there has been a slight but
noticeable increase in transfusions since
the adoption of the ESRD PPS.
Additionally, a United States Renal Data
System analysis presented in May 2012
found an increase in blood transfusion
rates among ESRD patients concurrent
with the implementation of the ESRD
PPS. Although the association of

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changes in transfusion rates with the
ESRD PPS, FDA labeling changes, and
other factors are not yet known, we
believe proactive facility engagement in
regular monitoring of patient
hemoglobin or hematocrit levels
regardless of ESA use is critical to
maintaining safe care, protecting the
safety of beneficiaries, and monitoring
the program effectively. We further
believe that the data collected from the
proposed measure are necessary for
measure development in a clinical area
of critical significance to patient
safety—anemia and transfusion. A delay
in proposing to adopt this reporting
measure may prevent us from creating
clinical measures for use in future years
of the program and pose a risk to
patients. Finally, we noted that section
1881(h) of the Act specifically
highlights the importance of anemia
management measures, and we do not
believe it would be in the best interest
of the program to wait an additional
year to propose this measure.
For the reasons stated above, we
proposed to adopt an Anemia
Management reporting measure for the
PY 2015 ESRD QIP and subsequent
payment years. We provided the
technical specifications for this
measure, at http://
www.dialysisreports.org/pdf/esrd/
public-measures/AnemiaManagementReporting-2015–NPRM.pdf. We
requested public comment on these
proposals.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Some commenters
supported the measure, stating that they
believe this measure will allow us to
closely monitor the underutilization of
ESAs and the increase in transfusions.
Commenters also stated that they
believe that this measure will assist in
explaining and monitoring timely ESA
discontinuation and studying the
potential effect of altitude on patients.
Many commenters supported this
measure, but requested that we make
modifications to our proposed
exclusions. These commenters
suggested that we exclude, for all of the
reporting measures, the following
patients: (i) Beneficiaries who are
regularly treated at the facility and who
fit into one of these categories: (a)
beneficiaries who die within the
applicable month; (b) beneficiaries that
receive fewer than 7 treatments in a
month; and (c) beneficiaries receiving
home dialysis therapy who miss their
in-center appointments when there is a
documented, good faith effort to have
them participate in such a visit during
the applicable month; (ii) transient

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dialysis patients; (iii) pediatric patients
(unless the measure is specific to this
population); and (iv) kidney transplant
recipients with a functioning graft.
Commenters stated that these exclusions
would be consistent with our own
measures reported on DFC; commenters
also stated that these exclusions seek to
hold facilities accountable only for
those beneficiaries to whom they
regularly give care and for whose care
they can affect. Another commenter,
however, stated that we should not
implement other commenters’
suggestions that we exclude
beneficiaries receiving home dialysis
therapy who miss their in-center
appointments when there is a
documented, good faith effort to have
them participate in such a visit during
the applicable month; this commenter
stated that it is the responsibility of the
facilities to educate patients on the
importance of making and keeping
appointments. Additionally this
commenter argued that ‘‘good faith’’ is
too vague; commenter requested that, if
we did adopt this exclusion, we clearly
define a ‘‘good faith effort.’’ Another
commenter stated that peritoneal
dialysis patients do not need to be seen
at a facility once per month and the
measure should be accordingly revised.
Response: Consistent with the
Mineral Metabolism reporting measure,
we agree with commenters who believe
that the exclusions should be modified.
We recognize that treating a patient
twice may not provide enough time to
effectuate quality patient care. We agree
with the commenters who suggested
that an in-center hemodialysis patient
should be excluded if treated by a
facility fewer than seven times during
the month, regardless of whether the
patient is officially admitted to that
facility. With seven treatments, we
believe that a facility should have had
adequate opportunities to draw blood
necessary to report hemoglobin/
hematocrit. We also believe that the
threshold of seven will discourage
unnecessary testing of in-center
hemodialysis patients by facilities
because they will know that, since incenter patients are typically treated
three times per week, a patient must
have been treated by the facility for at
least two weeks to be included; thus, the
facility need not feel pressure to draw
blood for every patient during the first
few visits of the month. Based on these
considerations, we will not finalize our
proposal to only exclude in-center
patients who have been treated fewer
than two times by the facility during the
claim month. Instead, we will exclude
any patient who is treated by the facility

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fewer than seven times during the
reporting month.
We do not believe that it is necessary
to specifically exclude transient patients
from this measure because, as noted,
any patient that is treated by the facility
at least seven times during the
applicable reporting month is present at
the facility for enough time that the
facility should be able to measure that
patient’s hemoglobin/hematocrit.
Likewise, for the same reasons, we do
not believe we need to separately
exclude patients who are deceased at
the end of the reporting month.
Provided that the patient was treated by
the facility at least seven times during
that month, the facility should be able
to draw blood necessary to obtain
hemoglobin/hematocrit values even if
the patient is deceased at the end of the
month.
Additionally, we do not agree that
facilities should not be held accountable
for drawing blood from home dialysis
patients who fail to attend a monthly
appointment. We believe that it is
incumbent upon a facility to make home
dialysis patients aware that they must
attend monthly appointments to be
properly treated. Therefore, we will
finalize our proposal that we will
include any home hemodialysis patient
for which a facility submits a claim with
respect to the reporting month in this
measure.
Finally, we believe it is important to
include transplant patients until they
are officially discharged from a facility;
regular monitoring can help ensure that
a transplant remains effective and the
facility is continuing to provide the best
care possible.
For the reasons stated above, we will
modify our proposals for the exclusions
for this measure and finalize that, for
the PY 2015 ESRD QIP, facilities must
report hemoglobin/hematocrit at least
once per month via claims for (i) incenter Medicare patients who have been
treated at least seven times by the
facility; and (ii) home hemodialysis
Medicare patients for whom the facility
submits a claim. If the facility
administers an ESA to these patients, it
must also report the HCPCS code and
corresponding unit for that patient. We
will interpret an empty HCPCS field to
mean that no ESA was administered.
Comment: Several commenters
encouraged us to not adopt a percentage
reporting threshold because it does not
distinguish between beneficiaries
legitimately excluded and those that
were merely missed. Other commenters
requested that we use both exclusions
and a threshold; one commenter
suggested a threshold of 90 percent or
an allowance of two patients to ensure

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that small facilities are not
disproportionally affected. Another
commenter stated that requiring 98
percent reporting may make it difficult
for patients to travel because dialysis
facilities may encourage them otherwise
in order to ensure compliance with the
measure. One commenter requested that
we provide guidance regarding the
standardization of blood-draws so that
data can be reliable before we
implement a reporting threshold.
Response: We agree with the
commenters who argued that, even with
exclusions, there are circumstances in
which facilities cannot report the
hemoglobin/hematocrit and ESA
dosage, as applicable, for every patient
at least once per month. It is possible
that these exclusions alone may hold a
facility responsible for a patient who
was technically treated by the facility
but who did not receive actual treatment
from the facility during the applicable
month. For example, a facility may wait
to draw blood from a patient because it
believes that the patient will be treated
there for the entirety of the month, but
learns that the patient has been
hospitalized unexpectedly for all or part
of the applicable month. Therefore, we
believe that we should not require
facilities to report for 100 percent of
their patients. Based on data from
CROWNWeb, we believe that facilities
report hemoglobin/hematocrit and ESA
dosage for approximately 99 percent of
their patients on a monthly basis. We
believe it is appropriate to assume that
a similar percentage was reported via
claims. Although, as commenters have
argued with regard to the Mineral
Metabolism reporting and the
Hypercalcemia measures, this
information in CROWNWeb was
voluntarily reported which may mean
that the data is biased toward facilities
that value reporting; additionally, the
data from the CROWNWeb pilot was
mainly supplied by LDOs that may be
more likely to have more resources and
corporate policies that require reporting
compliance.
Taking all of these issues into
consideration, we finalize a normative
reporting threshold for this measure;
facilities will be required to report at the
lesser of the 50th percentile of all
facilities in 2013 or 99 percent, in total,
of their (i) in-center Medicare patients
who have been treated at least seven
times by the facility; and (ii) home
hemodialysis Medicare patients for
whom the facility submits a claim. This
floor ensures that facilities are not
penalized as long as they report at a
high rate that is consistent with
CROWNWeb data; that is, facilities
know that, provided they reach 99

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67493

percent for each month of the
performance period, they will meet the
requirements of the measure. We believe
that this methodology fairly balances
the concerns that the reporting in
CROWNWeb is skewed with our desire
to encourage continued excellence in
the community.
We are concerned that small facilities
may be disproportionately impacted by
the reporting threshold because, for
example, a facility with 10 patients
could fail to report for only one patient
and, therefore, fail to meet the
threshold. As we discuss below, we
believe that 11 cases is an appropriate
minimum for purposes of scoring
clinical measures. As we have stated,
we intend to use the information
collected from reporting measures for
purposes of scoring clinical measures
based on the same data in subsequent
payment years. Therefore, we will not
require a facility to report this measure
if it treats less than 11 (i) in-center
Medicare patients who have been
treated at least seven times by the
facility; or (ii) home hemodialysis
Medicare patients for whom the facility
submits a claim. If a facility does not
treat at least 11 of these patients during
the performance period, it will be
required to attest to this fact via
CROWNWeb. If a facility does not make
the attestation, we will score it
accordingly.
Comment: Several commenters do not
support this measure because facilities
already collect these data so the
measure is unlikely to improve care.
Some of these commenters asked us to
require facilities to report this
information separate from the ESRD QIP
on at least one monthly claim to ensure
anemia is properly treated.
Response: As we noted in the
proposed rule (77 FR 40974), we believe
that this measure will discourage
underreporting of ESAs and
hemoglobin. Currently, facilities may
report a value of 99.99 as default
hemoglobin for claims that do not
include an ESA. Since the bundle
includes ESAs, it may not be financially
beneficial for a facility to report an ESA,
especially if a patient’s hemoglobin is
greater than 12—negatively affecting its
Hemoglobin Greater than 12 g/dL
measure score. Additionally, we are
concerned that the 99.99 value will be
overutilized and will not allow us to
properly monitor hemoglobin levels
across the ESRD population. If we are
able to closely and accurately monitor
ESA dosage and hemoglobin, we believe
we will be able to improve care by using
this information to monitor the effects of
the bundle and the ESRD QIP on
beneficiaries; we also believe we may

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utilize these data in the future to
develop an anemia management clinical
measure.
Comment: Many commenters noted
that it is impractical for facilities to
obtain lab values from other providers
because other providers are not required
to measure these data, do not share data
with dialysis facilities, and, even if
facilities could obtain these data, they
could not be sure that the labs were
consistent or reported under the same
standards. Additionally, one commenter
argued that hemoglobin levels from
other facilities will be of little use
without further information regarding
why the patient was at that facility. One
commenter agreed that hemoglobin/
hematocrit values can be supplied by
another provider provided the labs are
evaluated by an accredited facility.
Response: We recognize that it may be
difficult for facilities to coordinate with
hospitals and other providers in order to
obtain lab values. We, however, are not
mandating facilities to do so. In the
proposed rule (77 FR 40974), we stated
that facilities may obtain lab values
from other providers. This proposal was
specifically designed to afford facilities
more flexibility in acquiring and
reporting hemoglobin and hematocrit
values, as well as ESA dosage. Facilities
are highly encouraged to coordinate
with other providers, but this measure
does not mandate them to do so. We
believe that the commenters’ concerns
about inconsistent lab data are mitigated
by the requirement that the lab must be
accredited. Further, we do not believe
that data from another provider will be
of little use. We can use these values to
monitor hemoglobin and hematocrit
levels of ESRD patients, as well as ESA
dosage; additionally, collecting these
data may encourage providers to engage
one another about the patient’s
conditions and care.
Comment: One commenter noted that
hemoglobin values on claims are from
the prior month; therefore the 99.99 is
used for the claim in the first month of
a patient’s dialysis or if a patient had a
transplant. The commenter requested
clarification on what it should report in
these circumstances. Other commenters
argued that 99.99 should be available
without penalty to facilities because in
some instances, it is appropriate. One
commenter supported disincentivizing
99.99 reporting in order to stop facilities
from not reporting patients with high
hemoglobin.
Response: The commenter is correct
in that the Erythropoietin Monitoring

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Policy (2006) 5 requests that the
hemoglobin/hematocrit reading reported
on claims be defined as ‘‘the most recent
reading taken before the start of this
billing period. For patients beginning
dialysis, use the most recent value prior
to the onset of treatment.’’ We recognize
that, for some patients, specifically
those new to dialysis, this hemoglobin/
hematocrit values may not be available.
Therefore, we will not require a facility
to report a hemoglobin/hematocrit value
for a patient if that patient has been on
dialysis for less than one month
(including when dialysis is resumed
after a transplant); facilities may report
the default value without being
penalized in this circumstance. We
remind facilities that if an ESA is
reported on a claim, the facility must
also report a hemoglobin/hematocrit
level, regardless of whether that patient
is new to dialysis (CR 7460).
Comment: One commenter asked us
to include Omontys, an ESA new to the
market, in this measure. Other
commenters generally requested that we
monitor new ESAs and their effects on
hemoglobin levels.
Response: We intend to monitor ESA
dosage for all ESAs used by dialysis
facilities. Using HCPCS codes, a facility
must indicate which ESA it
administered, including Omontys.
Comment: One commenter noted that
it supports the reporting of hemoglobin,
but not hematocrit because the data set
should be standardized to require only
hemoglobin reporting.
Response: Facilities can report either
hemoglobin or hematocrit on claims.
Either will count for the purpose of this
measure. (For the Hemoglobin Greater
than 12 g/dL measure, hematocrit values
are changed to hemoglobin by dividing
by 3). As of 2011, only 14 percent of
facilities reported hemoglobin, while 70
percent reported hematocrit. We believe
that requiring 70 percent of all facilities
to alter their reporting method would
generate undue burden on the dialysis
facility community, for relatively little
gain, as we have an established method
for incorporating both hemoglobin and
hematocrit into the measure calculation.
Comment: Some commenters asked us
to state the purposes of the anemia
management reporting measure with
more specificity. Some commenters
requested that we clarify how we intend
to report and make publicly available
hemoglobin/hematocrit levels and ESA
dosages. Commenters asked us to clarify
the plans for the use of the information
5 http://www.cms.gov/Outreach-and-Education/
Medicare-Learning-Network-MLN/
MLNMattersArticles/downloads/MM4135.pdf.

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and how we will account for patient
weight in our analyses.
Response: We believe that the anemia
management reporting measure
emphasizes the importance of anemia
management for the ESRD population
and will support efforts to establish
more meaningful, evidence-based
clinical measures of anemia
management in the future. We intend to
publicly report the anemia management
reporting measure rates in the same
manner that we use to publicly report
other measure rates under the ESRD QIP
but will not score facilities based on
those rates. Facilities will be able to
preview the reporting data to be
publicly reported before we post it on
DFC. At present, the Anemia
Management reporting measure does not
take patient weight into account, but we
will consider whether this type of
adjustment is appropriate for future
years of the ESRD QIP. We would also
like to clarify that we will use HCPCS
codes that indicate ESA administration
and their corresponding units for
assessing whether an ESA was
administered. We will interpret an
empty HCPCS field to mean that no ESA
was administered.
Comment: One commenter supports
this measure but suggests that the data
be captured in CROWNWeb since
hemoglobin levels are only reported on
claims with ESA doses.
Response: The commenter is correct
that CROWNWeb only requires a
hemoglobin/hematocrit if an ESA is
entered.
Since January 1, 2012, however,
facilities have been required to report
hemoglobin/hematocrit on claims
regardless of whether an ESA dose was
administered (CR 7460). Facilities are
expected to report the anemia
management reporting measure on their
claims.
Comment: One commenter supports
the measure but only for patients with
hemoglobin less than 10 g/dL. It is more
likely, the commenter argues, that one
will identify a patient with a low
hemoglobin (even if that patient is not
on ESAs) if a new reporting measure is
instituted. The commenter believes that
reporting hemoglobin for patients not on
ESAs who have a hemoglobin greater
than 12 g/dL is not necessary because
these patients are not at risk for the
complications that arise from targeting
high hemoglobin levels using ESAs.
Response: It is our intention to use the
data we collect from this reporting
measure to develop an anemia
management clinical measure and
monitor anemia management trends. In
order to better understand the ESRD
population as a whole and collect a

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robust data set, we believe it is
important to collect hemoglobin/
hematocrit levels for patients regardless
of their values or if an ESA was
administered. Using this information,
we can, among other things, assess
trends across the entire population and
use these data for measure development
and monitoring purposes.
As explained above, we are modifying
our proposed exclusions and finalizing
that a facility must report hemoglobin/
hematocrit and ESA dosage (via HCPCS
codes and their units) for the lesser of
the 50th percentile of facilities in 2013
or 99 percent, in total, of its (i) in-center
Medicare patients who have been
treated at least seven times by the
facility; and (ii) home hemodialysis
Medicare patients for whom the facility
submits a claim. We will interpret an
empty HCPCS field to mean that no ESA
was administered. We also finalize that
we will only apply this measure to
facilities with at least 11 (i) in-center
Medicare patients who have been
treated at least seven times by the
facility; and (ii) home hemodialysis
Medicare patients for whom the facility
submits a claim. Facilities who treat less
than 11 of these patients during the
performance period must attest to this
fact in CROWNWeb. If they do not make
this attestation, we will score them
accordingly. Additionally, we will not
penalize facilities for using the default
99.99 value for a patient in his/her first
month of treatment at that facility. The
technical specifications for this
finalized measure can be found at
http://www.dialysisreports.org/pdf/esrd/
public-measures/AnemiaManagementReporting-2015-FR.pdf.
4. Measures Under Consideration for
Future PYs of the ESRD QIP

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In addition to the PY 2015 ESRD QIP,
we noted in the proposed rule that we
are considering measures for future
payment years of the program. We are
specifically considering whether we
should propose in future rulemaking to
adopt the following two measures,
• NQF #1463: Standardized
Hospitalization Ratio for Admissions
(SHR) and
• NQF #0369: Dialysis Facility Riskadjusted Standardized Mortality Ratio
(SMR).
We stated that we intend to adopt these
measures for future payment years of
the ESRD QIP, possibly beginning with
the PY 2018 program. We notified
facilities of our intent and solicited
comments on incorporating these
measures into future payment years of
the ESRD QIP.

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a. Standardized Hospitalization Ratio
(SHR)
Hospitalizations are an important
indicator of patient quality of life and
morbidity. The SHR is an NQF-endorsed
(#1463), risk-adjusted measure of
hospitalization for dialysis patients. The
measure is claims-based and describes,
as a ratio, the number of ESRD Medicare
patient actual admissions versus
expected hospitalizations adjusted for
the facility’s Medicare patient case mix.
Please refer to the NQF Web site
(www.qualityforum.org) to obtain more
detail about this measure.
b. Standardized Mortality Ratio (SMR)
The SMR measure is an NQFendorsed (#0396) critical patientcentered, outcome measure of overall
patient care furnished by facilities. We
believe that the SMR measure would
encourage appropriate overall patient
care by facilities and incentivize
facilities to examine the holistic health
of the patient rather than treating the
patient based on an individual measureby-measure basis. The SMR measure
describes, as a ratio, the number of
ESRD Medicare patient actual deaths
versus expected deaths adjusted for the
facility’s Medicare patient case mix.
Please refer to the NQF Web site
(www.qualityforum.org) to obtain more
detail about this measure.
c. Public Reporting of SHR and SMR
Measures
Although the SHR and SMR measures
may not be adopted for the ESRD QIP
until a future payment year, we intend
to publicly report these measure ratios
to the public via Dialysis Facility
Compare (DFC) to encourage facilities to
improve their care. Section 4558(b) of
the Balanced Budget Act of 1997 (Pub.
L. 105–33) (BBA) directs the Secretary
to develop, not later than January 1,
1999, and implement, not later than
January 1, 2000, a method to measure
data reflective of the quality of renal
dialysis services provided under the
Medicare program. Under this authority,
we began reporting the SMR measure on
DFC in January, 2001 as a survival
measure and used three categories to
rate facility performance: ‘‘as expected,’’
‘‘worse than expected,’’ and ‘‘better than
expected.’’ The SMR measure that we
are considering adopting for the ESRD
QIP was developed in 1999 and
facilities are required to submit these
data via form 2746. The SHR measure
that we are considering adopting for the
ESRD QIP was developed in 1995,
presented to a Technical Expert Panel
after modifications to risk adjustment
and statistical modeling in 2007, and

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received NQF-endorsement in 2011. The
data needed to calculate the SHR
measure have been regularly reported to
DFR since 1995 and have been used by
facilities for quality improvement
activities. We plan to add the SHR data
to the DFC effective January 2013;
additionally we will report the actual
SMR rates/ratio on the DFC beginning
January 2013.
We originally proposed to adopt the
SHR measure for the PY 2014 ESRD
QIP, but did not finalize the proposal,
in part, because commenters voiced
concerns regarding the accuracy of the
co-morbidity data used in the
calculation of the measures. Details on
public comments and why we did not
adopt the SHR measure are articulated
in the CY 2012 ESRD PPS final rule (76
FR 70267). Since that time, we have
identified that the claim form UB 92
with the type of bill (TOB) field 72x
allows a facility to input up to 17 comorbid conditions per claim
submission. We acknowledge that
patient co-morbidities can change with
time and since the capability already
exists on the UB 92 TOB, we believe the
best means for facilities to update
patient co-morbidities is through the
ESRD 72x claims form. Details on this
form can be found in the Medicare
Claims Processing Manual, Chapter 8—
Outpatient ESRD Hospital, Independent
Facility, and Physician/Supplier Claims
(https://www.cms.gov/manuals/
downloads/clm104c08.pdf).
In addition, because the NQFendorsed SHR and SMR measures are
risk-adjusted for ESRD patients that
reside in nursing homes, in order to
calculate the measure rates on DFC, we
will utilize data from the Minimum Data
Set (MDS) to identify those individuals
in nursing homes. We would use these
data not only for reporting the measure
rates on DFC at present, but also for
calculating the measures if we adopted
them for use in future years of the ESRD
QIP. The Omnibus Budget
Reconciliation Act (OBRA) of 1987
requires that all Medicare and Medicaid
certified nursing homes complete MDS
assessments on all of their patients.
We requested comment regarding the
feasibility of adopting these measures
for future payment years of the ESRD
QIP.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Although most
commenters agreed that measures for
hospitalization are important for quality
reporting purposes, many commenters
strongly opposed that the SHR measure
be included in the ESRD QIP in
subsequent payment years. These

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commenters argued that the SHR
measure is a measure over which
facilities have little control because
patients often follow the advice of their
primary care physician or visit a
hospital without consulting the facility
to receive treatments that could be
furnished in the outpatient setting.
Commenters expressed concern that the
measure could lead to cherry-picking,
disincentivize appropriate
hospitalization, and is not transparent
enough for facilities to make
improvements in this area because of
they are confused about the riskadjustment methodology. Other
commenters stated that the measure
needs further refinement and validation,
specifically regarding risk adjustment
for frail patients such as those in
nursing homes, cultural factors,
socioeconomic factors, and health
factors specific to the ESRD population.
Commenters asked that these adjusters
be made public. One commenter
believes that this measure would create
a bias for facilities on the basis of
location. Some commenters suggested
that, instead of implementing this
measure, CMS consider a coordinated
care model. Other commenters
requested that we adopt a pilot for this
measure wherein only aggregate data is
reported until the measure can be
further assessed and validated. Several
commenters suggested that we
implement an SHR measure focused on
admissions that could have been
prevented by interventions from dialysis
facilities; one commenter suggested that
the SHR measure be modified to
calculate a ‘‘risk-adjusted standardized
hospitalization ratio for dialysis accessrelated infections and fluid overload,’’
since these are elements facilities can
control.
Response: We thank commenters for
these opinions. We will take these
comments into consideration as we
further assess the appropriateness of
adopting the SHR measure for the ESRD
QIP.
Comment: Many commenters strongly
supported the consideration of SHR for
future years of the ESRD QIP. One
commenter requested that we
implement the measure as soon as
possible. Commenters also supported
reporting measure rates on DFC
beginning in CY 2013. One commenter
supports the addition of SHR data to
DFC as long as a caveat is included
explaining that dialysis facilities can
influence but do not control
hospitalization rates. This commenter
also requested that the ‘‘expected,’’
‘‘better than expected,’’ and ‘‘less than
expected’’ categories remain on DFC.
One commenter argued that there is not

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enough data on SHR to report rates on
DFC.
Response: We thank the commenters
who supported the future consideration
of the SHR for implementation. We
intend to begin public reporting of the
SHR on DFC as of January 2013 to
indicate the relative performance of
facilities. We believe that dialysis
facilities own partial responsibility for
the rate at which their patients are
hospitalized, in particular when that
rate is substantially higher than at other
peer facilities and may not be explained
by variation in the illness of patients.
We do acknowledge that care provided
by dialysis facilities is not the sole
determinant of the hospitalization of
ESRD patients and this measure would
not support the assertion that they are.
The SHR is only shown for patients
with at least 5 patient years at risk,
which corresponds to approximately 10
expected hospitalizations. The
confidence interval for the SHR will
also be reported on DFC to show the
uncertainty in the value due to random
variation, which will help to address the
issue of limited data for the SHR. We
appreciate these suggestions and will
take them into consideration as we
further assess the appropriateness of
adopting the SHR measure for the ESRD
QIP.
Comment: Some commenters strongly
support using the 72x claims as
indicators of risk factors for facilities
and patients. One commenter suggested
that this information could be used in
creating an access to care measure/
adjustment in the future. Other
commenters, however, believe that
reporting comorbidities on the 72x
claim could be a huge administrative
burden for facilities, including time
associated with validating that the data
they submit on these claims is valid.
Response: We recognize that reporting
co-morbidities on 72x claims could be
burdensome to some facilities. We
believe, however, that this information
is valuable, specifically in the context of
future measure development. We will
continue to assess the best means
available for risk-adjustment for both
the SHR and SMR measures, taking both
the benefits of the information and the
burden to facilities into account, should
we propose to adopt these measures in
future rulemaking.
Comment: One commenter argued
that SHR is not a measure whereby
facilities can make meaningful
improvement because the measure’s
rates cannot be calculated in real-time;
the commenter asked that claims be
made available to the facility in a timely
manner if the measure is adopted so that
they can become aware of

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hospitalizations and other comorbidities and calculate their SHR in
real-time.
Response: We will consider this
suggestion if we decide to propose to
adopt the SHR measure for the ESRD
QIP in future rulemaking.
Comment: One commenter noted that
the SHR measure should be at least a
two to three year measure as 1 year of
data is not sufficient for an accurate
assessment.
Response: We recognize that the NQFspecifications call for a measurement
period that is longer than 1 year, and we
continue to assess how to implement
such an extended measure period
effectively in the ESRD QIP if we
propose to adopt the SHR measure in
future rulemaking.
Comment: Many commenters opposed
the use of SMR in future years for
reasons similar to that of SHR.
Commenters expressed concern that the
measure could lead to cherry-picking
and is not transparent enough for
facilities to make improvements in this
area because of they are confused about
the risk-adjustment methodology. Other
commenters stated that the measure
needs further refinement and validation,
specifically regarding risk adjustment
for frail patients such as those in
nursing homes, cultural factors,
socioeconomic factors, and health
factors specific to the ESRD population.
Commenters asked that these adjusters
be made public. One commenter
believes that this measure would create
a bias for facilities on the basis of
location. Another commenter argued
that the measure should only account
for catheter/dialysis complications and
should not include ‘‘sudden deaths.’’
One commenter stated that literature
suggests that the measure is invalid in
small facilities and only valid in large
facilities when averaged over several
years. Some commenters suggested that,
instead of implementing this measure,
CMS consider a coordinated care model.
Other commenters requested that we
adopt a pilot for this measure wherein
only aggregate data is reported until the
measures can be further assessed and
validated.
Response: We thank the commenters
who shared concerns and provided
suggestions regarding the future
consideration of the SMR for
implementation in the ESRD QIP. We
will continue to consider these
suggestions as we decide whether to
propose to adopt the SMR measure. In
the DFR, we limit reporting to facilities
with at least 3 expected events for the
time period. Similarly, we only
calculated SHR based on at least 5
patient years at risk, which corresponds

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to approximately 10 expected
hospitalizations. We incorporated these
limitations on the measures to account
for potentially imprecise estimates
resulting from small facility size.
Comment: One commenter stated that
the SMR measure should not be adopted
until CMS can articulate how it fits into
the ESRD QIP’s strategic vision.
Response: While we recognize that
the ESRD population is at high risk for
mortality by definition, we believe that
mortality rates are susceptible to the
quality of care provided by dialysis
facilities. We believe the SMR may help
distinguish the quality of care offered by
dialysis facilities as determined by
mortality, a key health care outcome
used to assess quality of care in other
settings, such as hospitals. We believe
the SMR may also fill an important gap
in the ESRD QIP by assessing the
outcome of all ESRD care provided at
the dialysis facilities, rather than
individual processes of care. For these
reasons, we will continue to consider
the inclusion of the SMR in future
rulemaking cycles.
Comment: Many commenters strongly
supported the consideration of SMR for
future program years, noting that death
is the most important measurement of
negative outcomes. One commenter
requested that we implement the
measure as soon as possible. One
commenter suggested that the measure
specifically focus on patients within
their first 90–120 days of dialysis since
these patients are generally more likely
to die. Commenters also supported
reporting measure rates on DFC
beginning in CY 2013.
Response: We thank commenters for
their support of this measure. At this
time, we do not believe it should be
included in the PY 2015 ESRD QIP due
to the concerns voiced by other
commenters. We will consider the
measure’s assessment of patients in
their first months of dialysis for future
rulemaking. Finally, we will begin
reporting the SMR measure rates on
DFC in 2013 and are attempting to
address potential shortcomings pointed
out by commenters that we described in
the CY 2012 ESRD PPS final rule (76 FR
70267) prior to proposing the measure
for ESRD QIP.
Comment: One commenter argued
that SMR is not a measure whereby
facilities can make meaningful
improvement because the measure’s
rates cannot be calculated in real-time;
the commenter asked that claims be
made available to the facility in a timely
manner if the measure is adopted so that
they can become aware of
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morbidities and may calculate their
SMR in real-time.
Response: We will consider this
suggestion if we decide to propose to
adopt the SMR measure for the ESRD
QIP in future rulemaking.
Comment: One commenter noted that
the SMR measure should be at least a
two to three year measure as 1 year is
not sufficient for an accurate
assessment.
Response: We recognize that the NQFspecifications call for a measurement
period that is longer than 1 year, and we
continue to assess how to implement
this measurement period effectively in
the ESRD QIP if we decide to propose
to adopt the SMR measure.
Comment: One commenter requested
clarification regarding whether the
facility’s rates would be compared to
current or past national averages when
assessing the number of expected
deaths.
Response: The SMR measure
estimates the relative death rate ratio for
a facility, as compared to the national
death rate. The relative death rate ratio
and the national results are all
determined during the same (current)
time period.
In response to comments, we will
continue to consider the SMR and SHR
measures for future years of the
program. We will, as proposed, begin
displaying the rates/ratios for these
measures on DFC beginning in early
2013.
5. Other Potential Future Measures
Under Development
As part of our effort to continuously
improve the ESRD QIP, we are working
on developing additional, robust
measures that provide valid assessments
of the quality of care furnished to ESRD
patients by ESRD facilities. Some areas
of measure development are discussed
below. In addition, we are considering
the feasibility of developing quality
measures in other areas such as kidney
transplantation, quality of life, health
information technology for quality
improvement at the point of care and
the electronic exchange of information
for care coordination, and transfusions.
We requested comment on these
potential areas of future measurement
and welcomed suggestions on other
topics for measure development.
The comments we received on these
proposals and our responses are set
forth below.
Comment: We received suggestions
for many future measures. These
included: (i) A CAHPS/experience of
care measure for home dialysis and predialysis patients; (ii) a measure
assessing catheter access site infections;

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(iii) a measure for adequate serum
albumin; (iv) a measure promoting
immunizations; (v) measures assessing
iron management; (vi) patient fluid
management measures; (vii) measures
incentivizing home hemodialysis; (viii)
an NHSN measure for home patients
that includes peritonitis; (ix) measures
that specifically monitor nursing
sensitive indicators; (x) a measure that
tracks which modalities a facility offers;
(xi) a measure that tracks whether a
facility exceeds the average percentage
of patients between 18 and 54 who are
employed; (xii) a measure that tracks
whether facilities have shifts after 5:00
p.m.; (xiii) an emergency department
use measure; (xiv) a measure on
transplantations/referrals; (xv) a
measure on dialysis adequacy for
frequent dialyzers; (xvi) measures on
phosphorus and PTH; (xvii) a composite
measure which takes into account the
interdependability of calcium,
phosphorus, and parathyroid hormone
in bone mineral metabolism; (xviii)
measures assessing quality of life; and
(xix) palliative care measures.
Response: We thank the commenters
for your comments regarding measure
implementation. We will take these
suggestions into consideration during
future measure development and
rulemaking.
Comment: Some commenters
specifically requested that we broaden
the use of pediatric measures in the
ESRD QIP. These commenters
recommended that we (i) develop (a) a
dialysis adequacy measure for
peritoneal pediatric patients and (b) a
CAHPS/experience of care measure for
pediatric patients; and (ii) consider the
following NQF-endorsed measures: (a)
Measure 1418: Frequency of Adequacy
Measurement for Pediatric
Hemodialysis Patients; (b) Measure
1421: Method of Adequacy
Measurement for Pediatric
Hemodialysis Patients; (c) Measure
1425: Measurement of nPCR for
Pediatric Hemodialysis Patients; (d)
Measure 1433: Use of Iron Therapy for
Pediatric Patients; and (e) 1424:
Monthly hemoglobin measurement for
Pediatric Patients.
Response: We thank the commenters
for suggesting additional measures
relevant to the pediatric portion of the
ESRD population for future
consideration in the ESRD QIP. We
recognize the importance of assessing
the quality of care furnished to pediatric
ESRD patients. To this end, we are
adopting in this final rule a measure of
pediatric hemodialysis adequacy for PY
2015. We will consider whether it is
appropriate to propose to adopt

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additional pediatric measures for the
ESRD QIP.
Comment: Some commenters
specifically discouraged us from
considering certain measures for future
ESRD QIP adoption. These included (i)
a quality of life measure, because no
research shows that facilities can
improve this aspect of patient life and
patients often refuse to take surveys;
and (ii) measures on electronic
information exchange because it is
unclear what these measures would
entail or how they could be carried-out.
Response: We appreciate the
comments and will take them into
consideration during future measure
development.
Comment: Many commenters
supported a measure on transfusions if
this measure assessed transfusions that
are within the control of ESRD facilities.
One commenter suggested that, before
the measure is adopted, we wait to see
the results of studies looking at when
transfusions are and are not within a
facility’s control. One commenter
requested clarification regarding where
CMS accesses transfusion data, whether
the information shows the underlying
reason for the transfusion, and the
timeframe for CMS’ access and analysis
of the data.
Response: We appreciate the
comments and will take them into
consideration during future measure
development.
Comment: Commenters also discussed
the general principles CMS should
embrace in future years of the program.
Commenters encouraged us to work
with the kidney care community to
adopt a strategic vision for the ESRD
QIP, specifically the criteria and process
for the adoption of measures and
domains. One commenter requested that
CMS and other stakeholders agree on
the timeline and process for future
measure development. Commenters also
urged us to provide the criteria used to
select measures, recommending the
NQF selection criteria, and engage the
Measures Application Partnership in
identifying measures to include in the
program and their weighting. In
selecting measures, commenters stated
that every measure should (i) have a
verified entity responsible to maintain
and update it at least once every three
years; and (ii) be fully and clearly
specified and tested for reliability and
validity. Commenters also
recommended that we phase measures
into the program, requiring reporting of
the measure outside of the ESRD QIP for
at least 1year, and once a measure is
added, we score facilities based on the
lesser of the facility’s performance or
the national performance rate, at least

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for the first year. One commenter stated
that all future measures should be NQFendorsed before they are adopted.
Another commenter noted that NQFendorsement does not mean a measure
is appropriate for the ESRD QIP.
Response: We remain dedicated to a
transparent, consensus-based measure
development process that offers
multiple opportunities for input from
stakeholders. The measure development
process that we currently use includes
using Technical Expert Panels and
public comment periods, seeking NQF
endorsement, providing measures to the
Measures Application Partnership for
feedback, and the rulemaking process in
which we respond to stakeholder
comments. We encourage continued
engagement by the kidney care
community in this process, both in
prioritizing additional measures,
supporting ongoing measure
development, and providing feedback
for currently implemented measures.
At present, we analyze all clinical
measures for validity and reliability,
and NQF endorsement is a key
consideration we take into account
when deciding whether to propose to
adopt clinical measures. Where
endorsed measures are not available to
address key issues relevant to the ESRD
population, we intend to consider
unendorsed measures until such
endorsed measures are available. We
agree that clinical measures should be
fully specified at the time they are
proposed.
We believe that, generally, it is
helpful to both the ESRD QIP
community and CMS to phase-in
measures as the commenter suggests.
We do not entirely understand the
comment stating that we should score
facilities based on the lesser of the
facility’s performance or the national
performance rate. We take this to mean
that we should use a scoring
methodology similar to PY 2012 and PY
2013 for new measures. At this time, we
believe the objectives of the program are
best served by scoring facilities using
the achievement and improvement
scoring methodology for the reasons
discussed below.
Comment: Some commenters support
additional measures but requested that
they be implemented no sooner than PY
2018 since CROWNWeb has just
launched and data collection would
likely be through CROWNWeb.
Response: We recognize that
CROWNWeb is a new data collection
system and plan to take that into
consideration while developing and
implementing ESRD QIP measures in
the future.

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Comment: In designing future years of
the ESRD QIP, commenters urged us to
focus on the most important measures
because adding measures could dilute
each measure’s weight in the calculation
of the Total Performance Score.
Response: We acknowledge the
commenter’s concern and note that we
will seek to balance appropriateness of
the measures, importance of the
measures, and parsimony as we
consider what measures to implement
through future rulemaking.
Comment: Some commenters made
broad suggestions about measure
adoption in the future, suggesting that
we use a phased approach for measure
implementation whereby the measures
would be reported outside of the ESRD
QIP for 1 year prior to adoption of the
measure in the ESRD QIP; commenters
argued that this reporting period will
allow us to set a proper baseline for
clinical measures.
Response: We thank commenters for
their suggestions. In general, we seek to
collect at least 1 year of data through
claims or CROWNWeb before adopting
a measure for the ESRD QIP. However,
we make this assessment on a case-bycase basis because of the importance of
timely implementation of some
measures (for example, measures that
directly affect patient safety). We will
continue to consider these issues as the
ESRD QIP evolves.
Comment: One commenter
encouraged us to improve the program
by maintaining a reasonable number of
measures in order to reduce
administrative costs and publicly
reporting quality measures on DFC.
Response: As the ESRD QIP evolves
from year-to-year, we seek to
continuously evaluate the effectiveness
of the measure set, burden to providers,
and clarity for beneficiaries.
a. Thirty-Day Hospital Readmissions
One of the major areas our VBP
programs seek to promote is care
coordination. Care coordination
measures assess caregivers not only on
the care directly under their control, but
also on their success in coordinating
care with other providers and suppliers.
Hospital readmission is often the
outcome of uncoordinated care. Care
coordination measures encourage
primary caregivers, ESRD facilities,
physicians, and hospitals to work
together to improve the quality of care.
A 30-day hospital readmissions measure
is a primary example of care
coordination. This measure is currently
under development for the ESRD QIP,
and we requested comment regarding
our use of such a measure in future
payment years.

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The comments we received on this
topic and our responses are set forth
below.
Comment: Commenters made many
suggestions with regard to a 30-Day
Readmissions measure. Some
commenters did not support the
adoption of this measure for the ESRD
QIP, arguing that facilities cannot
always control hospitalization, and
suggested that facilities would be better
suited to use this type of measure in a
coordinated care setting. One
commenter encouraged us to adopt this
measure in place of an SHR measure
because a 30-Day Readmission measure
is more likely to increase care
coordination and less likely to
encourage cherry-picking. One
commenter suggested that a 30-Day
Readmission measure include a grace
period of 10–14 days for which the
facility would not be held responsible,
preventing facilities from being
penalized if the patient received lowquality care in the hospital, and limiting
the possibility that facilities could turn
away patients who have recently been
hospitalized. This commenter also
pointed out that the hospital 30-Day
Readmissions measure does not include
ESRD patients and argued that hospitals
should be held responsible for
readmissions during the grace period
the commenter suggests. One
commenter requested that the
community be able to review the
findings of the Hospitalization TEP that
CMS held in May 2012 before this type
of measure is adopted.
Response: We appreciate the
comments regarding our consideration
of a 30-day readmission measure and
will take them into consideration in
future rulemaking. We note that it is our
policy to make publicly available the
results of measure development TEPs
through http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/MMS/
TechnicalExpertPanels.html.
b. Efficiency
One of the main goals of our VBP
programs is not only to enhance quality
of care but also improve efficiency in
providing that care. At present, we are
not aware of an efficiency measure that
is appropriate for the ESRD population.
We noted, however, that we were
interested in receiving comments
regarding this concept.
The comments we received on this
topic and our responses are set forth
below.
Comment: We received many
comments regarding our proposal of
developing and adopting an efficiency
measure in future years. Several

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commenters noted that an efficiency
measure is not necessary because of the
bundled payment. Many commenters
asked that, if such a measure is
developed, it be case-mix adjusted for
nursing home residents, homeless
patients, and drug and alcohol abuse to
discourage cherry-picking. One
commenter cautioned us to explore the
unintended consequences which may
result from this measure, and another
commenter requested that we engage in
more studies defining ‘‘efficiency’’
before we adopt a measure.
Response: We thank our commenters
for their input regarding the
consideration of an efficiency measure
for implementation in the ESRD QIP.
We will take these suggestions into
account as we develop measures for
future years of the ESRD QIP.
c. Population/Community Health
We are aware that unintended
consequences, specifically those
involving access to care, may result
from the ESRD QIP. To address these
concerns, we are currently monitoring
access to care and exploring the
development of new measures or
adjustments to existing measures that
would mitigate the unintended
consequences and/or incentivize
facilities caring for patients who may,
generally, contribute to lower facility
measure rates. We requested comment
on developing such a measure or
adjustments to measures, specifically
with regard to access to care issues.
The comments we received on this
topic and our responses are set forth
below.
Comment: Many commenters
provided feedback on a possible access
to care measure. Some commenters
encouraged the development of such
measures. Many of these commenters
suggested that, instead of creating a
measure to assess access to care, we
develop comorbidity adjustments for
quality measures that would ease
facilities’ concerns about treating these
patients. Commenters who serve aging
patients with multiple comorbidities
believe there needs to be further
consideration for facilities caring for
these types of patient populations.
Other commenters noted that present
and future measures should exclude
homeless patients, nursing home
patients, and patients with
comorbidities of drug/alcohol abuse and
mental health issues to protect access to
care for these patients. Several
commenters believe that care
coordination is important but is not
practical due to data timing issues and
knowledge of staff; these commenters
suggested that CMS fund additional staff

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and technology prior to implementing
care coordination measures. One
commenter suggested that we analyze
the following factors when assessing
access to care: (i) Miles traveled to
facility; (ii) time required to commute to
facility; and (iii) method of
transportation/responsible party.
Response: We thank the commenters
for expressing interest in addressing the
issue of access to care. We are sensitive
to the particular role access to care can
play for ESRD patients, and the
limitations encountered in collecting
relevant data. Clinical measures
assessing mortality and hospitalization
in the ESRD population were proposed
in the PY 2014 ESRD QIP, and we have
incorporated risk adjustment for
comorbidities in the specifications for
these measures, but it is not clear to us
how effectively this risk-adjustment can
address problems with access. Factors
such as distance traveled are not
captured by claims data. We believe that
exclusion of the suggested groups
(homeless, nursing home patients, etc.)
from quality measures may protect
access for these groups, but would fail
to adequately address issues for quality
of care in those patients who are most
at risk for poor health outcomes. We are
also concerned that such exclusions
may excuse facilities from taking steps
toward more effective coordination of
care. We respectfully disagree that care
coordination is not practical. Rather, we
believe it is a vital element of care for
a population that is by definition at
particular risk for transitions into and
out of care settings such as acute care
hospitals. It is particularly important for
those patients who reside in long-term
care facilities such as nursing homes, or
who must seek care for chronic
conditions related to mental health
issues or drug/alcohol abuse to receive
care that is coordinated since these
individuals often receive extensive care
from various types of providers.
6. Scoring Background and General
Considerations for the PY 2015 ESRD
QIP
Section 1881(h)(3)(A)(i) of the Act
requires the Secretary to develop a
methodology for assessing the total
performance of each facility based on
the performance standards established
with respect to the measures selected for
the performance period. For the PY
2014 ESRD QIP, we adopted a
performance scoring methodology that
assessed facilities on both their
achievement and improvement on
clinical measures. We stated that we
believe that this scoring methodology
will more accurately reflect a facility’s
performance on the measures because it

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will enable us to differentiate between
facilities that simply meet the
performance standards, those that
exceed the performance standards by
varying amounts, and those that fall
short of the performance standards. We
also stated that we believe that the PY
2014 methodology appropriately
incentivizes facilities to both achieve
high Total Performance Scores and
improve the quality of care they provide
(76 FR 70272). We believe that the
methodology set forth for PY 2014
continues to incentivize facilities to
meet the goals of the ESRD QIP;
therefore, with the exception of the
proposed changes in the proposed rule
(77 FR 40976), we proposed to adopt a
scoring methodology for the PY 2015
ESRD QIP that is nearly identical to the
PY 2014 ESRD QIP.
The comments we received on this
proposal and our responses are set forth
below.
Comment: Several commenters
supported our proposal to use the PY
2014 scoring methodology in the PY
2015 ESRD QIP.
Response: We thank commenters for
their support. We will finalize our
proposals to use the PY 2014 scoring
methodology for use in the PY 2015
program with the modifications
discussed below. We believe that these
modifications improve the efficacy of
the program for the reasons discussed.
7. Performance Period for the PY 2015
ESRD QIP
Section 1881(h)(4)(D) of the Act
requires the Secretary to establish the
performance period with respect to a
year. For the PY 2014 ESRD QIP, we
finalized a performance period of CY
2012. We stated that we believe that, at
this point, a 12-month performance
period is the most appropriate for the
program because this period accounts
for any potential seasonal variations that
might affect a facility’s score on some of
the measures, and also provides
adequate incentive and feedback for
facilities and Medicare beneficiaries (76
FR 70271). We continue to believe that
a 12-month performance period will
best meet these policy objectives, and
we considered what 12-month period
would be closest in time to the payment
year but would still allow us to time to
operationalize the program, calculate
scores, and allow facilities a period of
time to preview and ask questions
regarding these scores before they are
published and impact payment. We
determined that CY 2013 is the latest
period of time during which we can
collect a full 12 months of data and still
implement the payment reductions
beginning with January 1, 2015 services.

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Therefore, for the PY 2015 ESRD QIP,
we proposed to establish CY 2013 as the
performance period for all of the
measures. We requested comments on
this proposal.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Commenters supported our
proposal to use CY 2013 as the
performance period for the PY 2015
ESRD QIP; some commenters
specifically supported a performance
period that allows us to set standards
before the performance period begins.
Some commenters, while supporting
this performance period, cautioned us
against using data from CROWNWeb
from this period since CY 2013 will be
the first full year CROWNWeb is
implemented.
Response: We thank commenters for
their support. We note that, because we
are not finalizing the Hypercalcemia
measure, we are no longer using data
from CROWNWeb for purposes of
scoring any clinical measure for the PY
2015 ESRD QIP. For purposes of the PY
2015 ESRD QIP, we will be using
CROWNWeb to collect data only for the
Mineral Metabolism reporting measure.
We believe that this is appropriate since
facilities will only be required to report
data, but will not be scored based on
these data for PY 2015. We believe that
CROWNWeb is sufficiently
implemented to allow successful
reporting for CY 2013. We will continue
to assess the appropriateness of
CROWNWeb data for inclusion for
purposes of clinical measures in the
ESRD QIP.
Comment: Many commenters asked
us to shorten the data lag between the
performance period and the payment
reduction/public reporting of the data so
that the data can remain relevant.
Commenters suggested that
CROWNWeb could be used to reduce
these data lag.
Response: For PY 2015, we have
determined that data derived from
claims is the most appropriate source on
which to score facilities on clinical
measures because this source is the
most complete and representative of the
greatest number of facilities. Because
claims take more time to compile and
calculate than other data sources to
ensure reliability, there is a lag between
the time when the claims are submitted
for processing and the time that the
claims become available to calculate
ESRD QIP measure rates. We also
believe it is important to allow facilities
a period of time to review their scores
before the payment adjustments take
place. We are considering how we might
be able to shorten this timeline in the

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future. We believe that CROWNWeb
will be valuable in this effort once it has
been successfully launched for a period
of time, and we are confident that the
data submission and validity issues
have been resolved.
Comment: One commenter suggested
that we consider employing rolling 12month performance periods with
payment updated quarterly.
Response: At this time, we are not
able to implement a rolling 12-month
performance period that is updated on
a quarterly basis because we do not have
the systems or resources in place to
calculate scores, answer inquiries, and
provide Performance Score Certificates
more than once per year. We will,
however, continue to consider this
suggestion as the ESRD QIP evolves.
For the reasons stated above, we
finalize CY 2013 as the performance
period for the PY 2015 ESRD QIP as
proposed.
8. Performance Standards for the PY
2015 ESRD QIP
Similar to the PY 2014 ESRD QIP, we
proposed to adopt performance
standards for the PY 2015 ESRD QIP
measures under section 1881(h)(4)(A) of
the Act. This section provides that ‘‘the
Secretary shall establish performance
standards with respect to measures
selected * * * for a performance period
with respect to a year.’’ Section
1881(h)(4)(B) of the Act further provides
that the ‘‘performance standards * * *
shall include levels of achievement and
improvement, as determined
appropriate by the Secretary.’’ We use
the performance standards to establish
the minimum score a facility must
achieve to avoid a payment reduction.
a. Clinical Measure Performance
Standards
With respect to the seven proposed
clinical measures, we proposed to set
the PY 2015 improvement performance
standard and achievement performance
standard (collectively, the ‘‘performance
standard’’) for each measure at the
national performance rate (which we
would define as the 50th percentile) of
all facilities’ performance on the
measure during CY 2011 (the proposed
comparison period—discussed in more
detail below).
For the PY 2014 ESRD QIP, we set the
performance standards at the national
performance rate during a baseline
period of July 1, 2010–June 30, 2011.
This period of time, however, did not
allow us to publish the numerical
values for the performance standards
concurrently with the final rule because
of the length of time needed for us to
compile claims-based measure data at

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the individual facility level and
calculate the measure rates. Instead, we
included an estimate of the numerical
values for the performance standards in
the final rule, using nine months of
data, and posted the numerical values of
the performance standards based on the
full 12 months of data on http://
www.dialysisreports.org/pdf/esrd/
public-measures/UpdatedBaseline2014–FR.pdf by the end of December
2011. In order to ensure that we have
enough time to calculate and assign
numerical values to the proposed
performance standards for the PY 2015
program, we proposed to set the
performance standards based on the
national performance rate (that is, the
50th percentile) of facility performance
in CY 2011. We noted that by choosing
this time period for PY 2015, however,
the data on which we base the
performance standards would only
capture 6 months of more recent data
when compared to PY 2014 and would
also overlap with 6 months of the data
used to calculate the PY 2014
performance standards. We stated our
concern that if we finalize this period of
time, we would not be adequately
addressing stakeholder requests that we
take steps to minimize the length of
‘‘data lag’’ between the dates used to
calculate the performance standards and
the payment year. We recognized that
stakeholders might prefer that we base
performance standards on data as close
in time to PY 2015 as possible.
We stated that the period of time
closest to the payment year that would
allow us to post the numerical values
for the performance standards before the
end of the first month of the
performance period is parallel to that of
PY 2014, from July 1, 2011 through June
30, 2012. As with PY 2014, selecting
this time period for purposes of
calculating numerical values for the
performance standards would not allow
us to publish these numerical values
until late 2012 or early 2013, which is
closer in time and may possibly be
during the performance period.
However, as in PY 2014, we would still
be able to provide estimates for the
numerical values of the performance
standards at the time of final rule
publication and post the actual numbers
as soon as they are available in
December 2012 or January 2013.
Based on these considerations, we
proposed CY 2011 as the basis for the
performance standards (that is, the
national performance rates). We did,
however, request comment concerning
whether we should instead use data
closer in time to the payment year and
set the performance standards using July
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For two of the PY 2015 measure
topics, Kt/V Dialysis Adequacy and
Hypercalcemia, we noted that we do not
possess data for the entirety of CY 2011,
the year on which we proposed to base
the performance standards. We did not
begin collecting uniform data on the Kt/
V hemodialysis adequacy measure until
January 1, 2012 (see Change Request
7460), and, under the conditions for
coverage, facilities were not required to
report serum calcium values that will be
used to calculate the Hypercalcemia
clinical measure until their submission
of May, 2012 data with the June 2012
national implementation of
CROWNWeb. Despite these issues, we
stated that we do have data on which
we can base performance standards. We
noted that although facilities are not yet
required to report serum calcium levels,
approximately 63 percent of facilities,
which treat approximately 80 percent of
the Medicare ESRD patient population,
have been voluntarily reporting these
data via CROWNWeb piloting since July
2008. Additionally, we compared the
serum calcium values reported by
facilities in 2010 as part of a clinical
data reporting program called ELab,6 to
values that have been voluntarily
reported by facilities in 2010 through
CROWNWeb, and the values are
significantly similar. We stated our
belief that these similarities will also
extend to data reported in 2011.
Therefore, we proposed to calculate
performance standards for the
Hypercalcemia measure using the data
that we collected via CROWNWeb Pilots
collected during CY 2011.
Uniform Kt/V reporting for
hemodialysis patients did not begin
until January 1, 2012 (CR 7640). Before
this time, facilities could use a number
of different methodologies to calculate
Kt/V values, with the result that the
values could be different depending on
which methodology was used. We
stated in the proposed rule that we have
analyzed the data collected during the
CROWNWeb pilot and found that 88
percent of facilities that reported to
CROWNWeb had reported Kt/V values
using a NQF specified calculation
method (this method is also specified in
Change Request 7640) that yields
consistent results and that is part of the
specifications for each of the
hemodialysis Kt/V measures that we
proposed to adopt for the PY 2015
program. Though we are not able to tell
what calculation method a facility used
by reviewing a claim, we believe it is
reasonable to assume that roughly the
same percentage of facilities reported
Kt/V on their claims prior to 2012 using
6 http://www.esrdnet11.org.

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the same formula that they used to
report it under the CROWNWeb pilot.
For this reason, we proposed to
calculate the performance standards for
the three proposed Kt/V measures using
CY 2011 claims data. This is the best
data we have available at this time to set
reliable performance standards for Kt/V.
We stated that we understand that
stakeholders may be concerned about
the nuances of the data and we invited
public comment on this proposal.
We noted that if, after consideration
of the comments, we decided to not
adopt the adult, hemodialysis Kt/V
measure for PY 2015, we would
continue to use URR as a measure of
hemodialysis adequacy for this
population. We also noted that the NQFendorsed measure for Kt/V measure for
peritoneal dialysis adequacy does not
specify the body surface area formulae
or the total body water formulae to
utilize; and we would accept the
submission of peritoneal adequacy Kt/V
values that utilize the methods currently
in use as industry standards. We believe
it is important to include peritoneal
dialysis patients in the ESRD QIP and
we solicited comments on the inclusion
of the peritoneal dialysis Kt/V adequacy
measure. We proposed that, were we to
retain the URR measure for adult
hemodialysis, we would still adopt the
Kt/V peritoneal dialysis measure. We
proposed that these measures would
still comprise a Dialysis Adequacy
measure topic and would be scored in
the same manner as we proposed for the
Kt/V measures, below.
Even with the challenges outlined
above, we believed that the advantages
of adopting the Kt/V hemodialysis
measure for PY 2015 outweigh the
disadvantages. Therefore, we proposed
Kt/V as the measure for hemodialysis
adequacy for PY 2015, but we
specifically solicited comments
regarding whether we should continue
to use URR for adult hemodialysis
patients for PY 2015.7
We also considered calculating
performance standards for the Kt/V
Dialysis Adequacy measure topic based
on data from January 1, 2012–June 30,
2012, to ensure that the data was
calculated consistently. We are,
however, aware that a shortened data
period may affect the measure rates’
reliability. Therefore, we proposed to
calculate performance standards based
7 Note that, as further explained below, the issue
we have discussed with respect to the reporting of
Kt/V values prior to CY 2012 would not be an issue
for the calculation of improvement scores because
we proposed CY 2012 as the period used to
calculate the improvement threshold; beginning
January 1, 2012, all facilities are required to report
Kt/V uniformly on their claims.

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on the data from CY 2011 discussed
above, but we invited comment on an
alternative 6 month period beginning on
or after the date on which uniform
reporting began, January 1, 2012.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Many commenters agreed
with our proposal to use CY 2011 as the
comparison period for purposes of
calculating the performance standards
because this period will allow facilities
to view these standards when the final
rule is published. Others, however,
expressed support for using data from
July 1, 2011–June 30, 2012 to calculate
the performance standards because this
period is closest in time to the
performance period. Some commenters
did not have a preference for the
comparison period, but requested that
we be consistent in the time periods we
choose. Many commenters suggested
that, regardless of the time period, we
do not use CROWNWeb data to
calculate performance standards
because the data in CROWNWeb from
this time period is largely from large
dialysis organizations (LDOs).
Response: Although we appreciate
that July 1, 2011–June 30, 2012 is closer
in time to the performance period, we
believe that it will be more beneficial to
facilities if they are familiar with the
performance standards against which
their performance will be evaluated
before the performance period begins.
We will continue to evaluate whether it
will be feasible in the future to adopt
performance standards using data from
a period closer in time to the
performance period and also make those
standards public before the beginning of
the performance period. Additionally,
as we stated above, we will not be
finalizing the Hypercalcemia measure
for PY 2015. All of the other clinical
measures we are adopting for PY 2015
are claims-based, and we can set the
performance standards for those
measures without using CROWNWeb
data.
Comment: One commenter expressed
concern that the standards are too rigid
and we expect perfection.
Response: We believe that the
standards that we are setting are
appropriate. It is the past performance
of facilities nationally which determine
the performance standards; thus, ESRD
facilities have demonstrated their ability
to achieve these standards.
Additionally, to avoid a payment
reduction, facilities need only meet the
minimum Total Performance Score. As
discussed below, a facility need not
have a perfect score on all, or any, of the
measures to meet this minimum.

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Furthermore, we believe it is important
to incentivize the best care possible.
For these reasons, we finalize our
proposal to establish performance
standards for the PY 2015 ESRD QIP
clinical measures at the 50th percentile
of national performance during CY
2011. The numerical values for the
performance standards are set forth
below in Table 5.
b. Performance Standards

measure and the Vascular Access Type
measure topic) have not declined.
Therefore, for PY 2015, we will use the
performance standards in the above
table. If we discover that performance
on any of the measures is declining in
future years, we also intend to
investigate the precipitating causes and
modify the ESRD QIP as necessary to
ensure high quality care for
beneficiaries.
c. Performance Standards for the PY

TABLE 5—FINALIZED NUMERICAL VAL- 2015 Reporting Measures
UES FOR THE PERFORMANCE STANDWe established the performance
ARDS FOR THE PY 2015 ESRD QIP standards for the reporting measures for
PY 2014 based upon whether facilities
CLINICAL MEASURES
met certain reporting requirements
rather than achieved or improved on
Measure
specific clinical values. We proposed to
establish the same performance
Hemoglobin > 12 g/dL ..........
1 standard for the ICH CAHPS reporting
Vascular Access Type .......... ........................ measure for PY 2015 that we established
% Fistula ...........................
60 for PY 2014. Under this proposed
% Catheter ........................
13 performance standard, facilities would
Kt/V
........................ be required to provide an attestation
Adult Hemodialysis ...........
93 that they successfully administered the
Adult, Peritoneal Dialysis ..
84 ICH CAHPS survey via a third party in
Pediatric Hemodialysis ......
93
accordance with the measure
specifications. We proposed that this
In accordance with our statements in
attestation must be completed in
the CY 2012 ESRD PPS final rule (76 FR
CROWNWeb by January 31, 2014.
70273), if the final numerical values for
For the NHSN Dialysis Event
the PY 2015 performance standards are
reporting measure, we proposed to set
worse than PY 2014 for a measure, we
the performance standard as
proposed to substitute the PY 2014
successfully reporting 12 months of data
performance standard for that measure.
from CY 2013. If a facility has not yet
We stated our belief that the ESRD QIP
enrolled and trained in the NHSN
should not have lower standards than
dialysis event system, we proposed that
previous years. We requested comments the performance standard for that
on this proposal.
facility would also include completion
The comments we received on these
of these requirements.
proposals and our responses are set
For the Mineral Metabolism reporting
forth below.
measure, we proposed to set the
Comment: One commenter did not
performance standard as successfully
support our proposal to keep
reporting serum phosphorus and
performance standards at least as high
calcium values for all qualified patients
as they were the previous year and
for 12 months.
suggests that we, instead, investigate
For the Anemia Management
why a performance standard would
reporting measure we proposed to set
drop. Another commenter agreed with
the performance standard as
our proposal and stated that the only
successfully reporting hemoglobin or
reason that performance standards
hematocrit and ESA dosage (if
should be lower than they were the
applicable) for all qualified patients for
previous year is if we discover a major
12 months.
technical issue with the previous year’s
We requested comment on these
standards, such as that the performance proposals. We did not receive any
standards were miscalculated.
comments on these proposals. We will,
Response: We believe it is important
therefore, finalize the reporting measure
to encourage improvement as the ESRD
performance standards as proposed.
QIP evolves to ensure that beneficiaries
9. Scoring for the PY 2015 ESRD QIP
continue to receive quality care at
Measures
achievable levels. Therefore, we will
finalize our proposal to utilize previous
In order to assess whether a facility
years’ performance standards if they are has met the performance standards, we
higher than those of the next year. The
finalized a methodology for the PY 2014
performance standards for the measures program under which we separately
used in previous years of the ESRD QIP
score each clinical and reporting
(the Hemoglobin Greater than 12 g/dL
measure. We score facilities based on an

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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations
achievement and improvement scoring
methodology for purposes of assessing
their performance on the clinical
measures. Under the PY 2014 ESRD QIP
scoring methodology, a facility’s
performance on each of the clinical
measures is determined based on the
higher of (i) an achievement score or (ii)
an improvement score (76 FR 70273).
We proposed to use a similar
methodology for purposes of scoring
facility performance on each of the
clinical measures for the PY 2015 ESRD
QIP.
As in PY 2014, in determining a
facility’s achievement score for the PY
2015 program, we proposed that
facilities would, based on their
performance in CY 2013 (the proposed
performance period), receive points
along an achievement range, which we
would define as a scale that runs from
the achievement threshold to the
benchmark. We proposed to define the
achievement threshold for each of the
proposed clinical measures as the 15th
percentile of national facility
performance during CY 2011. We stated
our belief that this achievement
threshold will provide an incentive for
facilities to continuously improve their
performance while not reducing the
incentives to facilities that score at or
above the national performance rate for
the clinical measures (76 FR 70276). We
proposed to define the benchmark as the
90th percentile of the national facility
performance during CY 2011 because it
represents a demonstrably high but
achievable standard of excellence that
the best performing facilities reached.
We further proposed that, for the
proposed Kt/V Dialysis Adequacy
measures and the proposed
Hypercalcemia measure, we would use
the same data we proposed above to
calculate the performance standards for
purposes of calculating the achievement
thresholds and the benchmarks for these
measures. We requested comment on
these proposals.
In determining an improvement score
for the clinical measures, we proposed
that facilities would receive points
along an improvement range, defined as
a scale running between the
improvement threshold and the
benchmark. We proposed to define the
improvement threshold as the facility’s
rate on the measure during CY 2012.
The facility’s improvement score would
be calculated by comparing its
performance on the measure during CY
2013 (the proposed performance period)
to its performance on the measure
during CY 2012. We proposed to base
the improvement threshold on data from
CY 2012 rather than CY 2011 (the
period of time we had proposed to use

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to calculate the performance standards,
achievement thresholds, and
benchmarks) because, as we explained
above, we do not have complete facility
level CY 2011 data that we can use to
calculate an improvement threshold for
every facility on the Kt/V Dialysis
Adequacy measures. Rather than
proposing to adopt a policy under
which no facility could receive an
improvement score on these measures,
we proposed to use data from CY 2012
to calculate the improvement
thresholds. Additionally, we stated our
belief that by using CY 2012 to calculate
the improvement thresholds, we will
more closely align timing of the
payment reduction with the period of
time we use to calculate improvement
thresholds. We requested comments on
our proposal to use data from CY 2012
to calculate improvement thresholds.
When considering the time period we
would use to calculate improvement
thresholds, we sought to mitigate data
lag issues as much as possible by
selecting a period in time as close as
possible to the performance period.
However, to entirely mitigate this data
lag, we also considered a period that
would take place during the
performance period. Using this
approach, to calculate an improvement
score, we would derive an improvement
threshold from either the first quarter of
CY 2013 or the first 6 months of CY
2013 and compare it to the facility’s
measure rate in the last quarter of CY
2013 or the last 6 months of CY 2013,
respectively. We ultimately decided to
not propose this approach because,
when possible, we prefer to use 12
months of data to calculate measure
rates to ensure more reliable rates,
particularly for low-volume facilities.
Additionally, using this approach, part
of the performance period for purposes
of calculating the facility’s performance
rate and achievement score (all of CY
2013) could overlap with the data we
use to calculate the improvement
threshold (first quarter or 6 months of
CY 2013). Although we proposed to
calculate improvement thresholds based
on data from CY 2012, we also
requested comment regarding use of
these alternative periods for purposes of
calculating the improvement thresholds.
The comments we received on these
proposals and our responses are set
forth below.
Comment: One commenter stated that,
to foster continued improvement, we
should consider raising the achievement
threshold over time to a level greater
than 15 percent.
Response: We believe that, at this
time, it is appropriate to set the
achievement threshold at the 15th

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67503

percentile so that lower-performing
facilities are incentivized to provide
high quality care; if the thresholds are
set too high, it is possible that a facility
would not be incentivized to perform
well because the cost to meet the
achievement threshold would be so high
that it would outweigh the overall loss
of revenue resulting from the ESRD QIP
payment reduction. Although we do not
believe we should award lowperforming facilities a large number of
points, we do believe it is important to
set the standards to incentivize all
facilities to perform better.
Comment: One commenter suggested
that we rename the achievement
threshold the ‘‘Statistical Performance
Floor’’ because ‘‘achievement’’ seems
misleading if the floor is set at the 15th
percentile. This commenter also
recommended that the facility
performance rate be renamed the
‘‘Facility’s Current Year Performance
Rate,’’ the benchmark be renamed the
‘‘Exceptional Performance Rate’’ since it
is at the 90th percentile, and the
performance standard be renamed the
‘‘National Average/Median Performance
Rate in the Base Year.’’
Response: One of the ways we can
make the ESRD QIP transparent is by
seeking to achieve consistency from
year-to-year, provided there is not a
contravening interest. Changing the
terminology of the achievement
threshold, performance rate,
performance standards, and benchmark
could unnecessarily confuse both
facilities and beneficiaries.
Additionally, we seek to harmonize
CMS’ value-based purchasing programs
as much as possible, and we use these
naming conventions across programs.
Comment: Several commenters argued
that we are creating inconsistencies
between the Conditions for Coverage
(CfCs) and the ESRD QIP; these
commenters specifically argued that the
CfCs state that a facility cannot be
penalized for patient non-compliance,
but many of the ESRD QIP measures
effectively penalize facilities for patient
non-compliance. The commenter
suggested that we make allowances for
patient noncompliance in the ESRD
QIP’s design; one commenter
specifically recommended that we
should require only 90 percent
compliance from patients that visit the
facility at least seven times per month
to reconcile the CfCs and the ESRD QIP.
Response: We do not believe that we
are creating inconsistencies between the
CfCs and the ESRD QIP, nor do we
believe that the ESRD QIP penalizes
facilities for patient non-compliance.
Although patients’ compliance with the
plan of care is a factor in some of the

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measures, the quality of care is largely
controlled by the facility’s treatment of
patients. Additionally, to the extent that
patient non-compliance may be a factor,
facilities are not required to obtain
perfect results for every patient. To
avoid a payment reduction, as we
explain below, a facility need only meet
the performance standards (that is, the
50th percentile of national performance)
for each clinical measure during the
comparison period (for PY 2015, this
will be CY 2011) and score half of the
possible points for the reporting
measures.
Comment: Commenters agreed with
our proposal to use the facility’s rate in

CY 2012 to calculate improvement
thresholds.
Response: We thank the commenters
for their support.
Comment: One commenter suggested
that the improvement threshold be
renamed the ‘‘Facility’s Base Year
Performance Rate’’ since the
improvement threshold does not
represent a gain or level of
improvement.
Response: As noted above, we believe
it is important to use consistent
terminology from year-to-year to ensure
transparency and comprehension in
both the ESRD QIP and across CMS’
VBP programs.

For the reasons discussed above, we
finalize our proposed definitions of the
achievement thresholds, benchmarks,
and improvement thresholds. We have
calculated the numerical values for the
achievement threshold and benchmarks
based on data from CY 2011; we will
calculate the numerical values for the
improvement thresholds based on
individual facilities’ data from CY 2012.
The numerical values for the
achievement thresholds and
benchmarks for the PY 2015 ESRD QIP
clinical measures are set forth below in
Table 6.

TABLE 6—FINALIZED NUMERICAL VALUES OF ACHIEVEMENT THRESHOLDS AND BENCHMARKS FOR THE PY 2015 ESRD
QIP CLINICAL MEASURES
Achievement
threshold
(percent)

Measure

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Hemoglobin > 12 g/dL .............................................................................................................................................
Vascular Access Type:
% Fistula ...........................................................................................................................................................
% Catheter ........................................................................................................................................................
Kt/V:
Adult Hemodialysis ...........................................................................................................................................
Adult, Peritoneal Dialysis ..................................................................................................................................
Pediatric Hemodialysis .....................................................................................................................................

In accordance with our statements in
the CY 2012 ESRD PPS final rule (76 FR
70273), if the final PY 2015 numerical
values for the achievement thresholds
and benchmarks are worse than PY 2014
for a measure, we proposed to substitute
the PY 2014 achievement thresholds
and benchmarks for that measure. We
believe that the ESRD QIP should not
have lower standards than previous
years. We requested comments on this
proposal.
The comments we received on these
proposals and our responses are set
forth below.
Comment: One commenter did not
support our proposal to keep
achievement thresholds and
benchmarks at least as high as they were
the previous year and suggests that we,
instead, investigate why these values
would drop. Another commenter agreed
with our proposal and stated that the
only reason that performance standards
should be lower than they were the
previous year is if we discover a major
technical issue with the previous year’s
standards, such as that the performance
standards were miscalculated.
Response: We believe it is important
to encourage improvement as the ESRD
QIP evolves to ensure that beneficiaries
continue to receive quality care at
achievable levels. Therefore, we will
finalize our proposal to utilize previous

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years’ achievement threshold and
benchmarks if they are higher than
those of the next year. The achievement
thresholds and benchmarks for the
measures used in previous years of the
ESRD QIP (the Hemoglobin Greater than
12 g/dL measure and the Vascular
Access Type measure topic) have not
declined. Therefore, for PY 2015, we
will use the performance standards in
the above table. If we discover that
performance on any of the measures is
declining in future years, we also intend
to investigate the precipitating causes
and modify the ESRD QIP as necessary
to ensure high quality care for
beneficiaries.
a. Scoring Facility Performance on
Clinical Measures Based on
Achievement
We proposed to award between 0 and
10 points for each of the clinical
measures. As noted, we proposed that
this score be based upon the higher of
an achievement or improvement score
on the measure. For purposes of scoring
achievement for the measures, we
proposed to base the score on where a
facility’s performance falls relative to
the achievement threshold and the
benchmark for that measure. We
proposed that, identical to PY 2014, if
a facility’s measure rate during the
performance period is:

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Benchmark
(percent)

5

0

47
22

75
5

86
63
83

97
94
97

• Equal to or greater than the
benchmark, the facility would receive
10 points for achievement;
• Less than the achievement
threshold, the facility would receive 0
points for achievement; or
• Equal to or greater than the
achievement threshold, but below the
benchmark, the following formula
would be used to derive the
achievement score:
[9 * ((Facility’s performance period
rate—achievement threshold)/
(benchmark—achievement threshold))]
+ .5, with all scores rounded to the
nearest integer, with half rounded up.
Using this formula, a facility would
receive a score of 1 to 9 points based on
a linear scale disturbing all points
proportionately between the
achievement threshold and the
benchmark so that the interval in
performance between the score needed
to receive a given number of
achievement points and one additional
achievement point is the same
throughout the range of performance
from the achievement threshold to the
benchmark.
b. Scoring Facility Performance on
Clinical Measures Based on
Improvement
We proposed that facilities would
earn between 0 and 9 points for each of

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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations
the clinical measures based on how
much their performance on the measure
during CY 2013 improved from their
performance on the measure during CY
2012. A unique improvement range for
each measure would be established for
each facility. We proposed that if a
facility’s measure rate during the
performance period is:
• Less than the improvement
threshold, the facility would receive 0
points for improvement; or
• Equal to or greater than the
improvement threshold, but below the
benchmark, the following formula
would be used to derive the
improvement score:
[10 * ((Facility performance period
rate—Improvement threshold)/
(Benchmark—Improvement
threshold))]—.5, with all scores rounded
to the nearest integer, with half rounded
up.
We note that if the facility’s score is
equal to or greater than the benchmark,
it would receive 10 points on the
measure per the achievement score
methodology discussed above.
The comment we received on these
proposals and our responses are set
forth below.
Comment: One commenter requested
clarification on whether (i) a facility can
earn points if its performance rate is
below the improvement threshold but
above the achievement threshold and
(ii) a facility can earn points if its
performance rate is below the
achievement threshold but above the
improvement threshold. A commenter
also requested clarification regarding
whether, when scoring improvement,
we multiply the ((Facility performance
period rate—Improvement threshold)/
(Benchmark—Improvement threshold))]
by 10 before or after we subtract 0.5.
Likewise, this commenter requested
clarification for the achievement scoring
on whether we multiply the ((Facility’s
performance period rate—achievement
threshold)/(benchmark—achievement
threshold))] by 9 before or after we add
0.5.
Response: It is possible for a facility
to earn achievement points even if that
facility did not improve during the
performance period as long as that
facility’s performance period rate
exceeds the improvement threshold.
Likewise, a facility can earn
improvement points even if its measure
rate during the performance period is
below the achievement threshold
provided that facility improved during
the performance period. Additionally,
the 0.5 is added or subtracted, for
achievement and improvement
respectively, as the last step in the
equations.

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For the reasons stated above, we will
finalize the proposed methodology for
scoring measures on achievement and
improvement.
c. Calculating the Reporting Measure
Scores
As noted, reporting measures differ
from clinical measures in that they are
not scored based on clinical values, but
rather, are scored based on whether
facilities are successful in achieving the
reporting requirements associated with
each of the measures. The criteria that
would apply to each reporting measure
are discussed below.
With respect to the proposed Anemia
Management, Mineral Metabolism, and
NHSN Dialysis Event reporting
measures, for each measure, we
proposed to award facilities:
(i) 0 points for meeting the reporting
requirements for less than 6-consecutive
months during the performance period;
(ii) 5 points for meeting the reporting
requirements for at least 6-consecutive
months during the performance period;
and
(iii) 10 points for meeting the
reporting requirements for all 12 months
of the performance period.
We believe that requiring 6consecutive months of data rather than
6 non-consecutive months of data for a
facility to receive points on these
measures will hold facilities to the
highest level of quality, therefore,
facilities will be encouraged to continue
to improve their reporting mechanisms
throughout the performance period. We
are concerned that awarding points for
6 non-consecutive months of reporting
may cause facilities to be less diligent in
their reporting efforts overall. We
specifically requested comment
regarding whether the proposed 6consecutive month reporting
requirement will improve quality more
than a non-consecutive month reporting
requirement. We also proposed, as
discussed in more detail below, that
facilities would need to receive a CCN
prior to July 1, 2013 in order to receive
a score on a reporting measure. Finally,
for purposes of the NHSN Dialysis Event
reporting measure, we proposed that to
be awarded 5 or 10 points, any facility
that has not yet enrolled and trained in
the NHSN dialysis event system must
do so and must agree to the required
consent (http://www.cdc.gov/nhsn/PDFs
/PurposesEligibilityRequirements
Confidentiality.pdf).
With respect to the proposed ICH
CAHPS reporting measure, we proposed
to retain the PY 2014 scoring
methodology for the PY 2015 ESRD QIP.
An in-center hemodialysis facility will
receive a score of 10 points if it attests

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that it successfully administered the
ICH CAHPS survey via a third party
during the performance period
according to the specification found at
https://www.cahps.ahrq.gov/SurveysGuidance/ICH.aspx. Eligible facilities
(facilities providing adult, in-center
hemodialysis) that do not provide such
an attestation would receive 0 points on
the measure. We proposed that this
attestation must be entered via
CROWNWeb by January 31, 2014. We
note that the ICH CAHPS survey is only
available to adult patients who are
treated in-center. For purposes of the
ICH CAHPS reporting measure, we
determine whether a facility treats
adult, in-center patients by referencing
the facility’s information in CMS data
sources (that is, SIMS and
CROWNWeb). Facilities report the types
of patients that they serve in these data
sources. If a facility lists adult in-center
services, we proposed that the facility
would be required to comply with the
ICH CAHPS reporting measure.
We requested comment on the
proposed methodology for scoring the
PY 2015 ESRD QIP reporting measures.
We also requested comment regarding
whether facilities should receive points
for partially reporting data and whether
such reporting need be for consecutive
months.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Several commenters
requested that we award points for
partial or non-consecutive reporting of
data. Other commenters recommended
that we modify our scoring of the NHSN
Dialysis Event, Anemia Management,
and Mineral Metabolism reporting
measures to allow facilities to gain
points for non-consecutive reporting on
a point scale of 0–10. Commenters
suggested that two should be subtracted
from the number of months for which
the dialysis facility successfully meets
the reporting requirements (rounding
negative scores to zero), meaning that a
facility would have to report two
months of data before receiving points
on the measure. Commenters argued
that this approach will encourage
facilities to consistently report even if
consecutive reporting is not possible.
One commenter argued that facilities
should be required to report for all
months in order to receive any points on
this measure; alternatively, this
commenter urged us to require facilities
to report consecutive months of data.
Response: We thank commenters for
these suggestions. The NHSN
participation requirements state that
facilities must report at least 6 months
of data during a calendar year to the

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dialysis event module to maintain active
status in the NHSN. We believe it is
important to align the scoring
requirements for the NHSN dialysis
event reporting measure for the ESRD
QIP with the NHSN requirements,
which are intended to improve the
quality of the data submitted to the
NHSN. Furthermore, we believe the
severity of bloodstream infections and
other vascular access-related infections
among dialysis patients warrants more
extensive monitoring in order to prevent
future events. We will, therefore, require
a minimum of 6 months of NHSN
Dialysis Event reporting before
awarding facilities points. We believe

that facilities should receive credit for
reporting non-consecutive months for
this measure; we agree with commenters
that this approach will encourage
reporting because, even if a facility
misses a month or many months, it can
still receive points on the measure.
Additionally, NHSN requirements allow
non-consecutive reporting, but strongly
encourage regular monthly reporting.
We also agree with the commenters who
stated that facilities should be awarded
points on an incremental scale to
incentivize reporting as much as
possible. Therefore, we will begin
awarding points for 6 months of
reporting, and will not require

consecutive monthly reporting during
the performance period. Additionally,
we will award incremental points for
reporting more than 6 months of data.
We will award points to facilities as
follows:
(i) 0 points for reporting less than 6
months of data;
(ii) 5 points for reporting 6 months of
data; and
(iii) 10 points for reporting 12 months
of data.
(iv) If the facility reports more than 6
but less than 12 months of data, we will
award incremental points using the
following formula:

We will round the result of this formula
(with half rounded up) to generate a
measure score from 5–10 points; as
noted, facilities will earn points for
reporting non-consecutive months.
As we discuss below, because of the
time it takes to train and enroll in the
NHSN Dialysis Event module, we do not
believe that it is feasible for all facilities
receiving a CCN in the performance
period to report at least 6 months of
data. We will not apply the 6 month
minimum requirement on these newly
opened facilities, as we believe this
requirement would place significant
undue burden on these facilities to
report data during their initial year of
operation starting up their care delivery
and administration. Therefore, the
NHSN Dialysis Event reporting measure
will not apply to any facility receiving
a CCN on or after January 1, 2013.
For the Mineral Metabolism and
Anemia Management reporting

measures, we believe that it is beneficial
to encourage less than 6 months of
reporting so that we can receive data
from as many facilities as possible and
use this data to develop a robust clinical
measure in these areas. We believe that
the Anemia Management and Mineral
Metabolism reporting measures should
also allow facilities to receive credit for
reporting non-consecutive months
because we believe that this approach
will encourage reporting even if a
facility fails to report for a month or
more. We agree with commenters that a
facility should be required to report at
least two months before it is awarded
points. Two months of reporting
translates to reporting at a rate roughly
equal to our achievement threshold for
clinical measures—15 percent. We have
determined that this threshold is an
appropriate marker for where a facility
should start earning achievement points
on the clinical measures, and we believe

it should also apply to these reporting
measures. Additionally, as we discuss
below, we will apply the scoring
methodology for the Anemia
Management and Mineral Metabolism
reporting measures to facilities that
receive a CCN during the first 6 months
of the performance period. Taking all of
these elements into consideration, we
are finalizing a scoring methodology
that will allow facilities to score points
on the Mineral Metabolism and Anemia
Management reporting measures
provided that they receive a CCN before
July 1, 2013. In order to score above a
zero on these measures, a facility must
report at least three months of data.
Therefore, we finalize that facilities
receiving a CCN before July 1, 2013 will
score 0–10 points on the Anemia
Management and Mineral Metabolism
reporting measures using the following
formula:

We will round the result of this formula
(with half rounded up) to generate a
measure score from 0–10, and we will
allow facilities to earn points using the
same formula for reporting nonconsecutive months.
Additionally, we finalize the ICH
CAHPS measure scoring as proposed.

10. Weighting the PY 2015 ESRD QIP
Measures and Calculation of the PY
2015 ESRD QIP Total Performance Score
Section 1881(h)(3)(A)(iii) of the Act
provides that the methodology for
assessing facility total performance shall
include a process to weight the
performance scores with respect to

individual measures to reflect priorities
for quality improvement such as
weighting the scores to ensure that
facilities have strong incentives to meet
or exceed anemia management and
dialysis adequacy performance
standards, as determined appropriate by
the Secretary. In determining how to

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appropriately weight the PY 2015 ESRD
QIP measures for purposes of
calculating Total Performance Scores,
we considered two criteria. Specifically,
we considered the number of measures
we had proposed to include in the PY
2015 ESRD QIP as well as the National
Quality Strategy priorities.

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a. Weighting Individual Measures To
Compute Measure Topic Scores for the
Kt/V Dialysis Adequacy Measure Topic
and the Vascular Access Type Measure
Topic
Because the Kt/V Dialysis Adequacy
measure topic and the Vascular Access
Type measure topic are comprised of
multiple measures, it is necessary for us
to discuss how we will derive an overall
score for each measure topic. For these
measure topics, we proposed that each
measure be scored separately for each
facility using the achievement and
improvement methodology discussed
above. After calculating the individual
measure scores within a measure topic,
we proposed to calculate a measure
topic score using the following steps: (1)
Dividing the number of patients in the
denominator of each measure by the
sum of the denominators for all of the
applicable measures in the measure
topic; (2) multiplying that figure by the
facility’s score on the measure; (3)
summing the results achieved for each
measure; and (4) rounding this sum
(with half rounded up). We proposed
that, if a facility does not have enough
patients to receive a score on one of the
measures in the measure topic (this
proposal is discussed below), that
measure would not be included in the
measure topic score for that facility.
Only one measure within the measure
topic need have enough cases to be
scored in order for the measure topic to
be scored and included in the
calculation of the Total Performance
Score. We stated that we believe it is
important to proportionately weight the
measures within a measure topic
because we seek to give equal
importance to each patient. Finally, we
proposed that the measure topic score
would be equal to one clinical measure
in the calculation of the Total
Performance Score.
For additional explanation of our
proposals to calculate measure topic
scores, we provided the following
examples:
Example 1: Facility X serves hemodialysis
(HD), peritoneal dialysis (PD), and pediatric
patients. For HD patients, Facility X’s Kt/V
measure rate is 50/60. For PD patients,
Facility’s X’s Kt/V measure rate is 15/20. For
pediatric patients, Facility X’s Kt/V measure
rate is 10/20. There are 100 patients included
in the measure topic (60+20+20). Assume

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that the facility’s measure rates lead to the
following measure scores: HD—7; PD—8;
pediatric—5. To compute the Kt/V Dialysis
Adequacy measure topic score for Facility X,
we would calculate the following: (7*60/
100)+(8*20/100)+(5*20/100) = 6.8, which we
would round to 7. The Kt/V Dialysis
Adequacy measure topic score would then be
treated as one clinical measure when
calculating the Total Performance Score.
Example 2: Facility Y serves HD patients
and PD patients. For HD patients, Facility Y’s
Kt/V measure rate is 50/60; assume that this
rate leads to a score of 6. For PD patients,
Facility Y’s Kt/V measure rate is 4⁄7. Facility
Y has no Kt/V measure rate for pediatric
patients because it does not serve this
population. Assume that the minimum case
number for scoring a measure is 11. Because
there are only seven cases in Facility Y’s
denominator, Facility Y would not receive a
PD Kt/V measure score. Furthermore, Facility
Y did not treat any pediatric patients, so it
would not receive a pediatric Kt/V measure
score. Therefore, the Kt/V Dialysis Adequacy
measure topic score for Facility Y would be
6. The Kt/V Dialysis Adequacy would then
be treated as one clinical measure when
calculating the Total Performance Score.

We requested comment on the
proposed method of weighting
individual measure scores to derive a
measure topic score.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Some commenters
supported our proposals for weighting
measure topics. Some commenters,
however, raised concerns that, given the
small number of pediatric patients
relative to adult patients, combining the
adequacy measures might result in a
score that does not accurately reflect the
quality of care provided to pediatric
patients treated in adult dialysis
facilities. Other commenters suggested
that the measure topics should be
weighted consistently across facilities to
allow meaningful comparisons between
facilities; these commenters requested
that we modify the weighting so that
each measure is weighted based on
clinical relevance, importance, and the
number of patients in a ‘‘typical’’
facility’s population.
Response: We disagree with the
commenters’ statement that combining
the adequacy measures might not reflect
the quality of care given to certain
patients. The weighting scheme ensures
that emphasis on each measure in the
Kt/V measure topic is proportionate to
the number of patients that facility
treats. If we were to weight the measure
topics consistently across facilities or
base the weight on clinical relevance or
the typical facility, the scoring
methodology would not equally weight
the quality of care provided to each,
individual patient. That is, one patient’s

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results could count for more points than
another patient’s results, perhaps
incentivizing better care for only certain
ESRD populations. It is the goal of the
ESRD QIP to provide the best care for
every patient, and we believe the
proposed weighting for measure topics
meets this goal. Therefore, we are
finalizing the methodology of weighting
measure topics as proposed.
b. Weighting the Total Performance
Score
In the proposed rule we stated our
belief that weighting the finalized
clinical measures/measure topics
equally will incentivize facilities to
improve and achieve high levels of
performance across all of the measures,
resulting in overall improvement in the
quality of care provided to ESRD
patients. We also stated our belief that,
while the reporting measures are
valuable, the clinical measures value
actual patient outcomes and therefore
justify a higher combined weight. We
did, however, propose to weight the
clinical measures slightly less for the PY
2015 ESRD QIP than we did for the PY
2014 ESRD QIP. For the PY 2015 ESRD
QIP, we believe it is important to begin
to more rigorously incentivize reporting,
specifically since for three of the four
reporting measures, we now require
actual data submission. We intend to
use these data for purposes of
developing and creating clinical
measures in the future; thus, complete
and correct data submission in these
areas is essential to the program’s
overall goal of continued and improved
ESRD quality care. For these reasons, we
proposed to equally weight the clinical
measures/measure topics for which a
facility receives a score equal to 80
percent of the Total Performance Score;
we also proposed to equally weight the
reporting measures for which a facility
receives a score as 20 percent of the
Total Performance Score. We requested
comment on this proposed methodology
for weighting the clinical and reporting
measures.
We have also considered the issue
with awarding a Total Performance
Score to facilities that do not report data
on the proposed minimum number of
cases with respect to one or more of the
finalized measures/measure topics. As
we stated in the CY 2012 ESRD PPS
final rule, we believe it is important to
include as many facilities as possible in
the ESRD QIP. We did, however, revisit
our policy of including any facility that
receives a score on one measure,
whether that measure is a clinical or
reporting measure, and we proposed a
different approach for PY 2015. We
stated our belief that it is preferable to

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require a facility to have at least one
clinical and one reporting measure to
receive a Total Performance Score. By
requiring this minimum, we ensure that
a facility is not included in the program
unless it meets the minimum case
requirement for at least one clinical
measure/measure topic. In the case of a
facility that has sufficient data (11 cases,
as discussed below) from the
performance period, but lacks sufficient
data (11 cases, as discussed below) to
calculate the improvement threshold,
we proposed to only calculate its
achievement score, because it would not
be possible to calculate its improvement
score. We requested comment on our
proposals to require a facility to qualify
for a score on at least one reporting and
one clinical measure in order to receive
a Total Performance Score.
Finally, we proposed that all Total
Performance Scores be rounded to the
nearest integer, with half being rounded
up, and we requested comment on this
proposal. For further examples
regarding the proposed measure and
Total Performance Score calculations,
we refer readers to the figures below.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Many commenters
supported our proposed scoring
methodology. Commenters specifically
supported our proposal to require a
facility to have a score for both a clinical
and a reporting measure to receive a
Total Performance Score. One
commenter stated that, because of the
importance of preventing HAIs, we

should weight the reporting measures at
50 percent of the Total Performance
Score. Some commenters stated their
belief that we should maintain the 90/
10 Total Performance Score weighting
because clinical outcomes are more
important than simply tracking and
relaying information.
Response: We believe, at this time,
that it is appropriate to weight all of the
clinical measures topics equally and all
of the reporting measures equally in
order to equally incentivize quality in
all of these areas of care. We do,
however, agree with the commenter that
noted that because of the importance of
reporting measures, such the NHSN
Dialysis Event measure which tracks
HAIs, we should give greater weight to
the reporting measures in calculating
the Total Performance Score. As stated
above, we are not finalizing the
Hypercalcemia clinical measure due to
our lack of consistent baseline data.
Instead, we will collect calcium data
through the Mineral Metabolism
reporting measure until we have
baseline data that is robust enough to
support a clinical measure’s adoption.
Because of our need to collect data from
not only LDOs, as we did in the
CROWNWeb pilot, but all types of
dialysis facilities, our decision to not
finalize the Hypercalcemia measure,
and the importance of collecting HAI
data through the NHSN Dialysis Event
reporting measure, we believe it is
appropriate to weight the reporting
measures more than we had proposed.
We continue to believe, however, that

clinical outcomes should constitute the
majority of the Total Performance Score.
Therefore, we finalize that, for the PY
2015 ESRD QIP, each clinical measure/
measure topic will be equally weighted
to comprise 75 percent of the Total
Performance Score, and the reporting
measures will be equally weighted to
comprise 25 percent of the Total
Performance Score.

Figure 2 shows the scoring for another
facility, Facility B. As illustrated below,
the facility’s performance on the
example clinical measure improved

from 26 percent in CY 2012 to 54
percent during the performance period.
The achievement threshold is 46
percent, the performance standard is 58

percent, and the benchmark is 74
percent.

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c. Examples of the PY 2015 ESRD QIP
Scoring Methodology
Below, we provide examples to
illustrate the scoring methodology for
the PY 2015 ESRD QIP. Figures 1–3
illustrate the scoring for a clinical
measure. Figure 1 shows Facility A’s
performance on an example clinical
measure. Note that for this example
clinical measure, the facility is
attempting to achieve a high rate (that
is, the higher the measure rate, the
higher the measure score). The example
benchmark (which is the 90th percentile
of performance nationally in CY 2011)
calculated for this measure is 74
percent, and the example achievement
threshold (which is the 15th percentile
of performance nationally in CY 2011)
is 46 percent. Facility A’s performance
rate of 86 percent during the
performance period meets or exceeds
the benchmark of 76 percent, so Facility
A would earn 10 points (the maximum)
for achievement for this measure.
(Because, in this example, Facility A has
earned the maximum number of points
possible for this measure, its
improvement score is irrelevant.)

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Because the facility’s performance
during the performance period is within
both the achievement range and the

improvement range, we must calculate
both the improvement and achievement
score to find the example clinical

measure score. To calculate the
achievement score, we would employ
the formula discussed above.

The result of this formula for this
example is [9 * ((54 ¥ 46)/(74 ¥ 46))]

+ .5, which equals 3.07 and we round
to 3.

Likewise, to calculate the
improvement score, we employ the
improvement formula discussed above.

The result of this formula for this
example is [10 * ((54 ¥ 26)/(74 ¥ 26))]
¥ .5, which equals 5.33 and we round
to 5. Therefore, for this example clinical
measure, Facility B’s achievement score

is 3, and its improvement score is 5. We
award Facility B the higher of the two
scores. Thus, Facility B’s score on this
example measure is 5.

In Figure 3 below, Facility C’s
performance on the example clinical
measure drops from 53 percent in CY
2012 to 40 percent in CY 2013, a decline
of 13 percent.

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Because Facility C’s performance during
the performance period falls below the
achievement threshold of 46 percent, it
receives 0 points for achievement.
Facility C also receives 0 points for
improvement because its performance
during the performance period was
lower than its improvement threshold
(its performance during CY 2012).
Therefore, in this example, Facility C
would receive 0 points for the example
clinical measure.
The method illustrated above would
be applied to each clinical measure in
order to obtain a score for each measure.
Scores for reporting measures are
calculated based upon their individual
criteria, as proposed.
After calculating the scores for each
measure, we calculate the Total
Performance Score. As an example,
applying the weighting criteria to a
facility that receives a score on all
finalized measures, we would calculate
the facility’s Total Performance Score
using the following formula:
Total Performance Score = [(.25 *
Hemoglobin Greater Than 12g/dL
Measure) + (.25 * Kt/V Dialysis
Adequacy Measure Topic) + (.25 *
Vascular Access Type Measure Topic)
+ (..0625 * NHSN Dialysis Event
Reporting Measure) + (.0625 * ICH
CAHPS Survey Reporting Measure) +
(.0625 * Mineral Metabolism
Reporting Measure) + (.0625 *
Anemia Management Reporting
Measure)] * 10.
The Total Performance Score would be
rounded to the nearest integer (and
any individual measure values ending
in .5 would be rounded to the next
higher integer).
However, if, for example, a facility
did not receive a score on the Vascular
Access Type measure topic, the
facility’s Total Performance Score
would be calculated as follows:

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Total Performance Score = [(.375 *
Hemoglobin Greater Than 12g/dL
Measure) + (.375 * Kt/V Dialysis
Adequacy Measure Topic) + (.0625 *
NHSN Dialysis Event Reporting
Measure) + (.0625 * ICH CAHPS
Survey Reporting Measure) + (.0625 *
Mineral Metabolism Reporting
Measure) + (.0625 * Anemia
Management Reporting Measure)] *
10
Again, the Total Performance Score
would be rounded to the nearest
integer (and any individual measure
values ending in .5 would be rounded
to the next higher integer).
Finally, if, for example, a facility
qualified for only two of the reporting
measures, the facility’s Total
Performance Score would be calculated
as follows:
Total Performance Score = [(.25 *
Hemoglobin Greater Than 12g/dL
Measure) + (.25 * Kt/V Dialysis
Adequacy Measure Topic) + (.25 *
Vascular Access Type Measure Topic)
+ (.125 * Mineral Metabolism
Reporting Measure) + (.125 * Anemia
Management Reporting Measure)] *
10.
Again, the Total Performance Score
would be rounded to the nearest integer
(and any individual measure values
ending in .5 would be rounded to the
next higher integer).
11. Minimum Data for Scoring Measures
for the PY 2015 ESRD QIP
We proposed to only score facilities
on clinical measures for which they
have a minimum number of cases
during the performance period. We
assessed how reliable each clinical
measure is using the currently available
data. Specifically, we studied the degree
the measures assess the actual
differences in performance among
facilities as opposed to the variation

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within a facility. Thus, in order for a
facility to be scored on any clinical
measure, we proposed that the facility
must report a minimum number of cases
qualifying for that measure over the
course of the 12-month performance
period. This proposed minimum seeks
to ensure that facilities are being
evaluated based on the care they
provide.
a. Minimum Data for Scoring Clinical
Measures for the PY 2015 ESRD QIP
Dialysis facilities tend to have a small,
relatively stable patient census, with
each facility reporting on an average of
50–60 cases per measure. In previous
rules, commenters have asked that we
consider the effect of case size on
measure reliability in the context of the
ESRD QIP. We recognize that as a
general principle, reliability improves
with increasing case size; that is, the
reliability of a measure or score
describes numerically to what extent
that measure or score assesses the actual
differences in performance among
facilities as opposed to the random
variation within facilities. Furthermore,
we wish to be responsive to public
comment and to ensure that dialysis
facilities with extremely small numbers
of patients are not penalized by the
ESRD QIP due to random variation in
their patient samples. Thus, we
developed and proposed a new
methodology to make favorable
adjustments to the clinical measure
rates of facilities with very small
numbers of patients. We also proposed
a case minimum 8 for clinical measures
to protect patient privacy, which we
believe could be compromised if the
8 For clarification purposes, as in previous years,
a ‘‘case’’ refers to a patient that is included in the
measure.

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the ratio of the between-facility variance
to the sum of the between-facility
variance and the within-facility
variance.
We found the reliability of the Total
Performance Score to be acceptable for
all strata (IUR>0.6). However, we
recognize that facilities with very small
numbers of patients are more likely to
have a lower IUR. In a facility with a
low IUR, the case mix might potentially
shift its measure rate higher or lower
than the rate the same facility would
report if it were treating an ‘‘average’’
ESRD population. In the context of the
ESRD QIP, a favorable skew would not
have a negative effect on facility
payment, but an unfavorable skew
potentially could result in the facility
receiving a payment reduction. We
cannot identify which specific facilities
will have a low IUR until after the
performance period has concluded.
However, in performing the
stratification analysis, we found that a
favorable adjustment to the two strata
with the lowest number of cases would
reduce the risk of penalizing facilities in
those strata for random within-facility
variation. The average number of cases
contributing to the Total Performance
Score in the second stratum is 25.
Accordingly, we developed and
proposed below a favorable adjustment
to the measure rates for facilities with at
least the minimum case threshold of 11
and fewer than the adjustment threshold
of 26 cases. This methodology would
give facilities ‘‘the benefit of the doubt’’
and ensure that any error in measure
rates due to a small number of cases will
not adversely affect payment.
Specifically, we proposed that if a
facility reports at least 26 cases during
the 12-month performance period on a
measure, it would be scored based on its
raw performance rate on the measure. If
the facility reports between 11 and 25
cases during the 12-month performance
period, it would be scored based on its
raw performance rate plus a favorable

where ni is the number of patients in the
ith facility. Now denote C as the
minimum case number. We proposed
the following adjustment for the original
score xi by introducing a weight
depending on facility size.

where C is the lower bound of cases for
facilities that will not receive any
adjustment.
• For measures where large values of
xi are good (that is, for the PY 2015
ESRD QIP, the fistula measure and the
Kt/V Dialysis Adequacy measure topic):
o The new score is: ti = xi + wi *
SE(xi). (If ti > 100%, we set ti = 100%).
• In cases where lower values of xi
are better (that is, for the PY 2015 ESRD
QIP, the Hemoglobin Greater Than 12g/
dL and catheter measures):

o The new score is: ti = xi ¥ wi *
SE(xi). (If ti < 0%, we set ti = 0%).
We stated our belief that this
approach gives facilities an allowance to
account for the uncertainty in the
estimate xi by accounting for the size of
the patient population in both weights
and standard errors. As explained
above, this allowance decreases when
the case size increases (from 11 to 26 or
more)—the larger the case size, the
smaller the allowance. For example,

when C=26, this implies that for
measures with 26 cases and above, no
allowance is made. We sought public
comment on this methodology and the
proposed adjustment threshold. While
one model is presented above, we
invited comment on alternative
approaches that are consistent with our
intent to include as many facilities as
possible in the ESRD QIP and at the
same time address concerns from
stakeholders regarding the reliability of

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reliability adjustment to account for a
possible unfavorable skew in the
measure rate due to small sample size.
We proposed the following
methodology to adjust the measure rate
used to score facilities with 11–25 cases
for a given measure. The adjustment
factors in facility size and the standard
error of the measure, which can be
estimated using an analysis of variance
(ANOVA). This analysis allows us to
estimate how much better the measure
rate could have been if that facility were
treating an ‘‘average’’ population of
patients and make a favorable
adjustment to the facility’s score in that
amount. For example, as a facility treats
more patients, the reliability of the
measure rate improves, and the
difference between the facility’s
measure rate and the measure rate we
statistically would expect to see if the
facility were treating an ‘‘average’’ panel
of patients decreases. Thus, the
magnitude of the adjustment factor
increases as the number of cases
decreases from 25 to 11.
Because the adjustment factor takes
into account a facility’s performance
(standard error of the measure) and the
number of cases for the measure, it is
computed separately for each measure.
The specific methodology we proposed
follows:
• ANOVA provides an estimate sw of
the square root of within facility
variance, given by the within subject
mean square.
• Then for the ith facility, the standard
error of the average measure (denoted by
xi is given by

publicly reported data for a facility is
based on a small patient population.
Given the ESRD QIP’s potential to
encourage quality improvement, our
goal is to ensure the full participation of
as many facilities as possible in the
program. However, we must ensure that
all measure rates capture a large enough
number of patients so that the privacy
of each patient is protected. A case
minimum allows us to achieve these
policy objectives of measurement
reliability and patient privacy.
For the first 3 payment years of the
ESRD QIP, we set the minimum number
of cases to be scored on a clinical
measure at 11. Eleven cases has
historically been the case minimum for
displaying measures on DFC. We have
determined that in the context of DFC,
11 cases will meet the requirement that
individual patients are not identifiable
in the aggregate measure rate. Given that
we believe that 11 cases is sufficient to
address privacy concerns and that our
policy objective is to maximize the
number of facilities that participate in
the ESRD QIP, we proposed to set a
proposed case minimum threshold of 11
cases. Under this proposal, facilities
must report at least 11 qualifying cases
over the course of the 12-month
performance period to be scored on a
given clinical measure. We sought
public comment on this proposal.
We indicated in the CY 2012 ESRD
PPS final rule that we would continue
to assess the reliability of our measures
in future payment years of the program
(76 FR 70259). To further explore this
issue in response to comments, we
evaluated the reliability of measure rates
and the Total Performance Score for
facilities of various sizes using the PY
2014 program clinical measures.
Specifically, we performed a simulation
of the PY 2014 QIP to calculate the
Inter-Unit Reliability (IUR) stratified by
facility size. The IUR is a statistic
commonly adopted for assessing the
reliability of measures or scores, and is

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measures where there are small
numbers of cases. We stated our belief
that this adjustment is appropriate for
the ESRD QIP considering the particular
measure set and scoring methodology
for PY 2015. As the program grows and
evolves, we noted that we will continue
to assess reliability based on the
measures and scoring methodology for
that payment year.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Many commenters
supported our proposal to use an
adjustment for measure rates, especially
because aging patients and patients with
comorbidities can negatively affect a
small facility’s score. Commenters also
supported our proposal to use the
adjuster for measures with 11–25 cases.
Other commenters did not support the
proposed adjustment because it is
overly complicated, could mislead
patients, and could make low-volume
facilities appear better than high-volume
facilities when they are not, in fact;
these commenters suggested that we
raise the case minimum to at least 25
cases instead of employing the proposed
adjustment methodology. Some
commenters expressly stated that the
proposed case minimum is not
sufficient; other commenters argued that
the proposed case minimum should be
lowered because the proposal could
preclude participation from many lowvolume facilities, specifically pediatric
facilities.
Response: Were we to set the case
minimum at 26 rather than 11, we
estimate that an additional 520, or an
additional 10 percent of, facilities
would be excluded from the program.
Although lowering the case minimum
would include even more facilities, we
do not believe it is appropriate to do so
because of not only reliability but also
privacy concerns. As we stated in the
proposed rule (77 FR 40984), we believe
the adjustment balances the competing
concerns of reliability, privacy, and
inclusion.
Although it can be difficult to
understand the adjustment
methodology, we do not believe that
this concern alone should prevent us
from finalizing it as proposed. The
adjustment will result in no harm to any
facility; although a facility may not be
able to predict its Total Performance
Score if some of its measures are subject
to the adjustment, the facility will know
that the adjuster will not negatively
affect its score. It could continue to
predict its minimum score and use this
score as a baseline for assessing whether
or not it will receive a payment
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the argument that the adjuster could
allow smaller facilities to seem better
than they are is of little concern.
Although the adjuster will affect the
measure score, it will not affect the
measure rate. The rates that are
displayed to the public will be shown
without an adjustment. Thus, a
beneficiary could continue to
meaningfully compare facilities,
regardless of the number of patients
these facilities serve.
Comment: Some commenters
requested that, if we adopted the
proposed adjustment, we publish tables
with the values of sw to make the ESRD
QIP as transparent and predictable as
possible.
Response: The sw values represent the
within facility variation. It is specific to
each facility and, because it will be
based on 2013 data, it cannot be derived
until the end of the performance period.
Therefore, we are not able to publish the
sw values at this time.
Comment: Some commenters
encouraged us to continue to conduct
analyses to determine the appropriate
reliability of measures and the
minimum case number for future years
of the program. Some commenters
suggested that, if we are concerned with
reliability and minimum case numbers,
we employ longer performance periods
spanning multiple years. Commenters
also encouraged us to align the ESRD
QIP minimum case number with other
VBP programs.
Response: We will continue to study
the reliability of measures and the Total
Performance Score. We have and will
continue to consider using longer
performance periods on a measure-bymeasure basis. Although we strive to
align the VBP programs as much as
possible, each program has unique
measures which may necessitate
different minimum case numbers. We
will continue to look for harmonization
as much as is appropriate.
For the reasons stated above, we
finalize the case minimum and
adjustment for clinical measures as
proposed.
b. Minimum Data Requirements for
Reporting Measures by New Facilities
For purposes of the PY 2014 ESRD
QIP, we stated that a facility that
receives a CCN on or after July 1, 2012
has the option to choose whether or not
it is scored on each reporting measure
(76 FR 70275). We considered using the
same approach for PY 2015 as we did
in PY 2014 (that is, allowing new
facilities to choose whether or not they
will be scored on each reporting
measure). Under that approach, if a new
facility reports enough information to

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receive 10 points on a reporting
measure, the facility is scored on that
measure. If a new facility scores zero or
5 points on a reporting measure, it is not
scored on that measure. As the program
evolves, we believe it is important to
continuously push improvement in all
facilities—both old and new.
Additionally, we wish to incentivize
new facilities to put reporting
mechanisms in place as soon as
possible. For these reasons, we
proposed to modify the reporting
measure minimum data requirement
from that of PY 2014.
For PY 2015, we proposed that any
facility receiving a CCN before July 1,
2013 be scored on the reporting
measures. However, since a facility
receiving a CCN after January 1, 2013
would not be able to report a full 12
months of data, we stated our belief that
it is not appropriate to require it to do
so in order to receive a full 10 points on
the reporting measures. Instead, we
proposed to score these facilities
proportionately for the time for which
they have a CCN during the
performance period. To earn 10 points
on the ICH CAHPS reporting measure,
we proposed to require that a facility
receiving a CCN between January 1,
2013 and June 30, 2013 attest that it
successfully administered the survey
during the time for which it had a CCN
during the performance period. For
purposes of the Anemia Management,
NHSN Dialysis Event, and Mineral
Metabolism reporting measures, we
proposed that if a facility receives a
CCN on or after January 1, 2013, but
before July 1, 2013, it would receive 10
points for reporting for all months for
which it has a CCN and 5 points for
consecutively reporting half of the
months for which it has a CCN during
the performance period. If a facility has
a CCN for an odd number of months, we
proposed to round down to calculate the
number of months for which it must
report to receive 5 points. Finally, we
proposed to begin counting the number
of months for which a facility is open
on the first day of the month after the
facility receives a CCN. For example,
assume a facility receives a CCN on
March 15, 2013. In order for this facility
to receive 10 points on the applicable
reporting measure, we proposed that it
must report data from April 1, 2013–
December 31, 2013 (or 9 months of
data). In order for it to receive 5 points,
we proposed that it must report half of
the months for which it is open,
consecutively. For the example facility
to receive 5 points, it would need to
report 4.5 months of data. Since we
proposed to round down, this facility

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would be required to report 4 months of
data to receive 5 points.
We realized that facilities receiving a
CCN on or after July 1, 2013, may have
difficulty meeting the requirements of
the reporting measures, such as
enrolling and training for the NHSN
Dialysis Event reporting measure or
hiring a third-party to administer the
ICH CAHPS survey, because of the short
period of time left in the performance
period. We also stated our belief that it
is appropriate to reduce payment for a
1-year period based on less than 6
months of performance. Therefore, we
proposed to exclude facilities receiving
a CCN on or after July 1, 2013 from the
requirements of the reporting measures.
Because we finalized, as discussed
above, that a facility will not receive a
Total Performance Score unless it
receives a score on at least one clinical
and one reporting measure, finalizing
this proposal would result in facilities
not being eligible for a payment
reduction if they receive a CCN on or

after July 1, 2013. We requested
comment regarding these proposals. We
also elicited comments regarding
whether there would be a more
appropriate way to score these new
facilities on reporting measures so that
they may be eligible for inclusion in the
ESRD QIP.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Commenters supported our
proposals regarding the reporting
measures’ minimum data requirements
for new facilities; specifically,
commenters supported our proposal to
exempt facilities receiving a CCN after
June 30, 2013 from the reporting
measures. Some commenters suggested
that a facility that receives a CCN
between January 2013 and June 2013
should be required to begin reporting on
the first day of the third month after the
facility receives a CCN to allow the
facility to deploy its IT system and
enroll in CROWNWeb and NHSN.

Response: Consistent with our change
to allow facilities to score 0–10
incremental points on the Anemia
Management and Mineral Metabolism
reporting measures, we will finalize
changes to our proposed scoring
methodology for these measures for
facilities receiving a CCN between
January 1, 2013 and June 30, 2013.
Facilities receiving a CCN between
January 1, 2013 and June 30, 2013, will
be able to score points in proportion to
their overall rate of monthly reporting
on the Anemia Management and
Mineral Metabolism reporting measures.
As we noted above, we believe it is
important to require a minimum
threshold for facilities to earn points on
this measure. Thus, we finalize that a
facility receiving a CCN after January 1,
2013 but before June 30, 2013 can score
points on the Mineral Metabolism and
Anemia Management reporting
measures using the following formula:

We will round the result of this formula
(with half rounded up) to achieve a
measure score from 0–10.
For purposes of the Anemia
Management and Mineral Metabolism
reporting measures, we do not agree
with commenters that facilities should
be required to report the first day of the
third month after they receive their
CCN. A facility with a CCN may submit
claims to Medicare. If a facility is
submitting claims, it should be
reporting hemoglobin and ESA levels. It
should also be reporting in
CROWNWeb. Therefore, we do not
believe it is necessary to allow facilities
more time on these measures, and we
finalize that facilities must begin
reporting for these measures on the first
day of the month after they receive their
CCN.
As we have previously noted, we
believe that a facility needs a period of
time after it receives its CCN to ensure
that its systems are in place to report to
the NHSN system. As we explained
above, we are requiring facilities to
report 6 non-consecutive months of data
to receive points on the NHSN Dialysis
Event measure. Because of the time
required to enroll and train in the NHSN
system, we do not believe it is equitable
to require facilities receiving a CCN

during the performance period to
comply with this measure. Therefore,
we are finalizing that a facility that
receives a CCN during the performance
period will be not be scored on the
NHSN Dialysis Event reporting measure.
For the ICH CAHPS measure, we
believe that facilities receiving a CCN
before July 1, 2013 should be able to
hire a third-party administrator in time
to administer the ICH CAHPS survey.
Although it may take some time for
facilities to put this administrator in
place, it can begin doing so before it
receives a CCN. Therefore, we finalize
our proposals that, to earn 10 points on
the ICH CAHPS reporting measure, a
facility receiving a CCN between
January 1, 2013 and June 30, 2013 must
attest that it successfully administered
the survey during the time for which it
had a CCN during the performance
period.
We also finalize that facilities
receiving a CCN after June 30, 2013 will
be exempt from the Mineral
Metabolism, Anemia Management, and
ICH CAHPS reporting measures. For the
NHSN Dialysis Event reporting measure,
facilities will be exempt if they receive
a CCN on or after January 1, 2013.

12. Payment Reductions for the PY 2015
ESRD QIP

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Section 1881(h)(3)(A)(ii) of the Act
requires the Secretary to ensure that the
application of the scoring methodology
results in an appropriate distribution of
payment reductions across facilities
such that facilities achieving the lowest
Total Performance Scores receive the
largest payment reductions. For PY
2014, we adopted an approach under
which a facility did not have to meet or
exceed the performance standards with
respect to each of the finalized clinical
measures to avoid receiving a payment
reduction under the ESRD QIP. Rather,
even if a facility failed to meet or exceed
the performance standards with respect
to one or more of these measures, the
facility could avoid a payment
reduction if it achieved a minimum
Total Performance Score that is equal to
or greater than the minimum Total
Performance Score it would receive if it
had met the performance standards for
each of the clinical measures or, in the
case of the Vascular Access Type
Measure, for the two subcomponent
measures.
For PY 2014, in calculating this
minimum Total Performance Score, we
excluded the reporting measures

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because we believed this approach best
underscored the importance of the
clinical measures. For PY 2015, we
proposed to retain the same approach as
in PY 2014. We discuss the
methodology for deriving the
performance standards for the measure
topics, above. We requested comments
on these proposals.
Alternately, in order to better
incentivize compliance with reporting
measures, we also considered raising
the minimum Total Performance Score
to include 50 percent of the total points
a facility could have received had it met
all of the reporting requirements for
each measure. In other words, because
a facility could receive up to 40 points
in PY 2015 for meeting all of the
reporting measure requirements, we
considered raising the minimum Total
Performance Score by 20 points (onehalf of 40). This approach would ensure
that facilities receiving a CCN before
August 1, 2013 could still achieve the
minimum Total Performance Score by
meeting, on average, the performance
standards for the clinical measures and
achieving as many points on the
reporting measures as is possible. We
requested comment regarding whether
the reporting measures should be scored
at greater than 0 when calculating the
minimum Total Performance Score.
Section 1881(h)(3)(A)(ii) of the Act
requires that facilities achieving the
lowest Total Performance Scores receive
the largest payment reductions. For PY
2014, we adopted an approach we
intend to continue for PY 2015. We
believe that this consistency will allow
the program to be more understandable
to both facilities and the general public.
Accordingly, we proposed that the
payment reduction scale be the same as
the PY 2014 program. Therefore, for
each 10 points a facility falls below the
minimum Total Performance Score, it
would receive an additional 0.5 percent
payment reduction on its ESRD
payments for PY 2015, with a maximum
reduction of 2.0 percent. As we stated
in the CY 2012 ESRD PPS final rule (76
FR 70281), we believe that such a
sliding scale will incentivize facilities to
meet the performance standards and
continue to improve their performance
because even if a facility fails to achieve
the minimum Total Performance Score,
the facility will still be incentivized to
strive for, and attain, better performance
rates in order to reduce the amount of
its payment reduction. We requested
comments on the proposed payment
reduction scale.
The comments we received on these
proposals and our responses are set
forth below.

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Comment: Commenters agreed with
our proposal to use the PY 2014
payment reductions scale for the PY
2015 ESRD QIP. Some commenters,
however, supported placing more
emphasis on the reporting measures in
calculating the minimum Total
Performance Score since these are the
measures over which facilities have the
most control. Some commenters
suggested that we base payment
reductions on actual impact rather than
projections of impact, setting tiers of
reductions by percentage of facilities we
wish to be in each tier. Another
commenter urged us to create a more
individualized approach to payment
reductions because high quality care is
markedly different from patient to
patient.
Response: At this time, we do not
believe it is in the best interest of the
program to base payment reductions on
actual impact and the percentage of
facilities to which we wish to provide
payment reductions. Regardless of the
impact, we believe that facilities that do
not meet the performance standards for
each of the clinical measures should
face a payment reduction. Were we to
base reductions on percentages, the
result could be that some high
performing facilities receive a payment
reduction. Our current payment
reduction scale allows every facility to
avoid a payment reduction provided
that they meet the minimum Total
Performance Score.
We agree that it is important to
provide individualized care to patients.
We believe that the program,
incentivizes facilities to furnish
individualized care within a certain
range of established, clinical acceptable
guidelines.
Finally we agree with the commenters
that requested we place more emphasis
on the reporting measures when
calculating the minimum Total
Performance Score. We specifically
believe that this approach is appropriate
now that we have weighted the
reporting measure to comprise 25
percent of the Total Performance Score.
Were we to continue to score the
reporting measures at zero when
calculating the minimum Total
Performance Score, by increasing the
weight of the reporting measures, we
would be decreasing the minimum Total
Performance Score. This result is
contrary to our belief stated in this final
rule that the reporting measures should
be afforded more importance. Therefore,
we will finalize the alternative approach
we requested comment on in the
proposed rule to include the reporting
measures in the minimum Total
Performance Score at 50 percent of the

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total points a facility could have
received had it met all of the reporting
requirements. As noted above, it is
possible to gain a total of 40 points from
the reporting measures; thus, we will
include half, or 20 of these points, in
our calculation of the minimum Total
Performance Score. We believe this
approach is consistent with our
methodology for the clinical measures
since we calculate the clinical measure
component of the minimum Total
Performance Score as the score a facility
would have received if it had reached
the 50th percentile for all clinical
measures.
Comment: One commenter suggested
that the 2 percent payment reduction be
revisited since such a small percentage
will not be a worthwhile incentive as
new measures are added. Several
commenters expressed concern that the
ESRD QIP works as a penalty system
and suggested that the ESRD QIP
provide incentives as well as penalties,
and on balance, be budget-neutral. One
commenter suggested that the payment
reductions be returned to the penalized
facilities for use only to improve care in
the areas where they failed to meet
quality standards.
Response: Section 1881(h) of the Act
does not provide us with the authority
to issue bonus payments to facilities
based on their performance under the
ESRD QIP, to make reductions of more
than 2.0 percent, or to redistribute the
payment reductions to the originally
penalized facilities.
For the reasons stated above, we
finalize our proposals for calculating
payment reductions except that we will
include reporting measures in
calculating the minimum Total
Performance Score. The reporting
measure component of the minimum
Total Performance Score will equal the
score a facility would have received if
it is awarded half of the maximum
points it could have received on the
reporting measures (that is, 5 points on
each measure). Based on this approach,
the minimum Total Performance Score
is 60 points. Facilities failing to meet
this minimum will receive payment
reductions in the amounts indicated in
Table 7 below.

TABLE 7—FINALIZED PAYMENT
REDUCTION SCALE FOR PY 2015
Total performance score
100–60 ................................
59–50 ..................................
49–40 ..................................
39–30 ..................................
29–0 ....................................

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Reduction (%)
0
0.5
1.0
1.5
2.0

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13. Data Validation
One of the critical elements of the
ESRD QIP’s success is ensuring that the
data submitted to calculate measure
scores and Total Performance Scores is
accurate. To that end, we have procured
the services of a data validation
contractor who will be tasked with
validating a national sample of facilities’
records as they report data under the
ESRD QIP. Beginning in CY 2013, we
proposed to begin a pilot data validation
program for the ESRD QIP. Because data
validation for the ESRD QIP is new to
both facilities as well as CMS, we
believe that the first year of validation
should result in no payment reductions
to facilities. Accordingly, we proposed
that, beginning in CY 2013, we would
randomly sample the records of
approximately 750 facilities. We
anticipate that a CMS-designated
contractor would request approximately
10 records from each of these facilities.
We proposed that the facility must
comply with this request for records
within 60-days of receiving notice. The
contractor would review these records
to ensure accuracy and reliability of the
data reported by the facility for
purposes of the ESRD QIP.
As noted above, we proposed that, in
the first year of this program, no facility
will receive a payment reduction
resulting from the data validation
process. In future years of the program,
we noted our intent to evolve our pilot
program into a full, data validation
effort. We are also discussing a data
validation measure whereby facilities
would be scored based on the accuracy
of their records. Finally, we are
contemplating increasing a facility’s
payment reduction by one tier (for
example, from 0.5 percent to 1.0
percent) if its data are incorrect beyond
a certain threshold. In future years, we
stated our intention to propose more
detailed procedures regarding our data
validation process that may result in
penalties. We requested comment on
our data validation proposals for PY
2015 and the methods we are
considering for PY 2016.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Many commenters
supported our proposal to have a data
validation pilot program that would
result in no payment reductions. Some
commenters suggested that we continue
the pilot until we can evaluate the data
from the program, and some
commenters suggested that we should
share the results of the pilot with the
dialysis community before the official
program is launched. One commenter

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requested that, before the pilot program
begins, we define the errors being
sought and publish these for public
comment. Another commenter stated
that, before data validation efforts are
initiated, CMS should provide clear
specifications, data definitions, and
reporting requirements because it would
be inappropriate to penalize facilities
when clarification questions or
reporting issues have not been resolved.
Commenters also recommended that
CMS include the initial data validation
in the routine Comprehensive Error Rate
Testing (CERT) request for RACs
(Recovery Audit Contractors), but
cautioned against paying auditors on a
contingency fee.
Response: We thank commenters for
their support of the pilot data validation
program. At this time, we are still
finalizing the processes and procedures
for the pilot. We will provide this
information before the pilot program
begins on a publicly available Web site.
We will consider the commenters’
suggestions as we continue this process.
Additionally, as discussed in the
sections of this rule outlining the
measures, we believe that the
specifications, data definitions, and
reporting requirements are clear and
transparent. If it becomes apparent that
there is some significant confusion as to
any of these elements, we will clarify
these them using the most appropriate
means.
Comment: One commenter stated that
it does not believe it is appropriate for
CMS to develop a data validation
measure for the ESRD QIP. This
commenter argued that CMS must first
explain the scope of accuracy and errors
(for example, does it include missing
values, transcriptional errors) that CMS
requires. Other commenters requested
that, before payment is tied to
validation, CMS should publish for
comment the relationship of errors to
payment reductions (with some
accorded more weight than others
depending on their scope and type) and
allow the dialysis community to review
the results of the pilot.
Response: We thank commenters for
these suggestions. We believe that
ensuring data accuracy of reported data
is an important component to ensure
accurate performance scores and
corresponding payments. We continue
to consider whether and how we will tie
payment to any data validation issues.
We will publish any future proposals in
rulemaking for public comment.
Comment: Some commenters
expressed concern with the burden data
validation may place on facilities. One
commenter is concerned that producing
records within 60 days is too monetarily

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67515

burdensome and suggests a 120 day
period. Another commenter requested
that we limit the number of document
requests based on provider size and
resources and reimburse facilities for
data requests. One commenter suggested
that the requested data sample be a
percentage of patients rather than a
fixed number so that small facilities are
not disproportionally affected. One
commenter asked that the requested
records be as current as possible so that
they can be easily accessed by facilities
that many have data storage protocols.
Another commenter specifically noted
its support for HAI data validation, but
stated its concern that we
underestimated the burden on facilities;
this commenter requested that we
provide more detail on the validation
process, specifically the facilities’
responsibilities, and encouraged us to
partner with NHSN and state and public
health partners in developing a
standardized process for the validation
of HAI data.
Response: We do not believe that our
proposals place an undue burden on
facilities. We proposed to request only
ten records, and we will provide the
facility 60 days to produce these
records. We do not believe that
collecting such a small amount of
documentation in such a great deal of
time should pose problems for facilities.
As we explain later in this rule, we
estimate that it will take each facility
only 2.5 hours to comply with the
requests for these records and will cost
approximately $83.08 per facility. We
do not believe that 2.5 hours in the span
of 2 months (or 2.5 minutes per day) is
too little time to comply with these
requests nor do we believe it warrants
an additional 60 days for compliance.
Further, we do not agree that we should
request a percentage of documents from
facilities rather than a fixed number. If
a facility is large, asking for even one
percent of its records could prove to be
a large burden. Alternatively, requesting
that a small facility provide even 10
percent of its records would not provide
our data contractor with enough
information to assess the validity of the
data. By requesting 10 records from each
facility, we can ensure a similar burden
(2.5 hours and approximately $83.08)
for each facility and an analysis of its
validity based on the same volume of
information.
As noted above, at this time, we are
still finalizing the processes and
procedures for the pilot. We will
provide further information on a
publicly available Web site. As we
finalize these procedures, we intend to
engage various stakeholders to
encourage the development of a

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standardized process for the validation
of data, including data from the CDC for
HAIs.
Comment: One commenter requested
that we specify a data validation appeals
process.
Response: We will consider proposing
a data validation appeals process in
future rulemaking. Because the
proposed program is a pilot and will not
have any impact on payment, we do not
believe an appeals process is necessary
at this time.
Comment: One commenter believes
that the various technological resources
facilities have should be taken into
account when evaluating data validity.
This commenter encouraged us to
evaluate manual/electronic medical
records (EMR) data entry in
CROWNWeb.
Response: We will consider
commenter’s suggestion when we
evaluate the data in the pilot program.
We will specifically consider if there are
variations in the accuracy of data
because of the mode of data entry.
Comment: One commenter
encouraged us not to implement a
payment reduction until all facilities
have been asked to submit medical
records for purposes of data validation
at least one time. Another commenter
stated that each facility should have the
opportunity to identify data
transmission/download errors without
the risk of payment penalty.
Response: We thank commenters for
the suggestions and will consider them
as our pilot program advances.
For the reasons stated above, we
finalize our pilot data validation
program as proposed, and we will
specify the processes and procedures of
this pilot on http://
www.dialysisreports.org.
14. Scoring Facilities Whose Ownership
Has Changed
During our first year of
implementation of the ESRD QIP, PY
2012, facilities requested guidance
regarding how a change in ownership
affects any applicable ESRD QIP
payment reduction. We proposed that,
for all future years of the ESRD QIP, the
application of an ESRD QIP payment
reduction would depend on whether the
facility retains its CCN after the
ownership transfer. If the facility’s CCN
remains the same after the facility is
transferred, for purposes of the ESRD
QIP, we would consider the facility to
be the same facility (despite the change
in ownership) and we would apply any
ESRD QIP payment reduction for the
transferor to the transferee. Likewise, as
long as the facility retains the same
CCN, we would calculate the measure

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scores using the data submitted during
the applicable period regardless of
whether the ownership changed during
one of these periods. If, however, a
facility receives a new CCN as a result
of a change in ownership, we would
treat the facility as a new facility for
purposes of the ESRD QIP as of the date
it received the new CCN. We stated our
belief that these proposals are the most
operationally efficient and will allow
facilities the most certainty when they
change ownership. We proposed to
apply these rules beginning with the PY
2014 ESRD QIP, and we requested
public comment on these proposals.
The comments that we received and
our responses to these comments are set
forth below.
Comment: Many commenters strongly
supported our proposals for scoring
transferred facilities. One commenter
expressed concern that the proposals
will change the marketplace in ways
that are not yet known.
Response: We thank commenters for
their support. We realize that this
proposal may impact how dialysis
facilities are acquired in the future.
However, we believe that creating rules
around how we will treat transferred
facilities for purposes of the ESRD QIP
will create a marketplace that is more
predictable. Therefore, we finalize these
rules for transferred facilities as
proposed.
15. Public Reporting Requirements
Section 1881(h)(6)(A) of the Act
requires the Secretary to establish
procedures for making information
regarding facilities’ performance under
the ESRD QIP available to the public,
including information on the Total
Performance Score (as well as
appropriate comparisons of facilities to
the national average with respect to
such scores) and performance scores for
individual measures achieved by each
facility. Section 1881(h)(6)(B) of the Act
further requires that a facility have an
opportunity to review the information to
be made public with respect to that
facility prior to such information’s
publication. In addition, section
1881(h)(6)(C) of the Act requires the
Secretary to provide each facility with a
certificate containing its Total
Performance Score to post in patient
areas within the facility. Finally, section
1881(h)(6)(D) of the Act requires the
Secretary to post a list of facilities and
performance-score data on the CMS
Web site.
In the PY 2012 ESRD QIP final rule,
we adopted uniform requirements based
on sections 1881(h)(6)(A) through
1881(h)(6)(D) of the Act, establishing
procedures for facilities to review the

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information to be made public and the
procedures for informing the public
through facility-posted certificates for
the first 3 payment years of the ESRD
QIP (76 FR 636 through 639). We
proposed that these requirements
generally apply to PY 2015 and
subsequent payment years. However, we
proposed to make some modifications,
as outlined below, to these requirements
and that these modifications become
effective upon the effective date of this
final rule. Thus, these requirements, if
finalized, would apply in PY 2014 and
for subsequent payment years. All other
previously finalized requirements
would remain the same.
First, for the first year of the program,
PY 2012, we did not explicitly state that
we would be publishing a list of facility
performance on or after December 1 of
the year before the payment
consequence year. We did, however,
make this list available for the pubic via
the CMS Web site. For the PY 2013
ESRD QIP and subsequent payment
years, and in accordance with section
1881(h)(6)(D) of the Act, we proposed to
publish such aggregate list on the CMS
Web site at www.cms.gov and any other
Web site controlled by CMS. This list
will include information on the facility,
specifically:
(i) Name and address;
(ii) Measure rates (which may include
numerators and denominators) and
scores;
(iii) And Total Performance Scores.
This list will also indicate those
facilities that do not have enough data
to calculate one or more measure rates
and/or a Total Performance Score. We
believe it is important to publish such
a list because it allows beneficiaries, the
public, and facilities access to this
information without having to
individually download a certificate for
each facility, and, because of such
access, we believe it will ultimately
improve quality. The data will be more
accessible, Medicare beneficiaries and
their families will have the information
more easily to make choices about their
care, and facilities can more readily
compare their performance to other
facilities or across facilities. Therefore,
beginning in January 2013, we proposed
to publish a list of facility information
described above for each payment year
after facilities have the ability to review
their scores.
Second, for PY 2012, we required
facilities to prominently post certificates
within 5 days of us making these
certificates available for download from
www.dialysisreports.org in accordance
with section 1881(h)(6)(C) of the Act (76
FR 637). We proposed to modify the

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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations
previously finalized requirements for
posting certificates in two ways. We no
longer believe it is necessary for
facilities to post these certificates within
5 days of their availability. The
certificates are provided in late
December, and it was our experience in
the PY 2012 program that many
individuals responsible for the
certificates were away on holiday
during this period of time. Therefore,
we proposed to change this requirement
so that, beginning with the PY 2014
program, facilities will be required to
post their certificates on or before the
first business day after January 1 of each
payment year. Certificates are typically
available for download on or around
December 15, and we believe that this
two week amount of time is long enough
to allow facilities to post them.
Therefore, beginning PY 2014, we
proposed that facilities be required to
post their Performance Score
Certificates (PSCs) on or before the first
business day after January 1 of each
payment year in a prominent place for
the duration of that payment year and
otherwise comply with the requirements
listed in the PY 2012 final rule (76 FR
637).
Third, for the PY 2012 ESRD QIP, we
required facilities to post one copy of
the certificate in their facility (76 FR
637). Beginning in PY 2014, we
proposed to require facilities to post two
copies of this certificate, one copy in
English and one copy in Spanish. Both
of these certificates (which are posted as
a single file) will be provided by CMS,
both must be posted by the first
business day after January 1 of the
payment year, and both must be posted
for the entirety of such year in a
prominent location. We proposed to
require the certificate to be posted in
both English and Spanish to make the
certificate more understandable to
native Spanish speakers. Thus, to best
serve a greater number of ESRD patients,
we proposed to finalize the requirement
that facilities must post both an English
and a Spanish certificate prominently in
their facility. The only additional
burden for facilities in adding this
Spanish certificate is its printing and
posting.
The comments we received on these
proposals and our responses are set
forth below.
Comment: Commenters supported our
proposal to allow facilities until the first
business day after January 1 to post
certificates. Most commenters agreed
with our proposal to require facilities to
post both English and Spanish versions
of the PSC beginning in PY 2014, stating
that the additional burden is very small;
one commenter argued that Spanish

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versions of the PSC are not necessary in
all locations and recommended that
individual facility administrators
determine whether posting a PSC in
Spanish is necessary or beneficial based
upon the population that the facility
serves. Another commenter suggested
not only requiring a Spanish PSC but
also developing Spanish-language
materials explaining the PSCs.
Response: We agree with commenters
that the burden of posting a Spanish as
well as an English PSC is very little and
far outweighs the benefits it could
convey upon beneficiaries. We do not
agree that it is appropriate for facility
administrators to determine whether
posting the Spanish PSC is necessary. A
facility that does not furnish services to
native Spanish speaking patients in 1
year could begin to do so during the
next year. As the ESRD QIP evolves, we
seek to make the program as transparent
as possible for all beneficiaries.
Comment: Some commenters believe
that the ESRD QIP should be clearer,
and we should develop and make public
guidance documents for patients and
clinics. These commenters also
suggested that we hold open door
forums specifically for patients so that
they do not interpret the quality of care
information incorrectly.
Response: As we noted above, we
seek to make the program as transparent
as possible, specifically to beneficiaries.
We intend to continue to assess the
modes and efficacy of our
communications to beneficiaries. We
will take these comments into account
as we do so.
Comment: Some commenters
requested that we make available on our
Web site individual measure scores
(including the numerator and
denominator) and the Total Performance
Scores; commenters stated that these
scores should be organized by facility
and state to facilitate choice in care. One
commenter requested that this
information be published in both
English and Spanish. One commenter
encouraged us to create a ‘‘one-stopshop’’ for quality information on the
internet.
Response: Since the PY 2012 program,
we have made aggregate information on
measure scores and Total Performance
Scores available on http://www.cms.gov/
Medicare/End-Stage-Renal-Disease/
ESRDQualityImproveInit/index.html.
This information includes numerators
and denominators for each clinical
measure, the scores for each measure,
and Total Performance Scores for every
facility. The information is organized in
alphabetical order by state and facility.
We will consider publishing this
information in Spanish in future years.

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67517

Additionally, we seek to align the ESRD
QIP with CMS’ other VBP program; we
continue to assess how information
across programs should be presented,
and we will considering creating a ‘‘onestop-shop’’ for information related to
CMS’ programs. At present, a great deal
of information on these programs can be
found here: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/
QualityInitiativesGenInfo/index.html.
Comment: One commenter believes
that the NHSN measure should be
included in DFC because it is key to
patient safety.
Response: We thank comments and
will consider the appropriateness for
inclusion of this measure on DFC in
future Web site releases.
Comment: One commenter requested
that we confirm that there is consistency
in measures reported in DFR, DFC, PSR,
and for ESRD QIP purposes.
Response: We thank the commenter
for its inquiry regarding the consistency
of measures reported through DFR, DFC,
the Performance Score Reports (PSR),
and for ESRD QIP purposes. There are
some differences in the measure
descriptions between DFR, DFC, and
QIP because each serves its own
purposes; the measure rates for the
ESRD QIP that are posted on DFR, DFC,
and in the PSR are the same. For
example, for DFR/DFC, the
denominators for the Kt/V measures
include out of range values, whereas the
ESRD QIP Kt/V measure denominators
do not. We seek to align reporting
mechanisms as much as possible, but, in
some cases, we believe that it is
appropriate to present this information
differently.
Comment: One commenter
recommended that we timely monitor
quality data and intervene if trends
indicate a decrease in the quality of
care.
Response: We are committed to
monitoring and evaluating the impacts
of the ESRD QIP.
Comment: One commenter urged us
to prioritize the development and
implementation of a single system to
which facilities would report their data
in order to simplify reporting and
minimize unnecessary burdens on
providers, particularly staff members
otherwise providing direct care to
patients.
Response: We continue to evaluate
our reporting systems; we seek to
minimize provider burden as much as
possible, and we will continue to
evaluate ways in which we can do so as
the program moves forward.

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IV. Limitation on Payments to All
Providers, Suppliers and Other Entities
Entitled to Bad Debt
A. Background
In accordance with section 1861(v)(1)
of the Act and current regulations at 42
CFR 413.89, Medicare pays some or all
of the uncollectible deductible and
coinsurance amounts to those entities
eligible to receive reimbursement for
bad debt. To determine if bad debt
amounts are allowable, the requirements
at § 413.89 must be met. Chapter 3 of the
Provider Reimbursement Manual (PRM)
(CMS Pub. 15, Part I) provides
additional guidance on the standards
governing bad debt reimbursement.
Prior to the passage of the Middle
Class Tax Extension and Job Creation
Act of 2012 (Pub. L. 112–96), under
section 1861(v)(1)(T) of the Act and
§ 413.89(h)(1) of our regulations,
Medicare payments for allowable bad
debt amounts for hospitals were
reduced by 30 percent for cost reporting
periods beginning on or after October 1,
2001. Likewise, under section
1861(v)(1)(V) of the Act and
§ 413.89(h)(2) of our regulations,
Medicare payments for allowable bad
debt amounts for patients in skilled
nursing facilities (SNFs) that were not
dual eligible individuals beginning with
cost reporting periods beginning on or
after October 1, 2005, were reduced by
30 percent. Section 413.89(h)(2) defines
a dual eligible individual for bad debt
purposes as an individual that is
entitled to benefits under Part A of
Medicare and is determined eligible by
the State for Medical Assistance under
Title XIX of the Act as described in 42
CFR 423.772 paragraph (2) under the
definition of a ‘‘full-benefit dual eligible
individual.’’
For all other providers, suppliers, and
entities eligible to receive bad debt
payment, including critical access
hospitals (CAHs), rural health clinics
(RHCs), Federally qualified health
centers (FQHCs), community mental
health centers (CMHCs), end stage renal
diease (ESRD) facilities, swing bed
hospitals, as defined at 42 CFR
413.114(b), and patients that are dual
eligible individuals in SNFs, Medicare
paid 100 percent of allowable bad debt
amounts. Additionally, for health
maintenance organizations (HMOs)
reimbursed on a cost basis and
competitive medical plans (CMPs)
defined under section 1876 of the Act,
and for health care prepayment plans
(HCPPs) defined under section
1833(a)(1)(A) of the Act, Medicare pays
a portion of bad debt amounts under 42
CFR 417.536(f) of our regulations.
Although Medicare previously paid

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ESRD facilities 100 percent of allowable
bad debt amounts, these payments were
capped at the facility’s reasonable cost
in accordance with § 413.178(a). In the
proposed rule, we proposed to maintain
the cap on bad debt reimbursement to
an ESRD facility up to the facility’s
unrecovered costs. We also proposed to
apply the bad debt reduction
percentages mandated by section 3201
of the Middle Class Tax Extension and
Job Creation Act of 2012 (Pub. L. No.
112–96), prior to applying the cap up to
the ESRD facility’s unrecovered costs.
B. Section 3201 of The Middle Class Tax
Extension and Job Creation Act of 2012
(Pub. L. 112–96)
Sections 3201(a) and (b) of the Middle
Class Tax Extension and Job Creation
Act of 2012 (Pub. L. 112–96) amended
section 1861(v)(1)(T) and section
1861(v)(1)(V) of the Act, respectively, by
further reducing the percentage of
allowable bad debt attributable to the
deductibles and coinsurance amounts
payable to hospitals (section
1861(v)(1)(T)) and SNFs (section
1861(v)(1)(V)). Section 3201(b) of Public
Law 112–96 also revised the SNF bad
debt reductions to include both dual
eligible beneficiaries and non-dual
eligible beneficiaries under section
1861(v)(1)(V) of the Act, and to apply
such reductions to swing bed hospitals
for cost reporting periods beginning
during fiscal year 2013 and subsequent
fiscal years.
Finally, section 3201(c) of The Middle
Class Tax Extension and Job Creation
Act of 2012 added a new subparagraph
1861(v)(1)(W) to the Act, which applied
a reduction in bad debt payments to
‘‘providers’’ not addressed under
subparagraphs 1861(v)(1)(T) or
1861(v)(1)(V) of the Act. For the purpose
of subparagraph 1861(v)(1)(W) of the
Act, section 3201(c) Public Law 112–96
defined ‘‘providers’’ as those providers
not previously described in subsections
3201(a) or (b), suppliers, or any other
type of entity that receives payment for
bad debts under the authority of section
1861(v)(1)(A) of the Act. These
providers include, but are not limited
to, CAHs, RHCs, FQHCs, CMHCs, HMOs
reimbursed on a cost basis, CMPs,
HCPPs and ESRD facilities.
C. Summary of Provisions of This Final
Rule
1. Self-Implementing Provisions of
Section 3201 Public Law 112–96
The provisions of subsections 3201(a),
(b), and (c) of The Middle Class Tax
Extension and Job Creation Act of 2012
permit no discretion on the part of the
Secretary and thus, are self

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implementing, with the exception of the
proposal to maintain the cap on bad deb
reimbursement for ESRD facilities, as
discussed below.
Comment: We received comments
from commenters suggesting that the
bad debt reduction percentages be
implemented in single digit percent
reductions instead of the double digit
percent reductions, as mandated by
section 3201 of the Middle Class Tax
Extension and Job Creation Act of 2012.
Response: While we appreciate the
concerns of the provider community
regarding bad debt payments to
providers eligible to receive bad debt,
the percent reductions of bad debt
payments are statutorily mandated by
section 3201 of the Middle Class Tax
Extension and Job Creation Act of 2012
and do not provide for discretion.
Therefore, we are codifying these
provisions, as summarized below, in our
regulations.
• Payment of allowable bad debt to
hospitals for cost reporting periods
beginning during fiscal year 2013 and
subsequent fiscal years will be reduced
by 35 percent.
• Payment of allowable bad debt to
SNFs and swing bed hospitals for cost
reporting periods beginning during
fiscal year 2013 or a subsequent fiscal
year will be reduced by 35 percent for
coinsurance amounts for services
furnished to a beneficiary who is not a
dual eligible individual.
• Payment of allowable bad debt to
SNFs and swing bed hospitals for
coinsurance for services furnished to a
beneficiary who is a dual eligible
individual will be:
• For cost reporting periods
beginning during fiscal year 2013,
reduced by 12 percent;
• For cost reporting periods
beginning during fiscal year 2014,
reduced by 24 percent and;
• For cost reporting periods
beginning during fiscal year 2015,
reduced by 35 percent.
• Payment of allowable bad debt to
all other providers, suppliers and any
other entity that receives payment for
bad debts under the authority of section
1861(v)(1)(A) of the Act will be:
• For cost reporting periods
beginning during fiscal year 2013,
reduced by 12 percent;
• For cost reporting periods
beginning during fiscal year 2014,
reduced by 24 percent;
• And for cost reporting periods
beginning during fiscal year 2015 and
subsequent fiscal years, by 35 percent.
A summary of the changes in
Medicare bad debt payment percentages
required by section 3201 of The Middle
Class Tax Extension and Job Creation

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67519

Act of 2012 is reflected in Table 8
below:

TABLE 8—SUMMARY OF MEDICARE BAD DEBT REIMBURSEMENT BY PROVIDER TYPES FOR COST REPORTING PERIODS
THAT BEGIN DURING FY 2013, 2014, 2015 AND SUBSEQUENT YEARS
Allowable bad
debt amount
during FY 2012
(percent)

Provider type

Hospitals ..................................................................................
SNFs: Non-Full Dual Eligibles .................................................
Swing Bed Hospitals: Non-Full Dual Eligibles .........................
SNFs: Full Dual Eligibles .........................................................
Hospital Swing Beds: Full Dual Eligibles ................................
CAHs ........................................................................................
ESRD Facilities ........................................................................
CMHCs ....................................................................................
FQHCs .....................................................................................
RHCs .......................................................................................
Cost Based HMOs ...................................................................
Health Care Pre-Payment Plans .............................................
Competitive Medical Health Plans ...........................................

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2. ESRD Bad Debt Cap and Remove and
Reserve § 413.178
In the proposed rule, we proposed to
maintain the cap on bad debt
reimbursement up to an ESRD facility’s
unrecovered costs. Bad debt payments
are made under section 1861(v)(1)(A) of
the Act to prevent non-Medicare
patients from subsidizing Medicare
patients and vice-versa, also known as
the anti-cross subsidization principle.
The cap at an ESRD facility’s
unrecovered costs for bad debt
reimbursement was originally
implemented to assure that the
combination of the composite rate
payment and the bad debt payment did
not exceed the ESRD facility’s total
allowable costs of providing services to
Medicare beneficiaries, as well as to
avoid violating the anti-cross
subsidization principle. Thus, by
applying the cap, an ESRD facility
would not be paid for bad debt amounts
that exceeded its unrecovered costs
under the composite rate payment
system implemented in 1983.
Comment: We received comments
from commenters suggesting the
maintenance of the cap on bad debt
reimbursement to ESRD facilities up to
the facilities’ unrecovered costs was
inconsistent with the bad debt
reimbursement policies for all other
types of providers eligible to receive bad
debt reimbursement and was also
inconsistent with Federal court rulings.
Response: After careful consideration
of the policy implications of removing
the cap on bad debt reimbursement at
an ESRD facility’s unrecovered costs, we
have decided to eliminate the cap. The
elimination of the cap on bad debt

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Allowable bad
debt amount
during FY 2013
(percent)

70
70
100
100
100
100
100
100
100
100
100
100
100

65
65
65
88
88
88
88
88
88
88
88
88
88

reimbursement to ESRD facilities will
allow ESRD facilities to claim bad debts
at an amount exceeding unrecovered
costs incurred under a prospective
payment system. In addition, removal of
the cap on bad debt reimbursement to
ESRD facilities complies with the order
of the D.C. Circuit Court in Kidney
Center of Hollywood, et al. v. Shalala,
133 F.3d 78 (D.C. Circuit 1998), and will
allow us to apply our bad debt policies
consistently across all the types of
providers eligible to receive bad debt
payments. Therefore, we believe the
removal of the bad debt reimbursement
cap at an ESRD facility’s unrecovered
cost, is an equitable and reasonable
policy choice with respect to bad debt
reimbursement to ESRD facilities.
We are eliminating the cap for ESRD
facilities for cost reporting periods
beginning on or after January 1, 2013,
the effective date of this final rule. With
this change, ESRD facilities will be
reimbursed for bad debt reduced as
outlined in the proposed changes to
§ 413.89(h)(3), described above.
However, because the new bad debt
reductions for ESRD facilities become
effective October 1, 2012, and the
removal of the cap on bad debt
reimbursement to ESRD facilities will
not be effective until January 1, 2013,
for cost reporting periods beginning
between October 1, 2012 and December
31, 2012, the cap on bad debt
reimbursement to ESRD facilities will be
calculated with both the required bad
debt reductions and the cap on bad debt
reimbursement to ESRD facilities. For
illustrative purposes only, the following
examples present the interaction of the
application of the cap on ESRD bad debt

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Allowable bad
debt amount
during FY 2014
(percent)

Allowable bad
debt amount
during FY 2015 &
subsequent FYs
(percent)

65
65
65
76
76
76
76
76
76
76
76
76
76

65
65
65
65
65
65
65
65
65
65
65
65
65

payments until January 1, 2013 and the
ESRD bad debt reduction effective
October 1, 2012:
Example (A), for cost reporting periods
beginning before October 1, 2012, only the
cap applies as follows:
1. Unrecovered costs = $100.00
2. Aggregate Gross bad debt = $110.00
3. Bad debt amount of $110.00 is capped
at the unrecovered costs of $100.00,
therefore, the facility receives $100.00.
Example (B), for cost reporting periods
beginning between October 1, 2012 and
December 31, 2012, the 12 percent reduction
applies up to the facilities’ unrecovered costs
as follows:
1. Unrecovered costs = $100.00
2. Aggregate Gross bad debt = $110.00
3. Bad debt amount of $110.00 is reduced
by 12 percent (bad debt reduction in FY
2013) which equals $96.80. Since the
reduction is less than the cap, the facility
receives $96.80.
Example (C), for cost reporting periods
beginning on or after January 1, 2013 and
before October 1, 2013, only the 12 percent
reduction applies:
1. Unrecovered costs = $100.00
2. Aggregate Gross bad debt = $110.00
3. The $110.00 bad debt amount is reduced
by 12 percent (bad debt reduction in FY
2013). The facility receives $96.80 with no
cap applied.

We are moving current regulations
text at § 413.178(a) to proposed
§ 413.89(h)(3). The revised regulation
text will remove the bad debt cap for
ESRD facilities, and include the bad
debt reduction percentages applicable to
ESRD facilities in accordance with
1861(v)(1)(W).
We are removing current paragraphs
(b), (c), and (d)(1) of § 413.178 since
these provisions already are set out at
§ 413.89, Chapter 3 of the PRM Part I,

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D. Changes to Medicare Bad Debt Policy
In this rule, we are conforming
existing regulations text found at
§ 413.89(h) to the self-implementing
provisions of section 3201 of Public Law
112–96. Previously, bad debt
reimbursement to an ESRD facility was
capped up to the facility’s reasonable
costs under § 413.178(a). In this final
rule, we are moving the current
provision at § 413.178(a) to
§ 413.89(h)(3), and adding ESRD
facilities to the list of facilities to which
§ 413.89 ‘‘Bad debts, charity, and
courtesy allowances,’’ applies. We are
also eliminating duplicate provisions in
§ 413.178 and reserving § 413.178 for
future use. In addition, we are making
a technical correction to § 417.536(f)(1)
to clarify Medicare bad debt
reimbursement policy.

1861(v)(1)(T)(v) of the Act to hospitals
for cost reporting periods beginning
during fiscal year 2013 and subsequent
fiscal years.
We are revising § 413.89(h)(2) to add
paragraphs (h)(2)(i) and (h)(2)(ii).
Paragraph (h)(2)(i) will set forth the
percentage reduction in reimbursable
bad debt payments required by section
1861(v)(1)(V)(ii) of the Act for SNFs and
swing bed hospitals for cost reporting
periods beginning during fiscal years
2006 through 2012 for a patient that was
not a dual eligible individual. Paragraph
(h)(2)(ii) will set forth the reduction in
reimbursable bad debt payments for
SNFs and swing bed hospitals, for cost
reporting periods beginning during
fiscal year 2013 and subsequent fiscal
years, for a patient that was a dual
eligible individual.
We are revising § 413.89(h)(3) to set
forth the percentage reduction in
allowable bad debt payments required
by section 1861(v)(1)(W) of the Act for
ESRD facilities for cost reporting
periods beginning during fiscal year
2013, fiscal year 2014 and subsequent
fiscal years. We are also revising
§ 413.89(h)(3) to set forth the
applicability of the cap on bad debt
reimbursement to ESRD facilities for
cost reporting periods beginning
between October 1, 2012 and December
31, 2012.
We are adding a new § 413.89(h)(4) to
set forth the percentage reduction in
reimbursable bad debt payments for all
other entities required by section
1861(v)(1)(W) of the Act not described
in § 413.89(h)(1), (h)(2), or (h)(3) that are
eligible to receive reimbursement of bad
debt for cost reporting periods
beginning during fiscal year 2013, fiscal
year 2014, and subsequent fiscal years.

1. Changes to 42 CFR 413.89(h)
Under each paragraph of our existing
regulations at § 413.89(h), we describe
the limits on bad debt payment to be
reductions to the amount of bad debt
otherwise treated as allowable costs.
Under § 413.89(a), bad debts are
deductions from revenue and are not to
be included in allowable cost.
Therefore, we are clarifying that the
limits on bad debt payments are
reductions to amount of allowable bad
debt.
We are revising § 413.89(h)(1)(iv) to
set forth the percentage reduction in
reimbursable bad debt payments to
hospitals for cost reporting periods
beginning during fiscal years 2001
through 2012.
We are adding a new § 413.89(h)(1)(v),
which will set forth the percentage
reduction in reimbursable bad debt
payments required by section

2. Rationale for Removing 42 CFR
413.178
Previously, § 413.178(a) stated that
CMS will reimburse each ESRD facility
its allowable Medicare bad debts, as
defined in § 413.89(b), up to the
facility’s costs, as determined under
Medicare principles, in a single lump
sum payment at the end of the facility’s
cost reporting period. This cap on bad
debt reimbursements will be eliminated
and the new reductions in bad debt
reimbursements will be applied, as
discussed above.
We are revising § 413.89(h)(3) to
implement the ESRD facilities’ bad debt
reduction effective October 1, 2012 in
accordance with section 1861(v)(1)(W)
of the Act.
We are also removing and reserving
§ 413.178, since the revised provisions
already are set out at § 413.89, in
Chapter 3 of the PRM Part I, and in the

and in the Medicare cost report
instructions in the PRM Part II.
In addition, we are moving the bad
debt exception provision applicable to
ESRD facilities discussed at
§ 413.178(d)(2) to proposed
§ 413.89(i)(2). For consistency, we are
also moving the current general bad
debt exception set out at § 413.89(i) to
new paragraph § 413.89(i)(1).
We are removing and reserving
§ 413.178.

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3. Technical Corrections
We are making a technical correction
to 42 CFR 417.536(f)(1) to refer to 42
CFR 413.89 as the appropriate cross
reference to Medicare bad debt
reimbursement policy, to revise the
existing language describing bad debt to
conform to § 413.89(a), and to remove
requirements that already are set out at
§ 413.89.

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Medicare cost report instructions in the
PRM Part II. We are moving the current
general bad debt exception at § 413.89(i)
to new paragraph § 413.89(i)(1) in order
to move the ESRD facilities’ bad debt
exception provision previously
discussed at § 413.178(d)(2) to new
paragraph § 413.89(i)(2).
3. Technical Corrections to 42 CFR
417.536(f)(1)
In this final rule, we are revising the
regulations text at 417.536(f)(1) to
correct the cross-reference to the
Medicare bad debt reimbursement
regulation, so that § 417.536(f)(1) will
reference 42 CFR 413.89 instead of the
outdated reference to § 413.80. In
addition, we are revising the language at
42 CFR 417.536(f)(1) to conform to the
description of bad debt in § 413.89(a)
and we are removing § 417.536(f)(1)(i)
and (ii) since these provisions already
are set out at § 413.89, in Chapter 3 of
the PRM Part I, and in the Medicare cost
report instructions in the PRM Part II.
V. Collection of Information
Requirements
A. Legislative Requirement for
Solicitation of Comments
Under the Paperwork Reduction Act
of 1995, we are required to provide 30day notice in the Federal Register and
solicit public comment before a
collection of information requirement is
submitted to the Office of Management
and Budget (OMB) for review and
approval. In order to fairly evaluate
whether an information collection
should be approved by OMB, section
3506(c)(2)(A) of the Paperwork
Reduction Act of 1995 requires that we
solicit comment on the following issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of our agency.
• The accuracy of our estimate of the
information collection burden.
• The quality, utility, and clarity of
the information to be collected.
• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
B. Requirements in Regulation Text
We did not propose and therefore are
not finalizing any changes to regulatory
text for the ESRD PPS in CY 2013.
C. Additional Information Collection
Requirements
This final rule does not impose any
new information collection
requirements in the regulation text, as
specified above. However, this final rule
does make reference to several
associated information collections that

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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations
are not discussed in the regulation text
contained in this document. The
following is a discussion of these
information collections. We are
soliciting public comment on each of
these issues.
1. ESRD QIP

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a. Display of Certificates for the PY 2015
ESRD QIP
Section III.D.15 of this final rule
discusses a disclosure requirement for
the PY 2014 and PY 2015 ESRD QIP. As
stated earlier in this final rule, section
1881(h)(6)(C) of the Act requires the
Secretary to provide certificates to
dialysis care providers and facilities
with their Total Performance Scores
under the ESRD QIP. This section also
requires each facility that receives an
ESRD QIP certificate to display it
prominently at the facility.
To comply with this requirement, we
proposed to issue one English and one
Spanish ESRD QIP certificate beginning
in PY 2014 to facilities via a generally
accessible electronic file format. We had
previously finalized other display
requirements for the program, including
that each facility prominently display
the applicable ESRD QIP certificate in
the patient area, take the necessary
measures to ensure the security of the
certificate in the patient areas, and have
staff available to answer questions about
the certificate in an understandable
manner, taking into account that some
patients might have limited English
proficiency.
The burden associated with the
aforementioned requirements is the time
and effort necessary for facilities to print
the applicable ESRD QIP certificates,
display the certificates prominently in
patient areas, ensure the safety of the
certificates, and respond to patient
inquiries in reference to the certificates.
We do not anticipate that posting the
Spanish certificate will add more time
or burden to the Collection of
Information requirements outlined in
the CY 2011 ESRD PPS final rule (76 FR
70298 through 70299) for the PY 2014
ESRD QIP. Therefore, this analysis only
applies to the burden associated with
the PY 2015 and beyond requirements.
We estimate that approximately 5,726
facilities will receive ESRD QIP
certificates in PY 2015 and will be
required to display them. We also
estimate that it will take each facility 10
minutes per year to print, prominently
display, and secure the ESRD QIP
certificates, for a total estimated annual
burden of 954 hours (10/60 hours
*5,726 facilities). According to the
Bureau of Labor Statistics, the mean
hourly wage of a registered nurse is

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$33.23.9 Since we anticipate nurses (or
administrative staff) will post these
certificates, we estimate that the
aggregate cost of this requirement will
be $31,701 ($33.23/hour × 954 hours).
We estimate that approximately onethird of ESRD patients, or 100,000
patients, will ask a question about the
ESRD QIP certificate. We further
estimate that it will take each facility
approximately 5 minutes to answer each
patient’s question about the applicable
ESRD QIP certificate, or 1.52 hours per
facility each year. The total estimated
annual burden associated with this
requirement is 8,704 hours (1.52 hours/
facility × 5,726 facilities). The total
estimated annual burden for both
displaying the ESRD QIP certificates
and answering patients’ questions about
the certificates is 9,658 hours (8,704
hours + 954 hours). While the total
estimated annual burden associated
with both of these requirements as
discussed is 9,658 hours, we do not
believe that there will be a significant
cost associated with these requirements
because we are not requiring facilities to
complete new forms. We estimate that
the total cost for all ESRD facilities to
comply with the collection of
information requirements associated
with the certificates each year would be
less than $320,935 ($33.23/hour × 9,658
hours).
b. NHSN Dialysis Event Reporting
Requirement for the PY 2015 ESRD QIP
As stated above in section III.D.2.a of
this finalrule, we finalized a measure
requiring facilities to reporting dialysis
events to the NHSN for he PY 2015
ESRD QIP. Specifically, we will require
facilities to submit 12 months of dialysis
event data to the NHSN to receive 10
points on the measure. The burden
associated with this requirement for
existing facilities is the time and effort
necessary for facilities to submit 12
months of data in order to receive the
maximum number of points. According
to our most recent data, 5,525 facilities
treat adult in-center hemodialysis and/
or pediatric in-center hemodialysis
patients and are, then, eligible to receive
a score on this measure; therefore, we
estimate that approximately 5,525
facilities will submit the required data.
Based on data previously collected, we
further estimate that the average number
of dialysis events is 0.008 per patient
per month and that each facility has
approximately 75 patients. Accordingly,
we estimate the number of dialysis
events in a 12-month period for all
facilities to be 397,800 (0.09 events/
patient/month × 75 patiens/facility ×
9 This

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67521

5,525 facilities × 12 mohths) for the PY
201 ESRD QIP performance period. We
estimae it will require 10 minutes to
collect and submit data on these events,
and the estimated burden for submiting
12 mohths of data will be 66,300 hours
(397,800 dialysis events × 10/60
minute). If the dialysis events were
distributed evenly across all 5,525
facilities, the reporting would result in
an additional 12 hour (66, 300 hours/
5,525 facilities), burden for each facility
at a cost of $399 ($33.23/hour × 12
hours) per facility. Again, we estimate
the mean hourly wage of a registered
nurse is $33.23, and we anticipate
nurses (for administrative staff) will be
responsible for this reporting. In total,
we believe that the cost for all ESRD
facilities to comply with the reporting
requirements associated with NHSN
Dialysis Event reporting measure will be
approximately $2.2 million ($399 ×
5,525 facilities= $2,204,475) per year.
c. ICH CAHPS Survey Attestation
Requirement for the PY 2015 ESRD QIP
As stated above in section III.D.1.c of
this final rule, we finalized a measure
that assesses facility usage of the ICH
CAHPS survey as a reporting measure
for the PY 2015 ESRD QIP. The burden
associated with this requirement is the
time and effort necessary for facilities to
administer the ICH CAHPS survey
through a third party and submit an
attestation to CMS that they successfully
administered the survey.
We estimate that approximately 5,523
facilities treat adult, in-center
hemodialysis patients and are, therefore,
eligible to receive a score on this
measure. We estimate that all 5,523
facilities will administer the ICH
CAHPS survey through a third-party
and submit an attestation to that effect.
We estimate that it will take each
facility’s third-party administrator 16
hours per year to be trained on the
survey features. We further estimate that
it will take each facility approximately
5 minutes to submit the attestation each
year. The estimated total annual burden
on facilities is 88,829 hours ((16 hours
× 5,523 facilities) + ((5/60 minutes) ×
5,523 facilities) which is equal to
$2,952,818 (88,829 hours × $33.23), or
$534 per facility ($2,952, 818/5,523).
Again, we estimate the mean hourly
wage of a registered nurse is $33.23, and
we anticipate nurses (or administrative
staff) will be responsible for this
reporting. We estimate that it would
take each patient 30 minutes to
complete the survey (to account for
variability in education levels) and that
approximately 75 surveys per year

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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations

would be taken per facility.10
Interviewers from each facility would
spend a total of approximately 37.5
hours per year with patients completing
these surveys (30/60 minutes * 75
minutes) or $1,247 (37.5 hours × $33.23)
for an estimated annual burden of
207,113 hours (37.5 hours * 5,523
facilities) which is equal to $6.9 million
(207,113 hours × 33.23/hour). We
estimate that time burden for ESRD
facilities to comply with the collection
of information requirements associated
with administering the ICH CAHPS
survey each year would be
approximately $1,781 ($534 + $1,247)
for each facility, or $9.9 million ($1,781
× 5,523 facilities =$9,836,463) across all
ESRD facilities.
d. Data Validation Requirements

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Section III.D.13 of this final rule
outlines the data validation processes
we are finalizing. We will randomly
sample records from 750 facilities; each
sampled facility would be required to
produce approximately 10 records. The
burden associated with this validation
requirement is the time and effort
necessary to submit validation data to a
CMS contractor. Because we anticipate
that the sampled facilities will be
reimbursed by our validation contractor
for the costs associated with copying
and mailing the requested records, we
only estimate the burden of retrieving
and submitting the necessary records.
We estimate that it will take each
facility approximately 2.5 hours to
comply with these requirements. If 750
facilities are tasked with providing the
required documentation, the estimated
annual burden across all facilities will
be 1,875 hours (750 facilities × 2.5
hours) at a total of $62,307 (1,875 hours
× $33.23/hour) or $83.08 ($62,307/750)
per facility in the sample. Again, we
estimate the mean hourly wage of a
registered nurse is $33.23, and we
anticipate nurses (or administrative
staff) will be responsible for providing
this information.
The comments we received on this
analysis are set forth below.
Comment: One commenter believes
that the underlying premise for the
10 Last year, we stated that we believed that 200
surveys would be administered per facility per year
(76 FR 70299). Upon further review, however, we
note that the ICH CAHPS specifications require a
sample of 200 surveys only for those facilities with
a large patient population. Faculties with fewer
than 200 patients are required to survey all patients,
aiming for a 40 percent response rate. (http://
www.cahps.ahrq.gov/∼/media/Files/
SurveyDocuments/ICH/Admin_Survey/
53_fielding_the_ich_survey.pdf). Since we estimate
that each facility serves approximately 75 patients,
we believe that the average facility, at most, would
survey 75 patients per year.

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CAHPS burden analysis is incorrect.
This commenter stated that if the
average facility serves 75 patients, it
would survey at most 75 patients per
year.
Response: We believe that this
assumption is a good approximation for
this analysis. We realize that facilities
may have more than 75 patients or less
than 75 patients. Across the ESRD
population, however, we believe 75
patients per facility is accurate.
According to the ICH CAHPS
specifications, if a facility has less than
200 patients, it must draw a census of
patients from this facility. Therefore, if
the average facility has 75 patients, we
believe it would survey at most 75
patients.
Comment: One commenter expressed
concern that responding to questions
from patients about the Performance
Score Certificates (PSCs) could consume
too many staff hours.
Response: We recognize that patients
may have questions about the PSCs. The
ESRD QIP is designed not only to
incentivize care, but also to stimulate
discussion about the quality of dialysis
care. Therefore, we believe that these
questions and answers are important in
promoting the goals of the program and
improvement in care in that they
promote patient awareness and
understanding of the care they are
receiving. Additionally, we believe that
these questions will be answered during
the course of usual patient care. We will
continue to monitor the burden these
questions may place upon facilities.
To obtain copies of the supporting
statement and any related forms for the
paperwork collections referenced above,
access CMS’ Web site at http://
www.cms.gov/PaperworkReductionAct
of1995/PRAL/list.asp#TopOfPage.
If you comment on these information
collection and recordkeeping
requirements, please submit your
comments to the Office of Information
and Regulatory Affairs, Office of
Management and Budget, Attention:
CMS Desk Officer, [CMS–1352–F]; Fax:
(202) 395–6974; or Email:
[email protected].
2. Reductions to Bad Debt Payments for
All Medicare Providers
The statutorily mandated reductions
of bad debt payments to providers,
suppliers, and other entities that are
currently receiving bad debt payments
will not result in any changes to or any
additional collection of information
requirements. The removal of the cap on
bad debt reimbursement to ESRD
facilities will result in fewer collection
of information requirements for ESRD
facilities.

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VI. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
We examined the impacts of this final
rule as required by Executive Order
12866 (September 30, 1993, Regulatory
Planning and Review) and Executive
Order 13563 on Improving Regulation
and Regulatory Review (January 18,
2011). 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). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. This rule
has been designated economically
significant under section 3(f)(1) of
Executive Order 12866. Accordingly,
the rule has been reviewed by the Office
of Management and Budget. We have
prepared a Regulatory Impact Analysis
that to the best of our ability presents
the costs and benefits of the final rule.
2. Statement of Need
This rule finalizes a number of
routine updates for renal dialysis items
and services in CY 2013, implements
the third year of the ESRD PPS
transition, and makes several policy
changes and clarifications to the ESRD
PPS. These include updates and
changes to the ESRD PPS and composite
rate base rates, wage index values, wage
index budget-neutrality adjustment
factors, outlier payment policy, and
transition budget-neutrality adjustment.
Failure to publish this final rule would
result in ESRD facilities not receiving
appropriate payments in CY 2013.
This final rule also implements the
QIP for PY 2015 and beyond by
establishing measures, a scoring system,
and payment reductions to incentivize
improvements in dialysis care as
directed by section 1881(h) of the Act.
Failure to establish QIP program
parameters in this rule would prevent
continuation of the QIP beyond PY
2014.
This final rule also implements the
reduction percentages of bad debt
reimbursement required by section 3201
of The Middle Class Tax Extension and
Job Creation Act of 2012. This final rule
also removes the cap on bad debt
reimbursement to an ESRD facility up to
the facility’s unrecovered costs. Section
3201(c) of The Middle Class Tax

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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations
Extension and Job Creation Act of 2012
adds a new subparagraph—
1861(v)(1)(W) to the Act and applies a
reduction in bad debt payments to
‘‘providers’’ not addressed under
subparagraphs 1861(v)(1)(T) or
1861(v)(1)(V) of the Act. For the purpose
of subparagraph 1861(v)(1)(W) of the
Act, section 3201(c) of The Middle Class
Tax Extension and Job Creation Act of
2012 defined ‘‘providers’’ as a supplier
or any other type of entity that receives
payment for bad debts under the
authority of section 1861(v)(1)(A) of the
Act. These providers include, but are
not limited to, CAHs, RHCs, FQHCs,
CMHCs, HMOs reimbursed on a cost
basis, CMPs, HCPPs and ESRD facilities.
3. Overall Impact
We estimate that the final revisions to
the ESRD PPS will result in an increase
of approximately $250 million in
payments, from Medicare, to ESRD
facilities in CY 2013, which includes
the amount associated with the increase
in the ESRDB market basket reduced by
the productivity adjustment, updates to
outlier amounts, and the effect of
changing the blended payments from 50
percent under the composite rate
payment and 50 percent under the
ESRD PPS to 25 percent under the
composite rate payment and 75 percent
under the ESRD PPS.

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We estimate that the requirements
related to the ESRD QIP for PY 2015
will cost approximately $12.4 million
and the predicted payment reductions
will equal about $12.1 million to result
in a total impact from the proposed
ESRD QIP requirements of $24.6
million.
In section IV of this final rule, we
discuss the provisions required by
section 3201 of The Middle Class Tax
Extension and Job Creation Act of 2012,
which apply percentage reductions in
bad debt reimbursement to all providers
eligible to receive bad debt
reimbursement; these provisions are
specifically prescribed by statute and
thus, are self-implementing. Table 9 in
section IV.C.1 of the CY 2013 proposed
rule (77 FR 40988) depicts a comparison
of the bad debt payment percentages
prior to and after FY 2013. We estimate
these self implementing provisions of
section 3201 of The Middle Class Tax
Extension and Job Creation Act of 2012
will result in savings to the Medicare
program of $10.92 billion over the
period from 2012 through 2022.

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Fiscal year

2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................

Aggregate FY Total
Savings.

Medicare program
savings from
reductions in bad
debt
240 million.
600 million.
900 million.
1.06 billion.
1.14 billion.
1.21 billion.
1.30 billion.
1.39 billion.
1.49 billion.
1.59 billion.
10.92 billion.

Additionally, in section IV of this
final rule, we discuss the removal of the
cap on bad debt reimbursement to ESRD
facilities. We estimate the removal of
this cap will result in a cost to the
Medicare program in the amount of
$170 million from 2013 through 2022.
Fiscal year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................

Aggregate FY Total
Cost.

Medicare program
cost resulting from
cap removal
10
20
10
10
20
20
20
20
20
20

million.
million.
million.
million.
million.
million.
million.
million.
million.
million.

170 million.

B. Detailed Economic Analysis
1. CY 2013 End-Stage Renal Disease
(ESRD) Prospective Payment System
(PPS)
a. Effects on ESRD Facilities
To understand the impact of the
changes affecting payments to different
categories of ESRD facilities, it is
necessary to compare estimated
payments (that is, payments made under
the 100 percent ESRD PPS and those
under the ESRD PPS blended payment
during the transition) in CY 2012 to
estimated payments in CY 2013. To
estimate the impact among various
classes of ESRD facilities, it is
imperative that the estimates of
payments in CY 2012 and CY 2013
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 the June
2012 update of CY 2011 National Claims

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67523

History file as a basis for Medicare
dialysis treatments and payments under
the ESRD PPS. We updated the 2011
claims to 2012 and 2013 using various
updates. The updates to the ESRD PPS
base rate and the base composite rate
portion of the blended rate during the
transition are described in section II.C of
this final rule. In addition, in order to
prepare an impact analysis, since some
ESRD facilities opted to be paid the
blended payment amount during the
transition, we made various
assumptions about price growth for the
formerly separately billable drugs and
laboratory tests with regard to the
composite portion of the ESRD PPS
blended payment during the transition.
These rates of price growth are briefly
outlined below, and are described in
more detail in the CY 2011 ESRD PPS
final rule (75 FR 49078 through 49080).
We used the CY 2011 amounts for the
CYs 2012 and 2013 amounts for
Supplies and Other Services, since this
category primarily includes the $0.50
administration fee for separately billable
Part B drugs and this fee continues to be
an appropriate amount. Because some
ESRD facilities will receive blended
payments during the transition and
receive payment for ESRD drugs and
biologicals based on their average sales
price plus 6 percent (ASP+6), we
estimated price growth for these drugs
and biologicals based on ASP+6
percent. We updated the last available
quarter of actual ASP data for the top
twelve drugs (the fourth quarter of 2012)
thru 2013 by using the quarterly growth
in the Producer Price Index (PPI) for
Drugs, consistent with the method for
addressing price growth in the ESRDB
market basket. This resulted in increases
of 3.0 percent, 0.2 percent, 1.4 percent
and 1.0 percent, respectively, for the
first quarter of 2013 thru the fourth
quarter of 2013. Since the top twelve
drugs account for over 99 percent of
total former separately billable Part B
drug payments, we used a weighted
average growth of the top twelve drugs
for the remainder. Table 8 below shows
the updates used for the drugs.
We updated payments for laboratory
tests paid under the laboratory fee
schedule to 2012 and 2013 using the
statutorily required update of the CPI–
U increase with any legislative
adjustments. For this final rule, the
growth from 2011 to 2012 is 0.7 percent
and the growth from 2011 to 2013 is
¥1.1 percent.

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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations

TABLE 9—PRICE INCREASES FROM 2011 TO 2012 AND 2011 TO 2013 OF FORMER SEPARATELY BILLABLE PART B
DRUGS
Total growth 2011 to
2012
(percent)

Separately billable drugs

¥0.3
¥31.6
¥24.8
¥14.7
12.2
¥68.3
64.6
¥12.4
15.5
6.5
11.5
¥7.8
¥8.1

EPO .................................................................................................................................................
Paricalcitol ........................................................................................................................................
Sodium_ferric_glut ...........................................................................................................................
Iron_sucrose ....................................................................................................................................
Levocarnitine ....................................................................................................................................
Doxercalciferol .................................................................................................................................
Calcitriol ...........................................................................................................................................
Vancomycin .....................................................................................................................................
Alteplase ..........................................................................................................................................
Aranesp ............................................................................................................................................
Daptomycin ......................................................................................................................................
Ferumoxytol .....................................................................................................................................
Weight for others .............................................................................................................................

Table 10 below shows the impact of
the estimated CY 2013 ESRD payments

Total growth 2011 to
2013
(percent)
5.0
¥36.5
¥33.3
¥14.2
¥2.3
¥68.5
15.7
¥15.4
24.4
12.3
19.0
¥4.3
¥4.6

compared to estimated payments to
ESRD facilities in CY 2012.

TABLE 10—IMPACT OF CHANGES IN PAYMENTS TO ESRD FACILITIES FOR THE CY 2013 ESRD FINAL RULE
[Percent change in total payments to ESRD facilities (both program and beneficiaries)]
A

B

C

D

E

Number of
facilities

Number of
treatments
(in millions)

Effect of 2013
changes in
outlier policy 3
(percent)

Effect of 2013
changes in
wage indexes
(percent)

Effect of total
2013
changes 4
(percent)

tkelley on DSK3SPTVN1PROD with RULES2

Facility type
All Facilities ..........................................................................
Type
Freestanding .................................................................
Hospital based ..............................................................
Ownership Type
Large dialysis organization ...........................................
Regional chain ..............................................................
Independent ..................................................................
Hospital based 1 ............................................................
Unknown ..............................................................................
Geographic Location
Rural .............................................................................
Urban ............................................................................
Census Region
East North Central ........................................................
East South Central .......................................................
Middle Atlantic ..............................................................
Mountain .......................................................................
New England ................................................................
Pacific ...........................................................................
Puerto Rico and Virgin Islands .....................................
South Atlantic ................................................................
West North Central .......................................................
West South Central ......................................................
Facility Size
Less than 4,000 treatments 2 ........................................
4,000 to 9,999 treatments ............................................
10,000 or more treatments ...........................................
Unknown .......................................................................
Percentage of Pediatric Patients
Less than 2% ................................................................
Between 2% and 19% ..................................................
Between 20% and 49% ................................................
More than 50% .............................................................

5,726

41.4

0.4

0.0

3.0

5,176
550

38.0
3.4

0.5
0.3

0.0
0.1

2.9
3.6

3,719
926
636
434
11

27.3
7.1
4.4
2.6
0.0

0.5
0.3
0.2
0.3
0.3

0.0
0.1
0.0
0.2
1.5

2.9
3.0
3.0
3.6
4.4

1,267
4,459

6.8
34.6

0.5
0.4

¥0.2
0.0

2.9
3.0

941
472
641
335
171
667
41
1,259
416
783

6.3
3.1
5.1
1.9
1.4
5.6
0.3
9.5
2.2
6.0

0.5
0.6
0.4
0.3
0.5
0.2
0.2
0.6
0.4
0.5

0.1
¥0.5
0.0
¥0.3
0.5
0.6
¥2.4
¥0.2
0.1
¥0.2

3.1
2.5
3.1
2.6
3.5
3.4
0.6
2.8
3.2
2.8

1,105
2,225
2,370
26

2.5
11.6
27.2
0.0

0.4
0.5
0.4
0.2

0.0
0.0
0.0
0.1

3.0
3.0
3.0
3.2

5,616
44
8
58

41.0
0.4
0.0
0.1

0.5
0.3
0.1
¥0.2

0.0
¥0.1
¥0.1
0.0

3.0
3.0
4.1
2.2

1 Includes

hospital based facilities not reported to have large dialysis organization or regional chain ownership.
the 1,105 Facilities with less than 4,000 treatments, only 332 qualify for the low-volume adjustment. The low-volume adjustment is mandated by Congress, and is not applied to pediatric patients. The impact to these Low volume Facilities is a 3.3% increase in payments.
3 Includes the effects of the final payment policy on thrombolytics for those facilities that are paid under the blend.
2 Of

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67525

tkelley on DSK3SPTVN1PROD with RULES2

4 Includes the effect of Market Basket minus productivity increase of 2.3% to the ESRD PPS base and the Composite Rate.
Includes the effect of the change in the drug add-on percentage from 14.3% to 14.0% for those facilities that opted to be paid under the transition.
Includes the effect of the blend changing from 50/50 to 25/75 for those facilities that choose to be paid under the transition.
Includes the effect of the Transition Budget-Neutrality Factor of 0.1 percent for all facilities.
Note: Totals do not necessarily equal the sum of rounded parts.

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.C.7 of this final rule is shown in
column C. For CY 2013, the impact on
all facilities as a result of the changes to
the outlier payment policy would be a
0.4 percent increase in estimated
payments. The estimated impact of the
changes to outlier payment policy
ranges from a 0.2 percent decrease to a
0.6 percent increase. Most ESRD
facilities are anticipated to experience a
positive effect in their estimated CY
2013 payments as a result of the final
outlier policy changes.
Column D shows the effect of the
wage index on ESRD facilities and
reflects the CY 2013 wage index values
for the composite rate portion of the
blended payment during the transition
and the ESRD PPS payments. Facilities
located in the census region of Puerto
Rico and the Virgin Islands would
receive a 2.4 percent decrease in
estimated payments in CY 2013. Since
most of the facilities in this category are
located in Puerto Rico, the decrease is
primarily due to the reduction in the
wage index floor, (which only affects
facilities in Puerto Rico in CY 2013).
The other categories of types of facilities
in the impact table show changes in
estimated payments ranging from a 0.5
percent decrease to a 1.5 percent
increase due to the update of the wage
index.
Column E reflects the overall impact
(that is, the effect of the final outlier
policy changes, the effect of the final
wage index, the effect of the ESRDB
market basket increase minus
productivity adjustment, the effect of
the change in the blended payment
percentage from 50 percent of payments
based on the composite rate system and
50 percent based on the ESRD PPS in
2012, to 25/75, respectively, for 2013,
for those facilities that opted to be paid
under the transition, and the effect of
the 0.1 percent transition budgetneutrality adjustment increase). We
expect that overall, ESRD facilities will
experience a 3.0 percent increase in

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estimated payments in 2013. ESRD
facilities in Puerto Rico and the Virgin
Islands are expected to receive a 0.6
percent increase in their estimated
payments in CY 2013. This smaller
increase is primarily due to the negative
impact of the wage index. The other
categories of types of facilities in the
impact table show positive impacts
ranging from an increase of 2.2 percent
to 4.4 percent in their 2013 estimated
payments.
b. Effects on Other Providers
Under the ESRD PPS, ESRD facilities
are paid directly for the renal dialysis
bundle and other provider types such as
laboratories, DME suppliers, and
pharmacies, may no longer bill
Medicare directly for renal dialysis
services. Rather, effective January 1,
2011, such other providers can only
furnish renal dialysis services under
arrangements with ESRD facilities and
must seek payment from ESRD facilities
rather than Medicare. Under the ESRD
PPS, Medicare pays ESRD facilities one
payment for renal dialysis services,
which may have been separately paid to
suppliers by Medicare prior to the
implementation of the ESRD PPS.
Therefore, in CY 2013, the third year of
the ESRD PPS, we estimate that the final
ESRD PPS will have zero impact on
these other providers.
c. Effects on the Medicare Program
We estimate that Medicare spending
(total Medicare program payments) for
ESRD facilities in 2013 will be
approximately $8.4 billion. This
estimate is based on various price
update factors discussed in section VI.B
in this final rule and takes into account
a projected increase in fee-for-service
Medicare dialysis beneficiary
enrollment of 4.0 percent in CY 2013.
d. Effects on Medicare Beneficiaries
Under the ESRD PPS, beneficiaries are
responsible for paying 20 percent of the
ESRD PPS payment amount or blended
payment amount for patients treated in
facilities going through the ESRD PPS
transition. As a result of the projected
3.0 percent overall increase in the ESRD
PPS payment amounts in CY 2013, we
estimate that there will be an increase
in beneficiary co-insurance payments of

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3.0 percent in CY 2013, which translates
to approximately $60 million.
e. Alternatives Considered
We considered eliminating the AY
modifier use by ESRD facilities in CY
2013, which could address program
integrity concerns but could also require
Medicare beneficiaries to incur
additional injections, medical visits and
co-insurance liabilities and accordingly,
we did not pursue this alternative.
Rather, we decided to monitor the use
of the AY modifier and consider the
elimination of the AY modifier in future
rulemaking if we determine that it is
being used inappropriately.
2. ESRD QIP
a. Effects of the PY 2015 ESRD QIP
The ESRD QIP provisions are
intended to prevent possible reductions
in the quality of ESRD dialysis facility
services provided to beneficiaries as a
result of payment changes under the
ESRD PPS by implementing an ESRD
QIP that reduces ESRD payments by up
to 2 percent for dialysis facilities that
fail to meet or exceed a Total
Performance Score with respect to
performance standards established by
the Secretary with respect to certain
specified measures. The methodology
that we are finalizing to determine a
facility’s Total Performance Score is
described in section III.D.9 and III.D.10
of this final rule. Any reductions in
ESRD payments would begin on January
1, 2015 for services furnished on or after
January 1, 2015.
As a result, based on the ESRD QIP
outlined in this final rule, we estimate
that, of the total number of dialysis
facilities (including those not receiving
an ESRD QIP Total Performance Score),
approximately 20 percent or 1,093 of the
facilities would likely receive a payment
reduction for PY 2015. Facilities that do
not receive a TPS are not eligible for a
payment reduction.
The ESRD QIP impact assessment
assumes an initial count of 5,726
dialysis facilities paid through the ESRD
PPS. Table 11 shows the overall
estimated distribution of payment
reductions resulting from the PY 2015
ESRD QIP.

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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations

TABLE 11—ESTIMATED DISTRIBUTION
OF PY 2015 ESRD QIP PAYMENT
REDUCTIONS

TABLE 11—ESTIMATED DISTRIBUTION To estimate whether or not a facility
OF PY 2015 ESRD QIP PAYMENT would receive a payment reduction
under the proposed approach, we
REDUCTIONS—Continued

Payment
reduction
(percent)

Payment
reduction
(percent)

0.0
0.5
1.0
1.5

.................
.................
.................
.................

Number of
facilities

Percent of
facilities

4308
599
309
97

79.8
11.1
5.7
1.8

scored each facility on achievement and
improvement for each of the proposed
Percent of
clinical measures using the most recent
facilities
data available for each measure shown
1.6 in Table 12.

Number of
facilities

2.0 .................

88

* Note: this table excludes 325 facilities that
did not receive a score because they did not
have enough data to receive a Total Performance Score.

TABLE 12—DATA USED TO ESTIMATE PY 2015 ESRD QIP PAYMENT REDUCTIONS
Period of time used to
calculate achievement
thresholds, performance
standards, benchmarks,
and
improvement thresholds

Measure

Hemoglobin Greater Than 12 g/dL ................................................................................
Vascular Access Type
% Fistula .................................................................................................................
% Catheter ..............................................................................................................
Kt/V
Adult HD .................................................................................................................
Adult PD .................................................................................................................
Pediatric HD ...........................................................................................................

We used claims data for these
calculations. Clinical measures with less
than 11 cases for a facility were not
included in that facility’s Total
Performance Score. Clinical measures
with 11–25 cases for a facility received
an adjustment as outlined in section
III.C.11.a of this final rule. Each
facility’s Total Performance Score was
compared to the estimated minimum
Total Performance Score and the
payment reduction table found in
section III.D.12 of this final rule.
Facilities were required to have a score
on at least one clinical measure to
receive a Total Performance Score. For
these simulations, reporting measures
were not included due to lack of data
availability. Therefore, the simulated
facility Total Performance Scores were
calculated using only the clinical
measure scores.

Performance period

Jan 2010–Dec 2010 ...........

Jan 2011–Dec 2011.

Oct 2010–Apr 2011 ............
Oct 2010–Apr 2011 ............

May 2011–Dec 2011.
May 2011–Dec 2011.

Jul 2010–Mar 2011 ............
Jul 2010–Mar 2011 ............
Jul 2010–Mar 2011 ............

Apr 2011–Dec 2011.
Apr 2011–Dec 2011.
Apr 2011–Dec 2011.

To estimate the total payment
reductions in PY 2015 for each facility
resulting from this final rule, we
multiplied the total Medicare payments
to the facility during the 1-year period
between January 2011 and December
2011 by the facility’s estimated payment
reduction percentage expected under
the ESRD QIP, yielding a total payment
reduction amount for each facility:
(Total ESRD payment in January 2011
and December 2011 times the estimated
payment reduction percentage). For PY
2015 the total payment reduction for all
of the 1,093 facilities expected to
receive a reduction is approximately
$12 million ($12,087,940). Further, we
estimate that the total costs associated
with the collection of information
requirements for PY 2015 described in
section V.C. of this final rule would be
approximately $12.4 million for all
ESRD facilities. As a result, we estimate

that ESRD facilities will experience an
aggregate impact of $24.5 million
($12,087,940 + 12,424,180 =
$24,512,120) as a result of the PY 2015
ESRD QIP.
Table 13 below shows the estimated
impact of the finalized ESRD QIP
payment reductions to all ESRD
facilities for PY 2015. The table details
the distribution of ESRD facilities by
facility size (both among facilities
considered to be small entities and by
number of treatments per facility),
geography (both urban/rural and by
region), and by facility type (hospital
based/freestanding facilities). Given that
the time periods used for these
calculations will differ from those we
will use for the PY 2015 ESRD QIP, the
actual impact of the PY 2015 ESRD QIP
may vary significantly from the values
provided here.

TABLE 13—IMPACT OF ESRD QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR CY 2015
Number of
Medicare
treatments
2009
(in millions)

tkelley on DSK3SPTVN1PROD with RULES2

Number of
facilities

All Facilities ..........................................................................
Facility Type:
Freestanding .................................................................
Hospital-based ..............................................................
Ownership Type:
Large Dialysis ...............................................................
Regional Chain .............................................................

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Number of
facilities with
QIP score

Number of
facilities
expected to
receive a
payment
reduction

Payment
reduction
(percent
change in
total ESRD
payments)

5,726

41.4

5,401

1,093

¥0.17

5,176
550

38.0
3.4

4,989
412

931
162

¥0.15
¥0.41

3,719
926

27.3
7.1

3,612
882

662
151

¥0.14
¥0.14

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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations
TABLE 13—IMPACT OF ESRD QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR CY 2015—Continued
Number of
Medicare
treatments
2009
(in millions)

Number of
facilities

Independent ..................................................................
Hospital-based (non-chain) ...........................................
Unknown .......................................................................
Facility Size:
Large Entities ................................................................
Small Entities 1 ..............................................................
Unknown .......................................................................
Urban/Rural Status:
1) Rural .........................................................................
2) Urban ........................................................................
Census Region:
Northeast ......................................................................
Midwest .........................................................................
South .............................................................................
West ..............................................................................
U.S. Territories 2 ...........................................................
Census Division:
East North Central ........................................................
East South Central .......................................................
Middle Atlantic ..............................................................
Mountain .......................................................................
New England ................................................................
Pacific ...........................................................................
South Atlantic ................................................................
West North Central .......................................................
West South Central ......................................................
U.S. Territories 2 ...........................................................
Facility Size (# of total treatments):
Less than 4,000 treatments ..........................................
4,000–9,999 treatments ................................................
Over 10,000 treatments ................................................
Unknown .......................................................................
1 Small

Number of
facilities with
QIP score

Number of
facilities
expected to
receive a
payment
reduction

Payment
reduction
(percent
change in
total ESRD
payments)

636
434
11

4.4
2.6
0.0

584
318
5

150
128
2

¥0.22
¥0.43
¥0.30

4,645
1,070
11

34.4
7.0
0.0

4,494
902
5

813
278
2

¥0.14
¥0.30
¥0.30

1,267
4,459

6.8
34.6

1,188
4,213

263
830

¥0.18
¥0.16

810
1,352
2,510
1,001
53

6.5
8.5
18.7
7.5
0.3

752
1,238
2,420
952
39

166
310
445
154
18

¥0.20
¥0.21
¥0.15
¥0.13
¥0.37

941
472
641
335
171
667
1,259
416
783
41

6.3
3.1
5.1
1.9
1.4
5.6
9.5
2.2
6.0
0.3

856
451
593
321
159
631
1,217
382
752
39

227
77
143
64
23
90
236
83
132
18

¥0.23
¥0.15
¥0.22
¥0.15
¥0.13
¥0.11
¥0.16
¥0.17
¥0.13
¥0.37

1,105
2,225
2,370
26

2.5
11.6
27.2
0.0

864
2,190
2,345
2

214
420
459
0

¥0.27
¥0.15
¥0.14
¥0.00

Entities include hospital-based and satellite facilities and non-chain facilities based on DFC self-reported status.
Puerto Rico and Virgin Islands.

tkelley on DSK3SPTVN1PROD with RULES2

2 Includes

The comments we received on this
analysis are set forth below.
Comment: Several commenters
requested that we provide, for both PY
2014 and PY 2015, the data,
assumptions, and methodology used to
calculate the rate of improvement,
performance standards, achievement
thresholds, and benchmarks for all
measures to allow stakeholders to have
the opportunity to assess the impact on
facilities so that the community may
provide meaningful comment.
Commenters also argued that we have
underestimated the PY 2014 average
payment reduction (i.e., by 36 percent),
and requested that we provide the
model, data, and assumption we used
for these estimates.
Response: As we noted above, the PY
2014 final rule was finalized on
November 1, 2011 (76 FR 70228). We
direct commenters to this rule for our
analysis of the PY 2014 ESRD QIP. The
methodology and assumptions that we
used to calculate the estimated rate of
improvement, performance standards,

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achievement thresholds, and standards
are set forth in this section.
b. Alternatives Considered for the PY
2015 ESRD QIP In developing the PY
2015 ESRD QIP, we selected measures
that we believe are important indicators
of patient outcomes and quality of care
as discussed in sections III.C, and III.D
of this final rule. Poor management of
anemia and inadequate dialysis, for
example, can lead to otherwiseavoidable hospitalizations, decreased
quality of life, and death. Infections are
also a leading cause of hospitalization
and death among hemodialysis patients,
but there are proven infection control
methods that have been shown effective
in reducing morbidity and mortality. We
also considered proposing to adopt the
Standardized Hospitalization Ratio
Admissions (SHR) measure and the
Standardized Mortality Ratio (SMR)
measures as part of the PY 2015 ESRD
QIP. While we decided not to propose
to adopt the SHR and SMR measures for
the PY 2015 ESRD QIP, we will publicly
report these measure rates/ratios via

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DFC to encourage facilities to improve
their care. We believe the measures
selected for the ESRD QIP will allow us
to continue focusing on improving the
quality of care that Medicare
beneficiaries receive from ESRD dialysis
facilities.
In developing the scoring
methodology for the PY 2015 ESRD QIP,
we considered a number of alternatives
including various improvement ranges,
achievement thresholds, and
benchmarks. We also considered
whether some of the new measures
should be scored based only on
achievement. We also discussed scoring
some of the clinical measures using a
binary methodology (that is, facilities
receive either zero or 10 points for
missing or achieving a standard,
respectively). We ultimately decided to
mirror the PY 2014 ESRD QIP scoring
methodology as closely as possible. We
aim to design a scoring methodology
that is straightforward and transparent
to facilities, patients, and other
stakeholders, and we believe that one of

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the ways to obtain this transparency is
to be as consistent as possible from yearto-year of the program. We believe that
this consistency will allow us to better
assess the impacts of the ESRD QIP
upon facilities and beneficiaries.
Finally, we believe that all scoring
methodologies for Medicare VBP
programs should be aligned as
appropriate given their specific
statutory requirements, and the scoring
methodology for the ESRD QIP is
similar to the Hospital Inpatient VBP
Program.
When deciding upon how to best
score the Vascular Access Type and Kt/
V Dialysis Adequacy measure topics, we
considered combining all of the
measures within the measure topic into
one composite measure (that is, having
one, combined numerator and one,
combined denominator for all of the
measures within the topic) rather than
individually scoring each measure and
weighting it appropriately in the
measure topic. We believe that it is
important to mirror the NQF
specifications for each measure as much
as possible; we also heeded the
suggestion of the Measures Application
Partnership to further test composite
measures before implementing them.
Therefore, we decided to score measure
topics where each measure within the
measure topic is scored individually
and then weighted appropriately.
We considered requiring facilities to
report data for 100 percent of their
patients for the Mineral Metabolism and
Anemia Management reporting
measures in order to ensure complete,
accurate data collection. We ultimately
decided that, because there are some
situations where a facility cannot
control whether a patient’s blood is
drawn (for example, hospitalization), we
should adopt a reporting threshold of
less than 100 percent.

We also considered multiple baseline
periods for purposes of scoring facilities
on achievement and improvement. We
considered periods of the same time and
duration, periods occurring at different
times, and periods with various
durations. We ultimately decided that a
baseline period of 12-months for both
the achievement and improvement
scores is best because it is consistent
with the PY 2014 program.
Additionally, a 12-month baseline
period prevents issues related to
seasonality. We finalized achievement
and improvement baseline periods
occurring over different periods of time
because we believe that this approach
mitigates data lag as much as possible
and also allows us to score all of the
measures on both achievement and
improvement. Finally, we finalized an
achievement baseline period spanning a
calendar year (CY 2011) because this
approach allows us to publish the
numerical values for the performance
standards before the beginning of the
performance period.
In deciding upon the minimum
number of cases required for a facility
to be scored on a measure, we reviewed
and discussed many options. We
considered keeping the program the
same as PY 2014 by excluding measures
with less than 11 cases and applying no
adjustment. We also discussed
including an adjustment for measures
with 11–25 cases. Finally, we discussed
an adjustment applicable to measures
with 26–50 cases. We believe that we
should set the case minimum at 11 and
adopt an adjustment for measures with
11–25 cases.
Finally, in deciding upon the
calculation of the minimum Total
Performance Score, we considered
scoring the reporting measures at zero,
consistent with PY 2014. We decided,
however, to finalize a minimum Total

Performance Score that includes half of
the maximum score a facility could
receive on these measures. We believe
that this methodology appropriately
places emphasis on complete reporting
from all facilities.
We did not receive any comments
related to this analysis of the
alternatives that we considered for the
PY 2015 ESRD QIP.
3. Reductions to Bad Debt Payments for
All Medicare Providers
Section 3201 of The Middle Class Tax
Extension and Job Creation Act of 2012
that requires reductions in bad debt
reimbursement to all providers, supplies
and other entities eligible to receive bad
debt reimbursement will have a
significant impact on the operations of
all affected entities. However, these
provisions are specifically prescribed by
statute and thus, are self-implementing.
It is estimated that these provisions will
result in savings in CY 2013 of $330
million. Removal of the cap on bad debt
reimbursement to ESRD facilities up to
a facility’s unrecovered cost will have
an impact on ESRD facilities by
increasing their bad debt reimbursement
amounts. It is estimated that the
removal of this cap will result in $10
million in increased payments to ESRD
facilities for CY 2013. Therefore, it is
estimated that the combined overall
savings in the CY 2013 would be $320
million.
C. Accounting Statement
As required by OMB Circular A–4
(available at http://
www.whitehouse.gov/omb/
circulars_a004_a-4), in Table 14 below,
we have prepared an accounting
statement showing the classification of
the transfers and costs associated with
the various provisions of this final rule.

TABLE 14—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS AND COSTS/SAVINGS
ESRD PPS for CY 2013
Category

Transfers

Annualized Monetized Transfers ..............................................................
From Whom to Whom ..............................................................................
Increased Beneficiary Co-insurance Payments .......................................
From Whom to Whom ..............................................................................

$250 million.
Federal government to ESRD providers.
$60 million.
Beneficiaries to ESRD providers.

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ESRD QIP for PY 2015
Annualized Monetized Transfers ..............................................................
From Whom to Whom ..............................................................................

¥$12.1 million.*
Federal government to ESRD providers.

Category

Costs

Annualized Monetized ESRD Provider Costs ..........................................

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12.4 million.**

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TABLE 14—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS AND COSTS/SAVINGS—Continued
Savings from Congressionally Mandated Reductions of Bad Debt Payments in CY 2013
Category

Transfers

Annualized Monetized Bad Debt Payments .............................................
From Whom to Whom ..............................................................................

$¥320 million.
Federal government to Medicare providers.

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* It is the reduced payment to the ESRD facilities, which fall below the quality standards as stated in section III.D.12 of this proposed rule.
** It is the cost associated with the collection of information requirements for all ESRD facilities.

VII. Regulatory Flexibility Act Analysis
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 19 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 $34.5 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 Web site at
http://www.sba.gov/sites/default/files/
files/Size_Standards_Table.pdf (Kidney
Dialysis Centers are listed as 621492
with a size standard of $34.5 million).
The claims data used to estimate
payments to ESRD facilities in this RFA
analysis and RIA do not identify which
dialysis facilities are part of a large
dialysis organization (LDO), regional
chain, or other type of ownership
because each individual dialysis facility
has its own provider number and bills
Medicare using this number. Therefore,
in previous RFA analyses and RIAs
presented in proposed and final rules
that updated the basic case-mix adjusted
composite payment system, we
considered each ESRD facility to be a
small entity for purposes of the RFA
analysis. However, we conducted a
special analysis for this final rule that
enabled us to identify the ESRD
facilities that are part of an LDO or
regional chain and therefore, were able
to identify individual ESRD facilities
that will be considered small entities.
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.

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For purposes of the RFA, we estimate
that approximately 19 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 9.
Using the definitions in this ownership
category, we consider the 636 facilities
that are independent and the 434
facilities that are shown as hospitalbased to be small entities. The ESRD
facilities that are owned and operated
by LDOs and regional chains would
have total revenues of more than $34.5
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 in this
rule, a hospital-based ESRD facility (as
defined by ownership type) is estimated
to receive a 3.6 percent increase in
payments for CY 2013. An independent
facility (as defined by ownership type)
is estimated to receive a 3.0 percent
increase in payments for 2013.
Based on the ESRD QIP payment
reduction impacts to ESRD facilities for
PY 2015, we estimate that of the 1,093
ESRD facilities expected to receive a
payment reduction, 278 ESRD small
entity facilities will experience a
payment reduction (ranging from 0.5
percent up to 2.0 of total payments). We
anticipate the payment reductions to
average approximately $11,059 per
facility among the 1,093 facilities
receiving a payment reduction, with an
average of $12,866 per small entity
facilities receiving a payment reduction.
The projected impacts for these small
entities are estimates based on current
data. The actual impacts may differ.
Using our projections of facility
performance, we then estimated the
impact of anticipated payment
reductions on ESRD small entities, by
comparing the total payment reductions
for the 278 small entities expected to
receive a payment reduction, with the
aggregate ESRD payments to all small
entities. We estimate that there are a
total of 1,070 small entity facilities. For

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this entire group of 1,070 ESRD small
entity facilities, a decrease of 0.30%
percent in aggregate ESRD payments is
observed.
The comment we received on this
analysis is set forth below.
Comment: One commenter expressed
concern that we have not provided
additional funding for the ESRD QIP
COI requirements to alleviate the
aggregate associated cost; commenter is
specifically concerned of the impact on
small facilities.
Response: We recognize that a facility
may have additional costs resulting
from the ESRD QIP. We believe that
these costs, however, are necessary in
improving care and do not outweigh the
utility of the program. We will continue
to monitor these costs, paying specific
attention to their effect upon small
facilities.
Therefore, the Secretary has
determined that this final rule will not
have a significant economic impact on
a substantial number of small entities.
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
will have a significant impact on
operations of a substantial number of
small rural hospitals because most
dialysis facilities are freestanding.
While there are 180 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 180 rural hospital-based
dialysis facilities will experience an
estimated 3.5 percent increase in
payments. As a result, this final rule is
estimated to not have a significant
impact on small rural hospitals.
Therefore, the Secretary has determined
that this final rule will not have a
significant economic impact on a
substantial number of small entities.

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Section 3201 of The Middle Class Tax
Extension and Job Creation Act of 2012
that requires reductions in bad debt
reimbursement to all providers, supplies
and other entities eligible to receive bad
debt reimbursement will have a
significant impact on the operations of
a substantial number of small entities
and small rural hospitals. However,
these provisions are specifically
prescribed by the Congress and thus, are
self-implementing. Additionally, we do
not believe that the removal of the cap
on bad debt reimbursements to ESRD
facilities up to their unrecovered costs
will have a significant impact on the
operations of a substantial number of
small entities and small rural hospitals.
Thus, we are not providing a Regulatory
Flexibility Act Analysis to codify the
statutorily mandated reductions in bad
debt payments, nor for the removal of
the cap on bad debt reimbursement as
it pertains to ESRD facilities.
VIII. Unfunded Mandates Reform Act
Analysis
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
(Pub. L. 104–4) also requires that
agencies assess anticipated costs and
benefits before issuing any rule whose
mandates require spending in any 1 year
$100 million in 1995 dollars, updated
annually for inflation. In 2012, that
threshold is approximately $139
million. This final rule does not include
any mandates that will impose spending
costs on State, local, or Tribal
governments in the aggregate, or by the
private sector, of $139 million.

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IX. Federalism Analysis
Executive Order 13132 on Federalism
(August 4, 1999) establishes certain
requirements that an agency must meet
when it promulgates a final rule that
imposes substantial direct requirement
costs on State and local governments,
preempts State law, or otherwise has
Federalism implications. We have
reviewed this final rule under the
threshold criteria of Executive Order
13132, Federalism, and have
determined that it will not have
substantial direct effects on the rights,
roles, and responsibilities of States,
local or Tribal governments.
X. Files Available to the Public via the
Internet
This section lists the Addenda
referred to in the preamble of this final
rule. Beginning in CY 2012, the
Addenda for the annual ESRD PPS
proposed and final rulemakings will no
longer appear in the Federal Register.
Instead, the Addenda will be available
only through the Internet. We will

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continue to post the Addenda through
the Internet.
Readers who experience any problems
accessing the Addenda that are posted
on the CMS Web site at http://
www.cms.gov/ESRDPayment/PAY/
list.asp, should contact Michelle Cruse
at (410) 786–7540.
List of Subjects
42 CFR Part 413
Health facilities, Kidney diseases,
Medicare, Reporting and recordkeeping
requirements.
42 CFR Part 417
Administrative practice and
procedure, Grant programs—health,
Health care, Health insurance, Health
maintenance organizations (HMO), Loan
programs—health, 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:
PART 413—PRINCIPLES OF
REASONABLE COST
REIMBURSEMENT; PAYMENT FOR
END–STAGE RENAL DISEASE
SERVICES; OPTIONAL
PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED
NURSING FACILITIES
1. The authority citation for part 413
is revised to read as follows:

■

Authority: Secs. 1102, 1812(d), 1814(b),
1815, 1833(a), (i), and (n), 1861(v), 1871,
1881, 1883 and 1886 of the Social Security
Act (42 U.S.C. 1302, 1395d(d), 1395f(b),
1395g, 1395l(a), (i), and (n), 1395x(v),
1395hh, 1395rr, 1395tt, and 1395ww); and
sec. 124 of Pub. L. 106–113 (113 Stat. 1501A–
332) and sec. 3201 of Pub. L. 112–96 (126
Stat. 156).

Subpart F—Specific Categories of
Costs
2. Section 413.89 is amended by
revising paragraphs (h)(1) introductory
text, (h)(1)(iv), (h)(2), (h)(3), and (i), and
by adding paragraphs (h)(1)(v) and (h)(4)
to read as follows:

■

§ 413.89 Bad debts, charity, and courtesy
allowances.

*

*
*
*
*
(h) * * *
(1) Hospitals. In determining
reasonable costs for hospitals, the
amount of allowable bad debt (as
defined in paragraph (e) of this section)
is reduced:
*
*
*
*
*
(iv) For cost reporting periods
beginning during fiscal years 2001
through 2012, by 30 percent.

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(v) For cost reporting periods
beginning during a subsequent fiscal
year, by 35 percent.
(2) Skilled nursing facilities and swing
bed hospitals. For the purposes of this
paragraph (h)(2), a dual eligible
individual is defined as an individual
that is entitled to benefits under Part A
of Medicare and is determined eligible
by the State for medical assistance
under Title XIX of the Act as described
under paragraph (2) of the definition of
a ‘‘full-benefit dual eligible individual’’
at § 423.772 of this chapter. In
determining reasonable costs for a
skilled nursing facility and for posthospital SNF care furnished in a swing
bed hospital, as defined in § 413.114(b),
the amount of allowable bad debt (as
defined in paragraph (e) of this section)
is reduced:
(i) For non-dual eligible individuals—
(A) For cost reporting periods beginning
during fiscal years 2006 through 2012,
by 30 percent, for a patient in a skilled
nursing facility.
(B) For cost reporting periods
beginning during a subsequent fiscal
year, by 35 percent, for a patient in a
skilled nursing facility or receiving posthospital SNF care in a swing bed
hospital.
(ii) For dual eligible individuals—(A)
For cost reporting periods beginning
during fiscal year 2013, by 12 percent,
for a patient in a skilled nursing facility
or a patient receiving post-hospital SNF
care in a swing bed hospital.
(B) For cost reporting periods
beginning during fiscal year 2014, by 24
percent, for a patient in a skilled
nursing facility or a patient receiving
post-hospital SNF care in a swing bed
hospital.
(C) For cost reporting periods
beginning during a subsequent fiscal
year, by 35 percent, for a patient in a
skilled nursing facility or a patient
receiving post-hospital SNF care in a
swing bed hospital.
(3) End-stage renal dialysis facilities.
In determining reasonable costs for an
end-stage renal dialysis facility, the
amount of allowable bad debt (as
defined in paragraph (e) of this section)
is:
(i) For cost reporting periods
beginning before October 1, 2012,
reimbursed up to the facility’s costs.
(ii) For cost reporting periods
beginning on or after October 1, 2012
and before January 1, 2013, reduced by
12 percent with the resulting amount
reimbursed up to the facility’s costs.
(iii) For cost reporting periods
beginning on or after January 1, 2013
and before October 1, 2013, reduced by
12 percent.

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(iv) For cost reporting periods
beginning during fiscal year 2014,
reduced by 24 percent.
(v) For cost reporting periods
beginning during a subsequent fiscal
year, reduced by 35 percent.
(4) All other providers. In determining
reasonable costs for all other providers,
suppliers and other entities not
described elsewhere in paragraph (h) of
this section that are eligible to receive
reimbursement for bad debts under this
section, the amount of allowable bad
debts (as defined in paragraph (e) of this
section) is reduced:
(i) For cost reporting periods
beginning during fiscal year 2013, by 12
percent.
(ii) For cost reporting periods
beginning during fiscal year 2014, by 24
percent.
(iii) For cost reporting periods
beginning during a subsequent fiscal
year, by 35 percent.
(i) Exceptions applicable to bad debt
reimbursement. (1) Bad debts arising
from covered services paid under a
reasonable charge-based methodology or
a fee schedule are not reimbursable
under the program.
(2) For end-stage renal dialysis
services furnished on or after January 1,
2011 and paid for under the end-stage

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renal dialysis prospective payment
system described in § 413.215, bad debts
arising from covered items or services
that, prior to January 1, 2011 were paid
under a reasonable charge-based
methodology or a fee schedule,
including but not limited to drugs,
laboratory tests, and supplies are not
reimbursable under the program.
§ 413.178

[Removed and Reserved]

3. Section 413.178 is removed and
reserved.

■

PART 417—HEALTH MAINTENANCE
ORGANIZATIONS, COMPETITIVE
MEDICAL PLANS, AND HEALTH CARE
PREPAYMENT PLANS
4. The authority citation for part 417
continues to read as follows:

■

Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh), secs. 1301, 1306, and 1310 of the
Public Health Service Act (42 U.S.C. 300e,
300e–5, and 300e–9), and 31 U.S.C. 9701.

Subpart O—Medicare Payment: Cost
Basis

§ 417.536

Cost payment principles.

*

*
*
*
*
(f) * * *
(1) Bad debts attributable to Medicare
deductible and coinsurance amounts are
allowable only if the requirements of
§ 413.89 of this chapter are met, subject
to the limitations described under
§ 413.89(h) and the exceptions for
services described under § 413.89(i).
*
*
*
*
*
(Catalog of Federal Domestic Assistance
Program No. 93.773, Medicare—Hospital
Insurance; and Program No. 93.774,
Medicare—Supplementary Medical
Insurance Program)
Dated: October 26, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare
& Medicaid Services.
Kathleen Sebelius,
Secretary, Department of Health and Human
Services.
[FR Doc. 2012–26903 Filed 11–2–12; 4:15 pm]
BILLING CODE 4120–01–P

5. Section 417.536 is amended by
revising paragraph (f)(1) to read as
follows:

■

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