Att E4_Dialysis Facilities_Dialysis Event

Vol. 79

Thursday,

No. 215

November 6, 2014

Part III

Department of Health and Human Services

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Centers for Medicare & Medicaid Services
42 CFR Parts 405, 411, 413, and 414
Medicare Program; End–Stage Renal Disease Prospective Payment
System, Quality Incentive Program, and Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies; Final Rule

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations

DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Parts 405, 411, 413, and 414
[CMS–1614–F]
RIN 0938–AS13

Medicare Program; End-Stage Renal
Disease Prospective Payment System,
Quality Incentive Program, and
Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule.
AGENCY:

This final rule will update
and make revisions to the End-Stage
Renal Disease (ESRD) prospective
payment system (PPS) for calendar year
(CY) 2015. This rule also finalizes
requirements for the ESRD quality
incentive program (QIP), including for
payment years (PYs) 2017 and 2018.
This rule will also make a technical
correction to remove outdated terms and
definitions. In addition, this final rule
sets forth the methodology for adjusting
Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies
(DMEPOS) fee schedule payment
amounts using information from the
Medicare DMEPOS Competitive Bidding
Program (CBP); makes alternative
payment rules for certain DME under
the Medicare DMEPOS CBP; clarifies
the statutory Medicare hearing aid
coverage exclusion and specifies
devices not subject to the hearing aid
exclusion; will not update the definition
of minimal self-adjustment; clarifies the
Change of Ownership (CHOW) and
provides for an exception to the current
requirements; revises the appeal
provisions for termination of a CBP
contract, including the beneficiary
notification requirement under the
Medicare DMEPOS CBP, and makes a
technical change to the regulation
related to the conditions for awarding
contracts for furnishing infusion drugs
under the Medicare DMEPOS CBP.
DATES: Effective on January 1, 2015.
FOR FURTHER INFORMATION CONTACT:
Stephanie Frilling, (410) 786–4507, for
issues related to the ESRD PPS, the
ESRD PPS CY 2015 Base Rate, Wage
Indices, Drugs Used for the Treatment of
ESRD, and Payment for Frequent
Hemodialysis.
Michelle Cruse, (410) 786–7540, for
issues related to the ESRD PPS, the Low
Volume Payment Adjustment, and the
Wage Index.

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SUMMARY:

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Wendy Tucker, (410) 786–3004, for
issues related to the Low Volume
Payment Adjustment and the Wage
Index.
Heidi Oumarou, (410) 786–7342, for
issues related to the ESRD PPS Market
Basket Update.
James Poyer, (410) 786–2261, for
issues related to the ESRD QIP.
Christopher Molling (410) 786–6399
and Hafsa Vahora (410) 786–7899 for
issues related to the methodology for
making national price adjustments
based upon information gathered from
the DMEPOS CBP.
Sandhya Gilkerson, (410) 786–4085,
for issues related to the alternative
payment methodologies under the CBP.
Sandhya Gilkerson, (410) 786–4085
and Michelle Peterman, 410–786–2581
for issues related to the clarification of
the statutory Medicare hearing aid
coverage exclusion.
Michelle Peterman, (410) 786–2591
for issues related to the definition of
minimal self-adjustment at 414.402.
Janae James (410) 786–0801 for issues
related to CHOW and breach of contract
appeals.
SUPPLEMENTARY INFORMATION:
Electronic Access
This Federal Register document is
also available from the Federal Register
online database through Federal Digital
System (FDsys), a service of the U.S.
Government Printing Office. This
database can be accessed via the
internet at http://www.gpo.gov/fdsys/.
Addenda Are Only Available Through
the Internet on the CMS Web site
In the past, a majority of the Addenda
referred to throughout the preamble of
our proposed and final rules were
available in the Federal Register.
However, the Addenda of the annual
proposed and final rules will no longer
be available in the Federal Register.
Instead, these Addenda to the annual
proposed and final rules will be
available only through the Internet on
the CMS Web site. The Addenda to the
End-Stage Renal Disease (ESRD)
Prospective Payment System (PPS) rules
are available at: http://www.cms.gov/
ESRDPayment/PAY/list.asp. Readers
who experience any problems accessing
any of the Addenda to the proposed and
final rules of the ESRD PPS that are
posted on the CMS Web site identified
above should contact Stephanie Frilling
at 410–786–4507.
Table of Contents
To assist readers in referencing
sections contained in this final rule, we
are providing a Table of Contents. Some
of the issues discussed affect the

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payment policies, but do not require
changes to the regulations in the Code
of Federal Regulations (CFR).
I. Executive Summary
A. Purpose
1. End-Stage Renal Disease (ESRD)
Prospective Payment System (PPS)
2. End-Stage Renal Disease (ESRD) Quality
Incentive Program (QIP)
3. Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS)
B. Summary of the Major Provisions
1. ESRD PPS
2. ESRD QIP
3. DMEPOS
C. Summary of Costs and Benefits
1. Impacts of the Final ESRD PPS
2. Impacts for ESRD QIP
3. Impacts for DMEPOS
II. Calendar Year (CY) 2015 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,
Public Comments, and Responses to
Comments on the CY 2015 ESRD PPS
Proposed Rule
C. Routine Updates and Policy Changes to
the CY 2015 ESRD PPS
1. ESRD PPS Base Rate
a. Changes to the Drug Utilization
Adjustment
i. The Drug Utilization Adjustment
Finalized in CY 2014 ESRD PPS Final
Rule
ii. PAMA Changes to the Drug Utilization
Adjustment
b. Payment Rate Update for CY 2015
c. CY 2015 ESRD PPS Wage Index BudgetNeutrality Adjustment
d. Labor-Related Share
2. ESRD Bundled Market Basket and LaborRelated Share
a. Rebasing and Revision the ESRD
Bundled Market Basket
i. Cost Category Weights
ii. Price Proxies for the CY 2012 ESRDB
Market Basket
iii. 2012-Based ESRDB Market Basket
Updates Compared to 2008-Based
ESRDB Market Basket Updates
b. Proposed ESRDB Market Basket Update,
Adjusted for Multifactor Productivity for
CY 2015
c. Labor-Related Share
d. Responses to Comments on Proposed
Market Basket Rebasing & Revision
e. Final ESRDB Market Basket and LaborRelated Share
3. The CY 2015 ESRD PPS Wage Indices
a. Background
b. Implementation of New Labor Market
Delineations
c. Transition Period
4. CY 2015 Update to the Outlier Policy
a.CY 2015 Update to the Outlier Services
MAP Amounts and Fixed-Dollar Loss
Amounts
b. Outlier Policy Percentage
D. Restatement of Policy Regarding
Reporting and Payment for More than
Three Dialysis Treatments per Week
1. Reporting More than Three Dialysis
Treatments per Week on Claims

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
2. Medical Necessity for More Than Three
Treatments per Week
E. Delay of Payment for Oral-Only Drugs
under the ESRD PPS
F. ESRD Drug Categories Included in the
ESRD PPS Base Rate
G. Low-Volume Payment Adjustment
(LVPA)
1. Background
2. The United States Government
Accountability Office Study on the
LVPA
a. The GAO’s Main Findings
b. The GAO’s Recommendations
3. Clarification of the LVPA Policy
a. Hospital-Based ESRD Facilities
b. Cost Reporting Periods Used for
Eligibility
H. Continued Use of ICD–9–CM Codes and
Corrections to the ICD–10–CM Codes
Eligible for the Co-morbidity Payment
Adjustment
III. End-Stage Renal Disease (ESRD) Quality
Incentive Program (QIP)
A. Background
B. Considerations in Updating and
Expanding Quality Measures under the
ESRD QIP
C. Web sites for Measure Specifications
D. Updating the NHSN Bloodstream
Infection in Hemodialysis Outpatients
Clinical Measure for the PY 2016 ESRD
QIP and Future Payment Years
E. Oral-Only Drug Measures in the ESRD
QIP
F. Requirements for the PY 2017 ESRD QIP
1. Revision to the Expanded ICH CAHPS
Reporting Measure
2. Measures for the PY 2017 ESRD QIP
a. PY 2016 Measures Continuing in PY
2017 and Future Payment Years
b. Policy for Determining when a Measure
is ‘‘Topped-Out’’ in the ESRD QIP, and
the Removal of a Topped-Out Measure
from the ESRD QIP, Beginning with PY
2017
c. New Measures Proposed for PY 2017 and
Future Payment Years
i. Standardized Readmission Ratio (SRR)
Clinical Measure
3. Performance Period for the PY 2017
ESRD QIP
4. Performance Standards, Achievement
Thresholds, and Benchmarks for the PY
2017 ESRD QIP
a. Performance Standards, Achievement
Thresholds, and Benchmarks for the
Clinical Measures in the PY 2017 ESRD
QIP
b. Finalized Performance Standards,
Achievement Thresholds, and
Benchmarks for the Clinical Measures
Proposed for the PY 2017 ESRD QIP
c. Performance Standards for the PY 2017
Reporting Measures
5. Scoring the PY 2017 ESRD QIP Measures
a. Scoring Facility Performance on Clinical
Measures Based on Achievement
b. Scoring Facility Performance on Clinical
Measures Based on Improvement
6. Weighting the Total Performance Score
7. Minimum Data for Scoring Measures for
the PY 2017 ESRD QIP and Changing the
Attestation Process for Patient
Minimums
8. Payment Reductions for the PY 2017
ESRD QIP

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9. Data Validation
10. Monitoring Access to Dialysis Facilities
11. Extraordinary Circumstances Exception
F. Requirements for the PY 2018 ESRD QIP
1. Modification of the Mineral Metabolism
Reporting Measure Beginning in PY 2018
2. New Measures for the PY 2018 ESRD
QIP and Future Payment Years
a. Standardized Transfusion Ratio (STrR)
Clinical Measure
b. Adoption of the Pediatric Peritoneal
Dialysis Adequacy Clinical Measure in
the Dialysis Adequacy Measure Topic
c. ICH CAHPS Clinical Measure
d. Screening for Clinical Depression and
Follow-Up Reporting Measure
e. Pain Assessment and Follow-Up
Reporting Measure
f. NHSN Healthcare Personnel Influenza
Vaccination Reporting Measure
2. Performance Period for the PY 2018
ESRD QIP
3. Performance Standards, Achievement
Thresholds, and Benchmarks for the PY
2018 ESRD QIP
a. Performance Standards, Achievement
Thresholds, and Benchmarks for the
Clinical Measures in the PY 2018 ESRD
QIP
b. Estimated Performance Standards,
Achievement Thresholds, and
Benchmarks for the Clinical Measures
Proposed for the PY 2018 ESRD QIP
c. Performance Standards for the PY 2018
Reporting Measures
4. Scoring the PY 2018 ESRD QIP Measures
a. Scoring Facility Performance on Clinical
Measures Based on Achievement
b. Scoring Facility Performance on Clinical
Measures Based on Improvement
c. Scoring the ICH CAHPS Clinical
Measure
d. Calculating Facility Performance on
Reporting Measures
5. Minimum Data for Scoring Measures for
the PY 2018 ESRD QIP
6. Calculating the Clinical Measure Domain
Score
7. Calculating the Reporting Measure
Domain Score and the TPS for the PY
2018 ESRD QIP
8. Example of the PY 2018 ESRD QIP
Scoring Methodology
9. Payment Reductions for the PY 2018
ESRD QIP
H. Future Considerations for Stratifying
ESRD QIP Measures for Dual-Eligible
Beneficiaries
IV. Technical Corrections for 42 Part 405
A. Background
B. Summary of the Proposed Provisions
and Responses to Comments on the CY
2015 ESRD PPS
V. Methodology for Adjusting DMEPOS
Payment Amounts using Information
from Competitive Bidding Programs
A. Background
1. Fee Schedule Payment Basis for Certain
DMEPOS
2. DMEPOS Competitive Bidding Programs
Payment Rules
3. Adjusting Payment Amounts using
Information from the DMEPOS
Competitive Bidding Program
B. Summary of the Proposed Provisions
and Responses to Comments on the

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Methodology for Adjusting DMEPOS
Payment Amounts using Information
from Competitive Bidding Programs
1. Proposed Regional Adjustments Limited
by National Parameters
2. Methodology for Items and Services
Included in Limited Number of
Competitive Bidding Programs
3. Adjusted Payment Amounts for
Accessories used with Different Types of
Base Equipment
4. Adjustments to Single Payment
Amounts that Result from Unbalanced
Bidding
5. National Mail Order Program—Northern
Mariana Islands
6. Updating Adjusted Payment Amounts
VI. Final Payment Methodologies and
Payment Rules for Durable Medical
Equipment and Enteral Nutrition
Furnished under the Competitive
Bidding Program
A. Background
B. Summary of the Proposed Provisions
and Responses to Comments on the
Payment Methodologies and Payment
Rules for Durable Medical Equipment
and Enteral Nutrition Furnished under
the Competitive Bidding Program
1. Payment on a continuous rental basis for
select items
2. Responsibility for repair of beneficiaryowned power wheelchairs furnished
under CBPs
VII. Scope of Hearing Aid Coverage
Exclusion
A. Background
B. Current Issues
C. Proposed Provisions
VIII. Definition of Minimal Self-Adjustment
of Orthotics Under Competitive Bidding
A. Background
B. Current Issues
C. Summary of the Proposed Provisions
and Responses to Comments on the
Definition of Minimal Self-Adjustment of
Orthotics Under Competitive Bidding
IX. Revision to Change of Ownership Rules
to Allow Contract Suppliers to Sell
Specific Lines of Business
A. Background
B. Summary of the Proposed Provisions
and Responses to Comments on the
Revision to Change of Ownership Rules
to Allow Contract Suppliers to Sell
Specific Lines of Business
X. Changes to the Appeals Process for
Termination of Competitive Bidding
Contract
XI. Technical Change Related to Submitting
Bids for Infusion Drugs under the
DMEPOS Competitive Bidding Program
XII. Accelerating Health Information
Exchange
XIII. Collection of Information Requirements
XIV. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
2. Statement of Need
3. Overall Impact
B. Detailed Economic Analysis
1. CY 2015 End-Stage Renal Disease
Prospective Payment System
a. Effects on ESRD Facilities
b. Effects on Other Providers
c. Effects on the Medicare Program

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d. Effects on Medicare Beneficiaries
e. Alternatives Considered
2. End-Stage Renal Disease Quality
Incentive Program
a. Effects of the PY 2017 ESRD QIP
b. Effects of the PY 2018 ESRD QIP
3. DMEPOS Provisions
a. Effects of the Final Methodology for
Adjusting DMEPOS Payment Amounts
using Information from Competitive
Bidding Programs
b. Effects of the Final Special Payment
Methodologies under the Competitive
Bidding Program
c. Effects of the Final Clarification of the
Scope of the Medicare Hearing Aid
Coverage Exclusion
d. Definition of Minimal Self-Adjustment
of Orthotics Under Competitive Bidding
e. Effects of the Final Revision to Change
of Ownership Rules to Allow Contract
Suppliers to Sell Specific Lines of
Business
C. Accounting Statement
XV. Regulatory Flexibility Act Analysis
XVI. Unfunded Mandates Reform Act
Analysis
XVII. Federalism Analysis
XVIII. Congressional Review Act
XIX. Files Available to the Public via the
Internet
Regulations Text

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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:
ACO—Affordable Care Organization
AHRQ—Agency for Healthcare Research and
Quality
ANOVA—Analysis of Variance
ARM—Adjusted Ranking Metric
ASP—Average Sales Price
ATRA—The American Taxpayer Relief Act of
2012
AV—Arterial Venous
BEA—Bureau of Economic Analysis
BLS—Bureau of Labor Statistics
BMI—Body Mass Index
CBA—Competitive Bidding Area
CBP—Competitive Bidding Program
CBSA—Core based statistical area
CCN—CMS Certification Number
CDC—Centers for Disease Control and
Prevention
CfC—Conditions for Coverage
CHOW—Change of Ownership
CKD—Chronic Kidney Disease
CMSQS—CMS Quality Strategy
CPAP—Continuous positive airway pressure
CY—Calendar Year
DFC—Dialysis Facility Compare
DME—Durable Medical Equipment
DMEPOS—Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies
ESA—Erythropoiesis stimulating agent
ESRD—End-Stage Renal Disease
ESRDB—End-Stage Renal Disease bundled
ESRD PPS—End-Stage Renal Disease
Prospective Payment System
FDA—Food and Drug Administration
GEM—General Equivalence Mappings
HCP—Healthcare Personnel

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Health IT—Health Information Technology
HD—Hemodialysis
HAIs—Healthcare-Acquired Infections
HCPCS—Healthcare Common Procedure
Coding System
HCFA—Health Care Financing
Administration
HLM—Hierarchical Logistic Modeling
HHS—Department of Health and Human
Services
ICD—International Classification of Diseases
ICD–9–CM—International Classification of
Disease, 9th Revision, Clinical
Modification
ICD–10–CM—International Classification of
Disease, 10th Revision, Clinical
Modification
ICH CAHPS—In-Center Hemodialysis
Consumer Assessment of Healthcare
Providers and Systems
IGI—IHS Global Insight
IIC—Inflation-indexed charge
IOLs—Intraocular Lenses
IPPS—Inpatient Prospective Payment System
ICH CAHPS—In-Center Hemodialysis
Consumer Assessment of Healthcare
Providers and Services
IUR—Inter-unit reliability
MAC—Medicare Administrative Contractor
MAP—Medicare Allowable Payment
MFP—Multifactor Productivity
MIPPA—Medicare Improvements for Patients
and Providers Act of 2008
MLR—Minimum Lifetime Requirement
MSA—Metropolitan statistical areas
NAMES—National Association of Medical
Equipment Suppliers
NHSN—National Health Safety Network
NQF—National Quality Forum
NQS—National Quality Strategy
OBRA—Omnibus Budget Reconciliation Act
OMB—Office of Management and Budget
P&O—Prosthetics and orthotics
PAMA—Protecting Access to Medicare Act of
2014
PC—Product category
PD—Peritoneal Dialysis
PEN—Parenteral and enteral nutrition
PFS—Physician Fee Schedule
QIP—Quality Incentive Program
RMA—Reporting Measure Adjuster
RSPA—Regional single payment amounts
RUL—Reasonable useful lifetime
SAF—Standard Analysis File
SHR—Standardized Hospitalization Ratio
Admissions
SMR—Standardized Mortality Ratio
SPA—Single payment amount
SRR—Standardized Readmissions Ratio
STrR—Standardized Transfusion Ratio
TENS—Transcutaneous electrical nerve
stimulation
TEP—Technical Expert Panel
TPS—Total Performance Score
VBP—Value Based Purchasing

I. Executive Summary
A. Purpose
1. End-Stage Renal Disease (ESRD)
Prospective Payment System (PPS)
On January 1, 2011, we implemented
the ESRD PPS, a case-mix adjusted
bundled prospective payment system
for renal dialysis services furnished by

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ESRD facilities. This rule updates and
makes revisions to the End-Stage Renal
Disease (ESRD) prospective payment
system (PPS) for calendar year (CY)
2015. 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), and 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 Public Law
111–148), established that beginning CY
2012, and each subsequent year, the
Secretary shall annually increase
payment amounts by an ESRD market
basket increase factor, reduced by the
productivity adjustment described in
section 1886(b)(3)(B)(xi)(II) of the Act.
Section 632 of the American Taxpayer
Relief Act of 2012 (ATRA) (Pub. L 112–
240) included several provisions that
apply to the ESRD PPS. Section 632(a)
of ATRA added section 1881(b)(14)(I) to
the Act, which required the Secretary,
by comparing per patient utilization
data from 2007 with such data from
2011, to reduce the single payment
amount to reflect the Secretary’s
estimate of the change in utilization of
ESRD-related drugs and biologicals. We
finalized the amount of the drug
utilization adjustment pursuant to this
section in the CY 2014 ESRD PPS final
rule with a 3- to 4-year transition (78 FR
72161 through 72170). Section 632(b) of
ATRA prohibited the Secretary from
paying for oral-only ESRD-related drugs
and biologicals under the ESRD PPS
before January 1, 2016. And finally,
section 632(c) of ATRA requires the
Secretary, by no later than January 1,
2016, to analyze the case-mix payment
adjustments under section
1881(b)(14)(D)(i) of the Act and make
appropriate revisions to those
adjustments.
On April 1, 2014, the Congress
enacted the Protecting Access to
Medicare Act of 2014 (PAMA) (Pub. L.
113–93). Section 217 of PAMA included
several provisions that apply to the
ESRD PPS. Specifically, sections
217(b)(1) and (2) of PAMA amend
sections 1881(b)(14)(F) and (I) of the
Act. We interpret the amendments to
sections 1881(b)(14)(F) and (I) as
replacing the drug utilization
adjustment that was finalized in the CY
2014 ESRD PPS final rule (78 FR 72161
through 72170) with specific provisions
that dictate what the market basket
update will be for CY 2015 (0.0 percent)
and how it will be reduced in CYs 2016
through 2018. Section 217(a)(1) of
PAMA amends section 632(b)(1) of
ATRA, which now provides that the
Secretary may not pay for oral-only

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drugs and biologicals used for the
treatment of ESRD under the ESRD PPS
prior to January 1, 2024. Section
217(a)(2) further amends section
632(b)(1) of ATRA by adding a sentence
that provides: ‘‘Notwithstanding section
1881(b)(14)(A)(ii) of the Social Security
Act (42 U.S.C. 1395rr(b)(14)(A)(ii)),
implementation of the policy described
in the previous sentence shall be based
on data from the most recent year
available.’’ Finally, PAMA section
217(c) provides that, as part of the CY
2016 ESRD PPS rulemaking, the
Secretary shall establish a process for (1)
determining when a product is no
longer an oral-only drug; and (2)
including new injectable and
intravenous products into the ESRD PPS
bundled payment. As discussed further
below, section 212 of PAMA provides
that the Secretary may not adopt ICD–
10–CM prior to October 1, 2015.
Accordingly, HHS published a final rule
on August 4, 2014 that established
October 1, 2015 as the new ICD–10
compliance date, and required the use
of ICD–9 through September 30, 2015.

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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 years (PYs) 2017 and 2018.
The program is authorized under
section 1881(h) of 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
or exceed performance standards
established by CMS.
3. Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies
(DMEPOS)
This final rule finalizes a
methodology for making national price
adjustments to payments for Durable
Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) paid
under fee schedules based upon
information gathered from the DMEPOS
competitive bidding programs (CBPs)
and finalizes the phase-in of special
payment rules in a limited number of
competitive bidding areas (CBAs) under
the CBP for certain specified DME at 42
CFR 414.408 and 414.409. This final
rule clarifies the statutory Medicare
hearing aid coverage exclusion under
section 1862(a)(7) of the Act and the
regulation at § 411.15(d) to further
specify the scope of this exclusion. In
addition, this final rule will not finalize
the definition of minimal selfadjustment at § 414.402 to identify
certain individuals with specialized

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training with regard to off-the-shelf
(OTS) orthotics under the CBP. This
final rule revises the Change of
Ownership (CHOW) policy in the
current regulations to allow a product
category to be severed from a
competitive bidding contract and
transferred to a new contract when a
contract supplier sells a distinct line of
business to a new qualified owner. This
rule amends § 414.423 to clarify the
effective date for terminations of
competitive bidding contracts, and the
deadline for contract suppliers notifying
its beneficiaries of its contract
termination. Finally, this rule includes
a technical change related to submitting
bids for infusion drugs under the CBP.
B. Summary of the Major Provisions
1. ESRD PPS
• CY 2015 ESRD PPS base rate: For
CY 2015, the ESRD PPS base rate is
$239.43. This amount reflects a 0.0
percent update to the payment rate as
required by section 1881(b)(14)(F)(i) of
the Act, as amended by section 217(b)(2)
of PAMA, and the application of the
wage index budget-neutrality
adjustment factor of 1.001729 to the CY
2014 ESRD PPS base rate of $239.02.
• Rebasing and revision of the ESRD
bundled (ESRDB) market basket: For CY
2015, we are rebasing and revising the
ESRDB market basket; which entails an
update to the base year of the ESRDB
market basket from 2008 to 2012. The
base year update results in a shift in
relative costs from prescription drugs to
compensation; mainly driven by the
decreased utilization of drugs in
furnishing ESRD treatments experienced
from 2008 to 2012. Additionally, while
we proposed to use PPI—Vitamin,
Nutrient, and Hematinic Preparations as
the pharmaceutical price proxy (instead
of the current PPI—Pharmaceuticals for
Human Use, Prescription), we are
finalizing, based on comments, a blend
of PPI—Biological Products for Human
Use (78 percent) and PPI—Vitamin,
Nutrient, and Hematinic Preparations
(22 percent). The resulting CY 2015
market basket less MFP adjustment
would have been 1.6 percent (2.1
percent ESRDB market basket update
less 0.5 percent MFP adjustment);
however, section 1881(b)(14)(F)(i) of the
Act, as amended by section 217(b)(2) of
PAMA requires the market basket less
MFP adjustment to be 0.0 percent for CY
2015.
• CY 2015 ESRD PPS labor-related
share: As a result of the ESRDB market
basket rebasing and revision, outlined
above, the CY 2015 labor-related share
is 50.673 percent compared to the
current labor-related share of 41.737

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percent. This change to the labor-related
share will have a significant impact on
payments for certain ESRD facilities,
specifically those ESRD facilities that
have low wage index values. Therefore,
for CY 2015 we are implementing the
labor-related share of 50.673 with a 2year transition.
• CY 2015 wage indices 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 2015,
the application of the wage index
budget-neutrality adjustment factor will
continue to apply to the base rate when
computing payments under the ESRD
PPS. In addition, we will continue our
policy for the gradual phase-out of the
wage index floor and reduce the wage
index floor values to 0.40 for CY 2015,
as finalized in the CY 2014 ESRD PPS
final rule (78 FR 72173 through 72174).
• Update to wage index core-based
statistical areas (CBSA): Beginning
January 1, 2015, we will implement the
new CBSA delineations as described in
the February 28, 2013 OMB Bulletin No.
13–01, for all ESRD facilities, with a 2year transition. Facilities will receive 50
percent of their CY 2015 wage index
based on the CBSA delineations for CY
2014 and 50 percent of their CY 2015
wage index based on the new CBSA
delineations. In CY 2016, facilities’
wage index values will be based 100
percent on the new CBSA delineations.
• CY 2015 ESRD PPS outlier payment
adjustment: We have updated the
outlier services fixed-dollar loss and
Medicare Allowable Payments (MAPs)
amounts for adult and pediatric patients
for CY 2015 using 2013 claims data.
Based on the use of more current data,
the fixed-dollar loss amount for
pediatric beneficiaries will increase
from $54.01 to $54.35 and the MAP
amount will increase from $40.49 to
$43.57, as compared to CY 2014 values.
For adult beneficiaries, the fixed-dollar
loss amount will decrease from $98.67
to $86.19 and the MAP amount will
increase from $50.25 to $51.29.
• Clarification for the low-volume
payment adjustment (LVPA): We
clarified two policies regarding
Medicare Administration Contractor
(MAC) verification for LVPA eligibility
requirements and are implementing
conforming changes to the LVPA
regulation text at 42 CFR 413.232. The
first clarification explains that MACs
can consider supporting data from
hospital-based ESRD facilities to verify
the facility’s total treatment count. The
second clarification explains that MACs
can add or prorate treatment counts
from non-standard cost reporting

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periods (those that are not 12-month
periods) where there is a change in
ownership that does not result in a new
Provider Transaction Access Number.
• ICD–10–CM codes eligible for the
ESRD PPS co-morbidity payment
adjustment: Section 212 of PAMA
provides that the Secretary may not
adopt ICD–10–CM prior to October 1,
2015. An August 4, 2014 HHS final rule
delayed the transition from ICD–9–CM
to ICD–10–CM until October 1, 2015
and required the continued use of ICD–
9 through September 30,
2015.Therefore, the ESRD PPS will
continue to use ICD–9–CM through
September 30, 2015, and will require
the use of ICD–10–CM beginning
October 1, 2015 for purposes of the comorbidity payment adjustments. For CY
2015, we are correcting several
typographical errors and omissions in
the ICD–9–CM to ICD–10–CM crosswalk
tables that appeared in the CY 2014
ESRD PPS final rule.
• Delay of payment for oral-only
drugs under the ESRD PPS:
Section 217(a)(1) of PAMA amended
section 632(b)(1) of ATRA, which now
provides that the Secretary ‘‘may not
implement the policy under section
413.174(f)(6) of title 42, Code of Federal
Regulations (relating to oral-only ESRDrelated drugs in the ESRD prospective
payment system), prior to January 1,
2024.’’ Accordingly, we are finalizing
our proposal to amend the date in 42
CFR 413.174(f)(6) from January 1, 2016
to January 1, 2024, and to amend the
date in § 413.237(a)(1)(iv) regarding
outlier payments for oral-only ESRDrelated drugs made under the ESRD PPS
to January 1, 2024.
2. ESRD QIP
This final rule implements
requirements for the ESRD QIP,
including measure sets for PYs 2017 and
2018.
• PY 2017 Measure Set: For PY 2017,
we are removing one measure from the
ESRD QIP, the Hemoglobin Greater than
12 g/dL clinical measure, on the basis
that it is ‘‘topped out’’. We are also
adopting the Standardized Readmission
Ratio (SRR) clinical measure, which
assesses care coordination.
• PY 2018 Measure Set: For PY 2018,
we are adopting two new clinical
measures—the Standardized
Transfusion Ratio (STrR) and Pediatric
Peritoneal Dialysis Adequacy—and
three new reporting measures: (1) Pain
Assessment and Follow-Up; (2) Clinical
Depression Screening and Follow-Up;
and (3) National Healthcare Safety
Network (NHSN) Healthcare Personnel
Influenza Vaccination. We are also
converting the In-Center Hemodialysis

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Consumer Assessment of Healthcare
Providers and Systems (ICH CAHPS)
survey reporting measure to a clinical
measure.
• Revision to the ICH CAHPS
Reporting Measure: Beginning with the
PY 2017 program year, we are revising
the ICH CAHPS reporting measure to
determine facility eligibility for the
measure based on the number of surveyeligible patients treated during the
‘‘eligibility period’’, which we define as
the Calendar Year (CY) that immediately
precedes the performance period.
Survey-eligible patients are defined in
the ICH CAHPS measure specifications
available at http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_
TechnicalSpecifications.html and
https://ichcahps.org.
• Revision to the Mineral Metabolism
Reporting Measure: Beginning with the
PY 2018 program year, we are revising
the Mineral Metabolism reporting
measure to allow facilities to submit
both serum phosphorus and plasma
phosphorus measurements.
• Extraordinary Circumstances
Exemption: Beginning with the PY 2017
ESRD QIP, we are exempting dialysis
facilities from all requirements of the
ESRD QIP clinical and reporting
measures during the months in which
they are forced to close due to a natural
disaster or other extraordinary
circumstances.
• New Scoring Methodology for PY
2018: Beginning with PY 2018, we are
using a new scoring methodology for the
ESRD QIP. This scoring methodology
creates the Clinical Measure Domain,
within which facility scores on clinical
measures will be divided into
subdomains that align with National
Quality Strategy (NQS) domains and
weighted according to the number of
measures in a subdomain, facility
experience with the measure, and the
measure’s alignment with CMS
priorities for quality improvement.
These weighted scores will be summed
to produce a facility’s Clinical Measure
Domain score. A facility’s Clinical
Measure Domain score will be weighted
to comprise 90 percent of the facility’s
TPS, and the facility’s scores on the
reporting measures will be weighted
equally to comprise the remaining 10
percent of the facility’s TPS.
3. DMEPOS
• The methodology for making
national price adjustments based upon
information gathered from the DMEPOS
CBPs: As required by the MIPPA, this
rule finalizes methodologies for using
information from the DMEPOS CBP to
adjust the fee schedule amounts for

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DME in areas where CBPs are not
implemented. The rule finalizes the
same methodologies to adjust the fee
schedule amounts for enteral nutrition
and off-the shelf (OTS) orthotics in areas
where CBPs are not implemented.
• Phase-in of special payment rules
in a limited number of CBAs under the
CBP for certain, specified DME: This
rule finalizes a phase-in of special
payment rules for certain DME at 42
CFR 414.408 and 414.409 under the
DMEPOS CBP in a limited number of
CBAs.
• Medicare hearing aid coverage
exclusion under section 1862(a)(7) of
the Act: This rule modifies the
regulation at § 411.15 to address the
scope of the statutory hearing aid
exclusion and note the types of devices
that are not subject to the hearing aid
exclusion.
• Definition of minimal selfadjustment at § 414.402: This rule will
not finalize changes to the ‘‘minimal
self-adjustment’’ definition to specify
certain ‘‘individuals with specialized
training’’ with regard to the definition of
OTS orthotics under the CBP.
• Change of Ownership Rules to
Allow Contract Suppliers to Sell
Specific Lines of Business: This rule
establishes an exception under the
CHOW rules to allow CMS to sever a
product category from a contract,
incorporate the product category into a
new contract, and transfer the new
contract to a qualified new owner under
certain specific circumstances.
• Appeals Process for Termination of
a Competitive Bidding Contract: This
rule amends § 414.423 to clarify the
effective date for terminations of
competitive bidding contracts, and the
deadline for contract suppliers notifying
its beneficiaries of its contract
termination.
C. Summary of Costs and Benefits
In section XIV of this final rule, we set
forth a detailed analysis of the impacts
of the finalized changes for affected
entities and beneficiaries. The impacts
include the following:
1. Impacts of the Final ESRD PPS
The impact chart in section XIV.B.1 of
this final rule displays the estimated
change in payments to ESRD facilities in
CY 2015 compared to estimated
payments in CY 2014. The overall
impact of the CY 2015 changes is
projected to be a 0.3 percent increase in
payments. Hospital-based ESRD
facilities have an estimated 0.5 percent
increase in payments compared with
freestanding facilities with an estimated
0.3 percent increase.

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We estimate that the aggregate ESRD
PPS expenditures will increase by
approximately $30 million from CY
2014 to CY 2015. This reflects a $0
change from the payment rate update
and a $30 million increase due to the
updates to the outlier threshold
amounts. As a result of the projected 0.3
percent overall payment increase, we
estimate that there will be an increase
in beneficiary co-insurance payments of
0.3 percent in CY 2015, which translates
to approximately $10 million.
2. Impacts for ESRD QIP
The overall economic impact of the
ESRD QIP is an estimated $12 million
in PY 2017 and $11.8 million in PY
2018. In PY 2017, we expect the total
payment reductions to be approximately
$11.9 million, and the costs associated
with the collection of information
requirements for the validation of NHSN
data feasibility study to be
approximately $27 thousand for all
ESRD facilities. In PY 2018, we expect
the total payment reductions to be
approximately $11.6 million, and the
costs associated with the collection of
information requirements for the NHSN
Healthcare Personnel Influenza
Vaccination reporting measure to be
approximately $248 thousand for all
ESRD facilities.
The ESRD QIP will continue to
incentivize facilities to provide highquality care to beneficiaries.
3. Impacts for DMEPOS

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a. Final Methodology for Making
National Price Adjustments to DMEPOS
Fee Schedule Amounts Based Upon
Information Gathered From the CBPs
The final regulation adjusts Medicare
fee schedule amounts for items subject
to DMEPOS CBPs beginning January 1,
2016, using information from the
DMEPOS CBPs to be applied to items in
non-competitive bidding areas. It is
estimated that these adjustments would
save over $4.4 billion in gross payments
for the 5-year period beginning January
1, 2016, and ending December 30, 2020.
The estimated gross savings are
primarily derived from price reductions
for items. It is expected that most of the
economic impact would result from
reduced payment amounts. The ability
of suppliers to furnish items is not
expected to be impacted.
b. Phase-In of Special Payment Rules
Under the CBP for Certain DME and
Enteral Nutrition in Certain CBAs
We believe that the special payment
rules we are finalizing for certain DME
under the DMEPOS CBPs would not
have a significant impact on
beneficiaries and suppliers. Contract

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suppliers are responsible for furnishing
items and services needed by the
beneficiary, and the cost to suppliers for
furnishing these items and services does
not change based on whether or not the
equipment and related items and
services are paid for separately under a
capped rental payment method. Because
the supplier’s bids would reflect the
cost of furnishing items in accordance
with the new payment rules, we expect
the overall savings to generally be the
same as they are under the current
payment rules.
Furthermore, the final special
payment rules would be phased in
under a limited number of areas first to
evaluate their impact on the program,
beneficiaries, and suppliers, including
costs, quality, and access. Expanded use
of the special payment rules in other
areas or for other items would be
addressed in future rulemaking.
c. Clarification of the Statutory
Medicare Hearing Aid Coverage
Exclusion Under Section 1862(a)(7) of
the Act
This final rule clarifies the scope of
the Medicare coverage exclusion for
hearing aids. This rule will not have a
fiscal impact on the Medicare program
because there will be no change in the
devices that are currently covered for
Medicare payment purposes. This rule
provides further guidance about
coverage of DME with regard to the
statutory hearing aid exclusion.
d. Definition of Minimal SelfAdjustment at 42 CFR 414.402
This final rule will not finalize the
definition of minimal self-adjustment at
this time.
e. Change of Ownership Rules To Allow
Contract Suppliers To Sell Specific
Lines of Business
This rule finalizes changes to the
CHOW rules in order to limit disruption
to the normal course of business for
DME suppliers. This final rule
establishes an exception under the
current CHOW rules to allow CMS to
sever a product category from a contract,
incorporate the product category into a
new contract, and transfer the new
contract to a qualified new owner under
certain specific circumstances. This
change would impact businesses in a
positive way by allowing them to
conduct everyday transactions with less
disruption from our rules and
regulations.

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II. Calendar Year (CY) 2015 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 rule (75 FR
49030 through 49214) in which 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
November 10, 2011, we published in the
Federal Register a final rule (76 FR
70228 through 70316) in which 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 and
clarifications, and made technical
changes. On November 9, 2012, we
published in the Federal Register a final
rule (77 FR 67450 through 67531) in
which we made a number of routine
updates for CY 2013, implemented the
third year of the transition to the ESRD
PPS, and made several policy changes
and reiterations.
On December 2, 2013, we published
in the Federal Register a final rule (78
FR 72156 through 72253) in which we
made a number of routine updates for
CY 2014, implemented the fourth and
final year of the transition to the ESRD
PPS, implemented sections 632(a) and
(b)(1) of ATRA, and made several policy
changes and clarifications. Specifically,
we updated the ESRD PPS base rate to
$239.02 per treatment to reflect the CY
2014 ESRD bundled (ESRDB) market
basket update of 3.2 percent minus a
multifactor productivity adjustment of
0.4 percent, that is, a 2.8 percent
increase. This amount also reflected the
application of the wage index budgetneutrality adjustment of 1.000454, the
home dialysis training add-on budgetneutrality adjustment factor of 0.999912,
and the portion of the drug utilization
adjustment for CY 2014, or $8.16, and
delayed the payment for oral-only
ESRD-related drugs and biologicals until
January 1, 2016. In addition, this rule
also extends the gradual reduction of
the wage index floor, delays application
of ICD–10–CM diagnosis codes to the
comorbidity payment adjustment and
updates the fixed-dollar loss and MAP
amounts for the outlier policy.

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B. Summary of the Proposed Provisions,
Public Comments, and Responses to
Comments on the CY 2015 ESRD PPS
Proposed Rule
The proposed rule, titled ‘‘Medicare
Program; End-Stage Renal Disease
Prospective Payment System, Quality
Incentive Program, and Durable Medical
Equipment, Prosthetics, Orthotics, and
Supplies’’ (79 FR 40208 through 40315),
(hereinafter referred to as the CY 2015
ESRD PPS proposed rule), was
published in the Federal Register on
July 11, 2014, with a comment period
that ended on September 2, 2014. In that
proposed rule, for the ESRD PPS, we
proposed routine updates to the
payment system; proposed to
implement the statutory provisions set
forth in PAMA, and clarified policies for
billing and payment of short frequent
hemodialysis services and facility
eligibility requirements for the lowvolume payment adjustment (LVPA)
available under the ESRD PPS. We
received approximately 400 public
comments on our proposals, including
comments from: ESRD facilities;
national renal groups, nephrologists and
patient organizations; patients and care
partners; manufacturers; health care
systems; and nurses. In addition, we
received a several thousand signature
petition requesting that CMS include
‘‘full coverage ‘‘of the cost of home
hemodialysis patient training under
Medicare. We note that we made no
proposals in our CY 2015 ESRD PPS
proposed rule regarding these issues,
and therefore we are not finalizing a
modification to them in this final rule.
We will, however, consider the
comments set forth in the petition and
in other public comments in the future.
In addition, we received other
comments regarding policies for the
ESRD PPS for which we made no
proposals. For example, a few
comments from industry stakeholders
and medical associations encouraged
CMS to consider race and ethnicity
when assessing the cost of care. One
commenter contended that African
American dialysis patients require
significantly more ESA utilization per
treatment. Another commenter
encouraged CMS to monitor race and
ethnicity for the purpose of establishing
a race adjustment factor in the future.
We will consider these comments as we
refine the payment system in CY 2016.
Other comments requested that CMS
clarify inconsistent manual language in
Internet Only Manual Pub. 100–02
Medicare Benefit Policy, chapter 11
End-Stage Renal Disease. We appreciate
these suggestions and will clarify our

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manual language through sub-regulatory
guidance.
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
2015 ESRD PPS. Comments related to
the paperwork burden are addressed in
the ‘‘Collection of Information
Requirements’’ section in this final rule.
Comments related to the impact analysis
are addressed in the ‘‘Economic
Analyses’’ section in this final rule.
C. Routine Updates and Policy Changes
to the CY 2015 ESRD PPS
1. ESRD PPS Base Rate
In the CY 2011 ESRD PPS final rule
(75 FR 49071 through 49083), we
discussed the development of the ESRD
PPS per treatment base rate that is
codified in the Medicare regulations at
§§ 413.220 and 413.230. The CY 2011
ESRD PPS final rule also provides a
detailed discussion of the methodology
used to calculate the ESRD PPS base
rate and the computation of factors used
to adjust the ESRD PPS base rate for
projected outlier payments and budget
neutrality in accordance with sections
1881(b)(14)(D)(ii) and 1881(b)(14)(A)(ii)
of the Act, respectively. Specifically, the
ESRD PPS base rate was developed from
CY 2007 claims (that is, the lowest per
patient utilization year as required by
section 1881(b)(14)(A)(ii) of the Act),
updated to CY 2011, and represented
the average per treatment Medicare
Allowable Payment (MAP) for
composite rate and separately billable
services. In accordance with section
1881(b)(14)(D) of the Act and
regulations at § 413.230, the ESRD PPS
base rate is adjusted for the patientspecific case-mix adjustments,
applicable facility adjustments,
geographic differences in area wage
levels using an area wage index, as well
as applicable outlier payments or
training payments.
a. Changes to the Drug Utilization
Adjustment
i. The Drug Utilization Adjustment
Finalized in the CY 2014 ESRD PPS
Final Rule
Section 1881(b)(14)(I) of the Act, as
added by section 632(a) of the American
Taxpayer Relief Act of 2012 (ATRA),
required that, for services furnished on
or after January 1, 2014, the Secretary
shall make reductions to the single
payment for renal dialysis services to
reflect the Secretary’s estimate of the
change in the utilization of ESRDrelated drugs and biologicals (excluding
oral-only ESRD-related drugs) by

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comparing per patient utilization data
from 2007 with such data from 2012.
Section 1881(b)(14)(I) further required
that in making the reductions, the
Secretary take into account the most
recently available data on Average Sales
Prices (ASP) and changes in prices for
drugs and biologicals reflected in the
ESRD market basket percentage increase
factor under section 1881(b)(14)(F).
Consistent with these requirements, in
CY 2014, we finalized a payment
adjustment to the CY 2014 ESRD PPS
base rate that reflected the change in
utilization of ESRD-related drugs and
biologicals from CY 2007 to CY 2012.
Specifically, we finalized the drug
utilization adjustment amount of $29.93
per treatment, and finalized a policy to
implement this amount over a 3- to 4year transition period. For CYs 2014 and
2015, we stated that we would
implement the transition by offsetting
the payment update by a portion of the
reduction amount necessary to create an
overall impact of zero percent for
facilities from the previous year’s
payments. For example, in CY 2014 we
finalized a per treatment drug
utilization adjustment amount for the
first transition year of $8.16 or 3.3
percent, which represented the CY 2014
ESRDB market basket update minus
productivity and other impacts to create
an overall impact of zero percent. For a
complete discussion of the methodology
for computing the drug utilization
adjustment, please see the CY 2014
ESRD PPS final rule (78 FR 72161
through 72170).
ii. PAMA Changes to the Drug
Utilization Adjustment
On April 1, 2014, Congress enacted
PAMA. Section 217(b), titled
‘‘Mitigation of the Application of
Adjustment to ESRD Bundled Payment
Rate to Account for Changes in the
Utilization of Certain Drugs and
Biologicals,’’ amends section
1881(b)(14)(I) of the Act by inserting
‘‘and before January 1, 2015’’ after
January 1, 2014. This amendment
effectively eliminates the remaining
years of the drug utilization adjustment
transition. In its place, the PAMA
amendments to section 1881(b)(14)(F)(i)
dictate what the market basket increase
factor will be for 2015 and how it will
be reduced in 2016 through 2018. In
particular, PAMA section 217(b)(2)(C)
amended section 1881(b)(14)(F)(i) by
adding subclause (III), which provides
that ‘‘[n]otwithstanding subclauses (I)
and (II), in order to accomplish the
purposes of subparagraph (I) with
respect to 2015, the increase factor
described in subclause (I) for 2015 shall
be 0.0 percent.’’ We interpret subclause

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(III) to mean that the market basket
increase factor less the productivity
adjustment for 2015 is 0.0 percent.
The PAMA amendments also provide
for a payment reduction in lieu of the
drug utilization adjustment in 2016
through 2018. In particular, PAMA
section 217(b)(2)(ii) further amends
section 1881(b)(14)(i)(I) by adding at the
end the following new sentence, ‘‘In
order to accomplish the purpose of
subparagraph (I) with respect to 2016,
2017, and 2018, after determining the
increase factor described in the
preceding sentence for each of 2016,
2017, and 2018, the Secretary shall
reduce such increase factor by 1.25
percentage points for each of 2016 and
2017 and by 1 percentage point for
2018.’’ We interpret this provision as
requiring us to reduce the market basket
increase factor for 2016 through 2018 by
the percentages prescribed in the
statute.
Comment: All commenters were
supportive of CMS’s interpretation of
section 217 of PAMA and agreed that
PAMA required a 0.0 percent market
basket update in CY 2015. A few
commenters expressed concern that the
cumulative economic effect of ATRA’s
drug reduction, sequestration, and now
PAMA’s 0.0 percent update may be
jeopardizing care and access for
Medicare beneficiaries. Some
commenters noted an unstainable
Medicare payment trajectory and cited
an independent analysis that estimates
a mean gross margin of negative 7.4
percent for CY 2018.
Response: We thank the commenters
for their support of our interpretation of
section 217 of PAMA as requiring a 0.0
percent market basket update for CY
2015. We acknowledge the commenters’
concern for the collective effects of
reduced Medicare margins on care
quality and patient access. However,
PAMA, ATRA, and sequestration were
congressionally mandated payment
reductions and CMS must implement
them. CMS has finalized policies that
would mitigate the negative impacts of
statutorily mandated reductions on
facility margins. For example, we
proposed and finalized a transition not
to exceed four years for the ATRA drug
utilization adjustment, thus reducing
the CY 2014 payment reduction from
$29.93 to $8.16. We adopted this
transition policy to mitigate the negative
economic impact for facilities (78 FR
72161 through 72170), and to ensure our
beneficiaries’ access to quality care.
Comment: A few commenters
requested greater transparency in the
data used to establish the annual update
and other Medicare payment updates
included in the ESRD PPS. One

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commenter noted that transparency in
rate setting data gives the industry
confidence in a predictable and fair
payment methodology, and that
facilities can only then make
operational and investment decisions
for the future. Other commenters
provided a specific list of data files they
need in order to replicate CMS’s update
calculations, and provided additional
analysis to CMS: annual claims level
rate setting files for the ESRD PPS;
Medicare Part D Standard Analytic File
(SAF); 100 percent SAF for physician
services; and Medicare Part C SAF.
Response: We agree with commenters
that transparency in rate setting is
desirable. We posted the provider-level
impact file with the proposed rule
because we believe that furnishing an
impact file, sorted by facility, is the
most transparent method and enables
facilities to assess the economic impact
of policy changes at the facility level. In
addition, beginning in CY 2015, we
have made a Limited Data Set (LDS) of
ESRD PPS facility claims used for CY
2015 rate settings available for purchase.
A link to the LDS file was included in
our proposed rule in section XIX titled
Files Available to the Public via the
Internet (79 FR 40311). Likewise, we
included an updated LDS file with this
final rule that is discussed in section
XIX of this rule. The LDS files are
available for purchase at http://
www.cms.gov/research-statistics-dataand=systems/files-for-order/
limiteddatasets/
endstagerenaldiseasesystemfile.html.
We note that interested parties may
request Part D data from CMS at
http://www.cms.gov/Medicare/
Prescription-Drug-Coverage/
PrescriptionDrugCovGenIn/Downloads/
GuidePartD, and we will consider
furnishing encounter data under
Medicare Part C, and other Medicare
claims files in the future.
b. Payment Rate Update for CY 2015
As discussed in section II.A of this
final rule, 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 increased by the rate of
increase in the ESRD market basket,
reduced by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II)
of the Act. In accordance with section
1881(b)(14)(F)(i)(III) of the Act, as added
by PAMA section 217(b)(2)(C), we are
finalizing a 0.0 percent update to the CY
2014 ESRD PPS base rate of $239.02 for
CY 2015.

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66127

Comment: Generally, commenters
were supportive of the CY 2015
proposed base rate. Some commenters
cautioned that CMS ‘‘maintain financial
integrity’’ of the ESRD PPS by
addressing crucial components of the
payment system that inappropriately
reduce the base rate. A few commenters
identified the ESRD PPS payment
components of case-mix and the outlier
policy as examples of payment
adjustments that they believe are
structurally broken. The commenters
contend that these adjustments result in
lowering overall payments to facilities,
making it difficult for facilities to
furnish high quality care to patients.
Response: We thank the commenters
for their support of the proposed CY
2015 ESRD PPS base rate. While we do
not agree with the commenters who
contend that the case-mix and outlier
adjustments are structurally broken, we
believe that these adjustments have
been underutilized in the payment
system. We note that section 632 of
ATRA requires CMS to review the casemix payment adjustments and make
appropriate modifications by CY 2016.
We will consider these comments as
part of that larger ESRD PPS refinement
that will take place for CY 2016.
Comment: Other commenters
cautioned CMS to correct what they
term ‘‘flaws in standardization,’’ calling
upon CMS to use the most current data
available in re-calculating the
standardization factor in this final rule
in order to mitigate losses facilities may
have in CY 2015. As an alternative,
commenters suggest that CMS make an
interim reduction to the adjustor values
that would take into account the
decrease in drug utilization. With these
values, CMS could reduce the dollars in
the standardization factor for CY 2015.
They estimated that the standardization
factor discrepancy accounts for a loss of
one to two percent in the base rate.
They also suggested that for 2015,
CMS: (1) Eliminate the co-morbidity
case-mix adjustments because the
facilities are unable to obtain the
necessary documentation to substantiate
a co-morbid diagnosis and thus, are
unable to claim the adjustment; and (2)
reduce the outlier percentage so that it
reflects the percentage of cases paid as
outlier cases (0.5 percent) and so that it
is paid out annually in its entirety, or
else provide for a zero percent outlier
policy.
Response: We thank the commenters
for their suggestions for protecting the
integrity of the base rate and
questioning the necessity for some
payment adjustments available under
the ESRD PPS. However, as we stated in
the CY 2011 ESRD PPS final rule (75 FR

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49081), to account for the overall effects
of the proposed ESRD PPS patient- and
facility-level adjustment factors and
wage indexes, we had to standardize
payments in order to ensure that total
projected PPS payments were equal to
what would otherwise have been paid
had the ESRD PPS not been
implemented, prior to application of the
98 percent budget-neutrality
adjustment. The standardization factor
was calculated by dividing total
estimated payments in 2011 under the
basic case-mix adjusted composite rate
payment system by estimated payments
under the final ESRD PPS in 2011.
We wish to remind commenters that
we used the best data available for the
development of the standardization
factor and made a good faith effort to
simulate payments under the ESRD PPS
beginning in CY 2011. In addition, CMS
plans to conduct a regression analysis
for the CY 2016 ESRD PPS rulemaking
cycle to reassess the appropriateness of
the patient- and facility-level payment
adjustments applied under the ESRD
PPS. This analysis will include a
thoughtful assessment of utilization and
economic impact of the various
payment adjustments under the PPS to
determine whether they should
continue to apply, or if the magnitude
of the adjustments is over or
understated in the ESRD PPS.
We plan to consider all of the
improvements suggested as part of the
ESRD PPS refinement for CY 2016. We
do not think it would be appropriate to
eliminate any co-morbidity adjustments
in isolation from a broader refinement
that assesses all current and potentially
significant adjustments.
c. CY 2015 ESRD PPS Wage Index
Budget-Neutrality Adjustment
As discussed in section II.C of this
final rule, for CY 2015 we apply the
wage index budget-neutrality
adjustment factor of 1.001729 to the CY
2014 ESRD PPS base rate (that is,
$239.02), yielding a CY 2015 ESRD PPS
wage index budget-neutrality adjusted
base rate of $239.43 ($239.02 × 1.001729
= $239.43).
Comment: Commenters were
supportive of the CY 2015 proposed
wage index budget-neutrality
adjustment. A few commenters noted
the small payment increase for CY 2015,
and thanked CMS for continuing to
apply an updated wage index budgetneutrality adjustment in a year where a
0.0 percent market basket update was
congressionally mandated.
Response: We thank the commenters
for their support of our finalized wage
index budget-neutrality factor, and note
that the wage index budget-neutrality

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update is computed separately from the
annual market basket update. Therefore,
the wage index budget-neutrality update
continues to apply even in years when
a 0.0 market basket update is statutorily
required.
d. Labor-Related Share
As discussed in section II.C.2 of this
final rule, as part of the ESRDB market
basket rebase and revision, we are
updating the labor-related share from
41.737 percent to 50.673 percent. We
noted that some ESRD facilities are
adversely affected by this update. For
example, rural facilities and facilities
located in core-based statistical areas
(CBSA) with wage indexes below 1.0
will experience reduced payments due
to an increase in the labor-related share,
while other facilities located in CBSAs
where wage indices are above 1.0 will
experience increased payments. While
we are finalizing the new labor-related
share of 50.673 percent, we shall
implement this value using a 2-year
transition.
Therefore, for CY 2015 we will apply
50 percent of the value of the current
labor-related share under the ESRD PPS
(41.737 percent) and 50 percent of the
value of the new labor-related share
(50.673 percent), add the percentages
together and divide by two, for a CY
2015 labor-related share of 46.205
percent ((41.737 + 50.673)/2 = 46.205).
Beginning in CY 2016, we will apply
100 percent of the total labor-related
share of 50.673 percent. We shall
continue to apply a labor-related share
of 50.673 percent in computing a wage
index-adjusted base rate for ESRD
facilities until such time in the future
the ESRDB market basket is again
rebased or revised. This approach is
similar to the transition finalized for the
CY 2015 wage indexes and discussed in
section II.3 of this final rule, and is
intended to allow ESRD facilities time
to adjust to the new labor-related share.
Comment: While the majority of
commenters supported the updated
labor-related share, some commenters
expressed concern regarding the
negative impact for rural facilities and
any facility with a wage index value of
less than 1.0, and noted that they will
experience reduced ESRD PPS
payments in CY 2015 as a result of the
updated labor-related share. A few
commenters contended that this update
would be better received during a larger
payment system refinement and
encouraged CMS to delay the ESRDB
market basket update, with the new
labor-related share, until CY 2016 where
negative impacts could be offset with
other payment system refinements.
Another commenter noted that if the

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ESRDB market basket update was
delayed until CY 2016, 2012 audited
cost reports would be available to
ensure better accuracy. The commenter
noted that the PAMA legislation
mandated the audits and provided $18
million to fund the effort.
Response: We thank the commenters
for their support of our updated laborrelated share. We share stakeholders’
concern for negatively impacted
facilities. Moreover, we agree with
commenters that delaying the ESRDB
market basket update until CY 2016 may
have the advantage of offsetting some of
the negative impact indicated in section
XIV of this final rule. However, we
believe the labor-related share has been
undervalued in the payment system,
especially after the ATRA drug
utilization reduction finalized in the
ESRD PPS CY 2014 final rule (78 FR
72161 through 72170). Therefore, we are
finalizing a labor-related share of 46.205
percent for CY 2015 and a labor-related
share of 50.673 percent for CY 2016 and
until such time in the future the laborrelated share is updated.
Lastly, we wish to clarify for
commenters that the audits of Medicare
cost reports beginning during 2012 will
not be available for CY 2016
rulemaking. Any cost report findings
resulting from the statutorily-mandated
audits of Medicare cost reports
beginning during 2012 will be available
for future ESRDB market basket updates.
Comment: Many commenters
supported the update to the laborrelated share and the 2-year transition to
dampen the immediate impact of the
change. A few commenters thanked
CMS for appropriately recognizing
shifting costs in furnishing dialysis
services from drugs to labor.
Response: We thank the commenters
for their support and note that we
considered implementing the full
amount of the revised labor-related
share percentage of 50.673 for CY 2015,
but that would have increased the CY
2015 proposed wage index budgetneutrality factor. Such an increase
would have resulted in a further
decrease in CY 2015 Medicare payments
to rural facilities, and an additional
increase to urban facilities. When we
apply the transition labor-related share
of 46.205 percent the disparity in
impacts for rural and urban facilities is
reduced, resulting in a more stable
economic environment for all facilities
in general. We believe that offsetting the
negative economic impact for rural
facilities with the 2-year transition for
the labor-share will enhance access to
quality care for Medicare beneficiaries
living in rural communities. (For more
information of the CY 2015 Impact of

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Changes in Payments to ESRD Facilities
for CY 2015 ESRD final rule, see section
XIV of this final rule). Therefore, we
believe a 2-year transition strikes an
appropriate balance between ensuring
that ESRD PPS payments are as accurate
and stable as possible, while giving
rural and urban facilities in low wage
index areas time to adjust to the new
labor-related share.
Comment: A few commenters
requested that CMS consider a longer
transition to further mitigate the
financial pressures on rural providers.
One commenter encouraged CMS to
provide a longer transition period,
‘‘such as 3 or 4 years.’’ Another
commenter encouraged CMS to extend
the transition to 3 years to give rural
facilities more time to adjust to the
lower reimbursement and ‘‘get them
closer to the end of the PAMA cuts.’’
Response: We thank the commenters
for their concern for the economic
impacts on rural and urban facilities
located in areas with low wage indices.
In addition, we acknowledge the
commenter’s suggestion to extend the
transition period to 3 or 4 years to allow
disadvantaged facilities time to adjust to
the new labor-related share percentage.
However, we continue to believe a 2year transition strikes an appropriate
balance between allowing ESRD
facilities time to adjust to the new laborrelated share while appropriately
accounting for facility costs associated
with labor in furnishing renal dialysis
services.
In summary, we are finalizing a CY
2015 ESRD PPS base rate of $239.43.
This reflects, updated claims data used
for rate setting, a 0.0 percent payment
update consistent with section
1881(b)(14)(F)(i)(III) of the Act, as added
by section 217(b)(2) of PAMA, a 2-year
transition for the labor related
share(46.205 percent for CY 2015 and
50.673 for CY 2016), and the CY 2015
wage index budget-neutrality
adjustment factor of 1.001729.
2. ESRD Bundled Market Basket and
Labor-Related Share

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a. Rebasing and Revision of the ESRD
Bundled Market Basket
In July, we proposed to rebase and
revise the ESRD Bundled (ESRDB)
market basket for CY 2015. In
accordance with section
1881(b)(14)(F)(i) of the Act, beginning in
2012, the ESRD payment amounts are
required to be annually increased by an
ESRD market basket increase factor that
is reduced by the productivity
adjustment in section
1886(b)(3)(B)(xi)(II) of the Act. The
application of the productivity

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adjustment may result in the increase
factor being less than 0.0 for a year and
may result in payment rates for a year
being less than the payment rates for the
preceding year. The statute also
provides that the market basket increase
factor should reflect the changes over
time in the prices of an appropriate mix
of goods and services used to furnish
renal dialysis services.
In the CY 2011 ESRD PPS final rule
(75 FR 49151 through 49162), we
established an ESRDB market basket
using CY 2008 as the base year. This
market basket was used to annually
update the ESRD base rate payments for
CY 2012, CY 2013, and CY 2014.
In the CY 2015 ESRD proposed rule,
we proposed to rebase and revise the
ESRDB market basket for CY 2015, in
accordance with, section
1881(b)(14)(F)(i) of the Act, which
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. The multi-factor
productivity adjustment is applied to
the ESRDB market basket update under
the requirements of sections
1881(b)(14)(F)(i)(II) and
1886(b)(3)(B)(xi)(II) of the Act.
The CY 2012-based ESRDB market
basket represents the costs of operating
and capital-related costs. The
percentage change in the ESRDB market
basket reflects the average change in the
price of a fixed set of goods (both
operating and capital) and services
purchased by ESRD facilities necessary
for providing renal dialysis services. For
further background information, see the
CY 2011 final rule with comment period
(75 FR 49151 through 49162).
The ESRDB market basket is a fixedweight (Laspeyres-type) price index. A
Laspeyres-type index compares the cost
of purchasing a specified mix of goods
and services in a selected base period to
the cost of purchasing that same group
of goods and services at current prices.
The effects on total expenditures
resulting from changes in the quantity
or mix of goods and services purchased
subsequent or prior to the base period
are, by design, not considered.
The market basket is constructed in
three main steps: the first step is to
select a base period and estimate total
base period expenditure shares for
mutually exclusive and exhaustive
spending categories. We use total costs
for operating and capital expenses.
These shares are called ‘‘cost’’ or
‘‘expenditure’’ weights. The second step
is to match each expenditure category to
a price/wage variable, called a price
proxy. We draw these price proxy
variables from publicly available

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66129

statistical series published on a
consistent schedule, preferably at least
quarterly. The final step involves
multiplying the price proxy index level
for each spending category by the cost
weight for that category. The sum of
these products (that is, cost weights
multiplied by proxy index levels) for all
cost categories yields the composite
index level of the market basket for a
given quarter or year. Repeating the
third step for other quarters and years
produces a time series of market basket
index levels, from which we can
calculate rates of growth.
We proposed to use CY 2012 as the
base year for the rebased and revised
ESRDB market basket cost weights. The
cost weights are based on the cost report
data for independent ESRD facilities.
We refer to the market basket as a CY
market basket because the base period
for all price proxies and weights are set
to CY 2012 = 100. Source data included
CY 2012 Medicare cost reports (Form
CMS–265–11), supplemented with 2012
data from the U.S. Census Bureau’s
Services Annual Survey (SAS) for
Kidney Dialysis Centers (NAICS
621492). Medicare cost reports from
hospital-based ESRD providers were not
used to construct the proposed ESRDB
market basket because data from
independent ESRD facilities tend to
better reflect the actual cost structure
faced by the ESRD facility itself, and are
not influenced by the allocation of
overhead over the entire institution, as
can be the case with hospital-based
providers. This approach is consistent
with our standard methodology used in
the development of other market
baskets.
b. Rebasing and Revision of the ESRD
Bundled Market Basket
The terms ‘‘rebasing’’ and ‘‘revising’’,
while often used interchangeably,
actually denote different activities.
Rebasing means shifting the base year
for the structure of costs of the input
price index (for example, we proposed
to shift the base year cost structure from
CY 2008 to CY 2012). Revising means
changing data sources, cost categories,
price proxies, and/or methodology used
in developing the input price index. We
proposed both to rebase and revise the
ESRDB market basket.
We selected CY 2012 as the new base
year because 2012 is the most recent
year for which relatively complete
Medicare cost report (MCR) data are
available. In developing the market
basket, we reviewed ESRD expenditure
data from ESRD MCRs (CMS Form 265–
11) for CY 2012 for each freestanding
ESRD facility that reported expenses
and payments. The CY 2012 cost reports

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are those with cost reporting periods
beginning on or after January 1, 2012
and before December 31, 2012.
We developed cost category weights
for the proposed CY 2012-based ESRDB
market basket in two stages. First, we
derived base weights for nine major
categories (Wages and Salaries,
Employee Benefits, Medical Supplies,
Lab Services, Housekeeping &
Operations, Pharmaceuticals,
Administrative and General, CapitalRelated Building & Fixed Equipment,
and Capital-Related Machinery) from
the ESRD MCRs. Second, we proposed
to divide the Administrative & General
cost category into further detail using
2012 U.S. Census Bureau Services
Annual Survey (SAS) Data for the
industry Kidney Dialysis Centers
(NAICS 621492). We applied the 2012
distributions from the SAS data to the
2012 ‘‘Administrative & General’’ cost
weight to yield the more detailed 2012
cost weights. This is similar to the
methodology we used to break the 2008based Administrative & General Costs
into more detail for the ESRDB market
basket as detailed in the CY 2011 ESRD
final rule (75 FR 49154 through 49159).
For more information on the SAS data,
see http://www.census.gov/services/sas/
about_the_surveys.html.
We proposed to include a total of 20
detailed cost categories in the CY 2012based ESRDB market basket, which is
four more cost categories than the CY
2008-based ESRDB market basket. In
addition, we proposed to further
decompose both the Wages and Salaries
and Employee Benefits cost categories
into four more detailed cost categories

reflecting the occupational mix of full
time equivalents (FTEs) at ESRD
facilities. The four detailed occupational
categories are: (1) Health-related
workers; (2) Management workers; (3)
Administrative workers; and (4) Service
workers. Having more detailed cost
categories for these compensation costs
enables them to be proxied more
precisely. We also proposed to collapse
the Professional Fees and All Other
Services cost categories into single
categories rather than splitting those
categories into Labor-Related and NonLabor-Related Services. In addition, we
proposed to revise our labels for All
Other Materials to Medical Materials
and Supplies, Laboratories to Lab
Services, and All Other Labor-Related/
Non Labor-Related to All Other Goods
and Services.
i. Cost Category Weights
Using Worksheets A and B from the
CY 2012 Medicare cost reports, we
computed cost shares for nine major
expenditure categories: Wages and
Salaries, Employee Benefits,
Pharmaceuticals, Supplies, Lab
Services, Administrative and General
(A&G), Housekeeping and Operations,
Capital-Related Building & Equipment,
and Capital-Related Machinery. Edits
were applied to include only cost
reports that had total costs greater than
zero. In order to reduce potential
distortions from outliers in the
calculation of the cost weights for the
major expenditure categories, cost
values for each category less than the
5th percentile or greater than the 95th
percentile were excluded from the

computations. The resulting data set
included information from
approximately 4,700 independent ESRD
facilities’ cost reports from an available
pool of 5,333 cost reports. Expenditures
for the nine cost categories as a
proportion of total expenditures can be
found in the CY 2015 Proposed Rule (79
FR 40217).
Some costs are reported on the
Medicare cost report but are not
included in the ESRD bundled payment.
For example, we removed the expenses
related to vaccine costs from total
expenditures since these are excluded
from the ESRD bundled payment, but
reported on the Medicare cost report.
We also proposed to expand the
expenditure categories developed from
the Medicare cost reports to allow for
more detailed expenditure
decomposition. To expand these cost
categories, SAS data were used because
the Medicare Cost Reports do not collect
detailed information on the items of
interest. Those categories include:
Benefits for all employees, professional
fees, telephone, utilities, and all other
goods and services. We chose to
separately break out these categories to
more accurately reflect ESRD facility
costs. For a detailed description of how
the costs were further refined to yield
the proposed 2012-based ESRDB cost
weights please see (79 FR 40217 through
40221).
Table 1 lists all of the cost categories
and cost weights in the CY 2012-based
ESRDB market basket compared to the
cost categories and cost weights in the
CY 2008-based ESRDB market basket.

TABLE 1—COMPARISON OF THE CY 2012–BASED ESRDB MARKET BASKET COST CATEGORIES & WEIGHTS AND THE CY
2008-BASED ESRDB MARKET BASKET COST CATAGORIES & WEIGHTS
2008 Cost
weight
(percent)

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2008 Cost category
Total ..............................................................
Compensation ...............................................
Wages and Salaries ...............................
Employee Benefits .................................
Utilities ...........................................................
Electricity ................................................
Natural Gas ............................................
Water and Sewerage .............................
All Other Materials ........................................
Pharmaceuticals .....................................
Supplies .................................................
Lab Services ..........................................
All Other Services .........................................
Telephone ..............................................
Housekeeping and Operations ..............
Labor-Related Services .........................
Prof. Fees: Labor-related .......................
All Other Labor-related ..........................
NonLabor-Related Services ...................
Prof. Fees: Nonlabor-related .................
All Other Nonlabor-related .....................

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100.000
33.509
26.755
6.754
1.264
0.621
0.127
0.516
39.765
25.052
9.216
5.497
15.929
0.597
2.029
2.768
1.549
1.219
10.535
0.224
10.311

Frm 00012

2012 Cost
weight
(percent)
100.000
42.497
33.650
8.847
1.839
0.973
0.101
0.765
28.139
16.510
10.097
1.532
15.277
0.468
3.785
......................
0.617
......................
10.407
......................
......................

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2012 Cost category
Total.
Compensation.
Wages and Salaries.
Employee Benefits.
Utilities.
Electricity.
Natural Gas.
Water and Sewerage.
Medical Materials and Supplies.
Pharmaceuticals.
Supplies.
Lab Services.
All Other Goods and Services.
Telephone Service.
Housekeeping and Operations.
Professional Fees (Labor-related and NonLabor-related services).
All Other Goods and Services

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66131

TABLE 1—COMPARISON OF THE CY 2012–BASED ESRDB MARKET BASKET COST CATEGORIES & WEIGHTS AND THE CY
2008-BASED ESRDB MARKET BASKET COST CATAGORIES & WEIGHTS—Continued
2008 Cost
weight
(percent)

2008 Cost category
Capital Costs .................................................
Capital Related-Building and Equipment
Capital Related-Machinery .....................

9.533
7.459
2.074

2012 Cost
weight
(percent)
12.248
8.378
3.870

2012 Cost category
Capital Costs.
Capital Related-Building and Equipment.
Capital Related-Machinery.

Note: Totals may not sum to 100.000 percent due to rounding

ii. Price Proxies for the CY 2012 ESRDB
Market Basket
For each cost category in the CY 2012based ESRDB market basket, we selected
the most appropriate wage and price
proxies that measure the rate of price
change for each expenditure category.
An explanation of our rationale for the
proposed price proxies used for each
cost category can be found in the
proposed rule (79 FR 40221 through
40224). With the exception of the
pharmaceuticals cost category, all of the
price proxies we proposed to use for
each cost category weight are the same
in this final rule. We based the price
proxies on Bureau of Labor Statistics
(BLS) data and grouped them into one
of the following BLS categories:
• Employment Cost Indexes.
Employment Cost Indexes (ECIs)
measure the rate of change in
employment wage rates and employer
costs for employee benefits per hour
worked. These indexes are fixed-weight
indexes and strictly measure the change
in wage rates and employee benefits per
hour.
• Producer Price Indexes. Producer
Price Indexes (PPIs) measure price
changes for goods sold in other than
retail markets. PPIs are used when the
purchases of goods or services are made
at the wholesale level.
• Consumer Price Indexes. Consumer
Price Indexes (CPIs) measure change in
the prices of final goods and services
bought by consumers. CPIs are only
used when the purchases are similar to
those of retail consumers rather than

purchases at the wholesale level, or if
no appropriate PPIs were available.
We evaluated the price proxies using
the criteria of reliability, timeliness,
availability, and relevance:
• Reliability. Reliability indicates that
the index is based on valid statistical
methods and has low sampling
variability. Widely accepted statistical
methods ensure that the data were
collected and aggregated in a way that
can be replicated. Low sampling
variability is desirable because it
indicates that the sample reflects the
typical members of the population.
• Timeliness. Timeliness implies that
the proxy is published regularly,
preferably at least once a quarter. We
believe that using proxies that are
published regularly (at least quarterly,
whenever possible) helps to ensure that
we are using the most recent data
available to update the market basket.
• Availability. Availability means that
the proxy is publicly available. We
prefer that our proxies are publicly
available because this ensures that the
market basket updates are as transparent
to the public as possible.
• Relevance. Relevance means that
the proxy is applicable and
representative of the cost category
weight to which it is applied.
Pharmaceuticals
In the CY 2015 proposed rule, we
proposed to change the price proxy used
for the pharmaceuticals cost category
from the one used for the 2008-based
ESRDB market basket—the PPI:
Pharmaceuticals for Human Use,

Prescription (79 FR 40223). We
referenced a recent Health and Human
Services Office of the Inspector General
(OIG) report titled ‘‘Update: Medicare
Payment for End Stage Renal Disease
Drugs’’ which recommended that CMS
consider updating the ESRD payment
bundle using a factor that takes into
account drug acquisition costs. CMS
had responded to this recommendation
by stating that we would consider these
findings in the continual evaluation of
the ESRD market basket, particularly
during the next rebasing and revising of
the market basket index.1
Drug acquisition cost data is not
publicly available, nor are the methods
used to determine it transparent, and,
therefore, wouldn’t meet our price
proxy criteria of relevance, reliability,
transparency, and public availability.
However, after considering several
viable options that do meet the criteria
we proposed to use the PPI: Vitamin,
Nutrient, and Hematinic Preparations
(BLS series code #WPU063807).
Based on public comments and, for
the reasons articulated below in
comments and responses, we have
decided to finalize a price proxy blend
as the price proxy for the
pharmaceutical cost category. The blend
we are using is 22 percent PPI: Vitamin,
Nutrient, and Hematinic Preparations
(BLS series code #WPU063807) and 78
percent PPI: Biological Products,
Human Use (BLS series code
#WPU063719). Table 2 lists all price
proxies for the revised and rebased
ESRDB market basket.

tkelley on DSK3SPTVN1PROD with RULES3

TABLE 2—PRICE PROXIES FOR THE CY 2012-BASED ESRDB MARKET BASKET
Cost weight
(percent)

Cost category

Price proxy

Compensation ...........................................
Wages and Salaries ..........................
Health-related Wages
Management Wages
Administrative Wages
Service Wages ...........................
Employee Benefits ............................
Health-related Benefits

.....................................................................................................................................
.....................................................................................................................................
ECI—Wages & Salaries—Hospital (Civilian) .............................................................
ECI—Wages & Salaries—Management, Business, and Financial (Private) .............
ECI—Wages & Salaries—Office and Administrative Support (Private) ....................
ECI—Wages & Salaries—Service Occupations (Private)
.....................................................................................................................................
ECI—Benefits—Hospital (Civilian) .............................................................................

1 http://oig.hhs.gov/oei/reports/oei-03-1200550.asp

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42.497
33.650
26.920
2.356
2.356
2.019
8.847
7.078

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
TABLE 2—PRICE PROXIES FOR THE CY 2012-BASED ESRDB MARKET BASKET—Continued
Cost category

Cost weight
(percent)

Price proxy

Management Benefits
Administrative Benefits
Service Benefits .........................
Utilities ...............................................
Electricity ....................................
Natural Gas ................................
Water and Sewerage
Medical Materials and Supplies
Pharmaceuticals .........................
Supplies ......................................
Lab Services ..............................
All Other Goods and Services
Telephone Service
Housekeeping and Operations
Professional Fees
All Other Goods and Services
Capital Costs .....................................
Capital Related Building and
Equipment
Capital Related Machinery
Total ....................................

ECI—Benefits—Management, Business, and Financial (Private)
ECI—Benefits—Office and Administrative Support (Private)
ECI—Benefits—Service Occupations (Private) .........................................................
.....................................................................................................................................
PPI—Commercial Electric Power ...............................................................................
PPI—Commercial Natural Gas ..................................................................................
CPI—Water and Sewerage Maintenance ..................................................................
.....................................................................................................................................
Blend of PPI Biological Products for Human Use and PPI—Vitamin, Nutrient, and
Hematinic Preparations
PPI—Surgical and Medical Instruments ....................................................................
PPI—Medical Laboratories .........................................................................................
.....................................................................................................................................
CPI—Telephone Services ..........................................................................................
PPI—Cleaning and Building Maintenance Services
ECI—Compensation—Professional and Related Occupations (Private)
PPI—Finished Goods less Foods and Energy ..........................................................
.....................................................................................................................................
PPI—Lessors of Nonresidential Buildings .................................................................

0.619
0.619
0.531
1.839
0.973
0.101
0.765
28.139
16.510
10.097
1.532
15.277
0.468
3.785
0.617
10.407
12.248
8.378

PPI—Electrical Machinery and Equipment ................................................................

3.870

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

100.000

Note: Totals may not sum to 100.000 percent due to rounding.

iii. 2012-Based ESRDB Market Basket
Updates Compared to 2008-Based
ESRDB Market Basket Updates
Beginning with the CY 2015 ESRD
PPS update, we proposed to adopt the
CY 2012-based ESRDB market basket as
the appropriate market basket of goods
and services for the ESRD PPS.
Based on the IHS Global Insight, Inc.
(IGI) first quarter 2014 forecast with
history through the fourth quarter of

2013, the proposed CY 2012-based
ESRDB market basket for CY 2015 was
2.0 percent while the proposed CY
2008-based ESRDB market basket for CY
2015 was 2.7 percent.
Table 3 compares the proposed CY
2012-based ESRDB market basket and
the CY 2008-based ESRDB market
basket percent changes. For the
historical period between CY 2011 and
CY 2013, the average difference between

the two market baskets was ¥1.8
percentage points. This is primarily the
result of the proposed lower
pharmaceutical cost share weight
combined with the proposed revised
price proxy for the pharmaceutical cost
category. For the CY 2014 and CY 2015
forecasts, the differences in the market
basket forecasts are mainly driven by
the same factors as in the historical
period.

TABLE 3—PROPOSED CY 2012-BASED ESRDB MARKET BASKET AND CY 2008 BASED ESRDB MARKET BASKET,
PERCENT CHANGES: 2011–2015
Proposed CY
2012-based
ESRDB
market basket

Calendar year (CY)

Historical data:
CY 2011 ....................................................................................................................................................
CY 2012 ....................................................................................................................................................
CY 2013 ....................................................................................................................................................
Average CY 2011–2013 ...........................................................................................................................
Forecast:
CY 2014 ....................................................................................................................................................
CY 2015 ....................................................................................................................................................

CY 2008-based
ESRDB market
basket

1.2
1.4
1.1
1.3

2.8
3.4
3.0
3.1

1.8
2.0

2.3
2.7

Source: IHS Global Insight, Inc. 1st quarter 2014 forecast with historical data through 4th quarter 2013.

tkelley on DSK3SPTVN1PROD with RULES3

b. Proposed ESRDB Market Basket
Update, Adjusted for Multifactor
Productivity for CY 2015
Under section 1881(b)(14)(F) of the
Act, beginning in CY 2012, ESRD PPS
payment amounts shall be annually
increased by an ESRD market basket
percentage increase factor reduced by
the productivity adjustment. For CY

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2015, section 1881(b)(14)(F)(i)(III) of the
Act, as added by section 217(b)(2) of
PAMA, requires the Secretary to
implement a 0.0 percent ESRDB market
basket increase to the ESRD PPS base
rate. In addition, we interpret the
reference to ‘‘[n]otwithstanding
subclause (III)’’ that was added to
amended section 1881(b)(14)(F)(i)(III) of
the Act as precluding the application of

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the multi-factor productivity (MFP)
adjustment in 2015. As a result of these
provisions, the proposed CY 2015 ESRD
market basket increase was 0.0 percent.
We note that the proposed 2012-based
ESRDB market basket update less the
productivity adjustment for CY 2015
would have been 1.6 percent, or 2.0
percent less 0.4 percentage point, based

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
on IGI’s 1st quarter 2014 forecast of the
ESRDB market basket and MFP.
c. Labor-Related Share
We define the labor-related share
(LRS) as those expenses that are laborintensive and vary with, or are
influenced by, the local labor market.
The labor-related share of a market
basket is determined by identifying the
national average proportion of operating

costs that are related to, influenced by,
or vary with the local labor market. The
labor-related share is typically the sum
of Wages and Salaries, Benefits,
Professional Fees, Labor-related
Services, and a portion of the Capital
share from a given market basket.
We proposed to use the 2012-based
ESRDB market basket cost weights to
determine the labor-related share for
ESRD facilities of 50.673 percent, as

66133

shown in Table 4 below. These figures
represent the sum of Wages and
Salaries, Benefits, Housekeeping and
Operations, 87 percent of the weight for
Professional Fees (details discussed
below), and 46 percent of the weight for
Capital-related Building and Equipment
expenses (details discussed below). We
note that this is a similar methodology
used to compute the labor-related share
used from CY 2011 through CY 2014.

TABLE 4—CY 2015 LABOR-RELATED SHARE AND CY 2014 ESRDB LABOR-RELATED SHARE
Proposed
CY 2015 ESRDB
labor-related
share
(percent)

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Cost category

CY 2014
ESRDB laborrelated share
(percent)

Wages ..............................................................................................................................................................
Benefits ............................................................................................................................................................
Housekeeping and operations .........................................................................................................................
Professional fees (labor-related) .....................................................................................................................
Capital labor-related ........................................................................................................................................

33.650
8.847
3.785
0.537
3.854

26.755
6.754
2.029
2.768
3.431

Total ..........................................................................................................................................................

50.673

41.737

The labor-related share for
Professional Fees (87 percent) reflects
the proportion of ESRD facilities’
professional fees expenses that we
believe vary with local labor market. We
conducted a survey of ESRD facilities in
2008 to better understand the
proportion of contracted professional
services that ESRD facilities typically
purchase outside of their local labor
market. These purchased professional
services include functions such as
accounting and auditing, management
consulting, engineering, and legal
services. Based on the survey results, we
determined that, on average, 87 percent
of professional services are purchased
from local firms and 13 percent are
purchased from businesses located
outside of the ESRD facility’s local labor
market. Thus, we proposed to include
87 percent of the cost weight for
Professional Fees in the labor-related
share, the same percentage as used in
prior years.
The labor-related share for capitalrelated expenses (46 percent of ESRD
facilities’ adjusted Capital-related
Building and Equipment expenses)
reflects the proportion of ESRD
facilities’ capital-related expenses that
we believe varies with local labor
market wages. Capital-related expenses
are affected in some proportion by
variations in local labor market costs
(such as construction worker wages)
that are reflected in the price of the
capital asset. However, many other
inputs that determine capital costs are
not related to local labor market costs,
such as interest rates. The 46-percent

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figure is based on regressions run for the
inpatient hospital capital PPS in 1991
(56 FR 43375). We use a similar
methodology to calculate capital-related
expenses for the labor-related shares for
rehabilitation facilities (70 FR 30233),
psychiatric facilities, long-term care
facilities, and skilled nursing facilities
(66 FR 39585).
d. Responses to Comments on Proposed
Market Basket Rebasing & Revision
Comment: Many commenters support
rebasing the ESRDB market basket using
the most current and accurate data that
are available. Most commenters stated
that an updated base year allows the
market basket to better reflect the
relative costs of running an ESRD
facility under the PPS and accurately
captures the decline in dialysis drug use
that has occurred since 2008 (the base
year of the current market basket).
Response: We thank the commenters
who supported the rebasing of the
ESRDB market basket to reflect cost data
for 2012. The 2012 MCR data is the first
year of data available under the bundled
PPS system and reflects the changes to
the relative costs associated with
furnishing ESRD treatments. We agree
that the decline in dialysis drug use
since 2008 and its subsequent impact on
the relative costs of other goods and
services is an important update to
consider when estimating price
pressures faced by providers.
Comment: Several commenters
requested that CMS delay the market
basket rebasing until CY2016 so that the
rebasing weights could be based on

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2012 audited cost report data instead of
the proposed unaudited reports. One
commenter claimed that audits have
historically shown that facilities’ cost
reports have included unallowable costs
that either overstate or understate
provider costs. They believe these errors
could change the results of the cost
share weights derived from the market
basket data.
Response: We disagree with the
commenters that the market basket
rebasing should be delayed until CY
2016 in order to use audited cost report
data rather than the unaudited reports.
First, the audits will begin in fiscal year
2015 and the processing and analysis of
the audited data could take several years
to complete and therefore would not be
available to use for the CY 2016
updates. Additionally, although the
audits might lead to different cost levels
reported by some providers, we don’t
believe that different levels would result
in substantial variation in the relative
cost share weights derived from the
unaudited data since the cost weights
are based on shares of the total rather
than on levels. Additionally the weights
are derived from all providers and
therefore for a change to appear in the
market basket cost shares the
misreporting would have to be prevalent
across a significant percentage of
providers. Therefore, we do not agree
the upcoming audits are a reason to
delay the update to the market basket
weights for CY 2015. We believe the use
of the 2012 Medicare Cost Report data
to be a technical improvement to the use
of the 2008 ESRD relative cost shares.

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Comment: One commenter believes
that rebasing the market basket goes
against the intent of PAMA since the
rebasing will result in decreased
payments to some providers and
increased payments to others. They
believe that PAMA was passed to
mitigate the adjustment to ESRD
bundled payments for all dialysis
facilities by dictating a market basket
update for CY 2015 through 2018.
Response: The CY 2015 ESRD PPS
update will be 0.0 percent as mandated
by PAMA. For CY 2016 through CY
2018, PAMA mandates a reduction to
the market basket increase to the ESRD
PPS payment updates. PAMA did not
specify what the annual updates would
be for those years. It is critical that CMS
estimate an appropriate market basket
increase that reflects the inputs used to
furnish ESRD treatments in order for the
legislatively required reductions to be
applied in CYs 2016 through 2018.
Comment: One commenter believes
that the difference in the market basket
rate using the 2008 data versus the 2012
data is significant. They compared rules
where market basket rebasings have
been proposed and finalized for other
providers such as hospital and home
health and found that the rebasings did
not result in significant changes in
current or historical market basket
updates.
Response: We agree with the
commenter that the rebasing of other
market baskets has not, historically,
resulted in significant changes to the
market basket update rate. However,
between 2008 and 2012 the dialysis
market experienced considerable
changes. Most notable was the change in
the relative cost of pharmaceuticals;
specifically, the cost category weight
dropped from 25.052 percent to 16.510
percent, due largely to decreases in drug
utilization. In addition, we updated the
price proxy associated with the
pharmaceutical cost category based in
part on the recommendation of a Health
and Human Services Office of the
Inspector General (OIG) report titled
‘‘Update: Medicare Payment for End
Stage Renal Disease Drugs.’’ The
combined changes to the
pharmaceutical cost weight and the
update of the pharmaceutical price
proxy are the primary drivers of the
changes to the market basket updates.
For CY 2015, we note that the changes
to the cost share weights from 2008 to
2012 account for about 50 percent of the
difference while the change to the price
proxy, as finalized, accounts for the
other 50 percent of the difference.
Comment: One commenter requested
clarification on several of the cost
category calculations based on MCR

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data. First, the commenter requested we
review the ‘‘Administrative and
General’’ (A&G) and ‘‘Wages & Salaries’’
cost categories. The commenter
specifically requested that CMS clarify
the source of the percentage of nondirect wages associated with A&G that
are obtained from Sheet A of the MCR
as well as verify the method used on
worksheet B to estimate total costs for
each cost center. Second, the
commenter requested that CMS clarify
whether estimated salary costs for
capital-related machinery were
reallocated to salaries or if they were
not.
Response: Below we clarify the
calculation of the Wages & Salaries cost
share methodology as well as the
method for inclusion of the CapitalRelated Machinery cost center into the
moveable capital cost share weight.
To capture the salary costs associated
with non-direct patient care cost
centers, we calculated salary
percentages for non-direct patient care
from worksheet A of the MCR. The
estimated ratios were calculated as the
ratio of salary costs (worksheet A,
columns 1 & 2) to total costs (worksheet
A, column 4). The ratios were calculated
for seven distinct cost centers:
‘Operations & Maintenance’ combined
with ‘Machinery & Rental &
Maintenance’ (line 3 & 6), Housekeeping
(line 4), EH&W Benefits for Direct Pt.
Care (line 8), Supplies (line 9),
Laboratory (line 10), Administrative &
General (line 11), and Drugs (line 12).
Each of the ratios for the seven cost
centers was applied to the
corresponding reimbursable costs center
totals as reported on worksheet B. The
worksheet B totals were based on the
sum of reimbursable costs reported on
lines 8–17. We did not use line 18, the
subtotal line, as the commenter
presumes. For example, the salary
percentage for supplies (as measured by
line 9 on worksheet A) was applied to
the total expenses for the supply cost
center (the sum of costs reported on
worksheet B, column 7, lines 8–17).
Regarding the calculation of costs
associated with ‘Machinery & Rental &
Maintenance’, the estimated salary ratio
for this category was calculated jointly
with the ratio for ‘Operations &
Maintenance’ expenses. Therefore the
same ratio was applied to ‘Operations &
Maintenance’ and ‘Machinery & Rental
& Maintenance’. This ratio was applied
to the total of worksheet B, column 4,
lines 8–17. The salaries associated with
the ‘Machinery & Rental & Maintenance’
costs were added to ‘Total Salaries’. The
remaining costs reported in worksheet B
column 4, line 8–17 were considered
moveable capital-related expenses

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(excluding salaries). We believe, the
commenter’s confusion was the result of
the estimated salary share for the capital
‘Machinery & Rental & Maintenance’
costs being combined with the operation
and maintenance costs before being
added to salaries rather than being
added separately. We hope this clarifies
that the salary portion of ‘Machinery &
Rental & Maintenance’ costs follows the
same method as all other cost centers.
Comment: One commenter requested
CMS revisit the allocation of laboratory
costs from A&G once some of the
providers have re-filed their cost
reports. The commenter recommends
that CMS not allocate A&G to the
laboratory cost center and apply the lab
price proxy only to directly reported lab
costs. They note that allocating A&G to
laboratory costs would overstate the
proportion of lab costs based upon their
understanding as to how some providers
will allocate these costs once they re-file
the cost reports.
Response: The lab costs included in
the lab category in the rebased and
revised ESRDB market basket do not
include any allocation of administrative
and general (A&G) costs. The costs are
calculated based on lab expenses
reported on Medicare Cost Report,
worksheet B, lines 8–17, and column 8.
We did not allocate any A&G costs to
the lab category for the 2012 cost shares.
Comment: One commenter noted that
what goes into each of the provided
categories is not standardized. They
believe that CMS should use consistent
information from all providers to ensure
the accuracy of the data. They note that
smaller dialysis facilities, especially
those in rural areas, will likely struggle
to collect the information required to be
reported on the MCR.
Response: We are sensitive to all
reasonable cost report data being
included in the calculation of the
market basket cost share weights. We
perform various trimming techniques to
estimate the variability in the cost share
weight results. Trimming the data
removes providers that may have
misreported costs or are extreme
outliers. We analyze the results of the
cost share weights for various samples
of providers to ensure reasonability of
the overall cost share weights. We also
compare the results to other publicly
available data sources for
reasonableness of results. Our trimming
methods rely on relative share outliers
rather than dollar level outliers.
Therefore, smaller dialysis facilities are
subject to similar criteria as larger
facilities to be included or excluded
based on trimming methods. For
example, we would exclude a provider
in a 5 percent trim if the cost weight for

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
the wages and salaries was plus or
minus 2 standard deviations from the
mean cost weight of all providers for
wages and salaries. If costs are
significantly misreported we are unable
to use the data, as submitted. It is the
facility’s responsibility to work with the
MACs to ensure proper reporting.
Comment: One commenter is
concerned with CMS re-apportioning
certain costs and increasing the laborrelated share of the ESRD PPS base rate.
The commenter notes that they have one
of the lowest CBSA wage indexes in the
continental United States and are
therefore impacted adversely when the
labor-related share increases. Their
concern is based on CMS’s reliance
upon assumptions to re-apportion
certain costs. The commenter believes
these cost assumptions may not
accurately reflect the percentage of the
ESRD PPS base rate impacted by the
wage rate. The commenter recommends
that CMS determine how it may best
collect specific data on the labor-related
cost categories where CMS currently
relies on assumptions.
Response: We believe the
assumptions that we have made in
determining the labor-related share are
reasonable and follow a similar
methodology and assumptions used in
other CMS PPS payment systems. The
commenter’s recommendation to review
how we may gather detailed information
on the ESRD PPS’s labor-related cost
categories is helpful in identifying
future research opportunities. As part of
CMS’s ongoing efforts to update and
refine the Medicare Cost Reports we can
explore the opportunities for collecting
more specific information. Beyond the
Medicare Cost Reports, we can explore
conducting new surveys that would
help determine the costs that are
influenced or vary with the local labor
market, although these are subject to
resource availability and approval
through OMB’s standard survey and
auditing process (see ‘‘Standards and
Guidelines for Statistical Surveys’’
http://www.whitehouse.gov/sites/
default/files/omb/assets/omb/inforeg/
statpolicy/standards_stat_surveys.pdf
and ‘‘Guidance on Agency Survey and
Statistical Information Collections’’
http://www.whitehouse.gov/sites/
default/files/omb/assets/omb/inforeg/
pmc_survey_guidance_2006.pdf).
Comment: Many commenters
disagreed with the proposed price proxy
for the drug cost category in the ESRDB
market basket. They requested we
reconsider the proposed proxy and use
either a more appropriate index: The
PPI Biological Products, Human Use
(PPI–BPHU), or a composite proxy that
would better reflect the costs of drugs

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and biologicals that are included in the
ESRD bundle. Some commenters noted
that ESAs account for over 80 percent of
drug expenses and noted they are
supplied by a sole source manufacturer
that routinely imposes product price
increases on facilities. Some
commenters further point out that since
ESAs are fully represented in, the PPI–
BPHU, it is more relevant than the PPI
Vitamin, Nutrient, & Hematinic
Preparations (PPI–VNHP). Some
commenters agreed that the PPI–
Pharmaceutical for Human Use,
Prescription (PPI–RX) is likely not the
most appropriate proxy since it does not
track well with the acquisition costs for
ESRD drugs, as documented by the OIG
study. Another commenter notes that
the drugs in the PPI–VHNP include nonprescription (over-the-counter)
medicines.
Response: Given concerns raised by
commenters and further analysis into
the appropriateness of the proposed
price proxy, we agree with the
commenters that the proposed PPI–
VNHP suffers some shortcomings that
can be mitigated if we were to use the
PPI –BPHU. Most importantly, the PPI–
BPHU measures the price change of
drugs that are prescriptions, and ESAs
would be captured within this index if
they are included in the PPI sample
(although, because the PPI relies on
confidentiality with respect to the
companies and drugs/biologicals
included in the sample, we do not know
if these drugs are indeed reflected in
this price index). However, we believe
the PPI–BPHU is an appropriate proxy
to use because although ESAs may be a
small part of the fuller category of
biological products, we can examine
whether the price increases for the ESA
drugs are similar to the drugs included
in the PPI–BPHU. We did this by
comparing the historical price changes
in the PPI–BPHU and the ASP for ESAs
and found the cumulative growth to be
consistent over several years. We will
continue to monitor the trends in the
prices for ESA drugs as measured by
other price data sources to ensure that
the PPI–BPHU is still an appropriate
price proxy.
On the other hand, since the non-ESA
drugs used in the treatment of ESRD are
mainly vitamins and nutrients, we
believe that the PPI–VNHP is the best
available proxy for these types of drugs.
While this index does include over-thecounter drugs as well as prescription
drugs, a comparison of trends in the
prices for non-ESA drugs shows growth
to the proposed PPI–VNHP.
Therefore we think it is appropriate to
use both the PPI–VNHP and the PPI–
BPHU, and we will proxy the price

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66135

change for drugs included in the ESRD
bundle by a blended drug price proxy
with 78 percent of the index measured
by the PPI–BPHU and 22 percent of the
index measured by the PPI–VNHP. The
shares within the blend are based on the
2012 ESRD Part B spending for ESA and
non-ESA drugs included in the bundle.
ESA drugs are those considered as a
form of epoeitin alpha while the nonESA drugs are the remaining drugs
specified in the ESRD bundle.
Comment: One commenter claims that
the OIG criticism of the current index as
the drug price proxy—the PPI
Pharmaceuticals for Human Use,
Prescription—was based on a
retrospective analysis of drugs price
trends during a narrow 3-year window
at a significant time of transition in the
ESRD marketplace. They claim that if
the OIG looked at a broader window of
time (for example, 2003–2012), it would
likely show that the PPI for prescription
drugs has more closely tracked to cost
changes for most drugs within the ESRD
PPS. They note the OIG raised concerns
with the use of the PPI–RX prior to the
implementation of the ESRD PPS and
CMS did not concur with the
recommendation at that time and they
noted that the OIGs figures were not
suitable for inferring future price trends.
The commenter recommends that CMS
continue to use the PPI–RX as the
proxy.
Response: At the time of the
implementation of the ESRD market
basket, we proposed and finalized the
use of the PPI–RX since it is the proxy
used in other CMS market baskets to
proxy drug price growth and it would be
representative of the average
prescription drug price increase for the
overall prescription drug market.
However, analysis of the pricing trends
of the drugs used in furnishing ESRD
care (either the acquisition costs
collected by OIG or by ASP data as
collected by CMS) show relatively flat
price growth over the 2008–2014 period
(when taken on average) while the PPI
RX has grown at a much faster rate.
Additionally, there are a limited number
of drugs included in the ESRD bundle
and those drugs are mainly defined as
biological products which are not
captured in the PPI–RX. Therefore, as
explained in the proposed rule, we do
not believe that the PPI–RX should
continue to be used in the ESRDB
market basket.
Comment: One commenter
recommended that the pharmaceutical
price proxy changes be suspended and
CMS follow the OIG recommendation to
determine how drug acquisition costs
may be taken into consideration when
updating the ESRD PPS base rate.

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations

Response: The direct use of drug
acquisition costs in the ESRD market
basket is not possible, as noted in our
response to the OIG recommendation:
‘‘We will consider these findings in our
continual evaluation of the ESRD
market basket, particularly during the
next rebasing and revising of the index.
As we have done for all of the market
baskets developed by CMS, we will base
the decision on which price proxy is
used on four criteria: reliability,
timeliness, availability, and relevance.
We will be evaluating alternative data
sources and methods to determine if we
can improve the relevance of the ESRD
drug price proxy while not sacrificing
on the other three requirements. For
instance, the data used in the OIG
analysis is based on acquisition cost
data, which is not data that is readily
available in a public or timely manner.
Additionally, the ESRD annual market
basket updates are based on a projection
and any price proxy ultimately will
need to be forecasted. The more
restrictive or specific a price series, the
more difficult it can be to accurately
forecast future price movements.
Finally, the price proxy should also
reflect price trends associated with an
efficient market; therefore, to the extent
market inefficiencies exist, there would
be concerns with using direct cost or
price data.’’ 2
Comment: Several commenters
relayed the concern that CMS is making
changes to the market basket that
exacerbate the payment problems
particularly for rural and low volume
facilities while not contemporaneously
addressing other changes to the ESRD
payment. Other commenters support the

proposed revised labor-related share as
it reflects the proportionate decline over
the past three years in EPO utilization.
They recognize the impact on nonprofit
and small providers with wage adjustors
less than 1.0, and therefore support a 2year transition for labor changes and
updated CBSAs.
Response: We believe that the
proposed 2012-based ESRDB market
basket is a technical improvement to the
2008-based ESRDB market basket and
therefore should be implemented in CY
2015. A transition policy, for the revised
labor-related share, was proposed and
finalized that will help to mitigate the
impact to providers for any given year.
e. Final ESRDB Market Basket and
Labor-Related Share
In summary, we are finalizing the
rebasing and revision of the ESRDB
market basket effective for CY 2015. The
cost share weights will be based on the
2012 cost shares detailed in the
proposed rule (79 FR 40217 through
40221) and presented in this final rule.
We are also finalizing a labor-related
share of 50.673 percent as detailed in
the proposed rule (79 FR 40225 through
40226) and presented in this final rule.
We are finalizing all price proxies, as
proposed, with the exception of the
price proxy for the pharmaceutical cost
category. As detailed in our response to
comments, we believe that the PPI–
VNHP suffers some shortcomings that
can be mitigated with the use of the
PPI–BPHU, particularly for the ESA
drugs. We will, however, continue to
monitor the trends in the prices for ESA
drugs as measured by other price data
sources to ensure that the PPI–BPHU is

still an appropriate price proxy given
the unique market conditions related to
the manufacturing and production of
these types of drugs. On the other hand
we will use the PPI–VNHP for the
remaining drugs included in the ESRDB
market basket. While this index does
include over-the-counter drugs as well
as prescription drugs, a comparison of
trends in the prices for non-ESA drugs
shows growth similar to the PPI–VNHP.
Therefore, we are finalizing a blend of
the PPI Biological Products, Human Use
(PPI–BPHU) and the PPI Vitamin,
Nutrient, & Hematinic Preparations
(PPI–VNHP). The weights within the
blend are based on 2012 estimated
ESRD Part B spending for the drugs
used in the bundle, which results in a
split of 78 percent for ESAs (proxied by
the PPI–BPHU) and 22 percent for nonESAs (proxied by the PPI–VNHP).
Section 1881(b)(14)(F)(i)(III) of the
Act, as added by section 217(b)(2) of
PAMA requires a 0.0 percent market
basket less productivity update for CY
2015. We are therefore finalizing 0.0
percent as the ESRDB market basket
update less productivity adjustment for
CY 2015. In the absence of PAMA, the
CY2015 ESRDB market basket update
less productivity would be 1.6 percent
(2.1 percent market basket update less
0.5 percent MFP adjustment), based on
the IHS Global Insight, Inc. (IGI) third
quarter 2014 forecast with historical
data through the second quarter of 2014.
Table 5 compares the update of the
proposed market basket to the final
market basket; the only difference
between the two arises from the change
to the pharmaceutical price proxy.

TABLE 5—FINAL CY 2012-BASED ESRDB AND PROPOSED CY 2012-BASED ESRDB MARKET BASKET, PERCENT
CHANGES: 2011–2015
Final CY 2012based ESRDB
market basket

Calendar Year (CY)
Historical data:
2011 ..............................................................................................................
2012 ..............................................................................................................
2013 ..............................................................................................................
Average CY 2011–2013 ...............................................................................
Forecast:
2014 ..............................................................................................................
2015 ..............................................................................................................

Final CY 2012based ESRDB
market basket
1.2
1.4
1.1
1.2

1.7
1.5
1.4
1.5

1.4
2.0

1.6
2.1

Source: IHS Global Insight, Inc. 3rd quarter 2014 forecast with historical data through 2nd quarter 2014.

tkelley on DSK3SPTVN1PROD with RULES3

3. The CY 2015 ESRD PPS Wage Indices
a. Background
Section 1881(b)(14)(D)(iv)(II) of the
Act provides that the ESRD PPS may

include a geographic wage index
payment adjustment, such as the index
referred to in section 1881(b)(12)(D) of
the Act. In the CY 2011 ESRD PPS final
rule (75 FR 49117), we finalized for the

ESRD PPS the use of the Office of
Management and Budget’s (OMB) CoreBased Statistical Areas (CBSAs)-based
geographic area designations described
in OMB bulletin 03–04, issued June 6,

2 https://oig.hhs.gov/oei/reports/oei-03-1200550.pdf, Appendix D.

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
2003 as the basis for revising the urban
and rural areas and their corresponding
wage index values. This bulletin, as
well as subsequent bulletins, is
available online at http://
www.whitehouse.gov/omb/bulletins_
index2003-2005.
We also finalized that we would use
the urban and rural definitions used for
the Medicare IPPS but without regard to
geographic reclassification authorized
under sections 1886(d)(8) and (d)(10) of
the Act. In the CY 2012 ESRD PPS final
rule (76 FR 70239), we finalized that,
under the ESRD PPS, we will continue
to utilize the ESRD PPS wage index
methodology, first established under the
basic case-mix adjusted composite rate
payment system, for updating the wage
index values using the OMB’s CBSAbased geographic area designations to
define urban and rural areas.
b. Implementation of New Labor Market
Delineations
OMB publishes bulletins regarding
CBSA changes, including changes to
CBSA numbers and titles. In accordance
with our established methodology, we
have historically adopted via
rulemaking CBSA changes that are
published in the latest OMB bulletin.
On February 28, 2013, OMB issued
OMB Bulletin No. 13–01, which
established revised delineations for
Metropolitan Statistical Areas,
Micropolitan Statistical Areas, and
Combined Statistical Areas, and
provided guidance on the use of the
delineations of these statistical areas. A
copy of this bulletin may be obtained at
http://www.whitehouse.gov/sites/
default/files/omb/bulletins/2013/b-13;01.pdf. According to OMB, ‘‘[t]his
bulletin provides the delineations of all
Metropolitan Statistical Areas,
Metropolitan Divisions, Micropolitan
Statistical Areas, Combined Statistical
Areas, and New England City and Town

66137

available in order to maintain an up-todate payment system that accurately
reflects the reality of populations shifts
and labor market conditions. We have
reviewed our findings and impacts
relating to the new CBSA delineations
using the most recent data available at
the time of this final rule, and have
concluded that there is no compelling
reason to further delay the
implementation of the CBSA
delineations as set forth in OMB
Bulletin 13–01.
In order to implement these changes
for the ESRD PPS, it is necessary to
identify the new labor market area
delineation for each county and facility
in the country. For example, there
would be new CBSAs, urban counties
that would become rural, rural counties
that would become urban, and existing
CBSAs that would be split apart.
Because the wage index of urban areas
is typically higher than that of rural
areas, ESRD facilities currently located
in rural counties that will become
urban, beginning January 1, 2015, will
generally experience an increase in their
wage index values. We identified
approximately 100 counties and 110
facilities that will move from rural to
urban status when we adopt the new
CBSA delineations beginning in CY
2015. Table 6: (CY 2015 Rural to Urban
CBSA Crosswalk) shows the CBSA
delineations for CY 2014 and the rural
wage index values for CY 2015 based on
those delineations, compared to the
final CBSA delineations for CY 2015
and the urban wage index values for CY
2015 based on the new delineations,
and the percentage change in these
values for those counties that will
change from rural to urban when we
adopt the new CBSA delineations.
Approximately 100 facilities will
experience an increase in their wage
index values.

Areas in the United States and Puerto
Rico based on the standards published
on June 28, 2010, in the Federal
Register (75 FR 37246 through 37252)
and Census Bureau data.’’ In this CY
2015 ESRD PPS final rule, when
referencing the new OMB geographic
boundaries of statistical areas, we are
using the term ‘‘delineations’’ rather
than the term ‘‘definitions’’ that we have
used in the past, consistent with OMB’s
use of the terms (75 FR 37249). Because
the bulletin was not issued until
February 28, 2013, with supporting data
not available until later, and because the
changes made by the bulletin and their
ramifications needed to be extensively
reviewed and verified, we were unable
to undertake such a lengthy process
before publication of the FY 2014 IPPS/
LTCH PPS proposed rule and, thus, did
not implement changes to the hospital
wage index for FY 2014 based on these
new CBSA delineations. Likewise, for
the same reasons, the CY 2014 ESRD
PPS wage index (based upon the prefloor, pre-reclassified hospital wage
data, which is unadjusted for
occupational mix) also did not reflect
the new CBSA delineations. In the FY
2015 IPPS/LTCH PPS final rule (79 FR
49951 through 49963), we finalized the
implementation of the new CBSA
delineations as described in the
February 28, 2013 OMB Bulletin No.
13–01, beginning with the FY 2015 IPPS
wage index. Similarly, in this CY 2015
ESRD PPS final rule, we are finalizing
the new CBSA delineations as described
in the February 28, 2013 OMB Bulletin
No. 13–01, beginning with the CY 2015
ESRD PPS wage index. We believe that
the most current CBSA delineations
accurately reflect the local economies
and wage levels of the areas where
facilities are located, and we believe
that it is important for the ESRD PPS to
use the latest CBSA delineations

TABLE 6—CY 2015 RURAL TO URBAN CBSA CROSSWALK
ESRD PPS CY 2014
CBSA delineations
County name

State

tkelley on DSK3SPTVN1PROD with RULES3

CBSA
BALDWIN .......................................
PICKENS ........................................
COCHISE .......................................
LITTLE RIVER ................................
WINDHAM ......................................
SUSSEX .........................................
CITRUS ..........................................
GULF ..............................................
HIGHLANDS ...................................
SUMTER .........................................
WALTON ........................................
LINCOLN ........................................

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AL
AZ
AR
CT
DE
FL
FL
FL
FL
FL
GA

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01
03
04
07
08
10
10
10
10
10
11

PO 00000

Wage
Index
Value

Urban/Rural
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL

Frm 00019

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...............
...............
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...............
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Fmt 4701

Final ESRD PPS CY 2015
CBSA delineations

0.6963
0.6963
0.9125
0.7311
1.1251
1.0261
0.8006
0.8006
0.8006
0.8006
0.8006
0.7425

Sfmt 4700

CBSA
19300
46220
43420
45500
49340
41540
26140
37460
42700
45540
18880
12260

Urban/Rural
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN

E:\FR\FM\06NOR3.SGM

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

06NOR3

Wage
Index
Value
0.7248
0.8337
0.8937
0.7362
1.1493
0.9289
0.7625
0.7906
0.7982
0.8095
0.8156
0.9225

Change in
value
(percent)

4.09%
19.73
¥2.06
0.70
2.15
¥9.47
¥4.76
¥1.25
¥0.30
1.11
1.87
24.24

66138

Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
TABLE 6—CY 2015 RURAL TO URBAN CBSA CROSSWALK—Continued
ESRD PPS CY 2014
CBSA delineations
County name

State

tkelley on DSK3SPTVN1PROD with RULES3

CBSA
MORGAN ........................................
PEACH ...........................................
PULASKI .........................................
KALAWAO ......................................
MAUI ...............................................
BUTTE ............................................
DE WITT .........................................
JACKSON .......................................
WILLIAMSON .................................
SCOTT ............................................
UNION ............................................
PLYMOUTH ....................................
KINGMAN .......................................
ALLEN ............................................
BUTLER ..........................................
ACADIA ..........................................
IBERIA ............................................
ST. JAMES .....................................
TANGIPAHOA ................................
VERMILION ....................................
WEBSTER ......................................
ST. MARYS ....................................
WORCESTER ................................
MIDLAND ........................................
MONTCALM ...................................
FILLMORE ......................................
LE SUEUR ......................................
MILLE LACS ...................................
SIBLEY ...........................................
BENTON .........................................
YAZOO ...........................................
GOLDEN VALLEY ..........................
HALL ...............................................
HAMILTON .....................................
HOWARD .......................................
MERRICK .......................................
JEFFERSON ..................................
YATES ............................................
CRAVEN .........................................
DAVIDSON .....................................
GATES ............................................
IREDELL .........................................
JONES ............................................
LINCOLN ........................................
PAMLICO ........................................
ROWAN ..........................................
OLIVER ...........................................
SIOUX .............................................
HOCKING .......................................
PERRY ...........................................
COTTON .........................................
JOSEPHINE ...................................
LINN ................................................
ADAMS ...........................................
COLUMBIA .....................................
FRANKLIN ......................................
MONROE ........................................
MONTOUR .....................................
UTUADO .........................................
BEAUFORT ....................................
CHESTER .......................................
JASPER ..........................................
LANCASTER ..................................
UNION ............................................
CUSTER .........................................
CAMPBELL .....................................
CROCKETT ....................................
MAURY ...........................................

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21:57 Nov 05, 2014

GA
GA
GA
HI
HI
ID
IL
IL
IL
IN
IN
IA
KS
KY
KY
LA
LA
LA
LA
LA
LA
MD
MD
MI
MI
MN
MN
MN
MN
MS
MS
MT
NE
NE
NE
NE
NY
NY
NC
NC
NC
NC
NC
NC
NC
NC
ND
ND
OH
OH
OK
OR
OR
PA
PA
PA
PA
PA
PR
SC
SC
SC
SC
SC
SD
TN
TN
TN

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11
12
12
13
14
14
14
15
15
16
17
18
18
19
19
19
19
19
19
21
21
23
23
24
24
24
24
25
25
27
28
28
28
28
33
33
34
34
34
34
34
34
34
34
35
35
36
36
37
38
38
39
39
39
39
39
40
42
42
42
42
42
43
44
44
44

PO 00000

Wage
Index
Value

Urban/Rural
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL

Frm 00020

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

Fmt 4701

Final ESRD PPS CY 2015
CBSA delineations

0.7425
0.7425
0.7425
1.0741
1.0741
0.7398
0.8362
0.8362
0.8362
0.8416
0.8416
0.8451
0.7806
0.7744
0.7744
0.7580
0.7580
0.7580
0.7580
0.7580
0.7580
0.8554
0.8554
0.8207
0.8207
0.9124
0.9124
0.9124
0.9124
0.7589
0.7589
0.9024
0.8924
0.8924
0.8924
0.8924
0.8208
0.8208
0.7995
0.7995
0.7995
0.7995
0.7995
0.7995
0.7995
0.7995
0.7099
0.7099
0.8329
0.8329
0.7799
1.0083
1.0083
0.8719
0.8719
0.8719
0.8719
0.8719
0.4000
0.8374
0.8374
0.8374
0.8374
0.8374
0.8312
0.7365
0.7365
0.7365

Sfmt 4700

CBSA
12060
47580
47580
27980
27980
26820
14010
16060
16060
31140
17140
43580
48620
14540
14540
29180
29180
35380
25220
29180
43340
15680
41540
33220
24340
40340
33460
33460
33460
32820
27140
13740
24260
24260
24260
24260
48060
40380
35100
49180
47260
16740
35100
16740
35100
16740
13900
13900
18140
18140
30020
24420
10540
23900
14100
16540
20700
14100
10380
25940
16740
25940
16740
43900
39660
28940
27180
34980

Urban/Rural
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN

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

06NOR3

Wage
Index
Value
0.9369
0.7542
0.7542
1.0561
1.0561
0.8933
0.9165
0.8324
0.8324
0.8605
0.9473
0.8915
0.8472
0.8410
0.8410
0.7869
0.7869
0.8821
0.9452
0.7869
0.8325
0.8593
0.9289
0.7935
0.8799
1.1398
1.1196
1.1196
1.1196
0.8991
0.7891
0.8686
0.9219
0.9219
0.9219
0.9219
0.8386
0.8750
0.8994
0.8679
0.9223
0.9073
0.8994
0.9073
0.8994
0.9073
0.7216
0.7216
0.9539
0.9539
0.7918
1.0086
1.0879
1.0104
0.9347
1.0957
0.9372
0.9347
0.4000
0.8708
0.9073
0.8708
0.9073
0.8277
0.8989
0.7015
0.7747
0.8969

Change in
value
(percent)

26.18
1.58
1.58
¥1.68
¥1.68
20.75
9.60
¥0.45
¥0.45
2.25
12.56
5.49
8.53
8.60
8.60
3.81
3.81
16.37
24.70
3.81
9.83
0.46
8.59
¥3.31
7.21
24.92
22.71
22.71
22.71
18.47
3.98
¥3.75
3.31
3.31
3.31
3.31
2.17
6.60
12.50
8.56
15.36
13.48
12.50
13.48
12.50
13.48
1.65
1.65
14.53
14.53
1.53
0.03
7.89
15.88
7.20
25.67
7.49
7.20
0.00
3.99
8.35
3.99
8.35
¥1.16
8.14
¥4.75
5.19
21.78

Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations

66139

TABLE 6—CY 2015 RURAL TO URBAN CBSA CROSSWALK—Continued
ESRD PPS CY 2014
CBSA delineations
County name

State
CBSA

MORGAN ........................................
ROANE ...........................................
FALLS .............................................
HOOD .............................................
HUDSPETH ....................................
LYNN ..............................................
MARTIN ..........................................
NEWTON ........................................
OLDHAM ........................................
SOMERVELL ..................................
BOX ELDER ...................................
AUGUSTA ......................................
BUCKINGHAM ...............................
CULPEPER ....................................
FLOYD ............................................
RAPPAHANNOCK ..........................
STAUNTON CITY ...........................
WAYNESBORO CITY ....................
COLUMBIA .....................................
PEND OREILLE .............................
STEVENS .......................................
WALLA WALLA ..............................
FAYETTE ........................................
RALEIGH ........................................
GREEN ...........................................

TN
TN
TX
TX
TX
TX
TX
TX
TX
TX
UT
VA
VA
VA
VA
VA
VA
VA
WA
WA
WA
WA
WV
WV
WI

44
44
45
45
45
45
45
45
45
45
46
49
49
49
49
49
49
49
50
50
50
50
51
51
52

The wage index values of rural areas
are typically lower than that of urban
areas. Therefore, ESRD facilities located
in a county that is currently designated
as urban under the ESRD PPS wage
index that will become rural when we
adopt the new CBSA delineations may
experience a decrease in their wage
index values. We identified
approximately 35 counties and 30 ESRD

Wage
Index
Value

Urban/Rural
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL

Final ESRD PPS CY 2015
CBSA delineations

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

CBSA

0.7365
0.7365
0.7855
0.7855
0.7855
0.7855
0.7855
0.7855
0.7855
0.7855
0.8891
0.7674
0.7674
0.7674
0.7674
0.7674
0.7674
0.7674
1.0892
1.0892
1.0892
1.0892
0.7410
0.7410
0.9041

Urban/Rural

28940
28940
47380
23104
21340
31180
33260
13140
11100
23104
36260
44420
16820
47894
13980
47894
44420
44420
47460
44060
44060
47460
13220
13220
31540

facilities that will move from urban to
rural status when we adopt the new
CBSA delineations beginning in CY
2015. Table 7: (CY 2015 Urban to Rural
CBSA Crosswalk) shows the CBSA
delineations for CY 2014 and the urban
wage index values for CY 2015 based on
those delineations, compared with the
CBSA delineations and wage index
values for CY 2015 based on those

URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN

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

Wage
Index
Value
0.7015
0.7015
0.8137
0.9386
0.8139
0.8830
0.8940
0.8508
0.8277
0.9386
0.9225
0.8326
0.9053
1.0403
0.8473
1.0403
0.8326
0.8326
1.0934
1.1425
1.1425
1.0934
0.8024
0.8024
1.1130

Change in
value
(percent)

¥4.75
¥4.75
3.59
19.49
3.62
12.41
13.81
8.31
5.37
19.49
3.76
8.50
17.97
35.56
10.41
35.56
8.50
8.50
0.39
4.89
4.89
0.39
8.29
8.29
23.11

delineations, and the percentage change
in these values for those counties that
would change from urban to rural,
beginning in CY 2015, when we adopt
the new CBSA delineations. We expect
that when we adopt the new CBSA
delineations illustrated in Table 7
below, approximately 30 facilities will
experience a decrease in their wage
index values.

TABLE 7—CY 2015 URBAN TO RURAL CBSA CROSSWALK
ESRD PPS CY 2014 CBSA delineations
County name

State

tkelley on DSK3SPTVN1PROD with RULES3

CBSA

FRANKLIN .............................
POWER .................................
FRANKLIN .............................
GIBSON .................................
GREENE ................................
TIPTON ..................................
FRANKLIN .............................
GEARY ..................................
NELSON ................................
WEBSTER .............................
FRANKLIN .............................
IONIA .....................................
NEWAYGO ............................
GEORGE ...............................
STONE ..................................
CRAWFORD ..........................
HOWARD ..............................
WASHINGTON ......................
ANSON ..................................

VerDate Sep<11>2014

21:57 Nov 05, 2014

AR
ID
IN
IN
IN
IN
KS
KS
KY
KY
MA
MI
MI
MS
MS
MO
MO
MO
NC

Jkt 235001

22900
38540
17140
21780
14020
29020
28140
31740
31140
21780
44140
24340
24340
37700
25060
41180
17860
41180
16740

URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN

PO 00000

Urban/Rural

Wage
Index
Value

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

0.7593
0.9672
0.9473
0.8537
0.9062
0.8990
0.9419
0.8406
0.8593
0.8537
1.0271
0.8965
0.8965
0.7396
0.8179
0.9366
0.8319
0.9366
0.9230

Frm 00021

Fmt 4701

Sfmt 4700

Final ESRD PPS CY 2015 CBSA
delineations
CBSA
04
13
15
15
15
15
17
17
18
18
22
23
23
25
25
26
26
26
34

E:\FR\FM\06NOR3.SGM

Urban/Rural
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL

06NOR3

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

Wage
Index
Value
0.7311
0.7398
0.8416
0.8416
0.8416
0.8416
0.7779
0.7779
0.7748
0.7748
1.1553
0.8288
0.8288
0.7570
0.7570
0.7725
0.7725
0.7725
0.7899

Change in
value
(percent)

¥3.71
¥23.51
¥11.16
¥1.42
¥7.13
¥6.38
¥17.41
¥7.46
¥9.83
¥9.24
12.48
¥7.55
¥7.55
2.35
¥7.45
¥17.52
¥7.14
¥17.52
¥14.42

66140

Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
TABLE 7—CY 2015 URBAN TO RURAL CBSA CROSSWALK—Continued
ESRD PPS CY 2014 CBSA delineations

County name

State
CBSA

GREENE ................................
ERIE ......................................
OTTAWA ...............................
PREBLE .................................
WASHINGTON ......................
STEWART .............................
CALHOUN .............................
DELTA ...................................
SAN JACINTO .......................
SUMMIT .................................
CUMBERLAND ......................
DANVILLE CITY ....................
KING AND QUEEN ...............
LOUISA ..................................
PITTSYLVANIA .....................
SURRY ..................................
MORGAN ...............................
PLEASANTS ..........................

NC
OH
OH
OH
OH
TN
TX
TX
TX
UT
VA
VA
VA
VA
VA
VA
WV
WV

24780
41780
45780
19380
37620
17300
47020
19124
26420
41620
40060
19260
40060
40060
19260
47260
25180
37620

We note that facilities in some urban
CBSAs will experience a change in their
wage index values even though they
remain urban because an urban CBSA’s
boundaries and/or the counties
included in that CBSA could change.
Table 8 (CY 2015 Urban to a Different

URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN

Urban/Rural

Wage
Index
Value

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

0.9371
0.7784
0.9129
0.8938
0.8186
0.7526
0.8473
0.9703
0.9734
0.9512
0.9625
0.7963
0.9625
0.9625
0.7963
0.9223
0.9080
0.8186

Urban CBSA Crosswalk) shows those
counties that experienced a change in
their wage index value when the CBSA
delineations for CY 2014 and urban
wage index values for CY 2015 based on
those delineations, compared with the
CBSA delineations and urban wage

Final ESRD PPS CY 2015 CBSA
delineations
CBSA
34
36
36
36
36
44
45
45
45
46
49
49
49
49
49
49
51
51

Urban/Rural
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL

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

Wage
Index
Value
0.7899
0.8348
0.8348
0.8348
0.8348
0.7277
0.7847
0.7847
0.7847
0.9005
0.7554
0.7554
0.7554
0.7554
0.7554
0.7554
0.7274
0.7274

Change in
value
(percent)

¥15.71
7.25
¥8.56
¥6.60
1.98
¥3.31
¥7.39
¥19.13
¥19.39
¥5.33
¥21.52
¥5.14
¥21.52
¥21.52
¥5.14
¥18.10
¥19.89
¥11.14

index values for CY 2015 based on those
delineations, and the percentage change
in these values for counties that will
remain urban even though the CBSA
boundaries and/or counties included in
that CBSA will change.

TABLE 8—CY 2015 URBAN TO A DIFFERENT URBAN CBSA CROSSWALK
ESRD PPS CY 2014 CBSA delineations
County name

State

tkelley on DSK3SPTVN1PROD with RULES3

CBSA

FLAGLER ..............................
DE KALB ...............................
KANE .....................................
MADISON ..............................
MEADE ..................................
ESSEX ...................................
OTTAWA ...............................
JACKSON ..............................
BERGEN ................................
HUDSON ...............................
MIDDLESEX ..........................
MONMOUTH .........................
OCEAN ..................................
PASSAIC ...............................
SOMERSET ...........................
BRONX ..................................
DUTCHESS ...........................
KINGS ....................................
NEW YORK ...........................
ORANGE ...............................
PUTNAM ................................
QUEENS ................................
RICHMOND ...........................
ROCKLAND ...........................
WESTCHESTER ...................
BRUNSWICK .........................
BUCKS ..................................
CHESTER ..............................
MONTGOMERY ....................

VerDate Sep<11>2014

20:32 Nov 05, 2014

FL
IL
IL
IN
KY
MA
MI
MS
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NY
NY
NY
NY
NY
NY
NY
NY
NY
NY
NC
PA
PA
PA

Jkt 235001

37380
16974
16974
11300
31140
37764
26100
37700
35644
35644
20764
20764
20764
35644
20764
35644
39100
35644
35644
39100
35644
35644
35644
35644
35644
48900
37964
37964
37964

URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN

PO 00000

Urban/Rural

Wage
Index
Value

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

0.8462
1.0412
1.0412
1.0078
0.8593
1.0769
0.8136
0.7396
1.3110
1.3110
1.0989
1.0989
1.0989
1.3110
1.0989
1.3110
1.1533
1.3110
1.3110
1.1533
1.3110
1.3110
1.3110
1.3110
1.3110
0.8867
1.0837
1.0837
1.0837

Frm 00022

Fmt 4701

Sfmt 4700

Final ESRD PPS CY 2015 CBSA
delineations
CBSA
19660
20994
20994
26900
21060
15764
24340
25060
35614
35614
35614
35614
35614
35614
35084
35614
20524
35614
35614
35614
20524
35614
35614
35614
35614
34820
33874
33874
33874

E:\FR\FM\06NOR3.SGM

Urban/Rural
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN

06NOR3

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

Wage
Index
Value
0.8376
1.0299
1.0299
1.0133
0.7701
1.1159
0.8799
0.7896
1.2837
1.2837
1.2837
1.2837
1.2837
1.2837
1.1233
1.2837
1.1345
1.2837
1.2837
1.2837
1.1345
1.2837
1.2837
1.2837
1.2837
0.8620
1.0157
1.0157
1.0157

Change in
value
(percent)

¥1.02
¥1.09
¥1.09
0.55
¥10.38
3.62
8.15
6.76
¥2.08
¥2.08
16.82
16.82
16.82
¥2.08
2.22
¥2.08
¥1.63
¥2.08
¥2.08
11.31
¥13.46
¥2.08
¥2.08
¥2.08
¥2.08
¥2.79
¥6.27
¥6.27
¥6.27

Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations

66141

TABLE 8—CY 2015 URBAN TO A DIFFERENT URBAN CBSA CROSSWALK—Continued
ESRD PPS CY 2014 CBSA delineations
County name

State
CBSA

ARECIBO ...............................
CAMUY ..................................
CEIBA ....................................
FAJARDO ..............................
GUANICA ..............................
GUAYANILLA ........................
HATILLO ................................
LUQUILLO .............................
PENUELAS ............................
QUEBRADILLAS ...................
YAUCO ..................................
ANDERSON ..........................
GRAINGER ............................
LINCOLN ...............................
PUTNAM ................................

PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
SC
TN
WV
WV

41980
41980
21940
21940
49500
49500
41980
21940
49500
41980
49500
11340
34100
16620
16620

Likewise, ESRD facilities currently
located in a rural area may remain rural
under the new CBSA delineations but
experience a change in their rural wage
index value due to implementation of

URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN

Final ESRD PPS CY 2015 CBSA
delineations

Urban/Rural

Wage
Index
Value

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

0.4449
0.4449
0.4000
0.4000
0.4000
0.4000
0.4449
0.4000
0.4000
0.4449
0.4000
0.8744
0.6983
0.7988
0.7988

CBSA
11640
11640
41980
41980
38660
38660
11640
41980
38660
11640
38660
24860
28940
26580
26580

the new CBSA delineations. Table 9 (CY
2015 Changes to the Statewide Rural
Wage Index Crosswalk) shows the CBSA
delineations for CY 2014 and the rural
statewide wage index values for CY

Urban/Rural
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN
URBAN

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

Wage
Index
Value
0.4213
0.4213
0.4438
0.4438
0.4154
0.4154
0.4213
0.4438
0.4154
0.4213
0.4154
0.9161
0.7015
0.8846
0.8846

Change in
value
(percent)

¥5.30
¥5.30
10.95
10.95
3.85
3.85
¥5.30
10.95
3.85
¥5.30
3.85
4.77
0.46
10.74
10.74

2015, compared with the rural statewide
wage index values for CY 2015, and the
percentage change in these values.

TABLE 9—CY 2015 CHANGES TO THE STATEWIDE RURAL WAGE INDEX CROSSWALK
ESRD PPS CY 2014
CBSA delineations
State
CBSA

tkelley on DSK3SPTVN1PROD with RULES3

AL ..............................................................
AZ ..............................................................
CT ..............................................................
FL ...............................................................
GA ..............................................................
HI ...............................................................
IL ................................................................
KS ..............................................................
KY ..............................................................
LA ..............................................................
MD .............................................................
MI ...............................................................
MS .............................................................
NC ..............................................................
NE ..............................................................
NY ..............................................................
OH .............................................................
OR .............................................................
PA ..............................................................
TN ..............................................................
TX ..............................................................
UT ..............................................................
VA ..............................................................
WA .............................................................
WI ..............................................................
WV .............................................................

39
19
51
49
38
34
44
01
28
17
25
33
50
45
18
14
11
36
07
52
23
03
12
46
21
10

While we believe that the new CBSA
delineations will result in wage index
values that are more representative of
the actual costs of labor in a given area,
we also recognize that use of the new

VerDate Sep<11>2014

20:32 Nov 05, 2014

Jkt 235001

Wage
index
value

Urban/Rural
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL

Final ESRD PPS CY 2015
CBSA delineations

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

CBSA

0.8719
0.7580
0.7410
0.7674
1.0083
0.7995
0.7365
0.6963
0.8924
0.7806
0.7589
0.8208
1.0892
0.7855
0.7744
0.8362
0.7425
0.8329
1.1251
0.9041
0.8207
0.9125
1.0741
0.8891
0.8554
0.8006

CBSA delineations will result in
reduced payments to some facilities. In
particular, approximately 30 facilities
would experience reduced payments
when we adopt the new CBSA

PO 00000

Frm 00023

Fmt 4701

Sfmt 4700

Urban/Rural

39
19
51
10
38
34
44
01
28
17
25
33
50
45
18
14
11
36
07
52
23
03
12
46
21
10

RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL
RURAL

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

Wage
index
value
0.8083
0.7108
0.7274
0.8371
0.9949
0.7899
0.7277
0.6914
0.8877
0.7779
0.7570
0.8192
1.0877
0.7847
0.7748
0.8369
0.7439
0.8348
1.1295
0.9087
0.8288
0.9219
1.0872
0.9005
0.8746
0.8371

Change
in value
(percent)
¥7.3
¥6.2
¥1.8
9.1
¥1.3
¥1.2
¥1.2
¥0.7
¥0.5
¥0.3
¥0.3
¥0.2
¥0.1
¥0.1
0.1
0.1
0.2
0.2
0.4
0.5
1.0
1.0
1.2
1.3
2.2
4.6

delineations. At the same time, use of
the new CBSA delineations will result
in increased payments for
approximately 100 facilities, while the
majority of facilities would experience

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no change in payments due to the
implementation of the new CBSA
delineations. We are finalizing the
implementation the new CBSA
delineations, as proposed, using a 2-year
transition with a 50/50 blended wage
index value for all facilities in CY 2015
and 100 percent of the wage index based
on the new CBSA delineations in CY
2016.
Comment: Commenters largely agreed
with the implementation of the new
CBSAs and thanked CMS for offsetting
any negative impacts with a 2-year
transition. A few commenters expressed
concerns for low wage areas and for
areas where hospital wage data is not
available, and where proxies are used to
establish an areas wage index. Another
commenter requested reclassification to
address the Wheeling WV–OH wage
index, as well as, other areas with very
low wage indices. The commenter also
suggested that we apply the rural floor
policy that applies in the IPPS under
which an urban area with a wage index
below the statewide rural average would
be paid the statewide rural average wage
index value.
Response: We thank the commenters
for their support and are finalizing the
CY 2015 ESRD PPS wage indexes as
proposed. We agree that some areas of
the country will continue to have low
wage values, despite the annual updated
hospital wage data and the finalized
new CBSA delineations. However, the
purpose of updating the ESRD PPS wage
indexes as part of our annual update is
based upon the premise that our wage
index value should reflect the costs of
furnishing renal dialysis services in the
area where those services are provided
In addition, the ESRD PPS uses ‘‘prefloor’’ and ‘‘pre re-classified’’ hospital
wage data in computing the wage
indexes used in the ESRD PPS. That is,
the ESRD PPS uses IPPS wage data that
has not been adjusted based on hospital
reclassifications or application of the
IPPS rural floor policy. Because we do
not collect ESRD facility wage data, we
rely upon IPPS hospital wage data as the
best wage proxy for ESRD facilities. We
believe the IPPS hospital wage data
most closely reflects the costs of
furnishing renal dialysis services in an
area and it is the most accurate and upto-date wage data. We understand that
many rural areas generally have lower
wage values than urban areas, and that
in some cases rural facilities may have
to compete with urban areas for staffing.
In addition, a few areas do not have a
hospital upon which to base a wage
index and we apply a proxy wage index
value as described in the CY 2014 ESRD
PPS final rule (78 FR 72172). For these
reasons, we plan to evaluate the effect

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of the IPPS rural floor policy, the wage
index floor, and other wage indexrelated policies under the ESRD PPS.
c. Transition Period
We considered having no transition
period and fully implementing the new
CBSA delineations beginning in CY
2015, which would mean that all
facilities would have payments based on
the new delineations starting on January
1, 2015. However, because more
facilities would have increased rather
than decreased payments beginning in
CY 2015, and because the overall
amount of ESRD payments would
increase slightly due to the new CBSA
delineations, the wage index budgetneutrality factor would be higher. This
higher factor would reduce the ESRD
PPS per treatment base rate for all
facilities paid under the ESRD PPS,
despite the fact that the majority of
ESRD facilities are unaffected by the
new CBSA delineations. We believe that
it would be appropriate to provide for
a transition period to mitigate any
resulting short-term instability of a
lower ESRD PPS base rate as well as any
negative impacts to facilities that
experience reduced payments.
Comment: Generally, commenters
were supportive of our proposed
transition to implement the new CBSA
delineations and our CY 2015 wage
indices. Many commenters agreed that
the transition approach allowed all
facilities the ability to adjust to their
new status, without lowering the overall
base rate for all providers. A few
commenters noted that a longer
transition period would be helpful for
rural providers.
Response: We thank the commenters
for their support and agree that the
transition period allows all facilities to
adjust to their new CBSA status. We
continue to believe that the transition
period is sufficient to mitigate the
economic impact for ESRD facilities as
the impact analysis demonstrates an
impact of less than 1 percent.
Therefore, we are finalizing a 2-year
transition blended wage index for all
facilities. Facilities would receive 50
percent of their CY 2015 wage index
value based on the CBSA delineations
for CY 2014 and 50 percent of their CY
2015 wage index value based on the
new CBSA delineations. This results in
an average of the two values. A facility’s
CY 2016 wage index values will be
based 100 percent on the new CBSA
delineations. We believe a 2-year
transition strikes an appropriate balance
between ensuring that ESRD PPS
payments are as accurate and stable as
possible while giving facilities time to
adjust to the new CBSA delineations.

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In the CY 2011 ESRD PPS final rule
(75 FR 49117), we finalized a policy to
use the labor-related share of 41.737
percent for the ESRD PPS. For the CY
2015 ESRD PPS, we are finalizing a
labor-related share of 50.673 percent,
which we are implementing with a 2year transition of 46.205 percent for CY
2015 and 50.673 percent for CY 2016.
For a complete discussion of the
changes in the CY 2015 ESRD PPS
market basket and labor-related share, as
well as the transition of the labor-related
share. See section II.C of this final rule.
Comment: One commenter
encouraged CMS to explore alternative
payment mechanisms for small rural
providers. Whereas a standard payment
rate that is adjusted based on the
national labor-related share may work
for providers with moderate to high
patient volumes, the same does not hold
true for small rural providers. Small
providers have a different cost structure
than larger counterparts. Specifically,
small rural providers incur a higher
share of non-labor costs than the
national average. For example, a small
facility with 20 patients may only need
part-time employees. The small rural
town may not have potential employees
with the appropriate skill set who are
willing to work part time. As a result,
the ESRD facility will pay significant
amounts for mileage and lodging for
employees to travel from other sites, or
the facility may hire contracted labor.
The commenter encouraged CMS to
evaluate the labor versus non-labor costs
for small rural facilities compared to the
national average and propose payment
adjustments to address inequalities.
Response: We thank the commenters
for their concern for rural facilities and
appreciate the suggestions for
alternative payment mechanisms for
small rural ESRD facilities. We plan to
consider these comments as part of the
ESRD PPS refinement in CY 2016.
4. CY 2015 Update 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 are the following items and
services that are included in the ESRD
PPS bundle: (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

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
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
(75 FR 49142), we stated that for
purposes of determining whether an
ESRD facility would be eligible for an
outlier payment, it would be necessary
for the facility to identify the actual
ESRD outlier services furnished to the
patient by line item on the monthly
claim. Renal dialysis drugs, laboratory
tests, and medical/surgical supplies that
we would recognize as outlier services
were specified in Attachment 3 of
Change Request 7064, Transmittal 2033
issued August 20, 2010, rescinded and
replaced by Transmittal 2094, dated
November 17, 2010. 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 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 eliminated the
issuance of 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. However, we 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. We also can
identify, through our monitoring efforts,

items and services that are incorrectly
being identified as eligible outlier
services in the claims data. Information
about these items and services and any
updates to the list of renal dialysis items
and services that qualify as outlier
services are made through
administrative issuances, if necessary.
Our regulations at § 413.237 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 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. In accordance
with § 413.237(c) of the regulations,
facilities are paid 80 percent of the per
treatment amount by which the imputed
MAP amount for outlier services (that is,
the actual incurred amount) exceeds
this threshold. ESRD facilities are
eligible to receive outlier payments for
treating both adult and pediatric
dialysis patients.
In the CY 2011 ESRD PPS final rule,
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
differences in the utilization of
separately billable services among adult
and pediatric patients (75 FR 49140).
As we explained in the CY 2011 ESRD
PPS final rule (75 FR 49138 through
49139), the predicted outlier services

66143

MAP amounts for a patient are
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.
For CY 2014, the outlier services MAP
amounts and fixed-dollar loss amounts
were based on 2012 data (78 FR 72180).
Therefore, the outlier thresholds for CY
2014 were based on utilization of renal
dialysis items and services furnished
under the ESRD PPS. Because of the
utilization of ESAs and other outlier
services have continued to decline
under the ESRD PPS, we lowered the
MAP amounts and fixed-dollar loss
amounts for CYs 2013 and 2014 to allow
for an increase in payments for ESRD
beneficiaries requiring higher resources.
a. CY 2015 Update to the Outlier
Services MAP Amounts and FixedDollar Loss Amounts
For CY 2015, we did not propose any
changes to the methodology used to
compute the MAP or fixed-dollar loss
amounts. Rather, the proposed rule
updated the outlier services MAP
amounts and fixed-dollar loss amounts
to reflect the utilization of outlier
services reported on 2013 claims using
the December 2013 claims file. For this
final rule, the outlier services MAP
amounts and fixed dollar loss amounts
were updated using the 2013 claims
from the June 2014 claims file. The
impact of this update is shown in Table
10, which compares the outlier services
MAP amounts and fixed-dollar loss
amounts used for the outlier policy in
CY 2014 with the updated estimates
finalized in this rule. The estimates for
the final CY 2015 outlier policy, which
are included in Column II of Table 10,
were inflation adjusted to reflect
projected 2015 prices for outlier
services.

TABLE 10—OUTLIER POLICY: IMPACT OF USING UPDATED DATA TO DEFINE THE OUTLIER POLICY
Column I

Column II

Final outlier policy for CY 2014
(based on 2012 data price inflated to 2014) *

Proposed outlier policy for CY
2015 (based on 2013 data
price inflated to 2015) *

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

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Age
> = 18

Age
< 18

Age
> = 18

$37.29

$51.97

$39.89

$52.98

1.1079
0.98
$40.49

0.9866
0.98
$50.25

1.1145
0.98
$43.57

0.9878
0.98
$51.29

$54.01

$98.67

$54.35

$86.19

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations

TABLE 10—OUTLIER POLICY: IMPACT OF USING UPDATED DATA TO DEFINE THE OUTLIER POLICY—Continued
Column I

Column II

Final outlier policy for CY 2014
(based on 2012 data price inflated to 2014) *

Proposed outlier policy for CY
2015 (based on 2013 data
price inflated to 2015) *

Age
< 18
Patient months qualifying for outlier payment .................................................

Age
> = 18
6.7%

5.3%

Age
< 18

Age
> = 18
6.3%

6.3%

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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,
2014 prices in Column I and projected 2015 prices in Column II).
1 Excludes patients for whom not all data were available to calculate projected payments. The outlier services MAP amounts are based on
2013 data. The medically unbelievable edits of 400,000 units for EPO and 1,200 mcg for Aranesp that are in placeunder 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 2013 data to yield total outlier payments that represent 1 percent of total projected payments for the ESRD PPS.

As demonstrated in Table 10, the
estimated fixed-dollar loss amount that
determines the CY 2015 outlier
threshold amount for adults (Column II)
is lower than that used for the CY 2014
outlier policy (Column I). The threshold
is lower in spite of the fact that the
average outlier services MAP per
treatment has increased. Between 2012
and 2013, the variation in outlier
services across patients declined among
adults. The net result is an increase in
the percentage of patient-months
qualifying for outlier payment (6.3
percent based on 2013 data versus 5.3
percent based on 2012 data) but a
decrease in the average outlier payment
per case. The estimated fixed-dollar loss
amount that determines the CY 2015
outlier threshold amount for pediatric
patients (Column II) is slightly higher
than that used for the CY 2014 outlier
policy (Column I).
For pediatric patients, there was an
increase in the overall average outlier
service MAP amount between 2012
($37.29 per treatment as shown in
Column I) and 2013 ($40.05 per
treatment, as shown in Column II). In
addition, there was a continuing
tendency in 2013 for a relatively small
percentage of pediatric patients to
account for a disproportionate share of
the total outlier service MAP amounts.
The 1 percent target for outlier
payments is therefore expected to be
achieved based on a smaller percentage
of pediatric outlier cases using 2013
data compared to 2012 data (6.3 percent
of pediatric patient months are expected
to qualify for outlier payments rather
than 6.7 percent). These patterns led to
the estimated fixed-dollar loss amount
for pediatric patients being slightly
higher for the outlier policy for CY 2015
compared to the outlier policy for CY
2014.

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The updated fixed-dollar loss
amounts are added to the predicted
MAP amounts per treatment, yielding
the outlier thresholds for CY 2015 from
$98.67 to $86.19 for adult patients and
from $54.01 to $54.35 for pediatric
patients compared with CY 2014
amounts. We estimate that the
percentage of patient months qualifying
for outlier payments under the current
policy will be 6.3 percent for both adult
and pediatric patients, based on the
2013 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 ESAs and other injectable
drugs).
b. Outlier Policy Percentage
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.
Based on the 2013 claims, outlier
payments represented approximately
0.5 percent of total payments, again
falling short of the 1 percent target due
to further declines in the use of outlier
services. Recalibration of the thresholds,
which use 2013 data, reflects the
reduced variation in outlier services
among adults, is expected to result in
aggregate outlier payments close to the
1 percent target in CY 2015. We believe
the update to the outlier MAP and fixeddollar loss amounts for CY 2015 will
increase payments for ESRD
beneficiaries requiring higher resource
utilization and move us closer to
meeting our 1 percent outlier policy.
We note that recalibration of the
fixed-dollar loss amounts in this final
rule for CY 2015 outlier payments
results in no change in payments to

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ESRD facilities for beneficiaries with
renal dialysis items and services that are
not eligible for outlier payments, but
increases payments to ESRD facilities
for beneficiaries with renal dialysis
items and services that are eligible for
outlier payments. Therefore, beneficiary
co-insurance obligations would also
increase for renal dialysis services
eligible for outlier payments.
Comment: All commenters expressed
disappointment that the outlier target
percentage has not been achieved under
the ESRD PPS. Some commenters
encouraged CMS to revise the target so
that the adjustment would be more
attainable for facilities. Other
commenters requested that CMS
eliminate the adjustment from the
payment system altogether and return
the 1 percent back to the base rate for
CY 2015. One commenter suggested that
CMS could annually update the amount
withheld in the outlier pool based on
actual use in the two prior years. Still
other commenters encouraged CMS to
return the outlier ‘‘pool’’ to facilities, as
the adjustment erroneously lowered the
base rate in prior years.
Response: We thank the commenters
for their suggestions in improving the
ESRD PPS outlier policy. With regard to
the comment that we eliminate the
outlier adjustment altogether, we note
that, under section 1881(b)(14)(D)(ii) of
the Act, the ESRD PPS must ‘‘include a
payment adjustment for high cost
outliers due to unusual variations in the
type or amount of medically necessary
care, including variations in the amount
of erythropoiesis stimulating agents
necessary for anemia management.’’
Therefore, we would be unable to do so
and comply with section
1881(b)(14)(D)(ii) of the Act. In addition,
it is important to note that the ESRD
PPS base rate captures the cost for the

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
average patient. To the extent data
analysis continues to show that certain
patients, including certain racial and
ethnic groups, receive more ESAs than
average, we believe an outlier policy,
even a small one, is an important
payment adjustment to provide under
the ESRD PPS. Concerning comments
that we modify the outlier payment
adjustment, we did not propose to do
so, therefore, we will not finalize such
an adjustment. However, we will
consider the commenters’ suggestions as
part of the refinement process that we
will undertake in the CY 2016 ESRD
PPS proposed and final rules.
We share the industry’s frustration
that payments under the outlier policy
have not reached 1 percent of total
ESRD PPS payments. However, the
outlier policy is a target percentage
rather than a ‘‘pool.’’ As we explained
in the CY 2014 ESRD PPS final rule (78
FR 72165), each year we simulate
payments under the ESRD PPS in order
to set the outlier fixed-dollar loss and
MAP amounts for adult and pediatric
patients to try to achieve the 1 percent
outlier policy. We do not increase the
base rate to account for years where
outlier payments were less than 1
percent of total ESRD PPS payments,
nor would we reduce the base rate if the
outlier payments exceed 1 percent of
total ESRD PPS payments. Rather, we
would simulate payments in the
following year and adjust the fixeddollar loss and MAP amounts to try to
achieve outlier payments that meet the
1 percent outlier percentage. This
approach to updating the outlier policy
is consistent with how we update
outlier policies in other Medicare
prospective payment systems, for
example, the prospective payment
system for inpatient psychiatric
facilities.
We believe the 1 percent outlier
percentage has not been reached under
the payment system due to the
significant drop, over 20 percent, in the
utilization of high cost drugs such as
Epogen. In fact, we believe the drop in
utilization of ESAs and the QIP
measures, have made it less likely that
a patient’s treatment costs would meet
the outlier threshold, despite the fact we
have lowered the MAP amounts as part
of our annual update to the payment
system since 2011. We believe that the
2013 data used to update the CY 2015
outlier policy are representative of
stable drug utilization, and we believe
that in the future the outlier policy will
be an important payment adjustment
compensating facilities for high cost
services as the adjustment was
intended.

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D. Restatement of Policy Regarding
Reporting and Payment for More Than
Three Dialysis Treatments per Week
1. Reporting More Than Three Dialysis
Treatments per Week on Claims
Since the composite payment system
was implemented in the 1980s, CMS has
reimbursed ESRD facilities based upon
three hemodialysis treatments per week
and allowed for the payment of
additional weekly dialysis treatments
with medical justification. When a
dialysis modality regimen requires more
than three weekly dialysis treatments,
such as with short, frequent
hemodialysis (HD) and peritoneal
dialysis (PD) modalities, we apply
payment edits to ensure that Medicare
payment on the monthly claim is
consistent with the three times-weekly
dialysis treatment payment limit, which
translates to payment for 13 treatments
for a 30-day month and 14 treatments
for a 31-day month.
Under section 1881(b)(14)(C) of the
Act, the ESRD PPS may provide for
payment on the basis of renal dialysis
services furnished during a week, or
month, or such other appropriate unit of
payment as the Secretary specifies. In
the CY 2011 ESRD PPS final rule (75 FR
49064), CMS finalized the per treatment
basis of payment in which ESRD
facilities are paid for up to three
treatments per week, unless there is
medical justification for more than three
treatments per week. We codified the
per-treatment unit of payment under the
ESRD PPS at 42 CFR 413.215(a). Also in
the CY 2011 ESRD PPS final rule (75 FR
49078), we explained how we converted
patient weeks to HD-equivalent sessions
for PD patients. Specifically, we noted
that one week of PD was considered
equivalent to three HD treatments. For
example, a patient on PD for 21 days
would have (21/7) × 3 or 9 HDequivalent sessions. Our policy is that
ESRD facilities treating patients on PD
or home HD will be paid for up to three
HD-equivalent sessions for each week of
dialysis, unless there is medical
justification for furnishing additional
treatments.
Increasingly, some ESRD facilities
have begun to offer dialysis modalities
where the standard treatment regimen is
more than three treatments per week.
Also, we have observed a payment
variation among Medicare
Administrative Contractors (MACs) in
processing claims for dialysis treatments
for modalities that require more
frequent dialysis, resulting in payment
of more than 14 treatments per month
without medical justification. Lastly,
CMS has received several requests for
clarification regarding Medicare

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66145

payment and billing policies for dialysis
treatments for modalities requiring more
than three treatments per week that are
furnished in-facility or in the patient’s
home. Specifically, ESRD facilities,
renal physician groups, and MACs have
requested billing guidance regarding
whether all of the dialysis treatments
furnished to the patient during the
billing month should be reported on the
claim form, even though the Medicare
benefit only provides for payment of
three dialysis treatments per week.
For these reasons, we are reiterating
our policy with respect to payment for
more than three dialysis treatments per
week. We note that we are not changing
our policy for reporting extra dialysis
sessions. ESRD facility claims should
continue to include all dialysis
treatments furnished during the month
on claims, but payment is limited to
three dialysis treatments per week
through the payment edits of 13
treatments for a 30-day month or 14
treatments for a 31-day month. For
example, an ESRD facility that furnishes
dialysis services to patients who dialyze
using modalities requiring shorter, more
frequent dialysis (for example, a dialysis
regimen of 4, 5, 6 or 7 days a week infacility or at home), should report all of
the patient’s dialysis treatments on the
monthly claim. However, payment for
these services will reflect existing
claims processing system edits, and the
monthly Medicare payment would
mirror the Medicare ESRD benefit of
three dialysis treatments per week.
2. Medical Necessity for More Than
Three Treatments per Week
Under the ESRD benefit, we have
always recognized that some patient
conditions benefit from more than three
dialysis sessions per week and as such,
the Medicare policy for medically
necessary additional dialysis treatments
was developed. Under this policy, the
MACs determine whether additional
treatments furnished during a month are
medically necessary. While Medicare
does not define specific patient
conditions that meet the requirements of
medical necessity, we do furnish
instructions to MACs to consider
appropriate patient conditions that
would result in a patient’s medical need
for additional dialysis treatments (for
example, excess fluid of five or more
pounds). When such patient conditions
are indicated with the claim requesting
payment, we instruct MACs to consider
medical justification and the
appropriateness of payment for the
additional sessions.
In section 50.A of the Medicare
Benefit Policy Manual (Pub. 100–02),
we explained our policy regarding

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payment for hemodialysis-equivalent
PD and payment for more than three
dialysis treatments per week under the
ESRD PPS. We restated that ESRD
facilities are paid for a maximum of 13
treatments during a 30-day month and
14 treatments during a 31-day month
unless there is medical justification for
additional treatments. The only time
facilities should seek payment for
additional dialysis sessions, is when the
patient has a medical need for
additional dialysis and the facility has
furnished supporting medical
justification of the patient’s condition
for the extra treatments. Modality choice
does not constitute medical
justification.
Comment: Commenters were
generally supportive of our policy
clarification for reporting short frequent
hemodialysis treatments. Many
commenters noted the importance of
allowing Medicare payment for
additional medically necessary weekly
treatments. One commenter requested
that CMS clarify that medical
justification is subject to approval by the
MAC’s medical officer, as opposed to
the MAC’s local policy decisions.
Response: We thank the commenters
for their support of our policy
clarification and agree with commenters
that when medically necessary
additional dialysis treatments are
warranted based upon the patients’
medical conditions, Medicare should
pay for those treatments. In addition,
CMS has no national policy for medical
justification for additional dialysis
treatments, and we rely upon either a
MAC’s local coverage determination
(LCD) policy or medical review by a
physician working under the direction
of the MAC’s medical director.
Comment: One commenter expressed
concern that the language in the
proposed rule gives more authority to
the MACs to determine medical
necessity. The commenter cited to the
proposed rule that states, ‘‘the MACs
determine whether additional
treatments furnished during a month are
medically necessary,’’ and encouraged
CMS to communicate to the MACs that
physicians are ultimately responsible
for determining the medical justification
of ESRD services after considering the
patient’s health status and relevant
evidence-based medicine. The MAC’s
responsibility is to review the
documentation provided by the
physician to ensure the medical
justification meets the guidelines set
forth by CMS.
Another commenter indicated that
longer or more frequent schedules are
purposefully prescribed by the
physician to meet individual patient

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medical and lifestyle needs and because
the patient would medically benefit
based upon the ever-expanding base of
clinical literature finding clinical
benefit to these schedules compared to
conventional dialysis schedules. The
commenter believes that if such a
regimen is prescribed based upon sound
medical justification, it should be
eligible for payment of the additional
treatments under CMS’s long-standing
policy. The commenter believes this
approach has worked effectively for
many years during the modest growth of
home hemodialysis (HHD) and there is
no evidence of overutilization. The
commenter believes this is the policy
described in the proposed rule.
Other commenters pointed out that,
while a growing body of research shows
that more frequent dialysis improves
patient outcomes overall, the payment
policy for dialysis is limited based on
three times per week HD treatments.
The flexibility in permitting extra
payments for HD treatments, when
medical justification is provided, is a
reasonable approach to ensuring those
patients who need the extra treatments
the most are able to get them.
Response: We agree with the
commenter that, while we refer to
MACs’ approval for the payment of
medically necessary additional weekly
treatments, we do not mean that the
MACs make these decisions
unilaterally. Rather, necessity for these
extra treatments is reviewed, and
ultimately paid or unpaid, based upon
the policy and payment guidance
furnished by Medicare, the local
policies and guidance of the MAC, and
the information submitted by the
patient’s physician. It was not our intent
to imply a change in our requirements
for medical justification for additional
treatments, nor were we dismissing the
importance of the assessment of the
patient’s physician. We will continue to
follow research assessing the clinical
benefits of more frequent dialysis
schedules and monitoring the number of
treatments furnished and paid per
month.
In circumstances where a
nephrologist has ‘‘prescribed’’ shorter,
more frequent hemodialysis for their
patient there should be no expectation
of payment beyond three treatments per
week. For prescribed dialysis regimes
beyond three sessions per week,
furnished in the home or in center, such
as four, five, six or even seven times per
week, payment for the additional
weekly treatments is based on patient
conditions, supported by medical
documentation, that require additional
dialysis.

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Comment: One commenter believes
that it is inconsistent for CMS to require
that all dialysis treatments be reported,
while limiting payment to three times
per week.
Response: We thank the commenter
for their comment; however, dialysis
services furnished by a facility are
reported to Medicare, for purposes of
payment, on a monthly claim form.
During a given month, weekly dialysis
services may differ in terms of number
of treatments, drug dosing, acute casemix or other payment adjustments,
laboratory services. Therefore, we
require that all dialysis services be
reported on the Medicare 72x type of
bill so that all of the services furnished
to the beneficiary will be identifiable on
the claim form. More importantly,
reporting all treatments furnished
allows CMS to keep up with changes in
dialysis schedules over time.
Comment: One commenter believes a
reference we made in the proposed rule
to ‘‘dialysis modalities that require more
frequent dialysis’’ could be
misconstrued or misunderstood. The
commenter believes the reference
implies a comparison of more frequent
home HD to PD, where daily exchanges
are required in order to deliver a
minimally adequate dose. The
commenter pointed out that home HD,
and the equipment that delivers this
home therapy, may be prescribed with
adequate dose delivery under a variety
of treatment schedules, from the
conventional thrice-weekly to longer or
more frequent schedules. The
commenter suggests that correlating
short more frequent HD with PD should
be avoided.
Response: We thank the commenter
for this clarification and we will avoid
such references in the future.
Comment: One commenter disagreed
with CMS’s policy and stated that it
should not preclude modality choice as
a medical justification for more frequent
HD treatments, as precluding modality
choice would likely have a significant
adverse impact on the physical and
emotional well-being of patients
undergoing home hemodialysis
currently, and would significantly limit
Medicare beneficiaries’ access to home
HD. The commenter contends that this
policy is counter to CMS and Congress’s
stated goal of promoting the use of home
dialysis in lieu of continued growth of
patients undergoing in-center
hemodialysis. A few commenters
encouraged CMS to continue to be
flexible in providing beneficiaries with
more than three treatments per week
when medically necessary. Other
commenters noted that they support our
objectives in removing barriers for home

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dialysis modalities, including home
hemodialysis, but only if our policies do
not shift resources from in-center
patients.
Response: Payments provided by
MACs for additional hemodialysis
weekly dialysis treatments that are
furnished in-facility or in the home,
have been audited by CMS. We
recognize that some MACs were not
requiring documented patient
conditions for medical justification for
additional weekly treatments and were
inappropriately authorizing Medicare

payment for additional dialysis services
where no medical justification was
included in the claim. Thus, our intent
in clarifying our policy was to remind
facilities and MACs of the Medicare
ESRD benefit, which only allows for the
payment of three weekly dialysis
treatments, and that additional weekly
dialysis treatments may be paid for if
there’s documented medical
justification. We believe that our policy
clarification will result in a consistent
Medicare benefit for all beneficiaries

BILLING CODE 4120–01–P

BILLING CODE 4120–01–C

individuals for the treatment of ESRD
and for which payment was (before the
application of this paragraph) made
separately under this title, and any oral
equivalent form of such drug or
biological[.]’’
We interpreted this provision as
including not only injectable drugs and
biologicals used for the treatment of
ESRD (other than ESAs, which are
included under clause (ii) of section
1881(b)(14)(B)), but also all noninjectable oral drugs used for the
treatment of ESRD furnished under title
XVIII of the Act. We also concluded
that, to the extent ESRD-related oralonly drugs do not fall within clause (iii)
of the statutory definition of renal
dialysis services, such drugs would fall
under clause (iv), and constitute other

items and services used for the
treatment of ESRD that are not described
in clause (i) of section 1881(b)(14)(B).
As such, CMS finalized and
promulgated the payment policies for
oral-only drugs used for the treatment of
ESRD in the CY 2011 ESRD PPS final
rule (75 FR 49038 through 49053), and
we defined ‘‘renal dialysis services’’ at
42 CFR 413.171(3) as including, among
other things ‘‘other drugs and
biologicals that are furnished to
individuals for the treatment of ESRD
and for which payment was (prior to
January 1, 2011) made separately under
Title XVIII of the Act (including drugs
and biologicals with only an oral
form).’’
Although ESRD-related oral-only
drugs are included in the definition of

As we discussed in the CY 2014 ESRD
PPS final rule (78 FR 72185 through
72186), section 1881(b)(14)(A)(i) of the
Act, as added by section 153(b) of the
Medicare Improvements for Patients and
Providers Act of 2008 (MIPPA), requires
the Secretary to implement a payment
system under which a single payment is
made to a provider of services or a renal
dialysis facility for ‘‘renal dialysis
services’’ in lieu of any other payment.
Section 1881(b)(14)(B) of the Act defines
renal dialysis services, and subclause
(iii) of that section states that these
services include ‘‘other drugs and
biologicals that are furnished to

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and eliminate the regional payment
differences for HD.
Lastly, we thank the commenters who
suggest that Medicare should remove
the barriers to home modalities while
not jeopardizing the Medicare base rate
for in-facility services. We agree with
these commenters and believe our ESRD
PPS payment policies have contributed
to the increase in utilization of home
dialysis modalities as indicated in Table
11 below.

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ER06NO14.012

E. Delay of Payment for Oral-Only Drugs
Under the ESRD PPS

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renal dialysis services, in the CY 2011
ESRD PPS final rule (75 FR 49044), we
also finalized a policy to delay payment
for these drugs under the PPS until
January 1, 2014. We stated that there
were certain advantages to delaying the
implementation of payment for oralonly drugs, including allowing ESRD
facilities additional time to make
operational changes and logistical
arrangements in order to furnish oralonly ESRD-related drugs and biologicals
to their patients. Accordingly, 42 CFR
413.174(f)(6) provides that payment to
an ESRD facility for renal dialysis
service drugs and biologicals with only
an oral form is incorporated into the
PPS payment rates effective January 1,
2014.
On January 3, 2013, the Congress
enacted ATRA. Section 632(b) of ATRA
states that the Secretary ‘‘may not
implement the policy under section
413.176(f)(6) of title 42, Code of Federal
Regulations (relating to oral-only ESRDrelated drugs in the ESRD prospective
payment system), prior to January 1,
2016.’’ Accordingly, in the CY 2014
ESRD PPS final rule (78 FR 72185
through 72186), we delayed payment for
ESRD-related oral-only drugs under the
ESRD PPS until January 1, 2016, instead
of on January 1, 2014, which is the
original date we finalized for payment
of ESRD-related oral-only drugs under
the ESRD PPS. We implemented this
delay by revising the effective date for
providing payment for oral-only ESRDrelated drugs under the ESRD PPS at 42
CFR 413.174(f)(6) from January 1, 2014
to January 1, 2016. In addition, we also
changed the date when oral-only drugs
would be eligible for outlier services
under the outlier policy described in 42
CFR 413.237(a)(1)(iv) from January 1,
2014 to January 1, 2016.
On April 1, 2014, PAMA was enacted.
Section 217(a)(1) of PAMA amended
section 632(b)(1) of ATRA, which now
provides that the Secretary ‘‘may not
implement the policy under section
413.174(f)(6) of title 42, Code of Federal
Regulations (relating to oral-only ESRD
drugs in the ESRD prospective payment
system), prior to January 1, 2024.’’
Accordingly, payment for ESRD-related
oral-only drugs will not be made under
the ESRD PPS prior to January 1, 2024
instead of on January 1, 2016, which is
the date we finalized for payment of
ESRD-related oral-only drugs under the
ESRD PPS in the CY 2014 ESRD PPS
final rule (78 FR 72186).
We shall implement this delay by
modifying the effective date for
providing payment for renal dialysis
oral-only drugs and biologicals under
the ESRD PPS at 42 CFR 413.174(f)(6)
from January 1, 2016 to January 1, 2024.

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We also shall change the date in 42 CFR
413.237(a)(1)(iv) regarding outlier
payments for oral-only ESRD-related
drugs made under the ESRD PPS from
January 1, 2016 to January 1, 2024. We
continue to believe that oral-only drugs
used for the treatment of ESRD are an
essential part of the ESRD PPS payment
bundle and should be paid for under the
ESRD PPS as soon as possible, or
beginning January 1, 2024. We received
no public comments on these proposals
and therefore will finalize our
regulatory changes to 42 CFR Part 413
as proposed.
In addition to the delay of payment
for renal dialysis oral-only drugs,
section 217(a)(2) of PAMA further
amended section 632(b)(1) of ATRA by
adding a new sentence that provides,
‘‘[n]otwithstanding section
1881(b)(14)(A)(ii) of the Social Security
Act (42 U.S.C. 1395rr(b)(14)(A)(ii)),
implementation of the policy described
in the previous sentence shall be based
on data from the most recent year
available.’’ We interpret this provision
to mean that we are not to use per
patient utilization data from 2007, 2008,
or 2009 (whichever has the lowest per
patient utilization) as we were required
to do for the original ESRD PPS in
implementing payment for renal
dialysis oral-only drugs under the ESRD
PPS. We will make proposals consistent
with section 632(b)(1) of ATRA, as
amended by section 217(a)(2) of PAMA,
in future rulemaking.
Section 217(c) of PAMA requires the
Secretary, as part of the CY 2016 ESRD
PPS rulemaking, to establish a process
for ‘‘(1) determining when a product is
no longer an oral-only drug; and (2)
including new injectable and
intravenous products into the bundled
payment under such system.’’
Consistent with this statutory
requirement, we plan to propose a drug
designation process in our CY 2016
rulemaking cycle.
Comment: We received many
comments from industry stakeholders
questioning CMS’s authority to
incorporate additional renal dialysis
services into the payment bundle. A few
commenters were encouraged by CMS’s
request for comments and outlined a
comprehensive 7 principle drug
designation process. Other commenters
urged CMS to be cautious when adding
renal dialysis services to the bundle and
noted that separate payment for new
services would be important until
utilization and practice patterns have
been established. Another commenter
urged that the process should be
transparent, predictable, and result in
increases to the payment rate to reflect
the cost of these therapies and to

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promote adoption of innovations with a
demonstrated impact on patient
outcomes.
One commenter recommends a
collaborative process to determine when
a product is no longer an oral-only drug,
noting that MIPPA is unclear on this
point for non-ESA medications. The
commenter suggests that reasonable
criteria for inclusion of previously oralonly agents in the bundle may be when
a parenteral formulation has been
adequately shown to be clinically
superior in terms of efficacy and safety
with acceptable cost and costeffectiveness compared to already
available oral medications. The
commenter also believes it would be
appropriate to include new products in
the bundle if they are intended to be
used in practice as substitutes for
already bundled products or if their
primary use reflects management of
conditions specifically related to ESRD
and its complications as evidenced by
current use of bundled medications or
oral but not bundled medications.
Response: We thank the commenters
for the thoughtful comments regarding a
drug designation process. We will take
these comments into consideration
when we propose the drug designation
process in the CY 2016 ESRD PPS
proposed rule. In response to
commenters who questioned CMS’s
authority, we believe CMS does have
the authority to add services to the
bundle. Our definition of renal dialysis
services, which was adopted in our CY
2011 ESRD PPS final rule (75 FR 49036),
is consistent with section
1881(b)(14)(B)(iii) of the Act that
includes as renal dialysis services,
‘‘Other drugs and biologicals that are
furnished to individuals for the
treatment of end stage renal disease and
for which payment was (before
application of this [new ESRD PPS])
made separately under this title, and
any oral equivalent form of such drug or
biological.’’ We continue to believe that
we have the authority to add drugs and
biologicals that are furnished to
individuals for the treatment of ESRD to
the payment bundle. We have done this
in the case when new ESAs have been
made available.
Lastly, we thank the commenters for
the very thoughtful 7 principle drug
designation process outlined in
comments. Specifically, we are
encouraged by recommendations
regarding processes for coverage and
payment, data collection, and
protections for providers and
beneficiaries so that facilities ‘‘are not
forced to absorb the drug’s new costs
themselves.’’

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F. ESRD Drug Categories Included in the
ESRD PPS Base Rate
In the CY 2011 ESRD PPS final rule
(75 FR 49050), we finalized Table 4,
(Renal Dialysis Service ESRD Drug
Categories Included in the Final ESRD
PPS Base Rate), and have included
Table 12 below for the purpose of this
discussion. In that rule, we noted that

the categories of drugs and biologicals
used for access management, anemia
management, anti-infectives, bone and
mineral metabolism, and cellular
management would always be
considered renal dialysis drugs when
furnished to an ESRD patient, and that
payment for such drugs would be
included in the ESRD PPS payment
bundle. As such, beginning January 1,

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2011, Medicare no longer makes a
separate payment when a drug or
biological (except for renal dialysis oralonly drugs for which we are delaying
payment under the ESRD PPS until
January 1, 2024) identified in the
categories listed in the following table is
furnished to a Medicare ESRD
beneficiary.

TABLE 12—RENAL DIALYSIS SERVICE ESRD DRUG CATEGORIES INCLUDED IN THE FINAL ESRD PPS BASE RATE
Drug category

Rationale for inclusion

Access Management ......................

Drugs used to ensure access by removing clots from grafts, reverse anticoagulation if too much medication
is given, and provide anesthetic for access placement.
Drugs used to stimulate red blood cell production and/or treat or prevent anemia. This category includes
ESAs as well as iron.
Vancomycin and daptomycin used to treat access site infections.
Drugs used to prevent/treat bone disease secondary to dialysis. This category includes phosphate binders
and calcimimetics.
Drugs used for deficiencies of naturally occurring substances needed for cellular management. This category includes levocarnitine.

Anemia Management ......................
Anti-infectives ..................................
Bone and Mineral Metabolism ........
Cellular Management ......................

In the CY 2011 ESRD PPS final rule
(75 FR 49050), we noted that we
included the anti-infective drugs of
vancomycin and daptomycin because
these drugs were routinely furnished for
the renal dialysis conditions, such as,
access site infections and peritonitis.
However, in the CY 2012 ESRD PPS
final rule (76 FR 70242 through 70243),
we responded to public comments that
noted that vancomycin is a common
anti-infective drug appropriate for
treating infections that are both ESRDand non-ESRD-related by modifying our
policy to eliminate the payment
restriction for vancomycin when it is
furnished for reasons other than for the
treatment of ESRD. In addition, we
finalized the use of CMS payment
modifier AY (Item or service furnished
to an End-Stage Renal Disease (ESRD)
patient that is not for the treatment of
ESRD) and instructed facilities to
append the modifier to the claim line
reporting vancomycin to indicate that
the drug was furnished for reasons other
than for the treatment of ESRD. The
presence of the AY modifier on the
claim line allows the MAC to make a
separate payment for the drug when it
is furnished by the facility to a Medicare

beneficiary for reasons other than for the
treatment of ESRD.
In the CY 2013 ESRD PPS final rule
(77 FR 67461), we further amended this
policy to allow ESRD facilities to bill
separately for daptomycin when it is
furnished to ESRD beneficiaries for
reasons other than for the treatment of
ESRD. Once again, we instructed
facilities to append claim lines reporting
daptomycin furnished for reasons other
than for the treatment of ESRD with the
AY modifier so that MACs would be
able to make a separate payment.
Because we have removed the
payment limitation for both vancomycin
and daptomycin, and because we
believe that anti-infectives are a drug
category that may be furnished for both
ESRD- and non-ESRD-related reasons,
we updated the list of drug categories
that are always considered renal dialysis
drugs under the ESRD PPS by removing
the drug category for anti-infectives. We
included Table 13 (Renal Dialysis
Service ESRD Drug Categories Included
in the ESRD PPS Base Rate and Not
Separately Payable) below to
appropriately recognize the drug
categories that are always considered to
be renal dialysis services and we
confirm that the revised table reflects
policy changes made in the CY 2012

and CY 2013 ESRD PPS rulemaking
cycles and does not constitute new
policy.
Over the past few years, we have
received payment and billing inquiries
requesting clarification for the payment
for drugs represented by one of the drug
categories included in the ESRD PPS,
but not furnished for the treatment of
ESRD. Therefore, we clarify that any
drug included in the drug categories of
access management, anemia
management, bone and mineral
metabolism, and cellular management is
not separately paid by Medicare
regardless of why the drug is being
furnished. In addition, the facility may
not furnish a prescription for such drugs
with the expectation that a Medicare
Part D payment would be made, as the
payment for the drug is included in the
ESRD PPS payment bundle. Beginning
in CY 2011 when the ESRD PPS was
implemented, Part D plan sponsors were
encouraged to implement prior
authorization requirements for drugs in
the categories below in Table 13. In
addition, the drug categories presented
below are covered by the ESRD PPS
payment regardless of whether the drug
is expected to be taken at home or on
non-dialysis days.

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TABLE 13—RENAL DIALYSIS SERVICE ESRD DRUG CATEGORIES INCLUDED IN THE ESRD PPS BASE RATE AND NOT
SEPARATELY PAYABLE
Drug category

Rationale for inclusion

Access Management ......................

Drugs used to ensure access by removing clots from grafts, reverse anticoagulation if too much medication
is given, and provide anesthetic for access placement.
Drugs used to stimulate red blood cell production and/or treat or prevent anemia. This category includes
ESAs as well as iron.

Anemia Management ......................

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TABLE 13—RENAL DIALYSIS SERVICE ESRD DRUG CATEGORIES INCLUDED IN THE ESRD PPS BASE RATE AND NOT
SEPARATELY PAYABLE—Continued
Drug category

Rationale for inclusion

Bone and Mineral Metabolism ........

Drugs used to prevent/treat bone disease secondary to dialysis. This category includes phosphate binders
and calcimimetics.
Drugs used for deficiencies of naturally occurring substances needed for cellular management. This category includes levocarnitine.

Cellular Management ......................

The drug categories that may be
separately paid by Medicare when
furnished for reasons other than for the
treatment of ESRD were included in
Table 5 (ESRD Drug Categories Included
in the ESRD PPS Base Rate But May be
Used for Dialysis and non-Dialysis
Purposes) (75 FR 49051). Table 14 is
included below for the purpose of this
discussion. When any drug identified in
the drug categories listed in Table 14
(antiemetics, anti-infectives,
antipruritic, anxiolytic, excess fluid
management, fluid and electrolyte
management, or pain management), is

furnished for the treatment of ESRD,
payment for the drug is included in the
ESRD PPS payment and may not be paid
separately. When these drugs are used
for the treatment of ESRD, the facility
may not furnish a prescription for such
drugs with the expectation that a
Medicare Part D payment would be
made, as the payments for the injectable
drugs, which are generally more
expensive than oral substitutes, in those
categories were included in computing
the ESRD PPS base rate. Therefore,
drugs in these categories furnished for
the treatment of ESRD are covered by

the ESRD PPS payment regardless of
whether the drug is expected to be taken
at home or on non-dialysis days.
If a drug represented by a drug
category in Table 14 is furnished by
ESRD facilities for reasons other than for
the treatment of ESRD, a separate
Medicare payment is permitted when
the AY modifier is indicated on the
claim line reporting the drug for
payment. Prescriptions for oral versions
of drugs used for non-ESRD conditions
are appropriately billed to Part D.

TABLE 14—ESRD DRUG CATEGORIES INCLUDED IN THE ESRD BASE RATE BUT MAY BE USED FOR DIALYSIS AND NONDIALYSIS PURPOSES

Antiemetic .......................................
Anti-infectives ..................................
Antipruritic .......................................
Anxiolytic .........................................

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Excess Fluid Management .............
Fluid and Electrolyte Management
Including Volume Expanders.
Pain Management ...........................

Used to prevent or treat nausea and vomiting secondary to dialysis. Excludes antiemetics used in conjunction with chemotherapy as these are covered under a separate benefit category.
Used to treat infections. May include antibacterial and antifungal drugs.
Drugs in this classification have multiple clinical indications and are included for their action to treat itching
secondary to dialysis.
Drugs in this classification have multiple actions but are included for the treatment of restless leg syndrome secondary to dialysis.
Drug/fluids used to treat fluid excess/overload.
Intravenous drugs/fluids used to treat fluid and electrolyte needs.
Drugs used to treat graft site pain and to treat pain medication overdose.

Comment: A few commenters,
including national industry
organizations, expressed appreciation
for our efforts to clarify what drugs and
biologicals are included in the ESRD
PPS payment bundle. However, they
expressed concern that current guidance
has resulted in Part D plan sponsors’
inappropriately refusing to cover oral
drugs that are not renal dialysis services
nor essential to the delivery of such
services. Specifically, they noted that
beneficiaries have had difficulties
obtaining necessary medications such as
oral antibiotics prescribed for
pneumonia and pain medications
prescribed for back pain.
A commenter believes that, prior to
January 1, 2014, there appeared to be a
clear understanding as to what drugs
and biologicals should be reimbursed
through the ESRD PPS and those that
should appropriately be covered under
Part D. The commenter noted that

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guidance issued by CMS in 2011 to all
Part D plans correctly recognized that
drugs used as substitutes for any of the
drugs listed in Table C of the CY 2011
ESRD PPS final rule, or used to
accomplish the same effect, would also
be covered under the ESRD bundled
payment and were, therefore, ineligible
for separate payment.
However, implementation of the CY
2014 Part D Call Letter provision for
prior authorization for drug categories
that may be renal dialysis services but
may also prescribed for other conditions
has resulted in confusion for Part D plan
sponsors and delays in beneficiaries
obtaining essential medications at the
pharmacy. Another commenter pointed
out that patients should not be put in
the middle of benefit determinations,
and that they should receive their
medications when they arrive at the
pharmacy and payment disputes should
be settled after the fact.

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Response: There has been no change
in CMS policy with respect to the drugs
considered to be renal dialysis services
and covered under the ESRD PPS since
CY 2013 when we removed daptomycin
from the list of drug categories that are
always considered to be renal dialysis
services as discussed above. However,
in response to increases in billing under
Part D for drugs that may be for renal
dialysis services but may also be
prescribed for other conditions, we
issued guidance in the CY 2014 Part D
Call Letter to strongly encourage Part D
sponsors to place beneficiary-level prior
authorization edits on all drugs in the
seven categories identified in the CY
2011 ESRD PPS final rule as drugs that
‘‘may be’’ ESRD-related for beneficiaries
on dialysis (75 FR 49051). These
include: Antiemetics, anti-infectives,
antipruritics, anxiolytics, excess fluid
management, fluid and electrolyte
management including volume

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
expanders, and pain management
(analgesics).
Since our new guidance took effect
January 1, 2014, various stakeholders
have raised concerns regarding the
policy’s impact on beneficiary access.
We are considering various alternatives
for dealing with this issue, as it has
always been our intention to eliminate
or minimize disruptions or delays for
ESRD beneficiaries’ receiving essential
medications. We plan to issue guidance
in the near future to address this issue.
Comment: A national industry
organization commented that, prior to
implementation of the ESRD PPS, most
of the drugs that were listed as ‘‘may be
related to the treatment of ESRD were
also prescribed for patients to take, at
home, on non-dialysis treatment days.
The commenter pointed out that CMS
did not reflect Medicare payments for
those oral drugs in calculating the ESRD
PPS base rate. Therefore, CMS should
continue to allow payment under Part D
for those drug categories, that may be for
the treatment of ESRD, but that are
prescribed for non-dialysis days. The
commenter requested that we revise the
regulation text to provide that
prescription drugs and biologicals that
may be within the bundle are covered
under the Part B bundle only when they
are directly related to the provision of
renal dialysis services.
Another commenter pointed out that
a reasonable criterion regarding which
medications are covered under the
bundled payment should be if the
medication is essential to perform
dialysis or whether the dialysis
treatment could be altered or intensified
in some way that it would make the
medication unnecessary. For instance,
lidocaine cream for access site pain with
cannulation would be included in the
bundle, while an anti-pruritic agent
taken twice daily for chronic pruritus
that persists despite adequate dialysis
would not be included in the bundle.
Response: In order to maintain the
integrity of the ESRD PPS base rate and
the payment bundle implemented in CY
2011, the drugs and biologicals that we
consider to be renal dialysis services are
those that are routinely given to patients
‘‘for the treatment of ESRD’’ and were
billed separately to Part B prior to
implementation of the ESRD PPS and
where the payments for the injectable
versions was included in the base rate.
Therefore, if a facility would have
furnished an injectable drug and
received separate payment for that drug
under Part B prior to the ESRD PPS, it
would not be appropriate today to
unbundle the oral versions of those
injectable drugs by providing a
prescription for a substitute drug to be

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taken on non-dialysis days and expect
that drug to be covered under Part D.
For more information regarding the
injectable drugs included in the ESRD
PPS base rate, please refer to Table C of
the CY 2011 ESRD PPS Final Rule (75
FR 49205).
G. Low-Volume Payment Adjustment
(LVPA)
1. Background
Section 1881(b)(14)(D)(iii) of the Act
requires a payment adjustment that
‘‘reflects the extent to which costs
incurred by low-volume facilities (as
defined by the Secretary) in furnishing
renal dialysis services exceed the costs
incurred by other facilities in furnishing
such services, and for payment for renal
dialysis services furnished on or after
January 1, 2011, and before January 1,
2014, such payment adjustment shall
not be less than 10 percent.’’ As a result
of this provision and the regression
analysis conducted for the ESRD PPS,
effective January 1, 2011, the ESRD PPS
provides a facility-level payment
adjustment of 18.9 percent to ESRD
facilities that meet the definition of a
low-volume facility.
Under 42 CFR 413.232(b), a lowvolume facility is an ESRD facility that:
(1) Furnished less than 4,000 treatments
in each of the 3 cost reporting years
(based on as-filed or final settled 12consecutive month cost reports,
whichever is most recent) preceding the
payment year; and (2) Has not opened,
closed, or received a new provider
number due to a change in ownership
in the 3 cost reporting years (based on
as-filed or final settled 12-consecutive
month cost reports, whichever is most
recent) preceding the payment year.
Under § 413.232(c), for purposes of
determining the number of treatments
furnished by the ESRD facility, the
number of treatments equals the
aggregate number of treatments
furnished by other ESRD facilities that
are both under common ownership and
25 road miles or less from the ESRD
facility in question. This geographic
proximity criterion is only applicable to
ESRD facilities that were Medicare
certified on or after January 1, 2011.
For purposes of determining
eligibility for the low-volume payment
adjustment (LVPA), ‘‘treatments’’ means
total hemodialysis (HD) equivalent
treatments (Medicare and nonMedicare). For peritoneal dialysis (PD)
patients, one week of PD is considered
equivalent to 3 HD treatments. In the CY
2012 ESRD PPS final rule (76 FR 70236),
we clarified that we base eligibility on
the three years preceding the payment
year and those years are based on cost

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reporting periods. We further clarified
that the ESRD facility’s cost reports for
the cost reporting periods ending in the
three years preceding the payment year
must report costs for 12-consecutive
months.
In order to receive the LVPA under
the ESRD PPS, an ESRD facility must
submit a written attestation statement to
its Medicare Administrative Contractor
(MAC) that it qualifies as a low-volume
ESRD facility and that it meets all of the
requirements specified at 42 CFR
413.232. In the CY 2012 ESRD PPS final
rule (76 FR 70236), we finalized a yearly
November 1 deadline for attestation
submission and we revised the
regulation at § 413.232(f) to reflect this
date. We noted that this timeframe
provides 60 days for a MAC to verify
that an ESRD facility meets the LVPA
eligibility criteria. Further information
regarding the administration of the
LVPA is provided in CMS Pub. 100–02,
Medicare Benefit Policy Manual,
chapter 11, section 60.B.1.
2. The United States Government
Accountability Office Study on the
LVPA
The Medicare Improvements for
Patients and Providers Act of 2008
(MIPPA) required the United States
Government Accountability Office (the
GAO) to study the LVPA. The GAO
examined (1) the extent to which the
LVPA targeted low-volume, high-cost
facilities that appeared necessary for
ensuring access to care; and (2) CMS’s
implementation of the LVPA, including
the extent to which CMS paid the 2011
LVPA to facilities eligible to receive the
adjustment. To do this work, the GAO
reviewed Medicare claims, facilities’
annual cost reports, and data on dialysis
facilities’ locations to identify and
compare facilities that were eligible for
the LVPA with those that received the
adjustment. The GAO published a
report 13–287 on March 1, 2013,
entitled, ‘‘End-Stage Renal Disease: CMS
Should Improve Design and Strengthen
Monitoring of Low-Volume
Adjustment’’. The report found multiple
discrepancies in the identification of
low-volume facilities which are
summarized below.
a. The GAO’s Main Findings
The GAO found that many of the
facilities eligible for the LVPA were
located near other facilities, indicating
that they might not have been necessary
for ensuring access to care. They also
identified certain facilities with
relatively low-volume that were not
eligible for the LVPA but had aboveaverage costs and appeared to be
necessary for ensuring access to care.

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Lastly, they stated the design of the
LVPA provides facilities with an
adverse incentive to restrict their service
provision to avoid reaching the 4,000
treatment threshold. The GAO
calculated that Medicare overpaid an
estimated $5.3 million for the LVPA to
dialysis facilities that did not meet the
eligibility requirements established by
CMS. They indicated in their report that
the guidance that CMS issued for
implementation of the regulatory
requirements was sometimes unclear
and not always available when needed,
and the misunderstanding of LVPA
eligibility likely was exacerbated
because CMS conducted limited
monitoring of the Medicare contractors’
administration of LVPA payments.
b. The GAO’s Recommendations
In the conclusion of their study, the
GAO provided Congress with the
following recommendations: (1) To
more effectively target facilities
necessary for ensuring access to care,
the Administrator of CMS should
consider restricting the LVPA to lowvolume facilities that are isolated; (2) To
reduce the incentive for facilities to
restrict their service provision to avoid
reaching the LVPA treatment threshold,
the Administrator of CMS should
consider revisions such as changing the
LVPA to a tiered adjustment; (3) To
ensure that future LVPA payments are
made only to eligible facilities and to
rectify past overpayments, the
Administrator of CMS should take the
following four actions: require Medicare
contractors to promptly recoup 2011
LVPA payments that were made in
error; investigate any errors that
contributed to eligible facilities not
consistently receiving the 2011 LVPA
and ensure that such errors are
corrected; take steps to ensure that CMS
regulations and guidance regarding the
LVPA are clear, timely, and effectively
disseminated to both dialysis facilities
and Medicare contractors; and improve
the timeliness and efficacy of CMS’s
monitoring regarding the extent to
which Medicare contractors are
determining LVPA eligibility correctly
and promptly re-determining eligibility
when all necessary data become
available.
In response to the GAO’s
recommendations, we concurred with
the need to ensure that the LVPA is
targeted effectively at low-volume highcost facilities in areas where
beneficiaries may lack other dialysis
care options. We also agreed to take
action to ensure appropriate payment is
made in the following ways: (1)
Evaluating our policy guidance and
contractor instructions to ensure

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appropriate application of the LVPA; (2)
using multiple methods of
communication to MACs and ESRD
facilities to deliver clear and timely
guidance; and (3) improving our
monitoring of MACs and considering
measures that provide specific
expectations.
3. Clarification of the LVPA Policy
For CY 2015, we are not making
changes to the adjustment or to the
magnitude of the adjustment value. In
accordance with section 632(c) of
ATRA, for CY 2016 we will assess and
address other necessary LVPA policy
changes when we use updated data and
reevaluate all of the patient- and
facility-level adjustments together in a
regression analysis similar to the
analysis that is discussed in the CY
2011 ESRD PPS final rule (75 FR 49083).
At this time, we are not changing the
criteria in such a way that the number
of low-volume facilities would deviate
substantially from the number of
facilities originally modeled to receive
the adjustment in the first year of
implementation. This is because of the
interaction of the LVPA with other
payment adjustments under the ESRD
PPS. As discussed in the CY 2011 ESRD
PPS final rule (75 FR 49081), we
standardized the ESRD PPS base rate to
account for the payment variables and it
would not be appropriate to make
changes to one variable in the regression
when it could potentially affect the
other adjustments or the standardization
factor. However, there are two
clarifications under the LVPA policy
(discussed below) that we can address
in this year’s rulemaking that we believe
are responsive to stakeholder’s concerns
and GAO’s concern that the LVPA
should effectively target low-volume,
high cost-facilities.
a. Hospital-Based ESRD Facilities
As stated above, for purposes of
determining eligibility for the LVPA,
‘‘treatments’’ means total hemodialysis
(HD) equivalent treatments (Medicare
and non-Medicare) and for peritoneal
dialysis (PD) patients, one week of PD
is considered equivalent to 3 HD
treatments. Once a MAC receives an
attestation from an ESRD facility, it
reviews the ESRD facility’s cost reports
to verify that the facility meets the lowvolume criteria specified at 42 CFR
413.232(b). Specifically, the ESRD
facility cost report is used to verify the
total treatment count that an ESRD
facility furnishes in its fiscal year,
which includes Medicare and nonMedicare treatments. For independent
ESRD facilities, this information is
provided on Worksheet C of the Form

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CMS–265–11 form (previously Form
CMS–265–94) and for hospital-based
ESRD facilities, this information is on
Worksheet I–4 of the Form CMS–2552–
10.
After the LVPA was implemented, we
began hearing concerns from multiple
stakeholders, including members of
Congress and rural hospital-based ESRD
facilities, about the MACs’ LVPA
eligibility determinations. The
stakeholders indicated that because
hospital-based ESRD facilities are
financially integrated with a hospital,
their costs and treatment data are
aggregated in the I-series of the
hospital’s cost report. This means that if
there is more than one ESRD facility
that is affiliated with a hospital, the cost
and treatment data for all facilities are
aggregated on Worksheet I–4, typically
causing the facilities’ treatment counts
to exceed the 4,000-treatment criterion.
We have learned that some MACs
accepted treatment counts from
hospital-based ESRD facilities other
than those provided on the hospital’s
cost report and, as a result, certain
hospital-based ESRD facilities received
the LVPA. Other MACs solely used the
aggregated treatment counts from the
hospital’s cost report to verify LVPA
eligibility, which resulted in denials for
many hospital-based facilities that
would have qualified for the adjustment
if the MACs had considered other
supporting documentation.
We agree with stakeholders that
limiting the MAC review to the hospital
cost reports for verification of LVPA
eligibility for hospital-based ESRD
facilities places these facilities at a
disadvantage and does not comport with
the intent of our policy. We believe it
can be necessary for MACs to use other
supporting data to verify the treatment
counts for individual hospital-based
facilities that would meet the eligibility
criteria for the LVPA if their treatment
counts had not been aggregated with
one or more other facilities on their
hospitals’ cost reports. Because LVPA
eligibility is based on cost report
information and the individual hospitalbased facility treatment counts is the
source of the aggregated treatment
counts reported in the cost report,
however, we continue to believe that
cost report data is an integral part of the
process of verifying whether a hospitalbased facility meets the LVPA eligibility
criteria.
For these reasons, we are clarifying
that MACs may consider other
supporting data, such as a hospitalbased facility’s total treatment count,
along with the facility’s cost reports and
attestation, to verify it meets the lowvolume eligibility criteria provided at 42

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CFR 413.232(b). The attestation should
continue to be configured around the
parent hospital’s cost reports, that is, it
should be for the same fiscal periods.
The MAC can consider other supporting
data in addition to the total treatments
reported in each of the 12-consecutive
month cost reports, such as the
individual facility’s total treatment
counts, rather than the hospital’s cost
report alone, to verify the number of
treatments that were furnished by the
individual hospital-based facility that is
seeking the adjustment. Consistent with
this policy clarification, hospital-based
ESRD facilities’ eligibility for the LVPA
should be determined at an individual
facility level and their total treatment
counts should not be aggregated with
other ESRD facilities that are affiliated
with the hospital unless the affiliated
facilities are commonly owned and
within 25 miles.
MACs have discretion as to the format
of the attestation and any supporting
data, however, the facility must provide
the total number of Medicare and nonMedicare treatments for the three cost
reporting years preceding the payment
year for all of the hospital-based
facilities for which treatment counts
appear on the hospital’s cost report.
This will allow MACs to determine
which treatments on the cost report
were furnished by the individual
hospital-based facility that is seeking
the LVPA and which treatments were
furnished by other affiliated facilities.
Finally, we shall amend the regulation
text by adding a new paragraph (h)(1) to
§ 413.232 to reflect this clarification of
current policy under which MACs can
verify hospital-based ESRD facilities’
eligibility for the LVPA using
supporting data in addition to hospital
cost reports.
b. Cost Reporting Periods Used for
Eligibility
In the CY 2012 ESRD PPS final rule
(76 FR 70236), we clarified that for
purposes of eligibility under 42 CFR
413.232(b), we base eligibility on the
three years preceding the payment year
and those years are based on cost
reporting periods. We further clarified
that the ESRD facility’s cost reports for
the cost reporting periods ending in the
three years preceding the payment year
must report costs for 12-consecutive
months.
After the LVPA was implemented, we
began hearing concerns from the
industry that there is a conflict within
our policy. Currently, our policy allows
an ESRD facility to remain eligible for
the LVPA when they have a change of
ownership (CHOW) that does not result
in a new Provider Transaction Access

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Number (PTAN). However, our
regulations at § 413.232(b) suggest that
MACs must verify treatment counts
using cost reports for 12-consecutive
month cost periods even though
CHOWs often result in costs reports that
are nonstandard, that is, longer or
shorter than 12 months. In particular,
the previous owner’s final cost report
may not coincide with the ESRD
facility’s cost report fiscal year end
under its new ownership, resulting in
two costs reports that are not 12consecutive month cost reports. For
example, where a CHOW occurs in the
middle of the cost reporting period and
the new owner wishes to retain the
established cost report fiscal year end,
the previous owner submits a final cost
report covering their period of
ownership and the new owner submits
a cost report covering the remainder of
the cost reporting period. Alternatively,
a new owner could also choose not to
retain the previous owner’s established
cost reporting fiscal year end, in which
case the CHOW could result in a cost
reports that exceed twelve months when
combined. Further details regarding the
policies for filing cost reports during a
CHOW are available in the Provider
Reimbursement Manual—Part 1, chapter
15, ‘‘Change of Ownership.’’
We are clarifying the policies
governing LVPA that may prevent an
otherwise qualified ESRD facility from
receiving the adjustment. We have
always intended that if an ESRD facility
has a CHOW where the new owner
accepts the previous owner’s assets and
liabilities by retaining the facility’s
PTAN, they should continue to be
eligible for the LVPA. However, some
MACs used a strict reading of the
regulatory language and denied these
ESRD facilities the LVPA. Other MACs
added short cost reports together or
prorated treatment counts for cost
reporting periods spanning greater than
12 months.
In order to ensure consistent
verification of LVPA eligibility, we are
restating our intention that when there
is a CHOW that does not result in a new
PTAN but creates two non-standard cost
reporting periods (that is, periods that
are shorter or longer than 12 months)
the MAC is either to add the two nonstandard cost reporting periods together
where combined they would equal 12consecutive months or prorate the data
when they would exceed 12-consecutive
months to determine the total
treatments furnished for a full cost
reporting period as if there had not been
a CHOW.
For example, prior to a CHOW,
Facility A had a cost reporting period
that spanned January 1 through

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December 31. Facility A had a CHOW
mid-year that did not result in a new
PTAN but caused a break in the cost
reporting period. Consistent with the
clarification of our policy, the MAC
would add Facility A’s cost report that
spanned January 1 through May 31 to its
cost report that spanned June 1 through
December 31 to verify the total
treatment count.
The other situation that could occur is
when a CHOW results in a change of the
original fiscal period. For example, prior
to a CHOW, Facility B had a cost
reporting period that spanned January 1
through December 31 and, based on its
cost reports for 2012 and 2013; it met
the LVPA eligibility criteria. Then,
Facility B had a CHOW in the beginning
of 2014 that did not result in a new
PTAN, but changed its cost reporting
period to that of its new owner, October
1, 2014 through September 30, 2015.
This scenario would create a short and
a long cost report that would not total
12 months that the MAC would need to
review for verification. That is, Facility
B would have a cost report that spanned
January 1, 2014 through July 31, 2014 (7
months) and a cost report that spanned
August 1, 2014 through September 30,
2015 (14 months).
In this situation, the MAC should
combine the two non-standard cost
reporting periods that in combination
may exceed 12-consecutive months and
prorate the data to equal a full 12consecutive month period. Finally, we
shall amend the regulation text by
adding a new paragraph (h)(2) to
§ 413.232 to clarify the verification
process for ESRD facilities that
experience a CHOW with no change in
the PTAN.
Section 413.232(f) requires ESRD
facilities to submit LVPA attestations by
November 1 of each year. However, the
changes we are finalizing to the LVPA
regulation text would not be finalized in
enough time to give the ESRD facilities
the opportunity to learn about the
policy clarifications and provide an
attestation to their MAC by November 1,
2014. For these reasons, we are
amending § 413.232(f) to extend the
deadline for CY 2015 LVPA attestations
until December 31, 2014. This
timeframe would allow ESRD facilities
to reassess their eligibility and apply for
the LVPA for CY 2015. It would also
give MACs an opportunity to verify any
new attestations and reassess LVPA
eligibility verifications made since 2011.
We will issue guidance with additional
detail regarding this policy clarification,
which will include details about the
process ESRD facilities should follow to
seek the LVPA for past years.

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Comment: Commenters were largely
supportive of our policy clarification
and proposed regulation changes
regarding the facility eligibility
requirements for the LVPA available
under the ESRD PPS. A few commenter
encouraged CMS to ‘‘redesign’’ the
LVPA adjustment during the CY 2016
rulemaking, which will include
refinements of the payment system. One
commenter encouraged CMS to consider
a facility’s distance to the nearest
facility and develop and rural
adjustment factor as part of the
adjustment. Other commenters urged
CMS to implement the GAO
recommendations. Some commenters
encouraged CMS to consider travel time
as well as distance in their
consideration of the aggregate number of
treatments furnished by ESRD facilities
within 25 miles of each other under
common ownership, and other
commenters suggested that CMS
identify critical access facilities and
consider changes to the LVPA to protect
access to isolated essential facilities.
Another commenter asked that CMS
consider a larger adjustment for those
facilities that are more than 50 miles
from the closest dialysis facilities, as
closure of these facilities would create
particular hardship for patients.
Response: We thank the commenters
for their support of our policy
clarification and supporting regulation
changes. We will finalize these
provisions as proposed. In addition, we
thank the commenters for their
suggestions in computing a low-volume
payment adjustment in the future, and
we will consider these comments for
purposes of refinement in CY 2016.
Comment: A few commenters thanked
CMS for extending the attestation filing
deadline to December 31 so that affected
facilities would have enough time to
gather any supporting documentation
necessary for determining a facility’s
total treatment count. Another
commenter suggested that CMS further
clarify what years a facility is able to reattest for LVPA eligibility. One
commenter cited an independent study
claiming that over 1,000 facilities with
treatment counts of less than 3,200 were
not identified as low-volume facilities
under the ESRD PPS.
Response: We thank the commenters
for their support and agree that
extending the deadline by 60 days will
allow facilitates to gather any
documentation that supports a facility’s
treatment count. In addition, we clarify
that facilities that believe they have
been denied the LVPA payment
adjustment under the ESRD PPS may
attest to any of the payment years since
CY 2011. We thank the commenter who

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furnished independent data and plan to
consider treatment count thresholds as
part of our policy refinement in CY
2016.
Comment: One commenter
recommended that CMS specify which
years MACs will be required to reassess
for incorrect determinations. In
addition, as some MACs have advised
ESRD facilities not to submit an
application due to perceived
ineligibility, they recommend CMS
allow these facilities that did not file
attestations to do so for prior years and
receive a determination from the MAC.
Response: ESRD facilities that did not
submit an attestation for CY 2011
through CY 2014 due to perceived
ineligibility, but which now believe
they qualify for the LVPA based upon
our policy clarifications, should submit
an attestation to their MAC for a
determination. Likewise, facilities that
submitted attestations and were denied,
but now believe they qualify based upon
the policy clarifications, should submit
an attestation to their MAC for a
redetermination.
Comment: One commenter supports
allowing the submission of additional
data for all types of facilities, not only
those that are hospital-based, because
the commenter indicated such data
could help the contractors more
effectively identify facilities that qualify
for the LVPA. The commenter indicated
that more can and should be done to
make sure that MACs are appropriately
evaluating facilities to ensure accurate
determinations.
Response: We will consider this
suggestion as part of the ESRD PPS
refinement. In the meantime, we are
planning to issue additional subregulatory guidance to MACs in an
effort to ensure accurate LVPA
determinations. We thank the
commenter for their support and are
finalizing the revision to § 413.232(f) to
extend the deadline for CY 2015 LVPA
attestations until December 31, 2014.
H. Continued Use of ICD–9–CM Codes
and Corrections to the ICD–10–CM
Codes Eligible for the Co-morbidity
Payment Adjustment
Section 1881(b)(14)(D)(i) of the Act
requires that the ESRD PPS include a
payment adjustment based upon casemix that may take into account, among
other things, patient co-morbidities. Comorbidities are specific patient
conditions that coexist with the
patient’s principal diagnosis that
necessitates dialysis. The co-morbidity
payment adjustments recognize the
increased costs associated with comorbidities and provide additional
payment for certain conditions that

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occur concurrently with the need for
dialysis. For a detailed discussion of our
approach to developing the comorbidity payment adjustment, see the
CY 2011 ESRD PPS final rule (75 FR
49094 through 49108).
In the CY 2011 ESRD PPS final rule,
we finalized six co-morbidity categories
that are eligible for a co-morbidity
payment adjustment, each with
associated International Classification of
Diseases, 9th Revision, Clinical
Modification (ICD–9–CM) diagnosis
codes (75 FR 49100). These categories
include three acute, short-term
diagnostic categories (pericarditis,
bacterial pneumonia, and
gastrointestinal tract bleeding with
hemorrhage) and three chronic
diagnostic categories (hereditary
hemolytic sickle cell anemia,
myelodysplastic syndrome, and
monoclonal gammopathy). The comorbidity categories eligible for an
adjustment and their associated ICD–9–
CM codes were published in the
Appendix of the CY 2011 ESRD PPS
final rule as Table E: ICD–9–CM-Codes
Recognized for the Comorbidity
Payment Adjustment (75 FR 49211).
In the CY 2012 ESRD PPS final rule
(76 FR 70252), we clarified that the
ICD–9–CM codes eligible for the comorbidity payment adjustment are
subject to the annual ICD–9–CM coding
updates that occur in the hospital IPPS
final rule and are effective October 1st
every year. We explained that any
updates to the ICD–9–CM codes that
affect the categories of co-morbidities
and the diagnoses within the comorbidity categories that are eligible for
a co-morbidity payment adjustment
would be communicated to ESRD
facilities through sub-regulatory
guidance. Together with the rest of the
healthcare industry, CMS was
scheduled to implement the 10th
revision of the ICD coding scheme, that
is, ICD–10–CM, on October 1, 2014.
Hence, in the CY 2014 ESRD PPS (78 FR
72175 through 72179), we finalized a
policy that ICD–10–CM codes will be
eligible for a co-morbidity payment
adjustment where they crosswalk from
ICD–9–CM codes that are eligible for a
co-morbidity payment adjustment, with
two exceptions.
On April 1, 2014, PAMA was enacted.
Section 212 of PAMA, titled ‘‘Delay in
Transition from ICD–9–CM to ICD–10–
CM Code Sets,’’ provides that ‘‘[t]he
Secretary of Health and Human Services
may not, prior to October 1, 2015, adopt
ICD–10–CM code sets as the standard
for code sets under section 1173(c) of
the Social Security Act (42 U.S.C.
1320d–2(c)) and § 162.1002 of title 45,
Code of Federal Regulations.’’ On May

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1, 2014, the Secretary announced that
HHS expected to issue an interim final
rule that would require use of ICD–10–
CM beginning October 1, 2015 and
continue to require use of ICD–9–CM
through September 30, 2015. This
announcement is available on the CMS
Web site at http://cms.gov/Medicare/
Coding/ICD10/index.html.
Since the publication of the CY 2015
ESRD PPS proposed rule on July 11,
2014, HHS finalized the new
compliance date of October 1, 2015 for
ICD–10–CM and ICD–10–PCS in an
August 4, 2014 final rule titled
‘‘Administrative Simplification: Change
to the Compliance Date for the
International Classification of Diseases,
10th Revision (ICD–10–CM and ICD–
10–PCS).’’ The rule also requires HIPAA
covered entities to continue to use ICD–
9 through September 30, 2015.
Before the passage of PAMA, our
policy required facilities to utilize ICD–
10–CM codes to identify co-morbidities
eligible for the co-morbidity payment
adjustment beginning October 1, 2014.
However, in light of section 212 of
PAMA and the Secretary’s
announcement of the new compliance
date for ICD–10, we proposed to require
use of ICD–10–CM to identify comorbidities beginning on October 1,
2015, and, until that time, we would

continue to require use of the ICD–9–
CM codes to identify co-morbidities
eligible for the co-morbidity payment
adjustment. The ICD–9–CM codes that
are eligible for the co-morbidity
payment adjustment are listed in the
crosswalk tables below.
Because facilities will begin using
ICD–10–CM during the calendar year to
which this rule applies, we are
correcting several typographical errors
and omissions in the Tables that
appeared in the CY 2015 ESRD PPS
final rule. First, we are correcting one
ICD–9–CM diagnosis code that was
incorrectly identified due to a
typographical error in Table 1—ONE
ICD–9–CM CODE CROSSWALKS TO
ONE ICD–10–CM CODE (78 FR 72176).
In Table 2—ONE ICD–9–CM CODE
CROSSWALKS TO MULTIPLE ICD–10–
CM CODES (78 FR 72177), we are
correcting two ICD–10–CM codes
because of typographical errors and
finalizing two additional ICD–10–CM
codes that were inadvertently omitted
from the crosswalk. Lastly, in Table 3—
MULTIPLE ICD–9–CM CODES
CROSSWALK TO ONE ICD–10–CM
CODE (78 FR 72178), we are including
9 additional ICD–10–CM crosswalk
codes for eligibility for the comorbidity
payment adjustment. These codes were
omitted in error from the CY 2014 ESRD

66155

PPS final rule, and we have furnished
an updated Table 15 below reflecting
the additional codes.
We note that the ICD–10–CM codes
that facilities will be required to use to
identify eligible co-morbidities when
ICD–10–CM becomes the required
medical data code set on October 1,
2015 are those that were finalized in the
CY 2014 ESRD PPS final rule at 78 FR
72175 to 78 FR 72179 with the
corrections and proposed additions
included below.
Table 15—ONE ICD–9–CM CODE
CROSSWALKS TO ONE ICD–10–CM
CODE (78 FR 72175 Through 78 FR
72176)
Table 15 lists all the instances in
which one ICD–9–CM code crosswalks
to one ICD–10–CM code. We finalized a
policy in last year’s rule that all
identified ICD–10–CM codes would
receive a co-morbidity adjustment with
the exception of K52.81 Eosinophilic
gastritis or gastroenteritis. We have
since discovered that under the section
titled Myelodysplastic Syndrome, ICD–
9–CM code 238.7 Essential
thrombocythemia was in accurately
identified. The table below has been
amended to accurately identify ICD–9–
CM diagnostic code 238.71 Essential
thrombocythemia.

TABLE 15—ONE ICD–9–CM CODE CROSSWALKS TO ONE ICD–10–CM CODE
ICD–9

Descriptor

ICD–10

Descriptor

Gastrointestinal Bleeding
530.21
535.71
537.83
569.85

Descriptor Ulcer of esophagus with bleeding ............................
Eosinophilic gastritis, with hemorrhage .....................................
Angiodysplasia of stomach and duodenum with hemorrhage ..
Angiodysplasia of intestine with hemorrhage ............................

K22.11 Descriptor Ulcer of esophagus with bleeding.
K52.81 Eosinophilic gastritis or gastroenteritis.
K31.811 Angiodysplasia of stomach and duodenum with bleeding.
K55.21 Angiodysplasia of colon with hemorrhage.

Bacterial Pneumonia

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003.22 Salmonella pneumonia ..............................................................
482.0 Pneumonia due to Klebsiella pneumonia ....................................
482.1 Pneumonia due to Pseudomonas ...............................................
482.2 Pneumonia due to Hemophilus influenzae [H. influenzae] .........
482.32 Pneumonia due to Streptococcus, group B ...............................
482.40 Pneumonia due to Staphylococcus, unspecified .......................
482.41 Methicillin susceptible pneumonia due to Staphylococcus
aureus.
482.42 Methicillin resistant pneumonia due to Staphylococcus aureus
482.49
482.82
482.83
482.84
507.0
507.8
510.0
510.9

Other Staphylococcus pneumonia .............................................
Pneumonia due to escherichia coli [E. coli] ..............................
Pneumonia due to other gram-negative bacteria ......................
Pneumonia due to Legionnaires’ disease .................................
Pneumonitis due to inhalation of food or vomitus .......................
Pneumonitis due to other solids and liquids ................................
Empyema with fistula ...................................................................
Empyema without mention of fistula ............................................

A02.22 Salmonella pneumonia.
J15.0 Pneumonia due to Klebsiella pneumoniae.
J15.1 Pneumonia due to Pseudomonas.
J14 Pneumonia due to Hemophilus influenzae.
J15.3 Pneumonia due to streptococcus, group B.
J15.20 Pneumonia due to staphylococcus, unspecified.
J15.211 Pneumonia due to Methicillin susceptible Staphylococcus
aureus.
J15.212 Pneumonia due to Methicillin resistant Staphylococcus
aureus.
J15.29 Pneumonia due to other staphylococcus.
J15.5 Pneumonia due to Escherichia coli.
J15.6 Pneumonia due to other aerobic Gram-negative bacteria.
A48.1 Legionnaires’ disease.
J69.0 Pneumonitis due to inhalation of food and vomit.
J69.8 Pneumonitis due to inhalation of other solids and liquids.
J86.0 Pyothorax with fistula.
J86.9 Pyothorax without fistula.

Pericarditis
420.91

Acute idiopathic pericarditis .......................................................

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I30.0

Acute nonspecific idiopathic pericarditis.

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TABLE 15—ONE ICD–9–CM CODE CROSSWALKS TO ONE ICD–10–CM CODE—Continued
ICD–9

Descriptor

ICD–10

Descriptor

Hereditary Hemolytic and Sickle Cell Anemia
282.0 Hereditary spherocytosis .............................................................
282.1 Hereditary elliptocytosis ...............................................................
282.41 Sickle-cell thalassemia without crisis .........................................
282.43 Alpha thalassemia ......................................................................
282.44 Beta thalassemia .......................................................................
282.45 Delta-beta thalassemia ..............................................................
282.46 Thalassemia minor .....................................................................
282.47 Hemoglobin E-beta thalassemia ................................................
282.49 Other thalassemia ......................................................................
282.61 Hb-SS disease without crisis .....................................................
282.63 Sickle-cell/Hb-C disease without crisis ......................................
282.68 Other sickle-cell disease without crisis ......................................

D58.0
D58.1
D57.40
D56.0
D56.1
D56.2
D56.3
D56.5
D56.8
D57.1
D57.20
D57.80

Hereditary spherocytosis.
Hereditary elliptocytosis.
Sickle-cell thalassemia without crisis.
Alpha thalassemia.
Beta thalassemia.
Delta-beta thalassemia.
Thalassemia minor.
Hemoglobin E-beta thalassemia.
Other thalassemias.
Sickle-cell disease without crisis.
Sickle-cell/Hb-C disease without crisis.
Other sickle-cell disorders without crisis.

Myelodysplastic Syndrome
238.71
238.73
238.74

Essential thrombocythemia ........................................................
High grade myelodysplastic syndrome lesions .........................
Myelodysplastic syndrome with 5q deletion ..............................

238.76

Myelofibrosis with myeloid metaplasia ......................................

Table 16—ONE ICD–9–CM CODE
CROSSWALKS TO MULTIPLE ICD–10–
CM CODES (78 FR 72177 Through 78
FR 72178)
Table 16 lists all of the instances in
which one ICD–9–CM code crosswalks
to multiple ICD–10–CM codes. We
finalized a policy in last year’s rule that
all identified ICD–10–CM codes would
receive a co-morbidity adjustment with
the exception of D89.2
Hypergammaglobulinemia, unspecified.
Under the section titled Gastrointestinal
Bleeding, ICD–9–CM code 562
Diverticulosis of small intestine with
hemorrhage was in accurately

D47.3 Essential (hemorrhagic) thrombocythemia.
D46.22 Refractory anemia with excess of blasts 2.
D46.C Myelodysplastic syndrome with isolated del(5q) chromosomal
abnormality.
D47.1 Chronic myeloproliferative disease.

identified, as the complete code number
is 562.02. The table below has been
amended to accurately identify ICD–9–
CM diagnostic code 562.02
Diverticulosis of small intestine with
hemorrhage.
Also under the section titled
Gastrointestinal Bleeding, ICD–9–CM
diagnostic code 562.13 Diverticulitis of
colon with hemorrhage did not include
a complete crosswalk to ICD–10–CM
diagnostic codes. Therefore, we are
including ICD–10–CM diagnostic codes
K57.81 Diverticulitis of intestine, part
unspecified, with perforation and
abscess with bleeding and K57.93
Diverticulitis of intestine, part

unspecified, without perforation or
abscess with bleeding, in addition to the
ICD–10–CM diagnostic codes K57.21,
K57.33, K57.41, and K57.53, as eligible
for the co-morbidity payment
adjustment when the use of ICD–10–CM
is required, on October 1, 2015.
Under the section titled Pericarditis,
ICD–10–CM code 130.1 Infective
pericarditis was inaccurately identified.
The table below has been amended to
accurately identify the ICD–10–CM
diagnostic code I30.1 Infective
pericarditis as eligible for a comorbidity payment adjustment when
the use of ICD–10–CM is required, on
October 1, 2015.

TABLE 16—ONE ICD–9–CM CODE CROSSWALKS TO MULTIPLE ICD–10–CM CODES
ICD–9

Descriptor

ICD–10

Descriptor

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Gastrointestinal Bleeding
562.02

Diverticulosis of small intestine with hemorrhage .....................

562.03

Diverticulitis of small intestine with hemorrhage .......................

562.12

Diverticulosis of colon with hemorrhage ....................................

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K57.11 Diverticulosis of small intestine without perforation or abscess
with bleeding.
K57.51 Diverticulosis of both small and large intestine without perforation or abscess with bleeding.
K57.01 Diverticulitis of small intestine with perforation and abscess
with bleeding.
K57.13 Diverticulitis of small intestine without perforation or abscess
with bleeding.
K57.41 Diverticulitis of both small and large intestine with perforation
and abscess with bleeding.
K57.53 Diverticulitis of both small and large intestine without perforation or abscess with bleeding.
K57.31 Diverticulosis of large intestine without perforation or abscess
with bleeding.
K57.91 Diverticulosis of intestine, part unspecified, without perforation
or abscess with bleeding.
K57.51 Diverticulosis of both small and large intestine without perforation or abscess with bleeding.

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66157

TABLE 16—ONE ICD–9–CM CODE CROSSWALKS TO MULTIPLE ICD–10–CM CODES—Continued
ICD–9
562.13

Descriptor

ICD–10

Diverticulitis of colon with hemorrhage ......................................

Descriptor

K57.21 Diverticulitis of large intestine with perforation and abscess
with bleeding.
K57.33 Diverticulitis of large intestine without perforation or abscess
with bleeding.
K57.41 Diverticulitis of both small and large intestine with perforation
and abscess with bleeding.
K57.53 Diverticulitis of both small and large intestine without perforation or abscess with bleeding.
K57.81 Diverticulitis of intestine, part unspecified, with perforation and
abscess with bleeding.
K57.93 Diverticulitis of intestine, part unspecified, without perforation
or abscess with bleeding.

Bacterial Pneumonia
513.0

Abscess of lung ...........................................................................

J85.0 Gangrene and necrosis of lung.
J85.1 Abscess of lung with pneumonia.
J85.2 Abscess of lung without pneumonia.

Pericarditis
420.0

Acute pericarditis in diseases classified elsewhere ....................

420.90

Acute pericarditis, unspecified ...................................................

420.99

Other acute pericarditis ..............................................................

A18.84 Tuberculosis of heart.
I32 Pericarditis in diseases classified elsewhere.
M32.12 Pericarditis in systemic lupus erythematosus.
I30.1 Infective pericarditis.
I30.9 Acute pericarditis, unspecified.
I30.8 Other forms of acute pericarditis.
I30.9 Acute pericarditis, unspecified.

Hereditary Hemolytic and Sickle Cell Anemia
282.2

Anemias due to disorders of glutathione metabolism .................

282.3

Other hemolytic anemias due to enzyme deficiency ...................

282.42

Sickle-cell thalassemia with crisis ..............................................

282.62

Hb-SS disease with crisis ..........................................................

282.64

Sickle-cell/Hb-C disease with crisis ...........................................

282.69

Other sickle-cell disease with crisis ...........................................

D55.0 Anemia due to glucose-6-phosphate dehydrogenase [G6PD]
deficiency.
D55.1 Anemia due to other disorders of glutathione metabolism.
D55.2 Anemia due to disorders of glycolytic enzymes.
D55.3 Anemia due to disorders of nucleotide metabolism.
D55.8 Other anemias due to enzyme disorders.
D55.9 Anemia due to enzyme disorder, unspecified.
D57.411 Sickle-cell thalassemia with acute chest syndrome.
D57.412 Sickle-cell thalassemia with splenic sequestration.
D57.419 Sickle-cell thalassemia with crisis, unspecified.
D57.00 Hb-SS disease with crisis, unspecified.
D57.01 Hb-SS disease with acute chest syndrome.
D57.02 Hb-SS disease with splenic sequestration.
D57.211 Sickle-cell/Hb-C disease with acute chest syndrome.
D57.212 Sickle-cell/Hb-C disease with splenic sequestration.
D57.219 Sickle-cell/Hb-C disease with crisis, unspecified.
D57.811 Other sickle-cell disorders with acute chest syndrome.
D57.812 Other sickle-cell disorders with splenic sequestration.
D57.819 Other sickle-cell disorders with crisis, unspecified.

Monoclonal Gammopathy
273.1

Monoclonal paraproteinemia ........................................................

D47.2 Monoclonal gammopathy.
D89.2 Hypergammaglobulinemia, unspecified.

tkelley on DSK3SPTVN1PROD with RULES3

Myelodysplastic Syndrome
238.72

Low grade myelodysplastic syndrome lesions ..........................

238.75

Myelodysplastic syndrome, unspecified ....................................

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D46.0 Refractory anemia without ring sideroblasts, so stated.
D46.1 Refractory anemia with ring sideroblasts.
D46.20 Refractory anemia with excess of blasts, unspecified.
D46.21 Refractory anemia with excess of blasts 1.
D46.4 Refractory anemia, unspecified.
D46.A Refractory cytopenia with multilineage dysplasia.
D46.B Refractory cytopenia with multilineage dysplasia and ring
sideroblasts.
D46.9 Myelodysplastic syndrome, unspecified.
D46.Z Other myelodysplastic syndromes.

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Table 17—MULTIPLE ICD–9–CM
CODES CROSSWALK TO ONE ICD–10–
CM CODE (78 FR 72178)
Table 17 displays the crosswalk
where multiple ICD–9–CM codes
crosswalk to one ICD–10–CM code. We
finalized a policy in last year’s rule that
all of the ICD–10–CM codes listed in
Table 3 would be eligible for the comorbidity payment adjustment. Under
the section titled Gastrointestinal
Bleeding, nine ICD–10–CM codes (K25.0
Acute gastric ulcer with hemorrhage,

K25.2 Acute gastric ulcer with both
hemorrhage and perforation, K25.4
Chronic or unspecified gastric ulcer
with hemorrhage, K25.6 Chronic or
unspecified gastric ulcer with both
hemorrhage and perforation, K26.0
Acute duodenal ulcer with hemorrhage,
K26.2 Acute duodenal ulcer with both
hemorrhage and perforation, K26.4
Chronic or unspecified duodenal ulcer
with hemorrhage, K26.6 Chronic or
unspecified duodenal ulcer with both
hemorrhage and perforation, and K27.0
Acute peptic ulcer, site unspecified,

with hemorrhage) and the
corresponding ICD–9–CM codes were
inadvertently omitted from the
crosswalk. Therefore, we are finalizing
ICD–10–CM diagnostic codes—K25.0,
K25.2, K25.4, K25.6, K26.0, K26.2,
K26.4, K26.6, K27.0—will be eligible for
the comorbidity payment adjustment
beginning October 1, 2015. We also
finalize that the corresponding ICD–9–
CM codes will be eligible for the
comorbidity adjustment through
September 30, 2015.

TABLE 17—MULTIPLE ICD–9–CM CODES CROSSWALK TO ONE ICD–10–CM CODE
ICD–9

Descriptor

ICD–10

Descriptor

tkelley on DSK3SPTVN1PROD with RULES3

Gastrointestinal Bleeding
531.00 Acute gastric ulcer with hemorrhage, without mention of obstruction.
531.01 Acute gastric ulcer with hemorrhage, with obstruction.
531.20 Acute gastric ulcer with hemorrhage and perforation, without
mention of obstruction.
531.21 Acute gastric ulcer with hemorrhage and perforation, with obstruction.
531.40 Chronic or unspecified gastric ulcer with hemorrhage, without
mention of obstruction.
531.41 Chronic or unspecified gastric ulcer with hemorrhage, with obstruction.
531.60 Chronic or unspecified gastric ulcer with hemorrhage and perforation, without mention of obstruction.
531.61 Chronic or unspecified gastric ulcer with hemorrhage and perforation, with obstruction.
532.00 Acute duodenal ulcer with hemorrhage, without mention of obstruction.
532.01 Acute duodenal ulcer with hemorrhage, with obstruction.
532.20 Acute duodenal ulcer with hemorrhage and perforation, without mention of obstruction.
532.21 Acute duodenal ulcer with hemorrhage and perforation, with
obstruction.
532.40 Chronic or unspecified duodenal ulcer with hemorrhage, without mention of obstruction.
532.41 Chronic or unspecified duodenal ulcer with hemorrhage, with
obstruction.
532.60 Chronic or unspecified duodenal ulcer with hemorrhage and
perforation, without mention of obstruction.
532.61 Chronic or unspecified duodenal ulcer with hemorrhage and
perforation, with obstruction.
533.00 Acute peptic ulcer of unspecified site with hemorrhage, without mention of obstruction.
533.01 Acute peptic ulcer of unspecified site with hemorrhage, with
obstruction.
533.20 Acute peptic ulcer of unspecified site with hemorrhage and
perforation, without mention of obstruction.
533.21 Acute peptic ulcer of unspecified site with hemorrhage and
perforation, with obstruction.
533.40 Chronic or unspecified peptic ulcer of unspecified site with
hemorrhage, without mention of obstruction.
533.41 Chronic or unspecified peptic ulcer of unspecified site with
hemorrhage, with obstruction.
533.60 Chronic or unspecified peptic ulcer of unspecified site with
hemorrhage and perforation, without mention of obstruction.
533.61 Chronic or unspecified peptic ulcer of unspecified site with
hemorrhage and perforation, with obstruction.
534.00 Acute gastrojejunal ulcer with hemorrhage, without mention of
obstruction.
534.01 Acute gastrojejunal ulcer, with hemorrhage, with obstruction.
534.20 Acute gastrojejunal ulcer with hemorrhage and perforation,
without mention of obstruction.
534.21 Acute gastrojejunal ulcer with hemorrhage and perforation,
with obstruction.

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K25.0

Acute gastric ulcer with hemorrhage.

K25.2

Acute gastric ulcer with both hemorrhage and perforation.

K25.4

Chronic or unspecified gastric ulcer with hemorrhage.

K25.6 Chronic or unspecified gastric ulcer with both hemorrhage and
perforation.
K26.0

Acute duodenal ulcer with hemorrhage.

K26.2

Acute duodenal ulcer with both hemorrhage and perforation.

K26.4

Chronic or unspecified duodenal ulcer with hemorrhage.

K26.6 Chronic or unspecified duodenal ulcer with both hemorrhage
and perforation.
K27.0

Acute peptic ulcer, site unspecified, with hemorrhage.

K27.2 Acute peptic ulcer, site unspecified, with both hemorrhage and
perforation.
K27.4 Chronic or unspecified peptic ulcer, site unspecified, with hemorrhage.
K27.6 Chronic or unspecified peptic ulcer, site unspecified, with both
hemorrhage and perforation.
K28.0

Acute gastrojejunal ulcer with hemorrhage.

K28.2 Acute gastrojejunal ulcer with both hemorrhage and perforation.

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TABLE 17—MULTIPLE ICD–9–CM CODES CROSSWALK TO ONE ICD–10–CM CODE—Continued
ICD–9

Descriptor

ICD–10

534.40 Chronic or unspecified gastrojejunal ulcer
without mention of obstruction.
534.41 Chronic or unspecified gastrojejunal ulcer,
with obstruction.
534.60 Chronic or unspecified gastrojejunal ulcer
and perforation, without mention of obstruction.
534.61 Chronic or unspecified gastrojejunal ulcer
and perforation, with obstruction.

with hemorrhage,

K28.4

Descriptor

Chronic or unspecified gastrojejunal ulcer with hemorrhage.

with hemorrhage,
with hemorrhage

K28.6 Chronic or unspecified gastrojejunal ulcer with both hemorrhage and perforation.

with hemorrhage
Bacterial Pneumonia

482.30
482.31
482.39
482.81
482.89

Pneumonia
Pneumonia
Pneumonia
Pneumonia
Pneumonia

due
due
due
due
due

to
to
to
to
to

Streptococcus, unspecified .........................
Streptococcus, group A.
other Streptococcus.
anaerobes ...................................................
other specified bacteria.

We received no comments on our
proposals to amend or modify our ICD–
9–CM/ICD–10–CM crosswalk and,
therefore, we are finalizing these
changes as proposed.
III. End-Stage Renal Disease (ESRD)
Quality Incentive Program (QIP)

tkelley on DSK3SPTVN1PROD with RULES3

A. Background
For more than 30 years, monitoring
the quality of care provided by dialysis
facilities to patients with end-stage renal
disease (ESRD) 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 1881(h) of the
Social Security Act (the Act), which was
added by section 153(c) of the Medicare
Improvements for Patients and
Providers Act (MIPPA).
Specifically, section 1881(h) requires
the Secretary to establish an ESRD QIP
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 (TPS). The proposed
rule, titled ‘‘Medicare Program; EndStage Renal Disease Prospective
Payment System, Quality Incentive
Program, and Durable Medical
Equipment, Prosthetics, Orthotics, and
Supplies’’ (79 FR 40208 through 40315),

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Pneumonia due to other streptococci.

J15.8

Pneumonia due to other specified bacteria.

(hereinafter referred to as the CY 2015
ESRD PPS Proposed Rule), was
published in the Federal Register on
July 11, 2014, with a comment period
that ended on September 2, 2014. In that
proposed rule, we made proposals for
the ESRD QIP, including adding new
measures, revising existing measures;
refining the scoring methodology;
modifying the program’s public
reporting requirements; continuing the
data validation pilot program for
CROWNWeb and introducing a
validation feasibility study for the
NHSN Bloodstream Infection clinical
measure. We received 46 public
comments on the ESRD QIP proposals,
including comments from ESRD
facilities; national renal groups,
nephrologists 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
program. Comments related to the
paperwork burden are addressed in the
‘‘Collection of Information
Requirements’’ section of this final rule.
Comments related to the impact analysis
are addressed in the ‘‘Economic
Analyses’’ section of this final rule.
B. Considerations in Updating and
Expanding Quality Measures Under the
ESRD QIP
Throughout the past decade, Medicare
has been transitioning from a program
that pays for healthcare based on
particular services furnished to a
beneficiary to a program that bases
payments to providers and suppliers on
the quality of services they furnish. By
paying for the quality of care rather than
simply the quantity of care, and by
focusing on better care and lower costs

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through improvement, prevention and
population health, expanded healthcare
coverage, and enterprise excellence, we
are strengthening the healthcare system
while also advancing the National
Strategy for Quality Improvement in
Health Care (that is, the National
Quality Strategy (NQS)). We are also
working to update a set of domains and
specific quality measures for our Value
Based Purchasing (VBP) programs, and
to link the aims of the NQS with our
payment policies on a national scale.
We are working in partnership with
beneficiaries, providers, advocacy
groups, the National Quality Forum
(NQF), the Measures Application
Partnership, operating divisions within
the Department of Health and Human
Services (HHS), and other stakeholders
to develop new measures where gaps
exist, refine measures where necessary,
and remove measures when appropriate.
We are also collaborating with
stakeholders to ensure that the ESRD
QIP serves the needs of our beneficiaries
and also advances the goals of the NQS
to improve the overall quality of care,
improve the health of the U.S.
population, and reduce the cost of
quality healthcare.3
We believe that the development of an
ESRD QIP that is successful in
supporting the delivery of high-quality
healthcare services in dialysis facilities
is paramount. We seek to adopt
measures for the ESRD QIP that promote
better, safer, and more coordinated care.
Our measure development and selection
activities for the ESRD QIP take into
account national priorities such as those
established by the HHS Strategic Plan
(http://www.hhs.gov/strategic-plan/
priorities.html), the NQS (http://
3 2013 Annual Progress Report to Congress:
National Strategy for Quality Improvement in
Health Care, http://www.ahrq.gov/
workingforquality/nqs/nqs2013annlrpt.htm.

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www.ahrq.gov/workingforquality/nqs/
nqs2013annlrpt.htm), and the HHS
National Action Plan to Prevent
Healthcare Associated Infections (HAIs)
(http://www.hhs.gov/ash/initiatives/hai/
esrd.html). To the extent feasible and
practicable, we have sought to adopt
measures that have been endorsed by a
national consensus organization;
recommended by multi-stakeholder
organizations; and developed with the
input of providers, beneficiaries, health
advocacy organizations, and other
stakeholders.
We received a number of general
comments on our proposals, which we
summarize and respond to here.
Comment: Some commenters were
concerned about the number of
measures used in the ESRD QIP.
Commenters stated that as the number
of measures in the ESRD QIP grows, so
do the costs to providers and CMS.
Commenters also stated that
implementing too many measures
dilutes the impact of poor performance
on individual measures in the ESRD
QIP. Commenters recommended that
CMS ‘‘strive to include measures that
address multiple domains of CMS’s VBP
programs and are not duplicative.’’
Response: We understand that there
are a number of measures we proposed
to be added to the ESRD QIP. One of the
reasons we proposed to adopt measures
for both PY 2017 and PY 2018 in the CY
2015 ESRD PPS Proposed Rule this rule
(and why the majority of the new
measures were proposed for adoption in
PY 2018) was to provide facilities with
a sufficient amount of time to
implement processes that would enable
them to successfully report the measure
data and achieve high scores on the
measures. Although we recognize that
adopting more measures in the ESRD
QIP increases costs to facilities as well
as CMS, we believe these increased
costs are outweighed by the benefits to
patients of incentivizing quality care in
the domains that the measures cover.
We further note that the new measures
adopted for the ESRD QIP will not
dilute the weight of the PY 2017 clinical
measure set or the PY 2018 clinical
measure set, as compared to the weights
that we assigned to the PY 2016 clinical
measure set. The PY 2017 program
contains the same amount of clinical
measures as the PY 2016 program, and
the clinical measure sets receive the
same weight in both programs.
Additionally, the weight of the clinical
measures in the PY 2018 program will
be increased from 75 percent of a
facility’s TPS (as specified in the PY
2017 program) to 90 percent, and we
believe that this added weight will
preserve the program’s strong incentives

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for facilities to achieve high scores on
the clinical measures. Finally, we agree
with commenters who recommend that,
where possible, individual ESRD QIP
measures should span multiple
domains. We agree that adopting
measures that span multiple domains,
such as the SRR measure, allows us to
address multiple aspects of quality,
reduces the total number of measures in
the ESRD QIP, and presents less burden
for facilities than adopting multiple
measures that each address a single
domain. Going forward, we will
continue to strive to ensure that the
ESRD QIP measure set is as
parsimonious as possible.
Comment: Some commenters
requested that CMS explore new
methods of adjusting quality metrics for
patient case mix, because ESRD QIP
measures, as currently specified, place
facilities treating sicker patients at a
disadvantage. For example, dialysis
patients who are admitted to nursing
homes and long-term care hospitals
(LTCHs) often still receive their ESRD
treatment at the dialysis facility. These
patients are ‘‘inherently sicker and
require more care than the general
dialysis population.’’ Therefore, dialysis
facilities that only treat patients who are
admitted to LTCHs or nursing homes are
at a disadvantage under the current
methodology. Commenter stated that
comparing facilities with similar case
mixes would be a fairer way to evaluate
facility performance.
Response: We appreciate the
commenters’ concerns regarding the
exploration of new methods of adjusting
for patient case mix to ensure facilities
are not penalized for caring for sicker
patients. The SRR and STrR clinical
measures are risk-adjusted on the basis
of patient case mix. We make an effort
to adjust for case mix where clinical
evidence and methodological rigor
indicate doing so is appropriate, and we
consider the appropriateness of riskadjusting for case mix as part of our
ongoing reevaluation of quality
measures implemented in the ESRD
QIP.
Comment: A commenter was
concerned that many ESRD QIP
measures include patients who are only
treated at a facility for a short period of
time in the facility. The commenter
believes that outcomes for these patients
should be attributed to other facilities
(that is, other dialysis facilities and
hospitals), rather than a facility that had
a limited opportunity to provide care for
a patient.
Response: We believe the measure
specifications appropriately account for
patients seen at a facility for a limited
period of time by implementing

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exclusion criteria specific to quality
measures as deemed appropriate. For
example, the STrR measure excludes all
patients who have not received
treatment at a facility for 60 days. The
Hypercalcemia measure requires 30
days of treatment in the facility. The Kt/
V dialysis adequacy measures exclude
patient-months where fewer than 7
treatments are billed for the patient, and
the vascular access measures require a
minimum of 4 months of claims. An
analogous exclusion is not appropriate
for the SRR, where facility attribution is
defined by a hospital discharge, and not
time in treatment at a facility.
Comment: One commenter
recommended that CMS include the
Standardized Mortality Ratio (SMR) in
the ESRD QIP, because the ‘‘medical
literature has shown SMR is more
indicative of the quality of care received
at a facility than Standardized
Readmissions Ratio (SRR) or
Standardized Transfusion Ratio (STrR).’’
Response: We thank the commenter
for the input. We will consider
proposing to adopt the SMR measure for
future payment years.
Comment: One commenter
recommended that CMS include a
measure of the percent of eligible
patients on the transplant wait-list in
the ESRD QIP, because this indicator of
patient status ‘‘is under the immediate
auspices of the dialysis team.’’ Other
commenters recommended that CMS
develop one or more measures on fluid
management because this area is a high
priority concern for clinicians, patients,
and facilities. Another commenter
recommended that CMS develop a
measure evaluating the employment rate
among ESRD patients ages 18–54,
because the ability to maintain regular
employment is an indicator of both
positive clinical and psychosocial
outcomes in the ESRD population.
Commenter stated that monitoring
employment statistics among the ESRD
population will shift facility focus
toward patients’ overall well-being
rather than just clinical outcomes.
Response: We thank the commenters
for their input and will take their
recommendations into consideration as
we proceed with our measure
development work.
Comment: One commenter
recommended CMS fully test its system
for calculating ESRD QIP scores because
in the past 2 years scores on the
National Health Safety Network (NHSN)
Bloodstream Infection and Dialysis
Adequacy measures have been
miscalculated.
Response: We agree that it is essential
to calculate ESRD QIP measure scores
correctly. The purpose of the annual

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Preview Period process is to give
facilities the opportunity to identify
scoring issues and request score
changes. We further note that scoring
issues related to the NHSN and Dialysis
Adequacy measures were resolved via
the Preview Period processes, and we
take this as an indication that the
process is working as intended.
Comment: One commenter supported
CMS’s goal of improving coordination of
care for ESRD patients, but stated that
the adoption of measures that may
implicate providers outside of the
dialysis facility should be delayed until
renal-specific accountable care
organizations can be established
because without an incentive to
cooperate, other healthcare providers
may not share necessary information
with dialysis facilities. Commenters also
stated that many facilities lack the tools
necessary to effectively address care
coordination. Commenters supported
the Comprehensive ESRD Care Initiative
currently in development, and
recommended that CMS delay the
adoption of any care coordination
measures until results are available from
that model.
Response: We appreciate stakeholder
support of the ESRD Seamless Care
Organization (ESCO) model. However,
we do not believe that the ESCO’s focus
on coordination of care should preclude
the ESRD QIP from implementing
measures intended to improve care
coordination, because collecting and
analyzing results from the model will
take a number of years, and it may not
be possible to extrapolate results
obtained from the small sample of
facilities included in the model to all
facilities nationwide. In addition, by
including measures on coordination of
care in the ESRD QIP before the ESCOs
are in place, we will be able to
positively impact care coordination for
a large percentage of ESRD patients in
the near future, and will be able to
collect important data on care
coordination from a wide array of
facilities, which would better inform its
future model development efforts.
Comment: One commenter
recommended that CMS develop new
measures on anemia management
because transfusions have increased as
facilities’ utilization of ESAs has
declined.
Response: We agree with the
commenter than anemia management is
a major concern among patients with
ESRD, and will continue to take this
into account in future measure
development. We also note that the
ESRD QIP currently includes a measure
on anemia management and ESA
dosage, the Anemia Management

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reporting measure, and that the
intention of the STrR measure we are
adopting for the PY 2018 program is to
monitor and prevent transfusions
related to underutilization of ESAs.
Comment: Many commenters
recommended modifying the Vascular
Access Type measures such that
facilities are not penalized when grafts
are placed in certain patients (for
example, diabetics with intrinsic
vascular disease). Commenters stated
that outcomes for these patients are
comparable when grafts or fistulae are
used, and that the absence of a graft
measure in the Vascular Access Type
measure topic disincentivizes a
clinically appropriate access that is
selected after consultation with patients.
As an intermediate step, some
commenters recommended assigning
the catheter and fistula measures,
respectively, two-thirds and one-third
the weight of the Vascular Access Type
measure topic.
Response: The current NQF-endorsed
vascular access quality measures
adopted for use in the program (NQF
#0257: Hemodialysis Vascular Access—
Maximizing Placement of Arterial
Venous Fistula (AVF) and NQF #0256:
Hemodialysis Vascular Access—
Minimizing Use of Catheters as Chronic
Dialysis Access) consider Arterial
Venous (AV) fistula use as a positive
outcome, prolonged use of tunneled
catheter as a negative outcome, and
incorporates the clinical equipoise
regarding AV grafts, effectively creating
three categories of outcome (AV fistula
= positive; AV graft = neutral; prolonged
use of tunneled catheter = negative). We
believe this paradigm to be generally
appropriate. Positive incentives are
provided for AV fistula creation, but
dialysis providers must remain
cognizant of the clinical impact of
prolonged use of tunneled catheters
because of the negative incentive
provided for that outcome. This paired
incentive structure reflects consensus
best practice, and supports maintenance
of the gains in vascular access success
achieved via the Fistula First Project
over the last decade. Furthermore, a
recent large meta-analysis demonstrates
poorer survival with AV graft compared
to AV fistula, raising important
questions about the commenter’s
assertion of clinical appropriateness of
AV graft as an alternative to AV fistula.4
We appreciate the commenters’
suggestion to revise the relative weights
of the catheter and fistula components
of the Vascular Access Type measure
topic to increase the focus on ‘‘catheter
last’’. We will take this into
4 Ravani,

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consideration in as we continue to
revise and refine the ESRD QIP measure
set, and we may use future rulemaking
to propose changes to the measures’
relative weights.
Comment: One commenter
recommended that CMS exclude
patients with a limited life expectancy
from the Vascular Access Type: Catheter
≥90 days clinical measure.
Response: We appreciate the
commenters’ suggestion to exclude
patients with a limited life expectancy
from the measure denominator and will
consider whether this type of revision is
feasible and appropriate for this
measure.
Comment: Some commenters
recommended that CMS consider
making incentive payments to facilities
meeting and/or exceeding benchmarks
in the ESRD QIP in addition to
penalizing facilities that do not meet or
make progress toward the standards,
because the current incentive program
only withholds funding from the
nation’s kidney care infrastructure. One
commenter recommended working to
find ways, within the statutory
authorities of the Act, to provide
facilities with payment incentives for
high performance in the ESRD QIP. The
commenter stated that doing so is
consistent with the principle that valuebased purchasing programs should
‘‘redistribute to providers all of the
funding that was set aside in accordance
with their performance on the quality
measures.’’
Response: We do not believe that we
have the statutory authority to provide
facilities with incentive payments for
high performance on ESRD QIP
measures.
Comment: One commenter
recommended that CMS revise the
nomenclature it uses to categorize
measures in the ESRD QIP because the
current terminology is confusing and
may contribute to a lack of patient
understanding. The commenter stated
that the use of the terms ‘‘clinical’’ and
‘‘reporting’’ do not align with the
commonly accepted meaning of those
words. The commenter recommended
that CMS replace the term ‘‘clinical
measures’’ with ‘‘accountability
measures’’ and replace the term
‘‘reporting measures’’ with ‘‘required
data submission.’’
Response: We disagree that the terms
‘‘clinical measure’’ and ‘‘reporting
measure’’ are confusing. Specifically,
the term ‘‘clinical’’ indicates that the
clinical measures pertain to clinical care
and aspects of the clinical environment
that improve patient care. Furthermore,
the term ‘‘reporting’’ indicates that
reporting measures pertain to how well

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a facility meets requirements for
reporting data to CMS. Accordingly, we
do not believe it is necessary to revise
the nomenclature used to categorize
measures in the ESRD QIP.
Comment: Some commenters were
concerned that the ESRD QIP lacks a
strategic vision and encouraged CMS to
consult with the ESRD community to
establish a clear set of principles and
goals for the program. Commenter stated
that the program currently seems to be

focusing on adding new measures
without considering whether each
measure will drive improvements in
dialysis care.
Response: The goals of the ESRD QIP
closely align with the goals of the CMS
Quality Strategy (the CMSQS). The
CMSQS is designed to guide the
activities of various components
throughout the Agency and is aligned
with the Department of Health and
Human Services’ (HHS’) National

BILLING CODE 4120–01–C

these goals. The following table

The strategic vision of the ESRD QIP is
to adopt measures that address each of

Quality Strategy (the NQS). The six
goals of the CMSQS are organized
around NQS’ three broad aims and drive
and orient all of CCSQ’s quality
improvement programs, including the
ESRD QIP, insofar as these aims align
with the statutory goals of the program.
The following figure illustrates the six
goals of the CMSQS, which have been
informed by extensive consultation with
stakeholders across the country:
BILLING CODE 4120–01–P

illustrates the program’s efforts to
implement this strategic vision:

TABLE 18—ESRD QIP ALIGNMENT WITH CMSQS QUALITY STRATEGY GOALS
Measure

Promote effective prevention and treatment of chronic disease ............

Kt/V Measure Topic .......................

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Vascular Access Type Measure
Topic.

Strengthen person and family engagement as partners in their care ....
Promote effective communication and coordination of care ...................
Make care safer by reducing harm caused in the delivery of care ........
Work with communities to promote best practices of healthy living .......
Making care affordable ............................................................................

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Hemodialysis.
Peritoneal Dialysis.
Pediatric Hemodialysis.
Pediatric Peritoneal Dialysis.
Fistula.
Catheter for at Least 90 Days.

Mineral Metabolism Reporting.
Anemia Management Reporting.
Hypercalcemia.
Standardized Transfusion Ratio.
Screening for Depression and Follow Up reporting.
Pain Assessment and Follow-Up reporting.
ICH CAHPS Reporting (PY 2017) and Clinical (PY 2018).
Standardized Readmissions Ratio.
NHSN Bloodstream Infection in Hemodialysis Outpatients.
NHSN Healthcare Personnel Influenza Vaccination reporting.
None.
None.

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As the table above illustrates, the ESRD
QIP has not proposed or finalized
measures for the following quality goals:
• Work with communities to promote
the best practices of healthy living.
• Making care affordable.
We will evaluate these remaining goals,
particularly the goal of making care
affordable, to assess their
appropriateness as policy goals for the
ESRD QIP. In addition to evaluating the
ESRD QIP measure set in terms of how
well it addresses legislative mandates,
NQS and CMSQS goals, we are also
evaluating how well the measure set
addresses policy priorities that
stakeholders have brought to our
attention. We continue to engage both
external and internal stakeholders on a
regular basis, to communicate the
strategic vision of the program as well
as to engage in dialogue useful to the
development and implementation of
policy that will effectively create
improvements in the quality of care
provided to ESRD beneficiaries.
Comment: Some commenters were
concerned that CMS is proposing to
adopt a number of measures that have
not been reviewed or endorsed by NQF.
One commenter stated that the Social
Security Act authorizes the program to
adopt measures that have not been
endorsed by NQF, but the commenter
recommended that this authority should
only be exercised rarely.
Response: As described above, we
may adopt non-NQF-endorsed measures
under the ESRD QIP exception authority
in section 1881(h)(2)(B)(ii) of the Act.
This provision provides that, 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 as long as due consideration is
given to measures that have been
endorsed or adopted by a consensus
organization identified by the Secretary.
Although we proposed some measures
that are not currently NQF-endorsed,
they are pending NQF endorsement, and
we are actively seeking this
endorsement. We also considered other
available measures that have been
endorsed by the NQF and found no
other feasible and practical measures. In
addition, the MAP has supported or
conditionally supported all of the
measures proposed for the PY 2017 and
PY 2018 ESRD QIP.
Comment: Some commenters were
concerned about the process CMS uses
to develop measures for ESRD.
Commenters stated that the measure

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development process does not consider
the day-to-day operations of a dialysis
facility, appears to be pre-determined
and closed to influence from the ESRD
community, is insufficiently
transparent, and is not focused on areas
that are of concern to the ESRD
community.
Response: Our development process
makes use of the CMS Measures
Management System Blueprint, which is
publicly available at https://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/MMS/Measures
ManagementSystemBlueprint.html. The
CMS Blueprint guides measure
development through all stages in order
to prepare the measures for public
comment, and submission to NQF.
Development work begins with an
extensive review of relevant literature,
which is then presented to a panel of
technical experts (members of which are
selected after a public call for
nominations) convened for the purpose
of providing guidance to our quality
measure development contractor. These
panels typically include practicing
nephrologists and nurses, ESRD
researchers, and other experts who may
meaningfully contribute to the content
area under discussion. The results of
their deliberations are posted publicly
on a CMS Web site, and any measures
developed through this process undergo
a 30-day public comment period prior to
being considered for inclusion in the
ESRD QIP. We have additionally
submitted most of our measures to NQF
for endorsement, and as part of that
process, we must submit extensive
documentation supporting the measure
specifications, and the measure is
scrutinized extensively by a steering
committee to assess measure
importance, scientific acceptability,
feasibility, and usability. Furthermore,
we propose the measures through our
annual notice and comment rulemaking
process to allow for public comments.
Comment: One commenter
recommended CMS ensure the integrity
of the data used to develop measures
and score facilities on measures in the
ESRD QIP. Other commenters did not
support the use of multiple data sources
in the ESRD QIP.
Response: We are continuing to work
diligently to ensure the validity and
reliability of data that is used to
calculate facility scores and to develop
measures for the ESRD QIP. We believe
that our efforts to solicit stakeholder
feedback through the CROWNWeb
Users Group have dramatically
accelerated our efforts on this, and we
looking forward to the continued
collaboration.

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We believe that our measures are
currently valid and reliable, and use a
variety of tools to assess reliability and
validity. We base our measure
specifications on rigorous clinically
peer-reviewed findings, convene
technical expert panels of clinicians and
statistical experts, run medical record
reliability pilot tests, and submit
measures to the Secretary’s consensusbased endorsement entity and the
Measures Application Partnership for
review. We use these tools as
appropriate and feasible to ensure
validity and reliability.
We believe that it is appropriate to
use more than one data source to collect
ESRD QIP measure data because the use
of multiple data sources ensures that
measure scores are calculated using the
most reliable data source available, and
that data from one source can be
validated against data from another
source.
Comment: A commenter
recommended that CMS align
measurement methodologies and
reporting requirements across CMS
ESRD quality programs. Commenter
stated that current misalignments are
creating confusion and are burdening
facility staff.
Response: The ESRD QIP, Dialysis
Facility Compare program, and the
Dialysis Facility Reports program have
different purposes, which in certain
cases necessitates divergent measure
specifications and scoring
methodologies. We are currently in the
process of reviewing measure
specifications and scoring
methodologies across the three
programs, and we will continue to
create alignments where appropriate.
Comment: A number of commenters
recommended applying six exclusion
criteria to all measures in the ESRD QIP
unless there is a clinical or operational
reason not to do so: (1) Beneficiaries
who die within the applicable month;
(2) Beneficiaries who receive fewer than
7 treatments in a month; (3)
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; (4) Transient
dialysis patients; (5) Pediatric patients
(unless the measure is specific to
pediatric patients); and (6) Kidney
transplant recipients with a functioning
graft. Commenter also recommended
that patients should only be attributed
to a facility after being assigned to the
facility for 60 days, and that the dialysis
adequacy measures should exclude
patients with fewer than four eligible
claim months.

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Response: We considered applying
these six global exclusion criteria in
response to comments on the CY 2014
ESRD PPS proposed rule (78 FR 72192).
We agree with commenters that
exclusion criteria for the ESRD QIP
measures should be consistent, where
feasible. We further believe, however,
that exclusions also need to take into
account the population to which a
measure applies and the settings for
which the measures were developed (for
example, in-center hemodialysis as
opposed to home hemodialysis). As
stated in previous rules, we will
continue to look for ways to align
exclusion criteria for measures in the
ESRD QIP, as long as there is evidence
to support such consistency.
Comment: Commenter stated that
measures in the ESRD QIP
predominantly focus on in-center
dialysis. Commenter recommended
developing new measures, and
modifying existing measures, to take
greater account of peritoneal and home
hemodialysis. Commenter further
recommended that measure
development activities should utilize
data from patients on home dialysis,
rather than extrapolating data from
patients on in-center dialysis.
Commenter stated that this is
particularly important for measures of
dialysis adequacy, because patients on
home hemodialysis receive four to six
treatments per week, while patients on
in-center hemodialysis receive three
treatments per week on average. Other
commenters recommended that CMS
increase home hemodialysis patients’
representation in current ESRD QIP
measures, particularly in measures
directly assessing quality of care and
patient experience, such as the ICH
CAHPS survey. These commenters
stated that home hemodialysis patients
represent 10 percent of the ESRD
population and are excluded from most
measures currently used in the program.
Response: We appreciate commenters’
interest in ensuring that home dialysis
patients are appropriately included in
the ESRD QIP. Because home
hemodialysis patients currently
comprise a small percentage of the
ESRD population, we have confronted
challenges in developing quality
measures that can meaningfully
distinguish facility performance in the
quality of care furnished to these
patients, and many of our existing
measures specifically exclude home
hemodialysis patients from the
denominator for this reason. However,
we remain interested in exploring ways
to capture these patients in the ESRD
QIP, including developing measures
that would assess their quality of care.

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Comment: Some commenters
recommended that CMS reevaluate the
Dialysis Adequacy measure topic,
because the measures assess the
quantity and sufficiency of dialysis, but
do not account for the patient’s overall
health. Commenters stated that this
results in a focus on meeting the
measure standard, rather than achieving
the Kt/V level that is best for the
individual patient.
Response: The current measure
specifications are informed by the
KDOQI clinical practice guidelines and
the current body of evidence about
respective clinical thresholds. These
minimum standards do not specifically
preclude individualization of care, but
treatment should not fall below the
minimum standards supported by
evidence and guidelines.
Comment: One commenter was
concerned that the ESRD QIP
overemphasizes laboratory-based
measures and stated that measures that
assess a patient’s quality of life are more
meaningful.
Response: We recognize that the
majority of the measures that we
previously adopted for the ESRD QIP
involve laboratory measurements (for
example, the Hypercalcemia and
Dialysis Adequacy clinical measures).
However, we also note that we are
finalizing many measures in this final
rule that are not laboratory-based
measures, such as the SRR, STrR, and
ICH CAHPS clinical measures, as well
as the Screening for Depression and
Follow-Up and the Pain Assessment and
Follow-Up reporting measures. These
non-laboratory based measures are
intended to address patients’ quality of
life by assessing patient and family
engagement in their care, the clinical
care patients receive, and conditions
impacting patients’ ability to participate
in activities of daily living.
Comment: One commenter
recommended CMS develop a
‘‘palliative care exclusion’’ to avoid
unfairly penalizing facilities for
tailoring a very ill patient’s care to the
patient’s informed preferences. Another
commenter stated that the ESRD QIP
does not meet the needs of patients
pursuing palliative care because it does
not include measures that assess
improvements in quality of life or
whether care is consistent with patients’
treatment goals. The commenter
recommended that CMS develop
measures that prioritize patient comfort
and align the care furnished with
patient preferences and goals.
Commenter also recommended that
CMS develop measures on reducing the
social and psychological impact of
ESRD, advanced care planning, facility

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documentation of surrogate decisionmakers, facility assessment of patients’
needs on first visit after hospitalization,
and medication reconciliation.
Response: We recognize that some
patients may seek palliative care, and
that it is important to take this into
account when developing robust
clinical quality measures for patients
with ESRD. Through our ongoing
measure maintenance work, we will
consider this and other potential
exclusion criteria, and their role in
measure specifications. We will also
consider the commenter’s
recommendations as we establish
priorities for future measure
development.
Comment: One commenter
recommended that CMS reinstate the
Hemoglobin Less than 10 g/dL clinical
measure, because it protects patients
from anemia under-treatment.
Commenter stated that since the
removal of the Hemoglobin Less than 10
g/dL clinical measure, mean
hemoglobin levels among dialysis
patients have declined and transfusions
have increased, indicating that facilities
are not adequately addressing anemia in
this population. Commenter further
stated that a Hemoglobin Less than 10g/
dL measure is consistent with FDA
labeling of Erythropoiesis stimulating
agents (ESAs) because ESA treatment
should be initiated when patients reach
a hemoglobin level of 10 g/dL.
Commenter also states that the goal of
maintaining a hemoglobin level of at
least 10 g/dL is appropriate because the
risk of receiving a transfusion increases
four-fold when hemoglobin levels fall
below 10 g/dL.
Response: We appreciate commenter’s
recommendation to re-adopt the
Hemoglobin < 10 g/dL clinical measure
in the ESRD QIP. As discussed in the
proposed rule, we share commenter’s
concerns about adequate maintenance of
patients’ hemoglobin levels. In addition,
FDA guidance advises that treatment of
anemia should minimize the occurrence
of transfusions among ESRD dialysis
patients, and we believe that the STrR
is consistent with the guidance, and will
serve to guard against underutilization
of ESAs among patients. For this reason,
we proposed to implement the STrR
clinical measure in Payment Year 2018.
Comment: Some commenters stated
that patient-months indicating a Kt/V
value greater than 2.5 should not be
excluded from the Hemodialysis
measures, because patients on nocturnal
dialysis may achieve such values, and
they should be included in the measure.
Response: As stated in the CY 2013
ESRD PPS Final Rule, ‘‘We do not
currently have the ability to identify

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patients who are receiving thrice weekly
in-center nocturnal hemodialysis and do
not have a measure specific to this
population . . . 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’’ (77 FR
67488). As part of our measure reevaluation process, we are considering
alternatives to the 2.5 cut-off for spKt/
V values, as well as avenues for
identifying patients receiving in-center
nocturnal hemodialysis. We will
continue to pursue both avenues of
inquiry in our ongoing effort to provide
as comprehensive and accurate an
assessment of dialysis adequacy in the
QIP as is possible.
Comment: One commenter
recommended that CMS use raw data to
independently calculate Kt/V values for
the Dialysis Adequacy clinical measure
topic, because this will improve the
measures’ accuracy.
Response: As stated in the CY 2013
ESRD PPS Final Rule, ‘‘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’’ (77 FR 67489).
This is still true because the measure
continues to be based on data reported
on Medicare claims. We continue to
believe that Medicare claims are a
reliable data source for this purpose
because instructions for submission of
Kt/V on Medicare Claims are very
specific in the requirement to report Kt/
V calculated from either Daugirdas II or
urea kinetic modeling, the two most
reliable methods for determining Kt/V,
consistent with the most recent NKF
KDOQI consensus recommendations
and supported by a recent Technical
Expert Panel convened in 2013.
Comment: Commenter recommended
converting the Hypercalcemia clinical
measure to a reporting measure, because
the ESRD PPS will not be including
oral-only drugs until 2024. Commenter
stated that this provision of the ESRD
PPS will delay the economic incentives
for facilities to underutilize oral-only
drugs, so the hypercalcemia measure is
not needed to protect patient safety.
Response: We believe it is important
to retain Hypercalcemia as a clinical
measure in the ESRD QIP because this
measure is the only clinical outcome
measure endorsed by NQF for bone
mineral metabolism, and issues related
to bone mineral metabolism are
tremendously important for patients
with ESRD. The anticipated addition of
oral medications in the ESRD PPS may
incentivize the use of less costly
calcium-based phosphorus binders and

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less use of cinacalcet, which may lead
to increased hypercalcemia in the ESRD
dialysis population. We further note
that the measure’s clinical significance
has already been accounted for in the
scoring methodology that was finalized
for the PY 2016 program and proposed
for PY 2017–2018, wherein the
Hypercalcemia measure is given less
weight than other measures.
Comment: Some commenters
recommended that CMS work with the
kidney community to develop a
composite phosphorous/calcium/PTH
measure, because a composite measure
would be more likely to improve patient
outcomes than a measure evaluating one
of the individual components.
Response: We welcome an
opportunity for collaboration on this
and other projects. We note, however,
that in 2010, a Technical Expert Panel
discussed the possibility of developing
measures for phosphorus, and was
unable to come to a consensus regarding
a phosphorus measure that assesses
appropriate levels of phosphorus due to
a lack of evidence supporting a clinical
threshold. A reporting measure was
developed and originally endorsed by
the NQF in 2007, and forms the basis of
the Mineral Metabolism reporting
measure implemented in the ESRD QIP.
In 2011, NQF reviewed two phosphorus
measures, establishing one with an
upper limit (hyperphosphatemia) and
one with a lower limit
(hypophosphatemia). NQF did not
endorse either measure. A recent 2013
Technical Expert Panel recommended
the development of a reporting measure
for PTH, which we have specified, and
are currently working to test prior to
submitting it to NQF for endorsement.
However, the panel concluded that
there was insufficient evidence to
develop a clinical measure. We are
unaware of more recent evidence that
makes it likely that consensus around
such a clinical performance measure
would be reached in new measure
development efforts at this time, but we
would be interested in discussing any
such evidence with stakeholders.
Comment: One commenter
recommended aligning the dates used
for calculating patient censuses under
the Vascular Access Type measure topic
and NHSN Bloodstream Infection in
Hemodialysis Outpatients clinical
measure to reduce administrative
burden. Commenter stated that the
Vascular Access Type measure topic is
based on the last treatment of the
month, while the NHSN census is based
on the ESRD facility’s first two working
days of the month.
Response: We appreciate the
recommendation. Because these

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measures serve different purposes, and
because the methods used to calculate
the measures have shown to be reliable,
we do not believe there is sufficient
technical rationale to justify aligning
these administrative tasks at this time.
Comment: One commenter
recommended that CMS consider
coordinating occupational therapy with
dialysis treatments.
Response: We thank the commenter
for the input.
Comment: One commenter stated
their concern that the ESRD QIP does
not adequately account for the
challenges faced by acute hospital-based
programs that occasionally treat chronic
patients. Commenter recommended that
CMS reevaluate the exclusion criteria
for ESRD QIP measures and exclude
these facilities, because patients are
already sicker when entering care at
these facilities and will not remain there
long enough for the patient’s
improvement to be attributed to the
facility.
Response: We thank commenters for
the recommendation. Some of our
proposed measures, such as the SRR
and STrR, do seek to address patient
comorbidities through risk-adjustment.
Other measures, such as the Dialysis
Adequacy and Vascular Access Type
measures, identify the types of patients
who should be excluded as determined
by available evidence. We welcome
specific recommendations regarding
new exclusion criteria for our measures,
which we can address through our
ongoing measure re-evaluation process.
Comment: One commenter
recommended that when calculating all
of the ESRD QIP measures, CMS should
identify an alternative first ESRD service
date for individuals who resume
dialysis.
Response: We thank commenters for
the recommendation. All measures in
the ESRD QIP only include patients on
dialysis, so an alternate first service date
for those resuming dialysis would only
potentially affect measures that exclude
patients for some initial period. The
original 90-day rule following beginning
of ESRD was implemented to allow time
for patients to stabilize and to ensure
that a patient is a chronic dialysis
patient (that is, did not receive
temporary dialysis therapy). Currently,
we use the Medical Evidence Form 2728
to capture the date of first dialysis in
order to help determine patient
exclusions for the Dialysis Adequacy
and Hypercalcemia clinical measures.
For future payment years, we will
explore the appropriateness of using the
date of return to regular dialysis for
those individuals who resume dialysis
after transplant for the Dialysis

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Adequacy and hypercalcemia clinical
measures.
For the STrR measure, time at risk
begins at the start of the facility
treatment period (starting with day 91
after onset of ESRD after a patient has
been treated at the facility for 60 days)
and continues until the earliest
occurrence of the following: a Medicare
claim indicating a diagnosis on the
exclusions list, three days prior to a
kidney transplant, death, end of facility
treatment, or December 31 of the year.
Upon discharge from a facility, the
patient continues to be attributed to that
facility for 60 days. Patients who resume
dialysis after transplant resume time at
risk once they have been back at a
dialysis facility for 60 days. Therefore,
we believe this recommendation may be
of less concern for the STrR.
The SRR, the vascular access
measures, the NHSN Bloodstream
Infection measure, the ICH CAHPS
measure, and the reporting measures in
the ESRD QIP measure set do not have
exclusion criteria related to the first
ESRD service date and so are unaffected
by the first ESRD service date.
Comment: Some commenters
requested that CMS reevaluate the
Hemodialysis Adequacy clinical
measures’ inclusion of patients who are
treated at a facility at least twice in a
month, because facilities experience
difficulties in obtaining Kt/V
measurements for patients receiving a
small number of treatments during the
time they are at the facility. Specifically,
commenters recommended that instead
of excluding patients seen at a facility
two times or fewer in a month, the
measure should exclude patients seen
fewer than seven times. Commenter
stated that it may not be possible for a
facility to draw the blood needed to
determine a Kt/V value if a patient is
seen fewer than seven times in a month.
Commenter further stated that 9.99 is
reported on Medicare claims for patients
receiving less than six treatments at a
facility in a month, because patients
receiving so few treatments may have
changed modalities, received
transplantation, or undergone long
hospitalizations. Commenters also
stated that it would be inappropriate for
a facility to change a patient’s
hemodialysis prescription if the facility
only treated the patient two times in a
month. Commenter further stated that it
is not possible to monitor patient
conditions, modify treatment protocols,
and evaluate the impact of such changes
when patients are treated fewer than
seven times in a month. Commenter
recommended not including patientmonths in the denominator if the Kt/V
value reported on Medicare claims is

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9.99, and that facilities should submit
four months of claims for a patient
before the patient is included in the
measure.
Response: We disagree with
commenters’ assertion that that 9.99 is
reported on claims for patients receiving
six or fewer treatments per month. We
note that this is inconsistent with the
instructions in the Claims Processing
Manual, which does not direct
providers to use 9.99 for claims with
fewer than seven treatments in the
billing period, but instead provides the
following guidance:
‘‘Value Code D5—Result of last Kt/V
reading. For in-center hemodialysis patients
this is the last reading taken during the
billing period. For peritoneal dialysis
patients and home hemodialysis this may be
before the current billing period but should
be within 4 months of the claim date of
service.
Hemodialysis: For in-center and homehemodialysis patients prescribed for three or
fewer treatments per week, the last Kt/V
obtained during the month must be reported.
Facilities must report single pool Kt/V using
the preferred National Quality Forum (NQF)
endorsed methods for deriving the single
pool Kt/V value: Daugirdas II or Urea Kinetic
Modeling (UKM). The reported Kt/V should
not include residual renal function.
A value of 8.88 shall be entered on the
claim if the situation exists that a patient is
prescribed and receiving greater than three
hemodialysis treatments per week for a
medically justified and documented clinical
need. The 8.88 value is not to be used for
patients who are receiving ‘‘extra’’ treatments
for a temporary clinical need (for example,
fluid overload). A medical justification must
be submitted for patients receiving greater
than 13 treatments per month.
This code (D5) is effective and required on
all ESRD claims with dates of service on or
after July 1, 2010. In the event that no Kt/V
reading was performed providers must report
the D5 with a value of 9.99.’’

Despite the fact that Medicare claims
do not require facilities to report a Kt/
V value of 9.99 on claims with fewer
than seven times, we agree with
commenters who stated that it is
difficult to alter patients’ Kt/V values if
they are seen infrequently during a
month. We also agree with commenters
who stated that it is inappropriate for a
facility to change a patient’s
hemodialysis prescription if the patient
is typically treated at a different facility.
For these reasons, beginning with the
PY 2017 program, we will change the
exclusion criteria of the Adult and
Pediatric Hemodialysis Adequacy
measures, such that patients treated at a
facility fewer than seven times in a
month are excluded from the measures
for the month. This revision will appear
in the finalized measure specifications
for the PY 2017 and PY 2018 programs,

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available at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_
TechnicalSpecifications.html.
We also disagree that requiring that a
patient be treated at a facility for four
months before the patient is included in
the measure is appropriate. As noted
above, we are now requiring that a
patient receive at least seven treatments
at a facility during a month before being
included in the Hemodialysis Adequacy
measures for that month. We believe
this modification sufficiently addresses
commenters’ concerns about facilities
ability to impact patients’ Kt/V levels
when they only treat the patient a
limited number of times.
C. Web Sites for Measure Specifications
In an effort to ensure that facilities
and the general public are able to
continue accessing the specifications for
the measures that were proposed for and
have been adopted in the ESRD QIP, we
are now posting these measure
specifications on a CMS Web site,
instead of posting them on
www.dialysisreports.org as we have in
the past. Measure specifications from
previous years, as well as those for the
PY 2017 and PY 2018 programs, can be
found at: http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html.
We did not receive any comments on
this change.
D. Updating the NHSN Bloodstream
Infection in Hemodialysis Outpatients
Clinical Measure for the PY 2016 ESRD
QIP and Future Payment Years
The NHSN Bloodstream Infection in
Hemodialysis Outpatients clinical
measure (that is, NHSN Bloodstream
Infection clinical measure) that we
adopted beginning with the PY 2016
ESRD QIP is based on NQF #1460. At
the time we adopted it, the measure
included a risk adjustment for patients’
vascular access type but did not include
any reliability adjustments to account
for differences in the amount of
exposure or opportunity for healthcare
associated infections (HAIs) among
patients. On April 4, 2014, in response
to a measure update proposal submitted
by CDC, NQF endorsed a reliability
adjustment for volume of exposure and
unmeasured variation across facilities to
NQF #1460. This reliability adjustment
is called the Reliability-Adjusted
Standardized Infection Ratio or
Adjusted Ranking Metric (ARM). As a
result of this change to the NQFendorsed measure specifications, a
facility’s performance on NQF #1460
can be adjusted towards the mean (that

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is, facilities with low exposure volume
can be adjusted more than facilities with
high exposure volume, and the
performance rate can be adjusted up or
down depending on the facility estimate
and mean) to account for the differences
in the reliability of the infection
estimates based on the number of
patient-months at a facility and any
unmeasured variation across facilities.
Because the adjustment can be based on
the volume of exposure, facility scores
can be adjusted more if there are fewer
patient-months in the denominator, and
facility scores can be adjusted less if
there are many patient-months in the
denominator.
We proposed to adopt the same
reliability adjustment for purposes of
calculating facility performance on the
NHSN Bloodstream Infection clinical
measure, beginning with the PY 2016
ESRD QIP. We believe that the inclusion
of this reliability adjustment, in
addition to the risk factor adjustment,
will enable us to better differentiate
among facility performance on this
measure, because it accounts not only
for the variation in patient risk by
vascular access type, but also for
variation in the number of patients a
facility treats in a given month. The
ARM will be incorporated into the
existing risk-adjustment methodology,
which will also continue to include a
risk adjustment for patient vascular
access type. Further information about
the reliability adjustment, and the
NHSN Bloodstream Infection measure
specifications can be found at http://
www.cdc.gov/nhsn/PDFs/dialysis/
NHSN–ARM.pdf, http://www.cdc.gov/
nhsn/dialysis/dialysis-event.html, and
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html.
We sought comments on this
proposal. The comments and our
responses are set forth below:
Comment: One commenter supported
the proposal to calculate the NHSN
Bloodstream Infection measure with the
Adjusted Ranking Metric because this
adjustment ‘‘will provide a more
reliable SIR, and better reflect the
differences in opportunity for HAI
prevention in ESRD facilities.’’ The
commenter also recommended
monitoring and ongoing assessment of
this ranking.
Response: We thank the commenter
for their support.
Comment: Some commenters did not
support using the Adjusted Ranking
Metric to calculate performance rates for
the NHSN Bloodstream Infection
measure because the public has not
been provided with sufficient details

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about the adjustment’s methodology to
offer informed comments on the
proposal, so the proposal does not meet
the requirements of the Administrative
Procedures Act. The commenter also
stated that although NQF #1460 (the
measure upon which the NHSN
Bloodstream Infection measure is based)
remains endorsed, even with the revised
specifications to include the ARM
adjustment, an NQF Steering Committee
still has yet to review the revised
specifications, and this has limited
public scrutiny. Another commenter did
not support the use of the Adjusted
Ranking Metric in the NHSN
Bloodstream Infection measure, because
the adjustment imposes a rank order on
facilities that is not appropriate for
quality improvement and is not
mandated by the Act.
Response: We have reviewed the
information we made publicly available
regarding the ARM methodology for the
CY 2015 ESRD PPS comment period,
and we agree with commenters that
greater detail would have allowed
commenters to more meaningfully
analyze and comment on the proposed
revision to the NHSN Bloodstream
Infection clinical measure. Therefore,
we are not finalizing the proposal to
adopt the ARM reliability adjustment
for purposes of calculating facility
performance on the NHSN Bloodstream
Infection clinical measure. Instead,
facility performance on this measure
will be calculated as finalized in the CY
2014 ESRD PPS final rule, using the
Standardized Infection Ratio (78 FR
72204 through 72207).
Comment: One commenter did not
support the adoption of the NHSN
Bloodstream Infection clinical measure
in the ESRD QIP because apparent
differences in performance are actually
an artifact of reporting practices.
Accordingly, facilities that diligently
monitor and report infections receive
lower scores than those that do not, and
this creates a perverse incentive for
facilities to not report dialysis events to
NHSN. As an alternative to including
the NHSN Bloodstream Infection
measure as a clinical measure, another
commenter recommended including it
as a reporting measure.
Response: We understand
commenter’s concern regarding
differences in performance as an artifact
of reporting practices, and agree that
reporting rates in the NHSN
Bloodstream Infection measure are
subject to detection bias. This is one of
the concerns that prompted us to
propose the NHSN data validation study
for the NHSN Bloodstream Infection
clinical measure in CY 2015. In
addition, CDC is working to assist

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facilities and groups to evaluate the
quality of their submitted data, and we
recognize that support for a more
systematic means of assessing and
ensuring data quality and completeness
is needed. Because including a clinical
measure on bloodstream infections will
provide stronger incentives for facilities
to monitor and reduce these infections,
as compared to a reporting measure on
the same topic, we continue to believe
that it is essential to maintain the
measure as a clinical measure.
Comment: Some commenters did not
support the continuation of the NHSN
Bloodstream Infection measure in the
ESRD QIP, because sufficient
information about how the measure is
adjusted for access type is not available
to the public.
Response: The specifications for the
NHSN Bloodstream Infection in
Hemodialysis Outpatients measure
(NQF #1460) include the methodology
used to stratify the NHSN Bloodstream
Infection measure by vascular access
type. These specifications include the
following information about how the
measure is adjusted for access type:
‘‘Both the numerator and denominator
are stratified by vascular access type
since vascular access type is the single
greatest risk factor for bloodstream
infection in this population. The
vascular access variables that are
collected and included in this analysis
are: Arteriovenous (AV) fistula, AV
graft, other access device, tunneled
central line, and nontunneled central
line. If more than one access type is
present in a patient, the bloodstream
infection event is attributed to the
access type with the greatest risk (that
is, AV fistula < AV graft < other access
device < tunneled central line <
nontunneled central line). During
denominator collection, the user is
asked to count each patient as having
only 1 vascular access type, following
the algorithm described. During
numerator collection, all vascular access
types present at the time of the
bloodstream infection event are reported
and the algorithm is applied during
analysis of the data.
This information appears on the
specifications, which were posted at
http://www.cdc.gov/nhsn/nqf/ on
August 12, 2014, have been available
through the NQF Web site since the
measure was endorsed in August 2011.
Comment: One commenter
recommended that CMS and CDC
consider adjusting the patient counting
methodology for the NHSN Bloodstream
Infection clinical measure such that all
patients treated in the facility in a
month are included in the patient count
for that month, rather than the current

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method, which includes only counts of
patients that are in the unit on the first
two treatment days of the month.
Response: CDC has conducted pilot
validation work with a group of dialysis
facilities and found that the census on
the first two working days of the month
was a satisfactory predictor of the entire
month’s patient treatment count. The
alternative of counting denominator
data on a daily basis has been required
in inpatient settings, but was
determined by CDC to be unacceptably
burdensome for dialysis facilities
conducting manual data collection.
Comment: Some commenters did not
support the NSHN Bloodstream
Infection measure as a clinical measure
in PY 2016, because performance
standards were not identified prior to
the measure’s expansion to a clinical
measure.
Response: We appreciate the
commenters’ concerns about
establishing values for the NHSN
Bloodstream Infection clinical measure
performance standards before the
beginning of the PY 2016 performance
period. However, we stated in the CY
2014 ESRD PPS Final Rule that we
wanted to begin assessing facilities on
the number of these events as soon as
possible, rather than merely assessing
whether facilities report these events,
because of the abnormally large impact
HAIs have upon patients and the
healthcare industry. We believe these
safety concerns justified the adoption of
the NHSN Bloodstream Infection
clinical measure before collecting all of
the baseline data needed to apply the
traditional achievement and
improvement scoring methodologies.
We also note that, in recognition of the
fact that we would not initially be able
to award improvement points to
facilities, we set the minimum TPS low
enough that a facility can meet it even
if it receives zero achievement points on
the NHSN Bloodstream Infection
clinical measure, as long as it meets or
exceeds the performance standard for
each of the other finalized clinical
measures.
Comment: One commenter did not
support the continuation of the NHSN
Bloodstream Infection measure in the
ESRD QIP, because determining
whether a positive blood culture is a
true bloodstream infection is a
subjective exercise.
Response: As stated in the CY 2015
ESRD PPS final rule, ‘‘The NHSN
Bloodstream Infection clinical measure
is an objective measure based solely on
the presence of a positive blood culture.
Although NHSN collects information on
access-relatedness to provide additional
information that is of use for prevention

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purposes, the NHSN Bloodstream
Infection clinical measure does not rely
upon assessments of whether the
bloodstream infection was accessrelated’’ (78 FR 72207).
Comment: One commenter
recommended modifying the NHSN
Bloodstream Infection measure to focus
on event-specific indicators, beginning
with access-related bloodstream
infections. Commenter stated that
focusing on specific indicators would
help facilities develop prevention plans
and would be a more appropriate
benchmark for assessing dialysis-related
infections.
Response: We thank the commenter
for their recommendation. As discussed
in the CY 2014 ESRD PPS Final Rule (78
FR 72205), NQF endorsed a bloodstream
infection measure (that is, NQF #1460,
the measure upon which the NHSN
Bloodstream Infection clinical measure
is based) because positive blood
cultures (the reported event under the
bloodstream infection measure) can be
objectively identified. Although the
measure focuses on the presence of a
positive blood culture, event-specific
indicators (that is, counts and rates of
access related bloodstream infections)
are available in NHSN. Both CDC and
CMS encourage facilities to review and
utilize this data, together with overall
bloodstream infection rates, for
prevention purposes. As we continue to
further develop and refine the measure,
we may consider a greater focus on
event-specific indicators (for example,
access-relatedness) in the future.
Comment: Commenter recommended
that CMS should require facilities to
implement CDC’s core interventions for
dialysis bloodstream infection
prevention, particularly interventions 7
and 8, which the commenter stated
should be made into a clinical measure.
Response: We thank the commenter
for their recommendation. As stated in
the CY 2014 ESRD PPS final rule, ‘‘We
continue to encourage facilities to adopt
all of CDC’s core prevention
interventions. However, they are not
required under the ESRD QIP because
we do not believe it is feasible at this
time to design a performance measure
that would accurately evaluate facility
compliance’’ (78 FR 72206).
For these reasons, we are not
finalizing the proposal to adopt the
ARM reliability adjustment for purposes
of calculating facility performance on
the NHSN Bloodstream Infection
clinical measure. Instead, facility
performance on this measure will be
calculated as finalized in the CY 2014
ESRD PPS final rule, using the
Standardized Infection Ratio (78 FR
72204–72207). The technical

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specifications for this finalized measure
can be found at http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_
TechnicalSpecifications.html.
E. Oral-Only Drug Measures in the ESRD
QIP
Section 217(d) of the Protecting
Access to Medicare Act of 2014 (Pub. L.
113–93), enacted on April 1, 2014,
amends section 1881(h)(2) of the Act to
require the Secretary, for PY 2016 and
subsequent years, to adopt measures
(outcome-based, to the extent feasible)
in the ESRD QIP that are specific to the
conditions treated with oral-only drugs.
We believe that the Hypercalcemia
clinical measure adopted beginning
with the PY 2016 program (78 FR 72200
through 72203) meets this new statutory
requirement because hypercalcemia is a
condition that is treated with oral-only
drugs. The Hypercalcemia clinical
measure is not an outcome-based
measure, and we have considered the
possibility of adopting outcomes-based
measures that pertain to conditions
treated with oral-only drugs. However,
we have determined that it is not
feasible to propose to adopt an outcomebased measure on this topic at this time
because we are not aware of any
outcome measures developed on this
topic.
We sought comments on this
proposal. The comments and our
responses are set forth below.
Comment: One commenter supported
CMS’s interpretation of the
requirements of the Protecting Access to
Medicare Act of 2014 (PAMA) to delay
the adoption of measures (preferably
outcomes-based) related to conditions
treated by oral-only drugs.
Response: We appreciate the
commenter’s support, but clarify that
PAMA requires that for 2016 and
subsequent years, the measures
included in the ESRD QIP include
measures that are specific to the
conditions treated with oral-only drugs,
and that such measures, to the extent
feasible, be outcome-based.
Comment: Some commenters stated
that the Hypercalcemia measure does
not meet the Protecting Access to
Medicare Act of 2014 (PAMA)
requirement for the ESRD QIP to
include a measure ‘‘specific to
conditions treated with oral-only
drugs.’’ One commenter stated that it is
not an effective measure for oral-only
drugs because it is strongly influenced
by parenteral vitamin D. Another
commenter stated that current oral-only
drugs are intended reduce elevated
levels of parathyroid hormone and
phosphorus, and that the Hypercalcemia

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measure is not related to either
condition. Commenters recommended
that CMS adopt measures related to
these conditions for adoption in the PY
2018 program, not the PY 2016 program,
in accordance with the requirements of
PAMA.
Response: While we do not agree with
these comments, we recognize that we
could, consistent with PAMA, adopt
measures as late as for PY 2018 that are
specific to the conditions treated with
oral-only drugs. We will take these
comments into account as we evaluate
what measures, including the
Hypercalcemia clinical measure, might
satisfy this new statutory requirement in
the future.

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F. Requirements for the PY 2017 ESRD
QIP
1. Revision to the Expanded ICH CAHPS
Reporting Measure
For the ICH CAHPS reporting
measure, we proposed one change to the
reporting requirements finalized in the
CY 2014 ESRD PPS Final Rule for PY
2017. In the CY 2014 ESRD PPS final
rule, we finalized that facilities would
be eligible to receive a score on the
measure if they treated 30 or more
survey-eligible patients during the
performance period (78 FR 72220
through 72221). Subsequently, we were
made aware that facilities may not know
whether they will have enough surveyeligible patients during the performance
period to be eligible for the ICH CAHPS
measure when they are making
decisions about whether or not they will
contract with a vendor to administer the
survey. We agree that it would be
preferable if facilities knew at the
beginning of the performance period if
they will be eligible to receive a score
on the ICH CAHPS measure, because
this would allow facilities to make
informed decisions about whether they
should contract with a vendor to
administer the survey. For this reason,
we proposed that beginning with the PY
2017 program, facilities will be eligible
to receive a score on the ICH CAHPS
measure if they treat 30 or more surveyeligible patients during the ‘‘eligibility
period,’’ which we define as the CY
before the performance period.
However, even if a facility is eligible to
receive a score on the measure because
it has treated at least 30 survey-eligible
patients according to the ICH CAHPS
Survey measure specifications during
the calendar year prior to the
performance period, we proposed that
the facility will still not receive a score
for performance during the performance
period if it cannot collect 30 survey
completes during the performance

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period. We believe that facilities should
be able to determine quickly the number
of survey-eligible patients that they
treated during the eligibility period, and
that reaching this determination should
not impact facilities’ ability to contract
with a vender in time to meet the
semiannual survey administration
requirements. Technical specifications
for the ICH CAHPS reporting measure
can be found at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_
TechnicalSpecifications.html.
We sought comments on this
proposal. The comments and our
responses are set forth below.
Comment: Many commenters did not
support the requirement to conduct the
ICH CAHPS survey on a semiannual
basis, because it is an unfunded
mandate and does not provide facilities
with sufficient time to make changes to
the facility environment based on
survey responses. Commenters also
requested further evidence that a
semiannual survey administration
improves patient outcomes. For these
reasons, some commenters requested
that CMS reduce the ICH CAHPS survey
to one administration per year, until it
can be determined that survey fatigue
does not result in lower ICH CAHPS
scores. Other commenters
recommended allowing facilities to
coordinate with the Networks, such that
the facilities field the survey once
during the performance period, and the
Networks field the survey a second
time.
Response: Several options were
considered for the frequency of
administering the survey. A Technical
Expert Panel that we convened
suggested that quarterly administration
was too frequent due to the low
turnover in facilities. Annual collections
might result in outdated information for
public reporting and quality monitoring
purposes as well as a decrease in
respondent recall. By surveying twice a
year, we capture a diverse range of
patients within their care cycle, some
fairly new patients along with others
with more longevity on dialysis. With
semiannual administration, facilities
will learn first-hand about issues
concerning the care offered and where
there may be gaps in providing care to
this vulnerable population.
Semiannual administration of the
survey improves reliability of results
that will be useful for quality
improvement interventions. These more
reliable results will lead to quality
improvement and improve the patient
experience.
Comment: Some commenters did not
support the adoption of the ICH CAHPS

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66169

measure in the ESRD QIP because the
survey instrument consists of 58 core
questions, and this is burdensome for
patients, particularly if facilities are
required to have the survey
administered on a semiannual basis. In
order to reduce the burden on patients,
these commenters recommended
allowing venders to administer only one
of the survey’s three domains to each
patient in the sample.
Response: While we understand that
the ICH CAHPS survey may be time
consuming for some patients, we believe
its value as a tool for assessing the
patient’s experience of care outweighs
this concern. In-center hemodialysis
patients spend up to 12 hours a week in
treatment, and are therefore the best
source of information about the quality
of care provided in the facility.
Furthermore, the protocol for the ICH
CAHPS survey allows patients to
receive assistance on the survey from
family members or a caregiver not
associated with the dialysis facility. In
addition, we note that a patient need
only answer 29 of the 58 core questions
for the survey to be considered
complete. Looking at results from the
recent CMS Mode Experiment, less than
1 percent of the sampled patients
submitted incomplete surveys.
Anecdotally, we found that patients
were eager to complete the survey, as
evidenced by calls to the ICH CAHPS
hotline upon receipt of the prenotification letter regarding the survey
administration.
Comment: Some commenters stated
that the ICH CAHPS measure should not
include homeless people, because
vendors have trouble administering the
survey to this population, and facilities
are penalized for incomplete surveys.
Response: We are aware that it might
be difficult to contact homeless persons
to perform the ICH CAHPS survey;
however, we are interested in ensuring
that all patients, regardless of housing
status, receive high quality care from the
multidisciplinary team at their facility.
We are particularly concerned about the
needs of homeless patients because they
may have different concerns than other
patients that need to be addressed by
the facility. We further note that under
the ICH CAHPS survey administration
and ESRD QIP scoring methodology,
facilities are not penalized if they are
either (1) unable to contact a patient for
the survey administration, or (2) receive
incomplete survey responses, provided
that the survey vendor followed the
administration protocol.
Comment: Some commenters stated
that facilities should not be held
accountable for low response rates when
they do not have an opportunity to

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review patient contact information used
by survey vendors. One commenter also
recommended increasing the minimum
number of qualifying patients because
small and rural facilities often have high
non-response rates.
Response: As noted above, facilities
with high non-response rates, regardless
of their location or population size, are
not penalized on the basis of their
survey response rate. Instead, scores on
the ICH CAHPS reporting measure are
based on whether the facility
administers the survey on a twice-yearly
basis using a third-party, CMS-approved
vendor and submits these survey results
to CMS via that third-party vendor. We
therefore disagree that high nonresponse rates for small and rural
facilities justify increasing the minimum
number of qualifying patients for this
measure, and we note that doing so
would effectively discount (for the
purposes of the ESRD QIP) the
experiences of a substantial number of
patients. In addition, the ICH CAHPS
survey administration specifications
include methods of confirming that
patient contact information is as up-todate as possible. ICH CAHPS survey
vendors are required to verify the
contact information provided by the ICH
CAHPS Coordination Team from
CROWNWeb by using a commercial
address update service. Survey vendors
are permitted to ask facilities to provide
updated addresses and telephone
numbers for all patients they served
during the sampling window. To
maintain and protect the identity of the
patients sampled, survey vendors
cannot give the list of sample patients
to the facility when they request
updated patient addresses and contact
information.
Comment: Some commenters stated
that versions of the survey used for
patients who do not speak English as
their first language are mistranslated,
particularly the Chinese version.
Response: We appreciate commenter’s
input regarding the translated versions
of the ICH CAHPS survey. Recent
corrections to the Chinese language
versions of the ICH CAHPS survey have
been made to reflect changes to the
English version of the instrument. Our

language specialists assure us that we
are using translations which the
majority of people speaking a given
language will understand, but we are
open to concerns and feedback about
the translated versions of the ICH
CAHPS survey. Please send any
questions or comments to
[email protected].
Comment: One commenter stated that
the ICH CAHPS survey should be
expanded to include all patients with
ESRD, such as those who dialyze at
home, instead of being restricted to incenter hemodialysis patients.
Response: We appreciate the
commenter’s recommendation that we
develop additional questions or surveys
intended to capture a larger proportion
of the ESRD population. While the
current survey is specific to in-center
hemodialysis patients, we will look into
opportunities to capture other patients,
such as home hemodialysis and
peritoneal dialysis patients, in the
future.
Comment: One commenter sought
clarification as to how many times a
patient must be treated at a facility
before he or she becomes eligible for the
ICH CAHPS measure.
Response: Patient eligibility for the
ICH CAHPS measure is not determined
on the basis of a set number of
treatments, but rather on the amount of
time a patient is treated at a facility.
Nevertheless, assuming that a typical
hemodialysis patient receives three
treatments per week, and given that a
patient must be seen at a facility for
three months to be eligible for the ICH
CAHPS survey, an average surveyeligible patient will receive 36
treatments before becoming eligible for
the measure.
Comment: One commenter was
concerned that the ICH CAHPS survey
is of limited use in the ESRD
population, because its administration
excludes patients who die or are too
sick to complete the survey, and the
survey does not ask patients about
advance care planning. Commenter
recommended CMS continue to work on
the ICH CAHPS survey so that it
provides more actionable information
about whether the care patients receive
is consistent with patients’ goals.

Response: We understand
commenter’s concerns about the ICH
CAHPS survey excluding patients who
are deceased or physically or mentally
incapable of completing the survey. We
believe that in a patient experience of
care survey, patients are most qualified
to evaluate their experience. While we
agree that those who are capable of
completing the survey but require
assistance to do so should receive the
necessary assistance, we do not believe
that a survey administered to a family
member or proxy on behalf of a patient
is a satisfactory substitute for patient
input. Therefore, we do not believe it is
appropriate to include patients who are
deceased or are mentally or physically
incapable of completing the survey in
the ICH CAHPS survey at this time. We
appreciate commenter’s
recommendation to modify or include
new elements in the survey aimed at
providing actionable information about
whether a patient’s care is consistent
with the patient’s goals for care, and
will take this into consideration in the
future.
For these reasons, we are finalizing
the expanded ICH CAHPS reporting
measure as proposed for the PY 2017
ESRD QIP and for future payment years.
The technical specifications for this
finalized measure can be found at
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical
Specifications.html.
2. Measures for the PY 2017 ESRD QIP
a. PY 2016 Measures Continuing in PY
2017 and Future Payment Years
We previously finalized 11 measures
in the CY 2014 ESRD PPS Final Rule for
the PY 2016 ESRD QIP, and these
measures are summarized in Table 19
below. In accordance with our policy to
continue using measures unless we
propose to remove or replace them (77
FR 67477), we will continue to use 10
of these 11 measures in the PY 2017
ESRD QIP. As we discuss in more detail
below, we proposed to remove one
measure, Hemoglobin Greater than 12 g/
dL, beginning with the PY 2017 measure
set (see Table 20 below).

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TABLE 19—PY 2016 ESRD QIP MEASURES BEING CONTINUED IN PY 2017
NQF #

Measure title and description

0249 .....................

Hemodialysis Adequacy: Minimum delivered hemodialysis dose.
Percent of hemodialysis patient-months with spKt/V greater than or equal to 1.2.
Peritoneal Dialysis Adequacy: Delivered dose above minimum.
Percent of peritoneal dialysis patient-months with spKt/V greater than or equal to 1.7 (dialytic + residual) during the four
month study period.
Pediatric Hemodialysis Adequacy: Minimum spKt/V.
Percent of pediatric in-center hemodialysis patient-months with spKt/V greater than or equal to 1.2.

0318 .....................

1423 .....................

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66171

TABLE 19—PY 2016 ESRD QIP MEASURES BEING CONTINUED IN PY 2017—Continued
NQF #

Measure title and description

0257 .....................

Vascular Access Type: AV Fistula.
Percentage of patient-months on hemodialysis during the last hemodialysis treatment of the month using an autogenous AV
fistula with two needles.
Vascular Access Type: Catheter ≥ 90 days.
Percentage of patient-months for patients on hemodialysis during the last hemodialysis treatment of month with a catheter
continuously for 90 days or longer prior to the last hemodialysis session.
National Healthcare Safety Network (NHSN) Bloodstream Infection in Hemodialysis Patients.
Number of hemodialysis outpatients with positive blood cultures per 100 hemodialysis patient-months.
Hypercalcemia.
Proportion of patient-months with 3-month rolling average of total uncorrected serum calcium greater than 10.2 mg/dL.
In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) Survey Administration.
Facility administers, using a third-party CMS-approved vendor, the ICH CAHPS survey in accordance with survey specifications and submits survey results to CMS.
Mineral Metabolism Reporting.
Number of months for which facility reports serum phosphorus for each Medicare patient.
Anemia Management Reporting.
Number of months for which facility reports ESA dosage (as applicable) and hemoglobin/hematocrit for each Medicare patient.

0256 .....................
N/A1 ......................
1454 .....................
N/A2 ......................
N/A3 ......................
N/A .......................

1 We

note that this measure is based on a current NQF-endorsed bloodstream infection measure (NQF #1460).
note that a related measure utilizing the results of this survey has been NQF-endorsed (#0258). We are proposing to adopt NQF #0258
in the PY 2018 program.
3 We note that this measure is based upon a current NQF-endorsed serum phosphorus measure (NQF #0255).
2 We

TABLE 20—MEASURE PROPOSED FOR REMOVAL BEGINNING WITH THE PY 2017 ESRD QIP
NQF #

Measure title

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

Anemia Management: Hgb >12
Percentage of Medicare patients with a mean hemoglobin value greater than 12 g/dL.

b. Policy for Determining When a
Measure Is ‘‘Topped-Out’’ in the ESRD
QIP, and the Removal of a Topped-Out
Measure From the ESRD QIP, Beginning
With PY 2017
In the CY 2013 ESRD PPS final rule
(77 FR 67475), we finalized a list of
seven criteria we would consider when
making determinations about whether to
remove or replace a measure:

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‘‘(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 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.’’

In the CY 2014 ESRD PPS final rule
(78 FR 72192), we stated that we were
in the process of evaluating all of the
ESRD QIP measures against the criteria.
Subsequent to the publication of the CY
2014 ESRD PPS final rule, we
completed our evaluation and

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determined that none of the measures
finalized in the PY 2016 ESRD QIP met
criteria 2 through 7, as listed above.
With respect to the first criterion, we
proposed to more specifically define
when performance on a clinical measure
is so high and unvarying that the
measure no longer reflects meaningful
distinctions in improvements or
performance. The statistical definitions
that we proposed to adopt will align our
methodology with that used by the
Hospital VBP program to determine
when a measure is topped out (76 FR
26496 through 26497). Under this
methodology, a clinical measure is
considered to be topped out if national
measure data show (1) statistically
indistinguishable performance levels at
the 75th and 90th percentiles; and (2) a
truncated coefficient of variation (CV) of
less than or equal to 0.1.
To determine whether a clinical
measure is topped out, we initially
focused on the top distribution of
facility performance on each measure
and noted if their 75th and 90th
percentiles were statistically
indistinguishable. Then, to ensure that
we properly accounted for the entire
distribution of scores, we analyzed the
truncated coefficient of variation (CV)
for each of the clinical measures.
The CV is a common statistic that
expresses the standard deviation as a

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percentage of the sample mean in a way
that is independent of the units of
observation. Applied to this analysis, a
large CV would indicate a broad
distribution of individual facility scores,
with large and presumably meaningful
differences between hospitals in relative
performance. A small CV would
indicate that the distribution of
individual facility scores is clustered
tightly around the mean value,
suggesting that it is not useful to draw
distinctions between individual facility
performance scores. We used a modified
version of the CV, namely a truncated
CV, for each clinical measure, in which
the 5 percent of facilities with the
lowest scores, and the 5 percent of
facilities with the highest scores were
first truncated (set aside) before
calculating the CV. This was done to
avoid undue effects of the highest and
lowest outlier facilities; if included,
they would tend to greatly widen the
dispersion of the distribution and make
the clinical measure appear to be more
reliable or discerning. For example, a
clinical measure for which most facility
scores are tightly clustered around the
mean value (a small CV) might actually
reflect a more robust dispersion if there
were also a number of facilities with
extreme outlier values, which would
greatly increase the perceived variance
in the measure. Accordingly, the

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truncated CV of less than or equal to
0.10 was added as a criterion for
determining whether a clinical measure
is topped out.

We evaluated each of the clinical
measures finalized in the PY 2016 ESRD
QIP against these proposed statistical
conditions. The full analysis is available
at: http://www.cms.gov/Medicare/

Quality-Initiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html. The
results of that analysis appear below in
Table 21.

TABLE 21—PY 2016 CLINICAL MEASURES USING CROWNWEB AND MEDICARE CLAIMS DATA FROM JANUARY 2013–
DECEMBER 2013
Measure
Adult HD Kt/V ..............................
Adult PD Kt/V ...............................
Pediatric HD Kt/V .........................
Hgb >12 .......................................
Fistula Use ...................................
Catheter Use ................................
Hypercalcemia .............................

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75th
percentile

N
5665
1176
10
5521
5561
5586
5685

As the information presented in Table
21 suggests, the Hemoglobin Greater
than 12 g/dL measure meets the
proposed criteria for determining when
a clinical measure is topped-out in the
ESRD QIP. Accordingly, we proposed to
remove the Hemoglobin Greater than
12 g/dL measure from the ESRD QIP,
beginning with the PY 2017 program.
We recognize that the Pediatric
Hemodialysis Adequacy measure also
meets the conditions for being a toppedout clinical measure in the ESRD QIP.
However, we did not propose to remove
the Pediatric Hemodialysis Adequacy
measure from the ESRD QIP because we
determined that removing the measure
will not be useful for dialysis facilities.
There are currently very few measures
available that focus on the care
furnished to pediatric patients with
ESRD, and we are reticent to remove a
measure that addresses the unique
needs of this population. In addition,
although only 10 facilities were eligible
to receive a score on the Pediatric
Hemodialysis Adequacy measure (based
on CY 2013 data), we believe that the
publicly reported performance of these
facilities can influence the standard of
care furnished by other facilities that
treat pediatric patients, even if a facility
does not treat a sufficient number of
pediatric patients to be eligible to be
scored on the measure.
For these reasons, we believe that the
drawbacks of removing a topped out
clinical measure could be outweighed
by the other benefits to retaining the
measure. Accordingly, we proposed that
even if we determine that a clinical
measure is topped out according to the
statistical criteria we apply, we would
not remove or replace it if we determine
that its continued inclusion in the ESRD
QIP measure set will continue to set a
high standard of care for dialysis
facilities.

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90th
percentile

96.1
92.9
94.5
0.0
72.3
5.9
0.3

Std. error

97.4
94.8
97.1
0.0
77.0
2.8
0.0

0.13
0.55
2.71
0.02
0.16
0.10
0.04

We sought comments on these
proposals. The comments and our
responses are set forth below.
Comment: One commenter supported
removal of the Hemoglobin Greater than
12 g/dL clinical measure, because there
is little variation in facilities’
performance. The commenter
additionally supported this proposal
‘‘because under the PPS, facilities no
longer have an incentive to overuse
erythropoietin stimulating agents.’’
Several commenters recommended
continuing to publicly report facility
scores to ensure that patients’
hemoglobin levels are properly
monitored.
Response: We thank the commenters
for the support. We further note that the
Dialysis Facility Compare program will
continue to publically report facility
scores on the Hemoglobin Greater than
12 g/dL measure, and that this will help
ensure that patients’ hemoglobin levels
are properly monitored.
Comment: Some commenters did not
support the proposal to remove the
Hemoglobin >12 g/dL clinical measure
from the ESRD QIP, because the
measure is clinically important, and
removing this measure could lead to a
lapse in anemia monitoring in this
patient population. One commenter
recommended that CMS keep the
Hemoglobin >12 g/dL clinical measure,
but reduce its weight for QIP scoring
purposes in order to maintain facilities’
focus on anemia management while
decreasing this measure’s impact on
facility scores.
Response: We agree that maintaining
patients’ hemoglobin levels below 12 g/
dL is clinically important. For this
reason, the Dialysis Facility Compare
program will continue to publically
report facility scores on the Hemoglobin
Greater than 12 g/dL measure, and we
believe that this will help ensure that

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Statistically
indistinguishable
No ........................
No ........................
Yes .......................
Yes .......................
No ........................
No ........................
No ........................

Truncated
CV
0.04
0.15
0.08
<0.01
0.14
≤0.01
≤0.01

TCV <0.10
Yes.
No.
Yes.
Yes.
No.
Yes.
Yes.

patients’ hemoglobin levels are properly
monitored. Nevertheless, based on the
statistical criteria for determining when
a measure is topped out in the ESRD
QIP, we have determined that
performance on this measure is so high
and unvarying that meaning distinctions
in facility performance cannot be made.
Accordingly, we do not believe it is
appropriate to use the measure in a
value-based purchasing program, such
as the ESRD QIP, because the measure
is not an effective tool for incentivizing
facilities to further improve the quality
of care provided to patients with ESRD.
Comment: One commenter
recommended that CMS reevaluate the
Hemoglobin >12 g/dL clinical measure,
because it does not account for the
differences in ‘‘average’’ hemoglobin
levels among dialysis patients of
different ages, genders, and overall
health. For example, the commenter
stated that while a hemoglobin of 12–14
g/dL is ‘‘normal’’ for women, the range
for men is 14–18 g/dL, and that male
patients may be denied access to
treatments that would raise their
hemoglobin levels to ‘‘normal’’ because
their facility is concerned about its score
on the hemoglobin >12 g/dL clinical
measure.
Response: We appreciate the
commenter’s input and note that we are
removing the Hemoglobin Greater than
12 g/dL clinical measure from the ESRD
QIP beginning in the PY 2017 program.
However, we will consider the
commenter’s recommendation as we
continue to evaluate the use of the
measure in other CMS ESRD quality
programs, such as Dialysis Facility
Compare.
Comment: One commenter sought
clarification as to whether the Anemia
Management reporting measure is
sufficient to meet CMS’s statutory
requirements regarding measures on

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anemia management if CMS chooses to
remove the Hemoglobin >12 g/dL
clinical measure from the ESRD QIP.
Response: Based on the FDA’s
evolving position on ESAs, we believe
the Anemia Management reporting
measure meets the statutory mandate to
include such measures in the ESRD QIP.
The FDA labeling for ESAs previously
included a hemoglobin level target
range of 10 to 12 g/dL for chronic
kidney disease patients. In 2011, the
FDA released a modified drug
recommendation for the use of ESAs in
chronic kidney disease patients,
removing these hard cutoffs and
replacing them with more generalized
guidance to ‘‘individualize dosing and
use the lowest dose of ESA sufficient to
reduce the need for red blood cell
transfusions.’’ We therefore believe the
Anemia Management reporting
measure’s requirement that providers
report ESA dosages, rather than
prescribing a course of action, aligns
with the current FDA labeling regarding
ESA usage. Additionally, we note that
the STrR clinical measure, finalized for
the PY 2018 ESRD QIP, meets the
statutory requirement for measures on
anemia management.
Comment: One commenter did not
support the proposal to remove the
Hemoglobin >12 g/dL clinical measure
from the ESRD QIP, because its removal
and the inclusion of the proposed
Standardized Transfusion Ratio may
lead facilities to revert to higher ESA
doses in an effort to avoid transfusions.
Response: Evidence currently suggests
that ESA doses have declined sharply
since 2011, due in large part to the FDA
label change for ESAs. Since that time,
the Hemoglobin Greater than 12 g/dL
clinical measure has become topped out
as fewer patients have hemoglobin
levels that exceed 12 g/dL, and we
believe that current payment incentives
(i.e., the inclusion of ESAs in the ESRD
PPS) will minimize the risk of excessive
utilization of ESAs. However, we intend
to continue monitoring hemoglobin
levels through the Anemia Management
reporting measure and the Dialysis
Facility Compare program.
Comment: Many commenters
supported the proposed statistical
criteria for determining when a measure
is topped-out in the ESRD QIP.
However, one commenter recommended
modifying the criteria used to determine
when to remove a measure from the
ESRD QIP, and further recommended
that a measure should not be removed
from the program if the measure
uniquely ‘‘addresses the needs of a
specific population within the ESRD
program.’’ Another commenter
supported the statistical criteria, but

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also recommended that CMS should
consider lowering the thresholds for
determining when a measure is topped
out.
Response: We agree with commenters
that a measure should not be removed
from the ESRD QIP if it uniquely
addresses the needs of a specific
population within the ESRD population.
We are finalizing the proposed
statistical criteria for determining that a
measure is topped-out and should be
removed from the ESRD QIP. However,
for the reasons explained below, we are
not finalizing our proposal to retain a
clinical measure that is statistically
topped-out if we determine that its
continued inclusion in the ESRD QIP
measure set will continue to set a high
standard of care for dialysis facilities.
Instead, based on comments received,
we are finalizing a policy that allows us
to retain a topped-out clinical measure
if it addresses the unique needs of a
subset of the ESRD population, because
we believe that this criterion is clearer
and more transparent than the one
proposed. Additionally, we agree with
the commenter that statistically topped
out measures should be retained in the
ESRD QIP measure set if they address
the unique needs of a subset of the
ESRD population, because we believe
that the drawbacks associated with
scoring a topped out measure are less
significant than the benefits of including
as many subsets of the ESRD population
as possible.
Comment: One commenter sought
clarification as to why CMS is not
proposing to remove the Pediatric
Hemodialysis Adequacy measure,
despite the fact that it meets the
statistical criteria for being a topped-out
measure in the ESRD QIP.
Response: We originally proposed to
retain the Pediatric Hemodialysis
Adequacy clinical measure for two
reasons: (1) There are few measures
available that focus on the care
furnished to pediatric patients; and (2)
we believed that the small number of
facilities that are eligible to receive a
score on the measure should properly
set a standard of care for all facilities
treating pediatric hemodialysis patients,
even if these other facilities are not
eligible to a receive a score on the
measure. As explained above, and based
on public comments, we are not
finalizing a policy that would allow us
to retain a topped-out clinical measure
on the basis that its continued inclusion
in the ESRD QIP measure set will
continue to set a high standard of care
for dialysis facilities, because we agree
with the commenter that this standard
may be difficult to apply.

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66173

Comment: Commenter did not
support the use of the first statistical
criterion for determining when a
measure is topped out in the ESRD QIP,
because in a sample size of roughly
5600 facilities, measure scores will
appear to be statistically
indistinguishable, even though the
truncated coefficient of variation is less
than 0.1.
Response: The two proposed
statistical criteria were selected to create
alignments between the ESRD QIP and
other CMS quality-reporting and VBP
programs, such as the Hospital Inpatient
Quality Reporting program, the Hospital
VBP program, and the Hospital
Outpatient Quality Reporting program.
We recognize that using both of the
statistical criteria instead of just the
second (that is, truncated coefficient of
variation is less than 0.1) raises the
threshold a measure must reach before
it is considered topped out.
Nevertheless, we believe that this
elevated threshold appropriately
differentiates topped-out measures from
measures that reliably distinguish
facility performance, whereas the use of
only the second criterion would
inaccurately classify reliable measures
as being topped out.
Comment: Commenter stated that
there is little room for facilities to
improve on the dialysis adequacy
measures. For this reason, commenter
recommended that the adequacy
measures should be removed from the
ESRD QIP, and that performance on
these measures should be monitored
through other means.
Response: As illustrated in Table 21
above, the Adult Hemodialysis and the
Adult Peritoneal Adequacy measures do
not meet the statistical criteria for being
a topped out measure in the ESRD QIP.
Although performance rates are high
overall, there is still room for facility
improvement on the measures, and we
therefore do not think it is appropriate
to remove the measures from the ESRD
QIP. As explained above, even though
the Pediatric Hemodialysis Adequacy
measure meets the statistical criteria for
being a topped out measure in the ESRD
QIP, we have decided not to remove it
because it addresses the unique needs of
a specific subset of the ESRD
population.
For these reasons, we are finalizing
the removal of the Hemoglobin Greater
than 12 g/dL measure from the ESRD
QIP, beginning with the PY 2017
program. We are also finalizing as
proposed the statistical criteria for
determining when a measure is topped
out in the ESRD QIP. We are not
finalizing our proposal to retain a
clinical measure that is statistically

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topped-out if we determine that its
continued inclusion in the ESRD QIP
measure set will continue to set a high
standard of care for dialysis facilities.
Instead, we are finalizing that we will
not remove a statistically topped-out
measure if the measure addresses the

unique needs of a specific subset of the
ESRD population.
c. New Measures for PY 2017 and
Future Payment Years
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 2017
ESRD QIP and future payment years, we
proposed to adopt one new clinical
measure that addresses care
coordination (see Table 22).

TABLE 22—NEW MEASURE PROPOSED FOR THE PY 2017 ESRD QIP
NQF #

Measure title

N/A 1 .....................
1 We

Standardized Readmission Ratio, a clinical measure.
Risk-adjusted standardized hospital readmissions ratio.

note that this measure is currently under review at NQF.

i. Standardized Readmission Ratio
(SRR) Clinical Measure

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Background
At the end of 2011, 615,899 patients
were being dialyzed, 115,643 of whom
were new (incident) patients with
ESRD.5 The SRR measure assesses the
rate of unplanned readmissions of ESRD
patients to an acute care hospital within
30 days of an index discharge from an
acute care hospital, thereby identifying
potentially poor or incomplete quality
of care in the dialysis facility. In
addition, the SRR reflects an aspect of
ESRD care that is especially resourceintensive. In 2011, the total amount paid
by Medicare for the ESRD program was
approximately $34.3 billion, a 5.4
percent increase from 2010.2 In
particular, Medicare paid more than
$10.5 billion for costs associated with
hospitalized ESRD patients in 2011. In
2011, ESRD dialysis patients were
admitted to the hospital twice on
average, and spent an average of 12 total
days in the hospital over the year,
accounting for approximately 38 percent
of Medicare expenditures for patients
with ESRD.2 Furthermore, a substantial
percentage (30 percent) of ESRD
patients discharged from the hospital
have an unplanned readmission within
30 days.2 In the non-ESRD population,
clinical studies have demonstrated that
improved care coordination and
discharge planning may reduce
readmission rates. The literature also
reports a wide range of estimates of the
percentage of readmissions that may be
preventable. One literature review of
more than 30 studies found the median
proportion of readmissions that may be
preventable was 27%, with a range of
5 United States Renal Data System, USRDS 2013
Annual Data Report: Atlas of Chronic Kidney
Disease and End-Stage Renal Disease in the United
States, National Institutes of Health, National
Institute of Diabetes and Digestive and Kidney
Diseases, Bethesda, MD, 2013.

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5% to 79%.6 Preventability varied
widely across diagnoses. Readmissions
were more likely to be preventable in
patients with more severe conditions.
Therefore, a systematic measure on
unplanned readmissions is essential for
controlling escalating medical costs; it
can identify where readmission rates are
unusually high, and help facilities to
provide cost-effective healthcare.
Overview of Measure
The SRR is a one-year riskstandardized measure of a facility’s 30day, all-cause rate of unplanned
hospital readmissions among Medicarecovered ESRD dialysis patients. The
number of expected readmissions is
determined by a risk-adjustment model
that accounts for the hospital where the
index discharge took place, certain
patient characteristics (including age,
sex, and comorbidities), and the
national median expected performance
for all dialysis facilities, given the same
patient case mix.
We proposed to adopt the SRR
measure currently under review by NQF
(NQF #2496). 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)(iv) of the
Act must have been endorsed by the
entity with a contract under section
1890(a) of the Act (that entity currently
is NQF). Under the exception set forth
in section 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
6 van Walraven C, Bennett C, Jennings A, Austin
PC, Forster AJ. Proportion of hospital readmissions
deemed avoidable: a systematic review. CMAJ.
2011; 183(7): E391–E402.

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endorsed or adopted by a consensus
organization identified by the Secretary.
We have given due consideration to
endorsed measures, as well as those
adopted by a consensus organization,
and we are proposing this measure
under the authority of 1881(h)(2)(B)(ii)
of the Act. Although the NQF has
endorsed an all-cause hospital
readmission measure (NQF #1789), we
did not believe it was feasible to adopt
this measure in the ESRD QIP because
NQF #1789 is specified for use in
hospitals, not dialysis facilities. In
addition, NQF #1789 is intended to
evaluate readmissions across all patient
types, whereas the proposed SRR
measure is specified for the unique
population of ESRD dialysis patients,
which have a different risk profile than
the general population captured in NQF
#1789. Because the proposed SRR
measure has been developed
specifically for the dialysis-facility
setting, and because the measure has the
potential to improve clinical practice
and decrease healthcare costs, we
believe it is appropriate to adopt the
SRR in the ESRD QIP at this time.
We have analyzed the measure’s
reliability, the results of which are
provided below and in greater detail in
the SRR Measure Methodology report,
available at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_
TechnicalSpecifications.html. The InterUnit Reliability (IUR) was calculated for
the proposed SRR using data from 2012
and a ‘‘bootstrap’’ approach, which uses
a resampling scheme to estimate the
within-facility variation that cannot be
directly estimated by the analysis of
variance (ANOVA). The SRRs that we
calculated for purposes of this analysis
were for dialysis facilities that had at
least 11 patients who had been
discharged from a hospital during 2012.
A small IUR (near 0) reveals that most
of the variation of the measures between
facilities is driven by ‘‘random noise,’’
indicating the measure would not be a

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reliable characterization of the
differences among facilities, whereas a
large IUR (near 1) indicates that most of
the variation between facilities is due to
the real differences between facilities.
The IUR for the proposed SRR measure
was found to be 0.49, indicating that
about one-half of the variation in the
SRR can be attributed to betweenfacility differences, and about half to
within-facility variation. This value of
IUR indicates that an average-size
facility would achieve a moderate
degree of reliability for this measure.
This level of reliability is consistent
with the reliability of other outcome
measures in CMS quality-reporting and
VBP programs, such as the 30-day RiskStandardized All-Cause Acute
Myocardial Infarction, Heart Failure,
and Pneumonia Readmission and
Mortality measures used in the Hospital
IQR and VBP Programs. We therefore
believe that facilities can be reliably
scored on the proposed SRR measure.
We convened a technical expert panel
(TEP) in May 2012 for the purpose of
evaluating this measure, but the TEP did
not reach a final consensus and
declined to support the measure. Some
members of the TEP were concerned
that we did not risk-adjust for the
nephrologist treating the patients,
because actions taken by nephrologists
can impact readmission rates. After
reviewing the TEP’s arguments, we
determined that the suggested risk
adjustment for nephrologist care would
constitute a reversal of CMS policy not
to risk adjust for factors related to care
for which the provider is responsible.
We do not think that it is appropriate to
risk-adjust the measure for the
nephrologist because the nephrologist is
part of the facility’s multi-disciplinary
team, and medical directors, as
employees of the dialysis facilities, are
responsible for ensuring that
appropriate care is provided by a multidisciplinary team. The Measures
Application Partnership reviewed this
measure in February 2013 and
supported the direction of the measure,
advising CMS that the measure would
require additional development prior to
implementation. Subsequently, we
released draft specifications for the
measure to the public for a 30-day
comment period and, based on
comments received, finalized measure
specifications in September 2013. We
also, on a voluntary basis, provided
individual dialysis facilities with a
facility-specific report that calculated
their SRR measure results and compared
those results to SRR measure results at
the state and national level, as well as

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discharge-level data upon request.
Facilities also had an opportunity to
submit questions to CMS regarding the
measure and their reports. We therefore
believe that the proposed SRR measure
risk-adjusts appropriately for patient
condition and comorbidities at the start
of care for which the facility is not
responsible. We also believe that the
measure is ready for adoption because,
as explained above, it achieves a
moderate degree of reliability.
Data Sources
The data we will use to calculate the
proposed SRR measure come from
various CMS-maintained data sources
for ESRD patients including the
CROWNWeb database, the CMS Annual
Facility Survey (Form CMS–2744),
Medicare claims, the CMS Medical
Evidence Form (Form CMS–2728),
transplant data from the Organ
Procurement and Transplant Network
(OPTN), the Death Notification Form
(Form CMS–2746), the Nursing Home
Minimum Dataset, and the Social
Security Death Master File. These data
sources include all Medicare-covered
patients with ESRD. Information on
hospitalizations is obtained from
Medicare Inpatient Claims Standard
Analysis Files (SAFs) and past-year
comorbidity is obtained from Medicare
Claims SAFs (inpatient, outpatient,
physician/supplier, home health,
hospice, and skilled nursing facility
claims).
Outcome
The outcome for this measure is 30day all-cause, unplanned readmission
defined as a hospital readmission for
any cause beginning within 30 days of
the discharge date of an index
discharge, with the exclusion of
planned readmissions. This 30-day
readmission period is consistent with
other publicly reported readmission
measures endorsed by NQF and
currently implemented in the Hospital
Inpatient Quality Reporting Program
and Hospital Readmission Reduction
Program, and reflects an industry
standard.
Cohort
All discharges of Medicare ESRD
dialysis patients from an acute care
hospital in a calendar year are
considered eligible for this measure,
with the exception of the exclusions
listed in the next section.
Inclusion and Exclusion Criteria
The proposed SRR measure excludes
from the measure cohort
hospitalizations: (1) Where the patient

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66175

died during the index hospitalization;
(2) where the patient dies within 30
days of the index discharge with no
readmission; (3) where the patient is
discharged against medical advice; (4)
where the patient was admitted with a
primary diagnosis of certain conditions
related to cancers, mental health
conditions, or rehabilitation procedures
(because these patients possess radically
different risk profiles, and therefore
cannot reasonably be compared to other
patients discharged from hospitals); (5)
where the patient is discharged from a
PPS-exempt cancer hospital (because
these hospitals care for a unique
population of patients that cannot
reasonably be compared to the patients
admitted to other hospitals); (6) where
the patient is transferred to another
acute care hospital; and (7) where the
patient has already been discharged 12
times during the same calendar year (to
respond to concerns raised by the TEP
that patients who are hospitalized this
frequently during a calendar year could
unduly skew the measure rates for small
facilities).
Risk Adjustment
The measure adjusts for differences
across facilities with regard to their
patient case mix. Consistent with NQF
guidelines, the model does not adjust
for socioeconomic status or race,
because risk adjusting for these
characteristics would hold facilities
with a large proportion of patients who
are minorities and/or who have low
socioeconomic status to a different
standard of care than other facilities.
One goal of this measure is to illuminate
quality differences that such risk
adjustment would obscure. As with the
Hospital-Wide Readmission measure
employed by the Hospital Readmissions
Reduction program, the SRR employs a
hierarchical logistic regression model to
estimate the expected number of
readmissions to an acute care hospital,
taking into account the performance of
all dialysis facilities, the discharging
hospital, and the facility’s patient casemix.
Although the SRR risk-adjustment
model is generally aligned with the
Hospital-Wide Readmission measure
risk-adjustment methodology, we
proposed to modify it to account for
comorbidities and patient
characteristics relevant to the ESRD
population. The proposed SRR measure
includes the following patient
characteristics as risk adjustors, which
are obtained from the following data
sources:

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Risk adjustor

Data source

Sex ............................................................................................................
Age ...........................................................................................................
Years on ESRD ........................................................................................
Diabetes as cause of ESRD ....................................................................
BMI at incidence of ESRD .......................................................................
Days hospitalized during index admission ...............................................
23 past-year comorbidities (for example, cardiorespiratory failure/shock;
drug and alcohol disorders)..
Discharged with any of 11 high-risk conditions (for example, cystic fibrosis, and hepatitis).

CMS Form 2728.
REMIS database.
CMS Form 2728.
CMS Form 2728.
CMS Form 2728.
Part A Medicare Inpatient Claims SAFs.
Medicare Claims SAFs: Part A Inpatient, home health, hospice, and
skilled nursing facility; and Part B Outpatient.
Part A Medicare Inpatient Claims SAFs.

More details on the risk-adjustment
calculations, and the rationale for
selecting these risk adjustors and not
others, can be found at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical
Specifications.html. We proposed to
risk adjust the proposed SRR measure
based on sex, because we have
determined that patients’ sex affects the
measure in ways that are beyond the
control of dialysis facilities. We reached
this determination by examining the
effects of the risk adjusters, both
independently and in combination, on
rates of unplanned readmissions. This
analysis yielded two conclusions. First,
the analysis indicated that females are
generally more likely than males to
experience an unplanned readmission,
even when accounting for the other risk
adjustors. Second, the disparate effects
of gender were substantially impacted
by the effects of age: Females aged 15 to
45 were much more likely to experience
an unplanned readmission than males
of the same age, but this disparity was
significantly reduced for men and
women younger than 15 and older than
45. Based on these two conclusions, we
believe that women in the 15–45 age
range face a greater risk of experiencing
an unplanned readmission, as compared
to men of the same age with similar risk
profiles. This does not appear to be a
consequence of facility performance,
however, because the disparity is not
generally applicable to women, but only
to a limited age group. We therefore
believe it is essential to risk-adjust for
sex to ensure that facilities with larger
numbers of women aged 15 to 45 are not
inappropriately disadvantaged, because
not risk-adjusting for sex would
potentially incentivize facilities to deny
access to these individuals.
As indicated in the table above, the
measure is risk-adjusted, in part, based
on 23 comorbidities that develop in the
year prior to the index hospitalization,
as well as 11 high-risk conditions that
are present at the time of the index
discharge. These data are taken from
Medicare claims submitted by hospitals,

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dialysis facilities, and other types of
long-term and post-acute care facilities.
We believe that this proposed
approach to risk-adjusting the SRR
measure is consistent with NQF
guidelines for measure developers. NQF
evaluates measures on the basis of four
criteria: Importance, scientific
acceptability, feasibility, and usability.
The validity and reliability of a
measure’s risk-adjustment calculations
fall under the ‘‘scientific acceptability’’
criterion, and Measure Evaluation
Criterion 2b4 specifies NQF’s preferred
approach for risk-adjusting outcome
measures (http://www.qualityforum.org/
docs/measure_evaluation_
criteria.aspx#scientific). This criterion
states that patient comorbidities should
only be included in risk-adjustment
calculations if they are (1) present at the
start of care and (2) not indicative of
disparities or deficiencies in the quality
of care provided. As indicated in the
‘‘Inclusion and Exclusion Criteria’’
subsection above, as well as the measure
specifications that are currently under
review at NQF, the start of care is
defined as the index hospitalization.
Accordingly, we believe that NQF
Measure Evaluation Criterion 2b4
supports risk adjusting the proposed
SRR measure on the basis of patient
comorbidity data collected in the year
prior to the index hospitalization,
because these comorbidities are likely
present at the start of care (that is, the
date(s) that the patient spends in the
hospital during the index
hospitalization). For these reasons, we
believe that the risk-adjustment
methodology for the proposed SRR
measure is consistent with NQF
guidelines for measure developers and
is appropriate for this measure.
Full documentation of the SRR riskadjustment methodology is available at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html.
Calculating the SRR Measure
The SRR measure is calculated as the
ratio of the number of observed

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unplanned readmissions to the number
of expected unplanned readmissions.
Facilities that have more unplanned
readmissions than would be expected
for an average facility with a similar
case-mix would have a ratio greater than
one. Facilities having fewer unplanned
readmissions than would be expected
for an average facility with a similar
case mix would have a ratio less than
one. This ratio calculation is consistent
with that employed by one NQFendorsed outcome measure for ESRD,
the Standardized Hospitalization Ratio
(NQF #1463).
Hospitalizations are counted as events
in the numerator if they meet the
definition of unplanned readmission—
which is that they (a) occurred within
30 days of the index discharge and (b)
are not preceded by a ‘‘planned’’
readmission that also occurred within
30 days of the index discharge. Planned
readmissions are defined as
readmissions that do not bear on the
quality of care furnished by the dialysis
facility, that occur as a part of ongoing
appropriate care of patients, or that
involve elective care. Building on the
algorithm developed for the HospitalWide Readmission measure (NQF
#1789), the proposed planned
readmission list incorporates minor
changes appropriate to the ESRD
population as suggested by technical
experts. The full planned readmission
list and algorithm are available at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/
061_TechnicalSpecifications.html. In
general, a readmission is considered
‘‘planned’’ under two scenarios.
1. The patient undergoes a procedure
that is always considered planned
(example, bone marrow transplant) or
has a primary diagnosis that always
indicates the hospitalization is planned
(for example, maintenance
chemotherapy).
2. The patient undergoes a procedure
that may be considered planned if it is
not accompanied by an acute diagnosis.
For example, a hospitalization involving
a heart-valve procedure accompanied by

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a primary diagnosis of acute myocardial
infraction would be considered
unplanned, whereas a hospitalization
involving a heart-valve procedure
accompanied by a primary diagnosis of
diabetes would be considered planned
(because acute myocardial infraction is
a plausible alternative acute indication
for hospitalization).
The expected number of readmissions
is calculated using hierarchical logistic
modeling (HLM). This approach
accounts for the hospital from which the
patient was discharged and the patient
case mix (as defined by factors such as
age, sex, and patient comorbidities), as
well as the national median
performance of all dialysis facilities.
The HLM is an appropriate statistical
approach to measuring quality based on
patient outcomes when patients are
clustered within facilities (and therefore
the patients’ outcomes are not
statistically independent), and when the
number of qualifying patients for the
measure varies from facility to facility.
The HLM approach is also currently
used to calculate readmission and
mortality measures that are used in
several quality-reporting and VBP
programs by CMS, such as the Heart
Failure and Pneumonia Mortality
measures in the Hospital IQR and
Hospital VBP Programs.
The proposed SRR measure is a point
estimate—the best estimate of a facility’s
readmission rate based on the facility’s
case mix. For more information on the
proposed calculation methodology,
please refer to our Web site at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/
061_TechnicalSpecifications.html.
We sought comments on this
proposal. The comments and our
responses are set forth below.
Comment: One commenter supported
the proposal to adopt the Standardized
Readmission Ratio clinical measure,
because ‘‘hospital readmissions may be
an indicator of poor access to follow-up
primary care or missed opportunities for
inpatient and ambulatory care providers
to better coordinate care.’’
Response: We thank the commenter
for the support.
Comment: Some commenters did not
support the proposal to adopt the SRR
measure because it could harm patients.
Specifically, commenters stated that the
measure could lead facilities to deny
care to high-risk populations,
particularly in urban settings where
patients have more than one option for
dialysis treatment. One commenter
further stated that the measure’s riskadjustment methodology will not
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‘‘cherry-pick’’ patients, which would be
detrimental to patient health and waste
healthcare resources. Commenter was
also concerned that facilities may delay
needed hospital admissions if the SRR
measure were to be adopted in the ESRD
QIP.
Response: We agree that the concern
for unintended consequences is a
serious one with outcome measures.
Access to care is particularly important
and we continue to seek ways to ensure
that access is unabated. This is part of
the reason we proposed to adopt the
SRR measure, which incorporates a riskadjustment methodology that levels the
playing field for facilities with different
case-mixes and counters the incentive
for cherry-picking patients. We also
have the capacity to monitor and
evaluate for some types of unintended
consequences. For example, we
currently assess rates of mortality at the
facility level in the Dialysis Facility
Compare program. This is an approach
similar to that used on Hospital
Compare, which publicly reports both
mortality and readmissions rates for
hospitals. In general, we note that
mortality and readmission rates are
positively correlated among dialysis
facilities and in other settings,
suggesting that reducing readmissions
does not create increased risk to patients
through ‘‘cherry-picking’’. We also note
that similar measures have been
implemented in other post-acute care
settings for quality reporting and valuebased purchasing, including long-term
care hospitals, inpatient rehabilitation
facilities, and nursing homes. The SRR
risk adjustment is consistent with these
measures. We intend to monitor
whether the implementation of this
measure leads to unintended
consequences.
Comment: Many commenters did not
support the proposal to adopt the SRR
measure because it is not a fair way to
evaluate facility performance.
Specifically, commenters stated that
unplanned readmissions are beyond the
control of dialysis facilities, and that
cultural factors can make patients
noncompliant with treatment protocols,
leading to hospital admissions.
Response: We disagree with assertion
that unplanned readmissions are
beyond the control of dialysis facilities.
While the causes of readmissions are
multifactorial, our analyses support that
the facility exerts an influence on
readmissions roughly equivalent to that
exerted by the discharging acute care
hospital. We believe that coordination
of care requires interaction between
multiple providers, including those
discharging the patient, and those
continuing patient care following

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discharge. While cultural factors and
patient noncompliance can lead to
hospital admissions, this is no less true
for the acute care hospitals, long-term
care hospitals, inpatient rehabilitation
facilities, nursing homes, and home
health agencies, and it does not negate
the deleterious consequences
readmissions can have for those
patients.
Comment: Some commenters stated
that facilities are typically not notified
when a patient is discharged from a
hospital, that many patients are
discharged from and readmitted to a
hospital before they return to their
dialysis facility. Commenters also stated
that facilities cannot compel
nephrologists to see patient immediately
after the patients are discharged from a
hospital. Commenters recommended
that patients with a readmission within
one to five days of an index discharge
should be excluded from the measure,
because facilities typically do not have
a chance to see these patients before
they are readmitted to a hospital, and 17
percent of hospitalized patients with
ESRD are readmitted to a hospital
within three days of the index
discharge.
Response: We recognize that a
disproportionate number of
readmissions may occur during the days
immediately following discharge. We
believe this reflects an important
opportunity for quality improvement
that may be missed if these
readmissions are excluded from the
readmission measure. While it is true
that several days may pass between
discharge and a patient’s first regularly
scheduled appointment at a dialysis
facility, we submit that if this pattern of
practice results in excessive levels of
readmissions, then it represents a failure
to successfully manage a patient’s care
from the acute to non-acute setting.
Additionally, under the Conditions for
Coverage, a dialysis facility must have a
medical director whose responsibilities
include a quality assessment and
improvement program (CfC § 494.150).
Therefore, facilities can compel
nephrologists to see a patient
immediately after the patients are
discharged from the hospital, because
improving on quality issues, such as
care coordination, is part of the medical
director’s responsibilities.
Comment: Many commenters stated
that facilities should not be placed in
the position of managing comorbid
conditions that typically accompany
ESRD, and commenters preferred a
measure that was limited to
readmissions that are related to ESRD
and dialysis. Commenters stated that the
measure should be limited to

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readmissions associated with ESRD (as
opposed to focusing on all
readmissions, irrespective of cause),
because the majority of readmissions for
patients with ESRD are not attributable
to diagnoses related to ESRD and
dialysis, and this could penalize
facilities for readmissions beyond their
scope of control. One commenter stated
it may be difficult to distinguish
readmissions related to dialysis and
ESRD from those that are not, so the
commenter recommended addressing
this issue with further adjustments to
the measure’s statistical models, and by
adding additional adjustments for case
mix.
Response: A Technical Expert Panel
(TEP) that we convened for the purpose
of developing this measure considered
the issue of whether dialysis facility
readmission measures should be allcause, or limited to a specific set of
readmissions related to ESRD and
dialysis. The TEP concluded that an allcause measure was appropriate for the
SRR because it could not come to a
consensus of what specific causes for
readmissions did or did not fall within
the control of dialysis facilities or could
be considered to be related to ESRD and
dialysis. This approach is consistent
with readmission measures
implemented for other quality programs,
and is augmented using a planned
readmissions algorithm that excludes
readmissions identified as having been
planned, with the rationale that such
readmissions do not reflect poor quality
of care. This algorithm was originally
developed for hospital readmissions
measures, and has been adapted for use
in the dialysis facility setting, as well as
nursing homes, home health agencies,
inpatient rehabilitation facilities, and
long-term care hospitals.
Comment: Many commenters
expressed a number of technical
concerns with the specifications for the
SRR measure. Specifically, commenters
stated that using the 2728 form as the
data source for determining patient
comorbidities is inappropriate because
the form is not used to track
comorbidities that develop after the
initiation of ESRD; commenters
therefore recommend obtaining a
reliable data source for comorbidities
before adopting the measure.
Commenters further stated that the
measure relies on too many data sources
to be specific to ESRD, and that facilities
do not have ready access to hospital
data, which they could use to design
quality improvement programs.
Response: Although we do
incorporate some information from the
2728 form in the risk adjustment model,
the comorbidities are identified using

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Medicare Claims data. We use many
data sources to construct our quality
measures, but the data are derived from
ESRD dialysis patients, and are
therefore relevant to the care of this
patient population. We recognize that
dialysis facilities do not have access to
hospital claims data, and that they
believe they could benefit from such
access in developing quality
improvement programs. Providing such
data is fraught with difficulty, such as
logistical delays in the availability of the
data, concerns about patient privacy
across providers, and the lack of an
effective delivery system for such data.
While we continue to consider how
such data may be provided in a way that
is meaningful and as actionable as
possible, we believe implementing a
quality measure based on claims data is
appropriate and consistent with the
implementation of readmission
measures in other settings. Additionally,
we have implemented measures in the
LTCH, IRF, and Home Health quality
reporting programs even though
hospital and other claims data are not
currently available to these providers.
Even if we could find a feasible way to
make the hospital data available, there
would be a substantial delay between
the time we receive it and the time we
could make it available to facilities. It is
therefore not feasible for us to provide
facilities hospital data in a short
timeframe.
Comment: Some commenters stated
that sickle cell trait, angiodysplasia,
myelodysplasia, diverticular bleeding,
asthma and nursing home/rehab status
should be included as risk-factors in the
measure calculations. Some commenters
did not support the proposal to adopt
the SRR measure, because it does not
risk-adjust for patients’ socioeconomic
status. Commenters recommended that
CMS incorporate this risk adjustment
into the SRR measure, because
otherwise facilities serving a high
percentage of low-income patients may
be subject to unnecessary and
inappropriate payment reductions. One
commenter further recommended that
the SRR measure adjust for patient race,
language, life circumstances, and
environmental factors, because these
factors have an impact on health
outcomes and are beyond the control of
the facility. One commenter also
recommended that CMS institute a peergrouping system in order to compare
dialysis facilities that are similarly
situated and treat similar patient
populations before incorporating any
further outcome measures into the ESRD
QIP.
Response: The SRR already includes
risk adjustment for the prior-year

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comorbidities as supported by a TEP
and analysis of data. The suggested
comorbidities were not included in the
risk adjustment model following input
from the TEP and a 30-day public
comment period. We are aware that
there are differing opinions regarding
our current approach in risk-adjusting
measures in the QIP for socioeconomic
status (SES). We note that risk-adjusted
outcome measures aim to reveal
differences related to the quality of care
provided. We believe that quality of care
received by patients of lower SES
contributes at least in part to the
observed association between SES status
and the readmissions rate. We continue
to have concerns about holding dialysis
facilities to different standards for the
outcomes of their patients of low SES—
we do not want to mask potential
disparities or minimize incentives to
improve the outcomes of disadvantaged
populations.
Concerns that facilities treating large
numbers of low socioeconomic status
patients are disproportionately
penalized by quality measure
performance may be addressed through
risk adjustment, but other alternatives
exist that would first need to be
considered, such as peer grouping
stratification. Peer group stratification
involves stratifying hospitals by the
hospital’s proportion of low-SES
patients, as a method to correlate
readmission rates and penalties with
patient income. We may consider
incorporating such a peer-grouping
stratification or an alternate method of
addressing socioeconomic status in the
future, as we continue to revise and
refine the SRR clinical measure.
Comment: Some commenters stated
that the measure’s specifications are
inappropriate because the denominator
is defined in terms of index discharges,
as opposed to the number of eligible
patients at a facility. Commenters
recommended using the latter method
because under the proposed method a
facility’s score could be
disproportionately reduced if one or two
patients had high readmission rates,
even if the facility had a low
readmission rate overall.
Response: The same issue was
discussed by the TEP in the course of
their evaluation of the SRR. As a
consequence of those deliberations, we
have structured the SRR measure to
account for frequently hospitalized
patients in two ways: first, it excludes
all hospitalizations following a patient’s
12th admission (note that 1 percent of
all patients are admitted more than six
times in a calendar year) and, second,
the model that defines the expectation
of readmission adjusts for

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hospitalizations that involve high risk
diagnoses that are rare but very likely to
result in a 30-day readmission (for
example, sickle-cell anemia, HIV/AIDS).
The measure is focused on the process
of readmission following a hospital
discharge, and for this purpose the
denominator is appropriate. Each
hospital discharge is an opportunity for
success or failure in managing the
transition of a patient’s care from the
acute care facility to the dialysis facility.
Allowing for risk-adjustment, the SRR
assesses the rate of success at a given
dialysis facility, and compares it to the
rate of success at other facilities. It is
true that a facility that has relatively
fewer hospitalizations will have a
smaller denominator, but what portion
of those hospitalizations are followed by
a readmission within 30 days is still a
valid indicator of the successful
management of care transitions. If one
took as the denominator the set of all
patients at the facility, we might be led
to conclude that this facility with
relatively few hospital discharges had a
reasonable rate of readmissions even
though, for the condition of the patient
being discharged, we would have
expected significantly fewer
readmissions.
Furthermore, we proposed in the CY
2015 ESRD PPS Proposed Rule to
account for variability in small facilities’
SRR scores by excluding facilities with
fewer than 11 discharges, and by
applying a small facility adjustor (which
‘‘gives facilities the benefit of the doubt
when measure scores can be unduly
influenced by a few outlier patients’’)
for facilities with 11 to 41 index
discharges. We believe that this aspect
of the ESRD QIP scoring methodology
will mitigate the impact of one or two
outlier patients on a small facility’s SRR
score.
Comment: Some commenters sought
clarification as to why the proposed
SRR measure is not limited to patients
on chronic dialysis for 90 days, when
this exclusion is included in the
Standardized Mortality Ratio and
Standardized Hospitalization Ratio
measures. One commenter stated that
this specification should align across
the three measures.
Response: The original 90-day
exclusion following the start of ESRD
dialysis was implemented to allow time
for patients to stabilize; as a result,
hospitalizations and deaths in this
period did not count against the dialysis
facility when computing the SHR and
the SMR. The SRR diverges on this
point because the readmissions function
differently. The SRR measure addresses
the question as to how well the patient
is managed once discharged from an

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acute-care hospital and assesses the
outcome of the discharge. The start of
dialysis defines the point in time when
patients begin to be at risk for
hospitalization or death while in the
care of a dialysis facility (for the
purposes of calculating the SMR and
SHR measures). By contrast, risk for
readmission begins upon discharge from
an acute care hospital when calculating
the SRR measure. As SRR is a measure
of care coordination, there is no
expected need for a stabilization period.
Applying one would limit the measure’s
efficacy at assessing coordination of care
for the discharged patient.
Comment: Some commenters were
concerned that the proposal to exclude
index hospitalizations that occur after a
patient’s 12th readmission in a calendar
year will unduly impact small facilities,
because these facilities’ scores are
disproportionately impacted by outliers.
Commenters sought clarification as to
why this criterion was raised from 6
readmissions to 12 readmissions.
Response: We initially considered
allowing a maximum of six
readmissions per patient-year (95th
percentile of the 2009 test population).
We made the change since we were
concerned that there might be seasonal
exclusions—that is, that this exclusion
might disproportionately exclude
hospitalizations occurring later in the
reporting period and that these
hospitalizations might, in some way, be
different from hospitalizations occurring
earlier in the reporting period (that is,
in the calendar year).Variants of the
measure that include either the cap of
6 or 12 readmissions are highly
correlated (97.8 percent). Since
increasing the exclusion criteria to 12
admissions made only a small
difference, we felt comfortable applying
this criterion in the hope of reducing the
likelihood of bias.
Comment: Some commenters stated
that the Hospital-Wide All-Cause
Unplanned 30-Day Readmission Ratio
measure (NQF #1789) excludes patients
who have an incomplete claims history
from the past year. Commenters sought
clarification as to why this criterion was
not included in the proposed SRR
measure.
Response: We considered adopting
this exclusion for the SRR measure but
decided against doing so because it
would exclude approximately one-third
of ESRD dialysis patients who are
discharged from the hospital during
their first year of ESRD treatment. Many
ESRD beneficiaries are not Medicare
eligible at the initiation of dialysis but
may still be likely to experience a
hospitalization within the first year of
dialysis treatment. As a consequence,

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the exclusion criterion would effectively
eliminate accountability for
readmissions within the first year of
dialysis for patients who were not
Medicare eligible prior to being
diagnosed with ESRD, and we believe
that the measure should assess all
eligible unplanned readmissions of
ESRD dialysis patients.
Comment: Some commenters stated
that risk-adjusting for the discharging
hospital does not sufficiently account
for geographic variability in admission
and readmission rates. Commenters also
recommended risk-adjusting for the
admitting physician because physicians
decide when to admit and re-admit
patients to a hospital.
Response: We decided not to propose
a physician adjustment for three
reasons—our general goal of
encouraging the facility’s coordination
with its physicians; harmonization with
readmission measures implemented in
quality programs for other settings; and
issues with attribution of discharges and
readmissions to specific nephrologists
or other care providers.
Variations in practice patterns may
result in undesirable practices that this
and other ESRD measures are seeking to
improve. In view of the concept of
shared accountability, adjusting for
physician practice also removes a
potential role for the dialysis facility in
modifying physician practice.
Under our regulations (42 CFR
494.150(c)(2)(i)), dialysis facilities are
responsible for overseeing the provision
of care by a multi-disciplinary team,
including the nephrologist treating the
patient. Oversight of individual staff
nephrologist care, including, ensuring
adherence to facility policies and
Medicare regulations, is primarily the
responsibility of the site Medical
Director, a paid employee of the dialysis
facility, and, additionally, the
responsibility of the facility governing
body. Risk adjusting for physician
would place CMS in the position of
suggesting that a dialysis facility is not
responsible for health consequences
experienced by patients as the result of
business or policy decisions by the
facility administration.
We designed the SRR measure to be
aligned as closely as possible with the
existing Hospital-Wide Readmission
Measure (NQF# 1789). Adjusting for
physician effects in this measure would
be inconsistent with similar
readmission measures in other care
settings where we assume that like
dialysis facilities, the physicians
treating the patients fall under the
facility’s responsibility.
Risk-adjusting for the nephrologist
would also create issues with

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attribution. First, ESRD patients are
often under the care of multiple
physicians and attribution to a
particular physician would be difficult.
Second, it is not clear whether it is more
appropriate to hold responsible the
nephrologist seeing the patient
immediately before the index
admission, or the nephrologist seeing
the patient immediately after the
discharge, or both.
We do not adjust our readmission
measures to account for regional
hospitalization practices. We believe
that regional variation in hospital
utilization that is related to that
hospital’s case mix does not justify
differences in dialysis facility
readmission rates because this variation
is modifiable by provider behavior.
Comment: One commenter was
concerned that the double random
effects model used in stage 1 of the
proposed SRR measure is biased against
rural facilities, because these facilities
are likely to be the only major ones
available, and they are likely to be
served by one major hospital.
Commenter requested data on the
measure’s differential impact before
adopting the measure. Commenter also
recommended adjusting the measure to
account for the distance patients travel
from their homes to their dialysis
facility and to the admitting hospital,
because this could influence patient
choices to utilize health care resources.
Response: The risk adjustment
methodology uses a mixed model, with
fixed effects estimated for the dialysis
facilities’ contribution to readmissions,
and random effects estimated for the
hospitals’ contribution to risk for
readmissions. In the event that a rural
facility is paired only with a single
hospital, the associated (random)
hospital effect is estimated by borrowing
information from all the other hospitals
nationwide. There is no reason to
believe that rural facilities (or any
facilities) would be penalized with this
approach. As in the case of care
coordination measures for other
settings, responsibility for outcomes is
shared between the facility and the
hospital.
Comment: Commenter stated that
using a fixed effects model in the
proposed SRR measure is inconsistent
with the use of a random effects model
in the NHSN Bloodstream Infection’s
Adjusted Ranking Metric. Commenter
stated that the random effects model is
more appropriate for the dialysis facility
setting.
Response: Using random effects and
fixed effects requires different statistical
assumptions when estimating the
contribution of a risk factor to patient

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outcomes of care. While we recognize
that using fixed effects, along with
random effects, in the risk-adjustment
methodology for the SRR measure is
different than the model we use to riskadjust the Bloodstream Infection
measure, our risk-adjustment
methodology for the SRR measure is
consistent with the use of fixed effects
models developed for the SMR and
SHR. We also note that the NQF has
endorsed both approaches to riskadjustment. The SRR measure
incorporates both fixed and random
effects in its adjustment model for
particular purposes. When there is only
one hospital and one dialysis facility
serving a community, the random
effects approach basically assumes that
the hospital is drawn at random from
the population of hospitals, as is the
underlying assumption in a random
effects model. Thus, the adjustment for
the hospital in that case would be
essentially that of a randomly selected
hospital. In other instances, where the
same hospital is paired with two or
more dialysis facilities, the overall rate
of readmissions is used in the model to
determine the hospital adjustment. In
either case, the random variation due to
the hospital contributes to the standard
error of the estimated facility response.
There are no additional assumptions in
the fixed effects for facilities, as
opposed to the additional statistical
assumptions required of a random
effect.
Comment: One commenter stated that
the validity of the SRR measure is called
into question by the high number of
risk-adjustments included. Specifically,
commenter stated that risk-adjusting for
BMI at incidence of chronic dialysis is
inappropriate because the recorded
values may have been incorrectly
documented, and because a patient’s
BMI is likely to change significantly
between the initiation of chronic
dialysis and an index hospitalization.
Response: Our risk adjustment is
intended to fairly compare a given
facility to the national level of
performance after properly adjusting for
the case-mix in that facility. Thus, the
adjustments were chosen to reflect
important comorbidities and
characteristics of patients in a given
facility, and were assessed with respect
to their association with the
readmission outcome. We have,
however, avoided risk-adjusting for
facility practices that reflect choices in
care provided and that may result in
better or worse outcomes. We did this
to avoid adjusting away care choices
made by providers that may account for
important differences in facility
outcomes. We are not aware of a

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particular standard defining the number
of risk adjustors in a model that would
call its validity into question, but we
carefully consider the risk model’s
parsimony during its development,
evaluating components for redundancy,
and removing those that are either
redundant or do not contribute to the
model. We continuously re-evaluate our
quality measures for appropriateness,
and our analyses indicate that incident
BMI is a significant and appropriate
predictor of health outcomes in the
ESRD dialysis population.
Comment: One commenter stated that
claims codes used in a non-ESRD
population should not be used to
determine planned readmissions in the
ESRD population, as it the case for the
proposed SRR measure.
Response: The list of acute diagnoses
and planned procedures—both of which
were initially developed for the
Hospital-Wide Readmission Measure
(NQF #1789)—were reviewed by a
nephrologist, by members of the
Technical Expert Panel convened in
April 2012, and by stakeholders during
the CMS public comment period in May
2013 for the purpose of determining
whether they were appropriate for the
SRR measure. This process resulted in
the planned readmissions algorithm as
it is currently specified for the SRR. We
believe the systematically excluded
claims codes identify readmissions that
are planned, and therefore do not reflect
a failure in the transition of care for the
ESRD population. These codes are
applicable to the ESRD population
insofar as they are submitted by
hospitals for ESRD and non-ESRD
patients alike, and are therefore
appropriate for exclusion from the SRR.
Comment: One commenter stated that
claims data is not sufficient to reliably
estimate actual and expected
readmission rates. Commenter
recommended that the proposed SRR
measure should use data from facilities’
electronic medical records.
Response: A key advantage for claimsbased risk-adjustment is the availability
of standardized data elements for all
Medicare beneficiaries. There is
currently no set standard of medical
record compatibility and no national
electronic medical record system across
dialysis provider organizations.
Comment: Some commenters did not
support the adoption of the proposed
SRR measure, because the measure only
has a ‘‘moderate’’ degree of reliability.
Response: We believe that the SRR
clinical measure captures important
quality data for the purposes of the
ESRD QIP program. We believe the SRR
is sufficiently reliable for inclusion in
the ESRD QIP because it meets the

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NQF’s moderate degree of reliability
standard, and particularly in light of our
policies to set the case minimum for this
measure at 11 index discharges and
apply the small-facility adjuster to
facilities with between 11 and 41 index
discharges. We provide detailed
analysis of the reliability of the SRR at
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/Downloads/
AnalysisoftheReliabilityoftheProposed
SRRandSTrRMeasures.pdf. From 2009
through 2012, the SRR has an inter-unit
reliability ranging from 0.49 to 0.54,
which indicates a moderate degree of
reliability. For context, the standard of
an acceptable level of reliability is 0.40
or higher.
Comment: One commenter sought
clarification as to how the proposed
SRR measure will count hospital stays
less than 24 hours, observation days,
and same-day surgical procedures.
Response: The SRR measure assesses
the risk of readmission to an acute care
hospital within 30 days of discharge
from an acute care hospital. Patients
who are not admitted to an acute care
hospital within 30 days of discharge are
not included in the measure. Patients
who are admitted will be included in
the measure, even in cases (such as
same-day surgical procedures) where
admission and discharge occur within a
24-hour period. Such instances account
for 1.3 percent of hospitalizations
eligible to serve as index discharges in
the SRR in 2012.
Comment: One commenter sought
clarification on how the proposed SRR
measure will address unsuccessful
kidney transplants in the six months
following the transplant. Commenter
recommended that the measure exclude
these transplant failures.
Response: As specified, the measure
does not exclude patients who are
hospitalized after a failed kidney
transplant. We realize that this detail
was not clear in the measure
methodology report and we will edit the
report to ensure clarity. As part of our
ongoing quality measure re-evaluation
process, we will examine this issue and
consider how best to explicitly account
for failed transplants in the SRR.
Comment: One commenter sought
clarification on whether ‘‘poisoning by
nonmedical substances’’ encompasses
chronic substance abuse.
Response: We clarify that ‘‘poisoning
by non-medicinal substances’’ does not
include ICD–9 codes for ongoing alcohol
or drug abuse. Please refer to the
breakdown of this CCS group on
AHRQ’s Web site: http://www.hcupus.ahrq.gov/toolssoftware/ccs/
AppendixASingleDX.txt.

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Comment: Some commenters stated
that adopting the SRR measure would
penalize two facilities for the same
readmission: hospitals through the
Hospital Readmissions Reduction
Program and dialysis facilities through
the ESRD QIP. Other commenters stated
that readmissions measures are not an
effective way to increase care
coordination because different types of
facilities (for example, dialysis facilities
and hospitals) are paid separately.
Response: We agree that it is possible
that a hospital and a dialysis facility
could be penalized simultaneously for
the same readmission event. We believe
that both the hospital and the facility
should be held accountable for ensuring
that ESRD patients transition
successfully from the hospital to postacute care in the facility. Although
different types of facilities are paid
separately, we believe that all providers
involved in the transition of care from
acute to non-acute settings share
responsibility for avoiding excessive
rates of unplanned readmissions.
Comment: One commenter stated that
facilities will experience difficulty in
explaining facility scores on the SRR
clinical measure to patients, and that
doing so may be ‘‘politically
challenging’’ when the dialysis facility
is affiliated with the admitting hospital
system.
Response: The CY 2015 ESRD PPS
Proposed rule includes a link to a
measure methodology report (http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html) which
provides an extensive discussion of how
to interpret scores on the SRR measure.
Simply put, a readmission ratio of
greater than 1.0 reflects that a facility’s
patients are at higher risk for
readmissions than they would be at an
average facility. A score below 1.0
reflects that a facility’s patients are at
lower risk for readmissions than they
would be at an average facility. A lower
ratio is preferable because it indicates
that a facility is doing a better job of
managing patient transitions from a
hospital back to the dialysis facility.
Comment: Some commenters
recommended that CMS should delay
the adoption of this measure until it
provides facilities with reports
documenting their performance with
patient-level data, so that facilities can
identify root causes and implement
improvement plans. Commenters also
recommended delaying the adoption of
the proposed SRR measure until it has
been endorsed by NQF.
Response: From March through April
2014, we conducted a dry run of the

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SRR, in which facilities were given the
opportunity to view a quality report that
provided their readmission measure
results. At facility request, we also made
patient-level data available for their
review and entertained facility
comments regarding the measure and
the reporting process. We acknowledge
the desire to delay implementation until
after endorsement by NQF, and the
reasoning behind such a suggestion.
However, we believe that readmissions
represent an important outcome of care
for dialysis patients, given the
population has a readmission rate of
around 36 percent, which is twice that
of the Medicare population.
Comment: One commenter
recommended that CMS continue to
exclude pediatric patients from the
proposed SRR measure and any future
readmission measures, because the
pediatric population is so small that a
single readmission can skew the unit’s
results and may incentivize facilities to
deny admission to pediatric patients.
Response: We thank the commenter
for the recommendation and will take it
into account in future measure
development work.
Comment: One commenter stated that
the SRR measure should exclude
planned readmissions.
Response: We appreciate the
commenter’s support for the SRR’s
exclusion of planned readmissions. This
is an approach we have incorporated
into measures of readmissions across
multiple settings, and we agree that it is
appropriate for this measure because
planned readmissions do not reflect
failures in care transitions and if not
excluded, could bias SRR results for
facilities that treat patients who receive
certain kinds of in-patient hospital care.
Comment: One commenter
recommended that CMS require
hospitals to provide facilities with data
concerning a patient’s dry weight,
dialysis prescription changes, and
continuing antibiotics on the day a
patient is discharged. Commenter stated
that CMS could require hospitals to
provide this data using the hospital
Conditions for Coverage or the Hospital
Value-Based Purchasing Program, and
that this information is crucial for
facilities to identify problems that lead
to unplanned readmissions.
Response: We thank commenters for
the suggestions, which capture an
important issue of care coordination.
We believe all providers should
communicate and coordinate the care of
patients transitioning from one setting
of care to another. We agree that
effective communication of clinically
relevant data is an important goal. We
are exploring means by which to

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encourage the transfer of relevant
information between providers.
For these reasons, we are finalizing
the SRR clinical measure as proposed

for the PY 2017 ESRD QIP and for future
payment years. The technical
specifications for this finalized measure
can be found at http://www.cms.gov/

BILLING CODE 4120–01–C

comments and are finalizing it as
proposed.

3. Performance Period for the PY 2017
ESRD QIP
Section 1881(h)(4)(D) of the Act
requires the Secretary to establish the
performance period with respect to a
payment year, and that the performance
period occur prior to the beginning of
such year. In the CY 2013 ESRD PPS
Final Rule (77 FR 67500), we stated our
belief that, for most measures, a 12month 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 these
measures, and also provides adequate
incentive and feedback for facilities and
Medicare beneficiaries. CY 2015 is the
latest period of time during which we
can collect a full 12 months of data and
still implement the PY 2017 payment
reductions. Therefore, we proposed to
establish CY 2015 as the performance
period for PY 2017 ESRD QIP.
We sought comments on this
proposal. We did not receive any

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4. Performance Standards, Achievement
Thresholds, and Benchmarks for the PY
2017 ESRD QIP
We proposed to adopt performance
standards for the PY 2017 ESRD QIP
measures similar to those we finalized
for PY 2016 (78 FR 72211 through
72213). Section 1881(h)(4)(A) of the Act
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
Medicare payment reduction. We use
achievement thresholds and
benchmarks to calculate scores on the
clinical measures.

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TechnicalSpecifications.html.
BILLING CODE 4120–01–P

a. Performance Standards, Achievement
Thresholds, and Benchmarks for the
Clinical Measures in the PY 2017 ESRD
QIP
With the exception of the NHSN
Bloodstream Infection clinical measure,
we proposed to set the performance
standards, achievement thresholds, and
benchmarks for the PY 2017 clinical
measures at the 50th, 15th, and 90th
percentile, respectively, of national
performance in CY 2013, because this
would give us enough time to calculate
and assign numerical values to the
proposed performance standards for the
PY 2017 program prior to the beginning
of the performance period. We continue
to believe that these standards will
provide an incentive for facilities to
continuously improve their
performance, while not reducing
incentives to facilities that score at or
above the national performance rate for
the clinical measures. As stated in the
CY 2014 ESRD PPS Final Rule (78 FR
72213 through 72215), CY 2014 is the
first year for which we will have data

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for the NHSN Bloodstream Infection
clinical measure. Accordingly, we
proposed to set the performance
standard, achievement threshold, and
benchmark for the NHSN Bloodstream
Infection clinical measure based on the
50th, 15th, and 90th percentiles,
respectively, of national performance in
CY 2014.
We sought comments on these
proposals. The comments and our
responses are set forth below.
Comment: One commenter supported
CMS’s use of benchmarks to drive
quality improvement in the ESRD QIP,
and the scoring methodology proposed
for the PY 2017 program, because it
aligns with the methodology used in the
Hospital Value-Based Purchasing
program.
Response: We thank the commenter
for the support.
Comment: One commenter was
concerned with the proposed
benchmarks for PY 2017, stating that
these benchmarks are ‘‘unrealistic’’
because the increasingly high thresholds
for achievement are making it harder for
facilities to score well, even though they
may be delivering high-quality care to
patients. Commenter stated that for
some measures, circumstances beyond a
facility’s control, such patient eligibility
for a fistula and patient choice, will
impact facility scores.
Response: We disagree that the
proposed benchmarks for PY 2017 are
unrealistic or unachievable.
Benchmarks for clinical measures are
pegged to national performance rates,
such that 15 percent of facilities met the
benchmarks two years before the
performance period. Accordingly, the
benchmarks represent a high level of
achievement, but they are not
unrealistic because they have been met
by 15 percent of facilities nationwide,
and because they represent past (and
typically lower) standards of practice.
Comment: One commenter supported
the use of benchmarks to drive quality
improvement in the ESRD facility
setting, but stated that pegging
benchmarks to national performance
rates creates a ‘‘continually moving
target.’’ The commenter further stated
that without an adjustment for facility
location, population, or demographics,

these benchmarks may penalize a
facility that is performing well in
comparison to its peers. The commenter
recommended that CMS determine
standards for each individual measure
using evidence-based practices and
provide these standards to facilities.
Another commenter recommended CMS
carefully evaluate established
benchmarks to ensure that the high
standards established do not create an
incentive for facilities to deny care to
sicker patients.
Response: We thank the commenter
for the support. We recognize that
pegging benchmarks to national
performance rates creates a continually
moving target for facilities, because
facility performance on clinical quality
metrics typically improves over time.
We believe it is appropriate for
benchmarks to increase, in line with
improvements in national performance
rates, because not increasing the
benchmarks would hold facilities to a
lower standard of care and would
diminish incentives for improvement.
We discussed above the possibility of
using a peer group stratification system
for dialysis facilities as a feasible
approach to risk adjustment. We
welcome input on how such a system
might function, and will consider its
utility for future years of the ESRD QIP.
Comment: One commenter stated that
it is inappropriate for the ESRD QIP to
base payment reductions on retroactive
performance, and recommended that
CMS should finalize measures and
performance standards in a timely
manner, in order to ensure facilities are
made aware of appropriate standards.
Response: The current achievement
scoring methodology generally
compares facility performance in the
performance period to national
performance two years before the
performance period, except in cases
where there is a compelling patient
safety reason to accelerate the adoption
of a clinical measures (for example, the
NHSN measure in the PY 2016 ESRD
QIP). If facility performance during the
performance period were to be
compared to national performance
during the performance period, this
would place facilities on a ‘‘forced
curve’’ and ensure that fifty percent of

66183

facilities fell below the performance
standard. Additionally, we appreciate
that facilities want to learn as soon as
possible what the ESRD QIP measure set
will be for a given CY. For this reason,
we are finalizing measures the PY 2018
program in this final rule, 14 months
before the beginning of the performance
period for those measures. Finally we
publish numerical values for
performance standards as soon as data
reflecting current national facility
performance become available.
Comment: Commenter stated that
facilities should not be scored on a
forced normal curve. Commenter stated
that this practice is not mandated by the
Act, that it has been dismissed as
invalid in quality improvement
initiatives used in other professions,
and that this penalizes facilities for
providing patient-centered care when it
is inconsistent with measure goals and
targets.
Response: We appreciate commenter’s
concerns; however, the ESRD QIP does
not use a normal curve to score
facilities, nor have we proposed to
adopt such a methodology in the
proposed rule.
For these reasons, we are finalizing
the performance standards for the PY
2017 ESRD QIP as proposed.
b. Finalized Performance Standards,
Achievement Thresholds, and
Benchmarks for the Clinical Measures in
the PY 2017 ESRD QIP
Upon the publication of the CY 2015
ESRD PPS Proposed Rule, we did not
have the necessary data to assign
numerical values to the proposed
performance standards, achievement
thresholds, and benchmarks for the
clinical measures, because we did not
yet have complete data from CY 2013.
Since that time, we have collected the
data needed to calculate finalized
performance standards for the PY 2017
ESRD QIP. For all of the clinical
measures, including the SRR clinical
measure, this data comes from the
period of January through December
2013. Table 23 lists the finalized
numerical values for all of the finalized
PY 2017 ESRD QIP clinical measures
except the NHSN Bloodstream Infection
clinical measure.

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TABLE 23—NUMERICAL VALUES FOR THE PERFORMANCE STANDARDS FOR THE PY 2017 ESRD QIP CLINICAL MEASURES
USING THE MOST RECENTLY AVAILABLE DATA
Measure
Vascular Access Type:
%Fistula ..................................
%Catheter ...............................
Kt/V:
Adult Hemodialysis .................

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Performance standard

Achievement threshold

64.46 .............................................
9.92 ...............................................

52.42 .............................................
18.36 .............................................

78.56
3.23

96.89 .............................................

91.08 .............................................

99.35

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations

TABLE 23—NUMERICAL VALUES FOR THE PERFORMANCE STANDARDS FOR THE PY 2017 ESRD QIP CLINICAL MEASURES
USING THE MOST RECENTLY AVAILABLE DATA—Continued
Measure

Performance standard

Achievement threshold

Benchmark

Adult Peritoneal Dialysis .........
Pediatric Hemodialysis ...........
Hypercalcemia ...............................
NHSN Bloodstream Infection .........

87.10 .............................................
94.44 .............................................
1.30 ...............................................
50th percentile of eligible facilities’
performance during CY 2014.
0.996 .............................................

70.19 .............................................
84.15 .............................................
4.78 ...............................................
15th percentile of eligible facilities’
performance during CY 2014.
1.325 .............................................

95.20
99.06
0.00
90th percentile of eligible facilities’
performance during CY 2014
0.555

Standardized Readmission Ratio ..

We believe that the ESRD QIP should
not have lower performance standards
than in previous years. In accordance
with our statements in the CY 2012
ESRD PPS final rule (76 FR 70273), if
the final numerical value for a
performance standard, achievement
threshold, and/or benchmark is worse
than it was for that measure in the PY
2016 ESRD QIP, then we proposed to
substitute the PY 2016 performance
standard, achievement threshold, and/or
benchmark for that measure.
We sought comments on this
proposal. The comments and our
responses are set forth below.
Comment: One commenter supported
the proposal to use performance
standards from the previous year if the
current year’s standards are lower.
Response: We thank the commenter
for the support. For this reason, we will
finalize our proposal to utilize previous
years’ performance standards if they are
higher than those of the next year. The
performance standards for the measures
used in previous years of the ESRD QIP
have not declined. Therefore, for PY
2017, we will use the performance
standards in the above table.
c. Performance Standards for the PY
2017 Reporting Measures
In the CY 2014 ESRD PPS Final Rule,
we finalized performance standards for
the Anemia Management, Mineral
Metabolism, and ICH CAHPS reporting
measures (78 FR 72213). We proposed
to continue to use these performance
standards for these measures in the PY
2017 ESRD QIP. We sought comments
on this proposal. We did not receive any
comments on this proposal.

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5. Scoring the PY 2017 ESRD QIP
Measures
a. Scoring Facility Performance on
Clinical Measures Based on
Achievement
In the CY 2014 ESRD PPS Final Rule,
we finalized a policy for scoring
performance on clinical measures based
on achievement (78 FR 72215). In
determining a facility’s achievement
score for each measure under the PY
2017 ESRD QIP, we proposed to

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continue using this methodology for all
clinical measures. Under this
methodology, facilities receive points
along an achievement range based on
their performance during the proposed
performance period for each measure,
which we define as a scale between the
achievement threshold and the
benchmark.
b. Scoring Facility Performance on
Clinical Measures Based on
Improvement
In the CY 2014 ESRD PPS Final Rule,
we finalized a policy for scoring
performance on clinical measures based
on improvement (78 FR 72215 through
72216). In determining a facility’s
improvement score for each measure
under the PY 2017 ESRD QIP, we
proposed to continue using this
methodology for all clinical measures.
Under this methodology, facilities
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 performance on the measure
during CY 2014. The facility’s
improvement score would be calculated
by comparing its performance on the
measure during CY 2015 (the proposed
performance period) to its performance
rate on the measure during CY 2014.
We sought comments on this
proposal. We did not receive any
comments and are finalizing it as
proposed.
6. Weighting the Total Performance
Score
We continue to believe that while the
reporting measures are valuable, the
clinical measures evaluate actual patient
care and therefore justify a higher
combined weight (78 FR 72217). We
therefore did not propose to change our
policy, finalized most recently in the CY
2014 ESRD PPS (78 FR 72217), to
weight clinical measures as 75 percent
and reporting measures as 25 percent of
the TPS. We did not propose any
changes to the policy that facilities must
be eligible to receive a score on at least
one reporting measure and at least one

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clinical measure to be eligible to receive
a TPS, or the policy that a facility’s TPS
will be rounded to the nearest integer,
with half of an integer being rounded
up.
7. Minimum Data for Scoring Measures
for the PY 2017 ESRD QIP and Changing
the Attestation Process for Patient
Minimums
For the same reasons described in the
CY 2013 ESRD PPS final rule (77 FR
67510 through 67512), for PY 2017 we
proposed to only score facilities on
clinical and reporting measures for
which they have a minimum number of
qualifying patients during the
performance period. Our current policy
is that a facility must treat at least 11
qualifying patients during the
performance period in order to be
scored on a clinical measure (77 FR
67510 through 67511). We did not
propose any changes to this policy.
However, with respect to the
proposed SRR measure, we proposed
that facilities with fewer than 11 index
discharges will not be eligible to receive
a score on that measure. We considered
proposing to adopt the 11 qualifying
patient minimum that we use for the
other clinical measures. We decided,
however, to base facility eligibility for
the measure on the number of index
discharges attributed to a facility,
because the measure calculations are
determined by the number of index
discharges, adjusted for patient casemix. We decided to set the minimum
number of index discharges at 11
because this is consistent with reporting
for the proposed SRR measure during
the dry run conducted earlier this year,
as well as with the implementation of
outcome measures in the Hospital
Readmission Reduction Program, which
base case minimums on the number of
index discharges attributable to the
facility.
Additionally, for the proposed SRR
measure, we proposed to apply the
small-facility adjuster to facilities that
treat 41 or fewer index discharges
because we determined that this was the
minimum number of index discharges
needed to achieve an IUR of 0.4 (that is,

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
moderate reliability) for the proposed
SRR measure. Because the small-facility
adjuster gives facilities the benefit of the
doubt when measure scores can be
unduly influenced by a few outlier
patients, we believe that setting the
threshold at 41 index discharges will
not unduly penalize facilities that treat
small numbers of patients.
In the CY 2014 ESRD PPS Final Rule,
we finalized that the case minimum for
the Mineral Metabolism and Anemia
Management reporting measures is one,
and that facilities that treat one
qualifying patient could attest to this in
CROWNWeb in order to avoid being
scored on the measures (78 FR 72197
through 72199 and 72220 through
72221). In the process of responding to
questions from facilities about the
attestation requirements for the PY 2015
program, however, we found that
facilities were confused by this
requirement. For this reason, we
proposed to remove the option for
facilities to attest that they did not meet
the case minimum for these measures.
Accordingly, facilities that meet the case
minimum of one qualifying patient
would be scored on these measures,
facilities with between 2 and 11
qualifying patients would be required to
report data for all but one qualifying
patient, and facilities with 11 or more
qualifying patients would be required to
report data for all patients. Due to
facility confusion with the attestation
process, we also proposed to remove the
option for facilities to attest that they
did not meet the case minimum for the
ICH CAHPS survey reporting measure.
As we stated above, we did not propose
any further changes to the 30 surveyeligible case minimum for this measure.
We proposed that the ESRD QIP
program will determine facility
eligibility for these measures based on
available data submitted to
CROWNWeb, in Medicare claims, and
to other CMS administrative data
sources.
We sought comments on this
proposal. The comments and our
responses are set forth below.
Comment: Many commenters did not
support the proposed data minimum
requirements for the reporting measures
because the commenters stated that the
requirements unfairly penalize facilities
that may not be able to legitimately
report data for a few patients. As an
alternative, the commenters
recommended applying a consistent
case minimum of 26 for all measures in
the ESRD QIP.
Response: We agree with commenters
that requiring facilities with small
patient populations to report data for all
but one eligible patient may unfairly

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penalize small facilities, because failing
to report data for two or more patients
will have a greater impact on small
facility than on larger facilities.
However, we disagree that it is
appropriate to set the case minimum at
26 for these reporting measures, because
doing so would not allow CMS to
collect baseline data for a large
percentage of patients. We believe that
setting the case minimum at 11 for the
Anemia Management and Mineral
Metabolism reporting measures strikes
the appropriate balance between the
need to maximize data collection and
the need to not unduly penalize small
facilities that are unable, for legitimate
reasons, to report data on all but one
patient. We further believe that setting
the case minimum at 11 is appropriate,
because this would align with the case
minimum policy for the clinical
measures in the ESRD QIP. Therefore,
we are finalizing a case minimum policy
of 11 for the Anemia Management and
Mineral Metabolism reporting measures.
Comment: One commenter did not
support the proposed minimum data
requirements for the ICH CAHPS
measure, because small facilities will
have difficulty obtaining 30 completed
surveys. Commenter recommended
CMS use actual response rates from the
CY 2014 survey to determine eligibility
criteria for this measure in PY 2017 and
PY 2018.
Response: Under the minimum data
requirements proposed for the ICH
CAHPS reporting measure for PY 2017,
a facility that (1) treats fewer than 30
survey-eligible patients during the
eligibility period (that is., CY 2014); or
(2) receives fewer than 30 completed
surveys during the performance period
(that is., CY 2015) is not eligible to
receive a score on the ICH CAHPS
measure. We are finalizing below that
these data minimum requirements also
apply to the ICH CAHPS clinical
measure for PY 2018. Therefore, if a
small facility treats more than 30 ICH
CAHPS eligible patients during the
eligibility period but receives fewer than
30 completed surveys total from the two
survey administrations for the
performance period, that facility will
receive an ‘‘N/A’’ on the ICH CAHPS
measure for that Payment Year. We
disagree with commenter’s
recommendation to use CY 2014
response rates to determine survey
eligibility criteria for the ICH CAHPS
measure because actual response rates
are susceptible to a number of biases,
including facility case-mix, response
propensity, and the mode of survey
administration. We believe the current
minimum data requirement avoids the
possibility of unfairly penalizing

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facilities based on these response biases
by relying solely on the number of
patients treated and the number of
surveys completed to determine ICH
CAHPS scoring eligibility.
Comment: One commenter did not
support calculating clinical measure
performance rates for facilities with
between 11 and 25 eligible patients, and
then applying the small facility adjuster
to these facilities’ scores. One
commenter stated that including
facilities with small numbers of eligible
patients, and compensating (via the
small facility adjuster) for the random
effects that inevitably appear, is not
consistent with the NQS goal of
applying consistent approaches to
quality measurement.
Response: We recognize that measures
using a patient-minimum of 11 are
somewhat less reliable than measures
using a patient-minimum of 26. Despite
this modest decline in the measures’
reliability, we continue to believe that it
is essential to score facilities with
between 11 to 25 eligible patients on the
clinical measures. Based on data from
CY 2013, we have determined that
applying a 26-patient-minimum to all of
the clinical measures (as compared with
continuing the current 11-patientminimum) would result in the exclusion
of an additional 562 facilities from the
ESRD QIP, or 9.2 percent of facilities
overall. Given the inherent tradeoff
between a modest decline in measure
reliability and including these 562
facilities in the ESRD QIP, we believe
that on balance it is more important to
include these facilities. Additionally,
we recognize that the small facility
adjuster is an imperfect mechanism for
accounting for the possibility that a
small number of outlier patients will
disproportionately diminish a facility’s
score on a clinical measure.
Nevertheless, given the program’s
commitment to the 11-patient
minimum, using the adjuster is
preferable to not using any adjustment,
because the adjuster gives small
facilities the benefit of the doubt. We
further believe that this methodology is
consistent with the NQS goal of a
consistent approach to quality
measurement because it is applied to all
clinical measures in the ESRD QIP.
Comment: One commenter did not
support the use of the small facility
adjuster in the ESRD QIP, because
adjustments are haphazardly applied to
facilities with similar numbers of
eligible patients and patient-months in
the numerator. For example, and with
respect to the Peritoneal Dialysis
Adequacy clinical measure, a facility
with 18 eligible patients that misses the
threshold for 3 patients would not

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receive an adjustment, whereas a facility
with 17 eligible patients that misses the
threshold for 3 patients would, as would
a facility with 19 eligible patients that
misses the threshold for 3 patients. If
the small facility adjuster remains in the
ESRD QIP, commenter recommended
rounding the measure score after
applying the adjustment, as opposed to
beforehand, which the commenter states
is the current practice.
Response: The small facility
adjustment is applied consistently to
facilities’ performance rates (for
example, 87.5 percent for the Adult
Peritoneal Dialysis clinical measure),
such that facilities with fewer eligible
patients receive more of an adjustment
than facilities with more eligible
patients. With respect to the example
provided by the commenter, we
recognize that the impact of the small
facility adjustment on measure scores
can be different for facilities with the
same or similar numbers of eligible
patients for each facility. This variable
impact on facility measure scores is
attributable to the achievement and
improvement scoring methodologies
used in the ESRD QIP. Scores on the
clinical measures are determined by
selecting the higher of the facility’s
achievement and improvement scores.
The achievement score is determined by
comparing the adjusted performance
rate to the achievement threshold and
benchmark, and the facility’s
improvement score is determined by
comparing the adjusted performance
rate to the facility’s baseline rate.
Accordingly, the impact of the small
facility adjustment on a measure score
(as opposed to a performance rate) will
depend upon whether a measure is
scored on the basis of achievement or
improvement, as well as the facility’s

improvement threshold. Therefore, the
variable impact of the small facility
adjustment is not inherent to the small
facility adjuster, but rather an
intentional artifact of the ESRD QIP
scoring methodology. Finally, we note
that the small facility adjustment is
applied to the measure performance rate
(as opposed to the measure score), with
rounding performed at the 6th decimal
place. Rounding to the nearest integer
already occurs after the small facility
adjustment is applied, and this is
consistent with the commenters
recommendation on this finalized
policy. The following summarizes the
rounding algorithm that is currently
applied to the performance score
calculation for facilities with 11–25
eligible patients:
• Calculate the measure performance
rate (xi=(#patient-months numerator/
#patient-months denominator)*100),
round to 6th decimal place
• Calculate the facility weight (wi=1ni/26), round to 6th decimal place
• Calculate the Standard Error
(SE(xi)), round to 6th decimal place
• Calculate adjusted measure
performance rate (ti = xi +wi * SE(xi)),
round to nearest integer.
For these reasons, we are finalizing
the minimum data policies as proposed,
with the exception of the patient
minimum policies for the Anemia
Management and Mineral Metabolism
reporting measures. We are finalizing
that a facility must treat at least 11
qualifying patients to receive a score on
the Anemia Management and Mineral
Metabolism reporting measures.
We proposed to continue our policies
that govern when a newly opened
facility would be eligible to be scored on
measures as follows.
• Facilities with a CCN open date on
or after July 1 of the performance period

(for PY 2017, this would be July 1, 2015)
are not eligible to be scored on any
reporting measures except the ICH
CAHPS reporting measure.
• Facilities with a CCN open date on
or after January 1 of the performance
period (for PY 2017, this would be
January 1, 2015) are not eligible to
receive a score on the ICH CAHPS
reporting measure in the PY 2017
program, due to the time it takes to
contract with a CMS-approved thirdparty vendor to administer the survey.
• Facilities are eligible to receive a
score on all of the clinical measures
except the NHSN Bloodstream Infection
clinical measure if they have a CCN
open date at any time before the end of
the performance period.
• Facilities with a CCN open date
after January 1 of the performance
period (for PY 2017, this would be
January 1, 2015) are not eligible to
receive a score on the NHSN
Bloodstream Infection clinical measure,
due to the need to collect 12 months of
data to accurately score the measure.
We also proposed to continue our
policy that a facility will not receive a
TPS unless it receives a score on at least
one clinical measure and at least one
reporting measure. We note that as a
result, facilities will not be eligible for
a payment reduction under the PY 2017
ESRD QIP if they have a CCN open date
on or after July 1, 2015.
We sought comments on these
proposals. We did not receive any
comments and are finalizing them as
proposed.
Table 24 displays the finalized patient
minimum requirements for each of the
reporting measures, as well as the CCN
open dates after which a facility will not
be eligible to receive a score on a
reporting measure.

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TABLE 24—MINIMUM DATA REQUIREMENTS FOR THE PY 2017 ESRD QIP
Measure

Minimum data requirements

CCN open date

Adult Hemodialysis Adequacy
(Clinical).
Adult Peritoneal Dialysis Adequacy (Clinical).
Pediatric Hemodialysis Adequacy (Clinical).
Vascular Access Type: Catheter
(Clinical).
Vascular Access Type: Fistula
(Clinical).
Hypercalcemia (Clinical) ............
NHSN Bloodstream Infection
(Clinical).
SRR (Clinical) ............................
ICH CAHPS (Reporting) ............

11 qualifying patients ..................................................................

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

11–25 patients

11 qualifying patients ..................................................................

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

11–25 patients

11 qualifying patients ..................................................................

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

11–25 patients

11 qualifying patients ..................................................................

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

11–25 patients

11 qualifying patients ..................................................................

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

11–25 patients

11 qualifying patients ..................................................................
11 qualifying patients ..................................................................

N/A ...........................................
On or before January 1, 2015

11–25 patients
11–25 patients

11 index discharges ....................................................................
Facilities with 30 or more survey-eligible patients during the
calendar year preceding the performance period must submit survey results. Facilities will not receive a score if they
do not obtain a total of at least 30 completed surveys during
the performance period..
11 qualifying patients ..................................................................

N/A ...........................................
Before January 1, 2015 ...........

11–41 index discharges
N/A

Before July 1, 2015 ..................

N/A

11 qualifying patients ..................................................................

Before July 1, 2015 ..................

N/A

Anemia Management (Reporting).
Mineral Metabolism (Reporting)

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8. Payment Reductions for the PY 2017
ESRD QIP
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
TPSs receive the largest payment
reductions. For PY 2017, we proposed
that a facility will not receive a payment
reduction if it achieves a minimum TPS
that is equal to or greater than the total
of the points it would have received if:
• It performed at the performance
standard for each clinical measure;
• It received zero points for each
clinical measure that does not have a
numerical value for the performance
standard established through the
rulemaking process before the beginning
of the PY 2017 performance period; and
• It received 10 points (which is the
50th percentile of facility performance
on the PY 2015 reporting measures) for
each reporting measure.
We recognize that these conditions
are more stringent than the conditions
used to establish the minimum TPS in
the PY 2016 ESRD QIP, because this
proposal increases the number of points
a facility would have to receive on each
reporting measure from 5 to 10. The PY
2015 program is the most recent year for
which we will have calculated final
measure scores before the beginning of
the performance period for PY 2017
(that is., CY 2015). We note that facility
performance on the Anemia
Management, Mineral Metabolism,
NHSN Dialysis Event, and ICH CAHPS
reporting measures in the PY 2015
program is so high that the median score
on each of the measures was 10 points.
We proposed to increase the number of
points a facility would have to achieve
for each reporting measure to the 50th
percentile of facility performance on the
PY 2015 reporting measures (that is, the
average of the median scores for each
reporting measure), because a score of 5
on each of these reporting measures is
indicative of a below-average
performance, and we want to
incentivize facilities to provide aboveaverage care.
We sought comments on this
proposal. We did not receive any
comments and are finalizing it as
proposed.
Section 1881(h)(3)(A)(ii) of the Act
requires that facilities achieving the
lowest TPSs receive the largest payment
reductions. In the CY 2014 ESRD PPS
Final Rule (78 FR 72223 through 72224),
we finalized a payment reduction scale
for PY 2016 and future payment years,
such that for every 10 points a facility

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falls below the minimum TPS, the
facility would receive an additional 0.5
percent reduction on its ESRD PPS
payments, with a maximum reduction
of 2.0 percent. We did not propose any
changes to this policy.
Based on the finalized performance
standards listed above, we have
determined that a facility must meet or
exceed a minimum TPS of 60 for PY
2017. For all of the clinical measures
except the NHSN Bloodstream Infection
clinical measure, these data come from
CY 2013. For the NHSN Bloodstream
Infection clinical measure, we set the
performance standard to zero for
purposes of determining this minimum
TPS, because we are not able to
establish a numerical value for the
performance standard through the
rulemaking process before the beginning
of the PY 2017 performance period. We
proposed that facilities failing to meet
the minimum TPS, as established in the
CY 2015 ESRD PPS Final Rule, will
receive payment reductions based on
the estimated TPS ranges indicated in
Table 25 below.

TABLE 25—PAYMENT REDUCTION
SCALE FOR PY 2017 BASED ON THE
MOST RECENTLY AVAILABLE DATA
FROM CY 2013
Total performance
score

Reduction
(%)

100–60 ..................
59–50 ....................
49–40 ....................
39–30 ....................
29–0 ......................

0
0.5
1.0
1.5
2.0

9. Data Validation
One of the critical elements of the
ESRD QIP’s success is ensuring that the
data submitted to calculate measure
scores and TPSs are accurate. We began
a pilot data-validation program in CY
2013 for the ESRD QIP, and we have
procured the services of a datavalidation contractor that is tasked with
validating a national sample of facilities’
records as they report CY 2014 data to
CROWNWeb. Our first priority was to
develop a methodology for validating
data submitted to CROWNWeb under
the pilot data-validation program, and
this continues to be our goal. Once this
methodology has been fully developed,
we will propose to adopt it through the
rulemaking process. For the PY 2016
ESRD QIP (78 FR 72223 through 72224),
we finalized a requirement to sample
approximately 10 records from 300
randomly selected facilities; these
facilities will have 60 days to comply
once they receive requests for records.
We proposed to continue this pilot for

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the PY 2017 ESRD QIP. Under this
continued validation study, we will
sample the same number of records
(approximately 10 per facility) from the
same number of facilities (that is, 300)
during CY 2015. If a facility is randomly
selected to participate in the pilot
validation study but does not provide
CMS with the requisite medical records
within 60 days of receiving a request,
then we proposed to deduct 10 points
from the facility’s TPS. Once we have
developed and adopted a methodology
for validating the CROWNWeb data, we
intend to consider whether payment
reductions under the ESRD QIP should
be based, in part, on whether a facility
has met our standards for data
validation.
We also proposed a feasibility study
for validating data reported to CDC’s
NHSN Dialysis Event Module for the
NHSN Bloodstream Infection clinical
measure. HAIs are relatively rare, and
we proposed that the feasibility study
would target records with a higher
probability of including a dialysis event,
because this would enrich the
validation sample while reducing the
burden on facilities. The methodology
for this proposed feasibility study
would resemble the methodology used
by the Hospital Inpatient Quality
Reporting Program to validate the
central line-associated bloodstream
infection measure, the catheterassociated urinary tract infection
measure, and the surgical site infection
measure (77 FR 53539 through 535553).
Specifically, we proposed to
randomly select nine facilities to
participate in the feasibility study. A
CMS contractor will send these facilities
quarterly requests for lists of all positive
blood cultures drawn from its patients
during the quarter, including any
positive blood cultures that were
collected from the facility’s patients on
the day of, or the day following, their
admission to a hospital. Facilities will
have 60 days to respond to quarterly
requests for lists of positive blood
cultures. A CMS contractor will then
develop a methodology for determining
when a positive blood culture qualifies
as a ‘‘candidate dialysis event,’’ and is
therefore appropriate for further
validation. Once the contractor
determines a methodology for
identifying candidate dialysis events,
the contractor will analyze the records
of patients who had a positive blood
culture in order to determine if the
facility reported dialysis events for
those patients in accordance with the
NHSN Dialysis Event Protocol. If the
contractor determines that additional
medical records are needed from a
facility to validate whether the facility

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accurately reported the dialysis events,
then the contractor will send a request
for additional information to the facility,
and the facility will have 60 days from
the date of the letter to respond to the
request. Overall, we estimate that, on
average, quarterly lists will include two
positive blood cultures per facility, but
we recognize these estimates may vary
considerably from facility to facility. If
a facility is randomly selected to
participate in the feasibility study but
does not provide CMS with the requisite
lists of positive blood cultures or the
requisite medical records within 60
days of receiving a request, then we
proposed to deduct 10 points from the
facility’s TPS.
The goals of the proposed feasibility
study will be five-fold: (1) To estimate
the burden and associated costs to
facilities of validating the NHSN
Bloodstream Infection clinical measure;
(2) to assess the costs to CMS to validate
this measure; (3) to develop a
methodology for identifying candidate
dialysis events from lists of positive
blood cultures; (4) to develop a
methodology for determining whether a
facility accurately reported dialysis
events under the NHSN Bloodstream
Infection clinical measure; and (5) to
reach some preliminary conclusions
about whether facilities are accurately
reporting data under the NHSN
Bloodstream Infection clinical measure.
Based on the results of this study, we
will consider the feasibility of proposing
in future rulemaking to validate the
NHSN Bloodstream Infection clinical
measure for all facilities.
We sought comments on this
proposal. The comments and our
responses are set forth below.
Comment: Some commenters
supported the proposal to validate data
submitted for the NHSN Bloodstream
Infection measure, and stated that
asking facilities to provide blood culture
reports on a quarterly basis is
appropriate. However, one commenter
also recommended that the proposed
feasibility study be more robust. In
particular, the commenter stated that
previous validation studies of NHSN
data revealed that facilities were
underreporting dialysis events, and that
facilities did not understand when to
report that an infection was a ‘‘dialysis
event.’’ The commenter recommended
that these findings should be
incorporated into the proposed
feasibility study. Commenters also
recommended expanding the number of
facilities undergoing validation beyond
9, because the ‘‘proposed nine-facility
feasibility study is not robust enough to
evaluate true validation concerns.’’
Commenters recommended auditing the

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NHSN data of 10 percent of facilities,
because this would create a strong
incentive for facilities to accurately
report dialysis events. Another
commenter stated that the validation
study should be expanded to NHSN
data that is used directly used to score
the NHSN Bloodstream Infection
measure.
Response: We thank the commenters
for their support. We initially
considered expanding the scope of the
feasibility study to include more than
nine facilities. We decided not to do so
because we thought it was important to
demonstrate the study’s feasibility, and
to further develop the study’s
methodology, before expanding the
study to include more facilities.
Expanding the study to include more
facilities before demonstrating its
feasibility and validity could lead to a
waste of agency resources. Furthermore,
we are aware of existing studies that call
into question the validity of data
entered into the NHSN system. The
existence of these studies is one of the
reasons why we proposed to conduct
the feasibility study, and results from
previous studies will be taken into
account when developing the
methodology for the feasibility study.
Additionally, we appreciate the
recommendation to use a validation
study of NHSN data to audit ten percent
of facilities, and we agree that such a
process could improve the validity of
NHSN data overall. We will consider
expanding the scope of the study once
we have reviewed the results of the
feasibility study.
Comment: Some commenters stated
that the CROWNWeb validation pilot is
actually an audit of facility data, and is
not focused on testing a new payment
or delivery model. Commenters were
concerned that the pilot places facilities
at risk for incurring a 2 percent payment
reduction and recommended
‘‘intermediate penalties’’ as an
alternative. Commenters further
recommended that CMS ensure that
facilities have some means to dispute
CMS claims that they reported invalid
data.
Response: We agree that one of the
purposes of the validation pilot is to
identify instances in which facilities
reporting invalid data to CROWNWeb.
However, we do not believe it is
appropriate to designate the validation
pilot as an ‘‘audit’’ of facility data,
because the ultimate objective of the
study is to improve the validity of data
reported to CROWNWeb, rather than to
penalize facilities for reporting invalid
data. We further note that we did not
propose to penalize facilities for
reporting invalid data; if and when we

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propose to do so in future rulemaking,
we will consider implementing an
appeal process facilities can use to
contest CMS determinations that invalid
data was reported to CROWNWeb.
Finally, we recognize that facility noncompliance with the requirements of the
CROWNWeb validation pilot may result
in payment reductions that would not
otherwise be imposed. We believe this
is warranted, because facility
compliance is essential to the success of
the validation pilot, and we wish to
provide a strong incentive for facilities
to transmit the requested medical
records needed to validate CROWNWeb
data.
Comment: One commenter stated that
CROWNWeb should be fully functional
before assessing penalties for submitting
invalid data.
Response: We agree that is it essential
to improve the functionality of
CROWNWeb, and we believe that the
pilot validation study will assist in
identifying systematic issues with
CROWNWeb that diminish the system’s
functionality. We did not propose to
impose penalties on facilities for
reporting invalid data, and we will
consider the functionality of
CROWNWeb if we decide to propose to
impose such penalties in future
rulemaking.
Comment: One commenter
recommended that CMS should make
the methodology for the proposed
NHSN validation feasibility study
transparent and seek input from
nephrologists and dialysis professionals
when developing the methodology.
Response: We agree that it is
important to make the methodology of
the feasibility study transparent. We
will make the methodology publically
available on a CMS Web site and notify
the public of its availability via a
CROWN Memo or similar mode of
formal communication. Additionally,
we confirm that the CMS contractor
conducting the validation feasibility
study will consult nephrologists and
dialysis professionals when developing
the study’s methodology.
Comment: Some commenters did not
support the proposal to validate data
used to calculate the NHSN
Bloodstream Infection measure because
the commenter stated that the measure
should have been validated before it
would adopted in the ESRD QIP.
Response: NHSN provides detailed
trainings, protocols, and guidance for
users to follow to ensure that data are
reported in a standardized manner and
according to requirements. A small
validation study was conducted prior to
the adoption of the measure in the ESRD
QIP. Information from this study is

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described in the measure specifications.
We recognize that continuous internal
and external evaluation and quality
checks of the reported data are
important for accuracy and reliability.
We further note that one of the purposes
of the feasibility study is to improve the
validity of data reported to NHSN, and
we continue to believe that one of the
outcomes of the study will be to
improve the validity of the NHSN
Bloodstream Infection measure.
Comment: Some commenters did not
support the proposal to impose a 10point reduction on facilities that fail to
send medical records to CMS within the
60-day timeframe, because the 60-day
time frame is too short, and the penalty
discriminates against facilities selected
to participate in the validation studies,
particularly small facilities.
Commenters also stated that the ESRD
CfCs already require facilities to comply
with such requests. Commenter further
stated that CMS has not demonstrated
that facilities do not comply with these
requests, and therefore did not support
a penalty for non-compliance until the
problem has been demonstrated. One
commenter also questioned whether the
Act authorizes CMS to deduct points
from a facility’s TPS if it does not
comply with the requirements of data
validation studies.
Response: We disagree that the 60-day
time frame is too short for facilities to
respond to requests to validate medical
records, because facilities should have
these records on hand, and sampled
facilities will only be required to submit
a small number of medical records the
CROWNWeb and NHSN Bloodstream
Infection studies. We recognize that the
ESRD CfCs already require facilities to
comply with these requests for medical
records, and we are not aware of any
evidence suggesting that they are not
already doing so. Nevertheless, we
continue to believe that assessing
penalties on a facility’s TPS is the surest
way to ensure that facilities provide the
medical records needed to complete the
studies. This is because facilities are
typically not surveyed for compliance
with the ESRD CfCs on any given year,
so deducting points from a facility’s TPS
provides a more certain process for
penalizing noncompliance with the
requirements of the validation studies.
Our proposal to deduct points from a
facility’s TPS is consistent with section
1881(h)(3)(A)(i) of the Act, because it is
part of our a methodology for assessing
the total performance of each provider
of services and renal dialysis facility
based on performance standards with
respect to the measures selected. The
main purpose of these studies is to
assess whether facilities are reporting

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accurate data, and we have determined
that review of medical records is
integral to that determination.
For these reasons, we are finalizing, as
proposed, CROWNWeb pilot datavalidation program and the feasibility
study for validating data reported to
CDC’s NHSN Dialysis Event Module for
the NHSN Bloodstream Infection
clinical measure.
10. Monitoring Access to Dialysis
Facilities
Public comments on the proposal to
adopt the Standardized Hospitalization
Ratio measure in the PY 2014 ESRD QIP
(76 FR 70267) expressed concerns that
‘‘the measure may lead to ‘cherrypicking’ of patients based on their risk
of hospitalizations, causing access to
care issues for patients with more severe
illness.’’ We share commenters’
concerns about the SHR measure, and
we believe that these concerns equally
apply to other outcome measures
proposed for the ESRD QIP. We
recognize that, in general, inadequate
risk adjustment in outcome measure
calculations can create an incentive for
facilities to deny services to sicker
patients, because these patients’
illnesses would not be properly
accounted for in the risk-adjustment
calculations. We believe that outcome
measures proposed and adopted for the
ESRD QIP properly risk adjust for
patients with severe illnesses, but we
remain concerned that misperceptions
to the contrary might negatively impact
access to dialysis therapy.
Because we proposed to adopt the
SRR clinical measure for the PY 2017
program, and also proposed to adopt the
STrR clinical measure for the PY 2018
program, we proposed to initiate a
monitoring program focused on access
to dialysis therapy. This program would
compare dialysis data before and after
the adoption of an outcome measure,
looking for changes in admission and
discharge practices, as well as changes
in rates and patterns of involuntary
discharges. Specifically, this program
would assess and analyze the
characteristics of beneficiaries admitted
to dialysis centers (stratified by location,
size, and setting) in order to determine
when and if selective admission and
discharge practices are coupled with
negative patient attributes and trends
over time. We believe this program will
enable us to identify patterns that are
indicative of diminished access to
dialysis therapy.
We sought comments on this
proposal. The comments and our
responses are set forth below.
Comment: Some commenters
supported the proposed access study

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because monitoring and remediating
cases of cherry-picking are important for
ensuring that patients receive high
quality care.
Response: We thank commenters for
their support.
Comment: One commenter requested
more information from CMS regarding
its proposal to monitor dialysis facility
admission and discharge practices,
because this proposal may lead to
additional reporting (and burden) for
facilities.
Response: We are still in the process
of finalizing the methodology for the
proposed access study. Once we have
developed the methodology, we will
make it publically available on a CMS
Web site and notify the public of its
availability via a CROWN Memo or
similar mode of formal communication.
We clarify, however, that the study will
make use of existing data and will not
impose any additional burden on
facilities.
Comment: One commenter
recommended that, instead of
performing the proposed monitoring
access study, CMS focus its efforts on
developing a more comprehensive set of
comorbidities for use in adjusting the
standardized outcome measures.
Response: We appreciate the
recommendation to further develop the
risk-adjustment methodologies
associated with the SRR and STrR
measures, and we will continue to do so
as part of our ongoing measure reevaluation process. However, we
disagree that efforts to develop riskadjustment methodologies should be
pursued in lieu of the proposed access
study. We believe both activities are
important, and we intend to pursue
them at the same time.
For these reasons, and because we are
finalizing the SRR clinical measure for
PY 2017 (as discussed in more detail
above), and the STrR measure for PY
2018 (as discussed in more detail
below), we are finalizing that we will
conduct a study to determine the impact
of adopting the SRR and STrR measures
on access to care. Further details about
the study and its methodology will be
made available on a CMS Web site, and
facilities will be notified via a CROWN
Memo when this information is
available.
11. Extraordinary Circumstances
Exception
Many comments on the CY 2014
ESRD PPS proposed rule included the
recommendation to exempt a facility
from all the requirements of the ESRD
QIP clinical and reporting measures
during the time the facility was forced
to close temporarily due to a natural

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disaster or other extraordinary
circumstances. In response to these
comments, we agreed that ‘‘there are
times when facilities are unable to
submit required quality data due to
extraordinary circumstances that are not
within their control, and we do not wish
to penalize facilities for such
circumstances or unduly increase their
burden during these times’’ (78 FR
72209).
Section 1881(h)(3)(A)(i) of the Act
states, ‘‘[T]he Secretary shall develop a
methodology for assessing the total
performance of each provider of services
and renal dialysis facility based on
performance standards with respect to
the measures selected under paragraph
(2) for a performance period established
under paragraph (4)(D).’’ Given the
possibility that facilities could be
unfairly penalized for circumstances
that are beyond their control, we believe
the best way to implement an
extraordinary circumstances exception
is under the authority of this section.
We therefore proposed to interpret
section 1881(h)(3)(A)(i) of the Act to
enable us to configure the methodology
for assessing facilities’ total performance
such that we will not require a facility
to submit, nor penalize a facility for
failing to submit, data on any ESRD QIP
quality measure data from any month in
which a facility is granted an
extraordinary circumstances exception.
Under this policy, we proposed that,
in the event of extraordinary
circumstances not within the control of
the facility (such as a natural disaster),
for the facility to receive consideration
for an exception from all ESRD QIP
requirements during the period in
which the facility was closed, the
facility would need to submit a CMS
Disaster Extension/Exception Request
Form through www.qualitynet.org
within 90 calendar days of the date of
the disaster or extraordinary
circumstance. We proposed that the
facility would need to provide the
following information on the form:
• Facility CCN;
• Facility name;
• CEO name and contact information;
• Additional contact name and
contact information;
• Reason for requesting an exception;
• Dates affected;
• Date facility will start submitting
data again, with justification for this
date; and
• Evidence of the impact of the
extraordinary circumstances, including
but not limited to photographs,
newspaper, and other media articles.
Incomplete forms will be returned to
the facility without further review of
their content. We will evaluate the

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request and provide the facility with a
response. If we determine that the
facility was, in fact, closed for a period
of time due to extraordinary
circumstances, then we will exempt the
facility from the ESRD QIP requirements
for any month during which the facility
was closed due to the extraordinary
circumstances. As such, a facility
granted a temporary exception will be
scored on each measure only for the
months during a performance period not
covered by the exception. For example,
if a facility is granted an extraordinary
circumstances exception for the time
period between January 15 and February
15, 2015, then the facility will not be
required to report, and will not be
penalized for not reporting, data on any
ESRD QIP measure data for January and
February of CY 2015. The effect of this
proposal is that if a facility, because it
has been granted an exception, cannot
meet the reporting requirements that
apply to a measure, the facility will not
receive a score on the measure. For
example, if a facility is granted an
extraordinary circumstances exception
for February 2015, then that facility
would not be scored on the NHSN
Bloodstream Infection clinical measure
for the applicable payment year,
because this measure requires facilities
to submit 12 months of data in order to
avoid receiving zero points on the
measure.
We stated that this policy would not
preclude us from granting exceptions to
facilities that have not requested them
when we determine that an
extraordinary circumstance (for
example, a hurricane or other act of
nature) affects an entire region or locale.
If we made the determination to grant
an exception to facilities in a region or
locale, then we proposed to
communicate this decision through
routine communication channels to
facilities, vendors, and Networks,
including but not limited to issuing
memoranda, emails, and notices on a
CMS-approved Web site.
We sought comments on this
proposal. The comments and our
responses are set forth below.
Comment: Some commenters
supported the proposal to add an
Extraordinary Circumstances Exception
to the ESRD QIP, because facilities
should not be required to meet the
program’s requirements when they are
forced to close.
Response: We thank commenters for
their support.
Comment: Some commenters
supported the proposal to add an
Extraordinary Circumstance Exception
but sought clarification as to what
constitutes an ‘‘extraordinary

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circumstance.’’ Commenters
recommended that events such as fires
and explosions, which are not typically
considered ‘‘natural disasters’’ should
be considered ‘‘extraordinary
circumstances.’’ Commenters also
recommended granting exceptions for
facilities that temporarily close for
renovation or relocate.
Response: The Extraordinary
Circumstances Exception is intended to
address facility closures beyond the
control of the facility, and is not limited
to natural disasters. We note that
eligibility determinations for this
exception will be made on a case-bycase basis and based entirely on
evidence and documentation that
facilities present.
Comment: One commenter
recommended that camps and shortterm dialysis units should have an
opportunity to take advantage of the
extraordinary circumstances exception,
because they operate under unique
circumstances that do not apply to most
facilities.
Response: We appreciate that camps
and short-term dialysis units operate
under unique circumstances. However,
these circumstances are categorically
different than the types of
circumstances covered by the
Extraordinary Circumstances Exception,
because their closure is within the
facility’s control and is generally
planned in advance. Accordingly,
operating for a short period of time will
not be grounds for granting an
Extraordinary Circumstances Exception.
For these reasons, we are finalizing
the proposal to adopt an Extraordinary
Circumstance Exception in the ESRD
QIP, beginning with the PY 2017
program.
F. Requirements for the PY 2018 ESRD
QIP
1. Modification of the Mineral
Metabolism Reporting Measure
Beginning in PY 2018
In the CY 2013 ESRD QIP, we adopted
a reporting measure focused on mineral
metabolism, which was based in part on
NQF #0255 (77 FR 67487 through
67487). In the CY 2014 ESRD PPS, we
finalized two revisions to the Mineral
Metabolism reporting measure: (1) To
include home peritoneal dialysis
patients in the measure; and (2) to
remove serum calcium reporting from
the measure because of its reporting
under the Hypercalcemia clinical
measure (78 FR 72197 through 72198).
Accordingly, in order to meet the
requirements for the Mineral
Metabolism reporting measure, facilities
currently must report serum phosphorus

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values for each qualifying patient
treated at the facility on a monthly
basis.
Since the publication of the CY 2014
ESRD PPS final rule, members of the
renal community requested an ad hoc
NQF review of measure #0255, focusing
in particular on whether the measure
should be updated to allow for the
reporting of plasma phosphorus data.
The NQF Consensus Standards
Approval Committee (CSAC) reviewed
the measure and recommended that the
phosphorus reporting measure (NQF
#0255) be modified to allow for the
reporting of plasma phosphorus data as
an alternative to serum phosphorus
data. Although our TEP reviewed this
issue and concluded that measure #0255
should remain unchanged, we concur
with the CSAC’s recommendation due
to the CSAC’s ad hoc review of lab data
demonstrating the equivalency of
plasma and serum measurements of
phosphorus, as well as an additional
concurrent internal review of the data
by CMS and our measure development
contractor. We are in agreement with
the CSAC that readings of phosphorus
using either plasma or serum are
appropriate for the measure. As the
measure developer for NQF#255, we are
also in the process of revising the
specifications for that measure and plan
to submit the revised measure
specifications to the NQF for
endorsement. We believe the change to
these specifications is non-substantive
because plasma readings are an
alternative method of reporting on

phosphorus data and, as we state above,
are roughly equivalent to serum
phosphorus readings.
We considered proposing to allow
facilities to report plasma phosphorus
data for the Mineral Metabolism
reporting measure in the PY 2017
program, but we have determined that it
is not operationally feasible to configure
the relevant data fields in CROWNWeb
to accept plasma phosphorus readings
prior to January 1, 2015, the beginning
of the performance period for that
program year. For this reason, we
proposed to modify the measure
specifications for the Mineral
Metabolism reporting measure to allow
facilities to report either serum
phosphorus data or plasma phosphorus
data, beginning with the PY 2018
program. We further clarified that we
were not proposing any other changes to
the measure specifications for the
Mineral Metabolism reporting measure.
We sought comments on this
proposal. The comments and responses
are set forth below.
Comment: One commenter supported
the proposal to allow facilities to report
both plasma and serum phosphorous
under the Mineral Metabolism reporting
measure, beginning in PY 2018.
Response: We thank the commenter
for the support.
Comment: Many commenters
supported the proposal to modify that
Mineral Metabolism reporting measure,
but sought clarification as to why it is
not feasible to do so starting in PY 2017,
and urged CMS to adopt the change for
PY 2017.

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Response: We thank commenters for
their support. We have already begun
working to incorporate this modification
into the CROWNWeb system. However,
we do not expect to be able to fully
implement the modification by January
1, 2015 (that is, the beginning of the PY
2017 performance period), so it is not
possible to collect plasma phosphorus
data for the PY 2017 program.
For these reasons, we are finalizing
the proposed modifications to the
Mineral Metabolism reporting measure,
beginning with the PY 2018 program.
The technical specifications for this
finalized measure can be found at
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html.
2. New Measures for the PY 2018 ESRD
QIP and Future Payment Years
For the PY 2018 ESRD QIP, we
proposed to continue to use all of the
measures proposed for the PY 2017
ESRD QIP, with the exception of the
ICH CAHPS reporting measure, which
we proposed to convert to a clinical
measure. We also proposed to adopt five
new measures. The proposed new
measures include one new outcome
measure evaluating transfusions in the
ESRD population, one measure on
pediatric peritoneal dialysis adequacy,
one measure on pain assessment, one
measure on clinical depression
screening, and one measure on
healthcare personnel influenza
vaccination (see Table 26).

TABLE 26—NEW MEASURES PROPOSED FOR THE PY 2018 ESRD QIP
NQF#

Measure title

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

Pediatric Peritoneal Dialysis Adequacy, a clinical measure.
Percentage of pediatric peritoneal dialysis patient-months with spKt/V greater than or equal to 1.8 (dialytic + residual).
In-Center Hemodialysis Consumer Assessment of Providers and Systems Survey,1 a clinical measure.
Proportion of responses to rating items grouped into three composite measures and three global ratings.
Standardized Transfusion Ratio, a clinical measure.
Risk-adjusted standardized transfusion ratio for dialysis facility patients.
Pain Assessment and Follow-Up, a reporting measure.
Percentage of adult patients with documentation of pain assessment through discussion with the patient including the
use of a standardized tool(s) on each visit and documentation of a follow-up place when pain is present.
Depression Screening and Follow-Up, a reporting measure.
Percentage of adult patients screened for clinical depression using a standardized tool and follow-up plan is documented.
NHSN Healthcare Personnel Influenza Vaccination, a reporting measure.

0258 ...........................
N/A .............................
N/A 2 ...........................
N/A 3 ...........................

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N/A 4 ...........................

1 The proposed dimensions of the ICH CAHPS survey for use in the PY 2018 ESRD QIP are: Nephrologists’ Communication and Caring, Quality of Dialysis Center Care and Operations, Providing Information to Patients, Overall Rating of the Nephrologists, Overall Rating of the Dialysis
Center Staff, and Overall Rating of the Dialysis Facility.
2 We note that the NQF has previously endorsed a pain measure (NQF #0420) upon which this measure is based.
3 We note that the NQF has previously endorsed a depression measure (NQF #0418) upon which this measure is based.
4 We note that the NQF has previously endorsed a vaccination measure (NQF #0431) upon which this measure is based.

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a. Standardized Transfusion Ratio
(STrR) Clinical Measure

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Background
We are concerned that the inclusion
of erythropoiesis-stimulating agents
(ESAs) in the ESRD PPS and the
removal of the Hemoglobin Less than 10
g/dL clinical measure from the ESRD
QIP measure set could result in the
underutilization of ESAs to manage
anemia in ESRD patients, with the result
that these patients have lower achieved
hemoglobin levels and more frequently
need red-blood-cell transfusions.
In addition, patients with ESRD who
are eligible to receive a kidney
transplant and are transfused risk
becoming sensitized to the donor pool,
thereby making it less likely that a
transplant will be successful. Blood
transfusions also carry a small risk of
transmitting blood-borne infections to
the patient, and the patient could
additionally develop a transfusion
reaction. Furthermore, using infusion
centers or hospitals to transfuse patients
is expensive, inconvenient, and could
compromise future vascular access.
Overview of Measure
The Standardized Transfusion Ratio
(STrR) for all adult Medicare ESRD
patients is a ratio of the number of
observed eligible blood transfusion
events occurring in patients dialyzing at
a facility to the number of eligible
transfusions that would be expected
from a predictive model that accounts
for patient characteristics within each
facility. Eligible transfusions are those
that do not have any claims pertaining
to the comorbidities identified for
exclusion in the 12 months immediately
prior to the transfusion date.
We plan to submit the STrR measure
to NQF for review at the next available
call for measures. 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)(iv) 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
section 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.

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We have given due consideration to
endorsed measures, as well as those
adopted by a consensus organization,
and we proposed this measure under
the authority of 1881(h)(2)(B)(ii) of the
Act. NQF has not endorsed and a
consensus organization has not adopted
a measure on transfusions. Because the
proposed STrR measure has the
potential to decrease transfusions
resulting from underutilization of
anemia medications, we believe it is
appropriate to adopt the STrR in the PY
2018 ESRD QIP. We considered
proposing to adopt the measure for the
PY 2017, but we recognized that this is
a new measure, and wanted to give
facilities more time to familiarize
themselves with it. The Measure
Application Partnership, in its February
1, 2013 Pre-Rulemaking Report,
supported the direction of the measure,
stating that it ‘‘addresses an important
concept, but the establishment of
guidelines for hemoglobin range is
needed.’’ We have received public
comments and input from a TEP that we
convened on a prototype STrR measure,
and finalized development of the
proposed STrR measure in September
2013. The resulting measure
specifications did not include
hemoglobin thresholds, as no input
from the TEP or public comments
supported moving forward with
thresholds included in the measure. We
therefore believe these efforts meet the
requirements for further development of
the STrR prior to implementation in the
ESRD QIP.
In the process of preparing to submit
the measure for NQF review, we
conducted analyses on the reliability of
the STrR measure. The full analysis is
available at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_
TechnicalSpecifications.html. The STrR
is not a simple average; instead, we
estimate the IUR using a bootstrap
approach, which uses a resampling
scheme to estimate the within facility
variation that cannot be directly
estimated by ANOVA. A small IUR
(near 0) reveals that most of the
variation of the measures between
facilities is driven by ‘‘random noise,’’
indicating the measure would not be a
reliable characterization of the
differences among facilities, whereas a
large IUR (near 1) indicates that most of
the variation between facilities is due to
the real difference between facilities.
We have determined that the average
IUR for the STrR measure is 0.54,
meaning that about half of the variation
in the measure can be attributed to
between-facility differences, and about

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half to within-facility variation. This
value of IUR indicates a moderate
degree of reliability and is consistent
with the reliability of other outcome
measures in CMS quality reporting and
VBP programs. We therefore believe that
facilities can be reliably scored on the
proposed STrR measure.
Data Sources
Data for the measure come from
various CMS-maintained data sources
for ESRD patients including Program
Medical Management and Information
System (PMMIS/REMIS), Medicare
claims, the CROWNWeb database, the
CMS Annual Facility Survey (Form
CMS–2744), Medicare dialysis and
hospital payment records, the CMS
Medical Evidence Form (Form CMS–
2728), transplant data from the OPTN,
the Death Notification Form (Form
CMS–2746), the Nursing Home
Minimum Dataset, and the Social
Security Death Master File. These data
sources include all Medicare patients.
Information on transfusions is obtained
from Medicare Inpatient and Outpatient
Claims SAFs.
Outcome
The outcome of interest for the STrR
is blood transfusion events (defined as
the transfer of one or more units of
blood or blood products into the
recipient’s blood stream) among
Medicare ESRD patients dialyzing at the
facility during the inclusion time
periods.
Cohort
The cohort for the STrR includes all
adult Medicare ESRD dialysis patients
who have been documented as having
had ESRD for at least 90 days.
Inclusion and Exclusion Criteria
Patients will not be included in the
STrR during the first 90 days of ESRD
dialysis treatment. Starting with day 91
after onset of ESRD, a patient is
attributed to a facility once he or she has
been receiving dialysis there for 60
days. When a patient transfers from one
facility to another, we are proposing that
the patient would continue to be
attributed to the original facility for 60
days from the date of the transfer.
Starting on day 61, the patient would be
attributed to the transferee facility.
Patients would be excluded from the
measure for three days prior to the date
they receive a transplant to avoid
including transfusions associated with
the transplant hospitalization.
We also proposed to require that
patients reach a certain level of
Medicare-paid dialysis bills to be
included in the STrR, or that patients

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have Medicare-paid inpatient claims
during the period. This requirement was
intended to assure completeness of
transfusion information for all patients
included in the measure calculation by
excluding non-Medicare patients and
patients for whom Medicare is a
secondary payer, because they are not
expected to have complete information
on transfusion available in the claims
data. For each patient, a month is
included as a month at risk for
transfusion if that month in the period
is considered ‘‘eligible.’’ A month is
considered eligible if it is within two
months of a month in which a patient
has $900 of Medicare-paid claims or at
least one Medicare-paid inpatient claim.
The $900 amount represents
approximately the tenth percentile of
monthly dialysis claims per patient.
In addition, a transfusion event is
eligible for inclusion in the STrR
measure if the patient did not present
with certain comorbid conditions
during the 12 month period
immediately prior to the date of the
transfusion event. We proposed to
exclude these transfusion events

because the identified comorbid
conditions are associated with a higher
risk of transfusion and require different
anemia management practices that the
measure is not intended to address.
Specifically, we proposed that a
transfusion event will be excluded from
the measure if the patient, during the 12
month look back period, had a Medicare
claim for: Hemolytic and aplastic
anemia; solid organ cancer (breast,
prostate, lung, digestive tract and
others); lymphoma; carcinoma in situ;
coagulation disorders; multiple
myeloma; myelodysplastic syndrome
and myelofibrosis; leukemia; head and
neck cancer; other cancers (connective
tissue, skin, and others); metastatic
cancer; or sickle cell anemia. The
specific diagnoses used to identify each
of these conditions are listed in the
proposed measure specifications, which
are available at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_
TechnicalSpecifications.html.
Risk Adjustment
The denominator of the STrR uses
expected transfusions calculated from a

Cox model that is extended to handle
repeated events. For computational
purposes, the proposed STrR measure
adopts a model with piecewise-constant
baseline rates. A stage 1 model is fitted
to the national data with piecewiseconstant baseline rates across facilities.
Transfusion rates are adjusted for:
Patient age; diabetes as a cause of ESRD;
duration of ESRD; nursing home status;
BMI at incidence; comorbidity index at
incidence; and calendar year. This
model allows baseline transfusion rates
to vary between facilities, and applies
the regression coefficients for the riskadjustment model to each facility
identically. This approach is robust to
possible differences between facilities in
the patient mix being treated. The
second stage uses the risk-adjustment
factor from the first stage as an offset.
The stage 2 model then calculates the
national baseline transfusion rate.
The STrR measure includes the
following risk adjustors, which are
obtained from the following data
sources:

Risk adjustor

Data source

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Age ......................................................................................................................................................................
Diabetes as cause of ESRD ...............................................................................................................................
BMI at incidence of ESRD ..................................................................................................................................
Comorbidity index ................................................................................................................................................
Nursing home status ...........................................................................................................................................
Duration of ESRD ................................................................................................................................................

More details on the risk-adjustment
calculations, and the rationale for
selecting these risk adjustors and not
others, can be found at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html.
As indicated in the table above, the
proposed STrR measure risk adjusts
predominantly on the basis of patient
characteristics collected on CMS Form
2728, and we believe that this riskadjustment methodology is reliable and
valid.
NQF evaluates measures on the basis
of four criteria: Importance, scientific
acceptability, feasibility, and usability.
The validity and reliability of a
measure’s risk-adjustment calculations
fall under the ‘‘scientific acceptability’’
criterion, and Measure Evaluation
Criterion 2b4 specifies NQF’s preferred
approach for risk adjusting outcome
measures (http://www.qualityforum.org/
docs/measure_evaluation_
criteria.aspx#scientific). This criterion
states that patient comorbidities should

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only be included in risk-adjustment
calculations if they are (1) present at the
start of care and (2) not indicative of
disparities or deficiencies in the quality
of care provided. As indicated in the
‘‘Inclusion and Exclusion Criteria’’
subsection above, the proposed STrR
clinical measure includes Medicare
patients who have been documented as
having had ESRD for at least 90 days
and are not excluded for other reasons.
Accordingly, we believe that NQF
Measure Evaluation Criterion 2b4
supports risk-adjusting the proposed
STrR measure on the basis of incident
patient comorbidity data collected on
CMS Form 2728, because these
comorbidities are likely present at the
start of care. Moreover, comorbidities
that develop after the 90th day of
chronic dialysis treatment, and are
statistically associated with
transfusions, can be reflective of the
quality of care provided by the facility.
Therefore, we do not believe that NQF
Measure Evaluation Criterion 2b4
supports risk adjusting the proposed
STrR measure on the basis of updated

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REMIS database.
CMS Form 2728.
CMS Form 2728.
CMS Form 2728.
Nursing Home Minimum Dataset.
CMS Form 2728.

comorbidity data, because doing so may
mask disparities or deficiencies in the
quality of care provided, thereby
obscuring assessments of facility
performance. For these reasons, we
believe that the risk-adjustment
methodology for the proposed STrR
measure is consistent with NQF
guidelines for measure developers.
Testing that we have undertaken has
confirmed the validity and reliability of
the proposed STrR measure using these
data. We anticipate submitting the
measure to the NQF for endorsement in
CY 2015.
Full documentation of the STrR riskadjustment methodology is available at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html.
Calculating the STrR Measure
The STrR measure is calculated as the
ratio of the number of observed
transfusions to the number of expected
transfusions. The ratio is greater than
one for facilities that have more

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transfusions than would be expected for
an average facility with similar cases,
and less than one if the facility has
fewer transfusions than would be
expected for an average facility with
similar cases. This ratio is calculated in
terms of patient-years at risk. ‘‘Patientyear at risk’’ means that the
denominator of the rate calculation is
obtained by adding exposure times of all
patients until a censoring event (that is,
death, transplant, or end of the time
period) because each patient’s time at
risk varies based on these censoring
events. Time at risk is the time period
in which each patient is eligible to have
the transfusion event occur for the
purposes of the measure calculation,
exclusive of all days that have claims
pertaining to the exclusionary
comorbidities identified within the
previous 12 months.
The predicted value from stage 1 of
the model and the baseline rate from
stage 2 of the model, as described above,
are then used to calculate the expected
number of transfusion events for each
patient over the period during which
the patient is seen to be at risk for a
transfusion event.
The STrR is a point estimate—the best
estimate of a facility’s transfusion rate
based on the facility’s case mix. For
more detailed information on the
calculation methodology, please refer to
our Web site at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_
TechnicalSpecifications.html.
We sought comments on this proposal
to adopt the proposed STrR clinical
measure. The comments and our
responses are set forth below.
Comment: Some commenters
supported the proposal to adopt the
Standardized Transfusion Ratio clinical
measure because the measure ‘‘assesses
the poor outcomes related to anemia in
the ESRD QIP.’’
Response: We thank commenters for
their support.
Comment: Many commenters did not
support the proposal to adopt the STrR
measure because it is not a fair way to
evaluate facility performance.
Specifically, commenters stated that
transfusion events are beyond the
control of facilities, that physicians
outside of the facility may order a
transfusion (which would unduly
detriment the facility’s score on the
measure) or fail to continue a patient’s
ESA doses during the patient’s
hospitalization, and that hospital
physicians’ misunderstanding about
hemoglobin levels is often the source of
unnecessary transfusions. One
commenter recommended stratifying the
STrR measure according to patient

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comorbidities to capture only blood
transfusions that could be prevented by
the dialysis facility. Commenters further
stated that the measure does not reliably
differentiate facility performance
because a transfusion event could be
attributed to a chronic condition or an
acute problem during hospitalization, as
opposed to poor anemia management on
the part of facilities.
Response: We recognize that most
transfusions occur outside the dialysis
facility. We further recognize that blood
transfusions are often ordered in
response to acute events, such as
gastrointestinal bleeding or other
trauma, that happen during the
hospitalization. However, peer-reviewed
research identifies a strong association
between achieved hemoglobin and
subsequent transfusion events.7 Our
analysis of patient and facility level
risk-adjusted models supports the
literature. These observational analyses
are consistent with the findings of an
earlier randomized controlled trial that
identified marked differences in rates of
transfusion related to targeted
hemoglobin.8 Because dialysis facilities
have a direct role in determining
achieved hemoglobin as a result of their
anemia management practices, we
believe there is a shared responsibility
in subsequent transfusion events. The
attribution of responsibility to the
dialysis facility for achieved
hemoglobin outcomes (and transfusion
risk related to achieved hemoglobin) as
measured by the STrR is strengthened
by applying an extensive list of
exclusions for comorbid conditions that
are associated with decreased ESA
responsiveness, increased transfusion
risk, and increased risk of ESA
complication. These exclusion comorbidities are obtained from Medicare
Claims, based on recommendations of
the Anemia Technical Expert Panel
convened in 2012, as well as recent peer
reviewed publications evaluating
transfusions.9 We believe that the
7 Collins et al., ‘‘Effect of Facility-Level
Hemoglobin Concentration on Dialysis Patient Risk
of Transfusion’’, Am J Kidney Dis. 2014;63(6):997–
1006; Hirth RA, Turenne T, Wheeler JRC et al.,
(November 2012) ‘‘Did the dialysis Prospective
Payment System result in more patients receiving
transfusions?’’ Poster presentation at ASN Renal
Week in San Diego, CA; Sibbel S, Bond C, Wilfehrt
H et al. (2013 April) ‘‘Decreased Population
Hemoglobin (HB) Levels and Increased Transfusion
(TFN) Rates Under New ESA Guidelines in Patients
(PTS) with ESRD at a Large Dialysis Organization
(LDO). Poster to be presented at the National
Kidney Foundation (NKF) Spring Clinical Meeting
in Orlando, FL. Abstract retrieved from http://
ww3.aievolution.com/nkf1301/
index.cfm?do=abs.pubSearchAbstracts; Hirth, et al.
2014.
8 (Foley 2008).
9 Ibrahim HN, Ishani A, Foley RN et al.
‘‘Temporal Trends in red blood transfusion among

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salient quality issue is not that a clinical
decision to order a transfusion was
made, but that the management of a
patient’s anemia resulted in
circumstances that necessitated such a
transfusion.
We also believe that the
discontinuation of a patient’s ESA dose
during an acute hospitalization is very
unlikely to affect the patient’s
hemoglobin levels unless the
hospitalization is of very long duration,
given the several weeks long half-life of
red blood cells in the patient’s
circulation after being release from the
bone marrow. Therefore, ESA dosing
and achieved hemoglobin present on
admission, which are the responsibility
of the dialysis facility, are much
stronger drivers of the need for
transfusion than whether or not an ESA
is given during an average length
hospitalization for any given admission
diagnosis.
Further, we are not aware of peerreviewed evidence that would support a
concern that hospital-based physicians
do not understand the significance of
hemoglobin levels and, therefore, order
unnecessary transfusions. Although
transfusion decisions are individualized
based on a patient’s clinical condition,
many acute care hospitals use national
guidelines to determine when a blood
transfusion is appropriate. The
guidelines that we are aware of do not
differentiate between chronic dialysis
patients and the general population.
Additionally, if this type of
misunderstanding does exist, we believe
that proper communication and
coordination of care between the
dialysis facility and hospital physicians
could help reduce the possibility that an
unnecessary transfusion is ordered.
Comment: Many commenters
expressed a number of technical
concerns with the specifications for the
STrR measure. Specifically, commenters
stated that using the 2728 form as the
data source for determining patient
comorbidities is inappropriate because
the form is not used to track
comorbidities that develop after the
initiation of ESRD, the form is often
filled out incorrectly, and the form
systematically underestimates the
number of patient comorbidities.
Commenter therefore recommends
obtaining a reliable data source (such as
the Common Working File) for
comorbidities before adopting the
measure. Commenters further stated that
facilities do not have ready access to
transfusion data, which they could use
US dialysis patients, 1992–2005’’. American Journal
of Kidney Disease. 2008; 52: 1115.

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to design quality improvement
programs.
Response: The STrR uses both Form
2728-derived incident comorbidities
and patient demographics as well as
Medicare Claims derived prevalent
comorbidities for its risk-adjustment
and exclusions. The responsibility of
the dialysis facility for achieved
hemoglobin outcomes (and transfusion
risk related to achieved hemoglobin) is
strengthened by applying an extensive
list of exclusions for comorbid
conditions that are associated with
decreased ESA responsiveness,
increased transfusion risk, and
increased risk of ESA complication, and
may develop after initiation of dialysis.
It is important, however, that we be
circumspect in risk-adjusting for
conditions that appear after the
initiation of dialysis, to avoid adjusting
for conditions that resulted from the
care decisions made by the provider.
These exclusion co-morbidities are
obtained from Medicare Claims, based
on recommendations of the Anemia
Technical Expert Panel convened in
2012, as well as recent peer reviewed
publications evaluating transfusions.10
Comment: Some commenters were
concerned about validity of claims data
used to identify qualifying transfusion
events, because hospital coding for
transfusions is inconsistent, and
sometimes codes do not distinguish
between preparing for a transfusion and
the transfusion itself. Commenters also
stated that the claims data used to score
the measure is incapable of
differentiating among the various
reasons for a blood transfusion. As such,
the measure does not accurately predict
or identify when a patient actually
receives a transfusion.
Response: Prior research has
supported the validity of billing codes
for identifying red blood cell
transfusions.11 Additionally, other
recent articles accepted and published
in peer reviewed journals support the
review and acceptance of this method of
identification of transfusions from
administrative data.12 Specifically, we
used multiple sources (procedure codes,
revenue center codes, and value codes)
to improve the ability to detect actual
10 Ibrahim HN, Ishani A, Foley RN et al.
‘‘Temporal Trends in red blood transfusion among
US dialysis patients, 1992–2005’’. American Journal
of Kidney Disease. 2008; 52: 1115.
11 Segal JB1, Ness PM, Powe NR. Validating
billing data for RBC transfusions: A brief report.
Transfusion. 2001 Apr;41(4):530–3.
12 Collins et al., ‘‘Effect of Facility-Level
Hemoglobin Concentration on Dialysis Patient Risk
of Transfusion,’’ Am J Kidney Dis. 2014;63(6):997–
1006; and Hirth et al, Blood Transfusion Practices
in Dialysis Patients in a Dynamic Regulatory
Environment, Am J Kidney Dis. 2014 (in-press).

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transfusion events during a
hospitalization. Red blood cell
transfusions are identified by in-patient
records with revenue center codes in
(0380, 0381, 0382, 0389, 0390, 0391,
0392, 0399) or value code = 37 or
procedure code in (9903, 9904) and with
out-patient records with revenue center
codes in (0380, 0381, 0382, 0389, 0390,
0391, 0392, 0399) and HCPCS code in
(P9010, P9011, P9016, P9021, P9022,
P9038, P9039, P9040, P9051, P9054,
P9056, P9058, 36430). The measure
does not attempt to address the
particular reason for a transfusion event,
only that one occurred. One
‘‘transfusion event’’ is counted per
inpatient claim if one or more
transfusion-related revenue center or
value codes are present. This is the way
most inpatient transfusion events are
reported on claims (that is, using
revenue center or value codes, not
procedure codes). We only count a
single transfusion event for an inpatient
claim regardless of the number of
transfusion revenue center and value
codes reported so that the number of
discrete events counted is the same
whether the claim indicates 1 unit of
blood or multiple units of blood.
Comment: Some commenters did not
support the proposed STrR measure
because it has not been endorsed by
NQF, and one commenter was
concerned about the measure’s validity
and reliability. Commenter
recommended delaying the adoption of
the measure until it has been endorsed
by NQF.
Response: The STrR measure has
undergone rigorous review by a TEP and
the CMS measure development
contractor, and for the reasons detailed
in the proposed rule and this final rule,
we believe that the measure reliably
assesses facility performance. Because
unexpected transfusions in the ESRD
population are responsible for
considerable and unnecessary
morbidities and healthcare costs, and
because no NQF-endorsed measures of
anemia management are currently
available for use in the ESRD QIP, we
believe that the benefits of adopting the
measure for the PY 2018 ESRD QIP
outweigh the costs of waiting to adopt
the measure until it has been endorsed
by NQF.
Comment: One commenter
recommended that CMS develop a
hemoglobin-adjusted STrR rather than
the STrR proposed in the proposed rule.
Commenter stated that facilities should
only be held responsible for
transfusions related to chronically low
hemoglobin levels, and that this
adjustment would better differentiate

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between patients with chronically and
acutely low hemoglobin levels.
Response: We thank commenters for
the recommendation. We agree that
achieved hemoglobin is a significant
facility-associated component of
transfusion risk. Since dialysis facilities
do have a direct role in determining
achieved hemoglobin as a result of their
anemia management practices, there is a
shared responsibility in subsequent
transfusion events. The responsibility of
the dialysis facility for achieved
hemoglobin outcomes (and transfusion
risk related to achieved hemoglobin) is
strengthened by applying an extensive
list of exclusions for comorbid
conditions that are associated with
decreased ESA responsiveness,
increased transfusion risk, and
increased risk of ESA complication.
Applying a hemoglobin target would not
be consistent with the FDA label, which
does not support hemoglobin targets.
Comment: One commenter
recommended that CMS use calendar
year (CY) 2010 to set permanent
performance standards for the STrR
measure. Because transfusion rates have
increased since CY 2010, commenter
stated that the proposed performance
standard would set an inappropriately
low threshold for expected transfusion
events.
Response: We do not believe it would
be appropriate to use CY 2010 to set
permanent performance standards for
the STrR measure. The measure was
designed to assess relative rates of
transfusion, not to hold facilities
accountable to a historical rate of
transfusion. Furthermore, setting the
performance standard at CY 2010 rates
would not allow us to respond to
fluctuations in transfusion rates in the
future, and we believe it is appropriate
to do so, particularly in the event that
future national transfusion rates fall
below levels achieved in CY 2010.
Comment: Some commenters stated
that the risk-adjustment methodology
for the proposed STrR measure should
not be based on the risk-adjustment
methodology for the Standardized
Hospitalization measure, because
hospitalizations and transfusions
involve different types of risk factors.
Commenters stated that adjusting for
risks that are more proximately
associated with transfusions would
require the use of claims data for
determining patient comorbidities.
Response: We agree with commenters’
assertion that more proximate claimsbased risk factors are appropriate for use
in the risk adjustment strategy for STrR.
We also believe that this has already
been accomplished using our measure
methodology. The responsibility of the

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dialysis facility for achieved
hemoglobin outcomes (and transfusion
risk related to achieved hemoglobin) is
strengthened by applying an extensive
list of exclusions for comorbid
conditions that are associated with
decreased ESA responsiveness,
increased transfusion risk, and
increased risk of ESA complication. By
excluding transfusions not associated
with anemia management, we are able
to assess the rate of transfusions most
subject to influence by the quality of
care provided by dialysis facilities.
Exclusion comorbidities must have
occurred within the last year, and have
a similar, but stronger impact for the
measure, than risk-adjustment. As a
consequence, transfusions that are
occurring are not attributable to these
non-anemia management-based causes.
These exclusion co-morbidities are
obtained from Medicare Claims, based
on recommendations of the Anemia TEP
convened in 2012, as well as recent peer
reviewed publications evaluating
transfusions.13
Comment: One commenter
recommended that CMS limit the
number of transfusion events that a
single patient can contribute to this
measure, because very frequent
transfusions may be required due to
conditions that the dialysis facility
cannot control, such as chemotherapy
treatment, presence of bone marrow
malignancies, or sickle cell anemia,
which may not be captured in the past
year on Medicare claims.
Response: We thank commenters for
the recommendation. Because of the
way transfusion information is reported
in claims, there are different rules for
counting transfusion events depending
on whether or not they occur in
inpatient or (less commonly) in
outpatient settings.
For the STrR, transfusion events are
counted differently depending on
whether they are identified based on a
procedure code, a revenue center code,
or a value code. The transfusion
procedure may only be billed only once
per day per visit. For the STrR, unique
‘‘transfusion events’’ are counted for
each transfusion procedure code listed
on an inpatient claim, with one event
counted for any of those codes on a
given day. Additionally, one
‘‘transfusion event’’ is counted per
inpatient claim if one or more
transfusion-related revenue center or
value code is present. The vast majority
of inpatient claims we identify as
13 Ibrahim HN, Ishani A, Foley RN et al.
‘‘Temporal Trends in red blood transfusion among
U.S. dialysis patients, 1992–2005,’’ American
Journal of Kidney Disease. 2008; 52: 1115.

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having evidence of a transfusion (92
percent) do not include a transfusion
related procedure code. Therefore, most
inpatient transfusion events are
identified based on revenue center or
value codes. As noted above, we count
a single transfusion event for the
inpatient claim regardless of the number
of transfusion revenue center and value
codes reported on the claim, resulting in
a very conservative estimate of blood
transfusions from inpatient claims. In
all cases, the number of events counted
is the same whether the claim indicates
1 unit of blood or multiple units of
blood, again favoring a conservative
estimate of number of transfusion events
from inpatient claims.
Transfusion events are not common in
outpatient settings, but similar rules
apply. Multiple HCPCS codes reported
for the same Revenue Center Date are
counted as a single transfusion event
regardless of the number of units of
blood recorded. In other words, three
pints of blood reported with the same
Revenue Center Date would be counted
as a single transfusion event.
Therefore, the algorithm for
identifying blood transfusion events
described here results in a very
conservative estimate of transfusion
rates, limiting the impact of individual
patients who receive multiple units of
blood or multiple transfusions during
any one episode of care. We agree that
there are many conditions, including
acute malignancy diagnoses and
hereditary anemias (for example, sickle
cell anemia) that influence transfusion
risk. The STrR uses Form 2728-derived
incident comorbidities and patient
demographics as well as Medicare
Claims derived prevalent comorbidities
in the risk-adjustment strategy for STrR.
The responsibility of the dialysis facility
for achieved hemoglobin outcomes (and
transfusion risk related to achieved
hemoglobin) is strengthened by
applying an extensive list of exclusions
described in the technical report at
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html for
comorbid conditions that are associated
with decreased ESA responsiveness,
increased transfusion risk, and
increased risk of ESA complication.
These exclusion co-morbidities are
obtained from Medicare Claims, based
on recommendations of the Anemia
Technical Expert Panel convened in
2012, as well as recent peer reviewed
publications evaluating transfusions.14

The list of comorbid exclusions
includes acute cancer diagnoses and
Sickle Cell Anemia, as well as other
conditions that are associated with
increased transfusion risk beyond the
dialysis facilities’ control.
Comment: Some commenters stated
that transfusions related to ‘‘nonactionable conditions,’’ such as chronic
gastrointestinal bleeding, motor vehicle
accidents, and transfusions related to
surgical procedures, should be excluded
from the measure. Accordingly,
commenters recommended that CMS
should develop a comprehensive list of
exclusions before adopting the measure.
Response: The STrR incorporates a
list of exclusions based on patient
conditions identified through claims
data. These exclusions help to ensure
that transfusions for which the facility
may not reasonably be held accountable
are not incorporated in the measure
numerator. A full list of exclusions may
be read at http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_
TechnicalSpecifications.html. However,
for any given admission diagnosis such
as a motor vehicle accident, or a
hospital event such as a surgical
procedure, the achieved hemoglobin
present on admission, which is a
function of ESA dosing and the
responsibility of the dialysis facility, is
a strong predictor of a transfusion event
during the hospitalization.
Comment: One commenter sought
clarification on how transfusions will be
attributed to facilities, particularly when
a patient receives a transfusion and
temporarily relocates to a new facility
before returning to their home facility.
Response: The STrR Methodology
Report, which was published
concomitantly with the CY 2015 ESRD
PPS Proposed Rule, provides the
detailed algorithm used by the STrR
measure to attribute patients to a
facility. Briefly, if a patient undergoes a
transfusion event, the facility to which
this patient is assigned at the time is
responsible for it irrespective of where
the event takes place or whether the
patient is temporarily receiving dialysis
at another facility.
Comment: One commenter did not
support the STrR measure as proposed,
because it is not sufficient on its own
right to discourage under-treatment of
anemia. Commenter also recommended
that the measure should be stratified to
capture only those transfusions that
could have been prevented by the
dialysis facility.

14 Ibrahim HN, Ishani A, Foley RN et al.
‘‘Temporal Trends in red blood transfusion among

U.S. dialysis patients, 1992–2005.’’ American
Journal of Kidney Disease. 2008; 52: 1115.

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Response: The STrR is intended to
monitor facility-level, risk-adjusted
blood transfusion use, which is one
important consequence of undertreatment of anemia in chronic dialysis
patients, and it is the most appropriate
measure of which we are aware that is
available for this purpose.
Comment: One commenter stated that
facilities will experience difficulty in
explaining facility scores on the STrR
clinical measure to patients, and that
doing so may be ‘‘politically
challenging’’ when the dialysis facility
is affiliated with the admitting hospital
system.
Response: We have produced a
technical report that describes the
measure methodology and provided a
Web link in the proposed rule (http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html). A
transfusion ratio of greater than 1.0
reflects that a facility’s patients are at
higher risk for transfusions than they
would be at an average facility. A score
below 1.0 reflects that a facility’s
patients are at lower risk for
transfusions than they would be at an
average facility. A lower ratio is
preferable because it indicates that a
facility is doing a better job of managing
patient anemia, as assessed through the
occurrence of transfusions.
For these reasons, we are finalizing
the STrR measure as proposed for the
PY 2018 program and future payment
years. The technical specifications for
this finalized measure can be found at
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html.

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b. Adoption of the Pediatric Peritoneal
Dialysis Adequacy Clinical Measure in
the Dialysis Adequacy Measure Topic
Section 1881(h)(2)(A)(i) states that the
ESRD QIP must evaluate facilities based
on measures of dialysis adequacy.
Beginning with the PY 2018 ESRD QIP,
we proposed to add a new measure of
pediatric peritoneal dialysis adequacy to
the Dialysis Adequacy measure topic.
We stated that if this proposal is
finalized, then the modified Dialysis
Adequacy measure topic would include
four clinical measures on dialysis
adequacy—(1) Adult Hemodialysis
Adequacy; (2) Adult Peritoneal Dialysis
Adequacy; and (3) Pediatric
Hemodialysis Adequacy; and (4)
Pediatric Peritoneal Dialysis Adequacy.
Approximately 900 pediatric patients
in the United States receive peritoneal

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dialysis.15 Although recent studies
suggest improvement in mortality rates
among pediatric patients receiving
maintenance dialysis over time,
mortality in this patient population
remains high.16 Despite a lack of longterm outcome studies on pediatric
peritoneal dialysis patients, outcome
studies performed in the adult ESRD
population have shown an association
between the dose of peritoneal dialysis
and clinical outcomes,17 which could
suggest that improved quality of dialysis
care in the fragile pediatric patient
population may further improve
survival in those patients.
Section 1881(h)(2)(A)(iv) gives the
Secretary authority to adopt measures
for the ESRD QIP that cover a wide
variety of topics. Section
1881(h)(2)(B)(ii) of the Act states that
‘‘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 Act [in this case
NQF], 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.’’ We have
given due consideration to endorsed
measures, as well as those adopted by
a consensus organization. Because no
NQF-endorsed measures or measures
adopted by a consensus organization on
pediatric peritoneal dialysis adequacy
currently exist, we proposed to adopt
the Pediatric Peritoneal Dialysis
Adequacy clinical measure under the
authority of section 1881(h)(2)(B)(ii) of
the Act.
The Measure Application Partnership
expressed conditional support for
measure XCBMM, ‘‘Pediatric Peritoneal
Dialysis Adequacy: Achievement of
Target Kt/V’’ in its January 2014 Pre15 U.S. Renal Data System, USRDS 2012 Annual
Data report: Atlas of Chronic Kidney Disease and
End-stage Renal Disease in the United States,
National Institutes of Health, National Institute of
Diabetes and Digestive and Kidney Diseases,
Bethesda, MD, 2012.
16 U.S. Renal Data System, USRDS 2012 Annual
Data report: Atlas of Chronic Kidney Disease and
End-stage Renal Disease in the United States,
National Institutes of Health, National Institute of
Diabetes and Digestive and Kidney Diseases,
Bethesda, MD, 2012.
17 Paniagua R, Amato D, Vonesh E, et al. ‘‘Effects
of increased peritoneal clearance on mortality rates
in peritoneal dialysis: ADEMEX, a prospective,
randomized, controlled trial.’’ Journal of the
American Society of Nephrology: JASN (2002)
13:1307–1320. PMID: 11961019; See also Lo WK,
Lui SL, Chan TM, et al. ‘‘Minimal and optimal
peritoneal Kt/V targets: Results of anuric peritoneal
dialysis patient’s survival analysis.’’ Kidney
international (2005) 67:2032–2038. PMID:
15840054.

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Rulemaking Report, noting it would
‘‘consider this measure for inclusion in
the program once it has been reviewed
for endorsement.’’ However, we believe
the measure is ready for adoption in the
ESRD QIP because it has been fully
tested for reliability and has received
consensus support from the TEP that
was tasked with developing it. We
intend to submit this measure to the
NQF for endorsement in late 2014 or
early 2015.
For PY 2018 and future payment
years, we proposed to adopt the
Pediatric Peritoneal Dialysis Adequacy
clinical measure, which assesses the
percentage of eligible pediatric
peritoneal dialysis patient-months in
which a Kt/V of greater than or equal to
1.8 was achieved during the
performance period. Qualifying patientmonths are defined as months in which
a peritoneal dialysis patient is under the
age of 18 and has been receiving
peritoneal dialysis treatment for 90 days
or longer. Performance on this measure
will be expressed as a proportion of
patient-months meeting the measure
threshold of 1.8, and the measure will
be scored based on Kt/V data entered on
Medicare 72x claims. The measure is a
complement to the existing Kt/V
dialysis adequacy measures previously
adopted in the ESRD QIP. Technical
specifications for the proposed pediatric
peritoneal dialysis adequacy clinical
measure can be found at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html.
We sought comments on this proposal
to adopt the Pediatric Peritoneal
Dialysis Adequacy measure. The
comments and our responses are set
forth below.
Comment: Many commenters
supported the adoption of the Pediatric
Peritoneal Dialysis Adequacy measure,
because it is important to ensure that
this patient population is adequately
dialyzed.
Response: We thank the commenters
for their support.
Comment: One commenter supported
adoption of the Pediatric Peritoneal
Dialysis Adequacy clinical measure, but
recommended CMS change the Kt/V
target to a range, because it is harder to
reach the proposed threshold for a
pediatric patient than it is to reach the
threshold for adult patients.
Response: The proposed minimum
target of Kt/V–1.8 is consistent with
clinical guidelines and also the
recommendations of a TEP which we
convened for this purpose. The TEP
recommended using a target of 1.8 while
recognizing that although limited

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evidence in the pediatric population
exists, clinical practice guidelines and
clinical opinion support the
recommendation that target clearance in
pediatric patients should meet or exceed
adult standards. Studies of adult
peritoneal dialysis patients identified
better survival at Kt/V 1.8/week, and not
1.7 (Paniagua 2002, JASN 2002, Lo, KI
2005). We also believe that a target
range could have the effect of
substituting the current target with the
lower boundary of any specified range.
Comment: One commenter did not
support the adoption of the Pediatric
Peritoneal Dialysis Adequacy clinical
measure because it exposes pediatric
patients to unnecessary risk. Commenter
stated that ‘‘residual’’ Kt/V requires 24hour urine collection, and that young
children who are not toilet trained
would need to be hospitalized and have
a Foley catheter placed, which would
put them at risk for infections and
illness.
Response: We appreciate commenters’
concerns for the safety of pediatric
patients, and for the opportunity to
clarify this point. The commenters
statement about the potential difficulties
inherent in collecting a 24 hour urine on
young children on peritoneal dialysis
have been previously addressed in both
the KDOQI recommendations as well as
the recommendations of the TEP. Both
KDOQI and the TEP members
recommend addition of 24 hour urine if
available. They acknowledge that the 24
hour urine is usually not available for
use in the Kt/V calculation for very
young PD patients. In that case, they
recommend that the Kt/V collection be
based solely on the dialysate collection.
The commenter’s concern that patients
would have to be hospitalized to
complete a 24 hour collection in order
to perform the calculation is not
consistent with the clinical guidelines
upon which the measure was based.
For these reasons, we are finalizing
the Pediatric Peritoneal Dialysis
Adequacy measure as proposed for the
PY 2018 program and future payment
years and adding this measure to the
Dialysis Adequacy Measure Topic. The
technical specifications for this
finalized measure can be found at
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html.
c. ICH CAHPS Clinical Measure
Section 1881(h)(2)(A)(ii) of the Act
states that the Secretary shall specify, to
the extent feasible, measures of patient
satisfaction. Patients with ESRD are an
extremely vulnerable population: They
are completely reliant on ESRD facilities

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for life-saving care, and they are often
reluctant to express concerns about the
care they receive from an array of staff,
both professional and non-professional.
Patient-centered experience is an
important measure of the quality of
patient care, and it is a component of
the 2013 NQS, which emphasizes
patient-centered care by rating patient
experience as a means for empowering
patients and improving the quality of
their care.
Following a rigorous process, the ICH
CAHPS Survey was developed to
capture the experience of in-center
hemodialysis patients. The NQF
endorsed and the Measures Application
Partnership supported this quality
measure (NQF #0258: CAHPS In-Center
Hemodialysis Survey). The ICH CAHPS
Survey captures the experience of incenter hemodialysis patients on three
dimensions: ‘‘Nephrologists’
communication and caring;’’ ‘‘quality of
dialysis center care and operations;’’
and ‘‘providing information to
patients.’’ Three global ratings are also
part of the standardized ICH CAHPS
Survey: Rating of the nephrologist;
rating of the staff; and rating of the
facility.
We believe that this measure enables
patients to rate their experience of incenter dialysis treatment without fear of
retribution. Public reporting of results
from the ICH CAHPS survey, once
enough data are available, will satisfy
requests to provide consumers (patients
and family members alike) with desired
information on viewpoints from
patients. In addition, collecting and
reporting ICH CAHPS survey results
assists facilities with their internal
quality improvement efforts and
external benchmarking with other
facilities, and it provides CMS with
information that can be used to monitor
the experience of patients with ESRD.
Starting with the PY 2014 program,
we have taken steps to develop the
baseline data necessary to propose and
implement NQF #0258 as a clinical
measure in PY 2018. In the PY 2014 and
PY 2015 programs, we adopted a
reporting measure related to the ICH
CAHPS survey, which required that
facilities attest they had administered
the survey according to the
specifications set by the Agency for
Healthcare Research and Quality
(AHRQ). In the CY 2014 ESRD PPS final
rule, we: (1) Expanded the ICH CAHPS
reporting measure to require facilities to
submit (via CMS-approved vendors)
their survey results to CMS; (2)
increased the patient minimum for the
measure from 11 to 30 survey-eligible
patients; (3) required that facilities (via
CMS-approved vendors) administer the

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survey according to specifications set by
CMS; and (4) required facilities (via
CMS-approved vendors) to administer
the survey twice during each
performance period, and to report both
sets of survey results by the date
specified on http://ichcahps.org,
starting in PY 2017 (78 FR 72193
through 72196).
By CY 2016 (the proposed
performance period for the PY 2018
ESRD QIP), we will have worked with
dialysis facilities for four years to help
them become familiar with the ICH
CAHPS survey. By that time, we believe
that facilities will be sufficiently versed
in the survey administration process to
be reliably evaluated on the NQFendorsed ICH CAHPS measure (NQF
#0258). Because facilities (and CMSapproved vendors) will be familiar
enough with the ICH CAHPS survey
instrument to be reliably scored on the
basis of their survey results, we believe
it is reasonable to expand the ICH
CAHPS reporting measure into a clinical
measure for the PY 2018 ESRD QIP.
For these reasons, and because a
clinical measure would have a greater
impact on clinical practice by holding
facilities accountable for their actual
performance, we proposed to replace
the ICH CAHPS reporting measure that
we adopted in the CY 2014 ESRD PPS
Final Rule with a new clinical measure
for PY 2018 and future payment years.
This proposed ICH CAHPS clinical
measure is NQF #0258: CAHPS InCenter Hemodialysis Survey. We did
not propose to change the semiannual
survey administration and reporting
requirements. The proposed scoring
methodology for the ICH CAHPS
clinical measure is discussed below in
section III.G.4.c. Technical
specifications for the ICH CAHPS
clinical measure can be found at:
http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html.
We sought comments on this
proposal. The comments and our
responses are set forth below.
Comment: Some commenters
supported the proposal to convert the
ICH CAHPS reporting measure into a
clinical measure, because a clinical
measure would hold facilities
responsible for their ability to provide
patients with a positive experience of
care, adopting the clinical measure
would strengthen the significance of
patient input in the ESRD QIP, and
facilities have had sufficient experience
with the survey instrument for them to
be reliably scored on the measure. One
commenter stated that, in the hospital
setting, scoring CAHPS survey results

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has led to positive changes in the
treatment environment.
Response: We thank commenters for
their support.
Comment: One commenter did not
support the adoption of an ICH CAHPS
clinical measure because the measure
would be based on patient perceptions
(as opposed to clinical data).
Commenter further stated that the ICH
CAHPS clinical measure unfairly
penalizes facilities, because providers
have to contend with a number of
obstacles (including reductions in
payments under the ESRD PPS) and
clinical variables, of which patients may
not be aware. Commenter also stated
that the ‘‘efficacy of the survey
administration’’ may impact results, so
the proposed clinical measure would
evaluate facilities, in part, based on the
competencies of survey vendors.
Response: We understand
commenters’ concerns about the ICH
CAHPS measure and its patientcentered assessment of care. We further
understand that patients may not be
aware of the multiple influences on
facilities, such as the ESRD PPS bundle
and other clinical variables. However,
we believe that patients are qualified to
assess their perceptions of their
individual care, because the quality of
care provided to patients should not be
impacted by reimbursement rates or the
severity of a patient’s illness. The ICH
CAHPS survey provides patients with
an opportunity to assess the care they
receive as in-center hemodialysis
patients, and the results from this
survey will give facilities the
opportunity to develop plans for quality
improvement on this aspect of care. All
ICH CAHPS survey vendors must be
approved by CMS to ensure that the
survey is administered consistently
across facilities, and vendors are
required to undergo annual training
sessions and submit a Quality
Assurance Plan to us. Furthermore, the
ICH CAHPS Coordination Team intends
to carry out oversight activities,
including site cities and data reviews for
anomalies, to ensure that the survey is
being administered according to the ICH
CAHPS survey protocol. We note that,
ultimately, the choice of survey vendor
is within the control of the facility. If a
facility believes its vendor is not
properly administering the survey, then
the facility should report to this to CMS
and seek the services of another
qualified survey vendor.
Comment: Some commenters did not
support the proposal to convert the ICH
CAHPS reporting measure into a clinical
measure, because the clinical measure
includes questions pertaining to
nephrologists’ care in the ICH CAHPS

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survey. Commenters stated that most
dialysis facilities have little to no
control over the nephrologists who are
working in facilities, as well as over
physicians seen outside the facility, and
that both types of physicians are
implicated in the survey question used
to determine facility scores on the global
rating for Nephrologists’
Communication and Caring. Commenter
further stated that this limits the
facility’s opportunity improve patient
experience in this area.
Response: We disagree that facilities
should not be held accountable for the
quality of care provided by
nephrologists treating patients at their
facility. Dialysis facilities are required
under our regulations (42 CFR
494.150(c)(2)(i)), to oversee the
provision of care by a multi-disciplinary
team, including the nephrologist
treating the patient. Oversight of
individual staff nephrologist care,
ensuring adherence to facility policies
and Medicare regulations, is primarily
the responsibility of the site Medical
Director, a paid employee of the dialysis
facility, and, additionally, the
responsibility of the facility governing
body. We understand and agree that
facilities should not make or unduly
influence treatment decisions made by a
patient and his or her nephrologist.
However, the facility can ensure that the
treatment environment is one in which
patients feel empowered and informed
enough to participate in their care by
enacting policies regarding patient
engagement, and selecting medical
professionals whose behavior aligns
with these principles. As a result, we
believe facilities are capable of
improving patients’ experiences with
their nephrologists and may share
information received with physicians
outside of the facility.
Comment: Some commenters did not
support the adoption of the proposed
ICH CAHPS clinical measure because
patients typically dialyze at the same
facility for long periods of time, and it
is difficult for facilities and
nephrologists to always meet patients’
expectations. As an alternative to basing
measure scores on ‘‘top-box’’ responses,
one commenter recommended that
facilities should receive credit for
responses that indicate satisfactory (as
opposed to exemplary) experience.
Response: While we understand
commenters’ concerns about being able
to consistently meet patients’
expectations regarding their care, we
believe that patient satisfaction and
involvement in their treatment is a key
element of successful ESRD treatment.
The scoring methodology does not
require facilities to get 100 percent on

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a particular measure, but it evaluates
overall how the facility does.
Comment: Some commenters did not
support the proposal to convert the ICH
CAHPS reporting measure into a clinical
measure. Commenters stated that the
ICH CAHPS survey was originally
developed for hospitals, and that
transitioning the survey to the dialysis
facility setting may encourage facilities
to provide substandard care (for
example, inappropriately shortening the
length of dialysis sessions) in order to
please patients. Commenters further
stated that it is often impossible for
facilities to meet patient expectations
when treating a chronic condition such
as ESRD, and that patients might
inappropriately direct their frustrations
towards facilities and their staff.
Response: We understand that
facilities are concerned about a potential
conflict between ‘‘pleasing patients’’
and providing clinically adequate care.
The ICH CAHPS survey was developed
through literature reviews; focus groups
of in-center hemodialysis patients and
their families, nephrologists and facility
staff; a review of existing surveys for
ESRD patients; and a Technical Expert
Panel. We therefore believe the survey
adequately accounts for many
perspectives of dialysis care and will
allow patients to provide their opinions
of the care they receive without fear of
retribution. At this point, we lack any
evidence to substantiate concerns that
facilities will provide substandard care
‘‘in order to please patients’’ or that ‘‘it
is often impossible for facilities to meet
patient expectations when treating a
chronic condition’’; should such
evidence arise, we will reevaluate the
use of the ICH CAHPS survey in the
ESRD QIP for future payment years.
Comment: One commenter stated that
the ICH CAHPS survey instrument is
unreliable, because only 53 percent of
patients with ESRD are able to complete
forms for patient-reported outcomes,
and basing facility scores on responses
from the remaining patients cannot be
generalized to reflect the true
experience of all patients at a facility.
Response: We acknowledge
commenter’s concern regarding the
overall response rate, but note that a 53
percent response rate is considered
better than average, particularly for a
vulnerable, chronically ill patient
population. However, response rates are
not a measure of reliability because
response rates are subject to a variety of
factors. As part of the process of
submitting NQF #0258 to NQF for reendorsement, we conducted reliability
testing for the measure. Specifically, we
found that the item total correlations for
Kidney Doctor Communication were all

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above 0.40. Nineteen of the 22 item-total
correlations for Dialysis Facility Care
and Operations were above 0.40. Six of
11 item-total correlations for Patient
Empowerment were above 0.40. Internal
consistency reliabilities for the three
scales ranged from 0.75 to 0.93. We
believe the measure is reliable because
the item total correlations for the
measure’s three composite measures all
exceeded 0.40, which indicates a
moderate level of reliability.
Comment: Some commenters did not
support the expansion of the ICH
CAHPS reporting measure into a clinical
measure, because published research
demonstrates that several items on the
survey are unreliable.
Response: We are aware of some
studies that have questioned the
reliability of the ICH CAHPS survey
questions. However, a recent study in
which we have been involved found
that psychometric analyses strongly
support the internal consistency,
reliability, and validity of the ICH
CAHPS survey scales.18 This study
further showed that these scales can be
used to discriminate variation in quality
of care among dialysis facilities, and
that scale scores were strongly related to
patients’ global ratings of nephrologists,
dialysis center, and dialysis center staff.
We therefore believe that the survey
questions are reliable.
For reasons, we are finalizing the ICH
CAHPS clinical measure as proposed for
the PY 2018 program and future
payment years. Technical specifications
for the ICH CAHPS clinical measure can
be found at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_
TechnicalSpecifications.html.

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d. Screening for Clinical Depression and
Follow-Up Reporting Measure
Depression is the most common
psychological disorder in patients with
ESRD. Depression causes suffering, a
decrease in quality of life, and
impairment in social and occupational
functions; it is also associated with
increased health care costs. Current
estimates put the depression prevalence
rate as high as 20 percent to 25 percent
in patients with ESRD.19 Studies have
also shown that depression and anxiety
are the most common comorbid
18 Weidmer BA, Cleary PD, Keller S, Evensen C,
Hurtado MP, Kosiak B, Gallagher PM, Levine R,
Hays RD (2014). Development and Evaluation of the
CAHPS (Consumer Assessment of Healthcare
Providers and Systems) Survey for In-Center
Hemodialysis Patients. Am J Kidney Diseases. [Epub
ahead of print].
19 Kimmel PL, Cuckor D, Cohen SD, Peterson RA.
Depression in end-stage renal disease patients: a
critical review. Advances in Chronic Kidney
Disease. 2007:14(4):328–34.

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illnesses in patients with ESRD.20
Moreover, depressive affect and
decreased perception of social support
have been associated with higher rates
of mortality in the ESRD population,
and some studies suggest that this
association is as strong as that between
medical risk factors and mortality.21
Nevertheless, depression and anxiety
remain under-recognized and undertreated, despite the availability of
reliable screening instruments.22
Therefore, a measure that assesses
whether facilities screen patients for
depression, and develop follow-up
plans when appropriate, offers an
opportunity to improve the health of
patients with ESRD.
We proposed to adopt a depression
measure that is based on an NQFendorsed measure (NQF #0418:
Screening for Clinical Depression). NQF
#0418 assesses the percentage of
patients screened for clinical depression
using an age-appropriate standardized
tool and documentation of a follow-up
plan where necessary. The Measures
Application Partnership supported the
use of NQF #0418 in the ESRD QIP in
its January 2014 Pre-Rulemaking Report,
because the measure ‘‘addresses a
National Quality Strategy [NQS] aim not
adequately addressed in the program
measure set’’ and promotes person- and
family-centered care. We proposed to
adopt a reporting measure based on this
NQF-endorsed measure so that we can
collect data that we can use in the future
to calculate both achievement and
improvement scores, should we propose
to adopt the clinical version of this
measure in future rulemaking. Although
we recognize that we recently adopted
the NHSN Bloodstream Infection
clinical measure despite a lack of
baseline data to calculate achievement
and improvement scores, we believe
that measure warranted special
treatment in light of the fact that it
addresses patient safety. Because the
20 Feroze, U., Martin, D., Reina-Patton, A.,
Kalantar-Zadeh, K., & Kopple, J. D. (2010). Mental
health, depression, and anxiety in patients on
maintenance dialysis. Iranian Journal of Kidney
Diseases, 4(3), 173–80.
21 Cukor, D., Cohen, S. D., Peterson, R. A., &
Kimmel, P. L. (2007). Psychosocial aspects of
chronic disease: ESRD as a paradigmatic illness.
Journal of the American Society of Nephrology,
18(12), 3042–3055; and Kimmel, P. L., Peterson, R.
A., Weihs, K. L., Simmens, S. J., Alleyne, S., Cruz,
I., & Veis, J. H. (2000). Multiple measurements of
depression predict mortality in a longitudinal study
of chronic hemodialysis outpatients. Kidney
International, 57(5), 2093–2098.
22 Preljevic, V. T., ;sthus, T. B. H., Sandvik, L.,
Opjordsmoen, S., Nordhus, I. H., Os, I., & Dammen,
T. (2012). Screening for anxiety and depression in
dialysis patients: Comparison of the Hospital
Anxiety and Depression Scale and the Beck
Depression Inventory. Journal of Psychosomatic
Research, 73(2), 139–144.

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proposed screening for clinical
depression measure addresses quality of
life and patient well-being, and not
patient safety, we think it is appropriate
to adopt it as a reporting measure until
such time that we can collect the
baseline data needed to score it as a
clinical measure.
Section 1881(h)(2)(B)(ii) of the Act
states that ‘‘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) [in this
case NQF], the Secretary may specify a
measure that is not so endorsed as long
as due consideration is given to
measures that have been endorsed or
adopted by a consensus organization
identified by the Secretary.’’ Because we
have given due consideration to
endorsed measures as well as those
adopted by a consensus organization
and determined it is not practical or
feasible to adopt NQF #0418 as a
clinical measure in the ESRD QIP at this
time, we proposed to adopt the
Screening for Clinical Depression and
Follow-Up Plan reporting measure
under the authority of section
1881(h)(2)(B)(ii) of the Act.
For PY 2018 and future payment
years, we proposed that facilities must
report one of the following conditions in
CROWNWeb, at least once per
performance period, for each qualifying
patient (defined below):
1. Screening for clinical depression is
documented as being positive, and a
follow-up plan is documented
2. Screening for clinical depression
documented as positive, and a followup plan not documented, and the
facility possess documentation stating
the patient is not eligible
3. Screening for clinical depression
documented as positive, the facility
possesses no documentation of a followup plan, and no reason is given
4. Screening for clinical depression is
documented as negative, and a followup plan is not required
5. Screening for clinical depression
not documented, but the facility
possesses documentation stating the
patient is not eligible
6. Clinical depression screening not
documented, and no reason is given
For this proposed measure, qualifying
patients are defined as patients 12 years
or older who have been treated at the
facility for 90 days or longer. This
proposed measure will collect the same
data described in NQF #0418, but we
are proposing to score facilities based on
whether they successfully report the
data, and not the measure results. More
specifically, facilities will be scored on

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whether they report one of the above
conditions for each qualifying patient
once before February 1 of the year
directly following the performance
period. Technical specifications for the
Screening for Clinical Depression and
Follow-Up reporting measure can be
found at: http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html.
We sought comments on these
proposals. The comments and our
responses are set forth below.
Comment: Some commenters
supported the Screening for Clinical
Depression and Follow-Up reporting
measure, and recommended that CMS
either require facilities to use the same
screening for depression, or require
facilities to report the methodology
used. Commenters also recommended
that CMS require facilities to provide
documentation of referral for treatment
of depression beyond the abilities of the
renal social worker.
Response: We appreciate commenters’
support, and will consider incorporating
these recommendations in future
rulemaking.
Comment: Many commenters did not
support adoption of the Screening for
Clinical Depression and Follow-Up
reporting measure. Commenters stated
that the Screening for Clinical
Depression and Follow-Up reporting
measure is outside the dialysis facility’s
scope of practice, and that staff social
workers are not qualified to provide
treatment for depression. Commenters
also stated that a measure on depression
screening and follow-up is not covered
within the statutory authorities of the
ESRD QIP, since Section 1881 (h)(1)(A)
of the Act limits the program to ‘‘renal
dialysis services.’’ Commenters also
stated that while facilities can do
depression screenings, they are not
equipped to provide psychotherapy
services, and that requiring facilities to
conduct the assessment is a disservice
to patients, who would be better served
by pyschotherapists. Comments further
stated that depression unrelated to
dialysis should not fall under the
purview of the dialysis facility, and that
conducting the annual assessment is
unduly burdensome (particularly with
respect to hiring staff to provide the
assessment and training staff to enter
data correctly). Commenters further
stated that a future clinical version of
this measure would require dialysis
facilities to provide these services.
Commenter stated that the measure
would be more appropriate for the
Comprehensive ESRD Care Initiative,
because that initiative includes
physicians as well as dialysis facilities.

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Response: We appreciate commenters’
input on this measure. First, we disagree
that screening patients for clinical
depression is outside the scope of
practice for dialysis facilities. Patient
assessments, including screenings for
clinical depression, are a critical aspect
of renal dialysis services, because they
enable facilities to assess whether a
patient needs additional care. We
further note that the ESRD CfCs requires
that facilities perform a ‘‘comprehensive
assessment [for each patient that] must
include, but is not limited to . . . [an]
evaluation of psychosocial needs by a
social worker’’ (42 CFR 494.80(a)(7)).
We maintain that performing depression
assessments is covered by this section
(and, by extension, fall within the scope
of work for dialysis facilities), because
screening for clinical depression is an
evaluation of the patient’s psychosocial
needs. We further disagree that
requiring facilities to report whether
they screen patients for clinical
depression is unduly burdensome
because depression screening is a type
of a psychosocial evaluation, which, as
stated above, facilities are already
required to perform as a condition for
coverage under the Medicare program.
We also note that this measure does not,
and will not, require facilities to provide
psychotherapy services to patients. We
believe that this measure will
incentivize facilities to perform a
clinical depression screening for each
qualifying patient and develop a followup plan in order to ensure that the
patient receives appropriate treatment.
Although we agree that facilities are not
equipped to actually treat the
depression, we believe that the
screenings can be performed by the
individuals already in the
multidisciplinary care team, such as a
staff social worker. We appreciate that
the Comprehensive ESRD Care model
seeks to directly address coordination of
care issues in the dialysis facility
setting, but do not believe this precludes
us from adopting a measure on this
issue for the ESRD QIP, and we believe
that information gained as a result of
this measure can be used to better
inform policy decisions in both the
ESRD QIP and the CEC model.
Comment: Some commenters did not
support the proposal to adopt the
Screening for Clinical Depression and
Follow-Up reporting measure because
facilities are already performing these
screenings, and because screening for
depression overlaps with the Medicare
Conditions for Coverage for ESRD
facilities. One commenter recommended
CMS instead consider using a measure
such as the Standardized

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Hospitalization Ratio to capture the
effective management of the dialysis
patient.
Response: We appreciate that some
facilities may already be performing
these screenings. However, we do not
believe that all facilities are doing so,
and we believe that the Screening for
Clinical Depression and Follow-Up
reporting measure will incentivize all
facilities to conduct depression
screening and initiate follow-up plans
when necessary. We also recognize that
some facilities that are already screening
patients for depression in order to meet
the requirements of the ESRD CfCs will
experience significant additional
burdens associated with reporting data
for the reporting measure. Nevertheless,
depression is a highly prevalent
condition in patients with ESRD, which
impacts many aspects of a patient’s life
and is associated with higher rates of
mortality in the ESRD population. We
therefore believe the benefits of
incentivizing facilities that are not
already doing so to regularly screen
their patients for depression outweigh
the data reporting burdens for facilities
that are already conducting these
screening to meet the requirements of
the ESRD CfCs.
Comment: Some commenters sought
clarification as to what characteristics a
screening instrument must have to
qualify as an ‘‘age appropriate tool’’ and
what constitutes a ‘‘follow-up plan’’ in
the context of the proposed Clinical
Depression and Follow-Up reporting
measure. The commenters also sought
clarification as to whether facilities are
required to screen all patients for
depression, or whether only patients
‘‘identified as potentially having a
problem’’ should be screened.
Commenters sought clarification as to
whether the facility would be required
to perform the screening, or whether
another provider would be required to
do so.
Response: The measure does not
require facilities to select any particular
screening tool because we believe that
each facility should be able to select the
tool that is most appropriate for each of
their patients. However, examples of
screening tools that we would consider
to be age-appropriate include, but are
not limited to:
Adolescent Screening Tools (12–17
years): Patient Health Questionnaire for
Adolescents (PHQ–A), Beck Depression
Inventory-Primary Care Version (BDI–
PC), Mood Feeling Questionnaire
(MFQ), Center for Epidemiologic
Studies Depression Scale (CES–D), and
PRIME MD–PHQ2
Adult Screening Tools (18 years and
older): Patient Health Questionnaire

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(PHQ–9), Beck Depression Inventory
(BDI or BDI–II), Center for
Epidemiologic Studies Depression Scale
(CES–D), Depression Scale (DEPS), Duke
Anxiety-Depression Scale (DADS),
Geriatric Depression Scale (GDS),
Cornell Scale Screening, and PRIME
MD–PHQ2
We further note that we would
consider an appropriate follow-up plan
to be one that outlines a proposed
course of action, including at least one
of the following: (1) Additional
evaluation for depression; (2) suicide
risk assessment; (3) referral to a
practitioner who is qualified to diagnose
and treat depression; (4)
pharmacological interventions; and/or
(4) other interventions or follow-up for
the diagnosis or treatment of depression.
Under this measure, facilities are
required to report whether they
screened qualifying patients for
depression, and whether they developed
a follow-up plan.
Comment: One commenter
recommended increasing the minimum
age for qualifying patients from 12 to 18,
because pediatric patients present
unique challenges for depression
assessment.
Response: Although we recognize that
patients between the ages of 12 and 17
present unique challenges for
depression assessment, we believe it is
critically important to include these
patients because adolescent-onset
depression is associated with multiple
negative health outcomes, including an
increased sick of death by suicide,
suicide attempts, and recurrence of
depression in young adulthood. In
addition, the measure specifications for
NQF #0418, the measure upon which
this reporting measure is based,
provides that the measure is appropriate
for patients ages 12 to 17, and we agree
with NQF’s assessment because there
are age-appropriate screening tools for
this population, and requiring facilities
to report data on whether these
depression screenings were provided
could prevent the negative outcomes
listed above.
Comment: Some commenters did not
support the proposal to adopt the
Depression Screening and Follow-Up
reporting measure, because the measure
upon which it is based (NQF #0418) is
specified for physicians, not dialysis
facilities. Because the follow-up
component of the measure requires a
physician referral, commenter stated
that the measure is not appropriate for
dialysis facilities.
Response: We recognize that the NQFendorsed version of this measure is
specified for physicians, but we
continue to believe that it is an

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appropriate measure for the dialysis
facility setting. Dialysis facilities see
patients with ESRD far more frequently
than nephrologists and primary care
physicians. Accordingly, dialysis
facilities are in a better position to
detect when their patients are in need
of treatment for depression.
Furthermore, under the ESRD CfCs, the
nephrologist is considered part of the
multidisciplinary team that provides
dialysis treatment. As a result, we
believe nephrologists should be capable
of referring patients in need of further
treatment.
Comment: Some commenters did not
support the adoption of the Depression
Screening and Follow-Up reporting
measure because it is a ‘‘check-box’’
measure (that is, facilities receive credit
on the basis of attestations), there is no
depression screening tool specific to
patients with ESRD, and there is limited
data on the effectiveness of
pharmacotherapies for depression in
ESRD patients. One commenter was
concerned that adopting the measure
could lead to increased utilization of
pharmacotherapies without a
concomitant decline in rates of
depression, because this effect has been
seen in studies of the general
population. One commenter also
recommended that CMS develop
alternative measures on depression that
would be more valid for the dialysis
setting.
Response: We recognize that scores on
this measure are based on whether the
facility reported one of six conditions
for each qualifying patient. Depression
is a significant concern for patients with
ESRD, but it remains underdiagnosed
and undertreated. We believe that
facilities will more vigilantly monitor
and screen for depression because the
measure requires facilities to report
whether they performed the screening.
Additionally, we appreciate
commenters’ concerns that this measure
could lead to an overutilization of
pharmacotherapies for depression in
patients with ESRD. However, we are
not aware of any evidence indicating
pharmacotherapies are overused in the
ESRD population; absent such evidence,
we do not believe that this concern is
sufficient to delay adoption of this
measure. Finally, we appreciate
commenters’ recommendation that we
develop a measure specific to
depression in the dialysis setting. We
will continue to evaluate the measure’s
specifications, and if we conclude that
modifications are needed, we intend to
propose to adopt them in the future.
Comment: One commenter did not
support the adoption of the Screening
for Depression and Follow-Up reporting

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measure because patients risk being
denied transplants if they are diagnosed
with depression. Commenter was also
concerned that adopting the measure
may result in an over-reliance on
pharmacotherapies without encouraging
the types of emotional and social
support that are needed to treat patients
suffering from depression and ESRD.
Response: We appreciate commenters’
concerns regarding the impact of
depression on transplant eligibility and
the possibility that this measure may
result in increased use of
pharmacotherapies the treatment of
depression. However, absent evidence
of transplant denials resulting from
depression treatment or overuse of
pharmacotherapies to treat patients’
depression, we do not believe these
concerns are sufficient to support
delaying adoption of the Clinical
Depression Screening and Follow-Up
reporting measure. We believe that a
patient’s psychosocial wellbeing is a
critical aspect of an ESRD patient’s
overall health and quality of life.
Comment: One commenter did not
support the Depression Screening and
Follow-Up measure because a patient’s
status can change considerably during
the year, and the commenter
recommended requiring more frequent
assessments.
Response: We agree that patients’
depression status may change over the
course of a year, and we encourage
facilities to conduct more frequent
screenings. Nevertheless, because PY
2018 will be the first time this measure
will be included in the ESRD QIP, we
think it is appropriate to ask facilities to
report whether they performed the
screening at least once per performance
period. We may consider revising this
requirement in future years as we learn
more information, based on the data we
receive.
Comment: One commenter did not
support the Depression Screening and
Follow-Up measure because it does not
require facilities to assess the
underlying psychosocial causes of
depression, and because the measure
does not require facilities to ensure that
patients are engaged in their care,
including the setting of patient-centric
goals for treatment.
Response: This measure is intended to
ensure ESRD patients who may be
experiencing depression are identified
and referred, if necessary, for follow-up
treatment. It does not require the
dialysis facility to diagnose the nature
and causes of depression because these
tasks are not suitable for a dialysis
facility. Rather, we recognize that
treatment for clinical depression should
be furnished by appropriately trained

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
practitioners and other mental health
professionals, and it is our hope that
these professionals will evaluate
psychosocial causes and engage patients
in the selection of treatment goals.
Comment: Some commenters did not
support the Screening for Clinical
Depression and Follow-Up reporting
measure, because there is a lack of
concrete information about the causes of
depression and optimal screening
methods and referral practices in the
ESRD population. One commenter also
stated that applying the principles
underlying this measure to both adult
and pediatric patients is not valid,
because adult and pediatric present the
different symptoms of depression and
require different types of follow-up
treatment.
Response: The measure specifications
for NQF #0418 (the measure upon
which this reporting measure is based)
provide guidance about what constitutes
screening and follow-up within the
context of the measure. Furthermore,
the NQF-endorsed specifications do not
include an exclusion for patients with
ESRD, and we are not aware of any
studies demonstrating that the
particular causes of depression for
patients with ESRD invalidate the
measure’s prescriptions for screening
and follow-up. We therefore believe that
the Screening for Clinical Depression
and Follow-Up reporting measure is
appropriate for patients with ESRD.
Finally, as stated above, we note that
NQF #0418 was specified for patients
aged 12 and older, and we agree with
NQF that it is appropriate to include
pediatric patients who are 12 years or
older.
Comment: Some commenters did not
support the proposal to adopt the
Depression Screening and Follow-Up
measure, because meeting the
requirements of the measure will create
costs for the facility that will not be
covered by comparable increases in
payments under the ESRD PPS. Another
commenter stated that Medicare fee-forservice does not allow or reimburse
facilities for taking actions to address
depression.
Response: We recognize that
depression screenings are not
specifically reimbursed under the ESRD
PPS. However, psychosocial evaluations
are included in the ESRD CfCs and are
required for Medicare participation, and
depression screening is a type of
psychosocial evaluation. Although we
understand facilities may incur
additional costs for complying with the
measure’s requirements (because
facilities cannot bill Medicare separately
for these assessments and referrals), on
balance we believe that these costs are

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outweighed by potential improvements
for patients’ well-being.
For these reasons, we are finalizing
the Clinical Depression Screening and
Follow-Up reporting measure as
proposed. Technical specifications for
the measure can be found at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical
Specifications.html
e. Pain Assessment and Follow-Up
Reporting Measure
Pain is one of the most common
symptoms in patients with ESRD.23
Studies have shown that pain is a
significant problem for more than 50
percent of patients with ESRD, and up
to 82 percent of those patients report
moderate to severe chronic pain.24 Pain
is commonly associated with quality of
life in early- and late-stage chronic
kidney disease patients, but it is not
effectively managed in the ESRD patient
population and chronic pain often goes
untreated.25 Observational studies
suggest that under-managed pain has
the potential to induce or exacerbate
comorbid conditions in ESRD, which
may in turn adversely affect dialysis
treatment.26 Patients with ESRD
frequently experience pain that has a
debilitating impact on their daily lives,
and research has shown a lack of
effective pain management strategies
currently in place in dialysis facilities.27
Therefore, a measure that assesses
whether facilities regularly assess their
patients’ pain, and develop follow-up
plans as necessary, offers the possibility
of improving the health and well-being
of patients with ESRD.
We proposed to adopt a pain measure
that is based on an NQF-endorsed
23 Cohen, S. D., Patel, S. S., Khetpal, P., Peterson,
R. A., & Kimmel, P. L. (2007). Pain, sleep
disturbance, and quality of life in patients with
chronic kidney disease. Clinical Journal of the
American Society of Nephrology, 2(5), 919–925.
24 Davison SN. Pain in hemodialysis patients:
prevalence, cause, severity, and management.
American Journal of Kidney Disease. 2003;
42:1239–1247
25 Davison, S. N. (2007). The prevalence and
management of chronic pain in end-stage renal
disease. Journal of Palliative Medicine, 10(6), 1277–
1287.
26 De Castro C. (2013). Pain assessment and
management in hemodialysis patients. CANNT
Journal; 23(3):29–32; Weisbord SD, Fried LF,
Arnold RM, Fine MJ, Levenson DJ, et al. Prevalence,
severity, and importance of physical and emotional
symptoms in chronic hemodialysis patients. (2005)
Journal of the American Society of Nephrology;
16(8):2487–2494.
27 De Castro C. (2013). Pain assessment and
management in hemodialysis patients. CANNT
Journal; 23(3):29–32; Wyne A, Rai R, Cuerden M,
Clark WF, Suri RS. (2011). Opioid and
benzodiazepine use in end-stage renal disease: a
systematic review. Clinical Journal of the American
Society of Nephrology. 6(2):326–333.

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measure (NQF #0420: Pain Assessment
and Follow-Up). NQF #0420 assesses
the percentage of patients with
documentation of a pain assessment
using a standardized tool, and
documentation of a follow-up plan
when pain is present. The Measures
Application Partnership supported the
use of NQF #0420 in the ESRD QIP in
its January 2014 Pre-Rulemaking Report,
because the measure ‘‘addresses a
National Quality Strategy [NQS] aim not
adequately addressed in the program
measure set’’ and promotes person- and
family-centered care. We proposed to
adopt a reporting measure based on this
NQF-endorsed measure so that we can
collect data that we can use in the future
to calculate both achievement and
improvement scores, should we propose
to adopt the clinical version of this
measure in future rulemaking. Although
we recognize that we recently adopted
the NHSN Bloodstream Infection
clinical measure despite a lack of
baseline data to calculate achievement
and improvement scores, we believe
that measure warranted special
treatment in light of the fact that it
addresses patient safety. Because the
proposed screening for pain measure
addresses quality of life and patient
well-being, and not patient safety, we
think it is appropriate to adopt it as a
reporting measure until such time that
we can collect the baseline data needed
to score it as a clinical measure.
Section 1881(h)(2)(B)(ii) of the Act
states that ‘‘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 [in this case NQF], 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.’’ Because we have given due
consideration to endorsed measures, as
well as those adopted by a consensus
organization, and determined it is not
practical or feasible to adopt those
measures in the ESRD QIP, we proposed
to adopt the Pain Assessment and
Follow-Up reporting measure under the
authority of section 1881(h)(2)(B)(ii) of
the Act.
For PY 2018 and future payment
years, we proposed that facilities must
report one of the following conditions in
CROWNWeb, once every six months per
performance period, for each qualifying
patient (defined below):
1. Pain assessment using a
standardized tool is documented as

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positive, and a follow-up plan is
documented
2. Pain assessment documented as
positive, a follow-up plan is not
documented, and the facility possesses
documentation that the patient is not
eligible
3. Pain assessment documented as
positive using a standardized tool, a
follow-up plan is not documented, and
no reason is given
4. Pain assessment using a
standardized tool is documented as
negative, and no follow-up plan
required
5. No documentation of pain
assessment, and the facility possesses
documentation the patient is not eligible
for a pain assessment using a
standardized tool
6. No documentation of pain
assessment, and no reason is given
For this measure, a qualifying patient
is defined as a patient age 18 years or
older who has been treated at the
facility for 90 days or longer. This
proposed measure will collect the same
data described in NQF #0420, but we
are proposing a few modifications to the
NQF-endorsed version. First, we
proposed that facilities must report data
for each patient once every six months,
whereas NQF #0420 requires facilities to
report the data based on each visit. We
proposed this modification because we
agree with public comments reflected
on the Measures Application
Partnership’s January 2014 PreRulemaking Report, which stated that
conducting a pain assessment every
time a patient receives dialysis would
be unduly burdensome for facilities.
Second, we proposed that conditions
covering the first 6 months of the
performance period must be reported in
CROWNWeb before August 1 of the
performance period, and that conditions
covering the second 6 months of the
performance period must be reported in
CROWNWeb before February 1 of the
year directly following the performance
period. We believe this reporting
schedule will ensure regular monitoring
and follow-up of patients’ pain without
imposing an undue burden on facilities.
Third, we proposed to score facilities
based on whether they successfully
report the data, and not based on the
measure results. Technical
specifications for the Pain Assessment
and Follow-Up reporting measure can
be found at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_
TechnicalSpecifications.html.
We sought comments on this
proposal. The comments and our
responses are set forth below.

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Comment: One commenter supported
adoption of the Pain Assessment and
Follow-Up reporting measure because
the measure can help reduce the pain
associated with dialysis needles, and
also encourage facility staff to undergo
training in pain management and
cannulation techniques. Commenters
also supported the measure because
pain is an underdiagnosed and
undertreated condition in patients with
ESRD that can inhibit individual
function and change the ability of
patients to fulfill their desired and
required roles in life.
Response: We thank the commenters
for the support.
Comment: Some commenters
supported adopting the proposed Pain
Assessment and Follow-Up reporting
measure, because pain is an important
concern among the ESRD population.
Commenters recommended that CMS
also require facilities to use the same
screening tool, or collect information
from facilities about the validated pain
assessment tool used.
Response: We thank commenters for
their support. We did not propose to
collect information about the pain
assessment tool used or to require
facilities to use the same tool. However,
we will take these recommendations
into consideration as we reevaluate the
measure for future payment years.
Comment: Many commenters did not
support adoption of the Pain
Assessment and Follow-Up reporting
measure. Commenters stated that the
Pain Assessment and Follow-Up
reporting measure is outside the dialysis
facility’s scope of practice. Commenters
also noted that while facilities can do
pain screenings, they are not equipped
to provide pain treatment services, and
that requiring facilities to conduct the
assessment is a disservice for patients,
who would be better served by pain
centers. Comments further stated that
pain unrelated to dialysis should not
fall under the purview of the dialysis
facility, and that conducting the
semiannual assessment is unduly
burdensome. Commenters further stated
that a future clinical version of this
measure would require dialysis facilities
to provide these services. Commenter
stated that the measure would be more
appropriate for the Coordinated ESRD
Care model, because that initiative
includes physicians as well as dialysis
facilities.
Response: We appreciate commenters’
input on this measure. First, we disagree
that screening patients for pain is
outside the scope of work for dialysis
facilities. Patient assessments are a
critical aspect of renal dialysis services
because they enable facilities to provide

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care that is directly responsive to
patient needs. The ESRD CfCs require
that facilities perform a ‘‘comprehensive
assessment [for each patient that] must
include, but is not limited to . . . [an]
evaluation of current health status and
medical condition, including co-morbid
conditions’’ (42 CFR 494.80(a)(7)).
Because screening for pain is an
assessment of patients’ current health
status, this screening falls within the
ESRD CfCs and, by extension, the scope
of work for dialysis facilities. We further
disagree that the requirement for twice
annual pain assessments is unduly
burdensome because facilities are
already required to perform an
assessment of their patients’ current
health status, and pain assessments are
an example of such as assessment. We
also note that this measure does not,
and will not, require facilities to provide
chronic pain treatment services to
patients. This measure requires facilities
to report whether or not they performed
a pain assessment for each qualifying
patient, including whether or not they
documented a follow-up plan. Although
we agree that facilities are not the
appropriate parties to actually treat
pain, we do think the assessment can be
performed by members of the
multidisciplinary care team, such as a
staff nurse. We recognize that the
Coordinated ESRD Care model seeks to
directly address coordination of care
issues in the dialysis facility setting, but
do not believe this precludes us from
adopting a measure on the same issue
for the ESRD QIP, and we believe that
information collected as a result of this
measure can be used to better inform
policy decisions in the ESRD QIP and
the CEC model.
Comment: Some commenters did not
support adoption of the Pain
Assessment and Follow-Up reporting
measure because facilities are already
performing these screenings, screening
for pain overlaps with the Medicare
Conditions for Coverage for ESRD
facilities, and the ICH CAHPS survey
already asks patients about the presence
of pain. One commenter recommended
CMS instead consider using a measure
such as the Standardized
Hospitalization Ratio to capture the
effective management of the dialysis
patient. Another commenter also stated
that uremia is typically responsible for
pain in patients with ESRD, and
recommended delaying the adoption of
the measure until research identifies an
effective way to relieve pain associated
with uremia.
Response: We appreciate that some
facilities may already be performing
these screenings. However, we do not
believe that all facilities are doing so,

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and we believe that the Pain Assessment
and Follow-Up reporting measure will
incentivize all facilities to conduct pain
assessments and initiate follow-up plans
when necessary. Additionally, one of
the reasons we believe this measure is
appropriate for dialysis facilities is that
the actions required to comply with the
reporting requirements are covered, as
discussed above, by the ESRD CfCs.
Comment: One commenter
recommended increasing the number of
pain assessments patients receive each
year beyond two and notes that the Joint
Commission recommends assessing
pain on an on-going basis.
Response: We agree that patients’ pain
status may change over the course of a
year, and we encourage facilities to
conduct more frequent assessments.
Nevertheless, because PY 2018 will be
the first time this measure is adopted in
the ESRD QIP, we think it is appropriate
to require facilities to report whether or
not they performed a pain assessment
once every six months. We may
consider asking facilities to report more
frequently in future years, after we have
had an opportunity to evaluate the data
that facilities report on this measure.
Comment: One commenter sought
clarification as to whether facilities are
required to screen all patients for pain,
or whether only patients ‘‘identified as
potentially having a problem’’ should be
screened.
Response: Under this measure,
facilities are required to report whether
they performed pain assessments for
qualifying patients, and whether they
developed a follow-up plan based on
that assessment. As stated in the CY
2015 ESRD PPS Proposed Rule,
qualifying patients for this measure are
patients aged 18 years or older who
have been treated at the facility for 90
days or longer (79 FR 40261).
Comment: Commenter did not
support the proposal to adopt the Pain
Assessment and Follow-Up reporting
measure, because the measure upon
which it is based (NQF #0420) is
specified for physicians, not dialysis
facilities. Because the follow-up
component of the measure requires a
physician referral, commenter stated
that the measure is not appropriate for
dialysis facilities.
Response: We recognize that the NQFendorsed version of this measure is
specified for physicians, but we
continue to believe that it is an
appropriate measure for the dialysis
facility setting. Dialysis facilities see
patients with ESRD far more frequently
than nephrologists and primary care
physicians. Accordingly, dialysis
facilities are in a better position to
detect when their patients are in need

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of treatment for pain. Furthermore,
under the ESRD CfCs, the nephrologist
is considered part of the
multidisciplinary team that provides
dialysis treatment. We therefore believe
that nephrologists should be capable of
referring patients for follow-up care
following an initial pain assessment, if
necessary.
Comment: One commenter did not
support the adoption of the Pain
Assessment and Follow-Up reporting
measure because it focuses on chronic,
not acute, pain, and chronic pain is best
managed by physicians, not dialysis
facilities. Commenter also stated that
the measure is not appropriate because
significant pain is not typically
associated with dialysis, and facilities
are already addressing acute pain
associated with dialysis, when it occurs.
Response: The purpose of this
measure is to incentivize facilities to
assess both chronic and acute pain.
Although some facilities may already
have in place robust processes to
address acute pain, we believe there is
still considerable room for improvement
in the assessment and management of
acute pain. Although chronic pain is
best treated by a qualified physician,
dialysis facilities see patients far more
frequently than nephrologists or other
physicians, so dialysis facilities are in
the best position to conduct regular
assessments and refer patients to
appropriate practitioners as needed. We
further note that the reporting measure
does not require facilities to treat
chronic pain, or to report whether they
have done so.
Comment: One commenter did not
support adoption of the Pain
Assessment and Follow-Up reporting
measure, because it is unclear whether
the measure seeks to assess acute or
chronic pain, and the commenter does
not understand how this measure will
improve patient care. For example, a
pain assessment performed at one point
in time may not be relevant to the
patient’s experience of pain at a
different time.
Response: As stated above, this
measure is intended to assess overall
pain—both acute and chronic. We
further believe that this measure will
improve patients’ quality of life because
it will increase the likelihood that
patients who suffer from pain will be
identified and referred to an appropriate
practitioner. Finally, as stated above, we
agree that patients’ pain status may
change over the course of a year, and we
encourage facilities to conduct more
frequent assessments.
Comment: Some commenters did not
support the adoption of the Pain
Assessment and Follow-Up reporting

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measure because it is a ‘‘check-box’’
measure (that is, facilities receive credit
on the basis of attestations), and because
there is no pain assessment tool specific
for patients with ESRD.
Response: We recognize that scores on
this measure are based on whether a
facility reports one of six conditions for
each qualifying patient once every six
months. However, we disagree that the
measure will not make an impact on
patients’ quality of life. Pain—both
chronic and acute—is a significant
concern for patients with ESRD, but it
remains underdiagnosed and
undertreated. We believe this measure
will incentivize facilities to more
vigilantly monitor and address patients’
pain, and that as a result patients with
pain issues will be identified more
quickly and receive the follow-up care
necessary to improve and maintain their
quality of life.
We understand that there is no firm
consensus on what pain assessment tool
is best for patients with ESRD; however,
there are a number of standardized tools
available. We believe that facilities are
in the best position to choose an
appropriate screening tool for use with
their patients. Examples of standardized
assessment tools that we believe would
be appropriate include but are not
limited to the following: the Brief Pain
Inventory (BPI); Faces Pain Scale (FPS);
McGill Pain Questionnaire (MPQ);
Multidimensional Pain Inventory (MPI);
Neuropathic Pain Scale (NPS); Numeric
Rating Scale (NRS); Oswestry Disability
Index (ODI); Roland Morris Disability
Questionnaire (RMDQ); Verbal
Descriptor Scale (VDS); Verbal Numeric
Rating Scale (VNRS); and Visual Analog
Scale (VAS).
Comment: One commenter did not
support the proposal to adopt the Pain
Assessment and Follow-Up measure
because the commenter is concerned
that facilities will simply conduct a
straightforward assessment (for
example, a numerical pain scale) and
prescribe analgesics. Commenter stated
that it would be preferable to identify
the underlying causes of chronic and
acute pain, and to develop care plans
that address these causes.
Response: As stated above, we believe
that facilities have many options when
selecting an appropriate pain
assessment tool, and we believe that
facilities should be able to select the
tool that is most appropriate for their
patients. We further believe that
decisions to prescribe analgesics are
best left to the prescribing clinician,
though it is our hope that clinicians will
take into account the underlying causes
of pain, as well as patients’ treatment
goals, when prescribing therapies.

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Comment: One commenter did not
support the proposal to adopt the Pain
Assessment and Follow-Up measure,
because meeting the requirements of the
measure will create costs for the facility
that will not be covered by comparable
increases in payments under the ESRD
PPS. Another commenter stated that
Medicare fee-for-service does not allow
or reimburse facilities for taking actions
to address pain management.
Response: We recognize that pain
assessments are not covered under the
ESRD PPS. However, evaluations of
current health status and medical
condition are included in the ESRD
CfCs and required for participation in
the Medicare program, and pain
assessment is an example of such an
evaluation. Although we understand
that facilities may incur additional costs
for complying with the measure’s
requirements, on balance we believe
that these costs are outweighed by
potential improvements in patients’
quality of life.
Comment: One commenter did not
support the proposed Pain Assessment
and Follow-Up reporting measure,
because adopting the measure may lead
to prescription of narcotics and other
pain medications, which can cause
iatrogenic effects.
Response: We understand the
commenter’s concern that a measure
assessing pain may lead to prescription
of narcotics and other pain medications,
which can carry the risk of negative side
effects when used or prescribed
inappropriately. However, absent
evidence indicating that pain
medication utilization rates among
ESRD patients are unnecessarily high,
we do not believe this concern is
sufficient to delay adoption of the Pain
Assessment and Follow-Up reporting
measure because of the prevalence and
severity of pain-related health issues in
the ESRD population.
For these reasons, we are finalizing
the Pain Assessment and Follow-Up
reporting measure as proposed.
Technical specifications for the measure
can be found at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_
TechnicalSpecifications.html
f. NHSN Healthcare Personnel Influenza
Vaccination Reporting Measure
Infection is the second most common
cause of death in patients with ESRD,
following cardiovascular causes,28 and
influenza accounts for significant
morbidity and mortality in patients
28 Soni R, Horowitz B, Unruh M. Immunization in
end-stage renal disease: opportunity to improve
outcomes. Semin, Dial. 2013 Jul–Aug;26(4):416–26.

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receiving hemodialysis.29 Healthcare
personnel (HCP) can acquire influenza
from patients and transmit influenza to
patients and other HCP; decreasing
transmission of influenza from HCP to
persons at high risk likely reduces
influenza-related deaths among persons
at high risk for complications from
influenza, including patients with
ESRD.30 Vaccination is an effective
preventive measure against influenza
that can prevent many illnesses, deaths,
and losses in productivity.31 In
addition, HCP are considered high
priorities for vaccine use. Achieving and
sustaining high influenza vaccination
coverage among HCP is intended to help
protect HCP and their patients, and to
reduce disease burden and healthcare
costs. Results of studies in post-acute
care settings similar to the ESRD facility
setting indicate that higher vaccination
coverage among HCP is associated with
lower all-cause mortality.32 We
therefore proposed to adopt an NHSN
HCP Influenza Vaccination reporting
measure for PY 2018 and future
payment years.
We proposed to use a measure that is
based on an NQF-endorsed measure
(NQF #0431: Influenza Vaccination
Coverage Among Healthcare Personnel)
of the percentage of qualifying HCP
who: (a) Received an influenza
vaccination; (b) were determined to
have a medical contraindication; (c)
declined influenza vaccination; or (d)
were of an unknown vaccination status.
A ‘‘qualifying HCP’’ is defined as an
employee, licensed independent
practitioner, or adult student/trainee/
volunteer who works in a facility for at
least one day between October 1 and
March 31. The Measures Application
Partnership supported the use of NQF
#0431 in the ESRD QIP in its January
2014 Pre-Rulemaking Report because
the measure is NQF-endorsed for use in
29 Fiore AE, Shay DK, Haber P, et al. Prevention
and control of influenza. Recommendations of the
Advisory Committee on Immunization Practices
(ACIP). MMWR Recomm Rep. 2007;56:1–54.
30 Pearson ML, Bridges CM, Harper SA. Influenza
vaccination of health-care personnel:
Recommendations of the Healthcare Infection
Control Practices Advisory Committee (HICPAC)
and the Advisory Committee on Immunization
Practices (ACIP). MMWR. 2006:55:1–16.
31 Talbot TR, Bradley SE., Cosgrove SE., et al.
Influenza vaccination of healthcare workers and
vaccine allocation for healthcare workers during
vaccine shortages. Infect Control Hosp Epidemiol.
2005;26(11):882–90.
32 Carman WF, Elder AG, Wallace LA, et al.
Effects of influenza vaccination of health-care
workers on mortality of elderly people in long-term
care: a randomized controlled trial. Lancet.
2000;355(9198):93–7; see also Potter J, Stott DJ,
Roberts MA, et al. Influenza vaccination of health
care workers in long-term-care hospitals reduces the
mortality of elderly patients. J infect Dis.
1997;175(1):1–6.

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the dialysis facility care setting. We
proposed to adopt a reporting measure
based on this NQF-endorsed measure so
that we can collect data that we can use
in the future to calculate both
achievement and improvement scores,
should we propose to adopt the clinical
version of this measure in future
rulemaking. Although we recognize that
we recently adopted the NHSN
Bloodstream Infection clinical measure
despite a lack of baseline data to
calculate achievement and improvement
scores, we believe that measure
warranted special treatment in light of
the fact that it addresses patient safety.
Because the proposed NHSN HCP
Influenza Vaccination reporting
measure addresses population health,
and not patient safety, we think it is
appropriate to adopt it as a reporting
measure until such time that we can
collect the baseline data needed to score
it as a clinical measure.
Section 1881(h)(2)(B)(ii) of the Act
states that ‘‘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) [in this
case, NQF], the Secretary may specify a
measure that is not so endorsed as long
as due consideration is given to
measures that have been endorsed or
adopted by a consensus organization
identified by the Secretary.’’ Because we
have given due consideration to
endorsed measures as well as those
adopted by a consensus organization,
and determined it is not practical or
feasible to adopt this measure in the
ESRD QIP, we proposed to adopt the
NHSN Healthcare Personnel Influenza
Vaccination reporting measure under
the authority of section 1881(h)(2)(B)(ii)
of the Act.
For PY 2018 and future payment
years, we proposed that facilities must
submit, on an annual basis, an HCP
Influenza Vaccination Summary Form
to CDC’s NHSN system, according to the
specifications available in the NHSN
Healthcare Personnel Safety Component
Protocol (http://www.cdc.gov/nhsn/
PDFs/HPS-manual/vaccination/HPSflu-vaccine-protocol.pdf). This proposed
measure differs from NQF #0431 in that
we are proposing to collect the same
data but will score facilities on the basis
of whether they submit this data, rather
than on the percentage of HCP
vaccinated. We proposed that the
deadline for reporting this information
to NHSN be May 15th of each year. This
date is consistent with the reporting
deadline established by CMS for other
provider types reporting HCP
vaccination data to NHSN. Because the

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
flu season typically spans from October
to April, NHSN protocols submitted by
May 15 would document vaccinations
received during the preceding flu
season. For example, NHSN HCP
Influenza Vaccination Summary Forms
submitted by May 15, 2016, would
contain data from October 1, 2015 to
March 31, 2016, and would be used for
the PY 2018 ESRD QIP; NHSN protocols
submitted by May 15, 2017, would
contain data from October 1, 2016 to
March 31, 2017, and would be used for
the PY 2019 ESRD QIP, and so on.
Technical specifications for this
measure can be found at: http://
www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/ESRDQIP/061_Technical
Specifications.html.
We sought comments on this
proposal. The comments and our
responses are set forth below.
Comment: Some commenters
supported the proposal to adopt the
NHSN HCP Influenza Vaccination
reporting measure because HCP can
expose patients to influenza if they have
not been vaccinated, and because the
measure will help improve patient
safety.
Response: We thank the commenters
for their support.
Comment: One commenter did not
support the adoption of the NHSN HCP
Influenza Vaccination reporting
measure, because its definition of HCP
is overly inclusive and reporting
vaccination status for short-term HCP is
overly burdensome. Commenter was
concerned about facilities’ ability to
comply with the requirement to provide
written documentation of each HCP’s
vaccination during the influenza season,
and that if this measure is expanded to
a clinical measure in the future it may
limit access to temporary workers
(including students and volunteers) due
to the requirement that HCPs are
included in the measure even if they
only work at the facility for a single day.
Response: We disagree that the
definition of ‘‘qualified healthcare
personnel’’ is overly inclusive. The
NHSN HCP Influenza vaccination
measure was pilot-tested at over 300
healthcare facilities in the United States;
based on the results of this pilot test,
CDC restricted the types of nonemployee healthcare personnel
included in the measure in order to
balance inclusiveness and feasibility of
reporting for healthcare facilities. It is
important to measure influenza
vaccination among non-employee
healthcare personnel as many of these
personnel provide care to or interact
directly with patients and employee
healthcare personnel, placing them at

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risk of acquiring or transmitting
influenza. We therefore believe the
inclusion of non-employee healthcare
personnel in this measure is
appropriate. We also note that this
measure does not require facilities to
report documentation regarding HCP
immunization status when vaccinations
are obtained within their own
healthcare facility. Under the NHSN
HCP Influenza Vaccination reporting
measure and associated NHSN module,
facilities should obtain written
documentation of influenza
vaccinations obtained outside of the
healthcare facility, but need only report
the total number of those vaccinations
received outside of the healthcare
facility.
Comment: One commenter supported
CMS’s effort to ensure HCPs are
vaccinated, but was concerned about the
administrative aspects of the proposed
NHSN HCP Influenza Vaccination
reporting measure. The commenter
specifically sought clarification as to
whether written documentation would
be required to establish an HCP’s
vaccination status, and whether
vaccinations received before October 1
would qualify under this proposed
measure.
Response: Written documentation of
an HCP’s vaccination status is only
required for HCP receiving the influenza
vaccination outside of the healthcare
facility. Acceptable forms of
documentation of influenza vaccination
received outside of the healthcare
facility include a signed statement or
form, or an electronic form or email
from the healthcare worker indicating
when and where he/she has received
the influenza vaccine, or a note, receipt,
vaccination card, or similar form of
documentation from the outside
vaccinating entity stating that the
healthcare worker received the
influenza vaccine at that location.
Facilities should maintain this
documentation for their own record;
however, only summary count of
number reported within this category
should be reported.
Under the NHSN HCP Influenza
Vaccination reporting measure, the
performance period for the denominator
(the number of healthcare personnel
working in a facility) is from October 1
through March 31. However, the
numerator measurement (vaccination
status) includes vaccines obtained ‘‘as
soon as vaccine is available.’’ As a
result, an HCP working at the facility as
of October 1 who was vaccinated in
September would be considered
vaccinated for the performance period
under this measure.

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Comment: One commenter supported
the NHSN HCP Influenza reporting
measure, but stated that the NQFendorsed measure ‘‘only includes
personnel working at a facility for 30
days or more.’’ Commenter
recommended that CMS exclude HCP
working at a facility for less than 30
days from this measure.
Response: The NHSN HCP Influenza
Vaccination module’s requirement to
include only healthcare personnel
working in the healthcare facility for 30
days or more was in place during the
2012–2013 influenza season. Beginning
with the 2013–2014 influenza season,
facilities are required to report
healthcare personnel working in the
facility for one day or more from
October 1 through March 31, because
this more accurately captures healthcare
personnel in the facility at risk of
acquiring or transmitting influenza
virus. The National Quality Forum
(NQF) accepted CDC’s proposal to make
the change to one day or more in May
2013, and the current NQF-endorsed
measure available at http://
www.qualityforum.org/QPS/0431
reflects this revised specification.
Comment: Some commenters did not
support the proposal to adopt the NHSN
HCP Influenza Vaccination reporting
measure because influenza vaccination
is already a requirement for
employment in dialysis facilities, and
that adopting this measure will dilute
the scores of other measures in the
ESRD QIP.
Response: Although influenza
vaccinations for healthcare
professionals may be a condition of
employment for some facilities, this is
not a condition for all facilities, and
some facilities do not require volunteers
or short-term employees to have current
influenza vaccinations. Accordingly, we
believe that potential improvements to
patients’ health warrant the adoption of
the measure. We further clarify that
adopting this measure in the ESRD QIP
will not dilute the weights of the
clinical measures in the program. The
scoring methodology we are adopting
for PY 2018 weights the reporting
measure scores equally to comprise 10
percent of a facility’s TPS. Although this
methodology reduces the significance of
the other reporting measures it does not
impact weight of the clinical measures,
and it allows us to collect the baseline
data needed to expand the NHSN HCP
measure into a clinical measure in the
future. We therefore believe that the
benefits of adopting this measure
outweigh the drawbacks of diluting the
weight of the other reporting measures
in the ESRD QIP measure set.

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Comment: Some commenters did not
support the proposal to adopt the NHSN
HCP Influenza Vaccination measure,
because meeting the requirements of the
measure will create costs for the facility
that will not be covered by comparable
increases in payments under the ESRD
PPS.
Response: We understand that this
measure may result in additional cost to
dialysis facilities from having to
compile and report the vaccination
status of their health care professionals;
however, we believe that these costs are
outweighed by improvements in
community health resulting from an
immunized workforce.
Comment: Some commenters stated
that reporting data to NHSN HCP
Influenza Module for dialysis facilities
within a hospital will result in
duplicative reporting because these
entities are already included in the
hospital’s reporting. One commenter
recommended that facilities receive full
credit on the measure if they indicate
their hospital submitted the data on
their behalf.
Response: Dialysis facility reporting
will be completely separate from acute
care reporting regardless of whether a
dialysis facility is affiliated with acute
care. It is important that all eligible
healthcare personnel be counted by

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each facility where they work so that
each facility’s reporting to NHSN under
this measure presents an accurate
picture of the vaccination coverage
among healthcare personnel at that
specific facility or location. The
concerns regarding duplicative
reporting are unfounded, because
reporting for the same individual’s
vaccination status will only occur in
instances where that individual worked
in both facilities during the reporting
period. In these cases, it is appropriate
to include the HCP in both facilities’
counts because they meet the eligibility
criteria for both facilities’ reporting.
Comment: One commenter
recommended that CMS consider
collecting data for the NHSN HCP
Influenza Vaccination reporting
measure as actual numbers of HCPs
vaccinated rather than percentages,
because small facilities may appear to
be noncompliant based on a small
number of HCP not receiving a
vaccination. The commenter further
recommended that this information be
reported annually rather than monthly,
because this is consistent with the way
data is entered into CROWNWeb.
Response: Under the proposed NHSN
HCP Influenza Vaccination reporting
measure, facilities are required to report
the number of HCP working in the

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facility (denominator data) and the
number of those individuals with a
certain vaccination status (numerator
data). Accordingly, in the process of
calculating the percentage of HCPs who
receive an influenza vaccination, the
measure collects data on the actual
number of HCPs vaccinated. We also
note that for the PY 2018 program
NHSN HCP Influenza Vaccination is a
reporting measure, meaning that
facilities will receive a score on this
measure based on the successful
reporting of data, not on the values
actually reported. In addition, monthly
reporting is not required of facilities
under this measure. Instead, facilities
are required to submit a single summary
report of final HCP influenza
vaccination data for the specified
influenza season by the annual
reporting deadline.
For these reasons, we are finalizing
the NHSN HCP Influenza Vaccination
measure as proposed. Technical
specifications for the measure can be
found at: http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-AssessmentInstruments/ESRDQIP/061_
TechnicalSpecifications.html.
Figure 2: Summary of Finalized PY 2018
Measures

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BILLING CODE 4120–01–C

2. Performance Period for the PY 2018
ESRD QIP
Section 1881(h)(4)(D) of the Act
requires the Secretary to establish the
performance period with respect to a
year, and that the performance period
occur prior to the beginning of such
year. In accordance with our proposal to
adopt CY 2015 as the performance
period for the PY 2017 ESRD QIP, as
well as our policy goal to collect 12
months of data on each measure when
feasible, we proposed to adopt CY 2016
as the performance period for the PY
2018 ESRD QIP. With respect to the
NHSN Healthcare Personnel Influenza
Vaccination Reporting measure, we
proposed that the performance period
will be from October 1, 2015 through
March 31, 2016, which is consistent
with the length of the 2015–2016
influenza season.
We sought comments on these
proposals. We did not receive any
comments and are finalizing them as
proposed.

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3. Performance Standards, Achievement
Thresholds, and Benchmarks for the PY
2018 ESRD QIP
a. Performance Standards, Achievement
Thresholds, and Benchmarks for the
Clinical Measures in the PY 2018 ESRD
QIP
For the same reasons stated in the CY
2013 ESRD PPS final rule (77 FR 67500
through 76502), we proposed for PY
2018 to set the performance standards,
achievement thresholds, and
benchmarks based on the 50th, 15th,
and 90th percentile, respectively, of
national performance in CY 2014 for all
the clinical measures except for the
proposed ICH CAHPS clinical measure.
As finalized in the CY 2014 ESRD PPS
Final Rule (78 FR 72213), facilities are
not required to administer the ICH
CAHPS survey (via a CMS-approved
third-party vendor) on a semiannual
basis until CY 2015, the proposed
performance period for the PY 2017
ESRD QIP. We believe that ICH CAHPS
data collected during CY 2014 will not
be reliable enough to use for the
purposes of establishing performance
standards, achievement thresholds, and
benchmarks, because facilities are only
required to administer the survey once
in CY 2014. Therefore, we proposed to
set the performance standards,
achievement thresholds, and
benchmarks based on the 50th, 15th,
and 90th percentile, respectively, of
national performance in CY 2015 for the
proposed ICH CAHPS clinical measure.
We sought comments on these
proposals. We did not receive any

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comments and are finalizing them as
proposed.

4. Scoring the PY 2018 ESRD QIP
Measures

b. Estimated Performance Standards,
Achievement Thresholds, and
Benchmarks for the Clinical Measures
for the PY 2018 ESRD QIP

a. Scoring Facility Performance on
Clinical Measures Based on
Achievement
In the CY 2014 ESRD PPS Final Rule,
we finalized a policy for scoring
performance on clinical measures based
on achievement (78 FR 72215). In
determining a facility’s achievement
score for each measure under the PY
2018 ESRD QIP, we proposed to
continue using this methodology for all
clinical measures except the ICH
CAHPS clinical measure. Under this
methodology, facilities receive points
along an achievement range based on
their performance during the proposed
performance period for each measure,
which we define as a scale between the
achievement threshold and the
benchmark.
We sought comments on these
proposals. We did not receive any
comments and are finalizing them as
proposed.

At this time, we do not have the
necessary data to assign numerical
values to the performance standards for
the clinical measures, because we do
not yet have data from CY 2014 or the
first portion of CY 2015. We will
publish values for the clinical measures,
using data from CY 2014 and the first
portion of CY 2015, in the CY 2016
ESRD PPS Final Rule.
c. Performance Standards for the PY
2018 Reporting Measures
In the CY 2014 ESRD PPS Final Rule,
we finalized performance standards for
the Anemia Management and Mineral
Metabolism reporting measures (78 FR
72213). We did not propose any changes
to this policy beyond the proposal to
modify the reporting requirements for
the Mineral Metabolism reporting
measure, which appears above in
Section III.G.1.
For the Screening for Clinical
Depression and Follow-Up reporting
measure, we proposed to set the
performance standard as successfully
reporting one of the above-listed clinical
depression and follow-up screening
conditions for each qualifying patient in
CROWNWeb before the February 1st
directly following the performance
period.
For the Pain Assessment and FollowUp reporting measure, we proposed to
set the performance standard as
successfully reporting one of the abovelisted pain assessment and follow-up
conditions for each qualifying patient in
CROWNWeb twice annually: once
before August 1st for the first 6 months
of the performance period, and once
before the February 1st directly
following the performance period for
the last six months of the performance
period.
For the NHSN Healthcare Provider
Influenza Vaccination reporting
measure, we proposed to set the
performance standard as successfully
submitting the HCP Influenza
Vaccination Summary Form to CDC’s
NHSN system by May 15, 2017.
We sought comments on these
proposals. We did not receive any
comments and are finalizing them as
proposed.

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b. Scoring Facility Performance on
Clinical Measures Based on
Improvement
In the CY 2014 ESRD PPS Final Rule,
we finalized a policy for scoring
performance on clinical measures based
on improvement (78 FR 72215 through
72216). In determining a facility’s
improvement score for each measure
under the PY 2018 ESRD QIP, we
proposed to continue using this
methodology for all clinical measures
except the ICH CAHPS clinical measure.
Under this methodology, facilities
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 performance on the measure
during CY 2015. The facility’s
improvement score would be calculated
by comparing its performance on the
measure during CY 2016 (the proposed
performance period) to its performance
rate on the measure during CY 2015.
We sought comments on these
proposals. We did not receive any
comments and are finalizing them as
proposed.
c. Scoring the ICH CAHPS Clinical
Measure
For PY 2018 and future payment
years, we proposed the following
scoring methodology for the ICH CAHPS
clinical measure. We proposed to score
the measure on the basis of three
composite measures and three global
ratings.
Composite Measures:

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• Nephrologists’ Communication and
Caring;
• Quality of Dialysis Center Care and
Operations; and
• Providing Information to Patients.
Global Ratings:
• Overall rating of the nephrologists
(Question 8)
• Overall rating of the dialysis center
staff (Question 32)
• Overall rating of the dialysis facility
(Question 35)
The composite measures are
groupings of questions that measure the
same dimension of healthcare.
(Groupings of questions and composite
measures can be found at https://
ichcahps.org/Portals/0/ICH_
Composites_English.pdf.) Global ratings
questions employ a scale of 0 to 10,
worst to best; each of the questions
within a composite measure use either
‘‘Yes’’ or ‘‘No’’ responses, or response
categories ranging from ‘‘Never’’ to
‘‘Always,’’ to assess the patient’s
experience of care at a facility. Facility
performance on each composite
measure will be determined by the
percent of patients who choose ‘‘topbox’’ responses (that is, most positive or
‘‘Always’’) to the ICH CAHPS survey
questions in each domain. Examples of
questions and top-box responses are
displayed below:

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Q11: In the last 3 months, how often did
the dialysis center staff explain things in a
way that was easy for you to understand?
Top-box response: ‘‘Always’’
Q19: The dialysis center staff can connect
you to the dialysis machine through a graft,
fistula, or catheter.
Do you know how to take care of your
graft, fistula or catheter?
Top-box response: ‘‘Yes’’

We proposed that a facility will
receive an achievement score and an
improvement score for each of the
composite measures and global ratings
in the ICH CAHPS survey instrument.
For purposes of calculating achievement
scores for the ICH CAHPS clinical
measure, we proposed to base the score
on where a facility’s performance rate
falls relative to the achievement
threshold and the benchmark for that
measure. We proposed that facilities
will earn between 0 to 10 points for
achievement based on where its
performance for the measure falls
relative to the achievement threshold. If
a facility’s performance rate during the
performance period is:
• Equal to or greater than the
benchmark, then the facility would
receive 10 points for achievement;
• Less than the achievement
threshold, then the facility would
receive 0 points for achievement; or

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• Equal to or greater than the
achievement threshold, but below the
benchmark, then 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.
For the purposes of calculating
improvement scores for the ICH CAHPS
clinical measure, we proposed that the
improvement threshold will be defined
as facility performance in CY 2015, and
further proposed to base the score on
where a facility’s performance rate falls
relative to the improvement threshold
and the benchmark for that measure. We
proposed that a facility can earn
between 0 to 9 points based on how
much its performance on the measure
during the performance period improves
from its performance on the measure
during the baseline period. If a facility’s
performance rate during the
performance period is:
• Less than the improvement
threshold, then the facility would
receive 0 points for improvement; or
• Equal to or greater than the
improvement threshold, but below the
benchmark, then 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 further proposed that a facility’s
ICH CAHPS score will be based on the
higher of the facility’s achievement or
improvement score for each of the
composite measures and global ratings.
Additionally, we proposed that
achievement and/or improvement
scores on the three composite measures
and the three global ratings will be
averaged together to yield an overall
score on the ICH CAHPS clinical
measure.
The timing and frequency of
administering the ICH CAHPS survey is
critical to obtaining reliable results. For
example, if a facility did not conduct
two semiannual surveys during a given
performance period, then patient
experiences during the 6-month
period(s) covered by the missed
survey(s) would not be captured.
Additionally, if facilities (via CMSapproved vendors) do not report their
ICH CAHPS survey results to CMS, then
these results cannot be taken into
account when establishing national
performance standards for the measure,
thereby diminishing the measure’s

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reliability. Because timely survey
administration and data reporting is
critical to reliably scoring ICH CAHPS
as a clinical measure in the ESRD QIP,
we proposed that a facility will receive
a score of 0 on the measure if it does not
meet the survey administration and
reporting requirements finalized in the
CY 2014 ESRD PPS Final Rule (78 FR
72193 through 72196).
We sought comments on these
proposals to score the ICH CAHPS
clinical measure. The comment and our
response are set forth below.
Comment: One commenter sought
clarification as to how multiple
administrations of the ICH CAHPS
survey in a single performance period
will factor into facilities’ ICH CAHPS
clinical measure scores if the ICH
CAHPS clinical measure proposal is
finalized.
Response: We clarify that survey
responses from the two survey
administrations will be compiled
together into a single dataset, which will
then be used to calculate facility scores
on the ICH CAHPS clinical measure. In
other words, responses to the first and
second survey administrations will be
combined to produce a facility’s ICH
CAHPS score. Each of the three
composite measures consists of six or
more questions from the survey that are
reported as one composite score. Scores
are created by first determining the
proportion of answers to each response
option for all questions in the
composite. The final composite score
averages the proportion of those
responding to each answer choice in all
questions. Only questions that are
answered by survey respondents will be
included in the calculation of composite
scores.
For these reasons, we are finalizing
the scoring methodology for the ICH
CAHPS clinical measure as proposed for
the PY 2018 program and future
payment years.
d. Calculating Facility Performance on
Reporting Measures
In the CY 2014 ESRD PPS Final Rule,
we finalized policies for scoring
performance on the Anemia
Management and Mineral Metabolism
reporting measures in the ESRD QIP (78
FR 72216). We did not propose any
changes to these policies beyond the
proposals that were made beginning
with the PY 2017 program, which
appear in section III.F.7 above.
With respect to the Screening for
Clinical Depression and Follow-up, Pain
Assessment and Follow-Up, and NHSN
Healthcare Provider Influenza
Vaccination reporting measures, we
proposed that facilities will receive a
score of 10 on the measures if they meet

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the proposed performance standards for
the measures, and a score of 0 on the
measure if they do not. We proposed to
score these reporting measures
differently than the Anemia
Management and Mineral Metabolism
reporting measures because they require
annual or semiannual reporting, and
therefore scoring based on monthly
reporting rates is not feasible.
We sought comments on these
proposals. The comments and our
responses are set forth below.

Comment: One commenter did not
support the proposal to allocate zero
points on the proposed Pain Assessment
and Follow-Up measure if a facility does
not report one of the six specified
conditions for each patient. Commenter
recommended using a scoring system
that awards partial points for partial
compliance.
Response: We agree with the
commenter that an all-or-nothing
methodology will not incentivize
facilities to provide pain assessments

and follow-ups if they are unable meet
the requirements of the Pain Assessment
and Follow-Up measure for a single
qualifying patient. We also believe that
this same concern applies equally to the
Screening for Clinical Depression and
Follow-Up reporting measure, because
the proposed scoring methodology for
both reporting measures is identical. In
order to respond to the commenter’s
recommendation to award partial
points, we finalize that the two
measures will be scored as follows:

We selected the above scoring
methodology for the Screening for
Clinical Depression and Follow-Up
reporting measure because it evaluates
the percentage of eligible patients for
whom a facility reports the data
required for the measure. In contrast to
the proposed scoring methodology,
which would have assigned zero points
on the measure if a facility failed to
report data for a single patient, this
methodology allows facilities to receive
a high score on the measure even if they
fail to report data for a small number of
patients. We selected the above scoring
methodology for the Pain Assessment
and Follow-Up measure for the same
reasons. However, in this case we
calculated separate percentages for first
and second six months and averaged the
two percentages together. We did this
because the Pain Assessment and
Follow-Up measure requires facilities to
report data on a semiannual basis, and
we believe that taking the average of the
two percentages provides a fair way to
evaluate facilities’ overall performance
during the performance period.

For these reasons, we are finalizing
that we will calculate facility
performance on the Screening for
Clinical Depression and Follow-Up,
Pain Assessment and Follow-Up, and
NHSN HCP Influenza Vaccination
reporting measures as described above.

the eligibility period and the survey
administration and reporting
requirements, if the facility is only able
to obtain 29 or fewer survey completes
during the performance period, the
facility will not be eligible to receive a
score on the ICH CAHPS clinical
measure.
We further proposed that facilities
with fewer than 10 patient-years at risk
will not be eligible to receive a score on
the proposed STrR clinical measure. We
considered adopting the 11-patient
minimum requirement that we use for
the other clinical measures. We decided,
however, to base facilities’ eligibility for
the measure in terms of the number of
patient-years at risk, because facility
performance rates are based on the
number of patient-years at risk, not the
number of patients. Additionally, we
decided to set the minimum data
requirements at 10 patient-years at risk
because, based on national average
event rates, this is the time required to
achieve an average of 5 transfusion
events. The 5 expected transfusion
events requirement translates to a
standard deviation of approximately

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5. Minimum Data for Scoring Measures
for the PY 2018 ESRD QIP
With the following exceptions
discussed below, we did not propose to
change the minimum data policies for
the PY 2018 ESRD QIP from those
proposed above for the PY 2017 ESRD
QIP. We also proposed that the 30
survey-eligible patient minimum during
the eligibility period and 30 survey
complete minimum during the
performance period that we proposed to
adopt for the ICH CAHPS reporting
measure will also apply to the ICH
CAHPS clinical measure. We have
determined that the ICH CAHPS survey
is satisfactorily reliable when a facility
obtains a total of at least 30 completed
surveys during the performance period.
Therefore, even if a facility meets the 30
survey-eligible patient minimum during

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0.45 if the facility has rates exactly
corresponding to the national average.
In addition, 10 patient-years at risk is
the threshold used in the Dialysis
Facility Compare program, and we
believe that public-reporting and VBP
programs for ESRD should adopt
consistent measure specifications where
feasible.
For the proposed STrR measure, we
proposed to apply the small-facility
adjuster to facilities with 21 or fewer
patient-years at risk. We decided to base
the threshold for applying the smallfacility adjuster on the number of
patient-years at risk, because facility
performance rates are based on the
number of patient-years at risk, not the
number of patients. We proposed to set
the threshold at 21 patient-years at risk,
because we determined that this was the
minimum number of patient-years at
risk needed to achieve an IUR of 0.4
(that is, moderate reliability) for the
proposed STrR measure. Because the
small-facility adjuster gives facilities the
benefit of the doubt when measure
scores can be unduly influenced by a
few outlier patients, we believe that
setting the threshold at 21 qualifying
patient-years at risk will not unduly
penalize facilities that treat small
numbers of patients on the proposed
STrR clinical measure.
With these exceptions, we did not
propose to change the policy, finalized
most recently in the CY 2014 ESRD PPS
Final Rule (78 FR 72220 through 72221),
that facilities must have at least 11
qualifying patients for the entire
performance period in order to be
scored on a clinical measure.
We currently have a policy, most
recently finalized in the CY 2014 ESRD
PPS final rule (78 FR 72197 through
72198 and 72220 through 72221), to
score facilities on reporting measures
only if they have a minimum number of
qualifying patients during the
performance period. As discussed in
Section III.F.7 above, we proposed to
modify the case minimum requirements
for the Anemia Management and
Mineral Metabolism reporting measures
beginning with the PY 2017 ESRD QIP.
We did not propose any additional
changes in the patient minimum
requirements for the Anemia
Management and Mineral Metabolism
reporting measures in the PY 2018
program.
For the Screening for Clinical
Depression and Follow-Up and the Pain
Assessment and Follow-Up reporting
measures, we proposed a case minimum
of one qualifying patient. We believe
this patient minimum requirement will
enable us to gather a sufficient amount
of data to calculate future performance

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standards, benchmarks, and
achievement thresholds, should we
propose to adopt clinical versions of
these measures in the future.
As discussed in Section III.G.2.f, we
did not propose that a facility will have
to meet a patient minimum in order to
receive a score on the NHSN Healthcare
Provider Influenza Vaccination
reporting measure. We believe it is
standard practice for all HCP to receive
influenza vaccinations and, as discussed
above, HCP vaccination is likely to
reduce influenza-related deaths and
complications among the ESRD
population. Accordingly, we proposed
that all facilities, regardless of patient
population size, will be scored on the
influenza vaccination measure.
We sought comments on this
proposal. The comments and our
responses are set forth below:
Comment: Some commenters
supported the proposal to determine
facility eligibility for scoring on the ICH
CAHPS reporting measure based on the
number of patients treated in the
eligibility period, because it will allow
providers to better anticipate their
eligibility in a given year.
Response: We thank commenters for
their support.
Comment: Many commenters did not
support the proposed data minimum
requirements for the reporting measures
because the commenters stated that the
requirements unfairly penalize facilities
that may not be able to legitimately
report data for a few patients. As an
alternative, the commenters
recommended applying a consistent
case minimum of 26 for all measures in
the ESRD QIP.
Response: We agree with commenters
that setting the patient minimum for the
Screening for Clinical Depression and
Follow-Up, and Pain Assessment and
Follow-Up reporting measures at one
qualifying patient may unfairly penalize
small facilities, because a failing to
report data for two or more patients will
have a greater impact on small facility
than on larger facilities. However, we
disagree that it is appropriate to set the
case minimum at 26 for these reporting
measures, because doing so would not
allow CMS to collect baseline data for
a large percentage of patients. We
believe that setting the case minimum at
11 for the Screening for Depression and
Follow-Up and Pain Assessment and
Follow-Up reporting measures strikes
the appropriate balance between the
need to maximize data collection and
the need to not unduly penalize small
facilities that are unable, for legitimate
reasons, to report data on all but one
patient. We further believe that setting
the case minimum at 11 is appropriate,

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because this would align with the case
minimum policy for the clinical
measures in the ESRD QIP. Therefore,
we are finalizing a case minimum policy
of 11 for the Screening for Clinical
Depression and Follow-Up and Pain
Assessment and Follow-Up reporting
measures.
Under our current policy, we begin
counting the number of months for
which a facility is open on the first day
of the month after the facility’s CCN
open date. Only facilities with a CCN
open date before July 1, 2016, are
eligible to be scored on the Anemia
Management and Mineral Metabolism
reporting measures in the PY 2018
program. We proposed to apply this
finalized policy to the Screening for
Clinical Depression and Follow-Up and
the Pain Assessment and Follow-Up
reporting measures. We further
proposed that facilities with a CCN open
date after January 1, 2016, will not be
eligible to receive a score on the NHSN
Healthcare Personnel Influenza
Vaccination reporting measure in the PY
2018 program. Due to the time it takes
for facilities to register with NHSN and
become familiar with the NHSN
Healthcare Personnel Safety Component
Protocol, we do not believe it is
reasonable to expect facilities with CCN
open dates after January 1, 2016, to
submit an HCP Influenza Vaccination
Summary Form to CDC’s NHSN system
before the May 15, 2016, deadline.
As finalized in the CY 2014 ESRD PPS
Final Rule (78 FR 72220), facilities are
generally eligible to receive a score on
the clinical measures if their CCN open
date occurs before the end of the
performance period. However, facilities
with a CCN open date after January 1 of
the performance period are not eligible
to receive a score on the NHSN
Bloodstream Infection clinical measure,
due to the need to collect 12 months of
data to accurately score the measure. We
proposed that facilities with a CCN open
date after January 1, 2016, will also not
be eligible to receive a score on the ICH
CAHPS clinical measure in the PY 2018
program. Due to the additional time
needed to arrange to contract with CMSapproved third-party vendors, and for
vendors to administer the survey twice
and report the results to CMS, we do not
believe facilities with CCN open dates
after January 1, 2016, can reasonably be
expected to meet the requirements
associated with the proposed ICH
CAHPS clinical measure for that
performance period.
As discussed in Section III.G.7 below,
we are continuing our policy that a
facility will not receive a TPS unless it
receives a score on at least one clinical
measure and at least one reporting

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
measure. We note that finalizing the
above proposals would result in
facilities not being eligible for a
payment reduction for the PY 2018
ESRD QIP if they have a CCN open date
on or after July 1, 2016.
We sought comments on these
proposals but did not receive any
comments.
For these reasons, we are finalizing
the minimum data policies for the PY

2018 program as proposed, with the
exception of the patient minimum
policies for the Screening for Clinical
Depression and Follow-Up and Pain
Assessment and Follow-Up reporting
measures. For the reasons discussed
above, we are finalizing the policy that
a facility must treat at least 11
qualifying patients during the
performance period to receive a score on

66213

the Screening for Clinical Depression
and Follow-Up and Pain Assessment
and Follow-Up reporting measures.
Table 27 displays the finalized patient
minimum requirements for each of the
measures, as well as the CCN open dates
after which a facility will not be eligible
to receive a score on a reporting
measure.

TABLE 27—MINIMUM DATA REQUIREMENTS FOR THE PY 2018 ESRD QIP
Measure

Minimum data requirements

CCN open date

Adult Hemodialysis Adequacy (Clinical).
Adult Peritoneal Dialysis Adequacy
(Clinical).
Pediatric Hemodialysis Adequacy
(Clinical).
Pediatric Peritoneal Dialysis Adequacy (Clinical).
Vascular Access Type: Catheter
(Clinical).
Vascular Access Type: Fistula
(Clinical).
Hypercalcemia (Clinical) .................
NHSN Bloodstream Infection (Clinical).
SRR (Clinical) ..................................
STrR (Clinical) .................................
ICH CAHPS (Clinical) .....................

11 qualifying patients ...................

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

11–25 patients.

11 qualifying patients ...................

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

11–25 patients.

11 qualifying patients ...................

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

11–25 patients.

11 qualifying patients ...................

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

11–25 patients.

11 qualifying patients ...................

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

11–25 patients.

11 qualifying patients ...................

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

11–25 patients.

11 qualifying patients ...................
11 qualifying patients ...................

N/A ...............................................
Before January 1, 2016 ...............

11–25 patients.
11–25 patients.

11 index discharges .....................
10 patient-years at risk ................
Facilities with 30 or more surveyeligible patients during the calendar year preceding the performance period must submit
survey results. Facilities will not
receive a score if they do not
obtain a total of at least 30
completed surveys during the
performance period..
11 qualifying patients ...................
11 qualifying patients ...................
11 qualifying patients ...................

N/A ...............................................
N/A ...............................................
Before January 1, 2016 ...............

11–41 index discharges.
10–21 patient-years at risk.
N/A.

Before July 1, 2016 ......................
Before July 1, 2016 ......................
Before July 1, 2016 ......................

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

11 qualifying patients ...................

Before July 1, 2016 ......................

N/A.

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

Before January 1, 2016 ...............

N/A.

Anemia Management (Reporting) ...
Mineral Metabolism (Reporting) ......
Depression Screening and FollowUp (Reporting).
Pain Assessment and Follow-Up
(Reporting).
NHSN HCP Influenza Vaccination
(Reporting).

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6. Calculating the Clinical Measure
Domain Score
As the ESRD QIP evolves and we
continue to adopt new clinical measures
that track the goals of the NQS, we do
not believe that the current scoring
methodology provides the program with
enough flexibility to strengthen
incentives for quality improvement in
areas where quality gaps continue to
exist. Therefore, under the authority of
Section 1881(h)(3)(A)(i) of the Act, we
proposed to revise the scoring
methodology beginning with the PY
2018 ESRD QIP so that we assign
measure scores on the basis of two
domains: A Clinical Measure Domain
and a Reporting Measure Domain.

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First, we proposed to establish a
Clinical Measure Domain, which we
define as an aggregated metric of facility
performance on the clinical measures
and measure topics in the ESRD QIP.
Under this proposed approach, we
would score individual clinical
measures and measure topics using the
methodology we finalize for that
measure or measure topic. Clinical
measures and measure topics would
then be grouped into subdomains
within the Clinical Measure Domain,
according to quality categories. Within
these subdomains, measure scores
would be multiplied by a weighting
coefficient, weighted measure scores
would be summed together to determine
subdomain scores, and then subdomain
scores would be summed together to

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Small facility adjuster

determine a facility’s Clinical Measure
Domain score. This scoring
methodology provides more flexibility
to focus on quality improvement efforts,
because it makes it possible to group
measures according to quality categories
and to weight each category according
to opportunities for quality
improvement.
We further proposed to divide the
clinical measure domain into three
subdomains for the purposes of
calculating the Clinical Measure
Domain score:
• Safety
• Patient and Family Engagement/
Care Coordination
• Clinical Care
We took several considerations into
account when selecting these particular

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subdomains. First, safety, patient
engagement, care coordination, and
clinical care are all NQS goals for which
the ESRD QIP has proposed and/or
finalized measures. We are attempting
to align all CMS quality improvement
efforts with the NQS because its patientcentered approach prioritizes measures
across our quality reporting and pay-forperformance programs to ensure that the
measurement approaches in these
programs, as a whole, can make
meaningful improvements in the quality
of care furnished in a variety of settings.
We also believe that adopting an NQSbased subdomain structure for the
clinical measures in the ESRD QIP is

responsive to stakeholder requests that
we align our measurement approaches
across HHS programs.
Second, we proposed to combine the
NQS goals of Care Coordination and
Patient- and Caregiver-Centered
Experience of Care into one subdomain
because we believe the two goals
complement each other. ‘‘Care
Coordination’’ refers to the NQS goal of
promoting effective communication and
coordination of care. ‘‘Patient- and
Caregiver- Centered Experience of Care’’
refers to the NQS goal of ensuring that
each patient and family is engaged as a
partner in care. In order to engage
patients and families as partners, we

believe that effective communication
and coordination of care must coexist,
and that patient and family engagement
cannot occur independently of effective
communication and care coordination.
We therefore believe that it is
appropriate to combine measures of care
coordination with those of patient and
family engagement for the purposes of
calculating a facility’s clinical measure
domain score.
For PY 2018 and future payment
years, we proposed to include the
following measures in the following
subdomains of the proposed clinical
measure domain (see Table 28):

TABLE 28—PROPOSED SUBDOMAINS IN THE CLINICAL MEASURE DOMAIN
Subdomain

Measures and measure topics

Safety Subdomain ............................................................................................................
Patient and Family Engagement/Care Coordination Subdomain ....................................

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Clinical Care Subdomain .................................................................................................

We sought comments on these
proposals to adopt a Clinical Measure
Domain that includes three subdomains
(safety, patient and family engagement/
care coordination, and clinical care) for
the purpose of calculating a facility’s
clinical measure domain score for PY
2018.
In deciding how to weight the
proposed subdomains that comprise the
clinical measure domain score, we took
the following considerations into
account: (1) The number of measures
and measure topics in a proposed
subdomain; (2) how much experience
facilities have had with the measures
and measure topics in a proposed
subdomain; and (3) how well the
measures align with CMS’s highest
priorities for quality improvement for
patients with ESRD. Because the
proposed Clinical Care subdomain
contains the largest number of
measures, and facilities have the most
experience with the measures in this
subdomain, we proposed to weight the
Clinical Care subdomain significantly
higher than the other subdomains.
Facilities have more experience with the
NHSN Bloodstream Infection measure
in the proposed Safety subdomain than
they do with the SRR measure in the
proposed Patient and Family
Engagement/Care Coordination
subdomain, but we proposed to include
a larger number of measures in the
Patient and Family Engagement/Care
Coordination subdomain. We proposed

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NHSN Bloodstream Infection measure.
ICH CAHPS measure.
SRR measure.
STrR measure.
Dialysis Adequacy measure topic.
Vascular Access Type measure topic.
Hypercalcemia measure.

to give the Patient and Family
Engagement/Care Coordination
subdomain slightly more weight than
the Safety subdomain, because it
includes two measures, whereas only
one measure appears in the proposed
Safety subdomain. In future rulemaking,
we will consider revising these weights
based on facility experience with the
measures contained within these
proposed subdomains.
For these reasons, we proposed the
following weights for the three
subdomains in the clinical measure
domain score for PY 2018:

patients with ESRD are two of our
highest priorities for quality
improvement, so we believe it is
appropriate to weight the NHSN
Bloodstream Infection clinical measure
at 20 percent of a facility’s Clinical
Measure Domain Score. Because
facilities have substantially more
experience with the ICH CAHPS clinical
measure, as compared with the SRR
clinical measure, we proposed to give
the proposed ICH CAHPS measure twice
as much weight as the proposed SRR
measure. Additionally, we noted that
improving patients’ experience of care is
as high a priority for CMS quality
Weight in the
improvement efforts as improving
clinical meas- patient safety, so we believe it is
Subdomain
ure domain
percent score appropriate to assign the ICH CAHPS
clinical measure the same weight as the
Safety ....................................
20 NHSN Bloodstream Infection clinical
Patient and Family Engagemeasure. We proposed to give the
ment/Care Coordination ....
30 Dialysis Adequacy and Vascular Access
Clinical Care .........................
50 Type measure topics the most weight in
the Clinical Care subdomain because
In deciding how to weight measures
facilities have substantially more
and measure topics within a proposed
experience with these measure topics,
subdomain, we took into account the
as compared to the other measures in
same considerations we considered
the Clinical Care subdomain. We
when deciding how to weight the
proposed to assign equal weights to the
proposed subdomains. Because the
STrR and Hypercalcemia measures
NHSN Bloodstream Infection clinical
because PY 2018 would be the first
measure is the only measure in the
program year in which facilities are
proposed Safety subdomain, we
measured on the STrR measure, and
proposed to assign the entire subdomain because the clinical significance of the
weight to that measure. We additionally Hypercalcemia measure is diminished
noted that improving patient safety and
in the absence of other information
reducing bloodstream infections in
about mineral metabolism (for example,

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subdomains within the clinical measure
domain. Commenter stated that the
proposed weighting places too much
emphasis on the Patient and Family
Engagement/Care Coordination
subdomain which contains clinical
measures over which the facility has the
least control, and places too little
emphasis on safety. Commenter
Measure
recommended that CMS revise the
weight in the
Measures/measure topics by
clinical meas- weights of the subdomains to weight the
Safety and Clinical Care subdomains
subdomain
ure domain
score
equally, and assign less weight to the
(percent)
Patient and Family Engagement/Care
Coordination subdomain.
Safety Subdomain ................
20
Response: We disagree with the
NHSN Bloodstream Infection measure .........
20 commenter that the proposed
subdomain weighting places too much
Patient and Family Engageemphasis on Patient and Family
ment/Care Coordination
Subdomain ........................
30 Engagement/Care Coordination, as
ICH CAHPS measure ....
20 compared to the Safety subdomain. As
SRR measure ................
10 discussed in the CY 2015 ESRD PPS
Clinical Care Subdomain ......
50
Proposed Rule (79 FR 40267), we
STrR measure ...............
7
proposed to assign the Patient and
Dialysis Adequacy
measure topic ............
18 Family Engagement/Care Coordination
subdomain slightly more weight than
Vascular Access Type
measure topic ............
18 the Safety subdomain, because the
Hypercalcemia measure .......
7 former subdomain includes two
measures and the latter subdomain only
We sought comments on this proposal includes one measure. We continue to
for weighting individual measures
believe that these weights are
within the Clinical Measure Domain.
appropriate for the PY 2018 ESRD QIP
The comments and our responses are set measure set, but we will reconsider the
forth below.
weighting system in its entirety, in light
Comment: One commenter supported of the three criteria listed above (that is.,
the proposal to create a Clinical
the number of measures and measure
Measure Domain, and the weightings
topics in a proposed subdomain; how
applied therein, because the proposed
much experience facilities have had
domain appropriately prioritizes
with the measures and measure topics
outcome measures, and compared to
in a proposed subdomain; and how well
process measures, outcome measures
the measures align with CMS’s highest
provide a better indication of quality
priorities for quality improvement for
care.
patients with ESRD) in future
Response: We thank the commenter
rulemaking.
for the support.
Comment: One commenter
Comment: One commenter supported
ICH CAHPS clinical measure’s proposed recommended reducing the weight of
the ICH CAHPS clinical measure in the
weight in the Clinical Measure Domain
Clinical Measure Domain ‘‘to avoid
and recommended that CMS consider
giving the measure greater weight in the penalizing dialysis units that provide
safe, high quality care’’ but do not score
future, because CAHPS is weighted
as highly on the ICH CAHPS measure.
slightly higher in other value-based
Response: We agree that safety is a
purchasing programs.
paramount concern in dialysis
Response: We thank the commenter
treatment, but also believe that patient
for the support and we will consider
increasing the weight of the ICH CAHPS experience is a crucial element of the
overall care provided by the dialysis
clinical measure in future payment
facility. As stated in the CY 2015 ESRD
years.
PPS Proposed Rule, we based decisions
Comment: Commenter supported
about subdomain and measure
placing the NHSN Bloodstream
weighting on three criteria, and we
Infection measure alone in the Safety
continue to believe that the weight of
subdomain because reducing
the ICH CAHPS clinical measure is
bloodstream infections is one of the
consistent with these criteria. We
highest priorities for patients with
further note that it is possible for a
ESRD.
facility that does not perform well on
Response: We thank the commenter
the ICH CAHPS clinical measure to
for the support.
Comment: One commenter did not
avoid a payment reduction if it performs
support the proposed weighting for the
well on the other clinical measures.

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a patient’s phosphorus and plasma
parathyroid hormone levels), which
would provide a more comprehensive
assessment of mineral metabolism (78
FR 72217). For these reasons, we
proposed to use the following weighting
system for calculating a facility’s
Clinical Measure domain score:

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Comment: One commenter did not
support weighting the ICH CAHPS
clinical measure at 20 percent of a
facility’s TPS, because small facilities
will have trouble meeting the eligibility
requirements for this measure, which
will result in a 20 percent reduction in
their TPS.
Response: If a facility does not meet
the eligibility requirements for the ICH
CAHPS clinical measure, the facility
will not be scored on the measure and
the corresponding measure weight will
be reallocated equally across the clinical
measures for which the facility received
a score.
Comment: Some commenters
recommended lowering the weight of
the ICH CAHPS clinical measure,
because no studies have demonstrated a
positive association between scores on
the measure and positive patient
outcomes.
Response: While it is premature to
know for certain in this provider setting,
measuring patient experience can lead
to quality improvement. In other
settings, better patient experience can
lead to better outcomes. Patient
experience and clinical measures may
be related, but they are distinct
measures of quality. ICH CAHPS
supports the National Quality Forum’s
strategy priorities of Effective
Communication and Care Coordination
and Person and Family-centered Care as
well as the Institute of Medicine’s six
specific aims for improvement.
Comment: One commenter did not
support the proposed weighting for the
Safety subdomain because there is only
one measure in the domain. Commenter
recommended that CMS not include
subdomains with only one measure, or
in the alternative, reduce that
subdomain’s weight so that the one
measure is weighted similar to measures
in the other subdomains.
Response: As stated in the proposed
rule, we decided how to weight the
Clinical Measure Domain subdomains
and individual measures using three
criteria: ‘‘(1) The number of measures
and measure topics in a proposed
subdomain; (2) how much experience
facilities have had with the measures
and measure topics in a proposed
subdomain; and (3) how well the
measures align with CMS’s highest
priorities for quality improvement for
patients with ESRD’’ (79 FR 40267). We
further stated that facilities have more
experience with the NHSN Bloodstream
Infection clinical measure than they do
with the measures in the Patient and
Family Engagement/Care Coordination
subdomain, and that ‘‘improving patient
safety and reducing bloodstream
infections in patients with ESRD is one

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of our highest priorities for quality
improvement, so we believe it is
appropriate to weight the NHSN
Bloodstream Infection clinical measure
at 20 percent of a facility’s Clinical
Measure Domain score’’ (79 FR 40268).
We continue to believe that the weight
assigned to the Safety subdomain and
the NHSN Bloodstream Infection
clinical measure is appropriate for these
reasons.
Comment: Some commenters
recommended lowering the weight of
the NHSN Bloodstream Infection
measure, because facilities do not
reliably report the data used to calculate
performance rates on the measure.
Response: NHSN provides detailed
trainings, protocols, and guidance for
users to follow to ensure that data are
reported in a standardized manner and
according to requirements. We
recognize that continuous internal and
external evaluation and quality checks
of the reported data are important for
accuracy and reliability. We further note
that one of the purposes of the
feasibility study is to improve the
validity of data reported to NHSN, and
we continue to believe that one of the
outcomes of the study will be to
improve the validity and reliability of
the NHSN Bloodstream Infection
measure. For this reason, and the
reasons stated in the CY 2015 ESRD PPS
Proposed Rule, we continue to believe
that the NHSN Bloodstream Infection
measure is weighted appropriately.
Comment: Some commenters
recommended increasing the weight of
the Vascular Access Type measure
topic, because high scores on the
measure topic are strongly associated
with positive patient outcomes.
Response: We agree that the Vascular
Access Type measures are strongly
associated with positive patient
outcomes. For this reason, and for the
reasons described in the CY 2015 ESRD
PPS Proposed Rule, the Vascular Access
Type received the second highest
weighting (that is, 18 percent) in the
Clinical Measure Domain, lower only
than the ICH CAHPS clinical measure
(20 percent) and the NHSN Bloodstream
Infection measure (20 percent).
Accordingly, we believe that the
Vascular Access Type measure topic is
weighted appropriately.
Comment: One commenter supported
CMS’s inclusion of a Patient and Family
Engagement/Care Coordination
subdomain, but feels the measures
within this domain are not meaningful
to patients because the ICH CAHPS
clinical measure excludes home dialysis
patients, and the Standardized
Readmission Ratio does not assess
patients’ quality of life.

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Response: We disagree that the
measures in the Patient and Family
Engagement/Care Coordination
subdomain are not meaningful to
patients. We are continuing to
investigate the possibility of expanding
the ICH CAHPS survey to include a
greater proportion of the ESRD
population. Nevertheless, the measure
as it is currently specified assesses the
experience of care for the majority of
patients with ESRD. In addition, we
believe the Standardized Readmission
Ratio does assess patients’ quality of life
because preventing unplanned hospital
readmissions significantly improves
patients’ quality of life.
Comment: One commenter did not
think facilities’ experience with a
clinical measure should affect the
weight assigned to the measure. For
example, the proposed weight for the
STrR clinical measure was reduced
because facilities have not had a large
amount of experience with this
measure.
Response: We consider facility
experience with a clinical measure in
how we weight that measure in order to
give facilities time to become familiar
with the reporting requirements and put
into place the necessary tools to
maximize their potential to score highly.
We therefore believe it is appropriate to
increase a measure’s weight as facilities
gain familiarity with the measure.
Comment: Some commenters
supported the proposed criteria for
assigning weights to measures and
subdomains, but commenters
recommended adding three additional
criteria when assigning weights.
Specifically, the commenters
recommended the following three
criteria: 1) Strength of evidence; 2)
Opportunity for improvement; and 3)
Clinical significance.
Response: We agree with commenters
that these criteria encompass important
considerations for evaluating measures.
We clarify that these are criteria that are
taken into account when making
decisions about whether to adopt a
measure in the ESRD QIP, because it
would be inappropriate to adopt a
measure that did not meet these criteria.
For this reason, we do not believe it
would be appropriate to also factor
these criteria into decisions about how
much weight to give measures in a
facility’s Clinical Domain score.
Comment: One commenter stated that
the Clinical Domain scoring
methodology does not provide more
flexibility than the current scoring
methodology because the current
scoring methodology makes it possible
to redistribute weights between clinical
and reporting measures, and to

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distribute weights for individual
measures within the two categories.
Response: We recognize that under
the current scoring methodology it is
possible to assign weights to individual
measures without grouping them in
subdomains, as proposed for the new
scoring methodology. We nevertheless
believe that assigning weights to
subdomains (as opposed to just the
measures contained therein) simplifies
the process of prioritizing quality
improvement goals as the program
evolves, and in light of the NQS. We
further believe that assigning weights to
subdomains provides for greater
transparency, because it directly
communicates CMS’s priorities for
measure areas. For these reasons, we
believe that the merits of grouping
measures into subdomains, and
explicitly articulating weights for the
various subdomains, outweighs the
merits of continuing to weight measures
individually.
Comment: One commenter was
concerned that some measures span
multiple subdomains. For example, SRR
could be attributed to Patient and
Family Engagement/Care Coordination
subdomain as well as the Clinical Care
subdomain.
Response: We recognize that some
measures could reasonably be placed in
multiple subdomains. In such cases, we
need to make a judgment regarding
which subdomain we think will be most
appropriate. In the case of SRR, we
believe that it is appropriate to place the
measure in the Patient and Family
Engagement/Care Coordination
subdomain because the measure is
primarily intended to evaluate care
coordination, not the quality of clinical
care provided by facilities.
For these reasons, we are finalizing
that we will calculate facilities’ Clinical
Measure Domain scores beginning in PY
2018 as proposed.
7. Calculating the Reporting Measure
Domain Score and the TPS for the PY
2018 ESRD QIP
Starting with the PY 2014 program,
the ESRD QIP has used a scoring
methodology in which the clinical
measures receive substantially more
weight than the reporting measures in
the TPS, and the weighting coefficients
for the two types of measures total 100
percent of the TPS. We continue to
believe it is appropriate to incorporate
reporting measure scores in the TPS
calculations because ‘‘reporting is an
important component in quality
improvement’’ (76 FR 70274); we also
continue to believe that clinical
measures should carry substantially
more weight than reporting measures

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because clinical measures ‘‘score
providers/facilities based upon actual
outcomes’’ (76 FR 70275). These
statements reflect the fact that clinical
and reporting measures serve different
functions in the ESRD QIP. Clinical
measures provide a direct assessment of
the quality of care a facility provides,
relative to either the facility’s past
performance or standards of care
nationwide. Reporting measures create
an incentive for facilities to monitor
significant indicators of health and
illness, and they help facilities become
familiar with CMS data systems. In
addition, they allow the ESRD QIP to
collect the robust clinical data needed to
establish performance standards for
clinical measures.
As we continue to add reporting
measures to the ESRD QIP measure set,
it becomes increasingly challenging to
not weight them so heavily that they
dilute the significance of the clinical
measures, while still ensuring that we
do not weight the reporting measures so
lightly that facilities are not
incentivized to meet the reporting
measure requirements.
Although we considered the
possibility of abandoning the use of
reporting measures, we determined that
this is not feasible because doing so
would make it impossible to calculate

performance standards for many clinical
measures that promise to promote highquality care. We also considered the
possibility of weighting the reporting
measures such that each reporting
measure comprised a smaller percentage
of the TPS. We believe, however, that
doing so would result in the reporting
measures not carrying enough weight to
provide facilities with an incentive to
meet the reporting requirements,
particularly if additional reporting
measures were added to the program.
For example, if 5 reporting measures
were adopted in the ESRD QIP, and the
reporting measures collectively were
weighted at 5 percent of a facility’s TPS
(in order to preserve the significance of
the clinical measures), then each
reporting measure would only comprise
1 percent of a facility’s TPS. Under such
conditions, we believe that facilities
may choose not to meet the reporting
measure requirements, because not
doing so would have a negligible impact
on their overall TPS. If enough facilities
reached this determination, then we
would not be able to establish reliable
baselines, should we propose to adopt
clinical measure versions of the
reporting measures. For these reasons,
we proposed the following scoring
methodology for determining the impact

of reporting measure scores on a
facility’s payment reductions.
For PY 2018 and future payment
years, we proposed to establish a new
Reporting Measure Domain. We further
proposed that a facility’s reporting
measure domain score will be the sum
of all the reporting measure scores that
the facility receives. We strive to expand
reporting measures into clinical
measures in the ESRD QIP as quickly as
measure development and
administrative processes permit.
Therefore, unlike the case with clinical
measures in the Clinical Domain Score,
we do not intend to continue to use any
particular reporting measure in the
ESRD QIP for an indefinite period of
time. For this reason, we believe that it
would be unnecessarily opaque and
confusing to group reporting measures
into subdomains, as we are proposing
for the clinical measures in the Clinical
Measure Domain.
Additionally, we proposed to
establish a Reporting Measure Adjuster
(RMA), which will provide the ESRD
QIP with an index of facility
performance on reporting measures
within the Reporting Measure Domain.
We proposed to use the following
general formula to determine a facility’s
RMA, based on its reporting measure
domain score:

This formula is constructed such that
a high RMA is indicative of low
performance on the reporting measures,
and a low RMA is indicative of high
performance. A facility’s Reporting
Measure Domain score (that is, the sum
of its scores on the reporting measures)
is subtracted from the total number of
points a facility could earn on the
reporting measures for which it was

eligible. This result is then multiplied
by ‘‘C,’’ which is a coefficient used to
translate reporting measure points into
TPS points. As C increases, so too does
the TPS ‘‘value’’ of a reporting measure
point. For example, if C is set to 2, then
1 reporting measure point is worth 2
TPS points. If C is set to 0.5, then 1
reporting measure point is worth onehalf of a TPS point. The value of C is

in not tied to the number of reporting
measures in the ESRD QIP; rather, it
represents how much value we place on
the reporting measures’ contribution to
the quality goals of the ESRD QIP. We
will use the rulemaking process to set
the value for C for each program year.
For the PY 2018 ESRD QIP, we
proposed to use the following formula
to determine a facility’s RMA:

We set coefficient C at five-sixths for
the PY 2018 program because each
reporting measure point in the PY 2016
program, and the proposed PY 2017
program, is equivalent to five-sixths of
a TPS point (that is, 30 points for three
reporting measures comprised 25 TPS
points). We believe it is important to

maintain as much consistency as
possible in the transition to the
proposed scoring methodology.
Therefore, we proposed that the ‘‘value’’
of a reporting measure point in the TPS,
as finalized in the PY 2016 program and
proposed for the PY 2017 program, will
remain constant in PY 2018.

For the reasons described above, we
continue to believe that the clinical
measures are considerably more
important than the reporting measures
in the ESRD QIP. We therefore believe
that a facility’s TPS should be
predominantly determined by its
Clinical Measure Domain score, and that

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a facility’s TPS should be downwardly
adjusted in the case of noncompliance
with the reporting measure
requirements. The RMA, as described
above, is constructed such that a high
RMA value indicates low reporting
measure scores and a low RMA value
indicate high reporting measure scores.
As a result, a facility’s TPS would be
entirely determined by its Clinical
Measure Domain score if it receives full
credit on the reporting measures; the
TPS would be slightly decreased if the
facility received high (but not perfect)
scores on the reporting measures; and
the TPS would be significantly
decreased if it performed poorly on the

reporting measures. For these reasons,
we proposed to calculate a facility’s TPS
by subtracting the facility’s RMA from
its Clinical Measure Domain score.
Additionally, we proposed to continue
our policy to require a facility to be
eligible for a score on at least one
reporting and one clinical measure in
order to receive a TPS (78 FR 72217).
In an effort to estimate the impact of
this proposed change for the ESRD QIP’s
scoring methodology, we conducted an
analysis of how the proposed scoring
methodology affected payment
reduction distributions, based on data
from CY 2012 and CY 2013. This
analysis compared the scoring

methodology proposed in this section
and the previous section to the scoring
methodology finalized for the PY 2016
program. In order to ensure that the
analysis reliably estimated the impact
on facilities’ payment reductions, the
proposed scoring methodology and the
methodology finalized for the PY 2016
program were each applied to the PY
2016 measure set. The full analysis is
available at: http://www.cms.gov/
Medicare/Quality-Initiatives-PatientAssessment-Instruments/ESRDQIP/061_
TechnicalSpecifications.html. The
results of this analysis are presented
below in Table 29.

TABLE 29—EXPECTED IMPACT OF PROPOSED SCORING METHODOLOGY ON THE DISTRIBUTION OF PAYMENT REDUCTIONS,
USING MEASURES AND MEASURE WEIGHTS FINALIZED FOR THE PY 2016 ESRD QIP AND DATA FROM CY 2012 AND
CY 2013
Finalized scoring methodology
for PY 2016, applied to
measures and measure
weights finalized in the
PY 2016 program

Payment reduction
(percent)

Number of
facilities

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0 .......................................................................................................................
0.5 ....................................................................................................................
1.0 ....................................................................................................................
1.5 ....................................................................................................................
2.0 ....................................................................................................................

As illustrated in Table 29, we expect
that 4.3 percent more facilities (222
overall) would receive a two percent
payment reduction under the proposed
methodology for PY 2018, as compared
with the scoring methodology that we
will use for the PY 2016 program. We
therefore believe that adopting the
scoring methodology proposed in this
section and the previous section will
not appreciably change the distribution
of facility payment reductions, as is our
intention.
We sought comments on these
proposals for calculating a facility’s
reporting measure domain score, to
calculate the RMA, and to determine the
TPS.
Although we believe advantages are
afforded by adopting the scoring
methodology proposed in this section
and the previous section, we also
recognize that there may be advantages
associated with maintaining consistency
with previous years’ scoring
methodology. Accordingly, as an
alternative to the scoring methodology
proposed in this section and the
previous section, we also sought public
comments on whether we should
continue to use the same methodology
we currently use to weight measures in

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Percent

4,828
884
242
69
59

the ESRD QIP and calculate a facility’s
TPS, with the exception that the clinical
and reporting measures would be
weighted at 90 percent and 10 percent,
respectively, of a facility’s TPS.
We sought public comments on these
proposals. The comments and our
responses are set forth below.
Comment: One commenter supported
the proposed scoring methodology for
PY 2018, because it appropriately
balances the importance of reporting
and clinical measures in a facility’s TPS.
Another commenter recommended that
CMS consider reallocating measure
weights within the domains if a facility
does not meet minimum data
requirements for a measure.
Response: We thank the commenters
for their support and recommendations.
Comment: Some commenters did not
support the proposed RMA
methodology for the ESRD QIP, because
it is too complex and likely difficult to
explain to patients. Commenters stated
that the ESRD QIP should maintain a
consistent scoring methodology from
year to year. Commenters also stated
that using more complicated scoring
formulas makes the ESRD QIP less
transparent, and limits facilities’ ability
to participate. Commenters

Proposed scoring methodology
for PY 2018, applied to measures and measure weights finalized in the PY 2016
program

79.4
14.5
4.0
1.1
1.0

Number of
facilities
4,606
739
306
108
323

Percent
75.7
12.2
5.0
1.8
5.3

recommended that CMS delay finalizing
any change in scoring methodology to
allow for more time to analyze the
proposed changes and how facilities
would perform under the new scoring
system. Commenters recommended that
CMS continue to use the current
weighting system, because it assigns
greater weight to the clinical measures,
as compared to the reporting measures.
Another commenter stated that the
weight of the clinical measures should
be increased in the ESRD QIP, and
expressed concerns that the proposed
scoring methodology will result in less
weight for the clinical measures.
Specifically, commenters recommended
adopting the alternative scoring
methodology, in which clinical
measures and reporting measures are
weighted at 90 percent and 10 percent,
respectively.
Response: We appreciate the
numerous comments we received on the
RMA methodology. As a result of the
significant concerns expressed about the
RMA methodology, we have decided
not to finalize the methodology at this
time. We will further review the RMA
methodology, and we may decide to
propose to adopt it in future
rulemaking. In its stead, we will retain

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proposed. Instead, we are finalizing the
alternative scoring methodology, under
which clinical measures will we
weighted as finalized for the Clinical
Domain score, and the Clinical Domain
score will comprise 90 percent of a
facility’s TPS, with the reporting
measures weighted equally to form the
remaining 10 percent of a facility’s TPS.
8. Example of the PY 2018 ESRD QIP
Scoring Methodology
In this section, we provide an
example to illustrate the scoring

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methodology for PY 2018 and future
payment years. Figures 3—7 illustrate
how to calculate the clinical measure
domain score, the reporting measure
domain score, the RMA, and the TPS.
Note that for this example, Facility A, a
hypothetical facility, has performed
very well. Figure 3 illustrates the
general methodology used to calculate
domain scores for the clinical measure
domain, as well as the example
calculations for Facility A.
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the current scoring methodology used in
the ESRD QIP to weight measures and,
as proposed, increase the weight
assigned to clinical measures. Under
this methodology, clinical measures will
be weighted as finalized for the Clinical
Domain score, and the Clinical Domain
Score will comprise 90 percent of a
facility’s TPS. Reporting measures will
be weighted equally to form 10 percent
of the facility’s TPS.
For these reasons we are not finalizing
the RMA scoring methodology as

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Figure 4 illustrates the general
methodology for weighting subdomains
in the clinical measure domain, as well

as the example calculations for Facility
A’s clinical measure domain score.

Figures 5 and 6 illustrate the general
methodology for calculating a facility’s
reporting measure domain score and

TPS, as well as the example calculations
for Facility A.

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66221

Figure 5

Scoring Example: Facility A
dinical Measure

Measure Score

NHSN Bloodstream Infection

8

ICHCAHPS

9

SRR

9

STrR

10
10
9
10

Dialysis Adequacy measure topic
vascular Access measure topic
Hypercalcemia

Mintrai1Vletabolismse9r:••·
+
1\n,miaManesement··s~re

...

·Pain.~essm~ntstof'e
+

Reportln1 Measure

PE!pressij)nStr~E!ntrasseore

Measure Sco':

Mineral Metabolism

Anemia Management
Pain Assessment and Follow-Up
Clinical Depression Screeninc and Follow-Up
NHSN HCP Influenza Vaccination

f

8

~~--=-----\"""__.._, NHSN\laceinationscortl
10

Reporti.. Measure Domain Score example for Fadlity A

8 +8+10+ 10+ 10=46/50or92"

Figure 6

TPSformula

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9. Payment Reductions for the PY 2018
ESRD QIP
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

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TPSs receive the largest payment
reductions. For the same reasons
described in Section III.F.8 above, we
proposed that a facility would not
receive a payment reduction for PY
2018 if it achieves a minimum TPS that
is equal to or greater than the total of the
points it would have received if:
• It performed at the performance
standard for each clinical measure;

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• It received the number of points for
each reporting measure that corresponds
to the 50th percentile of facility
performance on each of the PY 2016
reporting measures.
The PY 2016 program is the most
recent year for which we will have
calculated final measure scores before
the beginning of the proposed
performance period for PY 2018 (that is,

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TPS example for Facility A
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CY 2016). Because we have not yet
calculated final measure scores, we are
unable to determine the 50th percentile
of facility performance on the PY 2016
reporting measures. We will publish
that value in the CY 2016 ESRD PPS
final rule once we have calculated final
measure scores for the PY 2016
program.
Section 1881(h)(3)(A)(ii) of the Act
requires that facilities achieving the
lowest TPSs receive the largest payment
reductions. In the CY 2014 ESRD PPS
Final Rule (78 FR 72223 through 72224),
we finalized a payment reduction scale
for PY 2016 and future payment years:
For every 10 points a facility falls below
the minimum TPS, the facility would
receive an additional 0.5 percent
reduction on its ESRD PPS payments for
PY 2016 and future payment years, with
a maximum reduction of 2.0 percent.
We did not propose any changes to this
policy.
Because we are not yet able to
calculate the performance standards for
each of the clinical measures, we are
also not able to calculate a minimum
TPS at this time. We will publish the
minimum TPS, based on data from CY
2014 and the first part of CY 2015, in
the CY 2016 ESRD PPS Final Rule.
We sought comments on this
proposal. We did not receive any
comments and are finalizing it as
proposed.
H. Future Considerations for Stratifying
ESRD QIP Measures for Dual-Eligible
Beneficiaries
CMS recognizes that individuals with
both Medicare and Medicaid (also
known as ‘‘dual-eligible beneficiaries’’),
comprise a relatively large proportion of
Medicare enrollees with ESRD. Because
ESRD programs have a long history of
performance measurement linked with
public reporting, and because there are
a large number of dual-eligible
beneficiaries receiving ESRD care, we
are considering stratifying ESRD QIP
measures for Medicare-Medicaid
enrollees.
Measure reporting under the ESRD
QIP does not currently allow us to
separately review results for dualeligible beneficiaries or compare those
results with results achieved by other
patients with ESRD, so it is not
currently known if their experiences are
better, worse, or the same as other
patients. Even the basic demographics
of dual-eligible beneficiaries receiving
ESRD care are not well understood.
After discussion of the pros and cons
that included input from the ESRD
provider community, the Measures
Application Partnership’s dual-eligible
workgroup recommended that CMS take

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the first step in exploring the feasibility
of requiring facilities to separately
report ESRD QIP measures for MedicareMedicaid enrollees by analyzing the
composition of the dual-eligible
beneficiary population receiving ESRD
care and determining potential ways in
which stratified reporting may further
quality improvement efforts.
Furthermore, the Measures Application
Partnership recommended, in the
context of measure development, that
CMS explore whether other risk factors
unique to the dual-eligible population
receiving ESRD care would present
significant hurdles to measure
stratification along these lines. We
therefore sought comments on whether
it would be feasible to stratify ESRD QIP
measures based on whether the
beneficiary is a dual eligible. We were
interested in whether stakeholders
recommend stratification and, if so, for
what specific measures stakeholders
would find stratification most
compelling.
We were particularly interested in
public comments on whether MedicareMedicaid stratified quality measures
under the ESRD QIP should be reported
publicly, and how we should factor
those measures into our scoring
methodology. We sought comments on
the meaningfulness of stratifying
measures, and the feasibility and burden
associated with reporting stratified
measures.
The comments and our responses are
set forth below.
Comment: Some commenters did not
support stratifying ESRD QIP measures
based on whether the beneficiary is
dually eligible for Medicare and
Medicaid, because the commenter feels
this constitutes risk adjusting for
patients’ socioeconomic status, which
may obscure differences in facilities’
risk-adjusted quality scores and mask
potential disparities in care. One
commenter recommended that CMS
instead consider evaluating facilities in
relation to their peers by comparing
facilities serving similar shares of dualeligible beneficiaries, because ‘‘such an
approach adjusts for socioeconomic
status without masking differences in
quality.’’ The commenter further
recommended that CMS compare
facilities using only ESRD QIP measures
that are claims-based, in order to
minimize administrative burden to
facilities and the agency resulting from
the comparison. Another commenter
stated that stratifying ESRD QIP scores
on the basis of dual-eligibles is an
‘‘interesting idea,’’ but one that is
complex and would require
considerable collaboration with the
ESRD community. Some commenters

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did not support stratifying ESRD QIP
measures based on whether the
beneficiary is dually eligible.
Commenters stated it is not
operationally feasible for facilities to
separately report ESRD QIP measures
for dual eligible beneficiaries, because
dual eligibility status can change on a
monthly basis. Another commenter also
stated its belief that this stratification
would include dual eligible patients in
the facility’s Medicare patient
population and the dual eligible
population, raising the possibility that a
facility could be penalized twice for the
same patient. Another commenter
recommended stratifying ESRD QIP
measures solely for investigative
purposes, and not using these scores to
determine payment reductions. Another
commenter expressed reservations about
the effects of stratifying for dual eligible
patients, but recommended that CMS
place greater emphasis on the role of
socioeconomic status and demographic
factors when assessing facility
performance under the ESRD QIP.
Response: We appreciate commenters’
input and we will take it into
consideration as we continue to
evaluate how to account for dualeligibles in the ESRD QIP and other
CMS ESRD quality initiatives.
IV. Technical Corrections for 42 Part
405
A. Background
In the April 15, 2008, final rule
‘‘Conditions for Coverage for End-Stage
Renal Disease Facilities,’’ (73 FR 20370)
we revised the health and safety
standards for Medicare-participating
End-Stage Renal Disease (ESRD)
facilities. This rule made the first
comprehensive revisions to the ESRD
Conditions for Coverage (CfCs) since
they were adopted in 1976. The original
ESRD CfCs at 42 CFR Part 405 Subpart
U were deleted and new conditions
were issued at 42 CFR Part 494. Subpart
U now only addresses certain
requirements for ESRD networks.
As a part of these revisions, we
intended to delete most of the terms and
definitions set out in Part 405 Subpart
U, and create new definitions in Part
494. This is discussed in the 2008 final
rule and in the corresponding proposed
rule (70 FR 6184), and is laid out in the
final rule crosswalk (comparing the old
CfCs with the new ones) at 73 FR 20451.
While we intended to delete most of
the definitions at Part 405 Subpart U,
we inadvertently omitted the
regulations text that would have made
those changes. Subpart U, at § 405.2102,
still has 32 definitions, most of them
unnecessary and several of them

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obsolete. This creates confusion for
ESRD stakeholders, patients, and
suppliers.
B. Summary of the Proposed Provisions
and Responses to Comments on the CY
2015 ESRD PPS
In the CY 2015 ESRD PPS proposed
rule, we proposed to make a technical
correction that deletes the outdated
terms and definitions at § 405.2102.
Specifically, we proposed to delete
these terms and definitions: agreement,

arrangement, dialysis, end-stage renal
disease (ESRD), ESRD facility, renal
dialysis center, renal dialysis facility,
self-dialysis unit, special purpose renal
dialysis facility, ESRD service, dialysis
service, inpatient dialysis, outpatient
dialysis, staff-assisted dialysis, selfdialysis, home dialysis, self-dialysis and
home dialysis training, furnishes
directly, furnishes on the premises,
medical care criteria, medical care
norms, medical care standards, medical
care evaluation study, qualified

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personnel, chief executive officer,
dietitian, medical record practitioner,
nurse responsible for nursing service,
physician-director, and social worker.
We also proposed to delete the term and
definition for ‘‘ESRD network
organization,’’ as it is duplicated within
§ 405.2102 as ‘‘network organization.’’
We would retain the terms and
definitions for ‘‘network, ESRD,’’ and
‘‘network organization.’’ These changes
are also outlined in Table 30 below.’’

TABLE 30—TECHNICAL CORRECTIONS TO § 405.2102
Term

Proposed action

Agreement ....................................................................................................................
Arrangement .................................................................................................................
Dialysis .........................................................................................................................
End-Stage Renal Disease (ESRD) ..............................................................................
ESRD facility introductory text .....................................................................................
Renal dialysis center .............................................................................................
Renal dialysis facility .............................................................................................
Self-dialysis unit ....................................................................................................
Special purpose renal dialysis facility ...................................................................
ESRD Network organization ........................................................................................
ESRD service introductory text ....................................................................................
Dialysis service .....................................................................................................
Inpatient dialysis ....................................................................................................
Outpatient dialysis .................................................................................................
Staff-assisted dialysis ............................................................................................
Self-dialysis ...........................................................................................................
Home dialysis ........................................................................................................
Self-dialysis and home dialysis training ................................................................
Furnishes directly .........................................................................................................
Furnishes on the premises ...........................................................................................
Medical care criteria .....................................................................................................
Medical care norms ......................................................................................................
Medical care standards ................................................................................................
Medical care evaluation study (MCE) ..........................................................................
Network, ESRD ............................................................................................................
Network organization ....................................................................................................
Qualified personnel ......................................................................................................
Chief executive officer ...........................................................................................
Dietitian .................................................................................................................
Medical record practitioner ....................................................................................
Nurse responsible for nursing service ..................................................................
Physician-director ..................................................................................................
Social worker .........................................................................................................

We did not receive any public
comments addressing this technical
correction. Therefore, we are finalizing
the deletion of obsolete definitions in
§ 405.2102 as proposed.
V. Methodology for Adjusting DMEPOS
Payment Amounts Using Information
From Competitive Bidding Programs

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A. Background
1. Fee Schedule Payment Basis for
Certain DMEPOS
Section 1834(a) of the Act governs
payment for durable medical equipment
(DME) covered under Part B and under
Part A for a home health agency and
provides for the implementation of a fee

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schedule payment methodology for
DME furnished on or after January 1,
1989. Sections 1834(a)(2) through (a)(7)
of the Act set forth separate payment
categories of DME and describe how the
fee schedule for each of the following
categories is established:
• Inexpensive or other routinely
purchased items,
• Items requiring frequent and
substantial servicing,
• Customized items,
• Oxygen and oxygen equipment,
• Other covered items (other than
DME), and
• Other items of DME (capped rental
items).

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Other CFR
location
—
—
—
406.13(b)
—
—
494.10
—
494.120
—
—
—
—
—
—
494.10
494.10
—
494.10
494.180(d)
—
—
—
—
N/A
N/A
—
—
494.140(c)
—
494.140(b)
494.140(a)
494.140(d)

Section 1834(h) of the Act governs
payment for prosthetic devices,
prosthetics, and orthotics (P&O) and sets
forth fee schedule payment rules for
P&O. Effective for items furnished on or
after January 1, 2002, payment is also
made on a national fee schedule basis
for parenteral and enteral nutrition
(PEN) in accordance with the authority
under section 1842(s) of the Act. The
term ‘‘enteral nutrition’’ will be used
throughout this document to describe
enteral nutrients supplies and
equipment covered as prosthetic devices
in accordance with section 1861(s)(8) of
the Act and paid for on a fee schedule
basis and enteral nutrients under the
Medicare DMEPOS Competitive Bidding

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Program (CBP), as authorized under
section 1847(a)(2)(B) of the Act.
Additional background discussion about
DMEPOS items subject to section 1834
of the Act, rules for calculating
reasonable charges, and fee schedule
payment methodologies for PENs and
for DME prosthetic devices, prosthetics,
orthotics, and surgical dressings, was
provided in the proposed rule (79 FR
40275 through 40277).

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2. DMEPOS Competitive Bidding
Programs Payment Rules
Section 1847(a) of the Act, as
amended by section 302(b)(1) of the
Medicare Prescription Drug,
Improvement, and Modernization Act of
2003 (MMA) (Pub. L. 108–173), requires
the Secretary to establish and
implement CBPs in competitive bidding
areas (CBAs) throughout the United
States for contract award purposes for
the furnishing of certain competitively
priced DMEPOS items and services. The
programs mandated by section 1847(a)
of the Act are collectively referred to as
the ‘‘Medicare DMEPOS Competitive
Bidding Program.’’ Section 1847(a)(2) of
the Act provides that the items and
services to which competitive bidding
applies are:
• Off-the-shelf (OTS) orthotics for
which payment would otherwise be
made under section 1834(h) of the Act;
• Enteral nutrients, equipment and
supplies described in section
1842(s)(2)(D) of the Act; and
• Certain DME and medical supplies,
which are covered items (as defined in
section 1834(a)(13) of the Act) for which
payment would otherwise be made
under section 1834(a) of the Act.
The DME and medical supplies
category includes items used in infusion
and drugs (other than inhalation drugs)
and supplies used in conjunction with
DME, but excludes class III devices
under the Federal Food, Drug, and
Cosmetics Act and Group 3 or higher
complex rehabilitative power
wheelchairs and related accessories
when furnished with such wheelchairs.
Sections 1847(a) and (b) of the Act
specify certain requirements and
conditions for implementation of the
Medicare DMEPOS CBP.
3. Adjusting Payment Amounts Using
Information From the DMEPOS
Competitive Bidding Program
Section 1834(a)(1)(F)(ii) of the Act
provides authority for using information
from the DMEPOS CBPs to adjust the
DME payment amounts for covered
items furnished on or after January 1,
2011, in areas where competitive
bidding is not implemented for the
items. Similar authority exists at section

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1834(h)(1)(H)(ii) of the Act for OTS
orthotics, and at section 1842(s)(3)(B) of
the Act for enteral nutrition. Section
1834(a)(1)(F) also requires adjustments
to the payment amounts for all DME
items subject to competitive bidding
furnished in areas where CBPs have not
been implemented on or after January 1,
2016.
For items furnished on or after
January 1, 2016, section
1834(a)(1)(F)(iii) requires us to continue
to make such adjustments to DME
payment amounts where CBPs have not
been implemented, as additional
covered items are phased in or
information is updated as contracts are
recompeted.
Section 1834(a)(1)(G) of the Act
requires that the methodology used to
adjust payment amounts for DME and
OTS orthotics using information from
the CBPs be promulgated through notice
and comment rulemaking. Section
1834(a)(1)(G) of the Act also requires
that we consider the ‘‘costs of items and
services in areas in which such
provisions [sections 1834(a)(1)(F)(ii) and
1834(h)(1)(H)(ii)] would be applied
compared to the payment rates for such
items and services in competitive
acquisition [competitive bidding]
areas.’’
B. Summary of the Proposed Provisions
and Responses to Comments on the
Methodology for Adjusting DMEPOS
Payment Amounts Using Information
From Competitive Bidding Programs
The proposed rule for implementing
section 1834(a)(1)(G) of the Act to
establish a methodology for using
information from CBPs to adjust the fee
schedule amounts in accordance with
sections 1834(a)(1)(F)(ii) and
1834(h)(1)(H)(ii) of the Act was
published on July 1, 2014 (79 FR
40208). We proposed applying the
methodology proposed in this rule in
making adjustments to the payment
amounts for enteral nutrition as
authorized by section 1842(s)(3)(B) of
the Act (79 FR 40281). We received 89
public comments on the proposed rule,
including comments from patient
organizations, patients, manufacturers,
health care systems, and DME suppliers.
In this final rule, we provide a summary
of each proposed provision, a summary
of the public comments received, our
responses to the comments, and the
policies we are finalizing for DMEPOS
furnished under section 1834 of the Act.
Comments related to the paperwork
burden are addressed in the ‘‘Collection
of Information Requirements’’ section in
this final rule. Comments related to the
impact analysis are addressed in the

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‘‘Economic Analyses’’ section in this
final rule.
We proposed establishing three
methodologies for adjusting DMEPOS
fee schedule amounts in areas where
CBPs have not been established for
these items and services based on single
payment amounts SPAs established in
accordance with the payment rules at
§ 414.408 (79 FR 40281). We stated that
the use of SPAs that may be established
in accordance with the payment rules
proposed in section VI of the proposed
rule to adjust DMEPOS fee schedule
amounts in areas where CBPs have not
been established for these items and
services would be addressed in future
notice and comment rulemaking. The
first methodology we proposed is
summarized in subsection V. B. 1 below
and would utilize regional adjustments
limited by national parameters for items
bid in more than 10 CBAs throughout
the country. The second methodology
we proposed is summarized in
subsection 2 below and would be used
for lower volume items or other items
that were bid in no more than 10 CBAs
for various reasons. The third
methodology we proposed is
summarized in subsection 5 and would
be used for mail order items furnished
in the Northern Mariana Islands. We
also proposed rules that would apply to
all of these proposed methodologies,
which are discussed in sections V.B.3,
V.B.4, and V.B.6 below.
1. Proposed Regional Adjustments
Limited by National Parameters
CBPs are currently in place in 100 of
the largest metropolitan statistical areas
(MSAs) in the country for items and
services that make up over 80 percent of
the total allowed charges for items
subject to the DMEPOS CBP. SPAs are
currently used in 109 CBAs that include
areas in every state throughout the
country except for Alaska, Maine,
Montana, North Dakota, South Dakota,
Vermont, and Wyoming. The number of
CBAs that are fully or partially located
within a given state range from one to
twelve. One CBA is for a noncontiguous area of the United States
(Honolulu, Hawaii) and was phased in
under Round 2 of the program.
Suppliers submitting bids for furnishing
items and services in these areas have
received extensive education that they
should factor all costs of furnishing
items and services in an area as well as
overhead and profit into their bids.
For items and services that are subject
to competitive bidding and have been
included in more than 10 CBAs
throughout the country, we proposed to
adjust the fee schedule payment
amounts for these items and services

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
using a methodology that is modeled
closely after the regional fee schedule
payment methodology in effect for P&O
to allow for variations in payment based
on bids for furnishing items and
services in different parts of the country
(79 FR 40281). Under the proposed
methodology, adjusted fee schedule
amounts for areas within the contiguous
United States would be determined
based on regional SPAs or regional
single payment amounts (RSPAs)
limited by a national floor and ceiling.
The RSPA would be established using
the average of the SPAs for an item from
all CBAs that are fully or partially
located in the region. The adjusted
payment amount for the item would be
equal to its RSPA but not less than 90
percent and not more than 110 percent
of the average of the RSPAs established
for all states. This limits the range in the
regional fee schedule amounts from
highest to lowest to no more than 20
percent, 10 percent above the national
average and 10 percent below the
national average. By contrast, the fee
schedule payment methodology for
DME only allows for a variation in
statewide fees of 15 percent below the
median of statewide fees for all the
states. The national limits to the fee
schedule amounts for P&O and DME
have not resulted in a barrier to access
to items and services in any part of the
country. We believe this reflects the fact
that the costs of furnishing DMEPOS
items and services do not vary
significantly from one part of the
country to another and that national
limits on regional prices is warranted.
We therefore proposed to limit the
variation in the RSPAs using a national
ceiling and floor in order to prevent
unnecessarily high or low regional
amounts that vary significantly from the
national average prices for the items and
services (79 FR 40284). The national
ceiling and floor limits would be based
on 110 percent and 90 percent,
respectively, of the average of the
RSPAs applicable to each of the 48
contiguous states and the District of
Columbia (that is, the average of RSPAs
is weighted by the number of
contiguous states including the District
of Columbia per region). We proposed
that any RSPA above the national
ceiling would be brought down to the
ceiling and any RSPA below the
national floor would be brought up to
the floor. We proposed that the national
ceiling would exceed the average of the
RSPAs by the same percentage that the
national floor would be under the
average of the RSPAs. This allows for a
maximum variation of 20 percent from
the lowest RSPA to the highest RSPA.

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We believe that a variation in payment
amounts both above and below the
national average price should be
allowed, and we believe that allowing
for the same degree of variation (10
percent) above and below the national
average price is more equitable and less
arbitrary than allowing a higher degree
of variation (20 percent) above the
national average price than below (10
percent), as in the case of the national
ceiling and floor for the P&O fee
schedule, or allowing for only 15
percent variation below the national
average price, as in the case of the
national ceiling and floor for the DME
fee schedule.
Under the DMEPOS CBP, the statute
prohibits competitions before 2015 in
new CBAs that are rural areas or MSAs
with a population of less than 250,000.
Even if competitions were to begin in
these areas in 2015, it is very unlikely
that the SPAs from these areas would be
computed and finalized by January 1,
2016. Therefore, we proposed that the
proposed RSPAs initially be based
solely on information from existing
programs implemented in 100 MSAs,
which are generally comprised of more
densely populated, urban areas than
areas outside MSAs (79 FR 40284). We
therefore believe that the initial RSPAs
would not directly account for unique
costs that may be associated with
furnishing DMEPOS in states that have
few MSAs and are predominantly rural
or cover large geographic areas and are
sparsely populated. However, in
keeping with the discussion above, we
do not believe that the cost of furnishing
DMEPOS in these areas should deviate
significantly from the national average
price established based on supplier bids
for furnishing items and services in
different areas throughout the country.
The DMEPOS fee schedule amounts
are based primarily on supplier charges
for furnishing items and services in
urban areas and this has not resulted in
problems associated with access to these
items and services in rural areas or
large, sparsely populated areas.
Nonetheless, for the purpose of ensuring
access to necessary items and services
in states that are more rural or sparsely
populated than others, we proposed that
the adjusted fee schedule amounts for
states that are more rural than urban and
defined as ‘‘rural states’’ or states where
a majority of the counties are sparsely
populated and defined as ‘‘frontier
states’’ would be no lower than the
national ceiling amount discussed
above.
We proposed in § 414.202 that a rural
state be defined as a state where more
than 50 percent of the population lives
in rural areas within the state as

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determined through census data, since a
majority of the general population of the
state lives in rural areas, it is likely that
a majority of DMEPOS items and
services are furnished in rural settings
in the state (79 FR 40284). This is in
contrast to other states where the
majority of the general population of the
state lives in urban areas, making it
more likely that a majority of DMEPOS
items and services are furnished in
urban settings or in MSAs. We believe
that for states where a majority of the
general population lives in rural areas,
adjustments to the fee schedule amounts
should be based on the national ceiling
amount if the RSPA is lower than the
national ceiling amount. This higher
level of payment would provide more
assurance that access to items and
services in states within a region that
are more rural than urban is preserved
in the event that costs of furnishing
DMEPOS items and services in rural
areas is higher than the costs of
furnishing DMEPOS items and services
in urban areas.
We proposed in § 414.202 that a
frontier state, would be defined as a
state where at least 50 percent of
counties in the state have a population
density of 6 people or less per square
mile (79 FR 40284). In such states, the
majority of counties where DMEPOS
items and services may be needed are
very sparsely populated and suppliers
may therefore have to drive
considerably longer distances in
furnishing these items and services as
opposed to other states where the
beneficiaries live closer to one another.
The designation of states as frontier
states or frontier areas is currently used
under Medicare Part A to make
adjustments to the wage index for
hospitals in these remote areas in order
to ensure access to services in these
areas. The definition of frontier state
that we proposed for the purpose of
implementing section 1834(a)(1)(F) and
(G) of the Act is consistent with the
current definition in section
1886(d)(3)(E)(iii)(II) and (III) of the Act
and 42 CFR 412.64(m) of the regulations
related to implementation of the
hospital wage index adjustments and
prospective payment system for
hospitals under Part A. We believe that
states designated as frontier states have
a significant amount of area that is
sparsely populated and are more likely
to be geographically removed from (that
is, a considerable driving distance from)
areas where population is more
concentrated. However, we solicited
comments on alternative definitions of
frontier states.
Based on the 2010 Census data, states
designated as rural would include

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Vermont, Maine, West Virginia, and
Mississippi. Other than one CBA that is
fully located in Mississippi, one CBA
that is partially located in Mississippi,
and two CBAs that are partially located
in West Virginia, the RSPAs would not
include SPAs that reflect the costs of
furnishing items and services in these
states based on where the CBAs are
currently located. Current frontier states
include North Dakota, South Dakota,
Montana, and Wyoming, and the RSPAs
would not include SPAs that reflect the
costs of furnishing items and services in
any of these states based on where the
CBAs are currently located. We
proposed that the designation of rural
and frontier states could change as the
U.S. Census information changes. We
proposed that when a state that is not
designated as a rural state or frontier
becomes a rural state or frontier state
based on new, updated information
from the U.S. Census Bureau, that
adjustments to the fee schedule amounts
in accordance with the proposed
provision of this section would take
effect as soon as such changes can be
implemented. Likewise, we proposed
that at any time a state that is designated
as a rural state or frontier no longer
meets the proposed definition in this
section for rural state or frontier state
based on new, updated information
from the U.S. Census Bureau, that
adjustments to the fee schedule amounts
in accordance with the proposed
provision of this section would take
effect as soon as such changes can be
implemented (79 FR 40285). We
proposed that the changes to the state
designation would occur based on the
decennial Census. The decennial
Census uses total population of the state
to determine whether the state is
predominately rural or frontier. The
U.S. Census Bureau also uses current
population estimates every 1, 3, and 5
years through the American Community
Survey but only samples a small
percentage of the population every year,
not the total population. Therefore, we
proposed that the designation of a rural
or frontier state occur approximately
every 10 years when the total
population data is available. For the
current proposed fee schedule
adjustments, we proposed to use the
2010 Census Data. The next update
would reflect the 2020 Census Data and
any changes in the designation of a rural
or frontier state and corresponding fee
schedule changes would be
implemented after the 2020 Census Data
becomes available. For this and
subsequent updates, we proposed to
include a listing of the qualifying rural
and frontier States in program guidance

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that is issued quarterly and to provide
at least 6 months advance notice of any
adjustments.
We indicated in the proposed rule (79
FR 40285) that some of the comments
received on the advance notice of
proposed rulemaking indicated that the
costs of furnishing DMEPOS items and
services in rural areas is significantly
higher than the costs of furnishing
DMEPOS items and services in urban
areas. Other commenters suggested that
the adjustments to the payment amounts
based on information from CBPs be
phased in to give suppliers time to
adjust to the new payment levels.
Although we believe that the costs of
furnishing items and services in rural
areas are different than the costs of
furnishing items and services in urban
areas, there is no evidence to support a
statement that the difference in costs is
significant. In summary, we proposed
that adjustments to payment amounts
for areas within different regions of the
contiguous United States would be
based on the un-weighted average of
SPAs from CBAs that are fully or
partially located within these regions.
The regional amounts would be limited
by a national ceiling and floor and the
adjusted payment amounts for all states
designated as rural or frontier states
would be equal to the national ceiling.
In addition, we solicited public
comments on whether payment in rural
areas of states that are not designated as
rural or frontier states should be set
differently. For the purpose of ensuring
access to necessary items and services
in states that are more rural or sparsely
populated than others, we proposed that
the adjusted fee schedule amounts for
states that are more rural than urban and
defined as ‘‘rural states’’ or states where
a majority of the counties are sparsely
populated and defined as ‘‘frontier
states’’ would be no lower than the
national ceiling amount.
In addition, we proposed that the
adjustments to the fee schedule amounts
for areas outside the contiguous United
States would not be based on the
RSPAs. Rather, we proposed that the
adjustments to the fee schedule amounts
for these areas be based on the higher of
the average of SPAs for CBAs in areas
outside the contiguous United States
(for example, Honolulu) or the national
ceiling limit applied to the payment
adjustments for areas within the
contiguous United States (79 FR 40285).
These proposals were made in
consideration of the unique costs of
furnishing DMEPOS items and services
in remote, isolated areas outside the
contiguous United States such as
Alaska, Guam, Hawaii, Puerto Rico, the
United States Virgin Islands and other

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areas. We proposed that any SPAs from
programs in these areas be excluded
from the calculation of the RSPAs in
section a. In addition, we proposed that
the adjustments to the fee schedule
amounts for areas outside the
contiguous United States would not be
based on the RSPAs. Rather, we
proposed that the adjustments to the fee
schedule amounts for these areas be
based on the higher of the average of
SPAs for CBAs in areas outside the
contiguous United States (for example,
Honolulu) or the national ceiling limit
applied to the payment adjustments for
areas within the contiguous United
States. We believe that, to the extent
that SPAs from non-contiguous areas are
available, these amounts should be used
in making adjustments to the payment
amounts for other areas outside the
contiguous United States since the
challenges and costs of furnishing
DMEPOS items and services in all
remote, isolated areas is similar. We also
believe that the payment adjustments
for these areas, like those for the
proposed rural and frontier states,
should not be lower than the national
ceiling established for items and
services furnished in the contiguous
United States. Areas outside the
contiguous United States generally have
higher shipping fees and other costs. We
believe the SPAs in Honolulu and other
areas outside the contiguous United
States reflect these costs and could be
used to adjust the fee schedule amounts
for these areas without limiting access
to DMEPOS items and services.
However, in the event that the national
ceiling limit described in section b
above is greater than the average of the
SPAs for CBPs in areas outside the
contiguous United States, we proposed
that the higher national ceiling amount
be used in adjusting the fee schedule
amounts for areas outside the
contiguous United States in order to
better ensure access to DMEPOS items
and services (79 FR 40285).
For the purpose of establishing the
boundaries for the regions, we proposed
using 8 regions developed for economic
analysis purposes by the Bureau of
Economic Analysis (BEA) within the
Department of Commerce (79 FR 40282).
Research and analysis conducted by the
BEA indicated that the states in each
region share economic ties. Further
information can be obtained at: https://
www.bea.gov/regional/definitions/
nextpage.cfm?key=Regions. The
information provided at this link states
that:
BEA Regions are a set of Geographic Areas
that are aggregations of the states. The
following eight regions are defined: Far West,

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Great Lakes, Mideast, New England, Plains,
Rocky Mountain, Southeast, and Southwest.
The regional classifications, which were
developed in the mid-1950s, are based on the
homogeneity of the states in terms of
economic characteristics, such as the
industrial composition of the labor force, and
in terms of demographic, social, and cultural
characteristics. For a brief description of the
regional classification of states used by BEA,
see U.S. Department of Commerce, Census
Bureau, Geographic Areas Reference Manual,
Washington, DC, U.S. Government Printing
Office, November 1994, pp. 6–18; 6–19.

Therefore, we proposed to revise the
definition of region in § 414.202 to mean
a region developed for economic
analysis purposes by the BEA within the
Department of Commerce for the
purpose of calculating regional single
payment amounts (RSPAs); the
definition of region for the purposes of
the P&O regional fee schedule would
also continue to apply for those items
and services not adjusted based on
prices in competitively bid areas.
According to the BEA, the regional

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classifications are based on the
homogeneity of the states in terms of
economic characteristics, such as the
industrial composition of the labor
force, and in terms of demographic,
social, and cultural characteristics. The
contiguous areas of the United States
that fall under the 8 BEA regions under
our proposal the proposed rule are
listed in Table 31 below. Further
information can be obtained at http://
www.bea.gov/.

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TABLE 31—BUREAU OF ECONOMIC ANALYSIS REGIONS
Region

Name

States/areas
(count)

1 ..........
2 ..........

New England ................................................
Mideast .........................................................

3 ..........
4 ..........
5 ..........

Great Lakes ..................................................
Plains ............................................................
Southeast .....................................................

6 ..........
7 ..........
8 ..........

Southwest .....................................................
Rocky Mountain ............................................
Far West .......................................................

Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont (6).
Delaware, District of Columbia, Maryland, New Jersey, New York, and Pennsylvania
(6).
Illinois, Indiana, Michigan, Ohio, and Wisconsin (5).
Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota (7).
Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina,
South Carolina, Tennessee, Virginia, and West Virginia (12).
Arizona, New Mexico, Oklahoma, and Texas (4).
Colorado, Idaho, Montana, Utah, and Wyoming (5).
California, Nevada, Oregon, and Washington (4).

We solicited public comments on
whether different regional boundaries
should be considered that would better
reflect potential regional differences in
the costs of furnishing items and
services subject to the DMEPOS CBP.
The comments on these proposals and
our responses are set forth below.
Comment: Many commenters stated
that the DMEPOS CBP and the SPAs
established under the program are
flawed because the bids they are based
on are not binding and therefore result
in the submission of non-bona fide bids
and because the SPA is based on the
median of supplier bids for an item
rather than the maximum bid resulting
in some suppliers being paid less than
the amount they bid. The commenters
therefore believe that the SPAs should
not be used to adjust payment amounts
for items and services furnished in other
areas of the country. A few commenters
said that no decisions should be made
before future Office of the Inspector
General (OIG) reports on competitive
bidding are published because these
reports might validate their claims that
the SPAs are flawed.
Response: We do not agree that the
DMEPOS CBP and the SPAs established
under the program are flawed because
the bids they are based on are not
binding and therefore result in the
submission of non-bona fide bids or
because the SPA is based on the median
of supplier bids for an item rather than
the maximum bid resulting in some
suppliers being paid less than the

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amount they bid. Bids are screened to
ensure that they are bona fide. Suppliers
that submit the lowest bids are required
to provide invoices and other
information to validate the bid and bids
that are not validated are rejected.
Regarding calculation of the SPA using
the median rather than maximum bid,
suppliers offered contracts under the
program do not have to accept these
amounts, but if they do, they are
accepting the payment amounts in the
contract and suppliers have successfully
furnished items at these amounts with
no impact on access. Over 90 percent of
suppliers accept contracts they are
offered, indicating that the SPAs are
appropriate. We therefore do not agree
with the commenters that the SPAs
should not be used to adjust payment
amounts for items and services
furnished in other areas of the country
and we do not agree that waiting for an
OIG evaluation of this issue is
necessary. Section 1834(a)(1)(F)(ii) of
the Act mandates use of information on
the payment determined under CBPs to
adjust the payment amount that would
otherwise be made for DME for an area
that is not a CBA by no later than
January 1, 2016, therefore, we believe it
is appropriate to establish the
methodology in rulemaking so that it
takes effect on January 1, 2015, allowing
time for calculation and implementation
of the adjusted fee schedule amounts on
January 1, 2016.
Comment: Some commenters
suggested that a survey of supplier costs

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in areas outside of CBAs should be
conducted to determine whether the
costs in these areas are greater than the
costs in CBAs or to otherwise provide
information on how the payment
amounts in areas outside CBAs should
be adjusted.
Response: We disagree with this
comment. The statute requires CMS to
use CBP information (as opposed to
survey data of supplier costs as the
commenters suggest).
Comment: Many commenters
suggested that as an alternative to using
SPAs to adjust payment amounts, the
methodology should use either the
highest bid submitted for each item
under the competition or the highest bid
submitted for the item by the suppliers
in the winning range.
Response: We disagree with this
suggestion. We believe that the median
bid is a better reflection of the costs of
furnishing items by suppliers as whole
as reflected in their bids than either the
lowest bid or the highest bid. Medicare
payment methods at 42 CFR 405.502
used in the past for DME have relied on
customary charges from suppliers based
on the median of their charges as well
as fee schedule amounts based on
average reasonable charges. In no case
have the highest supplier charges or
highest reasonable charges been used to
establish Medicare allowed amounts for
DME in the past, and in no case has use
of median or average charges in
establishing Medicare allowed payment
amounts resulted in significant

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problems related to obtaining access to
items and services in the past.
Comment: Some commenters stated
that bids submitted by suppliers unable
to fulfill the terms of their contract, for
example, due to problems associated
with meeting State licensure
requirements, should be excluded and
SPAs should be recalculated before they
are used to determine the adjusted fee
schedule amounts.
Response: We disagree with this
comment. We have observed no
significant negative impacts on access to
items and services under the CBPs since
they were initially phased in on January
1, 2011. In the limited situations where
bids used in the calculation of the SPAs
were from suppliers that later were
determined to be ineligible, these bids
did not impact access to items and
service.
Comment: One commenter indicated
that the boundaries for the regions based
on the 8 regions developed for economic
analysis purposes by the Bureau of
Economic Analysis (BEA) within the
Department of Commerce are too broad
and are not representative of current
regional economic characteristics.
Response: We disagree. The BEA
regional designations have been
evaluated and have evolved over the
years to continue to encompass socioeconomic patterns.
Comment: Many commenters stated
that the proposed methodology does not
adequately address the costs of
furnishing items and services in areas of
the country where CBPs have not been
established, particularly for rural areas,
non-contiguous areas, or remote areas
where suppliers must incur
extraordinary delivery expenses. Some
commented that the SPA-based pricing
is too low for a supplier to stay in
business and for the beneficiaries to
receive equipment. Some commenters
believe that the quality of items and
services furnished will be compromised
by the proposed methodology for
adjusting payment amounts. Many
commenters did not agree with the
proposed methodology for using the
national ceiling or 110 percent of the
average of the RSPAs as a payment floor
for rural states and frontier states and
suggested varied ways to adjust prices
in rural areas, including raising the
national ceiling to 120 or 150 percent,
or having rural and low population
density areas add-on payments at the
ZIP code or county level similar to the
add-on payments allowed for rural areas
under the ambulance fee schedule.
Commenters believe that considerations
should be made for all rural areas
within states regardless of whether the
state meets the proposed definitions of

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rural or frontier state. Some commenters
stated that the SPAs do not account for
unique costs of delivering items to
extremely remote locations and should
not be used to adjust payments in these
areas.
Response: We agree that the proposed
methodology for using the national
ceiling or 110 percent of the average of
the RSPAs as a payment floor for rural
states and frontier states should be
applied to all rural areas and on a
statewide basis depending on whether
or not the state meets the proposed
definitions for rural or frontier state. We
believe the proposed methodology for
using the national ceiling or 110 percent
of the average of the RSPAs as a
payment floor should be applied, at
least initially, in other areas within a
state that are designated as rural areas
rather than entire states in order to
ensure access to items and services in
these areas. Although we do not have
direct evidence that cost in rural areas
are higher than costs in urban areas or
vice versa or that the SPAs do not cover
costs in rural areas, we believe it is
prudent for the sake of ensuring access
to items and services in these areas to
proceed cautiously in adjusting fee
schedule amounts in these areas.
Therefore, in response to comments that
considerations should be made for all
rural areas within states regardless of
whether the state meets the proposed
definitions of rural or frontier state, we
are finalizing a definition for rural area
at § 414.202 to mean a geographic area
represented by a postal zip code of at
least 50 percent of the total geographic
area of the area included in the zip code
is estimated to be outside any
metropolitan area (MSA). The definition
of rural area also includes a geographic
area represented by a postal zip code
that is a low population density area
excluded from a competitive bidding
area in accordance with the authority
provided by section 1847(a)(3)(A) of the
Act at the time the rules at § 414.210(g)
are applied. As part of the methodology
we are finalizing for adjusting fee
schedule amounts using information
from CBPs, we are finalizing a provision
that the adjusted fee schedule amounts
for any area meeting the definition of
rural area will be no lower than the
national ceiling amount. We are not
finalizing the proposed definitions of
rural state and frontier state because we
have decided to apply provisions
proposed for these areas (79 FR 40284)
to all rural areas based on comments
received and as explained in more detail
below. Lastly, we note that Medicare
program guidance at section 60 of
chapter 20 of the Medicare Claims

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Processing Manual (Pub. 100–04) allows
for payment of separate charges for
delivery expenses in rare and unusual
circumstances in order to meet the
needs of beneficiaries living remote
areas that are not served by a local
supplier.
Comment: Some commenters
recommended a 4 year phase-in of the
adjusted fees by payment amounts or
regions so suppliers have time to adjust
to the change in payment amounts.
Response: We agree that phasing in
the adjustments to the payment amounts
would allow time for suppliers to adjust
to the new payment rates and would
allow time to monitor the impact of the
change in payment rates on access to
items and services; however, we do not
believe that a phase in period of 4 years
is necessary. We believe that time frame
is excessive. Therefore, we are finalizing
a phase in of 6 months, which we
believe provides suppliers with an
adequate amount of time to make
adjustments to their businesses in light
of the reduced payment amounts and is
more than enough time to determine if
the payment amounts are impacting
access to items and services in any part
of the country. CMS will monitor access
and health outcomes using real time
claims data and analysis. Therefore, in
this final rule at § 414.210(g)(9), we
finalizing the adjustments to the fee
schedule amounts for use in paying
claims with dates of service from
January 1, 2016, thru June 30, 2016,
based on 50 percent of the un-adjusted
fee schedule amount and 50 percent of
the adjusted fee schedule amount. For
example, if the fee schedule amount that
would have gone into effect on January
1, 2016, without any adjustments would
have been $100.00, and the amount
resulting from the methodology
established in this rule would have been
$75.00, the fee schedule amount taking
effect on January 1, 2016, will be $87.50.
Beginning on July 1, 2016, the fully
adjusted fees will apply.
Comment: Many commenters urged
CMS to monitor patient access,
utilization, and satisfaction levels after
the implementation of the adjusted fees.
Commenters also recommended adding
a methodology to adjust prices if access
problems develop.
Response: We concur with the
recommendation to closely monitor the
impact of the reductions in payment on
access to items and services and health
outcomes. We do not believe that the
reductions in payment will negatively
impact access to items and services, so
we do not find it necessary to adopt an
additional methodology to account for
access problems; however, we can

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address the matter in future rulemaking,
if necessary.
After consideration of the public
comments, and for the reasons we
discussed in the proposed rule and
above, we are finalizing the proposed
provisions summarized above and in the
proposed rule (79 FR 40208), with the
exception of the proposed definitions
for rural state and frontier state and the
proposed provision to use the national
ceiling or 110 percent of the average of
the RSPAs as a payment floor for
adjusting the fee schedule amounts for
these states. We are finalizing a
definition of rural area and revising the
definition of ‘‘Region’’ as described
above at § 414.02. We are finalizing the
proposed § 414.210(a) and (g), except we
have amended 42 CFR 414.210(g) to
note the application of competitive
bidding information and limitation of
inherent reasonableness authority, and
the payment adjustments for areas
within and outside the contiguous
United States using information from
CBPs.
2. Methodology for Items and Services
Included in Limited Number of
Competitive Bidding Programs
In some cases, there may not be a
sufficient number of CBAs and SPAs
available for use in computing RSPAs,
and therefore, a different methodology
for implementing section
1834(a)(1)(F)(ii) of the Act would be
necessary. For items and services that
are subject to competitive bidding and
have been included in CBP in no more
than 10 CBAs, we proposed that
payment amounts for these items in all
non-competitive bidding areas be
adjusted based on 110 percent of the
average of the SPAs for the areas where
CBPs are implemented (79 FR 40285).
Using a straight average of the SPAs
rather than a weighted average of the
SPAs gives SPAs for the various CBAs
equal weight regardless of the size of the
CBA. We believe this avoids giving
undo weight to SPAs for more heavily
populated areas. We proposed the
additional 10 percent adjustment to the
average of the SPAs to account for
unique costs such as delivering items in
remote, isolated locations, but would
make this a uniform adjustment for
program simplification purposes.
Under the DMEPOS CBP, there may
be items and services for which
implementation of CBPs could generate
significant savings for the beneficiary
and/or program, but which are
furnished infrequently in most MSAs. In
some cases, such items and services
could be combined with other items and
services under larger PCs or included in
mail order competitions, to the extent

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that these are feasible options. For
example, combining infrequently used
traction equipment and frequently used
hospital beds in the same product for
bidding purposes would ensure that any
beneficiary that needs traction
equipment in the CBA would have
access to the item from the suppliers
also contracted to furnish hospital beds
in the area. This would make it feasible
to include traction equipment in
numerous MSAs throughout the country
and would allow use of the RSPA
methodology described above. However,
if a PC was established just for traction
equipment for bidding purposes, the
volume of items furnished in certain
MSAs may not be sufficient to generate
viable competitions under the program
because there may be a limited number
of suppliers interested in competing to
furnish the items in local areas.
Nonetheless, if savings for the
beneficiary and/or program are possible
for the equipment, we are mandated to
phase the items in under the DMEPOS
CBP.
In addition, for lower volume items
within large PCs, such as wheelchair
accessories, we proposed to include
these items in a limited number of local
competitions rather than in all CBAs to
reduce the burden for suppliers
submitting bids under the programs as
a whole. In these cases, for the purposes
of implementing section 1834(a)(1)(G) of
the Act, we proposed that payment
amounts for these items in all areas
where CBPs are not implemented be
adjusted based on 110 percent of the
average of the SPAs for the areas where
CBPs are implemented. We proposed
the additional 10 percent adjustment to
the national average price to account for
unique costs in certain areas of the
country such as delivering items in
remote, isolated locations. For example,
the PC for standard mobility in the 9
Round 1 CBAs includes 25 HCPCS
codes for low volume wheelchair
accessories that are not included in the
PC for standard wheelchairs, scooters,
and related accessories in the 100
Round 2 CBAs. We proposed that
payment amounts for these items in
areas where CBPs are not implemented
be adjusted based on 110 percent of the
average of the SPAs for the 9 Round 1
areas where CBPs are implemented (79
FR 40285). Alternatively, we could
include these low volume items in all
PCs in all 109 CBAs and suppliers
would need to develop bid amounts and
enter bids for these 25 codes for low
volume items such as toe loop holders,
shock absorbers and IV hangers.
Including these 25 Healthcare Common
Procedure Coding System (HCPCS)

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codes for low volume wheelchair
accessories in the PCs under the 9
Round 1CBAs means that suppliers
submitting bids for wheelchairs have 25
bid amounts to develop and enter per
CBA for these items, or a total of 225 bid
amounts to develop and enter for these
low volume items if bidding for
wheelchairs in all 9 Round 1 CBAs. In
contrast, including these codes in the
PCs under all 109 CBAs means that
suppliers submitting bids for
wheelchairs have 2,725 bid amounts to
develop and enter for these low volume
items, if biding for wheelchairs in all
109 CBAs. We believe that adjusting fee
schedule amounts based on SPAs from
10 or fewer CBAs achieve the savings
mandated by the statute for these items
while greatly reducing the burden on
suppliers and the program in holding
competitions for these items in all 109
CBAs across the country.
Finally, if contracts and SPAs for low
volume items included in a limited
number of CBAs expire and the items
are not included in future CBPs, we
proposed to use the information from
the past competitions to adjust the
payment amounts for these items
nationally based on 110 percent of the
average of the SPAs for the areas where
CBPs were implemented (79 FR 40286).
Even though the SPAs may no longer be
in effect, we believe it is reasonable to
use the information to reduce excessive
payment amounts for items and services
as long as the SPAs did not result in a
negative impact on access to quality
items and services while they were in
effect and as long as the amounts are
adjusted to account for increases in
costs over time. For example, 4 codes
for adjustable wheelchair seat cushions
were included in the Round 1 Rebid,
with SPAs that were approximately 25
percent below the fee schedule amounts
being in effect in 9 CBAs from January
2011 thru December 2013. These items
were not bid in future rounds due to the
low volume of use relative to other
wheelchair seat cushions. During the
course of the 3-year contract period
when the SPAs were in effect in the 9
areas, there were no reports of access
problems and there were no negative
health outcomes as a result of including
these items under CBPs. For the future,
savings for these items could be
achieved by including them in future
competitions or by using the previous
SPAs, updated by an economic update
factor to account for increases in costs.
If the decision is made not to include
these items in future competitions, we
believe savings can and should still be
obtained based on information from the

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previous competitions. The comments
and our responses are set forth below.
Comment: Several commenters
suggested that in the instances where
the items and services included in
limited number of CBPs, the adjusted
fee schedule amounts for rural, frontier
and non-contiguous areas should be
greater than 110 percent of the average
of the SPAs because the commenters
believe that the cost of furnishing
DMEPOS items in these areas are more
than 10 percent higher than the cost of
furnishing DMEPOS items in the CBAs.
The commenters suggested using greater
than 110 percent of the average of the
SPAs to adjust the fee schedule amounts
for rural, frontier, and non-contiguous
areas.
Response: We disagree with this
comment because we do not have direct
evidence that the cost of furnishing
DMEPOS items in rural, frontier, or noncontiguous areas is greater than the
costs of furnishing the items in CBAs. In
some cases, the cost of furnishing
DMEPOS items in the CBAs may be
greater than the costs of furnishing the
items in rural, frontier, or noncontiguous areas, but we have no direct
evidence of this either. Our proposal
struck a balance by using 110 percent of
the average of the SPAs rather than 100
percent of the average of the SPAs to
account for the possibility that there
may be slightly higher costs for
furnishing items and services in certain
areas than the cost of furnishing the
items in the CBAs. Absent additional
evidence, we believe that paying more
than 110 percent of the average of the
SPAs for the CBAs is not appropriate.
However, we can consider making
changes in the future if new information
is made available.
Comment: Some commenters stated
that that items that were excluded from
CBP after initially being in the program
should be excluded from the adjustment
of fees One commenter argued that the
SPAs for items only included in CBPs
during the Round 1 Rebid are no longer
reflective of the true and current cost of
the items. Also, one commenter argued
that if CMS included items in CBPs and
then decides not to include the items in
subsequent CBPs, this is an indication
that CMS believes the items are not
well-suited for competitive bidding.
Other commenters stated that data from
less than 10 CBPs is not enough data to
determine what the payment amounts
should be for the items on a national
basis.
Response: We disagree with these
comments. We believe that SPAs based
on supplier bids from CBPs established
in recent years are far more reflective of
the true and current cost of the items

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than fee schedule amounts based on
supplier charges from 1986 and/or 1987.
There may be reasons why items are not
included in subsequent CBPs, such as
the fact that the item is a low volume
item such as one of the hundreds of
HCPCS codes for wheelchair options
and accessories that is not included in
subsequent CBPs to reduce the burden
and cost of suppliers submitting bids for
a product category (for example,
wheelchairs) that already includes over
a hundred higher volume items (HCPCS
codes). It does not mean that CMS
believes that the item is not suitable for
competitive bidding. We believe that
recent data from less than 10 CBPs is
enough data to determine what the
payment amounts should be for the
items on a national basis, especially for
those items that are furnished on a
limited basis to a small number of
beneficiaries throughout the United
States yet are items for which
implementation of CBPs or adjustments
to payment amounts using information
from CBPs is mandated by the statute.
Using pricing from 10 or fewer CBPs
allows for implementation of the
statutory requirement to implement
competitive bidding for the item.
After consideration of the public
comments, we are finalizing the rule in
§ 414.210(g)(3) to include payment
adjustments for items and services
included in no more than ten
competitive bidding programs reduced
to 110 percent of the unweighted
average of the single payment amounts.
We added technical changes to the final
regulation text from the proposed
regulation text by adding the term ‘‘ten
or fewer’’ for added clarification. We are
also finalizing the rule in § 414.210(g)(4)
for payment adjustments using data on
items and services included in
competitive bidding programs no longer
in effect and specify that we will be
updating the payment amounts prior to
adjusting the fee schedule amounts as
described above.
3. Adjusted Payment Amounts for
Accessories Used With Different Types
of Base Equipment
There may be situations where the
same accessory or supply identified by
a HCPCS code is used with different
types of base equipment, and the item
(HCPCS code) is included in one or
more PCs under competitive bidding for
use with some, but not all of the
different types of base equipment it is
used with. For these situations, we
proposed (79 FR 40286) to use the
weighted average of the SPAs from CBPs
and PCs where the item is included for
use in adjusting the payment amounts
for the item (HCPCS code). We believe

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that it would be unnecessarily
burdensome to have different fee
schedule amounts for the same item
(HCPCS code) when it is used with
similar, but different types of base
equipment. We believe that the costs of
furnishing the accessory or supply
should not vary significantly based on
the type of base equipment it is used
with. Therefore, we sought public
comments on addressing situations
where an accessory or supply identified
by a HCPCS code is included in one or
more PCs under competitive bidding for
use with more than one type of base
equipment. In these situations, we
proposed to calculate the SPA for each
CBA by weighting the SPAs from each
PC in that CBA by national allowed
services. This would result in the
calculation of a single SPA for the item
for each CBA. The single SPA per code
per CBA would then be used in
applying the payment adjustment
methodologies proposed above. For
example, HCPCS code Exxx1 describes
a tray used on a wheelchair. Exxx1 was
included in a PC for manual
wheelchairs in all CBAs and in a
separate, second PC for power
wheelchairs in all CBAs. SPAs for
Exxx1 under the manual wheelchair PC
are different than the SPAs for Exxx1
under the power wheelchair PC. Under
the proposed methodology, national
allowed services would be used to
compute a weighted average of the SPAs
for code Exxx1 in each of the CBAs. So,
rather than having 2 different SPAs for
the same HCPCS code in the same CBA,
we would have 1 SPA for the code for
the CBA. If the item is included in only
one PC, we proposed to use the SPAs for
the item from that PC in applying the
payment adjustment methodologies
proposed above (79 FR 40287). The
comments and our responses are set
forth below.
Comment: Several commenters argued
that accessories used with different base
equipment have higher service costs.
They pointed out cases where CMS
established different SPAs for the same
accessories when used with different
base equipment included in different
PCs. The commenters do not believe
that SPAs established for a HCPCS code
describing an accessory used with one
type of base item (for example, standard
power wheelchair) should be used to
adjust the fee schedule amounts for the
HCPCS code that would govern
payment for the accessory when it is
used with a different type of base item
(for example, complex rehabilitative
power wheelchair).
Response: We disagree. We believe
that using the weighted average of the
SPAs established for accessories used

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
with different base equipment takes into
account any difference in the cost of
furnishing the accessories with different
types of base equipment in setting the
overall rate for the accessories. We
believe it is administratively
burdensome and unnecessary to have
more than one fee for the same item.
Comment: Some commenters
suggested that composite bids and items
weights make some accessories underbid when they have a low weight
relative to other items in the PC or
relative to the same item in a different
PC. For example, a HCPCS code
describing a wheelchair accessory
included in two different PCs, one for
power wheelchairs and one for manual
wheelchairs might be underbid in one
PC if the item weight for the item is very
low relative to the item weight for the
item in the other PC. The commenter
argued that, creating a weighted
payment amount from the SPAs for the
item from the manual and power
wheelchair PCs distorts the true cost of
the item if the item was under-bid in
one PC because it had a low weight.
Response: We disagree. Suppliers are
required to submit a bona fide bid for
every item in every product category
and the bids are screened to ensure that
they are all bona fide. In addition, we
believe that the costs of the accessories
described by a single HCPCS code do
not vary depending on what type of base
equipment the item is used with. To the
extent that the costs do vary, combining
the SPAs for the accessories from
different product categories results in
payment amounts that reflect the
average costs of the accessory when
used in conjunction with various types
of base equipment. If an item was
underbid due to its low volume, that bid
would not be considered for a contract.
After consideration of the public
comments, we are finalizing the rule as
proposed in § 414.210(g)(5) for adjusted
payment amounts for accessories used
with different types of base equipment,
when included in more than one
product category in a CBA under
competitive bidding, a weighted average
of the single payment amounts for the
code is computed for each CBA based
on the total number of allowed services
for the item on a national basis for the
code from each product category prior
to applying the payment adjustment
methodologies under the section. We
also made an additional change to the
regulation from the proposed rule for
added clarification by specifying that
‘‘the total number of allowed services
for the item on a national basis for the
code from each product category’’ is
completed ‘‘prior to applying the

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payment adjustment methodologies
under the section.’’
4. Adjustments to Single Payment
Amounts That Result From Unbalanced
Bidding
Within the HCPCS there are instances
where there are multiple codes for an
item that are distinguished by the
addition of a hierarchal feature(s).
Under competitive bidding, the code
with the higher utilization would
receive a higher weight and the bid for
this item would have a greater impact
on the composite bid and
competitiveness of the supplier’s overall
bid for the product category (PC) within
the CBP than the bid for the less
frequently used alternative. This can
result in unbalanced bidding where the
bids and SPAs for the item without the
additional features is higher than the
bids and SPAs for the item with the
additional features due to the fact that
the item with the features is utilized
more than the item without the features
and therefore receives a higher weight.
In the proposed rule (79 FR 40287), we
identified the case where unbalanced
bidding resulted in higher SPAs for
enteral infusion pumps without alarms
than enteral infusion pumps with
alarms, even though pumps without
alarms have become virtually obsolete.
In this case, the alarm is the hierarchal
feature. Only 0.3 percent of beneficiaries
using enteral infusion pumps received a
pump without an alarm in 2012
according to Medicare claims data.
Clearly, separately identifying pumps
with alarms and pumps without alarms
is no longer necessary, yet the codes for
both types were included in the CBPs,
resulting in a case of unbalanced
bidding that could have been avoided if
only one code for enteral infusion
pumps existed. Likewise, in 2006, codes
were added for portable power
wheelchairs and power wheelchairs
with less functionality (Group 1) than
those commonly used by beneficiaries
(Group 2). All of the codes for standard
power wheelchairs meet the same needs
for power wheelchairs used in the
patient’s home. The features of being
more expensive, sturdier non-portable
power wheelchairs or higher performing
power wheelchairs are the hierarchal
features for the standard power
wheelchairs. Although the codes for
portable power wheelchairs and Group
1 power wheelchairs were added in
order to provide a less expensive
alternative for power wheelchairs used
in the home, beneficiaries did not take
advantage of the lower priced,
alternative equipment. Only 0.9 percent
of beneficiaries using standard power
wheelchairs received a portable or

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Group 1 power wheelchair in 2012
according to Medicare claims data. The
goal of creating savings for beneficiaries
by having codes for economy power
wheelchairs did not materialize, yet the
codes for these types of power
wheelchairs were included in the CBPs,
resulting in a case of unbalanced
bidding that could have been avoided if
the codes for the economy power
wheelchairs did not exist. For the
purpose of implementing section
1834(a)(1)(G) of the Act, and in making
adjustments to payment amounts under
sections 1834(a)(1)(F)(ii),
1834(h)(1)(H)(ii), and 1842(s)(3)(B) of
the Act, we proposed that the payment
amounts for infrequently used codes
that describe items and services with
fewer features than codes with more
features be adjusted so that they are no
higher than the payment amounts for
the more frequently used codes with
more features (79 FR 40287). We sought
public comments on this issue and our
proposed provision to address this
issue. The comments and our responses
are set forth below.
Comment: A commenter suggested
that ‘‘hierarchal feature’’ be better
defined. Another commenter suggested
that weighing based on utilization rates
ignores whether there were supply
issues that affected the utilization rates.
One commenter also suggested that
balanced bidding does not reflect SPA
cost differences based on the features of
equipment.
Response: We agree that hierarchal
features should be clearly identified for
the purpose of implementing the
proposed rule. We will limit the final
policy by identifying two specific
scenarios where the hierarchal features
involved are additional features or
features with additional functionality.
In the future, we will either add other
scenarios or develop a definition of
‘‘hierarchal features.’’ Therefore, the
final policy will only apply to the
specific cases of unbalanced bidding
that were identified in the proposed rule
that clearly show that certain equipment
has features that exceed that of other
equipment.
After consideration of the public
comments, we will limit the final policy
by identifying two specific scenarios
where the hierarchal features involved
are additional features or features with
additional functionality. In the future,
we will either add other scenarios or
develop a way to define ‘‘hierarchal
features’’ in general, or in a way that
would identify various scenarios, which
we expect to address in future
rulemaking. Therefore, the final policy
will only apply to the specific cases of
unbalanced bidding that were identified

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in the proposed rule (79 FR 40287) that
clearly show that certain equipment has
features that exceed that of other
equipment. Specifically, we are adding
§ 414.210(g)(6) and requiring that
adjusted fee schedule amounts for
Group 1 power wheelchairs or Group 2
portable power wheelchairs cannot
exceed the adjusted fee schedule
amounts for Group 2, non-portable
power wheelchairs in order to avoid
situations where Medicare allowed
payment amounts for power
wheelchairs with less functionality are
established that are higher than fee
schedule amounts for power
wheelchairs with more functionality.
We are also finalizing a rule at
§ 414.210(g)(6) that adjusted fee
schedule amounts for enteral infusion
pumps without alarm cannot exceed the
adjusted fee schedule amounts for
enteral infusion pumps with alarm. We
believe that wheelchairs that can go
farther, faster, can climb over higher
obstacles, or are not portable and more
sturdy have features that exceed
wheelchairs that travel shorter
distances, go slower, climb over lower
obstacles, or are portable and less
sturdy. Payment amounts for shorter
distance, slower, smaller obstacle
climbing, less sturdy, power
wheelchairs should not be higher than
the payment amounts for longer
distance, faster, higher obstacle
climbing, sturdy, power wheelchairs.
An enteral feeding pump with a safety
alarm includes additional features than
a pump without such an alarm. Payment
amounts for enteral feeding infusion
pumps without an alarm should not be
higher than the payment amounts for
pumps with an alarm. We will consider
whether to add a definition of hierarchal
feature, or to apply the rule we
proposed to other items not identified
above through future notice and
comment rulemaking.
5. National Mail Order Program—
Northern Mariana Islands
While Section 1847(a)(1)(A) of the Act
provides that CPBs be established
throughout the United States, the
definition of United States at section
210(i) of the Act does not include the
Northern Mariana Islands. We therefore
previously determined that the Northern
Mariana Islands are not considered an
area eligible for inclusion under a
national mail order CBP. For the
purpose of implementing the
requirements of section 1834(a)(1)(F)(ii)
of the Act, we proposed that the
payment amounts established under a
national mail order CBP would be used
to adjust the fee schedule amounts for
mail order items furnished to

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beneficiaries in the Northern Mariana
Islands (79 FR 40287). We proposed that
the adjusted fee schedule amounts
would be equal to 100 percent of the
amounts established under the national
mail order CBP (79 FR 40287).
We solicited comments on these
proposals. The comments and our
responses are set forth below.
Comment: A few commenters
recommended waiting for the second
round of bidding for the national mailorder CBP before applying the payment
amount in order to allow more time to
determine if the competitive bidding
payment amounts allow access to items
and services and acquire more pricing
points over an extended period of time.
They further recommended increasing
payment amounts for the national mail
order SPA for the Northern Mariana
Islands to limit any access or pricing
complications.
Response: We disagree with these
suggestions. The national mail order
SPAs currently apply to items shipped
to various remote areas of the United
States and have not resulted in any
problems with access to mail order
items in these areas. Therefore, we
believe these amounts can be used to
adjust the mail order fee schedule
amounts for the Northern Mariana
Islands effective January 1, 2016.
After consideration of the public
comments and for the reasons we
previously articulated, we are finalizing
the proposal regarding the National Mail
Order Program and the Northern
Mariana Islands at § 414.210(7) to
provide that the fee schedule amounts
for mail order items furnished in the
Northern Mariana Islands are adjusted
so that they are equal to 100 percent of
the single payment amounts established
under a national mail order program.
6. Updating Adjusted Payment Amounts
In accordance with section
1834(a)(1)(F)(iii) of the Act, the adjusted
payment amounts for DME must be
updated as additional items are phased
in or information is updated. We
proposed to add regulation text
indicating that we would revise the
adjusted payment amounts for DME,
enteral nutrients, supplies, and
equipment, and OTS orthotics each time
a SPA is updated following one or more
new competitions, which may occur at
the end of a contract period, as
additional items are phased in, or as
new programs in new areas are phased
in (79 FR 40287). This is required by
section 1834(a)(1)(F)(iii) for DME. Since
we believe it is reasonable to assume
that updated information from CBPs
would better reflect current costs for
furnishing items and services, we

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proposed regulations to require similar
updates for enteral nutrients, supplies,
and equipment, and OTS orthotics.
As we indicated above, if the only
SPAs available for an item are those that
were established under CBP that are no
longer in effect, we proposed to use
these SPAs to adjust payment amounts
using the methodologies described
above and we proposed to do so
following application of inflation
adjustment factors. We proposed that
the inflation adjustment factor would be
based on the percentage change in the
Consumer Price Index for all Urban
Consumers (CPI–U) from the mid-point
of the last year the SPAs were in effect
to the month ending 6 months prior to
the date the initial payment adjustments
would go into effect. The adjusted
payment amounts would continue to be
updated every 12 months using the
percentage change in the CPI–U for the
12-month period ending 6 months prior
to the date the updated payment
adjustments would go into effect (79 FR
40288).
The payment amounts that would be
adjusted in accordance with sections
1834(a)(1)(F)(ii) and (iii) of the Act for
DME, section 1834(h)(2)(H)(ii) of the Act
for orthotics, and section 1842(s)(2)(B)
of the Act for enteral nutrients, supplies,
and equipment shall be used to limit
bids submitted under future
competitions of the DMEPOS CBP in
accordance with regulations at
§ 414.414(f). Section 1847(b)(2)(A)(iii)
prohibits the awarding of contracts
under a CBP unless total payments
made to contract suppliers in the CBA
are expected to be less than the payment
amounts that would otherwise be made.
In order to assure savings under a CBP,
the fee schedule amount that would
otherwise be paid is used to limit the
amount a supplier may submit as their
bid for furnishing the item in the CBA.
The payment amounts that would be
adjusted in accordance with sections
1834(a)(1)(F)(ii) and (iii) of the Act for
DME, section 1834(h)(2)(H)(ii) of the Act
for orthotics, and section 1842(s)(2)(B)
of the Act for enteral nutrients, supplies,
and equipment would be the payment
amounts that would otherwise be made
if payments for the items and services
were not made through implementation
of a CBP. Therefore, the adjusted fee
schedule amounts would become the
new bid limits (79 FR 40288).
We solicited comments on these
proposals. The comments and our
responses are set forth below.
Comment: Some commenters
suggested updating adjusted fees yearly
with CPI–U and not freeze it for 3 years
until the next.

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Response: We disagree. Contracts and
SPAs are replaced at least once every 3
years, following one or more new
competitions and as other items are
added to programs established under
Subpart F of this part, and increased
costs in doing business are factored into
the bids with each new competition. In
addition, suppliers submitting bids
under the CBPs are educated that their
bids will be used in establishing SPAs
that will be in effect for the entire
duration of the contract period.
Therefore, we believe that suppliers take
increased costs and prices into account
when developing their bids. In addition,
because section 1847(b)(2)(A)(iii) of the
Act prohibits the awarding of contracts
under a CBP if the total amounts paid
to contract suppliers are expected to be
more than the total amounts that would
otherwise be paid, we believe that the

intent of competitive bidding is to
product a reduction in payment
amounts rather than an increase in
payment amounts. In lieu of
establishing a CBP in an area, the
authorities under the statute for
adjusting fee schedule amounts based
on information from CBPs must be used;
however, in no case should it result in
an increase in the amounts that would
otherwise be paid. If an inflation
adjustment factor is applied to fee
schedule amounts that are adjusted by
the methodologies we are adopting in
this final rule, it could result in an
amount that is greater than the fee
schedule amount that would otherwise
be paid, and we believe that this is
contrary to the intent of the statute.
After consideration of the public
comments, for the reasons we set forth
above, we are finalizing the proposals

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and are adding § 414.210(g)(8) to
indicate that adjusted fee schedule
amounts are revised each time an SPA
for an item or service is updated
following one or more new competitions
and as other items are added to
programs established under Subpart F of
this part.
Table 32 provides a summary of the
final methodologies intended to achieve
savings by adjusting fee schedule
amounts using information from CBPs.
With regard to all methodologies in this
final rule that are intended to achieve
savings by adjusting fee schedule
amounts using information from CBPs,
we are adding a provision specifying
that in any case where application of
these methodologies results in an
increase in the fee schedule amount, the
adjustment to the fee schedule amount
is not made.

TABLE 32—SUMMARY OF FINAL METHODOLOGIES FOR ADJUSTING PAYMENT IN NON-BID AREAS
Proposed Methodology

Calculations

(1) Adjustments for Items Included in More than 10
CBAs*:
(a) Regional Adjustments Limited by National Parameters for Items Furnished Within the Contiguous United States.
(b) Adjustments for Rural Areas .................................
(c) Adjustments for Items Furnished Outside the
Contiguous United States.
(2) Adjustments for Lower Volume or Other Items Included in 10 or Fewer CBAs*.
(3) Adjustments for Items Where the Only Available SPA
is from a CBP No Longer in Effect.
(4) Adjustments for Accessories Used with Different
Types of Base Equipment:
(a) Adjustments for Accessories Included in One
CBP Product Category.
(b) Adjustments for Accessories Included in One or
More CBP Product Category.
(5) Payment Adjustments to Northern Mariana Islands
Using the National Mail Order SPAs.

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VI. Final Payment Methodologies and
Payment Rules for Durable Medical
Equipment and Enteral Nutrition
Furnished Under the Competitive
Bidding Program
A. Background
The payment rules for DME have
changed significantly over the years
since 1965, resulting in the replacement
of the original monthly rental payment
methodology with lump sum purchase
and capped rental payment rules, as

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—Adjusted payment equal to the RSPA (calculated using the un-weighted average of
SPAs from CBAs that are fully or partially located with a BEA region) limited by a
national floor and ceiling. The national ceiling and floor would be set at 110 percent and 90 percent, respectively, of the average of the RSPAs calculated for each
of the 48 contiguous states and District of Columbia (national average RSPA).
—Adjusted payment for areas designated as rural areas based on 110 percent of the
national average RSPA.
—Adjusted payment for non-contiguous areas (e.g., Alaska, Guam, Hawaii) based on
the higher of the average of SPAs for CBAs in areas outside the contiguous U.S.
or 110 percent of the national average RSPA applied to adjustments within the
contiguous U.S.
—Adjusted payment based on 110 percent of the un-weighted average of the SPAs
for the areas where CBPs are implemented for contiguous and non-contiguous
areas of the United States.
—Payment based on adjusted payment determined under 1) or 2) above and adjusted on an annual basis based on the CPI–U update factors from the mid-point
of the last year the SPAs were in effect to the month ending 6 months prior to the
date the initial payment adjustments would go into effect.
—SPAs for the item from that one Product Category would be used in determining
the adjusted payment amounts under methodologies 1) or 2).
—A weighted average of the SPAs for the item in each CBA where the item is included in more than one Product Category would be used to determine the adjusted payment amounts under methodologies 1) or 2).
—Fee schedule amounts adjusted to equal the SPAs under the national mail order
CBP.

well as separate payment for repairs,
maintenance and servicing, and
replacement of expensive accessories for
beneficiary-owned equipment. In our
experience, these payment rules have
been burdensome to administer and
have added program costs associated
with expensive wheelchair repairs and
payment for loaner equipment, and have
significantly increased costs associated
with frequent replacement of expensive
accessories at regular intervals for items

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such as continuous positive airway
pressure (CPAP) devices.
We believe that we have general
authority under section 1847(a) and (b)
of the Act to establish payment rules for
DME and enteral nutrition equipment
that are different than the rules
established under section 1834(a) of the
Act for DME, section 1842(s) for enteral
nutrients, supplies, and equipment, and,
section 6112(b) of Omnibus Budget
Reconciliation (OBRA) Act of 1989
(Pub. L. 101–239) for enteral pumps. We

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believe that lump sum purchase and
capping rentals for certain DME and
enteral nutrition may no longer be
necessary to achieve savings under the
program when competitive bidding can
be used to establish a reasonable
monthly payment. We also believe that
payment on a continuous rental basis—
that is, ongoing monthly payments not
subject to a cap—could help to ensure
that medically necessary DME and
enteral nutrition equipment is kept in
good working order for the entire
duration of medial need and would
make it easier for beneficiaries to change
from one supplier to another since the
new supplier would not be faced with
a finite number of rental payments.
Currently, there is no requirement that
a supplier take responsibility for
repairing equipment once it is owned by
a beneficiary, which may cause
difficulties for the beneficiary to find a
supplier to undertake such services. We
believe that continuous rental payment
would eliminate such issues because the
supplier of the rented equipment would
always be responsible for keeping the
equipment in good working order. We
do not believe that continuous monthly
rental payments for DME and enteral
nutrition would negatively impact
access to items and services and could
potentially be implemented in a manner
that does not increase program
expenditures since suppliers would be
paid based on bids for furnishing the
same general items and services they
would otherwise provide. In addition,
since Medicare payment for rental of
DME and enteral nutrition equipment
include payment for maintenance and
servicing of the rented equipment, the
suppliers would be directly responsible
for meeting the monthly needs of the
beneficiary in terms of keeping the
rented equipment in good working
order.
As explained in more detail below,
we proposed to revise the regulation by
adding a new section at 42 CFR 414.409
with special payment rules to replace
existing payment rules at § 414.408 for
certain items and services in no more
than 12 CBPs where these rules are
applied. We also proposed to revise
§ 414.412 to address the submission of
bids for furnishing items and services
paid in accordance with these proposed
special payment rules.
B. Summary of the Proposed Provisions
and Responses to Comments on the
Payment Methodologies and Payment
Rules for Durable Medical Equipment
and Enteral Nutrition Furnished Under
the Competitive Bidding Program
In this final rule, we provide a
summary of each proposed provision, a

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summary of the public comments
received and our responses to them, and
the policies we are finalizing for the
DMEPOS CBP. Comments related to the
paperwork burden are addressed in the
‘‘Collection of Information
Requirements’’ section in this final rule.
Comments related to the impact analysis
are addressed in the ‘‘Economic
Analyses’’ section in this final rule.
We proposed to update the
regulations to include proposed special
payment rules for paying claims for
certain DME or enteral nutrition under
a limited number of CBPs. We proposed
to revise the regulation by adding a new
section at 42 CFR 414.409 with special
payment rules to replace specific
payment rules at § 414.408 for these
items and services in CBPs where the
special rules are applied. We also
proposed to revise § 414.412 regarding
submission of bids for furnishing items
and services paid in accordance with
these special payment rules.
We believe that alternative payment
models for certain DME and enteral
nutrition may achieve savings under the
program when competitive bidding can
be used to establish a reasonable
monthly payment. We also believe that
payment on a continuous rental basis—
that is, ongoing monthly payments not
subject to a cap—could help to ensure
that medically necessary DME and
enteral nutrition equipment is kept in
good working order for the entire
duration of medial need and would
make it easier for beneficiaries to change
from one supplier to another since the
new supplier would not be faced with
a finite number of rental payments.
Currently, there is no requirement that
a supplier take responsibility for
repairing equipment once it is owned by
a beneficiary, which may cause
difficulties for the beneficiary to find a
supplier to undertake such services. We
believe that continuous rental payment
would eliminate such issues because the
supplier of the rented equipment would
always be responsible for keeping the
equipment in good working order. We
do not believe that continuous monthly
rental payments for DME and enteral
nutrition would negatively impact
access to items and services and could
potentially be implemented in a manner
that does not increase program
expenditures since suppliers would be
paid based on bids for furnishing the
same general items and services they
would otherwise provide. In addition,
since Medicare payment for rental of
DME and enteral nutrition equipment
include payment for maintenance and
servicing of the rented equipment, the
suppliers would be directly responsible
for meeting the monthly needs of the

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beneficiary in terms of keeping the
rented equipment in good working
order. We sought comments on these
proposals.
We proposed (79 FR 40291 through
40292) to phase-in the special payment
rules described in sections VI.B.1 and
VI.B.2 below in a limited number of
areas for a limited number of items
initially to determine whether it is in
the best interest of the Medicare
program and its beneficiaries to phase
these rules in on a larger scale based on
evaluation of the rules’ effects on
Medicare program costs, quality of care,
and access to items and services. In
order to monitor the impact of phasing
in the special payment rules in no more
than 12 CBAs, we proposed that, at a
minimum, we would utilize evaluation
criteria that are consistent with the
current evaluation criteria for
monitoring the impact of the CBP on
utilizers of items and services in CBAs.
To evaluate the quality of care for
beneficiaries affected by the special
payment rules, we proposed that, at a
minimum, we would utilize health
status outcomes based criteria that
would measure specific indicators such
as mortality, morbidity,
hospitalizations, emergency room, and
other applicable indicators unique to
each product category. To evaluate
beneficiary access to necessary items
and services we proposed that, at a
minimum, we would monitor utilization
trends for each product category and
track beneficiary complaints related to
access issues. To evaluate the cost of the
program, we proposed that, at a
minimum, we would analyze the claims
data for allowed services and allowed
cost for each product category and the
associated accessories, supplies and
repair cost in the 12 CBAs and the
comparator CBAs. We proposed to
analyze the effect of the proposed
payment rules on beneficiary cost
sharing.
We proposed that in any competition
where these rules are applied, suppliers
and beneficiaries would receive advance
notice about the rules at the time the
competitions that utilize the rules are
announced. The combined, total
number of CBAs where the proposed
rules in either section 1 or 2 would
apply would be limited to twelve. In
other words, it would not be twelve
CBAs for the rules in section 1 and an
additional twelve CBAs for the rules in
section 2, but 12 CBAs total. In addition,
we proposed that the PCs listed below
would be phased in to include one or
more of the CBAs that would number no
more than twelve total. In addition, if a
determination is made to phase-in these
rules on a larger scale in additional

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areas and for additional items based on
program evaluation results regarding
cost, quality, and access, the process for
phasing in the rules and the criteria for
determining when the rules would be
applied would be addressed in future
notice and comment rulemaking. This
rulemaking would also address how the
methodology for using these SPAs to
adjust fee schedule amounts would
need to be revised.
We proposed that separate payment
for all repairs, maintenance and
servicing, and replacement of supplies
and accessories for beneficiary-owned
DME or enteral nutrition equipment
would cease in the CBAs where the
payment rules proposed under this
section are in effect. We proposed that
if the beneficiary has a medical need for
the equipment, the contract supplier
would be responsible for furnishing new
equipment and servicing that
equipment. This option would ensure
that beneficiaries continue to receive
medically necessary equipment;
including the supplies, accessories,
maintenance and servicing that may be
needed for such equipment. Please note
that this would not apply to items
which are not paid on a bundled,
continuous rental basis. We proposed to
revise the regulations at § 414.409 to
specify that any beneficiary who owns
DME or enteral nutrition equipment and
continues to have a medical need for the
items should these rules take effect in a
CBA where they reside, would have the
option to obtain new equipment, if
medically necessary, and related
servicing from a contract supplier. We
requested comment as to whether a
transitional process should be
considered when claims are selected for
review to determine whether they are
reasonable and necessary and other
safeguards are required to ensure timely
delivery of the replacement DME so that
individuals’ mobility and ability to live
independently is not adversely
impacted by delays. While this could
potentially increase beneficiary cost
sharing, it would eliminate issues
associated with repair of beneficiaryowned equipment.
The Affordable Care Act (Patient
Protection and Affordable Care Act of
2010, Pub. L. 111–148 (March 23, 2010),
Sec. 3021) establishes the Center for
Medicare and Medicaid Innovations
(CMMI) which is authorized to test
models to reduce Medicare and
Medicaid expenditures while preserving
or improving quality for beneficiaries of
those two programs. We solicited
comments on the option for testing the
above special payment rules for DME
and enteral nutrition using the CMMI
demonstration authority in no more

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than 12 CBAs that would allow us to
test and evaluate the special payment
rules on a wider scale and determine
whether the special payment rules
reduce Medicare expenditure while
preserving or improving the quality for
Medicare beneficiaries. Regardless of
the authority used to phase-in or test
these special payment rules, we
proposed to undertake rigorous
evaluation to determine the rules’
effects on program costs, quality, and
access.
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
DMEPOS CBP. Comments related to the
paperwork burden are addressed in the
‘‘Collection of Information
Requirements’’ section in this final rule.
Comments related to the impact analysis
are addressed in the ‘‘Economic
Analyses’’ section in this final rule.
We received 28 public comments on
this proposal from manufacturers,
DMEPOS suppliers, coalitions, and
beneficiaries. The comments and our
responses are set forth below.
1. Payment on a Continuous Rental
Basis for Select Items
Under our general authority under
section 1847(a) and (b) of the Act to
establish payment rules for DME and
enteral nutrition equipment, we
proposed (79 FR 40292) to revise the
regulation at 42 CFR 414.409 to allow
for payment on a continuous monthly
rental basis under future competitions
in no more than 12 CBAs for one or
more of the following categories of items
and services: enteral nutrition, oxygen
and oxygen equipment, standard
manual wheelchairs, standard power
wheelchairs, CPAP and respiratory
assist devices (RADs), and hospital
beds. We proposed that the SPAs
established under the special payment
rules would be based on bids submitted
and accepted for furnishing rented DME
and enteral nutrition on a monthly
basis. We proposed that the SPAs would
represent a monthly payment for each
month that rented DME or enteral
nutrition is medically necessary. The
SPA for the monthly rental of DME
would include payment for each item
and service associated with the rental
equipment including the ongoing
maintenance and servicing of the rental
equipment, and replacement of supplies
and accessories that are necessary for
the effective use of the equipment.
Comment: Several commenters
indicated that CMS does not have the
authority to use bundled payments
under the CBP.

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Response: We do not agree with this
comment. The existing payment rules
under section 1834 of the Act govern
DMEPOS paid under the various fee
schedules and do not directly apply to
the CBP; therefore, CMS is not explicitly
required to apply such rules to the CBP.
Section 1847 of the Act mandates the
implementation of CBPs throughout the
United States for the purpose of
awarding contracts for furnishing
competitively priced items and services
described under section 1847(a)(2) of
the Act. As discussed in the proposed
rule (79 FR 40290), we believe we have
broad authority under section 1847 to
establish payment rules for the CBP. In
particular, consistent with section
1847(a)(6), the general payment rules for
the CBPs are governed by section
1847(b) which mandates payment based
on bids submitted and accepted by
Medicare for the competitively priced
items and services. Therefore, we
believe that we have discretion to
establish rules on whether covered
items are paid for on a purchase or
rental basis as long as total payments to
contract suppliers are expected to be
less than the total amounts that would
otherwise be paid.
Comment: Several commenters felt
that CMS has not demonstrated that a
CBP that includes bundling meets the
criteria for a demonstration under the
CMMI.
Response: We thank the commenters
for their comments. If a decision is
made to use CMMI demonstration
authority to implement and evaluate
payment on a bundled, continuous
rental basis for DME and/or enteral
nutrition, it would only be after CMMI
has determined that a particular
payment model meets the criteria
established for such a demonstration.
Comment: Many commenters
expressed concerns that monthly
bundled payments for DME and enteral
nutrition would reduce quality and
access to care. For example, they believe
that if separate payments are not made
for certain items, such as the ongoing
replacement of CPAP accessories,
contract suppliers will not have an
incentive to replace the items when they
need to be replaced. Other commenters
suggested that specific parameters or
guidelines for replacement of such
items, such as the usual maximum
number of accessories needed as
provided in DME MAC local coverage
policies, be established under the
programs. Commenters were
particularly vocal about the fact that
these rules should not be phased in for
enteral nutrition and that enteral
nutrition is not a suitable product
category for bundled monthly payments.

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Response: We do not agree. The rules
are not being phased-in in limited areas
due to concerns that suppliers
contracted to provide items and services
under these rules will not provide those
items and services. The rules are being
phased in to gauge whether rental caps
are necessary in order to save money for
items used on a longer term basis and
whether the rules can address problems
associated with repair of beneficiaryowned equipment. Suppliers awarded
contracts under the programs must be in
compliance with DMEPOS quality
standards and supplier standards in
order to remain a contract supplier and
in order to continue to be an enrolled
DMEPOS supplier under Medicare. As
always, we will closely monitor contract
suppliers and real time claims data and
health outcomes data to ensure that
suppliers are in compliance with the
standards. Guidelines for the usual
maximum amount of accessories
expected to be medically necessary have
already been established under local
DME MAC policies, and suppliers will
be educated to take the cost of replacing
these accessories into account when
establishing their bids. Suppliers
submitting bids under the program will
be educated that they cannot receive
payment for furnishing DME without
furnishing everything the patient needs
each and every month they continue to
need and use the equipment. As stated
in the proposed rule, the impact of the
rules on program expenditures,
beneficiary cost sharing, access to items
and services, and quality of care will be
closely monitored and compared to
impacts under comparator areas.
However, in light of concerns regarding
the impact of the rules on access to
quality items and services, we are
further limiting the scope of the phase
in to CPAP devices and standard power
wheelchairs, and we are not finalizing
the remaining categories of items at this
time. These two categories of items
generate the greatest amount of separate
payments for accessories and repair
compared to enteral nutrition or any
other category of DME described in
section 1847(a)(2) of the Act.
We will apply a focused and intense
monitoring program to these two
categories of items to evaluate quality of
care and access to items and services,
including specific accessories
prescribed for beneficiaries under the
programs to these two categories. Using
real time claims analysis and health
outcomes data, we will quickly identify
potential problems and take action to
ensure that contract suppliers are
providing access to quality items and
services under the programs. We believe

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these two DME categories will provide
sufficient information in order to
determine the overall effect of the
special payment rules on program and
beneficiary costs, quality, and access to
items and services.
Comment: Some commenters
supported bundling for enteral
nutrition. They noted that the
beneficiary would not be responsible for
maintaining the pump and temporary
cessation of therapy would not occur
while the pump is being repaired if it is
not owned. Other commenters believed
that bundled payment for enteral
nutrition would be beneficial for short
term nutritional therapy because the
patient would no longer own a pump
that is not needed. However, other
commenters argued that CMS should
exclude enteral nutrition from the
bundled initiative because of the wide
variation in cost of the enteral nutrients.
Some commenters recommended
establishing a monthly rental bundled
payment based upon mode of delivery.
Other commenters recommended
establishing a separate bundled
payment amount that would only cover
the supplies and equipment used for
each mode of delivery (syringe, gravity
and pump) and would exclude enteral
formulas from the bundle because of
wide variation in cost and treatment.
Response: We thank the commenters
for their support and input. After careful
consideration of the comments received
on this topic, we will not be finalizing
the proposal to phase in bundled,
continuous monthly rental payment for
enteral nutrition at this time.
Comment: One commenter made
suggestions for calculating the bundled
payment rates for oxygen and oxygen
equipment.
Response: We thank the commenter
for their input. We will not be finalizing
the proposal to phase in bundled,
continuous monthly rental payment for
oxygen at this time.
Comment: Many commenters opposed
bundling monthly payment for all
standard manual wheelchair bases with
accessories or all standard power
wheelchair bases with accessories or all
standard and power wheelchair bases
with accessories because they feel the
different types are wheelchair bases are
unique and should not be bundled
together. Some recommended a bundled
bid approach for standard manual or
standard power wheelchairs and only
those accessory items that are tied to the
same medical necessity as the
wheelchair. Some suggested bundling
only 3 codes or 6 accessory codes with
each base code for wheelchairs based on
utilization in order to simplify billing.
Some suggested excluding repair and

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replacement items from the bundle.
Commenters believed that bundling of
multiple HCPCS codes into a single
code for payment will further decrease
access and quality of products and
services and is complex. The
commenters believes that a single bid
code cannot accommodate the
characteristics of the various
technologies and varying manufacturing
costs for standard manual or power
wheelchairs. The commenters believe
that there will be no mechanism to track
utilization to ensure the beneficiaries
still have access to the range of
medically necessary technology. If base
codes are combined then distinguishing
coverage policies that reflect the
medical and functional needs of
beneficiaries cannot be developed. It
provides a disincentive to suppliers to
avoid high risk or complex beneficiaries
and decreases beneficiary choices.
Response: We will not be finalizing
the proposal to phase in competitions
for bundled, continuous monthly rental
payment for standard manual
wheelchairs at this time. The specific
power wheelchair items and HCPCS
codes included in competitions where
special payment rules are applied will
be announced to suppliers and
beneficiaries in advance of the
competitions with an explanation of
why wheelchair bases are bundled
together to the extent that they are
under the competition.
Comment: Many commenters were
opposed to applying bundled monthly
continuous rental payment rules to
CPAP devices and RADs. Some
commenters recommended enforcing
the current replacement schedule for
CPAP and RAD accessories as outlined
in DME MAC local coverage policies
under the CBPs that utilize the special
payment rules. Other commenters
stressed that the CPAP supply
replacement schedules should be
factored into the development of any
bundled payment data and should be
used to determine bundles and their
respective amounts. In addition,
commenters were concerned that
bundling of CPAP removes all ability of
CMS and providers to ensure that
beneficiaries receive medically
necessary equipment because they will
not see claims for the items to know
how often they are being replaced. For
CPAP, some commenters urged CMS to
craft policies integral to bundling such
as a minimum service/contract level
requirement for the provider to maintain
with the beneficiary. Some commenters
suggested that we require suppliers to
check in on supply requirements with
the beneficiaries.

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Response: After consideration of the
public comments we received, we will
not be finalizing the proposal to phase
in competitions for bundled, continuous
monthly rental payment for respiratory
assist devices. But we will be finalizing
the proposal to phase in competitions
for bundled, continuous monthly rental
payment for CPAP devices. We note that
Medicare paid on a bundled, continuous
monthly rental basis for CPAP devices
under the fee schedules from 1989 thru
1993 and did not encounter any
problems related to access to necessary
items and services during this time. The
tables in the DME MAC local coverage
policies listing the usual maximum
amount of CPAP accessories expected to
be reasonable and necessary are not
tables that indicate how often these
items need to be replaced. They
represent how often claims for the
accessories would be paid without the
need to have additional medical
documentation in the patient’s record.
They can be used as guidelines for the
usual maximum amount that are
typically needed, but under a bundled,
continuous rental payment method for
CPAP devices, the supplier would be
expected to replace the accessories as
often as necessary for the effective use
of the CPAP device. If the usual number
of masks needed is once every 6
months, the masks may need to be
replaced less often in the case of some
beneficiaries and more often than once
every 6 months in the case of other
beneficiaries. In any case where a
replacement of an accessory is needed
during a month, the contract supplier
would be responsible for furnishing the
necessary accessory, just as they would
be responsible for repairing rented
equipment whenever necessary. We will
closely monitor contract suppliers to
ensure that they are doing so.
Comment: Two commenters opposed
our proposal that the bids submitted for
furnishing CPAP devices on a bundled,
continuous monthly rental basis cannot
exceed the 1993 fee schedule amounts
for these items, increased by the covered
item update factors provided for these
items in section 1834(a)(14) of the Act.
The commenters contended that
equipment features developed since the
establishment of the base year fees, such
as a heated humidifier, would not be
encompassed in the bid limits and
instead suggested using a more recent
base period for these items. Other
commenters noted that the proposal to
set bid limits for CPAP to 1993 fee
schedule is inconsistent with the
proposed methodology for the other
bundled product categories which

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would use recent expenditures per
beneficiary.
Response: We do not agree with these
comments. Historical bundled, monthly
rental fee schedule amounts are
available for CPAP devices and reflect a
bundled monthly rental payment that
was previously mandated and
established for these items under the
Medicare program. We believe that
separate payment for CPAP accessories
has led to overutilization of the
accessories based on complaints
received from beneficiaries over the
years about suppliers shipping
unnecessary quantities of accessories.
Therefore, we believe that the average
payment per beneficiary for equipment
and accessories could result in a bid
limit that is artificially high when
compared to historic Medicare bundled
monthly rental fees for CPAP devices
that were in place for 5 years and did
not result in any problems with access
to necessary items and services. The
1993 fee schedule amounts for CPAP
devices are based on historic reasonable
charges that are representative of
payment made to a supplier for
furnishing these items on a bundled,
continuous rental basis over a period of
5 years. The application of the covered
item updates for DME in general, in
section 1834(a)(14) of the Act, account
for changes in the costs of furnishing
covered items and services. Historic
continuous bundled fee schedule
amounts are not available to use to set
the bid limit for the standard power
wheelchair bundled category, therefore,
current expenditure data would be used
to set bid limits for the standard power
wheelchair product category.
Comment: Many commenters believed
that continuous monthly rental
payments for DME would increase the
financial burden of the beneficiaries
because instead of being limited to
paying coinsurance for no more than 13
months of continuous use, they would
be required to make coinsurance
payments for as long as they use the
equipment.
Response: Our analysis strongly
suggests that the benefits associated
with paying on a continuous monthly
rental basis outweigh the potential of
increased copayments for the
beneficiary. For items that are paid on
a capped rental basis where title to the
item transfers to the beneficiary after
conclusion of the 13-month rental
period, beneficiaries are responsible for
maintaining and repairing the item after
title transfer. Under the special payment
rules that provide for payment on a
continuous rental basis, beneficiaries
will no longer be responsible for repair
and maintenance of equipment because

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they will not own the equipment. The
supplier will retain the title to the
equipment and will be responsible for
repair and maintenance. Although
beneficiaries who use a CPAP device or
power wheelchair for more than 13
months of continuous use will pay
coinsurance payments for additional
rental months beyond 13 months of
continuous use, the monthly payments
include payment for ongoing costs such
as replacement of accessories and repair
and maintenance of equipment, which
are also ongoing costs that exist under
the current capped rental payment
methodology. The cost of furnishing
items and services is the same
regardless of whether payment is made
on a capped rental basis for equipment
with separate payment for accessories,
maintenance and servicing or on a
bundled, continuous rental basis.
Most importantly, the statute
prohibits the awarding of contracts
under a CBP if the total payments to
contract suppliers under the CBP are
expected to be more than what would
otherwise be paid and we would
confirm that this requirement is met
prior to implementing prices established
under these special payment rules.
Comment: Some commenters were
concerned that beneficiaries would not
have the choice of opting out of the
program although they would be
notified about the alternative payment
initiative.
Response: We proposed to phase-in
the special payment rules because we
believe they will have a positive impact
on beneficiary access to quality
equipment that continues to remain in
good working order, while lowering the
administrative costs of the program, and
eliminating the need for beneficiaries to
locate suppliers willing to repair
equipment they own. In order to receive
payment for equipment subject to this
program, beneficiaries do not have the
option to opt out. The programs will be
closely monitored.
Comment: Most commenters were
supportive of phasing in or testing the
continuous rental bundled payment
methodology on select products in
limited areas. Some stakeholders
suggested that bundled payment should
be pilot tested first with a small subset
of items and exclude complex items.
Many commenters agreed that bundling
will simplify complex administration
procedures.
Response: We agree with commenters
that a phase-in limited to only a few
select categories would be the best way
to evaluate the impact of the special
payment rules at this time. As such, we
are not finalizing bundled, continuous
payment rules for the following

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categories of items: Enteral nutrition,
oxygen and oxygen equipment, standard
manual wheelchairs, respiratory assist
devices and hospital beds. The special
payment rules would only be phased in
initially for the following categories of
DME items: CPAP devices and standard
power wheelchairs. We selected the
category of CPAP devices because we
believe the cost of paying separately for
the expensive accessories used with
these devices exceeds the amount of
savings achieved from capping the
rental payments for the equipment. We
selected the category of power
wheelchairs because we believe that
payment on a separate, piecemeal basis
for hundreds of various power
wheelchair options and accessories is
unnecessary and overly complex. In
addition, power wheelchairs are the
most frequently repaired DME item and
we believe that phasing in payment on
a continuous monthly rental basis
would ensure access to power
wheelchairs that are in good working
order. As discussed in our proposal (79
FR 40291), the CBPs would be phased
in as early as 2017, and would be
closely monitored. Subsequent
rulemaking would be necessary to adopt
special payment rules for other items or
in more than 12 CBAs.
Comment: Some commenters
recommended a bundled bid approach
comprised of products associated with a
single medical necessity or single
coverage and payment policy. Some
suggested accessories that are included
in a bundle with the base equipment
must be tied to the same medical
necessity as the base equipment. One
commenter suggested that beneficiaries
meeting medical necessity for a support
surface may also meet the medical
necessity for a hospital bed; however,
support surfaces and hospital beds
should never be included in the same
bundle.
Response: These are issues that would
be addressed in Medicare program
guidance.
Comment: Some commenters were
concerned that CMS has not provided
information about how the Agency will
administer a bundled bid program so
the lack of information violates the
Administrative Procedure Act (APA).
The commenter’s claim the proposed
rule only gives general outline of the
bundling program but does not explain
what makes up a bundle, how bids will
be evaluated or pivotal bids will be
selected to establish payment amounts.
These commenters stated that CMS
must publish a new proposed rule
soliciting comments on the elements of
the bidding program.

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Response: We disagree. We have
issued rules concerning the general
dictates of the CBP and this competition
would be consistent with those rules.
We would evaluate suppliers and bids
consistent with those provisions except
that the bids and the SPAs established
based on those bids would be for the
monthly rental of DME and all items
and services necessary for the effective
use of the DME (that is, all related
supplies, accessories, maintenance and
servicing, etc.). Bids would not be
submitted for purchase of any item or
for separate payment for accessories
used with base DME items. Under the
existing CBP, CMS specifies certain
parameters, but then through the
Request for Bids (RFB) and competitive
bidding process, further addresses
certain details. Similar to other CBPs
that do not employ the special payment
rules, we intend to conduct extensive
education outreach programs prior to
implementing competitions that apply
the bundled continuous rental
methodology so that suppliers are
educated about the rules and
understand what is required of the
bidding suppliers. This includes
advance notice of bidding and
comparator areas and defining the
bundled categories. We believe that our
proposed rules were sufficiently
detailed to enable the public to provide
meaningful comments on them.
Comment: Many commenters urged
CMS to share the bundled bidding
methodology with stakeholders and
establish quality metrics before
beginning the program. Some
commenters suggested that to facilitate
accurate bidding CMS must give
suppliers per patient utilization and
expenditures data by HCPCS codes.
Some commenters argued that CMS
states in the proposed rule that it will
monitor and evaluate the quality and
success of bundled payments but no
metrics have been determined or shared
by CMS. Some suggested that submitted
claims data versus paid claims data
must be used. Those commenters stated
that bid limits must take into account all
repairs, accessories, and rental
payments divided by number of patients
to create a monthly per patient
allowable. Commenters stated that bids
must include only patients with active
rental periods in calculating the bid
limit. Commenters also stated that CMS
must identify the data parameters from
which it will take data. Many
commenters recommended that CMS
establish quality metrics before
implementing the bundled payment.
Some commenters recommended
providing safeguards for Medicare

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beneficiaries, setting proper
expectations with providers and
evaluating the feasibility of the bundled
payment methodology by creating
methods to identify beneficiaries not
identified in claims data, establishing
minimum standards of quality and
quantity of services, tracking products
provided to the beneficiaries furnished
with equipment paid on a bundled
continuous rental basis as compared to
all other Medicare beneficiaries to
ensure quality care is being provided
and beneficiaries have access to most
innovative products. Commenters
suggested we conduct a long term
longitudinal study to determine
comorbidity costs and access to care
with bundled payments.
Response: We thank the commenters
for their input. Consistent with the
current CBP monitoring and oversight,
CMS will employ a wide range of
monitoring techniques before beginning
any competition that applies the special
payment rules. We will provide advance
notice of the areas and comparator
areas, defining bundles, verifying bona
fide bids, and setting up monitoring
techniques before beginning the
competition. As we proposed in the
proposed rule (79 FR 40291), in any
competition where these final special
payment rules are applied, we will
provide advance notice of the rules at
the time the competitions that utilize
the rules are announced.
In order to monitor the impact of
phasing in the special payment rules in
the no more than 12 CBAs we are
finalizing, we will utilize evaluation
criteria that are consistent with the
current evaluation criteria for
monitoring the impact of the CBP on
utilizers of items and services in CBAs.
To evaluate the quality of care for
beneficiaries affected by the special
payment rules, we will at a minimum,
utilize health status outcomes based
criteria that would measure specific
indicators such as mortality, morbidity,
hospitalizations, emergency room and
other applicable indicators unique to
each product category. To evaluate
beneficiary access to necessary items
and services we will monitor utilization
trends for each product category and
track beneficiary complaints related to
access issues. To evaluate the cost of the
program, we intend to analyze the
claims data for allowed services and
allowed cost for each product category
and the associated accessories, supplies
and repair cost in the 12 CBAs and the
comparator CBAs. We will also analyze
the effect of the proposed payment rules
on beneficiary cost by analyzing number
of monthly rental payments made
compared to reductions in coinsurance

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payments. Medicare has established
quality standards, supplier standards,
local medical review policies and other
requirements that currently address
furnishing medically necessary items
and services, and CMS monitors
whether these requirements have been
met by suppliers, as applicable.
Submitted charge data is not used to
establish Medicare allowed payment
amounts and therefore would not be a
good bid limit or a limit used to ensure
that payments under the programs are
less than what would otherwise be paid.
Comment: Some commenters argued
that CMS did not provide information
on how bids will be evaluated, what
constitutes a bundle or how the pivotal
bid will be selected to establish
payment amounts. Commenters also
indicated that CMS did not identify
CBAs and comparator areas.
Commenters also stated that there is no
baseline for what constitutes a bundle in
a product category so suppliers will not
know what to bid. Commenters raised
concerns that CMS has no way to
compare bids because there is no
consensus on what it takes to service
patients who receive the bundle.
Without an assessment tool and a
baseline tool, those commenters believe
that CMS has no way of comparing bids,
or determining pivotal bids or verifying
bona fide bids because there is no
consensus on what is in the bundle or
the intensity of the services patients
who receive the bundle need. It would
be difficult for suppliers to determine
the appropriate amount to bid under a
bundled payment method because there
are many factors that would influence
the cost associated with supplies,
maintenance and repairs. Some
expressed concerns about supplier
challenges in determining the
appropriate amount to bid because of
factors such as case mix, variable cost of
different types of base equipment and
accessories and the variable cost
associated with supplies, maintenance,
repairs and frequency of replacement
parts. Suppliers will have to guess the
type of equipment and frequency of
services different patients may need.
Under a bundled bid, commenters were
concerned that CMS will not be able to
track utilization patterns that could be
harmful to the beneficiaries.
Response: We thank the commenters
for their input. Although specific CBAs
were not identified in the proposed rule,
we will be identifying the areas and
comparator areas, defining the bundles,
and setting up monitoring techniques
before beginning the competition as we
have done during the previous rounds.
As we proposed in the proposed rule
(79 FR 40291), in any competition

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where these final special payment rules
are applied, we will provide advance
notice of implementation at the time the
competitions that utilize the rules are
announced. This notice could take the
form of the competitive bidding request
for bids or a CMS web posting or
programs instructions or listserv
messages and would define the related
products and services included in a
category’s single bundled grouping. The
process for setting the SPA and
determining the pivotal bid in
competitions where the special payment
rules are applied would follow the
existing process that is in place for a
product category and outlined in
sections 42 CFR 414.414 and 414.416 of
our regulations.
Using the CPAP and standard power
wheelchair bid limits, which we will
announce in advance of the
competitions and calculate, consistent
with what we proposed in the proposed
rule (79 FR 40291) and are finalized in
this rule, as well as past CBA utilization
data for these bundled items, we believe
bidding suppliers can use their
experience in furnishing these items to
develop a monthly bundled rental bid
that would be reflective of their costs
and profit for all items identified in the
bundle. In competitions where the
single bundled bid rules apply, CMS
would continue to employ the wide
range of resources used to monitor the
CBP including use of real-time claims
analysis to monitor the health outcomes
status of groups in CBAs. Suppliers are
responsible for providing all items and
services to beneficiaries in accordance
with the orders of their physicians. This
responsibility does not change
depending on whether one payment is
made for the monthly rental of DME and
all related supplies, accessories, and
services or whether piece meal
payments are made for each individual
item or service. For example, a supplier
furnishes a CPAP device and accessories
in accordance with the physician’s
order and replaces the accessories and
services the rented equipment for up to
13 months of continuous use for
individual beneficiaries.
As stated in the proposed rule, the
impact of the rules on program
expenditures, beneficiary cost sharing,
access to items and services, and quality
of care will be closely monitored and
compared to impacts under comparator
areas. To evaluate the quality of care for
beneficiaries affected by the special
payment rules, we will at a minimum,
utilize health status outcomes based
criteria that would measure specific
indicators such as mortality, morbidity,
hospitalizations, emergency room and
other applicable indicators unique to

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each product category. To evaluate
beneficiary access to necessary items
and services we will monitor utilization
trends for each product category and
track beneficiary complaints related to
access issues. To evaluate the cost of the
program, we intend to analyze the
claims data for allowed services and
allowed cost for each product category
and the associated accessories, supplies
and repair cost in the 12 CBAs and the
comparator CBAs. We will also analyze
the effect of the proposed payment rules
on beneficiary cost by analyzing number
of monthly rental payments made
compared to reductions in coinsurance
payments.
Comment: Some commenters
contended that payment on a
continuous rental basis for select
bundled items instead of on a capped
rental basis would result in additional
administrative burden for suppliers
because they would have to submit
more than 13 claims for rental of
equipment to a beneficiary. Commenters
reacted unfavorably to repeated billings
for monthly rental claims for as long as
the item is medically necessary.
Response: While suppliers may need
to submit additional claims for the
monthly rental of CPAP devices and
power wheelchairs, they would no
longer have to submit separate claims
for accessories and repairs and would
no longer have to keep track of periods
of continuous use or when a rental cap
is approaching. In addition, suppliers
would no longer have to transfer title to
equipment after 13 months of
continuous use, and would therefore
need to replace items in their inventory
less often.
Comment: Numerous commenters
requested a delay in the implementation
of payment on a continuous rental basis
for select bundled items. One
commenter stated that more time is
needed to educate practitioners,
suppliers, and patients along with
receipt of adequate program guidance.
Several commenters stated CMS should
convene advisory groups to study
bundling payment methods and bidding
factors. Another comment from a
manufacturer’s association requested
CMS establish an additional HCPCS
Advisory Panel to review and revise
current HCPCS codes for improved
bundling.
Response: The final rule does not set
forth an exact timeframe for when the
special payment rules will be
implemented. CMS will be providing
additional guidance and education, if
needed.
Comment: Various commenters
expressed concern that our proposal did
not include a listing of existing HCPCS

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base codes along with HCPCS accessory
codes that may comprise a bundled item
code. As a result, several commenters
submitted recommended coding
bundles of existing HCPCS codes for
enteral nutrition, oxygen and oxygen
equipment, standard manual
wheelchairs, power wheelchairs, CPAP,
RADs, and hospital beds.
Response: CMS will follow the
HCPCS coding process. We appreciate
these comments and thank the
commenters for their helpful
suggestions for coding bundles. When
further steps for implementing a
continuous rental basis for select
bundled items are developed, we will
review the submitted information to
ensure compliance with the Medicare
coverage and coding guidelines. As
noted in an earlier response, specific
information on the items that comprise
a bundled bid for the CPAP category or
standard power wheelchairs category
will be announced well in advance of a
competition that would use the
continuous rental payment
methodology.
Comment: Commenters stated that the
proposed change in payment rules will
be adopted by payers other than
Medicare and therefore should not be
adopted.
Response: Such issues are beyond the
scope of this rulemaking and we have
not taken such things into consideration
when finalizing our policies for the
Medicare program. We appreciate that
changes in Medicare policy may affect
other insurers who choose to base their
payments on Medicare payment rules;
however, it is our obligation to set our
policies based upon the needs of
Medicare and its beneficiaries.
Comment: One commenter asked for
clarification on how CMS will establish
coverage criteria for a bundle of HCPCS
codes consisting of a base and all
options and accessories including what
data will be used to establish the
coverage criteria that will identify
whether or not a beneficiary qualifies
for a bundle of equipment, services, and
supplies.
Response: These comments are
outside the scope of the proposed rule,
and therefore are not addressed in this
final rule. The process for reviewing
coverage for an item or bundle of items
is not addressed in this payment rule.
We received many additional
comments that were out of the scope of
this rule.
In this final rule we are finalizing our
proposal for only two items, CPAP
devices and standard power
wheelchairs. This rule finalizes the
phase-in of special payment rules for
CPAP and power wheelchairs as noted

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previously in the proposed rule (79 FR
40293) under the DMEPOS CBP in no
more than 12 CBAs at 42 CFR 414.408,
414.409, and 414.412.
Comment: Some commenters noted
that making payments for DME on a
bundled, continuous rental basis will
not eliminate repair issues and will
increase financial burden on the
beneficiaries. Some commenters noted
that the ability for a beneficiary to
switch to another provider should he/
she feel the service is not appropriate
would drive competition for better care
but bundling would not eliminate the
need for patients to requalify for
equipment when they change suppliers.
Beneficiaries would still need to reestablish medical necessity when
changing suppliers. Some suggested
allowing beneficiaries to switch
suppliers without restarting
documentation. Some commented that
mandating suppliers repair will not
solve beneficiary’s inability to obtain
repairs for beneficiary-owned
equipment.
Response: Contract suppliers paid for
furnishing DME paid for on a bundled,
continuous rental basis would be
responsible for all necessary repairs,
maintenance and servicing needed to
keep the rental equipment in good
working order or for replacing rental
equipment that no longer functions and
cannot be repaired. The process for
documenting medical necessity for
items would be addressed outside the
rulemaking process.
We proposed to revise the regulation
at 42 CFR 414.409 to the include
supplier transition rules for enteral
nutrition, oxygen and oxygen
equipment, standard manual
wheelchairs, standard power
wheelchairs, CPAP and respiratory
assist devices, and hospital beds that
would be paid in accordance with the
rules proposed in this section. We also
proposed to revise the regulation at 42
CFR 414.408 to provide a cross
reference to proposed § 414.409. We
proposed that changes in suppliers from
a non-contract supplier to a contract
supplier at the beginning of the CBP
where the proposed payment rules
would apply would simply result in the
contract supplier taking on
responsibility for meeting all of the
beneficiary’s monthly needs while
receiving payment for each month of
service. We developed these proposed
rules based on that fact that for capped
rented DME and oxygen and oxygen
equipment, since rental caps would not
apply under the proposed rules, there
would be no need to restart or extend
capped rental periods when a
beneficiary transitions from a non-

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contract supplier to a contract supplier.
We proposed that supply arrangements
for oxygen and oxygen equipment, and
rental agreements for standard manual
wheelchairs, standard power
wheelchairs, CPAP devices, respiratory
assist devices, and hospital beds entered
into before the start of a CBP and
application of the payment rules
proposed in this section would be
allowed to continue so long as the
supplier agrees to furnish all necessary
supplies and accessories used in
conjunction with the rented equipment
and needed on a monthly basis. We
proposed that non-contract suppliers in
these cases would have the option to
continue rental agreements; however,
we proposed that as part of the process
of allowing the rental agreements to
continue, the grandfathered supplier
would be paid based on existing rules
at § 414.408. We solicited comments on
this proposed process. We did not
receive any specific comment for this
section and therefore, for the reasons we
discussed previously, we are finalizing
the proposed transition rules. This rule
finalizes the transition rules as noted
previously in the proposed rule (79 FR
40293, 40294) under the DMEPOS CBP
at 42 CFR 414.409.
2. Responsibility for Repair of
Beneficiary-Owned Power Wheelchairs
Furnished Under CBPs
We proposed (79 FR 40294) to revise
the regulation at 42 CFR 414.409 to add
a new payment rule that would apply to
future competitions for standard power
wheelchairs in no more than 12 CBAs
where payment is made on a capped
rental basis. In these CBPs, we proposed
that contract suppliers for power
wheelchairs would be responsible for all
necessary repairs and maintenance and
servicing of any power wheelchairs they
furnish during the contract period under
the CBP, including repairs and
maintenance and servicing of power
wheelchairs after they have transferred
title to the equipment to the beneficiary.
We proposed that this responsibility
would end when the reasonable useful
lifetime established for the power
wheelchair expires, medical necessity
for the power wheelchair ends, the
contract period ends, or the beneficiary
relocates outside the CBA. We proposed
that the contract supplier would not
receive separate payment for these
services and would factor the costs of
these services into their bids. We
proposed that the contract supplier
would not be responsible for repairing
power wheelchairs they did not furnish.
We proposed that services to repair
beneficiary-owned equipment furnished
prior to the start of the contract period

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would be paid in accordance with the
standard payment rules at § 414.210(e).
We sought comments on these
proposals. The comments and our
responses are set forth below.
Comment: Some commenters argued
that adding a requirement specifying
that contract suppliers are responsible
for repairing power wheelchairs they
furnish will not eliminate problems
beneficiaries are experiencing related to
obtaining repairs for beneficiary-owned
equipment.
Response: We agree that this
requirement would not address
situations where a beneficiary owns a
power wheelchair in need of repairs that
they received prior to the start of the
CBP or prior to moving into the CBA
where the proposed rule would be in
effect. It would also not address
situations where a beneficiary owns a
power wheelchair in need of repairs that
they received prior to enrolling in
Medicare part B. As stated in our
proposal (79 FR 40294) we proposed
that a contract supplier would not be
responsible for repairing power
wheelchairs they did not furnish. As a
result, we proposed that services to
repair beneficiary-owned equipment
furnished prior to the start of the
contract period would be paid in
accordance with the standard payment
rules at § 414.210(e), which allows any
Medicare enrolled DME supplier to
perform this service and receive
payment.
We also proposed that in the event
that a beneficiary relocates from a CBA
where the rules proposed in this section
apply to an area where rental cap rules
apply, that a new period of continuous
use would begin for the capped rental
item, enteral nutrition equipment, or
oxygen equipment as long as the item is
determined to be medically necessary.
We believe these rules are necessary to
safeguard beneficiary access to covered
items and services and plan to closely
monitor the impact these rules have on
beneficiary cost sharing before phasing
in these rules in more than a limited
number of CBAs. We sought comments
on these proposals, did not receive any
specific comment for these proposals,
and are therefore, for the reasons we
discussed previously, we are finalizing
these proposals. This rule finalizes the
sections Beneficiary-Owned Equipment
and Responsibility for Repair of
Beneficiary-Owned Power Wheelchairs
furnished under CBPs as noted
previously in the proposed rule (79 FR
40294) under the DMEPOS CBP at 42
CFR 414.409
We proposed that the CBAs where the
proposed rules in (79 FR 40294) above
would be applied would be for MSAs

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with a general population of at least
250,000 and a Medicare Part B
enrollment population of at least 20,000
that are not already included in Round
1 or 2. Based on 2012 population
estimates from the Census Bureau and
2011 Medicare enrollment data, there
are approximately 80 MSAs that would
satisfy this criteria. Selecting MSAs not
already included in Round 1 or 2 would
allow competitions and rules associated
with these competitions to begin after
the final rule would take effect in areas
that are comparable to existing CBAs.
We proposed that the boundaries of the
CBAs would be established in
accordance with the rules set forth at
§§ 414.406 and 414.410. We proposed
that additional CBPs for the items
identified in sections 1 and 2 above be
established in ‘‘comparator’’ CBAs
concurrent with CBPs where the
proposed rules would be applied.
Payment for items and services in the
comparator CBAs would be made in
accordance with the existing payment
rules in § 414.408. We proposed that
these additional comparator CBAs and
CBPs be established to facilitate our
analysis of the effect of the payment
rules proposed in sections 1 and 2 above
compared to the effect of the existing
payment rules in § 414.408. We
proposed that for each CBP where either
the rules in section 1 or 2 above are
implemented, a comparator CBA and
CBP would be established. We proposed
that the comparator CBAs be selected so
that they are located in the same state
as the CBA where the special payment
rules would apply and are similar to the
CBAs in which the proposed payment
rules would be implemented based on a
combination of factors that could
include geographic location (region of
the country), general population,
beneficiary population, patient mix, and
utilization of items. We proposed to
establish the comparator CBAs and
CBPs to enable us to review the impact
of the proposed payment rules on
expenditures, quality, and access to
items and services in order to determine
whether to pursue future rulemaking to
expand the proposed payment rules to
additional areas and or items. We
sought comments on this proposal, did
not receive any specific comment for
this proposal, and are therefore
finalizing this proposal.
We proposed that payment to a
supplier that elects to be a
grandfathered supplier of DME
furnished in CBPs where these special
payment rules apply is made in
accordance with § 414.408(a)(1). We
sought comments on this proposal, did
not receive any specific comment for

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66241

this proposal, and are therefore
finalizing this proposal.
We are finalizing a change to add
special payment rules at § 414.409 that
will be phased in. In no more than 12
CBAs, payment is made on a bundled,
continuous monthly rental basis for
standard power wheelchairs and CPAP
devices. In addition, in no more than 12
CBAs, payment for power wheelchairs
is made on a continuous rental basis, for
power wheelchairs furnished in
conjunction with competitions that
begin after January 1, 2015, contract
suppliers that furnish power
wheelchairs under contracts awarded
based on these competitions shall
continue to repair power wheelchairs
they furnish following transfer of title to
the equipment to the beneficiary. The
responsibility of the contract supplier to
repair, maintain and service beneficiaryowned power wheelchairs does not
apply to power wheelchairs that the
contract supplier did not furnish to the
beneficiary. For power wheelchairs that
the contract supplier furnishes during
the contract period, the responsibility of
the contract supplier to repair, maintain
and service the power wheelchair once
it is owned by the beneficiary continues
until the reasonable useful lifetime of
the equipment expires, coverage for the
power wheelchair ends, or the
beneficiary relocates outside the CBA
where the item was furnished. In
accordance with § 414.408(c), the
contract supplier may not charge the
beneficiary or the program for any
necessary repairs or maintenance and
servicing of a beneficiary-owned power
wheelchair it furnished during the
contract period.
VII. Scope of Hearing Aid Coverage
Exclusion
A. Background
Section 1862(a)(7) of the Act states
notwithstanding any other provision of
title XVIII, no payment may be made
under part A or part B for any expenses
incurred for items or services ‘‘where
such expenses are for . . . hearing aids
or examinations therefor. . . .’’ This
policy is codified in the regulation at 42
CFR 411.15(d), which states that hearing
aids or examination for the purpose of
prescribing, fitting, or changing hearing
aids are excluded from Medicare
coverage. Historically, CMS has
periodically addressed the scope of the
Medicare hearing aid coverage
exclusion through program instructions
and national coverage policies or
determinations. We briefly discuss the
relevant changes that have occurred
over time with regard to Medicare

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coverage and payment of hearing
devices.
Cochlear implants (CIs) were the first
device covered for Medicare payment
for adult beneficiaries in October 1986,
when no other hearing device was being
covered under Medicare, and such
coverage was supported by the Office of
Health Technology Assessment’s
‘‘Public Health Service Assessment of
Cochlear Implant Devices for the
Profoundly Hearing Impaired’’, dated
June 30, 1986 found at https://
archive.org/stream/
cochlearimplantd00feig/
cochlearimplantd00feig_djvu.txt.
Medicare coverage was restricted to CIs
that treated patients with post lingual,
profound, bilateral, sensorineural
deafness who are stimulable and who
lack the unaided residual auditory
ability to detect sound.
Effective January 1, 2003, we clarified
that the hearing aid exclusion broadly
applied to all hearing aids that utilized
functional air and/or bone conduction
pathways to facilitate hearing (see
section 15903, Hearing Aid Exclusion,
Medicare Carriers Manual, Part 3—
Claims Process (HCFA-Pub. 14–3),
which was later moved to section 100,
Hearing Aids and Cochlear Implants, of
Chapter 16, of the Medicare Benefit
Policy Manual, CMS-Pub. 100–02). Any
device that does not produce at its
output an electrical signal that directly
stimulates the auditory nerve is a
hearing aid for purposes of coverage
under Medicare. Devices that produce
air conduction sound into the external
auditory canal, devices that produce
sound by mechanically vibrating bone,
or devices that produce sound by
vibrating the cochlear fluid through
stimulation of the round window are
considered hearing aids and excluded
from Medicare coverage.
Effective April 4, 2005, Medicare’s
national coverage policy for CIs was
modified through the NCD process (see
section 65–14 of the Medicare Coverage
Issues Manual (HCFA-Pub. 6), which
was later moved to section 50.3,
Cochlear Implantation, of Chapter 1,
Part 1 of the Medicare National
Coverage Determinations Manual (CMSPub. 100–03)). Our findings under the
NCD, in part, state that ‘‘CMS has
determined that cochlear implants fall
within the benefit category of prosthetic
devices under section 1861(s)(8) of the
Social Security Act.’’ Medicare is a
defined benefit program. An item or
device must not be statutorily excluded
and fall within a benefit category as a
prerequisite to Medicare coverage.
Additional changes, regarding coverage
criteria, have been made to section 50.3
over time, however, the NCD decision

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regarding benefit category and Medicare
coverage for cochlear implantation has
remained consistent. The NCD states
that a cochlear implant device is an
electronic instrument, part of which is
implanted surgically to stimulate
auditory nerve fibers, and part of which
is worn or carried by the individual to
capture, analyze, and code sound.
Cochlear implant devices are available
in single-channel and multi-channel
models. The purpose of implanting the
device is to provide awareness and
identification of sounds and to facilitate
communication for persons who are
moderately to profoundly hearing
impaired.
The regulation at 42 CFR 419.66 was
revised to add new requirements,
effective January 1, 2006, for transitional
pass-through payments for medical
devices. The auditory osseointegrated
implant (AOI) device, referred to as a
bone anchored hearing aid (BAHA), was
determined to be a new device category
according to the new requirements for
transitional pass-through payment.
Medicare coverage was also expanded to
cover AOI and auditory brainstem
devices payable as prosthetic devices.
Currently, section 100 of Chapter 16 of
the Medicare Benefit Policy Manual
(CMS Pub. 100–02) reads as follows:
Hearing aids are amplifying devices that
compensate for impaired hearing. Hearing
aids include air conduction devices that
provide acoustic energy to the cochlea via
stimulation of the tympanic membrane with
amplified sound. They also include bone
conduction devices that provide mechanical
energy to the cochlea via stimulation of the
scalp with amplified mechanical vibration or
by direct contact with the tympanic
membrane or middle ear ossicles.
Certain devices that produce perception of
sound by replacing the function of the
middle ear, cochlea, or auditory nerve are
payable by Medicare as prosthetic devices.
These devices are indicated only when
hearing aids are medically inappropriate or
cannot be utilized due to congenital
malformations, chronic disease, severe
sensorineural hearing loss or surgery.
The following are considered prosthetic
devices:
• Cochlear implants and auditory
brainstem implants, that is, devices that
replace the function of cochlear structures or
auditory nerve and provide electrical energy
to auditory nerve fibers and other neural
tissue via implanted electrode arrays.
• Osseointegrated implants, that is,
devices implanted in the skull that replace
the function of the middle ear and provide
mechanical energy to the cochlea via a
mechanical transducer.

B. Current Issues
We received several benefit category
determination requests in recent years
for the consideration of non-implanted,

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bone conduction hearing aid devices for
single-sided deafness (SSD), as
prosthetic devices under the Medicare
benefit. We have received similar
requests for several other types of
implanted and non-implanted devices
as well. In response to these requests,
we have re-examined the scope of the
statutory hearing aid exclusion.
C. Proposed Provisions
The proposed rule (79 FR 40297)
stated that after further considering the
statutory Medicare hearing aid
exclusion under section 1862(a)(7) of
the Act, and re-examining the different
types of non-implanted and implanted
devices, we proposed to interpret the
term ‘‘hearing aid’’ to include all types
of air or bone conduction hearing aid
devices, whether external, internal, or
implanted, including, but not limited to,
middle ear implants, AOI devices,
dental anchored bone conduction
devices, and other types of external or
non-invasive devices that mechanically
stimulate the cochlea.
We believed that the hearing aid
exclusion did not apply to brainstem
implants and CIs as discussed in the
proposed rule (79 FR 40297). Therefore,
we did not propose any changes to our
current policy about brainstem implants
and CIs and how such implants fall
outside of the hearing aid statutory
exclusion (that is, such devices would
fall outside the Medicare coverage
exclusion for hearing aids and remain
covered subject to the Medicare NCD
50.3 found at https://www.cms.gov/
Regulations-and-Guidance/Guidance/
Manuals/downloads/ncd103c1_
Part1.pdf). We proposed, however, to
modify § 411.15(d)(2) to specifically
note that such devices do not fall within
the hearing aid exclusion.
We sought public comment on this
proposal and received approximately
2,635 public comments on this
provision. After consideration of the
comments received we have decided not
to finalize our proposal to further
interpret the hearing aid statutory
exclusion, but in response to comments,
this final rule will codify the current
program instructions found at section
100 of Chapter 16 of the Medicare
Benefit Policy Manual (CMS Pub. 100–
02) noted above. We believe AOIs that
provide focused stimulation to the
temporal bone structures, through an
implant that is physically integrated
into the bone of the skull, to the cochlea
are outside the scope of the hearing aid
exclusion. At the time section 1862(a)(7)
of the Act was initially established,
hearing aids consisted of non-implanted
air and bone conduction devices. AOIs
did not exist at the time the coverage

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exclusion was drafted and there are
clinical distinctions that separate AOIs
from all non-implanted air and bone
conduction hearing aids. Air conduction
and non-osseointegrated bone
conduction hearing aids have been in
existence since 1965 and have not been
covered by Medicare. In accordance
with section 100 of Chapter 16 of the
Medicare Benefit Policy Manual (CMS
Pub. 100–02), we believe the coverage
exclusion applies to all air conduction
and non-osseointegrated bone
conduction hearing aids or
technological refinements of nonimplanted air and bone conduction
devices that are not osseointegrated.
Cochlear devices, brainstem implants,
and AOIs are invasive devices and are
significantly different than the hearing
devices in existence at the time the
Medicare coverage exclusion for hearing
aids was enacted. We therefore do not
consider them to be the hearing aids or
technological refinements of the hearing
aids excluded from the program in 1965
and after 1965. We consider all types of
air conduction and non-osseointegrated
bone conduction hearing devices
utilized today to be technological
refinements of the devices excluded
from Medicare coverage; and therefore,
we consider all types of air conduction
and non-osseointegrated bone
conduction hearing devices utilized
today to be hearing aids excluded from
coverage under the Medicare program.
However, we recognize that new
technology in this area continues to
emerge that may benefit the Medicare
population and we will continue to
examine this issue as more information
becomes available and new devices are
introduced.
The comments and responses are set
forth below.
Comment: We received many
comments relating personal stories on
the profound difference the AOI has
made on themselves, friends, and
relatives who have suffered hearing loss.
Many people shared tremendous
improvement in the quality of life the
AOI has provided for them.
Response: We appreciate these
comments. We have reexamined AOIs
and the statutory exclusion for hearing
aids. We have come to the conclusion
that AOIs are not hearing aids because
of the clinical distinctions that separate
them from hearing aids excluded from
coverage under the Medicare program in
1965. Cochlear devices, brainstem
implants, and AOIs are invasive devices
and are significantly different than the
hearing devices in existence at the time
the Medicare coverage exclusion for
hearing aids was enacted. We therefore
do not consider them to be the hearing

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aids or technological refinements of the
hearing aids excluded from the program
in 1965 and after 1965. We consider all
types of air conduction and nonosseointegrated bone conduction
hearing devices utilized today to be
technological refinements of the devices
excluded from Medicare coverage.
Therefore, we have modified the
regulation at § 414.15 to reflect that
AOIs are outside the scope of the
hearing aid exclusion.
Comment: Many commenters stated
an AOI is a prosthetic device that
replaces all or part of an internal organ
and should remain classified as such.
The commenters stated that the AOI is
not simply a hearing aid but rather the
device replaces the function of the ear.
An AOI device meets the definition of
a prosthetic device as it requires an
implantable post which helps by-pass
an impaired ear canal and/or middle ear
system to directly stimulate a functional
sensory nerve via bone conduction. One
commenter stated the AOI replaces the
function of the ossicles by (1) converting
acoustic energy to mechanical energy,
(2) magnifying that mechanical energy,
and (3) transmitting that mechanical
energy to the inner ear, functions a
hearing aid cannot perform. Another
commenter added when the implantable
post is surgically placed by an
otolaryngologist, the post must
osseointegrate with the skull and then
becomes part of the patient’s skull
anatomy. It will also compensate for the
loss of the cochlea in a single sided
deafness (SSD) due to trauma, surgery,
infection, nerve injury or congenital
defect. One commenter stated these
types of hearing loss result from the loss
of organ function. Therefore, an AOI
does replace all or part of the internal
body organ making it a prosthetic.
Response: The hearing aid statutory
exclusion under section 1862(a)(7) of
the Act does not identify a particular
benefit category. However, we agree that
the AOI is distinguishable in that it
functions as a prosthetic device that is
designed to restore hearing for a limited
class of individuals with conductive
hearing loss (CHL), mixed hearing loss,
or SSD by replacing the function of the
middle ear and providing mechanical
energy to the cochlea via a mechanical
transducer. Therefore, we do not believe
it is a hearing aid excluded from
coverage by section 1862(a)(7) of the
Act. The AOI is functionally and
clinically distinct from the hearing aids
excluded from coverage in 1965. In this
final rule, we are modifying § 411.15 to
reflect that AOIs are outside the scope
of the hearing aid exclusion.
Comment: Many commenters stated
an AOI is not a hearing aid and does not

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provide traditional aid to hearing. Those
commenters believe that hearing aids
are designed to compensate the hearing
loss by amplifying the incoming sound
to the ear. By design, hearing aids do
not replace the function of the ear but
rather restore hearing loss using the
existing anatomical parts and organ.
Several commenters stated air
conduction hearing aids operate by
amplifying sound to overcome damaged
hair cells in the cochlea or inner ear.
Other commenters provided the
following differences of an AOI
compared to a conventional air
conduction hearing device: (1) The AOI
is surgically implanted in the patients
skull where it osseointegrates with the
bone and becomes part of the patients
anatomy, (2) The components of the
AOI function by bypassing the ear canal
and middle ear stimulating the hearing
nerve directly through bone conduction
and (3) The implant replaces the
function of outer and middle ear. Bone
conduction hearing aids utilize a tight
band placed around the user’s head to
transmit vibrations of sound to the
bones in the head. One commenter
stated an AOI is physically and
functionally distinguishable from a bone
conduction hearing aid in that they: (1)
Are never retained by a headband, and
(2) supply focused stimulation to the
temporal bone structures through an
implant that is physically integrated
into the bone of the skull. Further,
traditional hearing aids require no
surgery, may be purchased without a
physician’s prescription, and are
removed and placed ‘‘in the drawer’’ by
the hearing impaired person. In
addition, traditional hearing aids treat
presbycusis which is the cumulative
effect of aging on hearing. One
commenter stated candidates for the
AOIs do not have a functioning ear(s)
and cannot benefit even from the most
advanced hearing aid. While an AOI
does provide access to sound to patients
that would not, in most cases, otherwise
have that access it is not a hearing aid.
Several commenters stated a hearing aid
is just that; it ‘‘aids’’ what residual
hearing an individual has, it does not
restore hearing. An AOI restores hearing
loss in a completely non-functioning
ear.
Response: We agree with commenters
that an AOI is not a hearing aid
excluded from coverage under the
Medicare statute for some of the same
clinical and technological reasons set
forth by the commenters. Therefore, we
are modifying § 411.15 in this final rule
to reflect that AOI’s are outside the
scope of the hearing aid exclusion.
Comment: We received many
comments stating that candidates for

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AOI devices typically have no other
reasonable option for hearing assistance
or restoration and do not get benefit
from hearing aids. Instead, an AOI is the
modality of last resort for many of
patients, CMS’s current coverage
position provides that AOIs are
indicated only when hearing aids are
medically inappropriate or cannot be
utilized. Additionally, commenters were
concerned that patients with congenital
malformations and chronic diseases
(Treacher Collins, Aural Atresia and
Microtia) will be left without an
effective option as they are not
candidates for traditional hearing aids.
AOI technology is for a small and very
special group. AOIs have specific
indications—for example unilateral
anacousis (deafness), and particular
patterns of severe conductive and mixed
hearing loss. Patients with a conductive
or mixed hearing loss with a chronic
draining ear are unable to wear a
conventional air conduction hearing
device. The air conduction device
blocks the ear canal, which exacerbates
the build-up of infectious material in
the ear canal. The AOI is remote from
the ear canal. Therefore, chronic ear
drainage is often stopped or minimized
in these patients.
Response: We have reexamined AOIs
and the statutory exclusion
applicability. We have come to the
conclusion that AOIs are not hearing
aids given how they are functionally
and clinically distinct from the hearing
aids excluded from coverage in 1965., as
noted in section 100 of Chapter 16 of the
Medicare Benefit Policy Manual (CMS
Pub. 100–02). An AOI is an
osseointegrated device that is implanted
in the skull that replaces the function of
the middle ear and provides mechanical
energy to the cochlea via a mechanical
transducer. Therefore, we are finalizing
changes to § 414.15 to reflect that AOIs
are outside the scope of the hearing aid
exclusion.
Comment: Some commenters stated
that although there are other options for
treatment of SSD, patients report that
the sound quality of the AOI is far
superior to these other treatment
options for SSD (for example, CROS
hearing system, TransEar hearing
device). In addition the use of
conventional non-osseointegrated bone
conduction aids may be associated with
complications including: discomfort
and breakdown of skin at stimulation
point; feedback from mechanical
coupling via a steel headband; poor
compliance for consistent wear due to
discomfort, difficulty with fit and
feedback as well as poor sound quality
through all of the options that were

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attempted prior to being fit with AOI
devices.
Response: We understand there are
other bone conduction hearing aids that
may be used instead of the AOI devices
for some individuals with SSD. In
addition, as technology continues to
evolve there will be other new hearing
aid devices coming onto the market for
the treatment of SSD. However, nonosseointegrated air and bone conduction
hearing aids were in use in 1965 when
the coverage exclusion for hearing aids
was enacted and have not been covered
under the program. We believe that
given how they function, they should
continue to fall under the hearing aid
exclusion. However, osseointegrated
hearing devices were not in use in 1965
and as commenters have pointed out,
there are significant clinical and
technological difference between
osseointegrated hearing devices and
non-osseointegrated hearing devices
reasons.
Comment: A few commenters stated if
the fiscal impact on Medicare is so
insignificant why would you deny
thousands of men, women, children and
infants the ability to hear?
Response: CMS is bound by the
statutory coverage rules and to the
extent an items falls within a statutory
exclusion, it cannot be covered under
Medicare. Therefore, we are modifying
the § 414.15 to further specify the scope
of the hearing aid exclusion.
Comment: We received many
comments stating without Medicare
coverage patients who use AOIs would
otherwise benefit greatly in terms of
quality of life, productivity, engagement
in their community’s life, etc. will not
have the opportunity. Several
commenters stated denial of coverage of
these AOIs will affect not only hearing
and communication ability in older
adults but because CMS also provides
benefits under Social Security Disability
Insurance (SSDI) program, denial of
coverage also will prevent the normal
development of language and speech
ability in young children. It would cost
much more not having the AOI option
than to have the relatively inexpensive
surgery that would help them for the
rest of their lives.
Response: CMS is bound by the
statutory coverage rules and to the
extent an items falls within a statutory
exclusion, it cannot be covered under
Medicare. Therefore, we are modifying
the § 414.15 to further specify the scope
of the hearing aid exclusion.
Comment: Some commenters believe
most private insurers follow CMS
policies as they design their own
coverage which will inevitably lead to
the loss of this very valuable technology

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for everyone. Others stated, not covering
this procedure will mean many
thousands of people with this condition
will forego treatment. A great many
people benefit from an AOI and
otherwise will not be able to afford it if
insurance no longer covered the device.
Another commenter stated private third
party payers would eventually eliminate
coverage for AOIs, affecting both
children and adults, as these payers’
looks to Medicare for coverage
guidelines.
Response: Coverage by private
insurers is outside the scope of this
rulemaking. However, we have
reexamined AOIs and the statutory
exclusion applicability. We have come
to the conclusion that AOIs are not
hearing aids and therefore, have
modified the final regulation to specify
that AOIs are outside the scope of the
hearing aid exclusion.
Comment: Several commenters stated
that AOIs have been in use for over 30
years and have been shown to provide
significant, cost-effective benefit for
recipients. There is a large body of
published literature to support the use
of this technology for appropriate
indications.
Response: CMS is bound by the
statutory coverage rules and to the
extent an items falls within a statutory
exclusion, it cannot be covered under
Medicare. Therefore, we are modifying
§ 414.15 to further specify the scope of
the hearing aid exclusion.
Comment: One commenter stated
given the recent research on increased
presence of cognitive decline in
individuals with hearing loss, one
would think that the CMS would be
looking for ways to improve access to
sound for our Medicare and Medicaid
patients, thereby decreasing the overall
costs of managing dementia, not for
ways to make that situation even worse.
Hearing allows people to stay connected
to people; it increases their earning
potential thus increasing the tax base of
our society. In the retired population,
good access to hearing keeps people
engaged in their community,
volunteering, helping to raise
grandchildren, and in general
participating in life. As we all know the
more connected and engaged in society
and life around us, the lower financial
burden we present to society.
Response: We appreciate the
comments. However, Congress excluded
hearing aids from the Medicare program
in section 1862(a)(7) of the Act. We have
reexamined this issue and the statutory
exclusion applicability. We have come
to the conclusion that AOIs are not
hearing aids and therefore, have
modified § 414.15 to specify that AOIs

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are outside the scope of the hearing aid
exclusion.
Comment: Other commenters stated
AOIs restore a sense of safety to
individuals who have SSD as the
implant allows them to hear sounds on
the dead ear. In the SSD application, a
patient must have an unaidable ear
(meaning the hearing loss is so great or
their ability to understand speech is so
poor that use of a hearing aid is not
possible as a hearing aid would not
correct that degree of hearing loss). In
these cases, the AOI can be implanted
on the bad ear and allow patients to
have awareness of the sounds on the
dead ear because the sound is delivered
via bone conduction to the good ear
which can process the speech signal. In
unilateral hearing losses (such as
described above), individuals
experience difficulty localizing sounds,
an inability to hear sounds immediately
to the side with hearing loss and they
also experience difficulty understanding
in background noise. The recovery of
sound on the dead ear can provide a
sense of stability and safety as they no
longer have to work about people
sneaking up on the dead side.
Response: CMS is bound by the
statutory coverage rules and to the
extent an items falls within a statutory
exclusion, it cannot be covered under
Medicare. Therefore, we are modifying
§ 414.15 to further specify the scope of
the hearing aid exclusion.
Comment: Some commenters stated
there was no rationale provided
articulating reasoning or new evidence
that a change in Medicare policy, after
8 years of coverage, is necessary due to
law or for the benefit of Medicare
patients was necessary. Another
commenter stated AOIs function the
same way they did in 2006 when CMS
correctly recognized them as
prosthetics. One commenter stated that
the decision in 2005 that AOIs replace
the function of the middle ear and are
prostheses was made based on an
extensive record. In contrast, the
proposed rule fails to cite any evidence
on which CMS now contends that its
position has reversed. There are no
studies or other data mentioned, no
professional standards are cited, nor is
there any description of the content of
the benefit category determination
requests that are mentioned. Since CMS
has not disclosed the basic clinical or
legal information underlying the
proposed reversal of its benefit policy
and its interpretation of Section
1862(a)(7), CMS should defer any
action.
Response: As discussed in the
proposed rule, CMS has received several
new benefit category determinations

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that initiated a new review of devices
that are considered hearing aids.
However, in light of the comments and
upon further examination, we have
decided not to change the policy in
section 100 of Chapter 16 of the
Medicare Benefit Policy Manual (CMS
Pub. 100–02), that AOIs are not hearing
aids and therefore, are modifying
§ 414.15 to reflect that AOIs are outside
the scope of the hearing aid exclusion.
Comment: One commenter provided
their interpretation of the Congressional
intent and scope of the hearing aid
exclusion as meant to exclude routine
items and services, and not medical
treatment for disability created by
disease, trauma, infection, or congenital
deformity. They provided a comparison
of various Court decisions on the
eyeglass exclusion. Another commenter
stated while Medicare does not cover
eye glasses and/or contact lenses, they
do cover intraocular lenses because the
patient’s sensory organ cannot benefit
from nonsurgical treatment-the same
logic should hold for implantable
hearing devices, for patients who are not
able to benefit from amplification.
Response: The eyeglass exclusion is
not an appropriate comparison to the
hearing aid exclusion. Congress
amended the Social Security Act to
make allowances for eyeglasses and
intraocular lenses by amendments to
section 1862(a)(7) of the Act. There has
not been a similar allowance made for
hearing aids. As noted above, upon
consideration of the comments and for
the reasons outlined, we are modifying
the final regulation, as discussed above.
Comment: Several commenters
discussed the National Coverage
Determination for CIs stating that CMS
states in the NCD CIs are prosthetic
devices primarily because a CI replaces
the function of the cochlear by creating
an electrical output that stimulates the
auditory nerve as opposed to the
mechanical output of a bone conduction
device. There is no scientific, clinical,
or legal rational for distinguishing the
devices based on the type of energy
output. Nor does the agency provide any
medical or other justification as to why
the replacement of the function of the
cochlea meets the requirement of
replacing an organ function, but
replacing the function of the middle ear
does not. Another commenter stated in
both cases, the device in question
bypasses an organ and replaces its
function, in one case; it is part of the
cochlea, in the other, the ossicles and/
or auditory canal. Since in both cases a
device replaces the function of a
component of the ear, there is no basis
on which to classify one as a hearing aid
and the other as a prosthetic.

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Response: A National Coverage
Determination (NCD) is provided upon
request or internally generated, and is
vetted through a thorough scientific and
medical review. The information
provided for NCD 50.3 was provided
specifically for CIs. It is important to
understand that an item or device must
not be statutorily excluded and fall
within a benefit category as a
prerequisite to Medicare coverage. We
believe that AOIs are not ‘‘hearing aids’’
given that such devices do more than
‘‘aid’’ in hearing and instead replace the
function of an internal body organ (i.e.,
a part of the ear). Therefore, we’ve
concluded that AOIs are not hearing
aids and do not fall within the statutory
exclusion.
Comment: One commenter stated a
policy that deems which technology is
a Medicare benefit based on whether
that technology replaces hearing by a
particular means (electrical versus
mechanical energy), or whether it has a
surgically implanted component or not
(osseointegrated versus a dental
anchored device), or whether the
deafness is bilateral or unilateral, are
arbitrary distinctions without clinical
justification. Medicare policy should
focus on whether attributes of a device
replace the function of all or part of the
ear to restore hearing, not the means by
which it is accomplishes this task.
Response: We disagree that our policy
creates an arbitrary distinction. The
policy is based on whether a device
qualifies as a hearing aid as defined in
section 100 of Chapter 16 of the
Medicare Benefit Policy Manual (CMS
Pub. 100–02), or whether a device
functions in such a way that it falls
outside this definition.
Comment: A few commenters stated
withdrawing coverage of these devices
will preclude coverage and designing
new innovations that improve SSD
treatment and are more cost effective
than existing alternatives. One
commenter explained its concern that
the proposal will stifle innovation and
advances in auditory prosthetics and
will send a negative and damaging
message to the medical technology
development community as a whole—
that Medicare coverage is unpredictable,
even when there is long established
policy in favor of coverage. Such
unreliability makes it impossible for
investors to make reasoned decisions
about future investments and will lead
to the freezing of meaningful
innovation.
Response: We do not agree. We
believe new innovations will continue
to be pursued without Medicare
coverage as other payers would
continue to provide AOIs. However, we

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have reexamined AOIs and the
applicability of the hearing aid statutory
exclusion. We have come to the
conclusion that AOIs are not hearing
aids and therefore, have modified the
final regulation to specify that AOIs are
outside the scope of the hearing aid
exclusion.
Comment: Some commenters equated
removing coverage of the AOI as to
denying coverage for glasses, a
prosthetic leg, and colostomy.
Response: CMS is bound by the
statutory coverage rules and to the
extent an items falls within a statutory
exclusion, it cannot be covered under
Medicare. Therefore, we are modifying
§ 414.15 to further specify the scope of
the hearing aid exclusion.
Comment: Several commenters
provided their definition of a hearing
aid. Several commenters stated the
definition should include ‘‘wearable’’
and another commenter stated it should
include ‘‘amplify sound’’ and another
stated it should be ‘‘air conduction
devices.’’ Commenters provided
additional criteria as well, such as there
must be a medical evaluation and
physician prescription. In addition
several commenters advocated for a
plain and ordinary meaning of hearing
aid provided in the dictionary.
Response: We disagree with the
commenters’ definition of a hearing aid;
as stated in the proposed rule, in section
100 of Chapter 16 of the Medicare
Benefit Policy Manual (CMS Pub. 100–
02) Medicare defines hearing aids as
‘‘amplifying devices that compensate for
impaired hearing.’’ Hearing aids include
air conduction devices that provide
acoustic energy to the cochlea via
stimulation of the tympanic membrane
with amplified sound. They also
include bone conduction devices that
provide mechanical energy to the
cochlea via stimulation of the scalp with
amplified mechanical vibration or by
direct contact with the tympanic
membrane or middle ear ossicles.’’ We
believe the Medicare definition captures
the provisions we are finalizing and
accurately defines a hearing aid. Upon
re-examining the Medicare hearing aid
exclusion provision at section 1862(a)(7)
of the Act, and its applicability to AOIs,
we have determined that AOIs are not
hearing aids because they are
functionally and clinically distinct from
the hearing aids excluded from coverage
in 1965. They are implants that replace
the function of the middle ear and are
physically integrated into the temporal
bone structure of the skull to provide
mechanical stimulation through the
temporal bone to the cochlea. Therefore,
we have modified the final regulation to

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specify that AOIs are outside the scope
of the hearing aid exclusion.
Comment: One commenter stated
according to the Food and Drug
Administration (FDA) definition of a
hearing aid and state hearing aid
dispensing laws, the AOI is in fact not
a hearing aid because it is not
removable, is not available to the
general public for purchase and the
primary purpose is not to amplify
sound. Another commenter believed
CMS should recognize the FDA’s
classification system as these devices
are Class II whereas hearing aids are
Class I devices.
Response: Medicare does not adhere
to the same definition as the FDA
regarding hearing aids. For the reasons
state above, we have come to the
conclusion that AOIs are not hearing
aids in the context of section 1862(a)(7)
of the Act and the Medicare program
and coverage exclusion and therefore
have modified our final rule to reflect
that AOIs are outside the scope of the
hearing aid exclusion.
Comment: A few commenters stated
neither the statute nor its legislative
authority support the broad
interpretation CMS seeks in order to
prohibit AOIs under the hearing aid
exclusion. After review of the
Congressional Record and hearings held
by Congress before enactment of this
provision clearly shows Congress’ intent
was to exclude ‘‘routine care’’ from the
Medicare program. The majority of the
technologies that would be considered
hearing aids under this proposed rule
were not available in 1965. In particular,
AOIs could not have been contemplated
by Congress at the time the hearing aid
exclusion was enacted, because they did
not exist. At that time patients could
self-select available hearing aids, no
physician order was required, and
patients where accustomed to paying
out of pocket for these items.
Response: We believe we understand
the Congressional intent in 1965
regarding the hearing aid exclusion. We
believe air and bone conduction devices
were available and commonly used
when the exclusion was established and
therefore are excluded. However, since
AOIs were not in existence and are
clinically and functionally distinct from
bone conduction hearing aids in 1965,
we do not believe the exclusion applies.
Different refinements of bone
conduction hearing aid technologies
have been introduced over the years that
represent variations of non-implanted
devices that send mechanical energy to
the cochlea through bone without the
need to surgically implant a transducer
into the patient’s skull. These
implanted, osseointegrated devices were

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not part of the general technology and
category of devices excluded from
coverage from 1965 to the present. We
have therefore come to the conclusion
that AOIs are not hearing aids and have
modified the final regulation to specify
that AOIs are outside the scope of the
hearing aid exclusion.
Comment: One commenter stated the
AOI has a record of demonstrated cost
effectiveness in studies conducted
around the world. One example
includes a significant reduction in the
number of medical visits and prescribed
medications to address repeated
infections for individuals with chronic
suppurative otitis media following AOI
surgery. Another commenter stated for
patients that have failed previous
surgical attempts at hearing
reconstruction using conventional
techniques, it makes better sense for
Medicare to provide AOIs for these
patients in lieu of repeated, costly
traditional surgical attempts without an
AOI.
Response: CMS is bound by the
statutory coverage rules and to the
extent an items falls within a statutory
exclusion, it cannot be covered under
Medicare. Therefore, we are modifying
§ 414.15 to further specify the scope of
the hearing aid exclusion.
Comment: A few commenters stated
current users on Medicare who are
benefiting from an AOI will be unable
to maintain and upgrade their
equipment. Several commenters stated
discontinuing coverage for the
numerous existing recipients of AOIs is
unethical and discriminatory. These
individuals have existing AOIs that
require maintenance and fully
functioning systems in order to hear and
communicate. By discontinuing
coverage, the medical community is
forced to unjustly discontinue care of
these individuals unless they can
financially assume the cost of their
implant. This is an unreasonable
assumption, as many Medicare
recipients are no longer working and
living on a fixed income.
Response: As we stated above, we
have determined that AOIs are outside
the scope of the hearing aid exclusion.
So Medicare beneficiaries with existing
AOIs will continue to receive upgrades
and maintenance of these devices.
Comment: One commenter stated that
the patient’s medical condition should
be the primary consideration for
providing coverage, not the technology.
Many commenters stated there are
currently very specific patient selection
criteria for AOIs.
Response: We disagree; while the
patient’s medical condition is
important, we do not believe it should

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be the primary consideration for
providing coverage of a particular
device. Medicare is a defined benefit
program. It is important to understand
that an item or device must not be
statutorily excluded and fall within a
benefit category as a prerequisite to
Medicare coverage. We must analyze
whether the device is a hearing aid as
they are statutorily excluded from
coverage. We have reexamined AOIs
and the statutory exclusion
applicability. We have come to the
conclusion that AOIs are not hearing
aids and therefore, have modified the
final regulation to specify that AOIs are
outside the scope of the hearing aid
exclusion.
Comment: One commenter stated
hearing aids cost on average $1,675 per
device. AOIs including surgery cost are
in the range of $12,000 and that cost is
moderated by the significant availability
of insurance coverage. This cost would
likely double in the absence of
insurance coverage, which would
clearly make AOIs unaffordable for
many people. Another commenter
stated CMS is undermining the goals of
the Medicare program by decreasing
access and affordability to Medicare
patients.
Response: We understand, however,
Medicare is a defined benefit program
with certain coverage requirements. We
have reexamined AOIs and the statutory
exclusion applicability. We have come
to the conclusion that AOIs are not
hearing aids and therefore, have
modified the final regulation to specify
that AOIs are outside the scope of the
hearing aid exclusion.
Comment: Several commenters urged
CMS to continue to provide coverage of
CIs, brain stem implants, and AOIs, to
extend coverage to dental anchored
bone conduction devices since these
devices also meet the definite of covered
prosthetics and are not hearing aids, and
to provide coverage to other clinically
proven bone conduction hearing device
technologies with restrictive principles
applied.
Response: We will continue to cover
AOI devices that replace the function of
the middle ear and provide mechanical
energy directly to the cochlea, because
we do not consider them to be hearing
aids and excluded from coverage.
Comment: One commenter stated over
the past 8 years CMS has established a
precedent for providing coverage of
AOIs for Medicare beneficiaries, upon
which Medicare beneficiaries who have
received these technologies and health
care providers who establish patient
treatment plans have relied.
Response: While CMS had established
a precedent for coverage of AOIs, we

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reexamined AOIs and the statutory
exclusion applicability. CMS received
requests for informal benefit category
determinations from manufacturers of
certain non-implanted hearing devices.
We elected to address the issue of the
applicability of the Medicare coverage
exclusion for hearing aids to all hearing
devices in light of these requests and
initially determined and proposed (79
FR 40296) that all external, internal, and
implanted air conduction and bone
conduction hearing devices were subject
to the coverage exclusion for hearing
aids. Based on our review and in light
of comments received on the proposed
rule, for the reasons stated above, CMS
has decided that AOIs are not hearing
aids subject to the statutory exclusion.
Comment: One commenter opposed
the classification of middle ear implants
as a hearing aid, stating these devices do
not meet the definition of a hearing aid
and do bypass or supersede a nonfunctioning organ in the auditory
pathway. In addition, this commenter
stated CMS is over-reaching its
authority in including implantable bone
conduction hearing aids in this
definition. This commenter
recommended seeking input from the
medical and scientific community
convening a public meeting to discuss
the definitions at stake in this rule.
Response: For the reasons stated
above, CMS has decided to continue
covering AOIs because we have decided
they are not hearing aids subject to the
statutory exclusion.
Comment: One commenter felt the
current proposal would reverse the 2005
NCD.
Response: The proposed rule (79 FR
40297) would not reverse the NCD. As
we stated in the proposed rule, ‘‘we
continue to believe that the hearing aid
exclusion does not apply to brain stem
implants and CIs because these devices
directly stimulate the auditory nerve,
replacing the function of the inner ear
rather than aiding the conduction of
sound as hearing aids do.’’ Therefore,
we did not propose any changes to our
current policy about brain stem
implants and CIs and how such
implants fall outside of the hearing aid
statutory exclusion.
Comment: Several commenters agreed
with the decision CMS made in 2005 by
providing coverage for AOIs as
prosthetics and not hearing aids.
Response: We agree the decision in
2005 to provide coverage for AOIs was
correct. We believe AOIs are not hearing
aids since they are functionally and
clinically distinct from the hearing aids
excluded from coverage in 1965.
Therefore, this final rule will codify the
current program instructions found at

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section 100 of Chapter 16 of the
Medicare Benefit Policy Manual (CMS
Pub. 100–02).
Comment: One commenter stated the
statute at section1861(s)(8), regulations
at 42 CFR 414.202, and program
manuals in the Medicare Benefit Policy
Manual, Ch. 15, 120 set out a
straightforward test for defining a
covered prosthetic device which have
not been changed.
Response: We have reexamined AOIs
and the statutory exclusion
applicability. We have come to the
conclusion that AOIs are not hearing
aids and therefore, have modified the
final regulation to specify that AOIs are
outside the scope of the hearing aid
exclusion.
After consideration of the comments
received we have decided not to finalize
§ 411.15, as proposed. In response to
comments, this final rule will codify the
policy in the current program
instructions found at section 100 of
Chapter 16 of the Medicare Benefit
Policy Manual (CMS Pub. 100–02) noted
above.
VIII. Definition of Minimal SelfAdjustment of Orthotics Under
Competitive Bidding
A. Background
Section 1847(a)(1)(A) of the Act
mandates the implementation of CBPs
throughout the United States for
awarding contracts for furnishing
competitively priced items and services,
including OTS orthotics described in
section 1847(a)(2)(C) of the Act (leg,
arm, back or neck braces described in
section 1861(s)(9) of the Act for which
payment would otherwise be made
under section 1834(h)) which require
minimal self-adjustment for appropriate
use and do not require expertise in
trimming, bending, molding,
assembling, or customizing to fit the
individual. The regulation at 42 CFR
414.402 currently defines ‘‘minimal selfadjustment’’ as ‘‘an adjustment that the
beneficiary, caretaker for the
beneficiary, or supplier of the device
can perform and does not require the
services of a certified orthotist (that is,
an individual who is certified by either
the American Board for Certification in
Orthotics and Prosthetics, Inc., or the
Board for Orthotist/Prosthetist
Certification) or an individual who has
specialized training.’’ This current
definition was proposed in the 71 FR
25669 (May 1, 2006) proposed rule but
did not include the term ‘‘individual
with specialized training.’’ The
definition was finalized in the 72 FR
18022 (April 10, 2007) Final Rule with
the term ‘‘individual with specialized

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training’’ added after receiving
comments that disagreed with the May
2006 definition and pointed out that
occupational therapists, physical
therapists, and physicians are licensed
and trained to provide orthotics.
B. Current Issues
Since adoption of the minimal selfadjustment definition there has been
some concerns raised by industry and
other stakeholders regarding who is
considered an individual with
specialized training. We have had many
inquiries and comments that this term is
too ambiguous and left open for
interpretation. In addition, questions
were raised regarding when it is
appropriate for a supplier to bill for a
prefabricated orthotic as having been
custom fitted versus one furnished OTS.
In order to address this specific
question, the DME MACs issued a
policy article on March 27, 2014, which
details what custom fitting of an
orthotic involves and indicating that
furnishing custom fitted orthotics
‘‘requires the expertise of a certified
orthotist or an individual who has
equivalent specialized training in the
provision of orthotics such as a
physician, treating practitioner, an
occupational therapist, or physical
therapist in compliance with all
applicable Federal and State licensure
and regulatory requirements.’’ The
DMEPOS quality standards have been
updated to reflect this requirement and
we decided to revise the definition of
minimal self-adjustment in the
regulation to address this issue as well.
In order to identify OTS orthotics for
the purpose of implementing CBPs for
these items and services in accordance
with the statute, we need a clearer
distinction between OTS orthotics and
those that require more than minimal
self-adjustment and expertise in custom
fitting. In doing so, we believed it was
essential to identify the credentials and
training a supplier needs to have in
order to be considered a supplier with
expertise in custom fitting; therefore, we
believed the term ‘‘individual with
specialized training’’ must be clarified
in regulations as well as in contractor
policies and DMEPOS quality standards.
In addition, we believed that suppliers
who are not certified orthotists should
not be allowed to furnish custom fitted
orthotics unless they have specialized
training equivalent to a certified
orthotist for the provision of custom
fitted orthotic devices. We believed that
these suppliers must satisfy
requirements concerning higher
education, continuing education
requirements, licensing, and
certification/registration requirements

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so that they meet a minimum
professional skill level in order to
ensure appropriate care and safety for
Medicare beneficiaries.
C. Summary of the Proposed Provisions
and Responses to Comments on the
Definition of Minimal Self-Adjustment
of Orthotics Under Competitive Bidding
For reasons discussed above, we
proposed that physicians, treating
practitioners, occupational therapists,
and physical therapists are considered
‘‘individuals with specialized training’’
that possess training equivalent to a
certified orthotist for the provision of
custom fitted orthotic devices through
their individual degree programs and
continuing education requirements. We
proposed these types of practitioners
because we believe physicians, treating
practitioners, occupational therapists,
and physical therapists possess
equivalent or higher educational
degrees, continuing education
requirements, licensing, and
certification and/or registration
requirements. Each of these
professionals has undergone medical
training in various courses such as
kinesiology and anatomy.
Specifically, we proposed to update
the definition of minimal selfadjustment in § 414.402 to recognize as
an individual with specialized training:
a physician defined in section 1861(r) of
the Act, a treating practitioner defined
at section 1861(aa)(5) (physician
assistant, nurse practitioner, or clinical
nurse specialist), an occupational
therapist defined at 42 CFR 484.4, or
physical therapist defined at 42 CFR
484.4, who is in compliance with all
applicable Federal and State licensure
and regulatory requirements.
At this time, we have decided not to
finalize any changes to the definition of
minimal self-adjustment in § 414.402 to
recognize as an individual with
specialized training. We may address
this provision in future rulemaking.
IX. Revision To Change of Ownership
Rules To Allow Contract Suppliers To
Sell Specific Lines of Business
A. Background
Section 1847(a) of the Act, as
amended by section 302(b)(1) of the
Medicare Prescription Drug,
Improvement, and Modernization Act of
2003 (MMA) (Pub. L. 108–173), requires
the Secretary to establish and
implement competitive bidding
programs (CBPs) in competitive bidding
area (CBAs) throughout the United
States for contract award purposes for
the furnishing of certain competitively
priced DMEPOS items and services. The

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programs mandated by section 1847(a)
of the Act are collectively referred to as
the ‘‘Medicare DMEPOS Competitive
Bidding Program.’’ The 2007 DMEPOS
competitive bidding final rule (Medicare
Program; Competitive Acquisition for
Certain DMEPOS and Other Issues
published in the Federal Register on
April 10, 2007 (71 FR 17992)), required
CBPs for certain Medicare Part B
covered items of DMEPOS throughout
the United States. The CBP, which was
phased in over several years, utilizes
bids submitted by qualified suppliers to
establish applicable payment amounts
under Medicare Part B for certain
DMEPOS items for beneficiaries
receiving services in designated CBAs.
CMS awards contracts to those
suppliers who meet all of the
competitive bidding requirements and
whose composite bid amounts fall at or
below the pivotal bid (the bid at which
the capacity provided by qualified
suppliers meets the demand for the
item). These qualified suppliers will be
offered a competitive bidding contract
for that PC, provided there are a
sufficient number of qualified suppliers
(there must be at a minimum of 2) to
serve the area. Contracts are awarded to
multiple suppliers for each PC in each
CBA and will be re-competed at least
once every 3 years.
CMS specifies the duration of the
contracts awarded to each contract
supplier in the Request for Bid
Instructions. We also conduct extensive
bidder education where we inform
bidders of the requirements and
obligations of contract suppliers. Each
winning supplier is awarded a single
contract that includes all winning bids
for all applicable CBAs and PCs. A
competitive bidding contract cannot be
subdivided. For example, if a contract
supplier breaches its contract, the entire
contract is subject to termination. In the
Physician Fee Schedule final rule
published on November 29, 2010, we
stated that ‘‘once a supplier’s contract is
terminated for a particular round due to
breach of contract under the DMEPOS
CBP, the contract supplier is no longer
a DMEPOS contract supplier for any
DMEPOS CBP PC for which it was
awarded under that contract. This
termination applies to all areas and PCs
because there is only one contract that
encompasses all CBAs and PCs for
which the supplier was awarded a
contract.’’ (75 FR 73578)
A competitive bidding contract
cannot be sold. However, CMS may
permit the transfer of a contract to an
entity that merges with or acquires a
competitive bidding contract supplier if
the new owner assumes all rights,
obligations, and liabilities of the

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competitive bidding contract pursuant
to regulations at 42 CFR 414.422(d).
For the transfer of a contract to be
considered, the Change of Ownership
(CHOW) must include the assumption
of the entire contract, including all
CBAs and PCs awarded under the
contract.
B. Summary of the Proposed Provisions
and Responses to Comments on the
Revision to Change of Ownership Rules
To Allow Contract Suppliers To Sell
Specific Lines of Business
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
DMEPOS CBP. We received 1 public
comment on this proposal from a
manufacturer and supplier. Comments
related to the paperwork burden are
addressed in the ‘‘Collection of
Information Requirements’’ section in
this final rule. Comments related to the
impact analysis are addressed in the
‘‘Economic Analyses’’ section in this
final rule.
Specifically, we proposed (79 FR
40298) to revise § 414.422(d) to permit
transfer of part of a competitive bidding
contract under specific circumstances.
We believe requiring a transfer of the
entire contract to a successor entity in
all circumstances may be overly
restrictive, and may be preventing
routine merger and acquisition activity.
To maintain integrity of the bidding
process we award one contract that
includes all the CBA/PCs combinations
for which the supplier qualifies and
accepts as a contract supplier. We
proposed to establish an exception to
the prohibition against transferring part
of a contract by allowing a contract
supplier to sell a distinct company (for
example, an affiliate, subsidiary, sole
proprietor, corporation, or partnership)
which furnishes one or more specific
PCs or serves one or more specific CBAs
and transfer the portion of the contract
initially serviced by the distinct
company, including the PC(s), CBA(s),
and location(s), to a new qualified
successor entity who meets all
competitive bidding requirements (that
is, financial standards, licensing, and
accreditation) (79 FR 40299). The
exception would not apply to existing
contracts but would apply to contracts
issued in all future rounds of the
program, starting with the Round 2
Recompete. As required in § 414.422(d),
we also proposed that a contract
supplier that wants to sell a distinct
company which furnishes one or more
specific PCs or serves one or more
specific CBAs would be required to

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notify CMS 60 days before the
anticipated date of a change of
ownership. If documentation is required
to determine if a successor entity is
qualified that documentation must be
submitted within 30 days of anticipated
change of ownership, pursuant to
§ 414.422(d)(2)(ii). We proposed that
CMS would then modify the contract of
the original contract supplier by
removing the affected PC(s), CBA(s) and
locations from the original contract. For
CMS to approve the transfer, we
proposed that several conditions would
have to be met. First, we proposed that
every CBA, PC, and location of the
company being sold must be transferred
to the new owner. Second, we proposed
that all CBAs and PC’s in the original
contract that are not explicitly
transferred by CMS must remain
unchanged in that original contract for
the duration of the contract period
unless transferred by CMS pursuant to
a subsequent CHOW. Third, we
proposed that all requirements in 42
CFR 414.422 (d)(2) must be met. Fourth,
we proposed that the sale of the
company must include all of the
company’s assets associated with the
CBA and/or PC(s). Finally, we proposed
that CMS must determine that
transferring part of the original contract
will not result in disruption of service
or harm to beneficiaries. No transfer
would be permitted for purposes of this
program if we determine that the new
supplier does not meet the competitive
bidding requirements (such as financial
requirements) and does not possess all
applicable licenses and accreditation for
the product(s). In order for the transfer
to occur, the contract supplier and
successor entity must enter into a
novation agreement with CMS and the
successor entity must accept all rights,
responsibilities and liabilities under the
competitive bidding contract. Part of a
novation agreement requires successor
entity to ‘‘seamlessly continue to service
beneficiaries.’’ We believe that these
proposed conditions are necessary for
proper administration of the program, to
ensure that payments are made correctly
and also to ensure continued contract
accountability and viability along with
continuity of service and access to
beneficiaries. We specifically invited
comments on whether more or different
conditions would be appropriate.
We proposed to update the current
CHOW regulation at § 414.422(d) to
clarify the language to make it easier to
comprehend. The proposed changes
reformat the regulation so that the
requirements applicable to successor
entities and new entities are listed
separately. These proposed changes to

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the regulation are technical, and not
substantive in nature. CMS sought
comments on all changes proposed for
§ 414.422. The comment and our
responses are set forth below.
Comment: One commenter
recommended that CMS implement
financial penalties for suppliers who
sell their contracts along with selling
their organizations prior to providing
the product/service at the contracted
payment rate, and/or remove an entity’s
bid from calculation of the SPA if they
have failed to supply the awarded
contract items for a period of time prior
to re-sale. The commenters also believed
that bids by suppliers who have no
intention of providing services to
Medicare beneficiaries should not be
given the same weight as those of
reputable suppliers in the community.
Response: CMS does not agree with
the suggestions raised by this
commenter. CMS cannot require a
contract supplier to furnish a certain
amount of competitive bid items.
However, contract suppliers must be
ready, available and willing to furnish
contracted competitive bid items
starting on day one of implementation
to any beneficiary within a CBA. A
contract supplier is not permitted to sell
just its competitive bidding contract.
CMS ensures that the successor entity
(1) assumes all rights, obligations, and
liabilities of the entire competitive
bidding contract, (2) meets all
requirements applicable to a contract
supplier, and (3) is acquiring the assets
of the existing supplier. In addition, the
competitive bidding contract
specifically states that CMS does not
guarantee a minimum amount of
business. In response to the comment on
the recalculation of the single payment
amount (SPA), CMS carefully screens
and evaluates bids to ensure that they
are bona fide (rational and feasible)
before determining the single payment
amounts and offering contracts. Since
only bona fide bids from qualified
suppliers are included in the array of
bids used to set prices, recalculating
payment amounts based on contract
rejections would not improve the
validity of the single payment amounts.
Also, the SPAs are set at the time of
contract award and cannot be changed.
It would not be possible for CMS to recalculate the SPAs each time a contract
supplier goes through a change of
ownership. Contract offers include the
SPAs applicable throughout the
duration of the contract period for each
HCPCS code in each CBA. Therefore, it
is not possible for CMS to re-compute
the SPAs whenever there is a change in
contract suppliers as this would require
continued re-contracting.

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Therefore, for the reasons CMS stated
above, CMS is finalizing the proposed
changes to § 414.422(d) of the regulation
and making one additional technical
change to replace certain terms with ‘‘a
new qualified entity,’’ when referring to
a company that is approved to
purchases a contract supplier and
assume the competitive bidding contract
in whole or in part. We are making this
technical change for purposes of
consistency and to avoid possible
confusion.
X. Changes to the Appeals Process for
Termination of Competitive Bidding
Contract
We proposed (79 FR 40299) to modify
the DMEPOS CBPs appeals process for
termination of competitive bidding
contracts under § 414.423. First, we
proposed to modify the effective date of
termination in the termination notice
CMS sends to a contract supplier found
to be in breach of contract. Currently,
the regulation at 42 CFR
414.423(b)(2)(vi) indicates that the
effective date of termination is 45 days
from the date of the notification letter
unless a timely hearing request ‘‘has
been’’ filed or corrective action plan
‘‘has been’’ submitted within 30 days of
the effective date of the notification
letter (emphasis added). We proposed to
change these references to emphasize
that the contract will automatically be
terminated if the supplier does not file
a hearing request or submit a corrective
action plan.
In 42 CFR 414.423(l), we also
proposed (79 FR 40299) deleting the
lead-in sentence, as it does not properly
lead into the first paragraph.
Additionally, we proposed inserting
language from the lead-in sentence in
the second paragraph to indicate that
the contract supplier, ‘‘whose contract
has been terminated,’’ must notify
beneficiaries of the termination of their
contract. Second, we proposed to
modify the deadline by which a
supplier whose competitive bidding
contract is being terminated must notify
affected beneficiaries that it is no longer
a contract supplier. Current regulations
at 42 CFR 414.423(l)(2)(i) require a
contract supplier to provide this notice
within 15 days of receipt of a final
notice of termination. We proposed to
change the beneficiary notification
deadline to no later than 15 days prior
to the effective date of termination. This
proposed change is intended to provide
beneficiaries with the protection of
advanced notice prior to a contract
supplier being terminated from the CBP
so they have sufficient time to plan/
coordinate their current and future
DMEPOS needs. We did not receive any

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comments on this proposal (79 FR
40299). For the reasons we noted
previously, we are finalizing these
changes to § 414.423, with two
modifications to the regulation text to
address errors in citation references.
First, in the proposed regulation of the
proposed rule (79 FR 40315), we
incorrectly referenced § 414.423(b)(1)
instead of § 414.423(b)(2), so we are
correcting that citation in this final rule.
Second, although we made clear in the
preamble our proposal to delete the
lead-in language in § 414.423(l), we
inadvertently failed to note that deletion
in the proposed regulation text.
Therefore, we are making technical
corrections in the final rule to reflect
final decision to delete the lead-in
sentence in § 414.423(l).
XI. Technical Change Related to
Submitting Bids for Infusion Drugs
Under the DMEPOS Competitive
Bidding Program
The standard payment rules for drugs
administered through infusion pumps
covered as DME are located at section
1842(o)(1)(D) of the Act, and mandate
that payment for infusion drugs
furnished through a covered item of
DME on or after January 1, 2004, is
equal to 95 percent of the average
wholesale price for such drug in effect
on October 1, 2003. The regulations
implementing section 1842(o)(1)(D) of
the Act are located at 42 CFR 414.707(a),
under Subpart I of Part 414. Section
1847(a)(2)(A) of the Act mandates the
establishment of CBPs for covered DME
and medical supplies. The statute
specifically states that this category
includes ‘‘items used in infusion and
drugs (other than inhalation drugs) and
supplies used in conjunction with
DME.’’ Implementation of CBPs for
infusion drugs is therefore specifically
mandated by the statute.
Section 1847(b)(2)(A)(iii) of the Act
prohibits the awarding of contracts
under a CBP unless the total amounts to
be paid to contract suppliers are
expected to be less than would
otherwise be paid. The regulations
implementing section 1847(b)(2)(A)(iii)
of the Act with respect to items paid on
a fee schedule basis under Subparts C
and D of Part 414 are located at 42 CFR
414.412(b)(2), and specify that ‘‘the bids
submitted for each item in a PC cannot
exceed the payment amount that would
otherwise apply to the item under
Subpart C or Subpart D of this part.’’ In
addition, the regulations regarding the
conditions for awarding contracts under
the DMEPOS CBP at 42 CFR 414.414(f)
state that ‘‘a contract is not awarded
under this subpart unless CMS
determines that the amounts to be paid

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to contract suppliers for an item under
a CBP are expected to be less than the
amounts that would otherwise be paid
for the same item under subpart C or
subpart D.’’ The regulations
implementing of section
1847(b)(2)(A)(iii) of the Act did not
address payments for drugs under
subpart I, which was an oversight. We
therefore proposed to revise
§§ 414.412(b)(2) and 414.414(f) to
include a reference to drugs paid under
subpart I in addition to items paid
under subparts C or D. We proposed to
revise § 414.412(b)(2) to specify that the
bid amounts submitted for each drug in
a PC cannot exceed the payment limits
that would otherwise apply to the drug
under subpart I of part 414. Infusion
drugs have payment limits equal to 95
percent of the average wholesale price
for the drug in effect on October 1, 2003,
in accordance with § 414.707(a)(3). See
http://www.ecfr.gov/cgi-bin/text-idx
?c=ecfr&SID=7065f17b411e37b3788b6e
7fcce21f89&rgn=div8&view=text&node=
42:3.0.1.1.1.9.1.3amp;idno=42. We
proposed to revise § 414.414(f) to
specify that a contract is not awarded
under this subpart unless CMS
determines that the amounts to be paid
to contract suppliers for infusion drugs
provided with respect to external
infusion pumps under a CBP are
expected to be less than the amounts
that would otherwise be paid to
suppliers for the same drug under
subpart I of part 414. We sought
comments on this proposal and received
4 comments. The comments and
responses are set forth below.
Comment: Some commenters stated
that CMS does not have authority to
change payment amounts for infusion
drugs using competitive bidding. One
commenter stated that home infusion
therapy is one of the most clinically
complex therapies covered under the
DME benefit and involves more than the
delivery of infusion drugs to patients.
The commenter believed that payment
amounts for infusion drugs could be
improperly reduced if CMS sets the
payment rate using bids from
inexperienced providers who do not
adequately account for the cost of the
services.
Response: Section 1847(a)(2)(A) of the
Act includes infusion drugs in the list
of items subject to the DMEPOS
Competitive Bidding Program.
Therefore, we are finalizing our
proposal to modifying § 414.414(f) of the
regulations, with an additional
modification to make a general reference
to Subpart I. We note, however, that at
this time there are no CBPs in effect that
include infusion drugs. The phase-in of

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
infusion drugs would occur under a
future CBP(s).

XIII. Collection of Information
Requirements

XII. Accelerating Health Information
Exchange

A. Legislative Requirement for
Solicitation of Comments

HHS believes all patients, their
families, and their healthcare providers
should have consistent and timely
access to their health information in a
standardized format that can be securely
exchanged between the patient,
providers, and others involved in the
patient’s care. (HHS August 2013
Statement, ‘‘Principles and Strategies for
Accelerating Health Information
Exchange).’’ The Department is
committed to accelerating health
information exchange (HIE) through the
use of electronic health records (EHRs)
and other types of health information
technology (health IT) across the
broader care continuum through a
number of initiatives including: (1)
Alignment of incentives and payment
adjustments to encourage provider
adoption and optimization of health IT
and HIE services through Medicare and
Medicaid payment policies, (2) adoption
of common standards and certification
requirements for interoperable health
IT, (3) support for privacy and security
of patient information across all HIEfocused initiatives, and (4) governance
of health information networks. These
initiatives are designed to encourage
HIE among health care providers,
including professionals and hospitals
eligible for the Medicare and Medicaid
EHR Incentive Programs and those who
are not eligible for the EHR Incentive
programs, and are designed to improve
care delivery and coordination across
the entire care continuum. For instance,
to increase flexibility in the Office of the
National Coordinator for Health
Information Technology’s (ONC)
regulatory certification structure Health
IT Certification Program, ONC
expressed in the 2014 Edition Release 2
final rule (79 FR 54472 through 54473)
an intent to propose future changes to
the program that would permit the
certification of health IT for other health
care settings, such as long-term and
post-acute care and behavioral health
settings.
We believe that HIE and the use of
certified EHRs can effectively and
efficiently help ESRD facilities and
nephrologists improve internal care
delivery practices, support management
of patient care across the continuum,
and support the reporting of
electronically specified clinical quality
measures (eCQMs).

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Under the Paperwork Reduction Act
of 1995, we are required to provide 60day 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
requirement 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
In section II.E and section II.G of this
final rule, we are implementing changes
to regulatory text for the ESRD PPS in
CY 2015. However, the changes that are
being finalized do not impose any new
information collection requirements.
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
are not discussed in the regulation text
contained in this document. The
following is a discussion of these
information collections.
1. ESRD QIP
The information collection
requirements associated with the ESRD
QIP are currently approved under OMB
control number 0938–0386.
a. Data Validation Requirements for the
PY 2017 ESRD QIP
Section III.F.9 in this final rule
outlines our data validation studies for
PY 2017. Specifically, we proposed to
randomly sample records from 300
facilities as part of our continuing pilot
data-validation program. Each sampled
facility would be required to produce
approximately 10 records, and the
sampled facilities will be reimbursed by

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our validation contractor for the costs
associated with copying and mailing the
requested records. The burden
associated with these validation
requirements is the time and effort
necessary to submit the requested
records to a CMS contractor. We
estimated that it will take each facility
approximately 2.5 hours to comply with
this requirement. If 300 facilities are
asked to submit records, we estimate
that the total combined annual burden
for these facilities will be 750 hours
(300 facilities × 2.5 hours). According to
the Bureau of Labor Statistics, the mean
hourly wage of a registered nurse is
$33.13/hour. Since we anticipate that
nurses (or administrative staff who
would be paid at a lower hourly wage)
would submit this data, we estimated
that the aggregate cost of the
CROWNWeb data validation would be
$24,847.50 (750 hours × $33.13/hour)
total or $82.83 ($24,847.50/300
facilities) per facility in the sample.
We sought comments on these
estimates but did not receive any
comments.
Under the feasibility study for
validating data reported to the NHSN
Dialysis Event Module, we proposed to
randomly select nine facilities to
provide CMS with a quarterly list of all
positive blood cultures drawn from their
patients during the quarter, including
any positive blood cultures collected on
the day of, or the day following, a
facility patient’s admission to a hospital.
A CMS contractor will review the lists
to determine if dialysis events for the
patients in question were accurately
reported to the NHSN Dialysis Event
Module. If we determine that additional
medical records are needed to validate
dialysis events, facilities will be
required to provide those records within
60 days of a request for this information.
We estimated that the burden associated
with this feasibility study will be the
time and effort necessary for each
selected facility to compile and submit
to CMS a quarterly list of positive blood
cultures drawn from its patients. We
estimated that it will take each
participating facility approximately two
hours per quarter to comply with this
submission. If nine facilities are asked
to provide lists, we estimated the
quarterly burden for these facilities
would be 72 hours per year (9 facilities
× 2 hours/quarter × 4 quarters/year).
Again, we estimated the mean hourly
wage of a registered nurse to be $33.13/
hour, and we anticipated that nurses (or
administrative staff who would be paid
at a lower hourly wage) would be
responsible for preparing and
submitting the list. Because we
anticipated that nurses (or

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administrative staff who would be paid
at a lower hourly rate) would compile
and submit these data, we estimated
that the aggregate annual cost of the
feasibility study to validate NHSN data
would be $2,385.36 (72 hours × $33.13/
hour) total or $265.04 per facility
($2,385.36/9 facilities).
We sought comments on these
estimates. The comment we received
and our response is set forth below.
Comment: One commenter stated that
the cost estimate provided for the
proposed NHSN Data Validation study
is too low, because the study
requirements will likely be completed
by the facility’s Nurse Manager, who is
paid more than a Registered Nurse.
Response: We understand the
commenter’s concerns; however, the
Bureau of Labor Statistics does not
separately itemize Nurse Managers.
Based on our experience, Nurse
Managers are typically Registered
Nurses; therefore, we believe that the
costs of collecting this information have
been estimated correctly.
b. NHSN Healthcare Personnel
Influenza Vaccination Reporting
Measure for PY 2018
We proposed to include, beginning
with the PY 2018 ESRD QIP, a measure
requiring facilities to report healthcare
personnel influenza vaccination data to
NHSN. The NHSN is a secure, Internetbased surveillance system which is
maintained and managed by CDC. Many
dialysis facilities already submit NHSN
Bloodstream Infection clinical measure
data to NHSN. Specifically, we
proposed to require facilities to submit
on an annual basis an HCP Influenza
Vaccination Summary Form to NHSN,
according to the specifications available
in the NHSN Healthcare Personnel
Safety Component Protocol. We
estimated the burden associated with
this measure to be the time and effort
necessary for facilities to complete and
submit the HCP Influenza Vaccination
Summary Form on an annual basis. We
estimated that approximately 5,996
facilities will treat ESRD patients in PY
2018. We estimated it will take each
facility approximately 75 minutes to
collect and submit the data necessary to
complete the Healthcare Personnel
Influenza Vaccination Summary Form
on an annual basis. Therefore, the
estimated total annual burden
associated with reporting this measure
in PY 2018 is 7,495 hours [(75/60) hours
× 5,996 facilities]. Again, we estimated
the mean hourly wage of a registered
nurse to be $33.13, and we anticipated
that nurses (or administrative staff who
would be paid at a lower hourly wage)
would be responsible for this reporting.

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In total, we stated that we believe the
cost for all ESRD facilities to comply
with the reporting requirements
associated with the NHSN Healthcare
Personnel Influenza Vaccination
reporting measure would be
approximately $248,309 (7,495 hours ×
$33.13/hour) total, or $41.37 ($248,309/
5,996 facilities) per facility.
We sought comments on these
estimates but did not receive any
comments.
XIV. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
We examined the impacts of this 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 11,
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, harmonizing rules, and
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
services in CY 2015 and implements
several policy changes to the ESRD PPS.
The routine updates include: wage
index values, wage index budgetneutrality adjustment factor, and the
outlier payment threshold amounts. The
final policy changes to the ESRD PPS
include the revisions to the ESRDB
market basket, changes in the CBSA
delineations, changes to the laborrelated share, clarifications of the lowvolume payment adjustment and the
billing of short frequent hemodialysis
services, and additions and corrections
to the ICD–10–CM codes that will be
used for the co-morbidity payment
adjustment when compliance with ICD–
10–CM is required beginning October 1,
2015. In addition, this rule implements
sections 1881(b)(14)(F)(i) and (I) of the

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Act, as amended by section 217 (b)(1)
and (2) of PAMA, under which the drug
utilization adjustment transition is
eliminated and a 0.0 percent update to
the ESRD PPS base rate is imposed in
its place. This rule also implements the
delay in payment for oral-only drugs
used for the treatment of ESRD under
the ESRD PPS until January 1, 2024 as
required by section 217(a) of PAMA.
Failure to publish this final rule would
result in ESRD facilities not receiving
appropriate payments in CY 2015.
This final rule implements
requirements for the ESRD QIP by
adopting measure sets for the PYs 2017
and 2018 programs, as directed by
section 1881(h) of the Act. Failure to
finalize requirements for the PY 2017
ESRD QIP would prevent continuation
of the ESRD QIP beyond PY 2016. In
addition, finalizing requirements for the
PY 2018 ESRD QIP provides facilities
with more time to review and fully
understand new measures before their
implementation in the ESRD QIP.
This final rule establishes a
methodology for adjusting DMEPOS fee
schedule amounts using information
from the Medicare DMEPOS CBP. The
final rule phases in special payment
rules for certain DME in a limited
number of areas under the Medicare
DMEPOS CBP. This rule also clarifies
the Medicare hearing aid coverage
exclusion under section 1862(a)(7) of
the Act. Finally, this final rule modifies
the rules for a CHOW under the
Medicare DMEPOS CBP.
3. Overall Impact
We estimate that the proposed
revisions to the ESRD PPS will result in
an increase of approximately $30
million in payments to ESRD facilities
in CY 2015, which includes the amount
associated with updates to outlier
threshold amounts, updates to the wage
index, changes in CBSA delineations,
and the labor-related share.
For PY 2017, we estimate that the
finalized requirements related to the
ESRD QIP will cost approximately $27
thousand total, and the payment
reductions will result in a total impact
of approximately $12 million across all
facilities. For PY 2018, we estimate that
the finalized requirements related to the
ESRD QIP will cost approximately $248
thousand total, and the payment
reductions will result in a total impact
of approximately $12.7 million across
all facilities, resulting in a total impact
from the ESRD QIP of approximately
$13 million.
We estimate that the final
methodology for adjusting DMEPOS
payment amounts using information
from DMEPOS CBPs would save over

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$4.4 billion in gross payments over FYs
2016–2020. The gross savings would be
primarily achieved from the reduced
payment amounts for items and
services.
We estimate the special payment rules
at § 414.409 would not have a negative
impact on beneficiaries and suppliers,
or on the Medicare program. Contract
suppliers are responsible for furnishing
items and services needed by the
beneficiary, and the cost to suppliers for
furnishing these items and services
generally would not change based on
whether or not the equipment and
related items and services are paid for
separately under a capped rental
payment method. Because the supplier’s
bids would reflect the cost of furnishing
items in accordance with the new
payment rules, we expect the fiscal
impact generally would be the same as
is under the current payment rules.
Furthermore, as indicated above, the
special payment rules would be phased
in under a limited number of areas to
gradually determine effects on the
program, beneficiaries, and suppliers,

including their effects on cost, quality,
and access before expanding to other
areas after notice and comment
rulemaking, if supported by evaluation
results. We believe that the special
payment rules will give beneficiaries
more choice and flexibility in changing
suppliers. We estimate the clarification
of the statutory Medicare hearing aid
coverage exclusion will not have a
significant fiscal impact on the
Medicare program because we are not
changing the current coverage for
devices for Medicare payment purposes.
This regulation at § 411.15(d) will
provide guidance as to coverage of DME
with regard to the statutory exclusion.
We estimate finalizing a change to the
CHOW rules under the Medicare
DMEPOS CBP will have no significant
impact to DMEPOS suppliers.
B. Detailed Economic Analysis
1. CY 2015 End-Stage Renal Disease
Prospective Payment System

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categories of ESRD facilities, it is
necessary to compare estimated
payments in CY 2014 to estimated
payments in CY 2015. To estimate the
impact among various types of ESRD
facilities, it is imperative that the
estimates of payments in CY 2014 and
CY 2015 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
2014 update of CY 2013 National Claims
History file as a basis for Medicare
dialysis treatments and payments under
the ESRD PPS. We updated the 2013
claims to 2014 and 2015 using various
updates. The updates to the ESRD PPS
base rate are described in section II.C of
this rule. Table 33 shows the impact of
the estimated CY 2015 ESRD payments
compared to estimated payments to
ESRD facilities in CY 2014.

a. Effects on ESRD Facilities
To understand the impact of the
changes affecting payments to different

TABLE 33—IMPACT OF FINAL CHANGES IN PAYMENTS TO ESRD FACILITIES FOR CY 2015 FINAL RULE

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Facility type

All Facilities ..............................................
Type .........................................................
Freestanding .....................................
Hospital based ..................................
Ownership Type .......................................
Large dialysis organization ...............
Regional chain ..................................
Independent ......................................
Hospital based 1 ................................
Geographic Location ................................
Rural .................................................
Urban ................................................
Census Region ........................................
East North Central ............................
East South Central ...........................
Middle Atlantic ..................................
Mountain ...........................................
New England ....................................
Pacific 2 .............................................
Puerto Rico and Virgin Islands .........
South Atlantic ....................................
West North Central ...........................
West South Central ..........................
Facility Size ..............................................
Less than 4,000 treatments 3 ............
4,000 to 9,999 treatments ................
10,000 or more treatments ...............
Unknown ...........................................
Percentage of Pediatric Patients .............
Less than 2 .......................................
Between 2 and 19 ............................

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Number of
facilities

Number of
treatments
(in millions)

Effect of 2015
changes in
outlier policy

Effect of 2015
changes in
wage indexes,
CBSA designations and
labor-related
share

A

B

C
(%)

D
(%)

E
(%)

F
(%)

6,096
........................
5,615
481
........................
4,209
890
599
398
........................
1,230
4,866
........................
1,000
504
672
356
179
725
44
1,353
441
822
........................
1,283
2,261
2,536
16
........................
5,978
52

43.6
........................
40.7
2.9
........................
30.5
6.6
4.1
2.4
........................
6.5
37.0
........................
6.5
3.2
5.2
2.1
1.4
6.1
0.3
10.1
2.3
6.3
........................
3.2
11.8
28.6
0.0
........................
43.1
0.4

0.3
........................
0.3
0.3
........................
0.3
0.2
0.2
0.3
........................
0.3
0.3
........................
0.3
0.3
0.3
0.2
0.3
0.2
0.3
0.3
0.2
0.3
........................
0.3
0.3
0.3
0.3
........................
0.3
0.3

0.0
........................
0.0
0.2
........................
¥0.1
0.2
0.2
0.1
........................
¥0.8
0.1
........................
¥0.1
¥1.2
0.7
0.0
1.2
1.7
¥3.9
¥0.5
¥0.3
¥0.9
........................
¥0.2
¥0.3
0.1
¥2.2
........................
0.0
¥0.2

0.0
........................
0.0
0.0
........................
0.0
0.0
0.0
0.0
........................
0.0
0.0
........................
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
........................
0.0
0.0
0.0
0.0
........................
0.0
0.0

0.3
........................
0.3
0.5
........................
0.2
0.5
0.3
0.4
........................
¥0.5
0.4
........................
0.2
¥0.9
0.9
0.2
1.4
1.9
¥3.6
¥0.2
¥0.1
¥0.6
........................
0.1
0.0
0.4
¥1.9
........................
0.3
0.1

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Effect of 2015
changes in
payment rate
update

Effect of total
2015 changes

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TABLE 33—IMPACT OF FINAL CHANGES IN PAYMENTS TO ESRD FACILITIES FOR CY 2015 FINAL RULE—Continued

Facility type

Number of
facilities

Number of
treatments
(in millions)

Effect of 2015
changes in
outlier policy

Effect of 2015
changes in
wage indexes,
CBSA designations and
labor-related
share

A

B

C
(%)

D
(%)

E
(%)

F
(%)

12
54

0.0
0.1

0.1
0.1

0.0
0.1

0.0
0.0

0.1
0.1

Between 20 and 49 ..........................
More than 50 ....................................

Effect of 2015
changes in
payment rate
update

Effect of total
2015 changes

1 Includes

hospital-based ESRD facilities not reported to have large dialysis organization or regional chain ownership.
ESRD facilities located in Guam, American Samoa, and the Northern Mariana Islands.
3 1,283 ESRD facilities with less than 4,000 treatments, only 407 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 0.1 percent decrease in payments.
Note: Totals do not necessarily equal the sum of rounded parts, as percentages are multiplicative, not additive.

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2 Includes

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 changes to the outlier
payment policy described in section
II.C.4 of this final rule is shown in
column C. For CY 2015, the impact on
all ESRD facilities as a result of the
changes to the outlier payment policy
will be a 0.3 percent increase in
estimated payments. The estimated
impact of the changes to outlier
payment policy ranges from a 0.1
percent to a 0.3 percent increase. Nearly
all ESRD facilities are anticipated to
experience a positive effect in their
estimated CY 2015 payments as a result
of the outlier policy changes.
Column D shows the effect of the
wage index, new CBSA delineations,
and labor-related share on ESRD
facilities and reflects the CY 2015 wage
index values for the ESRD PPS
payments. Facilities located in the
census region of Puerto Rico and the
Virgin Islands would receive a 3.9
percent decrease in estimated payments
in CY 2015. Since most of the facilities
in this category are located in Puerto
Rico, the decrease is primarily due to
the change in the labor-related share.
The other categories of types of facilities
in the impact table show changes in
estimated payments ranging from a 2.2
percent decrease to a 1.7 percent
increase due to the update of the wage
indexes, CBSA delineations and laborrelated share.
Column E shows the effect of the
ESRD PPS payment rate update of 0.0
percent as required by sections
1881(b)(14)(F) and (I) as amended by
section 217 of PAMA.
Column F reflects the overall impact
(that is, the effects of the outlier policy
changes, the wage index, the CBSA
delineations, the labor-related share,

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and the effect of the payment rate
update. We expect that overall ESRD
facilities will experience a 0.3 percent
increase in estimated payments in 2015.
ESRD facilities in Puerto Rico and the
Virgin Islands are expected to receive a
3.6 percent decrease in their estimated
payments in CY 2015. This larger
decrease is primarily due to the negative
impact of the change in the labor-related
share. The other categories of types of
facilities in the impact table show
impacts ranging from a decrease of 1.9
percent to increase of 1.9 percent in
their 2015 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 2015, we estimate that
the 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 CY 2015 will be
approximately $9.0 billion. This
estimate takes into account a projected
increase in fee-for-service Medicare
dialysis beneficiary enrollment of 3.3
percent in CY 2015.

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d. Effects on Medicare Beneficiaries
Under the ESRD PPS, beneficiaries are
responsible for paying 20 percent of the
ESRD PPS payment amount. As a result
of the projected 0.3 percent overall
increase in ESRD PPS payment amounts
in CY 2015, we estimate that there will
be an increase in beneficiary coinsurance payments of 0.3 percent in CY
2015, which translates to approximately
$10 million.
e. Alternatives Considered
For this final rule, we will implement
a 50/50 blended wage index for CY 2015
that will apply to all ESRD facilities,
experiencing an impact, or not, due to
the implementation of the new CBSA
delineations. We considered
implementing the new CBSA
delineations without a transition;
however we decided to mitigate the
impact this change would have on ESRD
facilities that may experience a decrease
in payments due to the change.
In addition, we will implement the
updated labor-related share using a 2year transition. Therefore, for CY 2015,
we will apply 50 percent of the value of
the current labor-related share under the
ESRD PPS (41.737) and 50 percent of
the percent to the revised labor-related
share (50.673). In CY 2016, we will
apply 100 percent, or 50.673 percent, as
the labor-related share. We considered
implementing the labor-related share
without a transition; however we
decided to mitigate the impact this
change would have on ESRD facilities
that may experience a decrease in
payments due to the change.
2. End-Stage Renal Disease Quality
Incentive Program
a. Effects of the PY 2017 ESRD QIP
The ESRD QIP provisions are
intended to prevent possible reductions
in the quality of ESRD dialysis facility

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services provided to beneficiaries as a
result of payment changes under the
ESRD PPS. The methodology that we are
proposing to use to determine a
facility’s TPS for PY 2017 is described
in section III.F.5 of this final rule. Any
reductions in ESRD PPS payments as a
result of a facility’s performance under
the PY 2017 ESRD QIP would affect the
facility’s reimbursement rates in CY
2017.
We estimate that, of the total number
of dialysis facilities (including those not
receiving a TPS), approximately 19
percent or 1,123 of the facilities would
likely receive a payment reduction in
PY 2017. Facilities that do not receive
a TPS are not eligible for a payment
reduction.
In conducting our impact assessment,
we have assumed that there will be an

initial count of 5,996 dialysis facilities
paid under the ESRD PPS. Table 34
shows the overall estimated distribution
of payment reductions resulting from
the PY 2017 ESRD QIP.

To estimate whether or not a facility
would receive a payment reduction in
PY 2017, we scored each facility on
achievement and improvement on
several measures we have previously
finalized and for which there were
TABLE 34—ESTIMATED DISTRIBUTION available data from CROWNWeb and
OF PY 2017 ESRD QIP PAYMENT Medicare claims. Measures used for the
REDUCTIONS.
simulation are shown in Table 35.
Payment
reduction

0.0%
0.5%
1.0%
1.5%
2.0%

Number of
facilities

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

Percent of
facilities

4,541
784
282
44
13

80.17
13.84
4.98
0.78
0.23

Note: This table excludes 332 facilities that
we estimate will not receive a payment reduction because they will not report enough data
to receive a Total Performance Score.

TABLE 35—DATA USED TO ESTIMATE PY 2017 ESRD QIP PAYMENT REDUCTIONS
Period of time used to calculate achievement thresholds, performance standards,
benchmarks, and improvement thresholds

Measure
Vascular Access Type
% Fistula .................................................................
% Catheter .............................................................
Kt/V
Adult HD .................................................................
Adult PD .................................................................
Pediatric HD ...........................................................
Hypercalcemia ...............................................................
SRR ...............................................................................

Clinical measure topic areas with less
than 11 cases for a facility were not
included in that facility’s Total
Performance Score. Each facility’s Total
Performance Score was compared to the
estimated minimum Total Performance
Score and the payment reduction table
found in section III.F.8 of this final rule.
Facility reporting measure scores were
estimated using available data from CY
2013. Facilities were required to have a
score on at least one clinical and one
reporting measure in order to receive a
Total Performance Score.
To estimate the total payment
reductions in PY 2017 for each facility
resulting from this final rule, we
multiplied the total Medicare payments
to the facility during the 1-year period
between January 2013 and December

Performance period

Jan 2012–Dec 2012 ...................................
Jan 2012–Dec 2012 ...................................

Jan 2013–Dec 2013.
Jan 2013–Dec 2013.

Jan 2012–Dec 2012 ...................................
Jan 2012–Dec 2012 ...................................
Jan 2012–Dec 2012 ...................................
May 2012–Dec 2012 ..................................
Jan 2012–Dec 2012 ...................................

Jan
Jan
Jan
Jan
Jan

2013 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 2013
through December 2013 times the
estimated payment reduction
percentage). For PY 2017, the total
payment reduction for the 1,123
facilities estimated to receive a
reduction is approximately $11.9
million ($11,927,399). Further, we
estimate that the total costs associated
with the collection of information
requirements for PY 2017 described in
section III.F.9 of this final rule would be
approximately $27 thousand for all
ESRD facilities. As a result, we estimate
that ESRD facilities will experience an
aggregate impact of approximately $12

2013–Dec
2013–Dec
2013–Dec
2013–Dec
2013–Dec

2013.
2013.
2013.
2013.
2013.

million ($27,232 + $11,927,399 =
$11,954,631) in PY 2017, as a result of
the PY 2017 ESRD QIP.
Table 36 below shows the estimated
impact of the finalized ESRD QIP
payment reductions to all ESRD
facilities for PY 2017. The table
estimates 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 are proposing to use for the PY 2017
ESRD QIP, the actual impact of the PY
2017 ESRD QIP may vary significantly
from the values provided here.

tkelley on DSK3SPTVN1PROD with RULES3

TABLE 36—ESTIMATED IMPACT OF FINALIZED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES IN PY 2017
Number of
treatments
2013
(in millions)

Number of
facilities

All Facilities ..........................................................................

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5,996

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Number of
facilities with
QIP score

39.1

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5,664

06NOR3

Number of
facilities
expected to
receive a
payment
reduction
1,123

Payment
reduction
(percent
change in
total ESRD
payments)
¥0.13

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TABLE 36—ESTIMATED IMPACT OF FINALIZED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES IN PY 2017—Continued
Number of
treatments
2013
(in millions)

Number of
facilities

Facility Type:
Freestanding .................................................................
Hospital-based ..............................................................
Ownership Type:
Large Dialysis ...............................................................
Regional Chain .............................................................
Independent ..................................................................
Hospital-based (non-chain) ...........................................
Facility Size:
Large Entities ................................................................
Small Entities 1 ..............................................................
Rural Status:
1) Yes ...........................................................................
2) No .............................................................................
Census Region:
Northeast ......................................................................
Midwest .........................................................................
South .............................................................................
West ..............................................................................
US Territories 2 .............................................................
Census Division:
East North Central ........................................................
East South Central .......................................................
Middle Atlantic ..............................................................
Mountain .......................................................................
New England ................................................................
Pacific ...........................................................................
South Atlantic ................................................................
West North Central .......................................................
West South Central ......................................................
US Territories 3 .............................................................
Facility Size (# of total treatments):
Less than 4,000 treatments ..........................................
4,000–9,999 treatments ................................................
Over 10,000 treatments ................................................
Unknown .......................................................................
1
2

tkelley on DSK3SPTVN1PROD with RULES3

3

Number of
facilities with
QIP score

Number of
facilities
expected to
receive a
payment
reduction

Payment
reduction
(percent
change in
total ESRD
payments)

5,520
476

36.6
2.5

5,275
389

1,008
115

¥0.12
¥0.21

4,150
871
582
393

27.5
5.9
3.6
2.1

3,987
828
529
320

704
170
151
98

¥0.11
¥0.14
¥0.23
¥0.22

5,021
975

33.5
5.7

4,815
849

874
249

¥0.11
¥0.22

1,212
4,784

5.9
33.3

1,156
4,508

181
942

¥0.10
¥0.14

792
1,341
2,527
1,015
321

5.8
7.7
17.5
7.1
1.0

756
1,259
2,451
964
234

161
268
487
128
79

¥0.15
¥0.14
¥0.12
¥0.08
¥0.27

979
497
661
352
177
710
1,333
438
807
42

5.8
2.9
4.8
1.9
1.3
5.4
9.1
2.0
5.6
0.3

897
473
619
334
167
670
1,272
410
782
40

224
81
135
35
33
104
301
59
126
25

¥0.17
¥0.11
¥0.15
¥0.07
¥0.14
¥0.10
¥0.15
¥0.09
¥0.10
¥0.43

1,086
2,226
2,523
161

2.7
10.5
25.7
0.3

901
2,167
2,504
92

163
371
561
28

¥0.13
¥0.11
¥0.14
¥0.28

Small Entities include hospital-based and satellite facilities and non-chain facilities based on DFC self-reported status.
Includes Puerto Rico and Virgin Islands.
Based on claims and CROWNWeb data through December 2013.

b. Effects of the PY 2018 ESRD QIP
The methodology that we are using to
determine a facility’s TPS for the PY
2018 ESRD QIP is described in section
III.G.9 of this final rule. Any reductions
in ESRD PPS payments as a result of a
facility’s performance under the PY
2018 ESRD QIP would apply to ESRD
PPS payments made to the facility in CY
2018.
We estimate that, of the total number
of dialysis facilities (including those not
receiving a TPS), approximately 21
percent or 1,284 of the facilities would
likely receive a payment reduction in
PY 2018. Facilities that do not receive
a TPS are not eligible for a payment
reduction.
In conducting our impact assessment,
we have assumed that there will be
5,996 dialysis facilities paid through the

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PPS. Table 37 shows the overall
estimated distribution of payment
reductions resulting from the PY 2018
ESRD QIP.

To estimate whether or not a facility
would receive a payment reduction in
PY 2018, we scored each facility on
achievement and improvement on
several measures we have previously
TABLE 37—ESTIMATED DISTRIBUTION finalized and for which there were
OF PY 2018 ESRD QIP PAYMENT available data from CROWNWeb and
Medicare claims. Measures used for the
REDUCTIONS
simulation are shown in Table 38.
Payment
reduction

0.0%
0.5%
1.0%
1.5%
2.0%

Number of
facilities

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

4,338
1,023
225
33
3

Percent of
facilities
77.2
18.2
4.0
0.6
0.1

NOTE: This table excludes 374 facilities that
we estimate will not receive a payment reduction because they will not report enough data
to receive a Total Performance Score.

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66257

TABLE 38—DATA USED TO ESTIMATE PY 2018 ESRD QIP PAYMENT REDUCTIONS
Measure

Period of time used to calculate achievement thresholds, performance standards,
benchmarks, and improvement thresholds

Vascular Access Type ...................................................
% Fistula .................................................................
% Catheter .............................................................
Kt/V ................................................................................
Adult HD .................................................................
Adult PD .................................................................
Pediatric HD ...........................................................
Pediatric PD ...........................................................
Hypercalcemia ...............................................................
SRR ...............................................................................
STrR ..............................................................................

.....................................................................
Jan 2012–Dec 2012 ...................................
Jan 2012–Dec 2012 ...................................
.....................................................................
Jan 2012–Dec 2012 ...................................
Jan 2012–Dec 2012 ...................................
Jan 2012–Dec 2012 ...................................
Jan 2012–Dec 2012 ...................................
May 2012–Dec 2012 ..................................
Jan 2012–Dec 2012 ...................................
Jan 2012–Dec 2012 ...................................

Clinical measure topic areas with less
than 11 cases for a facility were not
included in that facility’s Total
Performance Score. Each facility’s Total
Performance Score was compared to a
proxy minimum Total Performance
Score developed consistent with the
policies outlined in sections III.G.9 of
this final rule. Facility reporting
measure scores were estimated using
available data from CY 2013. Facilities
were required to have a score on at least
one clinical and one reporting measure
in order to receive a Total Performance
Score.
To estimate the total payment
reductions in PY 2018 for each facility
resulting from this final rule, we
multiplied the total Medicare payments
to the facility during the 1-year period
between January 2013 and December

2013 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 2013
through December 2013 times the
estimated payment reduction
percentage). For PY 2018, the total
payment reduction for all of the 1,284
facilities expected to receive a reduction
is approximately $11.6 million
($11,576,214). Further, we estimate that
the total costs associated with the
collection of information requirements
for PY 2018 described in section III.G.2.f
of this final rule would be
approximately $248 thousand for all
ESRD facilities. As a result, we estimate
that ESRD facilities will experience an
aggregate impact of approximately $11.8

Performance period

Jan 2013–Dec 2013.
Jan 2013–Dec 2013.
Jan
Jan
Jan
Jan
Jan
Jan
Jan

2013–Dec
2013–Dec
2013–Dec
2013–Dec
2013–Dec
2013–Dec
2013–Dec

2013.
2013.
2013.
2013.
2013.
2013.
2013.

million ($248,309 + $11,576,215 =
$11,824,524) in PY 2018, as a result of
the PY 2018 ESRD QIP.
Table 39 below shows the estimated
impact of the finalized ESRD QIP
payment reductions to all ESRD
facilities for PY 2018. 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 2018 ESRD QIP, the
actual impact of the PY 2018 ESRD QIP
may vary significantly from the values
provided here.

TABLE 39—ESTIMATED IMPACT OF FINALIZED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR PY 2018
Number of
treatments
2013
(in millions)

tkelley on DSK3SPTVN1PROD with RULES3

Number of
facilities

All Facilities ..........................................................................
Facility Type:
Freestanding .................................................................
Hospital-based ..............................................................
Ownership Type:
Large Dialysis ...............................................................
Regional Chain .............................................................
Independent ..................................................................
Hospital-based (non-chain) ..................................................
Facility Size:
Large Entities ................................................................
Small Entities 1 ..............................................................
Rural Status:
1) Yes ...........................................................................
2) No .............................................................................
Census Region:
Northeast ......................................................................
Midwest .........................................................................
South .............................................................................
West ..............................................................................
US Territories 2 .............................................................
Census Division:
East North Central ........................................................
East South Central .......................................................

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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)

5,996

39.1

5,622

1,284

¥0.14

5,520
476

36.6
2.5

5,251
371

1,150
134

¥0.13
¥0.23

4,150
871
582
393

27.5
5.9
3.6
2.1

3,976
823
520
303

789
212
174
109

¥0.11
¥0.16
¥0.22
¥0.23

5,021
975

33.5
5.7

4,799
823

1,001
283

¥0.12
¥0.23

1,212
4,784

5.9
33.3

1,151
4,471

250
1,034

¥0.13
¥0.14

792
1,341
2,527
1,015
321

5.8
7.7
17.5
7.1
1.0

748
1,247
2,445
955
227

175
317
530
153
109

¥0.14
¥0.15
¥0.12
¥0.10
¥0.36

979
497

5.8
2.9

888
472

256
94

¥0.17
¥0.12

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TABLE 39—ESTIMATED IMPACT OF FINALIZED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR PY 2018—
Continued
Number of
treatments
2013
(in millions)

Number of
facilities

Middle Atlantic ..............................................................
Mountain .......................................................................
New England ................................................................
Pacific ...........................................................................
South Atlantic ................................................................
West North Central .......................................................
West South Central ......................................................
US Territories 2 .............................................................
Facility Size (# of total treatments).
Less than 4,000 treatments ..........................................
4,000–9,999 treatments ................................................
Over 10,000 treatments ................................................
Unknown .......................................................................
1
2
3

Number of
facilities
expected to
receive a payment reduction

Payment
reduction
(percent
change in total
ESRD
payments)

661
352
177
710
1,333
438
807
42

4.8
1.9
1.3
5.4
9.1
2.0
5.6
0.3

612
334
164
660
1,268
405
779
40

150
46
35
122
328
81
146
26

¥0.15
¥0.08
¥0.12
¥0.11
¥0.15
¥0.12
¥0.11
¥0.42

1,086
2,226
2,523
161

2.7
10.5
25.7
0.3

869
2,163
2,502
88

219
429
587
49

¥0.16
¥0.11
¥0.13
¥0.49

Small Entities include hospital-based and satellite facilities and non-chain facilities based on DFC self-reported status.
Includes Puerto Rico and Virgin Islands.
Based on claims and CROWNWeb data through December 2013.

3. DMEPOS Provisions

b. Effects of the Final Special Payment
Methodologies Under the Competitive
Bidding Program
We believe that the final special
payment rules will not have a
significant impact on beneficiaries and
We estimate that the final
suppliers. Contract suppliers are
methodology for adjusting DMEPOS
responsible for furnishing items and
payment amounts using information
services needed by the beneficiary, and
from DMEPOS CBPs will save over $4.4 the cost to suppliers for furnishing these
billion in gross payments over FY 2016
items and services does not change
through 2020. The gross savings will be
based on whether or not the equipment
primarily achieved from price
and related items and services are paid
reductions for items. Therefore, most of
for separately under a capped rental
the economic impact is expected from
payment method. Because the supplier’s
the reduced prices. We estimate that
bids will reflect the cost of furnishing
approximately half of the DMEPOS
items in accordance with the new
items and services furnished to
payment rules, we expect the overall
savings will be generally the same as
Medicare beneficiaries are furnished to
they are under the current payment
beneficiaries residing outside existing
rules. Section 1847(b)(2)(A)(iii)
CBAs. (See Table 40.)
prohibits the awarding of contracts
TABLE 40—IMPACT OF PRICING ITEMS under a CBP unless total payments
IN NON-COMPETITIVE AREAS USING made to contract suppliers in the CBA
are expected to be less than the payment
COMPETITIVE BIDDING PRICING *
amounts that would otherwise be made.
Furthermore, as indicated above, we are
Impact on
Impact on
finalizing a phase-in of the special
the gross
beneficiary
impact in
cost sharing payment rules under a limited number
FY
dollars (to
in dollars (to of areas to gradually determine effects
the nearer
the nearer
ten million)
ten million) on the program, beneficiaries, and
suppliers. If supported by evaluation
2016 ..................
¥550
¥130 results, a decision to expand the special
2017 ..................
¥1,120
¥280 payment rules to other areas will be
2018 ..................
¥1,330
¥330 addressed in future rulemaking.
a. Effects of the Final Methodology for
Adjusting DMEPOS Payment Amounts
Using Information From Competitive
Bidding Programs

tkelley on DSK3SPTVN1PROD with RULES3

Number of
facilities with
QIP score

2019 ..................
2020 ..................

¥1,430
¥1,530

¥360
¥380

* The impacts of the final rule differ from
those of the proposed rule due to six-month
phase-in in 2016 of the adjusted fees and the
expanded definition of rural areas.

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c. Effects of the Final Clarification of the
Scope of the Medicare Hearing Aid
Coverage Exclusion
This final rule clarifies the scope of
the Medicare coverage exclusion for

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hearing aids. This rule will not have a
fiscal impact on the Medicare program
because there will be no change in the
coverage of devices for Medicare
payment purposes. This clarification
will provide clear guidance about
coverage of DME with regard to the
statutory hearing aid exclusion.
d. Definition of Minimal SelfAdjustment of Orthotics Under
Competitive Bidding
The final rule will not finalize a
modification to the definition of
minimal self-adjustment.
e. Effects of the Final Revision To
Change of Ownership Rules To Allow
Contract Suppliers To Sell Specific
Lines of Business
This final rule modifies the change of
ownership rules to reduce interference
with the normal course of business for
DME suppliers. This rule establishes an
exception under the CHOW rules to
allow transfer of part of a competitive
bidding contract when a contract
supplier sells a distinct line of business
to a qualified successor entity under
certain specific circumstances. This
change impacts businesses in a positive
way by allowing them to conduct
everyday transactions without
interference from our rules and
regulations.
C. Accounting Statement
As required by OMB Circular A–4
(available at http://
www.whitehouse.gov/omb/circulars_
a004_a-4), in Table 41 below, we have

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prepared an accounting statement
showing the classification of the

transfers and costs associated with the
various provisions of this proposed rule.

TABLE 41—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS AND COSTS/SAVINGS
Category

Transfers
ESRD PPS for CY 2015

Annualized Monetized Transfers ..............................................................
From Whom to Whom ..............................................................................

$30 million.
Federal government to ESRD providers.

Category

Transfers

Increased Beneficiary Co-insurance Payments .......................................
From Whom to Whom ..............................................................................

$10 million.
Beneficiaries to ESRD providers.

ESRD QIP for PY 2017
Annualized Monetized Transfers ..............................................................
From Whom to Whom ..............................................................................

¥$11.9 million.
Federal government to ESRD providers.

Category

Costs

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

$27 thousand.

ESRD QIP for PY 2018
Annualized Monetized Transfers ..............................................................
From Whom to Whom ..............................................................................

¥$11.6 million.
Federal government to ESRD providers.

Category

Costs

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

$248 thousand.

Pricing Items in Non-competitive Areas Using Competitive Bidding Pricing
Category

Transfer

Annualized Monetized Transfer on Beneficiary Cost Sharing

Estimates

Year dollar

¥$288.0 million ................
¥$292.5 million ................
From Whom to Whom ..............................................................................

2014
2014

Discount
rate
7%
3%

Period
covered
2016–2020
2016–2020

Beneficiaries to Medicare providers.
Transfers

Annualized Monetized Transfer Payments

Estimates

Year dollar

¥$1,160.9 million .............
¥$1,178.5 million .............

tkelley on DSK3SPTVN1PROD with RULES3

From Whom to Whom ..............................................................................

XV. 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 16 percent of ESRD
dialysis facilities are considered small
entities according to the Small Business
Administration’s (SBA) size standards,
which classifies small businesses as

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7%
3%

Period
covered
2016–2020
2016–2020

Federal government to Medicare providers.

those dialysis facilities having total
revenues of less than $38.5 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/content/smallbusiness-size-standards (Kidney
Dialysis Centers are listed as 621492
with a size standard of $38.5 million).
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

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2014

Discount
rate

Sfmt 4700

included in this estimated RFA analysis.
Individuals and States are not included
in the definition of a small entity.
For purposes of the RFA, we estimate
that approximately 16 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 33.
Using the definitions in this ownership
category, we consider the 599 facilities
that are independent and the 398
facilities that are shown as hospital-

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based to be small entities. The ESRD
facilities that are owned and operated
by LDOs and regional chains would
have total revenues of more than $38.5
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 final updates in
this rule, a hospital-based ESRD facility
(as defined by ownership type) is
estimated to receive a 0.4 percent
increase in payments for CY 2015. An
independent facility (as defined by
ownership type) is also estimated to
receive a 0.3 percent increase in
payments for CY 2015.
We estimate that of the 1,123 ESRD
facilities expected to receive a payment
reduction in the PY 2017 ESRD QIP, 249
of those facilities would be ESRD small
entity facilities. We present these
findings in in Table 34 (‘‘Estimated
Distribution of PY 2017 ESRD QIP
Payment Reductions’’) and Table 36
(‘‘Estimated Impact of Finalized QIP
Payment Reductions to ESRD Facilities
for PY 2017’’) above. We estimate that
the payment reductions will average
approximately $10,621 per facility
across the 1,123 facilities receiving a
payment reduction, and $10,329 for
each small entity facility. Using our
estimates of facility performance, we
also estimated the impact of payment
reductions on ESRD small entity
facilities by comparing the total
payment reductions for the 249 small
entity facilities with the aggregate ESRD
payments to all small facilities. We
estimate that there are a total of 975
small facilities, and that the aggregate
ESRD PPS payments to these facilities
would decrease 0.22 percent in PY
2017.
We estimate that of the 1,284 ESRD
facilities expected to receive a payment
reduction in the PY 2018 ESRD QIP, 283
are ESRD small entity facilities. We
present these findings in Table 37
(‘‘Estimated Distribution of PY 2018
ESRD QIP Payment Reductions’’) and
Table 39 (‘‘Estimated Impact of
Finalized QIP Payment Reductions to
ESRD Facilities for PY 2018’’) above. We
estimate that the payment reductions
will average approximately $9,016 per
facility across the 1,284 facilities
receiving a payment reduction, and
$9,009 for each small entity facility.
Using our estimates of facility
performance, we also estimated the
impact of payment reductions on ESRD
small entity facilities by comparing the
total estimated payment reductions for
283 small entity facilities with the
aggregate ESRD payments to all small
entity facilities. We estimate that there

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are a total of 975 small entity facilities,
and that the aggregate ESRD PPS
payments to these facilities would
decrease 0.23 percent in PY 2018.
We expect the final methodologies for
adjusting DMEPOS fee schedule
amounts using information from
DMEPOS CBPs will have a significant
impact on a substantial number of small
suppliers. Although suppliers
furnishing items and services outside
CBAs do not have to compete and be
awarded contracts in order to continue
furnishing these items and services, the
fee schedule amounts for these items
and services will be reduced using the
methodology established as a result of
the final rule. The statute requires that
the methodology for adjusting fee
schedule amounts take into
consideration the costs of furnishing
items and services in areas where the
adjustments will occur and these
considerations are discussed in the
preamble (refer to section V.A.5.). The
final methodology for making payment
adjustments will allow for adjustments
based on bids in different geographic
regions to reflect regional costs of
furnishing items and services or the
national limits for adjustments in areas
with costs outside of MSAs and areas
subject to section 1847(a)(3)(A) of the
Act. We believe that suppliers will be
able to continue furnishing items and
services to beneficiaries in areas outside
the CBAs after the reductions in the
payment amounts are applied without a
significant change in the rate at which
they accept assignment of Medicare
claims for these items and services.
Because section 1834(a)(1)(F)(ii) of the
Act mandates that payment amounts for
DME subject to competitive bidding be
adjusted in areas where CBPs are not
implemented, the only alternative we
can consider other than paying based on
adjusted fee schedule amounts is to
implement CBPs in all areas. However,
this approach would have an even
greater impact on small suppliers.
We expect the final special payment
rules for certain DME will not have a
significant impact on small suppliers.
We believe that these rules will benefit
affected suppliers since payment for
rental of certain DME would no longer
be capped and suppliers would retain
ownership to the equipment.
We expect the final rule which
clarifies the scope of the Medicare
statutory exclusion for hearing aids will
have no impact on small suppliers as we
are not changing current coverage of
devices for Medicare payment purposes.
We expect that the final revisions to
CHOW rules to allow contract suppliers
to sell specific lines of business
provision will have a positive impact on

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suppliers and no significant negative
impact on small suppliers.
Therefore, the Secretary has
determined that this final rule will have
a significant economic impact on a
substantial number of small entities. We
solicited comment on the RFA analysis
provided. The comments and our
responses are set forth below.
Comment: Some commenters noted
that CMS has not considered the
economic and regulatory flexibility
analysis under the proposed rule for
applying special payment rules for
certain DME in competitive bidding
areas and the final Methodology for
Adjusting DMEPOS Payment Amounts
using Information from Competitive
Bidding Programs.
Response: We thank the commenters
for their input. The continuous rental
bundled payment methodology will be
phased in for only two items, CPAP
device and power wheelchairs in no
more than 12 CBAs at this time. Our
analysis indicates that establishing
single payment amounts based upon
bids submitted by suppliers using the
continuous rental bundled methodology
instead of capped rental methodology
for these two items in no more than 12
CBAs will not have a significant impact
because the bid limits for power
wheelchairs will be based upon current
utilization and expenditure in the 12
CBAs. The updated 1993 fee schedule
amounts would be the bid limits for
CPAP. The 1993 fee schedule represents
a fairly accurate bundled rental payment
amount for the CPAP and the covered
item update factor would cover for
improvements in technology. The CPAP
fees from 1993 were based on average
reasonable charges from July 1986
through June 1987 for rental of the
device with no separate payment for the
accessories; we believe the historic
amounts fairly reflect the utilization and
payment for accessories used with the
device. We expect that the final special
payment rules will not have a
significant impact on small suppliers
because of the limited scope of the
program. The phase-in of the special
payment rules would be limited to only
two product categories; Power
Wheelchairs and CPAP devices in no
more than 12 CBAs.
We expect the final methodologies for
adjusting DMEPOS fee schedule
amounts using information from
DMEPOS CBPs will have a significant
impact on a substantial number of small
suppliers. However, section
1834(a)(1)(F)(ii) of the Act mandates
that payment amounts for DME subject
to competitive bidding be adjusted in
areas where CBPs are not implemented,
therefore, the only alternative we can

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consider other than paying based on
adjusted fee schedule amounts is to
implement CBPs in all areas, however,
our analysis indicates that this approach
would have an even greater impact on
small suppliers. The statute requires
that the methodology for adjusting fee
schedule amounts take into
consideration the costs of furnishing
items and services in areas where the
adjustments will occur and we have
considered these factors in developing
the final methodology, thereby reducing
the extent of impact on small suppliers.
We believe that suppliers will be able to
continue furnishing items and services
to beneficiaries in areas outside the
CBAs after the reductions in the
payment amounts are applied without a
significant change in the rate at which
they accept assignment of Medicare
claims for these items and services.
XVI. 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 2013, that
threshold is approximately $141
million. This final rule does not include
any mandates that would impose
spending costs on State, local, or Tribal
governments in the aggregate, or by the
private sector, of $141 million.

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XVII. Federalism Analysis
Executive Order 13132 on Federalism
(August 4, 1999) establishes certain
requirements that an agency must meet
when it promulgates a proposed rule
(and subsequent final rule) that imposes
substantial direct requirement costs on
State and local governments, preempts
State law, or otherwise has Federalism
implications. We have reviewed 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.
XVIII. Congressional Review Act
This final rule is subject to the
Congressional Review Act provisions of
the Small Business Regulatory
Enforcement Fairness Act of 1996
(5 U.S.C. 801 et seq.) and has been
transmitted to the Congress and the
Comptroller General for review.
In accordance with the provisions of
Executive Order 12866, this proposed
rule was reviewed by the Office of
Management and Budget.

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XIX. Files Available to the Public via
the Internet
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 and
is posted on the CMS Web site at
http://www.cms.gov/ESRDPayment/
PAY/list.asp In addition to the
Addenda, limited data set (LDS) files are
available for purchase at http://
www.cms.gov/Research-Statistics-Dataand-Systems/Files-for-Order/
LimitedDataSets/EndStageRenal
DiseaseSystemFile.html. Readers who
experience any problems accessing the
Addenda or LDS files, should contact
Stephanie Frilling at (410) 786–4507.
List of Subjects
42 CFR Part 405
Administrative practice and
procedure, Health facilities, Health
professions, Kidney diseases, Medical
devices, Medicare, Reporting and
recordkeeping requirements, Rural
areas, and X-rays
42 CFR Part 411
Kidney diseases, Medicare, Physician
Referral, and Reporting and
recordkeeping requirements
42 CFR Part 413
Health facilities, Kidney diseases,
Medicare, Reporting and recordkeeping
requirements.
42 CFR Part 414
Administrative practice and
procedure, Health facilities, Health
professions, Kidney diseases, Medicare,
and 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 405—FEDERAL HEALTH
INSURANCE FOR THE AGED AND
DISABLED
1. The authority for part 405
continues to read as follows:

■

Authority: Secs. 205(a), 1102, 1861,
1862(a), 1869, 1871, 1874, 1881, and 1886(k)
of the Social Security Act (42 U.S.C. 405(a),
1302, 1395x, 1395y(a), 1395ff, 1395hh,
1395kk, 1395rr and 1395ww(k)), and sec. 353
of the Public Health Service Act (42 U.S.C.
263a).
§ 405.2102

[Amended]

2. Section 405.2102 is amended by
removing all the definitions, with the
exception of, ‘‘Network, ESRD’’, and
‘‘Network organization’’.

■

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66261

PART 411—EXCLUSIONS FROM
MEDICARE AND LIMITATIONS ON
MEDICARE PAYMENT
3. The authority citation for part 411
continues to read as follows:

■

Authority: Secs. 1102, 1860D–1 through
1860D–42, 1871, and 1877 of the Social
Security Act (42 U.S.C. 1302, 1395w–101
through 1395w–152, 1395hh, and 1395nn).

4. Section 411.15 is amended by
revising paragraph (d) to read as
follows:

■

§ 411.15 Particular services excluded from
coverage.

*

*
*
*
*
(d) Hearing aids or examinations for
the purpose of prescribing, fitting, or
changing hearing aids.
(1) Scope. The scope of the hearing
aid exclusion encompasses all types of
air conduction hearing aids that provide
acoustic energy to the cochlea via
stimulation of the tympanic membrane
with amplified sound and bone
conduction hearing aids that provide
mechanical stimulation of the cochlea
via stimulation of the scalp with
amplified mechanical vibration or by
direct contact with the tympanic
membrane or middle ear ossicles.
(2) Devices not subject to the hearing
aid exclusion. Paragraph (d)(1) of this
section shall not apply to the following
devices that produce the perception of
sound by replacing the function of the
middle ear, cochlea, or auditory nerve:
(i) Osseointegrated implants in the
skull bone that provide mechanical
energy to the cochlea via a mechanical
transducer, or
(ii) Cochlear implants and auditory
brainstem implants that replace the
function of cochlear structures or
auditory nerve and provide electrical
energy to auditory nerve fibers and
other neural tissue via implanted
electrode arrays.
*
*
*
*
*
PART 413—PRINCIPLES OF
REASONABLE COST
REIMBURSEMENT; PAYMENT FOR
END–STAGE RENAL DISEASE
SERVICES; OPTIONAL
PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED
NURSING FACILITIES
5. 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–

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332), sec. 3201 of Pub. L. 112–96 (126 Stat.
156), sec. 632 of Pub. L. 112–240 (126 Stat.
2354), and sec. 217 of Pub. L. No. 113–93.
§ 413.174

[Amended]

6. Section 413.174 (f)(6) is amended
by removing ‘‘January 1, 2016’’ and by
adding in its place ‘‘January 1, 2024’’.
■ 7. Section 413.232 is amended by
revising paragraph (b) introductory text
and paragraph (f) and adding paragraph
(h) to read as follows:
■

§ 413.232

Low-volume adjustment.

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*

*
*
*
*
(b) Definition of low-volume facility.
A low-volume facility is an ESRD
facility that, as determined based on the
documentation submitted pursuant to
paragraph (h) of this section:
*
*
*
*
*
(f) Except as provided in paragraph (g)
of this section, to receive the lowvolume adjustment an ESRD facility
must provide an attestation statement,
by November 1st of each year preceding
the payment year, to its Medicare
Administrative Contractor that the
facility meets all the criteria established
in this section, except that, for calendar
year 2012, the attestation must be
provided by January 3, 2012, and for,
calendar year 2015, the attestation must
be provided by December 31, 2014.
*
*
*
*
*
(h) To receive the low-volume
adjustment, an ESRD facility must
include in their attestation provided
pursuant to paragraph (f) of this section
a statement that the ESRD facility meets
the definition of a low-volume facility
in paragraph (b) of this section. To
determine eligibility for the low-volume
adjustment, the Medicare
Administrative Contractor (MAC) on
behalf of CMS relies upon as filed or
final settled 12-consecutive month cost
reports for the 3 cost reporting years
preceding the payment year to verify the
number of treatments, except that:
(1) In the case of a hospital-based
ESRD facility as defined in § 413.174(c),
the MAC relies upon the attestation
submitted pursuant to paragraph (f) of
this section and may consider other
supporting data in addition to the total
treatments reported in each of the 12consecutive month cost reports for the
3 cost reporting years preceding the
payment year to verify the number of
treatments that were furnished by the
individual hospital-based ESRD facility
seeking the adjustment; and
(2) In the case of an ESRD facility that
has undergone a change of ownership
that does not result in a new Provider
Transaction Access Number for the
ESRD facility, the MAC relies upon the
attestation and when the change of

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ownership results in two non-standard
cost reporting periods (less than or
greater than 12-consecutive months),
does one or both of the following for the
3 cost reporting years preceding the
payment year to verify the number of
treatments:
(i) Combines the two non-standard
cost reporting periods of less than 12
months to equal a full 12-consecutive
month period; and/or
(ii) Combines the two non-standard
cost reporting periods that in
combination may exceed 12-consecutive
months and prorates the data to equal a
full 12-consecutive month period.
§ 413.237

[Amended]

8. In § 413.237, paragraph (a)(1)(iv) is
amended by removing ‘‘January 1,
2016’’ and adding in its place ‘‘January
1, 2024’’.

■

PART 414—PAYMENT FOR PART B
MEDICAL AND OTHER HEALTH
SERVICES
9. The authority citation for part 414
continues to read as follows:

■

Authority: Secs. 1102, 1871, and 1881(b)(l)
of the Social Security Act (42 U.S.C. 1302,
1395hh, and 1395rr(b)(l)).

10. Section 414.105 is added to read
as follows:

■

§ 414.105 Application of competitive
bidding information.

For enteral nutrients, equipment and
supplies furnished on or after January 1,
2011, the fee schedule amounts may be
adjusted based on information on the
payment determined as part of
implementation of the programs under
subpart F using the methodologies set
forth at § 414.210(g).
■ 11. The heading of Subpart D is
revised to read as follows:
Subpart D—Payment for Durable
Medical Equipment and Prosthetic and
Orthotic Devices
12. Section 414.202 is amended by
revising the definition of ‘‘region’’ and
adding in alphabetical order a definition
of ‘‘rural area’’ to read as follows:

■

§ 414.202

Definitions.

*

*
*
*
*
Region means, for the purpose of
implementing § 414.210(g), geographic
areas defined by the Bureau of
Economic Analysis in the United States
Department of Commerce for economic
analysis purposes, and, for the purpose
of implementing § 414.228, those
contractor service areas administered by
CMS regional offices.
Rural area means, for the purpose of
implementing § 414.210(g), a geographic

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area represented by a postal zip code if
at least 50 percent of the total
geographic area of the area included in
the zip code is estimated to be outside
any metropolitan area (MSA). A rural
area also includes a geographic area
represented by a postal zip code that is
a low population density area excluded
from a competitive bidding area in
accordance with the authority provided
by section 1847(a)(3)(A) of the Act at the
time the rules at § 414.210(g) are
applied.
■ 13. Section 414.210 is amended by
revising paragraph (a) and adding
paragraph (g) to read as follows:
§ 414.210

General payment rules.

(a) General rule. For items furnished
on or after January 1, 1989, except as
provided in paragraphs (c), (d), and (g)
of this section, Medicare pays for
durable medical equipment, prosthetics
and orthotics, including a separate
payment for maintenance and servicing
of the items as described in paragraph
(e) of this section, on the basis of 80
percent of the lesser of—
(1) The actual charge for the item;
(2) The fee schedule amount for the
item, as determined in accordance with
the provisions of §§ 414.220 through
414.232
*
*
*
*
*
(g) Application of Competitive
Bidding Information and Limitation of
Inherent Reasonableness Authority. For
items furnished on or after January 1,
2011, the fee schedule amounts may be
adjusted, and for DME items furnished
on or after January 1, 2016, the fee
schedule amounts shall be adjusted,
based on information on the payment
determined as part of implementation of
the programs under subpart F, of this
part, excluding information on the
payment determined in accordance with
the special payment rules at § 414.409.
In the case of such adjustments, the
rules at § 405.502(g) and (h) of this
chapter shall not be applied. The
methodologies for adjusting fee
schedule amounts are provided below.
In any case where application of these
methodologies results in an increase in
the fee schedule amount, the adjustment
to the fee schedule amount is not made.
(1) Payment adjustments for areas
within the contiguous United States
using information from competitive
bidding programs. For an item or service
subject to the programs under subpart F
of this part, the fee schedule amounts
for such item or service for areas within
the contiguous United States shall be
adjusted as follows:
(i) CMS determines a regional price
for each state in the contiguous United

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations
States and the District of Columbia
equal to the un-weighted average of the
single payment amounts for an item or
service established in accordance with
§ 414.416 for competitive bidding areas
that are fully or partially located in the
same region that contains the state or
District of Columbia.
(ii) CMS determines a national
average price equal to the un-weighted
average of the regional prices
determined under paragraph (g)(1)(i) of
this section.
(iii) A regional price determined
under paragraph (g)(1)(i) of this section
cannot be greater than 110 percent of
the national average price determined
under paragraph (g)(1)(ii) of this section
nor less than 90 percent of the national
average price determined under
paragraph (g)(1)(ii) of this section.
(iv) The fee schedule amount for all
areas within a state that are not defined
as rural areas for purposes of this
subpart is adjusted to the regional price
determined under paragraphs (g)(1)(i)
and (iii) of this section.
(v) The fee schedule amount for all
areas within a state that are defined as
rural areas for the purposes of this
subpart is adjusted to 110 percent of the
national average price determined under
paragraph (g)(1)(ii) of this section.
(2) Payment adjustments for areas
outside the contiguous United States
using information from competitive
bidding programs. For an item or service
subject to the programs under subpart F,
the fee schedule amounts for areas
outside the contiguous United States are
reduced to the greater of—
(i) The average of the single payment
amounts for the item or service for CBAs
outside the contiguous United States.
(ii) 110 percent of the national average
price for the item or service determined
under paragraph (g)(1)(ii) of this section.
(3) Payment adjustments for items
and services included in no more than
ten competitive bidding programs.
Notwithstanding paragraph (g)(1) of this
section, for an item or service that is
included in ten or fewer competitive
bidding programs as defined at
§ 414.402, the fee schedule amounts
applied for all areas within and outside
the contiguous United States are
reduced to 110 percent of the unweighted average of the single payment
amounts from the ten or fewer
competitive bidding programs for the
item or service in the areas where the
ten or fewer competitive bidding
programs are in place.
(4) Payment adjustments using data
on items and services included in
competitive bidding programs no longer
in effect. In the case where adjustments
to fee schedule amounts are made using

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any of the methodologies described, if
the adjustments are based solely on
single payment amounts from
competitive bidding programs that are
no longer in effect, the single payment
amounts are updated before being used
to adjust the fee schedule amounts. The
single payment amounts are updated
based on the percentage change in the
Consumer Price Index for all Urban
Consumers (CPI–U) from the mid-point
of the last year the single payment
amounts were in effect to the month
ending 6 months prior to the date the
initial fee schedule reductions go into
effect. Following the initial adjustments
to the fee schedule amounts, if the
adjustments continue to be based solely
on single payment amounts from
competitive bidding programs that are
no longer in effect, the single payment
amounts used to reduce the fee schedule
amounts are updated every 12 months
using the percentage change in the CPI–
U for the 12-month period ending 6
months prior to the date the updated
payment adjustments would go into
effect.
(5) Adjusted payment amounts for
accessories used with different types of
base equipment. In situations where a
HCPCS code that describes an item used
with different types of base equipment
is included in more than one product
category in a CBA under competitive
bidding, a weighted average of the
single payment amounts for the code is
computed for each CBA based on the
total number of allowed services for the
item on a national basis for the code
from each product category prior to
applying the payment adjustment
methodologies in this section.
(6) Payment adjustments for enteral
infusion pumps and standard power
wheelchairs. (i) In situations where a
single payment amount in a CBA for an
enteral infusion pump without alarm is
greater than the single payment amount
in the same CBA for an enteral infusion
pump with alarm, the single payment
amount for the enteral infusion pump
without alarm is adjusted to be equal to
the single payment amount for the
enteral infusion pump with alarm prior
to applying the payment adjustment
methodologies in this section.
(ii) In situations where a single
payment amount in a CBA for a Group
1, standard, sling/solid seat and back
power wheelchair is greater than the
single payment amount in the same
CBA for a Group 2, standard, sling/solid
seat and back power wheelchair, the
single payment amount for the Group 1,
standard, sling/solid seat and back
power wheelchair is adjusted to be
equal to the single payment amount for
the Group 2, standard, sling/solid seat

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and back power wheelchair prior to
applying the payment adjustment
methodologies in this section.
(iii) In situations where a single
payment amount in a CBA for a Group
1, standard, captains chair power
wheelchair is greater than the single
payment amount in the same CBA for a
Group 2, standard, captains chair power
wheelchair, the single payment amount
for the Group 1, standard, captains chair
power wheelchair is adjusted to be
equal to the single payment amount for
the Group 2, standard, captains chair
power wheelchair prior to applying the
payment adjustment methodologies in
this section.
(iv) In situations where a single
payment amount in a CBA for a Group
2, standard, portable, sling/solid seat
and back power wheelchair is greater
than the single payment amount in the
same CBA for a Group 2, standard,
sling/solid seat and back power
wheelchair, the single payment amount
for the Group 2, standard, portable,
sling/solid seat and back power
wheelchair is adjusted to be equal to the
single payment amount for the Group 2,
standard, sling/solid seat and back
power wheelchair prior to applying the
payment adjustment methodologies in
this section.
(v) In situations where a single
payment amount in a CBA for a Group
2, standard, portable, captains chair
power wheelchair is greater than the
single payment amount in the same
CBA for a Group 2, standard, captains
chair power wheelchair, the single
payment amount for the Group 2,
standard, portable, captains chair power
wheelchair is adjusted to be equal to the
single payment amount for the Group 2,
standard, captains chair power
wheelchair prior to applying the
payment adjustment methodologies in
this section.
(7) Payment adjustments for mail
order items furnished in the Northern
Mariana Islands. The fee schedule
amounts for mail order items furnished
to beneficiaries in the Northern Mariana
Islands are adjusted so that they are
equal to 100 percent of the single
payment amounts established under a
national mail order competitive bidding
program.
(8) Updating adjusted fee schedule
amounts. The adjusted fee schedule
amounts are revised each time a single
payment amount for an item or service
is updated following one or more new
competitions and as other items are
added to programs established under
Subpart F of this part.
(9) Transition rules. The payment
adjustments described above are phased
in as follows:

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(i) For applicable items and services
furnished with dates of service from
January 1, 2016, through June 30, 2016,
based on the fee schedule amount for
the area is equal to 50 percent of the
adjusted payment amount established
under this section and 50 percent of the
unadjusted fee schedule amount.
(ii) For items and services furnished
with dates of service on or after July 1,
2016, the fee schedule amount for the
area is equal to 100 percent of the
adjusted payment amount established
under this section.
■ 14. Section 414.408 is amended by
adding paragraph (l) to read as follows:
§ 414.408

Payment rules.

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*
(l) Exceptions for certain items and
services paid in accordance with special
payment rules. The payment rules in
paragraphs (f) thru (h), (j)(2), (j)(3), and
(j)(7), and (k) of this section do not
apply to items and services paid in
accordance with the special payment
rules at § 414.409.
■ 15. Section 414.409 is added to read
as follows:

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§ 414.409

Special payment rules.

(a) Payment on a bundled, continuous
rental basis. In no more than 12 CBAs,
in conjunction with competitions that
begin after January 1, 2015, payment is
made on a bundled, continuous
monthly rental basis for standard power
wheelchairs and continuous positive
airway pressure (CPAP) devices. The
CBAs and competitions where these
payment rules apply are announced in
advance of each competition, with the
payment rules in this section used in
lieu of the payment rules at § 414.408(f)
thru (h), (j)(2), (j)(3), and (j)(7), and (k).
The single payment amounts are
established based on bids submitted and
accepted for furnishing rented standard
power wheelchairs and CPAP devices
on a monthly basis for each month of
medical need during the contract
period. The single payment amount for
the monthly rental of the DME includes
payment for the rented equipment,
maintenance and servicing of the rented
equipment, and replacement of supplies
and accessories necessary for the
effective use of the rented equipment.
Separate payment for replacement of
equipment, repair or maintenance and
servicing of equipment, or for
replacement of accessories and supplies
necessary for the effective use of
equipment is not allowed under any
circumstance.
(b) Payment for grandfathered DME
items paid on a bundled, continuous
rental basis. Payment to a supplier that
elects to be a grandfathered supplier of

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DME furnished in CBPs where these
special payment rules apply is made in
accordance with § 414.408(a)(1).
(c) Supplier transitions for DME paid
on a bundled, continuous rental basis.
Changes from a non-contract supplier to
a contract supplier at the beginning of
a CBP where payment is made on a
bundled, continuous monthly rental
basis results in the contract supplier
taking on responsibility for meeting all
of the monthly needs for furnishing the
covered DME. In the event that a
beneficiary relocates from a CBA where
these special payment rules apply to an
area where rental cap rules apply, a new
period of continuous use begins for the
capped rental item as long as the item
is determined to be medically necessary.
(d) Responsibility for repair and
maintenance and servicing of power
wheelchairs. In no more than 12 CBAs
where payment for power wheelchairs
is made on a capped rental basis, for
power wheelchairs furnished in
conjunction with competitions that
begin after January 1, 2015, contract
suppliers that furnish power
wheelchairs under contracts awarded
based on these competitions shall
continue to repair power wheelchairs
they furnish following transfer of title to
the equipment to the beneficiary. The
responsibility of the contract supplier to
repair, maintain and service beneficiaryowned power wheelchairs does not
apply to power wheelchairs that the
contract supplier did not furnish to the
beneficiary. For power wheelchairs that
the contract supplier furnishes during
the contract period, the responsibility of
the contract supplier to repair, maintain
and service the power wheelchair once
it is owned by the beneficiary continues
until the reasonable useful lifetime of
the equipment expires, coverage for the
power wheelchair ends, or the
beneficiary relocates outside the CBA
where the item was furnished. The
contract supplier may not charge the
beneficiary or the program for any
necessary repairs or maintenance and
servicing of a beneficiary-owned power
wheelchair it furnished during the
contract period.
■ 16. Section 414.412 is amended by
revising paragraph (b)(2) and adding
paragraphs (b)(3) through (5) to read as
follows:
§ 414.412 Submission of bids under a
competitive bidding program.

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(b) * * *
(2) The bids submitted for each item
or drug in a product category cannot
exceed the payment amount that would
otherwise apply to the item under

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subpart C, subpart D, or subpart I of this
part.
(3) The bids submitted for standard
power wheelchairs paid in accordance
with the special payment rules at
§ 414.409(a) cannot exceed the average
monthly payment for the bundle of
items and services that would otherwise
apply to the item under subpart D of
this part.
(4) The bids submitted for continuous
positive airway pressure (CPAP) devices
paid in accordance with the special
payment rules at § 414.409(a) cannot
exceed the 1993 fee schedule amounts
for these items, increased by the covered
item update factors provided for these
items in section 1834(a)(14) of the Act.
(5) Suppliers shall take into
consideration the special payment rules
at § 414.409(d) when submitting bids for
furnishing power wheelchairs under
competitions where these rules apply.
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■ 17. Section 414.414 is amended by
revising paragraph (f) to read as follows:
§ 414.414 Conditions for awarding
contracts.

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*
*
*
(f) Expected savings. A contract is not
awarded under this subpart unless CMS
determines that the amounts to be paid
to contract suppliers for an item or drug
under a competitive bidding program
are expected to be less than the amounts
that would otherwise be paid for the
same item under subpart C or subpart D
or the same drug under subpart I.
*
*
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*
*
■ 18. Section 414.22 is amended by
revising paragraph (d) to read as
follows:
§ 414.422

Terms of contracts.

*

*
*
*
*
(d) Change of ownership. (1) A
contract supplier must notify CMS if it
is negotiating a change in ownership no
later than 60 days before the anticipated
date of the change.
(2) CMS may transfer a contract to an
entity that merges with, or acquires, a
contract supplier if the entity meets the
following requirements:
(i) A successor entity—
(A) Meets all requirements applicable
to contract suppliers for the applicable
competitive bidding program;
(B) Submits to CMS the
documentation described under
§ 414.414(b) through (d) if
documentation has not previously been
submitted by the successor entity or if
the documentation is no longer
sufficient for CMS to make a financial
determination. A successor entity is not
required to duplicate previously
submitted information if the previously

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Federal Register / Vol. 79, No. 215 / Thursday, November 6, 2014 / Rules and Regulations

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submitted information is not needed to
make a financial determination. This
documentation must be submitted no
later than 30 days prior to the
anticipated effective date of the change
of ownership; and
(C) Submits to CMS, at least 30 days
before the anticipated effective date of
the change of ownership, a signed
novation agreement acceptable to CMS
stating that it will assume all obligations
under the contract; or
(ii) A new entity—
(A) Meets the requirements of
(d)(2)(i)(A) and (B) of this section; and
(B) Contract supplier submits to CMS,
at least 30 days before the anticipated
effective date of the change of
ownership, its final draft of a novation
agreement as described in paragraph
(d)(2)(C) of this section for CMS review.
The new entity submits to CMS, within
30 days after the effective date of the
change of ownership, an executed
novation agreement acceptable to CMS.
(3) Except as specified in paragraph
(d) (4) of this section, CMS transfers the
entire contract, including all product
categories and competitive bidding
areas, to a new qualified entity.
(4) For contracts issued in the Round
2 Recompete and subsequent rounds in
the case of a CHOW where a contract
supplier sells a distinct company, (e.g.,
an affiliate, subsidiary, sole proprietor,
corporation, or partnership) that
furnishes a specific product category or
services a specific CBA, CMS may

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transfer the portion of the contract
performed by that company to a new
qualified entity, if the following
conditions are met:
(i) Every CBA, product category, and
location of the company being sold must
be transferred to the new qualified
owner who meets all competitive
bidding requirements; i.e. financial,
accreditation and licensure;
(iii) All CBAs and product categories
in the original contract that are not
explicitly transferred by CMS remain
unchanged in that original contract for
the duration of the contract period
unless transferred by CMS pursuant to
a subsequent CHOW;
(iv) All requirements of paragraph
(d)(2) of this section are met; and
(v) The sale of the distinct company
includes all of the contract supplier’s
assets associated with the CBA and/or
product category(s); and
(vi) CMS determines that transfer of
part of the original contract will not
result in disruption of service or harm
to beneficiaries.
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*
■ 19. Section 414.423 is amended by
revising paragraphs (b)(2)(vi), (l)
introductory text, (l)(2) introductory
text, and (l)(2)(i) to read as follows:
§ 414.423 Appeals Process for Termination
of Competitive Bidding Contract.

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(b) * * *
(2) * * *

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66265

(vi) The effective date of termination
is 45 days from the date of the
notification letter unless a timely
hearing request is filed or a corrective
action plan (CAP) is submitted within
30 days of the date on the notification
letter.
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*
*
(l) Effect of contract termination.
*
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*
(2) A contract supplier whose contract
has been terminated must notify all
beneficiaries who are receiving rented
competitive bid items or competitive
bid items received on a recurring basis,
of the termination of their contract.
(i) The notice to the beneficiary from
the supplier whose contract is
terminated must be provided no later
than 15 days prior to the effective date
of termination.
*
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*
(Catalog of Federal Domestic Assistance
Program No. 93.773, Medicare—Hospital
Insurance; and Program No. 93.774,
Medicare—Supplementary Medical
Insurance Program)
Dated: October 22, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare &
Medicaid Services.
Approved: October 26, 2014.
Sylvia M. Burwell,
Secretary, Department of Health and Human
Services.
[FR Doc. 2014–26182 Filed 11–5–14; 8:45 am]
BILLING CODE 4120–01–P

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