CMS Rule to Update ESRD Medicare Reimbursement, New Care Model

CMS recently proposed the Calendar Year 2023 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) Proposed Rule, which would boost Medicare reimbursement for ESRD facilities and refine a new mandatory value-based purchasing program.

The proposed rule states that the base ESRD PPS rate next year is slated to be $264.09, an increase of $6.19 compared to the current base rate. The rate increase is estimated to total $8.2 billion in Medicare reimbursement to the 7,800 ESRD facilities furnishing renal dialysis services to Medicare beneficiaries.

CMS also includes in the proposed rule a rebasing of the ESRD bundled market basket, which the rule says would be based on the base year of 2020 and a labor-related share of 55.2 percent. The rule would also increase the wage index from 0.5 to 0.6 and apply a permanent 5.0 percent cap on any decreases to the index starting next year. Therefore, an ESRD facility’s wage index would never be less than 95.0 percent of its final wage index from the previous year.

Other proposed changes to ESRD Medicare reimbursement under the PPS in 2023 include:

• Applying a decrease in the fixed-dollar loss amount for pediatric beneficiaries from $26.02 to $21.51 and for adult beneficiaries from $75.39 to $40.75
• Decreasing the Medicare allowable payment for pediatric beneficiaries from $27.15 to $25.62 and from $42.75 to $36.85 for adult beneficiaries
• Adding the word “functional” to the definition of oral-only drug starting in 2025 to specify that an oral-only drug is a drug or biological product with no injectable functional equivalent or other form of administration other than the oral form

Combined with other policy changes in the proposed rule, CMS expects ESRD Medicare reimbursements to increase by 3.1 percent for all ESRD facilities in 2023. Hospital-based ESRD facilities will see a slightly larger increase in reimbursements, which is a projected 3.7 percent increase compared to this year’s total payments. Meanwhile, CMS projects freestanding facilities to see a 3.1 percent increase in total Medicare reimbursements.

In addition to ESRD Medicare reimbursement updates, CMS also proposes changes to the ESRD Treatment Choices (ETC) Model.

The ETC Model is a mandatory value-based purchasing program CMS stood up in 2021 alongside the Kidney Care Choices Model, which builds on the Comprehensive ESRD Care Model. The ETC Model adjusts some Medicare reimbursement—either positively or negatively—to ESRD facilities and clinicians who manage dialysis patients based on their home dialysis rate and transplant rate among assigned beneficiaries. CMS intends for the ETC Model to encourage higher rates of at-home dialysis services, which the agency says is more often preferred by patients and their physicians, as well as increased transplantation, the best scenario for most ESRD patients.

The proposed rule would refine the improvement scoring methodology in the ETC Model and modify requirements related to flexibilities CMS has granted for kidney disease patient education services.

To view the complete proposed rule, click here.