[Federal Register Volume 77, Number 218 (Friday, November 9, 2012)]
[Rules and Regulations]
[Pages 67449-67531]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-26903]



[[Page 67449]]

Vol. 77

Friday,

No. 218

November 9, 2012

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 413 and 417





Medicare Program; End-Stage Renal Disease Prospective Payment System, 
Quality Incentive Program, and Bad Debt Reductions for All Medicare 
Providers; Final Rule

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

[[Page 67450]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 413 and 417

[CMS-1352-F]
RIN 0938-AR13


Medicare Program; End-Stage Renal Disease Prospective Payment 
System, Quality Incentive Program, and Bad Debt Reductions for All 
Medicare Providers

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule updates and makes revisions to the end-stage 
renal disease (ESRD) prospective payment system (PPS) for calendar year 
(CY) 2013. This rule also sets forth requirements for the ESRD quality 
incentive program (QIP), including for payment year (PY) 2015 and 
beyond. In addition, this rule implements changes to bad debt 
reimbursement for all Medicare providers, suppliers, and other entities 
eligible to receive Medicare payment for bad debt and removes the cap 
on bad debt reimbursement to ESRD facilities. (See the Table of 
Contents for a listing of the specific issues addressed in this final 
rule.)

DATES: Effective Date: These regulations are effective on January 1, 
2013.
    Applicability Date: The regulations setting forth the reductions in 
Medicare bad debt pursuant to section 3201 of the Middle Class Tax 
Extension and Job Creation Act of 2012 (Pub. L. 112-96) are applicable 
for cost reporting periods beginning October 1, 2012.

FOR FURTHER INFORMATION CONTACT: Michelle Cruse, (410) 786-4533, for 
issues related to ESRD.
    Heidi Oumarou, (410) 786-7942, for issues related to the ESRD 
market basket.
    Anita Segar, (410) 786-4614, for issues related to the QIP.
    Kellie Shannon, (410) 786-0416 for information regarding Medicare 
bad debt.

SUPPLEMENTARY INFORMATION: 

Table of Contents

    To assist readers in referencing sections contained in this 
preamble, we are providing a Table of Contents. Some of the issues 
discussed in this preamble affect the payment policies, but do not 
require changes to the regulations in the Code of Federal Regulations 
(CFR).

I. Executive Summary
    A. Purpose
    1. End-Stage Renal Disease (ESRD) Prospective Payment System 
(PPS)
    2. ESRD QIP
    3. Reductions to Bad Debt Payments for All Medicare Providers 
and Elimination of the Cap on Bad Debt Reimbursement to ESRD 
Facilities
    B. Summary of Major Provisions
    1. ESRD PPS
    2. ESRD QIP
    3. Reductions to Bad Debt Payments for All Medicare Providers 
and Elimination of the Cap on Bad Debt Reimbursement to ESRD 
Facilities
    C. Summary of Cost and Benefits
    1. Impacts of the Final ESRD PPS
    2. ESRD QIP
    3. Impacts of Bad Debt Provisions
II. Calendar Year (CY) 2013 End-Stage Renal Disease (ESRD) 
Prospective Payment System (PPS)
    A. Background on the End-Stage Renal Disease (ESRD) Prospective 
Payment System (PPS)
    B. Summary of the Proposed Provisions and Responses to Comments 
on the CY 2013 ESRD PPS
    C. Routine Updates and Proposed Policy Changes to the CY 2013 
ESRD PPS
    1. Composite Rate Portion of the ESRD PPS Blended Payment
    a. Update to the Drug Add-on to the Composite Rate Portion of 
the ESRD Blended Payment Rate
    i. Estimating Growth in Expenditures for Drugs and Biologicals 
in CY 2013
    ii. Estimating Per Patient Growth
    iii. Applying the Growth Update to the Drug Add-On Adjustment
    iv. Update to the Drug Add-On Adjustment for CY 2013
    2. ESRD PPS Base Rate
    3. ESRD Bundled Market Basket
    a. Overview and Background
    b. Market Basket Update Increase Factor and Labor-Related Share 
for ESRD Facilities for CY 2013
    c. Productivity Adjustment
    d. Calculation of the ESRDB Market Basket Update Adjusted for 
Multifactor Productivity for CY 2013
    4. Transition Budget-Neutrality Adjustment for CY 2013
    5. Updates to the Wage Index Values and Wage Index Floor for the 
Composite Rate Portion of the Blended Payment and the ESRD PPS 
Payment
    a. Reduction to the ESRD Wage Index Floor
    b. Policies for Areas With No Wage Data
    c. Wage Index Budget-Neutrality Adjustment
    d. ESRD PPS Wage Index Tables
    6. Drug Policy Changes
    a. Daptomycin
    b. Alteplase and Other Thrombolytics
    c. Part B Drug Pricing
    7. Revisions to the Outlier Policy
    a. Impact of Changes to the Outlier Policy
    b. Outlier Policy Percentage
    D. Clarifications Regarding the ESRD PPS
    1. Reporting Composite Rate Items and Services
    2. ESRD Facility Responsibilities for ESRD-Related Drugs and 
Biologicals
    3. Use of AY Modifier
    E. Miscellaneous Comments
III. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) 
for Payment Year (PY) 2015
    A. Background
    B. Summary of the Proposed Provisions and Responses to Comments 
on the ESRD QIP for PY 2015
    C. Considerations in Updating and Expanding Quality Measures 
Under the ESRD QIP for PY 2015 and Subsequent PYs
    1. Value-Based Purchasing (VBP) Overview
    2. Brief Overview of Proposals
    3. Measures Application Partnership Review
    4. PY 2014 Mineral Metabolism Measure
    D. Proposed Measures for the PY 2015 ESRD QIP and Subsequent PYs 
of the ESRD QIP
    1. PY 2014 Measures Continuing for PY 2015 and Subsequent PYs
    a. Hemoglobin Greater Than 12 g/dL
    b. Vascular Access Type (VAT) Measure Topic
    c. In-Center Hemodialysis Consumer Assessment of Healthcare 
Providers and Systems (ICH CAHPS)
    2. Expansion of Two PY 2014 Measures for PY 2015 and Subsequent 
PYs
    a. Expanded National Healthcare Safety Network (NHSN) Dialysis 
Event Reporting Measure
    b. Expanded Mineral Metabolism Reporting Measure
    3. New Measures for PY 2015 and Subsequent PYs of the ESRD QIP
    a. Kt/V Dialysis Adequacy Measure Topic
    i. Adult Hemodialysis Adequacy
    ii. Peritoneal Dialysis Adequacy
    iii. Pediatric, In-center Hemodialysis Adequacy
    b. Hypercalcemia
    c. Anemia Management Reporting Measure
    4. Measures Under Consideration for Future PYs of the ESRD QIP
    a. Standardized Hospitalization Ratio (SHR)
    b. Standardized Mortality Ratio (SMR)
    c. Public Reporting of SHR and SMR Measures
    5. Other Potential Future Measures Under Development
    a. Thirty-Day Hospital Readmissions
    b. Efficiency
    c. Population/Community Health
    6. Scoring Background and General Considerations for the PY 2015 
ESRD QIP
    7. Performance Period for the PY 2015 ESRD QIP
    8. Performance Standards for the PY 2015 ESRD QIP
    a. Clinical Measure Performance Standards
    b. Performance Standards
    c. Performance Standards for the PY 2015 Reporting Measures
    9. Scoring for the PY 2015 ESRD QIP Measures
    a. Scoring Facility Performance on Clinical Measures Based on 
Achievement
    b. Scoring Facility Performance on Clinical Measures Based on 
Improvement
    c. Calculating the Reporting Measure Scores

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

Acronyms

    Because of the many terms to which we refer by acronym in this 
final rule, we are listing the acronyms used and their corresponding 
meanings in alphabetical order below:

AMCC Automated Multi-Channel Chemistry
ASP Average Sales Price
AV Arteriovenous
BLS Bureau of Labor Statistics
BMI Body Mass Index
BSA Body Surface Area
CAH Critical Access Hospital
CBSA Core-Based Statistical Area
CCN CMS Certification Number
CDC Centers for Disease Control and Prevention
CLABSI Central Line Access Bloodstream Infections
CFR Code of Federal Regulations
CIP Core Indicators Project
CMHC Community Mental Health Center
CMP Competitive Medical Plans
CMS Centers for Medicare & Medicaid Services
CPM Clinical Performance Measure
CPT Current Procedural Terminology
CROWNWeb Consolidated Renal Operations in a Web-Enabled Network
CY Calendar Year
DFC Dialysis Facility Compare
DFR Dialysis Facility Report
DME Durable Medical Equipment
ESA Erythropoiesis stimulating agent
ESRD End-Stage Renal Disease
ESRDB End-Stage Renal Disease Bundled
FDA Food and Drug Administration
FI/MAC Fiscal Intermediary/Medicare Administrative Contractor
FQHC Federally Qualified Health Center
FY Fiscal Year
GDP Gross Domestic Product
HAI Healthcare-associated Infections
HCPCS Healthcare Common Procedure Coding System
HCPP Health Care Prepayment Plan
HD Hemodialysis
HHD Home Hemodialysis
HMO Health Maintenance Organization
ICD-9-CM International Classification of Diseases, 9th Edition, 
Clinical Modifications
ICH CAHPS In-Center Hemodialysis Consumer Assessment of Healthcare 
Providers and Systems
IGI IHS Global Insight
IPPS Inpatient Prospective Payment System
KDIGO Kidney Disease: Improving Global Outcomes
KDOQI Kidney Disease Outcome Quality Initiative
Kt/V A measure of dialysis adequacy where K is dialyzer clearance, t 
is dialysis time, and V is total body water volume
LDO Large Dialysis Organization
MAP Medicare Allowable Payment
MCP Monthly Capitation Payment
MIPPA Medicare Improvements for Patients and Providers Act of 2008 
(Pub. L. 110-275)
MMA Medicare Prescription Drug, Improvement and Modernization Act of 
2003
MMEA Medicare and Medicaid Extenders Act of 2010 Pub. L. 111-309
MFP Multifactor Productivity
NHSN National Healthcare Safety Network
NQF National Quality Forum
PD Peritoneal Dialysis
PFS Physician Fee Schedule
PPS Prospective Payment System
PSR Performance Score Report
PY Payment Year
QIP Quality Incentive Program
REMIS Renal Management Information System
RFA Regulatory Flexibility Act
RHC Rural Health Clinic
RRF Residual Renal Function
RUL Reasonable Useful Lifetime
SBA Small Business Administration
SHR Standardized Hospitalization Ratio
SIMS Standard Information Management System
SMR Standardized Mortality Ratio
SNF Skilled Nursing Facility
SSA Social Security Administration
TEP Technical Expert Panel
The Act Social Security Act
The Affordable Care Act The Patient Protection and Affordable Care 
Act
URR Urea Reduction Ratio
VAT Vascular Access Type
VBP Value Based Purchasing

I. Executive Summary

A. Purpose

1. End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)
    This final rule updates and makes revisions to the End-Stage Renal 
Disease (ESRD) prospective payment system (PPS) for calendar year (CY) 
2013. In accordance with section 1881(b)(14) of the Social Security Act 
(the Act), as added by section 153(b) of the Medicare Improvements for 
Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), the 
Centers for Medicare & Medicaid Services (CMS) implemented a case-mix 
adjusted bundled PPS for Medicare outpatient ESRD dialysis services 
beginning January 1, 2011. The ESRD PPS replaced the basic case-mix 
adjusted composite payment system and the methodologies for the 
reimbursement of separately billable outpatient ESRD services.
    Also, section 1881(b)(14)(F) of the Act, as added by section 153(b) 
of MIPPA and amended by section 3401(h) of the Affordable Care Act 
(Pub. L. 111-148), established that beginning CY 2012, and each 
subsequent year, the Secretary shall reduce the market basket increase 
factor by a productivity

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

B. Summary of the Major Provisions

1. ESRD PPS
     Update to the composite and ESRD PPS base rate for CY 
2013: For CY 2013, the ESRD PPS base rate is $240.36. This amount 
reflects the application of the ESRD bundled (ESRDB) market basket 
reduced by the productivity adjustment, or 2.3 percent, and the wage 
index budget-neutrality adjustment factor of 1.000613 to the CY 2012 
ESRD PPS base rate of $234.81. The base rate is applicable to both the 
ESRD PPS portion of the blended payment under the transition and 
payments under the full PPS. During the transition, we are required to 
update the composite rate for ESRD facilities receiving a blended 
payment. For CY 2013, the composite base rate is $145.20. This amount 
reflects the CY 2012 composite rate of $141.94, increased by the ESRDB 
market basket reduced by the productivity adjustment.
     Update to the composite rate drug add-on for CY 2013: 
There are no changes to the methodology used to compute the drug add-on 
for CY 2013; we are only updating the data used to calculate the drug 
add-on for CY 2013. Using 6 years of average sales price (ASP) drug 
expenditure data and other data, we estimate a 2.9 percent decrease in 
aggregate drug expenditures and a 4.0 percent increase in enrollment. 
Using these estimates, we project a 6.6 percent decrease in per patient 
growth of drug expenditures for CY 2013. Thus, we are projecting that 
the combined growth in per patient utilization and pricing for CY 2013 
will result in a decrease to the drug add-on equal to 0.9 percentage 
points. We will apply a zero update to the drug add-on adjustment and 
maintain the $20.33 per treatment drug add-on amount for CY 2013. 
Because the market basket minus productivity that is applied to the 
composite rate increases the composite rate, the add-on adjustment of 
14.3 percent is reduced to 14.0 percent to maintain the drug add-on at 
$20.33.
     Market basket and productivity adjustment: Under section 
1881(b)(14)(F) of the Act, beginning in CY 2012, ESRD PPS payment 
amounts and the composite rate portion of the transition blended 
payment amounts shall be annually increased by an ESRD market basket 
percentage increase factor reduced by a multi-factor productivity (MFP) 
adjustment. The CY 2013 ESRDB market basket increase factor is 2.9 
percent. The current forecast of the CY 2013 MFP adjustment is 0.6 
percent. The resulting final CY 2013 MFP-adjusted ESRDB market basket 
update is equal to 2.3 percent.
     The transition budget-neutrality adjustment factor: For CY 
2013, we are applying the transition budget-neutrality adjustment 
methodology established in CY 2011. This results in a 0.1 percent 
adjustment. Therefore, for CY 2013, a 0.1 percent increase will be 
applied to both the blended payments made under the transition and 
payments made under the full ESRD PPS for renal dialysis services 
furnished January 1, 2013 through December 31, 2013.
     Updates to the wage index and wage index floor: We adjust 
wage indices on an annual basis using the most current hospital wage 
data to account for differing wage levels in areas in which ESRD 
facilities are located. In CY 2013, we are not making any changes to 
the application of the wage index budget-neutrality adjustment factor 
and will continue to apply the budget-neutrality adjustment to the pre-
floor, pre-reclassified wage index values for the composite rate 
portion of the blended payment and to the base rate for the ESRD PPS. 
Over the past several years, we have been gradually decreasing the wage 
index floor by 0.05 in an effort to gradually phase out the floor, and 
in CY 2013 we will continue to do so. Therefore, in CY 2013, we are 
reducing the wage index floor from 0.550 to 0.500. We also applied the 
wage index budget-neutrality adjustment factor to the wage index floor 
of 0.500, which results in an adjusted wage index floor of 0.501 (0.500 
x 1.001141) for CY 2013.
     Update to the outlier policy: We are updating the outlier 
services fixed dollar loss amounts and Medicare Allowable Payments 
(MAPs) for CY 2013 using 2011 data. Based on the use of more current 
data, the fixed dollar loss amount for pediatric patients will decrease 
from $71.64 to $47.32 and the MAP amount will decrease from $45.44 to 
$41.39 as compared to CY 2012 values. For adult patients, the fixed-
dollar loss amount drops from $141.21 to $110.22 and the MAP amount 
drops from $78.00 to $59.42. Because of the decline in utilization 
associated with the implementation of the expanded bundle, the 1 
percent target for outlier payments was not achieved in CY 2011. Use of 
2011 data to recalibrate the thresholds, reflecting lower utilization 
of epoetin and other outlier services, is expected to result in 
aggregate outlier payments close to the 1 percent target in CY 2013. We 
believe this update to the outlier MAPs and fixed dollar loss amounts 
for CY 2013 will increase payments for ESRD beneficiaries requiring 
higher resource utilization in accordance with a 1 percent outlier 
policy.
     Policy reiteration (composite rate drugs and AY modifier): 
Under the composite and basic case-mix adjusted composite rate payment 
systems, certain drugs were included in the composite rate and were not 
eligible for separate payment. Our analyses of claims show that ESRD 
facilities are continuing to report composite rate drugs on ESRD 
claims. In this rule, we are reiterating that any item or service 
included in the composite rate should not be identified on ESRD claims. 
An AY modifier can be appended to claims for drugs and laboratory tests 
that are not ESRD-related to allow for separate payment. Our analyses 
of claims show that there are ESRD facilities and laboratories that are 
appending the AY modifier to drugs and laboratory tests that we believe 
are ESRD-related, resulting in separate payment. In this rule, we 
reiterate the purpose of the AY modifier and emphasize that we are 
continuing our monitoring efforts. We also indicate that we may 
consider eliminating the AY modifier in future rulemaking if we believe 
that the AY modifier is not being used for the purpose intended.

[[Page 67453]]

2. ESRD QIP
    This final rule also implements new requirements for the ESRD QIP. 
It will continue some of the previous ESRD QIP measures, add new 
measures, and expand the scope of some of the existing measures to 
cover the measure topics as follows:
     To evaluate anemia management:
    [cir] Hemoglobin Greater Than 12 g/dL, a clinical measure.
    [cir] Anemia Management, a reporting measure.*
     To evaluate dialysis adequacy:
    [cir] A clinical Kt/V measure for adult hemodialysis patients.*
    [cir] A clinical Kt/V measure for adult peritoneal dialysis 
patients. *
    [cir] A clinical Kt/V measure for pediatric in-center hemodialysis 
patients. *
     To determine whether patients are treated using the most 
beneficial type of vascular access:
    [cir] Vascular Access Type, a clinical measure topic comprised of 
an arteriovenous fistula and a catheter measure.
     To address effective bone mineral metabolism management:
    [cir] Mineral Metabolism, a reporting measure.
     To address safety:
    [cir] National Healthcare Safety Network (NHSN) Dialysis Event 
reporting measure.
     To assess patient and caregiver experience:
    [cir] In-Center Hemodialysis Consumer Assessment of Healthcare 
Providers and Systems (ICH CAHPS) survey reporting measure.
* Denotes that this measure is new to the ESRD QIP.
    This final rule also establishes CY 2013 as the performance period 
for the PY 2015 ESRD QIP. It also establishes performance standards for 
each measure and adopts scoring and payment reduction methodologies 
that are similar to those finalized for the PY 2014 ESRD QIP.
3. Reductions to Bad Debt Payments for all Medicare Providers and 
Elimination of the Cap on Bad Debt Reimbursement to ESRD Facilities
    This rule also implements the statutory changes to the limitations 
on payments for bad debt reimbursement by revising 42 CFR 413.89, Bad 
debts, charity, and courtesy allowances. We are also moving 42 CFR 
413.178(a) to 42 CFR 413.89(h)(3), and moving 42 CFR 413.178(d)(2) to 
42 CFR 413.89(i)(2) and removing and reserving the remainder of 42 CFR 
413.178. Additionally, we are making a technical correction to the 
cross reference in 42 CFR 417.536(f)(1) to Medicare bad debt 
reimbursement policy. Finally, this final rule will eliminate the cap 
on bad debt reimbursement to an ESRD facility at its unrecovered costs.

C. Summary of Costs and Benefits

    In section VI.B of this final rule, we set forth a detailed 
analysis of the impacts that the changes will have on affected entities 
and beneficiaries. The impacts include the following:
1. Impacts of the Final ESRD PPS
    The impact chart in section VI.B of this final rule displays the 
estimated change in payments to ESRD facilities in CY 2013 as compared 
to estimated payments in CY 2012. The overall impact of the CY 2013 
changes is projected to be a 3.0 percent increase in payments. 
Hospital-based ESRD facilities have an estimated 3.6 percent increase 
in payments compared with freestanding facilities with an estimated 2.9 
percent increase. Urban facilities are expected to receive an estimated 
payment increase of 3.0 percent compared to an estimated 2.9 percent 
increase for rural facilities. We expect a 2.4 percent decrease in 
estimated payments as a result of wage index adjustments for Puerto 
Rico and the Virgin Islands. However, this decrease is offset primarily 
by the impact of the market basket increase, resulting in an estimated 
0.6 percent increase in payment. The estimated 3.0 percent overall 
payment increase will result in a $250 million cost to Medicare and a 
$60 million cost to beneficiaries. In 2013, a 2.3 percent market basket 
increase will result in a $190 million cost to Medicare and a $50 
million cost to beneficiaries. The outlier fixed dollar loss and MAP 
adjustments in CY 2013 will result in a $30 million cost to Medicare 
and a $10 million cost to beneficiaries. The difference in cost to 
Medicare is due to the effects of changing the blend of payments from 
50/50 to 25/75 and the 0.1 percent transition budget-neutrality 
adjustment.
2. Impacts for ESRD QIP
    The overall economic impact of the ESRD QIP is an estimated $24.6 
million for PY 2015. We expect the total payment reductions to be 
approximately $12.1 million, and the costs associated with the 
collection of information requirements for certain measures to be 
approximately $12.4 million.
    The estimated payment reduction will continue to incentivize 
facilities to provide higher quality care to beneficiaries. The 
reporting measures that result in costs associated with the collection 
of information are critical to better understanding the quality of care 
beneficiaries receive, particularly a patient's experience of care, and 
will be used to incentivize improvements in the quality of care 
provided.
3. Impacts of Bad Debt Provisions
    We are codifying the provisions of section 3201 of The Middle Class 
Tax Extension and Job Creation Act of 2012 that requires reductions in 
bad debt reimbursement to all providers eligible to receive bad debt 
reimbursement; these provisions are specifically prescribed by statute 
and thus, are generally self-implementing. There will be a $10.92 
billion savings to the program over 10 years resulting from these self-
implementing reductions in bad debt reimbursement. We are also removing 
the cap on reimbursement for bad debt to ESRD facilities for cost 
reporting periods beginning on or after January 1, 2013, which will 
result in a cost to the Medicare program of $170 million over 10 years.

II. Calendar Year (CY) 2013 End-Stage Renal Disease (ESRD) Prospective 
Payment System (PPS)

A. Background on the End-Stage Renal Disease (ESRD) Prospective Payment 
System (PPS)

    On August 12, 2010, we published in the Federal Register a final 
(75 FR 49030) titled, ``End-Stage Renal Disease Prospective Payment 
System'', hereinafter referred to as the CY 2011 ESRD PPS final rule. 
In the CY 2011 ESRD PPS final rule, we implemented a case-mix adjusted 
bundled PPS for Medicare outpatient ESRD dialysis services beginning 
January 1, 2011, in accordance with section 1881(b)(14) of the Act, as 
added by section 153(b) of MIPPA.
    On April 6, 2011, we published in the Federal Register an interim 
final rule with comment period (76 FR 18930) titled, ``Changes in the 
End-Stage Renal Disease Prospective Payment System Transition Budget-
Neutrality Adjustment'', which revised the ESRD transition budget-
neutrality adjustment for CY 2011. In the interim final rule, we 
revised the 3.1 percent transition budget-neutrality adjustment 
reduction to a zero percent transition budget-neutrality adjustment for 
renal dialysis services furnished on April 1, 2011 through December 31, 
2011 (76 FR 18933). On November 10, 2011, we published in the Federal 
Register, a final rule (76 FR 70228 through 70316) titled, ``Medicare 
Program; End-Stage Renal Disease Prospective Payment System and Quality 
Incentive Program;

[[Page 67454]]

Ambulance Fee Schedule; Durable Medical Equipment; and Competitive 
Acquisition of Certain Durable Medical Equipment, Prosthetics, 
Orthotics and Supplies (hereinafter referred to as the CY 2012 ESRD PPS 
final rule). In that final rule, for the ESRD PPS, we made a number of 
routine updates for CY 2012, implemented the second year of the 
transition to the ESRD PPS, made several policy changes, 
clarifications, and technical changes. In the CY 2013 ESRD PPS proposed 
rule (77 FR 40956), we summarize the updates, changes, and 
clarifications that were finalized in the CY 2012 ESRD PPS final rule 
(76 FR 70228).

B. Summary of the Proposed Provisions and Responses to Comments on the 
CY 2013 ESRD PPS

    The proposed rule, titled ``Medicare Program; End-Stage Renal 
Disease Prospective Payment System, Quality Incentive Program, and Bad 
Debt Reductions for All Medicare Providers'' (77 FR 40952), hereinafter 
referred to as the CY 2013 ESRD PPS proposed rule appeared in the 
Federal Register on July 11, 2012, with a comment period that ended on 
August 31, 2012. In that proposed rule, for the ESRD PPS, we proposed 
to (1) make a number of routine updates for CY 2013, (2) implement the 
third year of the transition, and (3) make several policy changes and 
clarifications. We received approximately 40 public comments on the 
ESRD PPS proposals, including comments from ESRD facilities; national 
renal, nephrologist and patient organizations; patients; manufacturers; 
health care systems; and nurses. In this final rule, we provide a 
summary of each proposed provision, a summary of the public comments 
received and our responses to them, and the policies we are finalizing 
for the CY 2013 ESRD PPS.

C. Routine Updates and Proposed Policy Changes to the CY 2013 ESRD PPS

1. Composite Rate Portion of the ESRD PPS Blended Payment
    Section 1881(b)(14)(E)(i) of the Act requires a 4-year transition 
under the ESRD PPS. This final rule implements the third year of the 
transition for those ESRD facilities that did not elect to receive 100 
percent of the payment amount under the ESRD PPS. For CY 2013, under 42 
CFR 413.239(a)(3), facilities that are transitioning will receive a 
blended rate equal to the sum of 75 percent of the full ESRD PPS amount 
and 25 percent of the basic case-mix adjusted composite payment amount. 
Accordingly, we continue to update the composite rate portion of the 
blended payment during the transition, (that is, CY 2011 through 2013), 
which includes updates to the drug add-on adjustment required by 
section 1881(b)(12)(F) of the Act, discussed in section II.C.1.a of 
this final rule, as well as the wage index values (which includes a 
budget-neutrality factor) used to adjust the labor component of the 
composite rate discussed in section II.C.5 of this final rule. For CY 
2013, we proposed to update the second part of the transition budget-
neutrality adjustment to reflect updated data. The transition budget-
neutrality adjustment is applied to both the blended payments under the 
transition and payments under the ESRD PPS. The discussion regarding 
the transition budget-neutrality adjustment can be found in section 
II.C.4 of this final rule.
    As discussed in the CY 2013 ESRD PPS proposed rule (76 FR 40957), 
section II.C.3 of this final rule, and in section 1881(b)(14)(F)(ii) of 
the Act, as added by section 153(b) of MIPPA and amended by section 
3401(h) of the Affordable Care Act, for the years in which the 
transition applies, the composite base rate shall be annually increased 
by the ESRDB market basket and, for CY 2012 and each subsequent year, 
the ESRDB market basket shall be reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. In the CY 2013 
ESRD PPS proposed rule (77 FR 40957), we proposed for CY 2013 a 
composite rate of $145.49, which reflected the CY 2012 composite rate 
of $141.94 increased by an ESRDB market basket of 3.2 reduced by the 
productivity adjustment of 0.7 percent, resulting in an update of 2.5 
percent, based on the first quarter 2012 IGI forecast of the ESRDB 
market basket.
    We received four public comments supporting our proposal to 
increase the composite base rate by 2.5 percent for ESRD services 
furnished in CY 2013 and paid under the blended payment methodology 
during the transition period.
    In section II.C.3.b of this final rule, we finalize the CY 2013 
ESRDB market basket update of 2.9 percent, and the MFP adjustment of 
0.6 percent, which results in a forecasted rate of increase to the base 
rate of 2.3 percent. This final update is based on the third quarter 
2012 IGI forecast of the ESRDB market basket. Consequently for CY 2013, 
we are finalizing the composite base rate under the ESRD PPS payment of 
$145.20 for ESRD services furnished during CY 2013 and paid under the 
blended payment methodology. This amount reflects the CY 2012 composite 
rate of $141.94 increased by the CY 2013 ESRD market basket increase 
factor of 2.9 percent reduced by the productivity adjustment of 0.6 
percent. The resulting CY 2013 MFP-adjusted ESRD market basket update 
is 2.3 percent ($141.94 x 1.023 = $ 145.20).
a. Update to the Drug Add-On to the Composite Rate Portion of the ESRD 
Blended Payment Rate
    Section 1881(b)(14)(E)(i) of the Act requires a 4-year transition 
under the ESRD PPS. Under 42 CFR 413.239, ESRD facilities were 
permitted to make a one-time election by November 1, 2010, to be 
excluded from the transition and receive full payment under the ESRD 
PPS. Under Sec.  413.239(a)(3), in CY 2013, ESRD facilities that 
elected to receive payment under the transition will be paid a blended 
amount consisting of 25 percent of the basic case-mix adjusted 
composite payment system payment and 75 percent of the ESRD PPS 
payment. Thus, we must continue to update the composite rate portion of 
the blended payment amount during the ESRD PPS transition (CY 2011 
through 2013), which includes an update to the drug add-on.
    As required under section 1881(b)(12) of the Act, the basic case-
mix adjusted composite payment system includes the services in the 
composite rate and an add-on to the composite rate portion of the 
blended payment to account for the difference between pre-Medicare 
Modernization Act payments for separately billed drugs and the revised 
drug pricing specified in the statute. For the drug add-on for CY 2013 
(77 FR 40957 through 40959), we did not propose any changes to the drug 
add-on methodology, but merely updated the data used in computing the 
drug add-on as described below.
i. Estimating Growth in Expenditures for Drugs and Biologicals in CY 
2013
    Section 1881(b)(12)(F) of the Act specifies that the drug add-on 
increase must reflect ``the estimated growth in expenditures for drugs 
and biologicals (including erythropoietin) that are separately billable 
* * *''. By referring to ``expenditures'', we believe the statute 
contemplates that the update would account for both increases in drug 
prices, as well as increases in utilization of those drugs.
    As we indicated in the CY 2013 ESRD PPS proposed rule (77 FR 
40957), we continue to estimate growth in drug expenditures based on 
the trends in available data. To account for increases in drug prices 
and utilization for CY 2013 we used the 6 years of available drug 
expenditure data based on ASP pricing. We then removed growth in

[[Page 67455]]

enrollment for the same time period from the expenditure growth so that 
the residual reflects the per patient expenditure growth (which 
includes price and utilization combined).
    To estimate drug expenditure growth using trend analysis, for CY 
2013, we looked at the average annual growth in total drug expenditures 
between 2006 and 2011. First, we estimated the total drug expenditures 
for all ESRD facilities in CY 2011. We used the final CY 2006 through 
CY 2010 ESRD claims data and the latest available CY 2011 ESRD facility 
claims, updated through December 31, 2011 (that is, claims with dates 
of service from January 1 through December 31, 2011, that were 
received, processed, paid, and passed to the National Claims History 
File as of December 31, 2011). We indicated in the CY 2013 ESRD PPS 
proposed rule (77 FR 40958) that for the CY 2013 PPS final rule, we 
would use additional updated CY 2011 claims with dates of service for 
the same timeframe. This updated CY 2011 data file would include claims 
received, processed, paid, and passed to the National Claims History 
File as of June 30, 2012. We further stated that while the CY 2011 
claims file used in the proposed rule was the most current available, 
we recognize that it does not reflect a complete year, as claims with 
dates of service towards the end of the year have not all been 
processed. To more accurately estimate the update to the drug add-on, 
completed aggregate drug expenditures are required.
    In the CY 2013 ESRD PPS proposed rule (77 FR 40958), we inflated 
the CY 2011 drug expenditures to estimate the June 30, 2012 update of 
the 2011 claims file. We used the relationship between the December 
2010 and the June 2011 versions of 2010 claims to estimate the more 
complete 2011 claims that were available in June 2012 and applied that 
ratio to the 2011 claims data from the December 2011 claims file. The 
net adjustment to the CY 2011 claims data was an increase of 9.7 
percent to the 2011 expenditure data. This adjustment allows us to more 
accurately compare the 2010 and 2011 drug expenditure data to estimate 
per patient growth.
    We further stated in the CY 2013 ESRD PPS proposed rule (77 FR 
40958), that using the completed full-year 2011 drug expenditure 
figure, we calculated the average annual change in drug expenditures 
from 2006 through 2011. This average annual change showed a decrease of 
3.0 percent in drug expenditures from 2006 through 2011. We used this 
3.0 percent decrease to project drug expenditures for both 2012 and 
2013.
    For this CY 2013 final rule, using the full year 2011 drug 
expenditure figure based on the June 2012 update of the CY 2011 
National Claims History File, we calculated the average annual change 
in drug expenditure from 2006 through 2011. This average annual change 
showed a decrease of 2.9 percent in drug expenditures from 2006 through 
2011. We used this 2.9 decrease to project drug expenditures for both 
2012 and 2013. We note that the decrease in the drug expenditures 
percentage is a result of our use of updated data.
ii. Estimating Per Patient Growth
    In the CY 2013 ESRD PPS proposed rule (77 FR 40958), we explained 
that once we had the projected growth in drug expenditures from 2012 to 
2013, we calculated per patient growth between CYs 2012 and 2013 by 
removing the estimated growth in enrollment data between CYs 2012 and 
2013. We had estimated a 4.6 percent growth in fee-for-service Medicare 
dialysis beneficiary enrollment between CYs 2012 and 2013. To obtain 
the per-patient estimated growth in expenditures, we divided the total 
drug expenditure change of a 3 percent decrease between 2012 and 2013 
(0.97) by enrollment growth of 4.6 percent (1.046) for the same 
timeframe. The result was a per-patient growth factor equal to 0.927 
(0.97/1.046 = 0.927). Thus, we are projecting a 7.3 percent decrease (-
7.3% = -.073 = 0.927 -1) in per patient growth in drug expenditures 
between CYs 2012 and 2013.
    For this final rule, we estimate a 4.0 percent estimated growth in 
enrollment between CYs 2012 and 2013. To obtain the per-patient 
estimated growth in expenditures, we divided the total drug expenditure 
change of a 2.9 percent decrease between CYs 2012 and 2013 (0.971) by 
enrollment growth of 4.0 percent (1.04) for the same timeframe. The 
result is a per-patient growth factor equal to 0.934 (.971/1.04=.934). 
Thus, in this final rule, for CY 2013 we are projecting a 6.6 percent 
decrease (-6.6% percent =-.063=.934-1) in per patient growth in drug 
expenditures between CYs 2012 and 2013.
iii. Applying the Proposed Growth Update to the Drug Add-On Adjustment
    We explained in the CY 2013 ESRD PPS proposed rule (77 FR 40958), 
that in the CY 2012 ESRD PPS proposed and final rules, we provided an 
incorrect citation to the CY 2006 PFS final rule with comment in the 
discussion of the application of the projected growth update 
percentages. The correct citation to this discussion in the CY 2006 PFS 
final rule with comment is 70 FR 70166 and 70167. In the CY 2006 rule, 
we applied the projected growth percentage to the total amount of drug 
add-on dollars established for CY 2005 to establish a dollar amount for 
the CY 2006 growth. In addition, we projected the growth in dialysis 
treatments for CY 2006 based on the projected growth in ESRD 
enrollment. We divided the projected total dollar amount of the CY 2006 
growth by the projected total dialysis treatments to develop the per 
treatment growth update amount. This growth update amount, combined 
with the CY 2005 per treatment drug add-on amount, resulted in a 14.7 
percent adjustment to the composite rate for CY 2006.
    We further explained in the CY 2013 ESRD PPS proposed rule (77 FR 
40958), that subsequent to the publication of the CY 2006 PFS final 
rule with comment, the Deficit Reduction Act (DRA) of 2005 (Pub. L. 
109-171) was enacted on February 8, 2006. Section 5106 of the DRA 
amended section 1881(b)(12) of the Act to require the Secretary to 
increase the amount of the composite rate component of the basic case-
mix adjusted system for dialysis services furnished on or after January 
1, 2006 by 1.6 percent above the amount of the composite rate for such 
services furnished on December 31, 2005. We issued Change Request 4291, 
Transmittal 849, entitled, ``Update to the ESRD Composite Payment 
Rates'' on February 10, 2006 to instruct contractors to implement this 
change. We stated in Change Request 4291 that because the drug add-on 
adjustment is determined as a percentage of the composite rate, it was 
necessary to adjust the drug add-on percentage to account for the 1.6 
percent increase in the composite payment rate. Therefore, the total 
drug add-on adjustment to the composite payment rate for 2006 was 14.5 
percent instead of 14.7 percent.
    Finally, we explained in the CY 2013 ESRD PPS proposed rule (77 FR 
40958) that in the CY 2007 PFS final rule with comment period (71 FR 
69683 and 69684), we revised our update methodology by applying the 
growth update to the per treatment drug add-on amount. That is, for CY 
2007, we applied the growth update factor of 4.03 percent to the $18.88 
per treatment drug add-on amount resulting in an updated per treatment 
drug add-on amount of $19.64 per treatment (71 FR 69684). For CY 2008, 
the per treatment drug add-on amount was updated to $20.33. In the CYs 
2009, 2010, and 2011 PFS final rule with comment period (73 FR 69755 
through 69757, 74 FR 61923, and 75 FR 73485, respectively) and the CY 
2012

[[Page 67456]]

ESRD PPS final rule (76 FR 70239), we applied a zero update to the per 
treatment drug add-on amount resulting in a per treatment drug add-on 
amount of $20.33. For CY 2013, we did not make any update to the per 
treatment drug add-on amount of $20.33 established in CY 2008.
    As discussed in detail below, in this final rule, for CY 2013, we 
are finalizing a zero update to the per treatment drug add-on amount of 
$20.33 established in CY 2008.
iv. Update to the Drug Add-On Adjustment for CY 2013
    As discussed above, in the CY 2013 ESRD PPS proposed rule (77 FR 
40958), we estimated a 3.0 percent decrease in drug expenditures 
between CYs 2012 and 2013. Combining this decrease with a 4.6 percent 
increase in enrollment, as described above, we projected a 7.3 percent 
decrease in per patient growth of drug expenditures between CYs 2012 
and CY 2013. Therefore, in the CY 2013 ESRD PPS proposed rule, we 
projected that the combined growth in per patient utilization and 
pricing for CY 2013 would result in a decrease to the drug add-on equal 
to 1.0 percentage points (out of the revised 14.0 percent add-on for 
2013). This figure was derived by applying the 7.3 percent decrease to 
the CY 2012 drug add-on of $20.33. This resulted in a revised drug add-
on of $18.85, which is 13.0 percent of the proposed CY 2013 base 
composite rate of $145.49. We indicated that if we were to apply no 
decrease to the drug add-on of $20.33, this would result in a 14.0 
percent drug add-on. However, similar to last year and as indicated 
above, we proposed a zero update to the drug add-on adjustment. We 
believe this approach is consistent with the language under section 
1881(b)(12)(F) of the Act, which states in part that ``the Secretary 
shall annually increase'' the drug add-on amount based on the growth in 
expenditures for separately billed ESRD drugs. Therefore, we proposed 
to apply a zero update and maintain the $20.33 per treatment drug add-
on amount for CY 2013. We sought comment on our proposed zero update to 
the drug add-on.
    We further stated in the CY 2013 ESRD PPS proposed rule (77 FR 
40959), that the current $20.33 per treatment drug add-on reflected a 
14.3 percent drug add-on adjustment to the composite rate in effect for 
CY 2012. As discussed in section II.3.a of the CY 2013 ESRD PPS 
proposed rule, section 1881(b)(14)(F) of the Act requires that an ESRDB 
market basket minus productivity adjustment be used to update the 
composite rate portion of the ESRD PPS payment resulting in a decrease 
to the CY 2013 drug add-on adjustment from 14.3 to 14.0 percent, to 
maintain the drug add-on at $20.33. This decrease occurs because the 
drug add-on adjustment is a percentage of the composite rate. Since the 
proposed CY 2013 composite rate is higher than the CY 2012 composite 
rate and since the drug add-on remains at $20.33, the percentage 
decreases. Therefore, we proposed a drug add-on adjustment to the 
composite rate for CY 2013 of 14.0 percent.
    We did not receive any comments on our proposals to use a zero 
update to the drug add-on or on the proposed drug-add on adjustment to 
the composite rate for CY 2013 of 14.0 percent.
    In this final rule, for CY 2013, we estimate a 2.9 percent decrease 
in drug expenditures between CYs 2012 and 2013. Combining this increase 
with a 4.0 percent increase in enrollment, we project a 6.6 percent 
decrease in per patient growth of drug expenditures between CYs 2012 
and 2013. Therefore, we project that the combined growth in per patient 
utilization and pricing for CY 2013 results in a decrease to the drug 
add-on equal to 0.9 percentage points. This figure is derived by 
applying the 6.6 percent decrease to the CY 2012 drug add-on of $20.33. 
This results in a revised drug add-on of $18.98, which is 13.1 percent 
of the final CY 2013 base composite rate of $145.20. Applying no 
decrease to the drug add-on of $20.33 results in a 14.0 percent drug 
add-on. Similar to last year and as discussed above, for CY 2013, we 
are finalizing a zero update to the drug add-on and maintaining the 
$20.33 per treatment drug add-on amount.
    The current $20.33 per treatment drug add-on reflected a 14.3 
percent drug add-on adjustment to the composite rate in effect for CY 
2012. Using the latest ESRDB market basket minus productivity 
adjustments to update the composite rate portion of the ESRD PPS 
payment (forecast of 2.3 percent in CY 2013 effective January 1, 2013, 
as discussed in section II.C.3 of this final rule), results in a 
decrease to the CY 2013 drug add-on adjustment from 14.3 to 14.0 
percent in order to maintain the drug add-on amount of $20.33. This 
decrease occurs because the drug add-on adjustment is a percentage of 
the composite rate. Because the final CY 2013 composite rate is higher 
than CY 2012 composite rate, and since the drug add-on remains at 
$20.33, the percentage decreases. Therefore, we are finalizing for CY 
2013 the drug add-on adjustment of 14.0 to the composite rate.
2. ESRD PPS Base Rate
    In the CY 2013 ESRD PPS proposed rule (77 FR 40959) and CY 2012 
ESRD PPS final rule (76 FR 70231), we discussed the development of the 
ESRD PPS per treatment base rate that is codified in the Medicare 
regulations at 42 CFR 413.220 and 413.230. We explained that the CY 
2011 ESRD PPS final rule (75 FR 49071 through 49082) provides a 
detailed discussion of the methodology used to calculate the ESRD PPS 
base rate and the computation of factors used to adjust the ESRD PPS 
base rate for projected outlier payments and budget-neutrality in 
accordance with sections 1881(b)(14)(D)(ii) and 1881(b)(14)(A)(ii) of 
the Act, respectively. Specifically, the ESRD PPS base rate was 
developed from CY 2007 claims (that is, the lowest per patient 
utilization year), updated to CY 2011, and represented the average per 
treatment Medicare Allowable Payment (MAP) for composite rate and 
separately billable services. We further explained that in accordance 
with 42 CFR 413.230, the ESRD PPS base rate is adjusted for the 
patient-specific case-mix adjustments, applicable facility adjustments, 
geographic differences in area wage levels using an area wage index, as 
well as any outlier payment or training payments (if applicable). For 
CY 2012, the ESRD PPS base rate was $234.81 (76 FR 70231).
    We also indicated in the CY 2013 ESRD PPS proposed rule (77 FR 
40959) that section 1881(b)(14)(F)(i) of the Act, as added by section 
153(b) of MIPPA and amended by section 3401(h) of the Affordable Care 
Act, provides that, beginning in 2012, the ESRD PPS payment amounts are 
required to be annually adjusted by the rate of increase in the ESRD 
market basket, reduced by the productivity adjustment. Accordingly, in 
the CY 2013 ESRD PPS proposed rule, we applied the 2.5 percent increase 
to the CY 2012 ESRD PPS base rate of $234.81, which resulted in a 
proposed CY 2013 ESRD PPS base rate of $240.68 ($234.81 x 1.025 = 
$240.68). The ESRD PPS base rate is applicable to both the ESRD PPS 
portion of the blended payment under the transition and payments under 
the full ESRD PPS.
    In addition, for CY 2013, we proposed a wage index budget-
neutrality adjustment factor of 1.000826 to be applied to the CY 2013 
ESRD PPS base rate (that is, $240.68), which yielded a proposed CY 2013 
ESRD PPS wage index budget-neutrality adjusted base rate of $240.88 
($240.68 x 1.000826 = $240.88).

[[Page 67457]]

    Comment: All commenters supported our CY 2013 ESRD PPS wage index 
budget-neutrality adjusted base rate. Two commenters thanked CMS for 
providing an update to the base rate, and one commenter specifically 
appreciated the base rate increase at a time when the Medicare ESRD 
program is undergoing significant changes and noted that it is 
important to retain savings where applicable.
    Response: We thank the commenters for their support. In this final 
rule, using updated data for CY 2013, we applied the 2.3 percent 
increase (ESRDB market basket update less productivity) to the CY 2012 
ESRD PPS base rate of $234.81, which results in an ESRD PPS base rate 
for CY 2013 of $240.21 ($234.81 x 1.023 = $240.21). In addition, we 
applied the wage index budget-neutrality adjustment factor of 1.000613 
to the updated base rate of $240.21, yielding an ESRD PPS wage index 
budget-neutrality adjusted base rate for CY 2013 of $240.36 ($240.21 x 
1.000613 = $240.36).
3. ESRD Bundled Market Basket
a. Overview and Background
    In accordance with section 1881(b)(14)(F)(i) of the Act, as added 
by section 153(b) of MIPPA and amended by section 3401(h) of the 
Affordable Care Act, beginning in 2012, the ESRD bundled payment 
amounts are required to be annually increased by an ESRD market basket 
increase factor that is reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. The application 
of the productivity adjustment described may result in the increase 
factor being less than 0.0 for a year and may result in payment rates 
for a year being less than the payment rates for the preceding year. 
The statute further provides that the market basket increase factor 
should reflect the changes over time in the prices of an appropriate 
mix of goods and services used to furnish renal dialysis services. 
Under section 1881(b)(14)(F)(ii) of the Act, as added by section 153(b) 
of MIPPA and amended by section 3401(h) of the Affordable Care Act, the 
ESRDB market basket increase factor will also be used to update the 
composite rate portion of ESRD payments during the ESRD PPS transition 
period from CYs 2011 through 2013; though beginning in CY 2012, such 
market basket increase factor will be reduced by the productivity 
adjustment. Therefore, a full market basket was applied to the 
composite rate portion of the blended payment in CY 2011 during the 
first year of the transition.
b. Market Basket Update Increase Factor and Labor-related Share for 
ESRD Facilities for CY 2013
    As required under section 1881(b)(14)(F) of the Act, CMS developed 
an all-inclusive ESRDB input price index (75 FR 49151 through 49162). 
Although ``market basket'' technically describes the mix of goods and 
services used to produce ESRD care, this term is also commonly used to 
denote the input price index (that is, cost categories, their 
respective weights, and price proxies combined) derived from that 
market basket. Accordingly, the term ``ESRDB market basket'', as used 
in this document, refers to the ESRDB input price index.
    We proposed to use the same methodology described in the CY 2011 
ESRD PPS final rule (75 FR 49151 through 49162) to compute the CY 2013 
ESRDB market basket increase factor and labor-related share based on 
the best available data (76 FR 40503). Consistent with historical 
practice, we estimated the ESRDB market basket update based on IHS 
Global Insight (IGI), Inc.'s forecast using the most recently available 
data. IGI is a nationally recognized economic and financial forecasting 
firm that contracts with CMS to forecast the components of the market 
baskets.
    Using this methodology and the IGI forecast for the third quarter 
of 2012 of the CY 2008-based ESRDB market basket (with historical data 
through the second quarter of 2012), and consistent with our historical 
practice of estimating market basket increases based on the best 
available data, the CY 2013 ESRDB market basket increase factor is 2.9 
percent.
    For the CY 2013 ESRD payment update, we will continue to use a 
labor-related share of 41.737 percent for the ESRD PPS payment and the 
ESRD PPS portion of the blended payment, which was finalized in the CY 
2011 ESRD final rule (75 FR 49161). We will also continue to use a 
labor-related share of 53.711 percent for the ESRD composite rate 
portion of the blended payment for all years of the transition. This 
labor-related share was developed from the labor-related components of 
the 1997 ESRD composite rate market basket that was finalized in the CY 
2006 Physician Fee Schedule (PFS) final rule (70 FR 70168), and is 
consistent with the mix of labor-related services paid under the 
composite rate, as well as the method finalized in the CY 2011 ESRD PPS 
final rule (75 FR 49116).
c. Productivity Adjustment
    The ESRDB market basket must be annually adjusted by changes in 
economy-wide productivity. Specifically, under section 
1881(b)(14)(F)(i) of the Act, as amended by section 3401(h) of the 
Affordable Care Act, for CY 2012 and each subsequent year, the ESRD 
market basket percentage increase factor shall be reduced by the 
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of 
the Act. The statute defines the productivity adjustment to be equal to 
the 10-year moving average of changes in annual economy-wide private 
nonfarm business multifactor productivity (MFP) (as projected by the 
Secretary for the 10-year period ending with the applicable fiscal 
year, year, cost reporting period, or other annual period) (the ``MFP 
adjustment''). The Bureau of Labor Statistics (BLS) is the agency that 
publishes the official measure of private nonfarm business MFP. Please 
see http://www.bls.gov/mfp to obtain the BLS historical published MFP 
data.
    CMS notes that the methodology for calculating and applying the MFP 
adjustment to the ESRD payment update is similar to the methodology 
used in other payment systems, as required by section 3401 of the 
Affordable Care Act.
    The projection of MFP is currently produced by IGI. The details 
regarding the methodology for forecasting MFP and how it is applied to 
the market basket was finalized in the CY 2012 ESRD PPS final rule (76 
FR 70232 through 70234). Using this method and the IGI forecast for the 
third quarter of 2012 of the 10-year moving average of MFP, the CY 2013 
MFP factor is 0.6 percent.
d. Calculation of the ESRDB Market Basket Update, Adjusted for 
Multifactor Productivity for CY 2013
    Under section 1881(b)(14)(F) of the Act, beginning in CY 2012, ESRD 
PPS payment amounts and the composite rate portion of the transition 
blended payment amounts shall be annually increased by an ESRD market 
basket percentage increase factor reduced by a productivity adjustment. 
We proposed to follow the same methodology for calculating the ESRDB 
market basket updates adjusted for MFP that was finalized in the CY 
2012 ESRD PPS final rule (76 FR 70234).
    Thus, in accordance with section 1881(b)(14)(F)(i) of the Act, the 
market basket increase factor for CY 2013 for the ESRDB market basket 
is based on the 3rd quarter 2012 forecast of the CY 2008-based ESRDB 
market basket

[[Page 67458]]

update, which is estimated to be 2.9 percent. This market basket 
percentage is then reduced by the MFP adjustment (the 10-year moving 
average of MFP for the period ending CY 2013) of 0.6 percent, which is 
based on IGI's 3rd quarter 2012 forecast. The resulting MFP-adjusted 
ESRDB market basket update for CY 2013 is equal to 2.3 percent, or 2.9 
percent less 0.6 percentage point.
    We received two comments in support of the market basket update. We 
are finalizing the update to the ESRDB market basket of 2.3 percent for 
CY 2013.
4. Transition Budget-Neutrality Adjustment for CY 2013
    Section 1881(b)(14)(E)(i) of the Act requires the Secretary to 
provide a 4-year phase-in of the payments under the ESRD PPS for renal 
dialysis services furnished on or after January 1, 2011, with payments 
under the ESRD PPS fully implemented for renal dialysis services 
furnished on or after January 1, 2014. Although the statute uses the 
term ``phase-in,'' we use the term ``transition'' in our discussions in 
order to be consistent with other Medicare payment systems.
    Section 1881(b)(14)(E)(ii) of the Act permitted ESRD facilities to 
make a one-time election to be excluded from the transition. An ESRD 
facility that elected to be excluded from the transition receives 
payment for renal dialysis services furnished on or after January 1, 
2011, based on 100 percent of the payment rate under the ESRD PPS 
rather than a blended payment based in part on the payment under the 
basic case-mix adjusted composite payment system and in part on the 
payment under the ESRD PPS. Section 1881(b)(14)(E)(iii) of the Act also 
requires that we make an adjustment to payments during the transition 
so that the estimated total amount of payments under the ESRD PPS, 
including payments under the transition, equals the estimated total 
amount of payments that would otherwise occur under the ESRD PPS 
without such a transition. We refer to this provision as the transition 
budget-neutrality adjustment.
    In the CY 2012 ESRD PPS final rule (76 FR 70235), we discussed the 
two parts that comprise the transition budget-neutrality adjustment 
factor. For the first part, we created a one-time payment adjustment to 
the composite rate portion of the blended payment during the transition 
to account for the per treatment costs of ESRD drugs with an injectable 
equivalent that were paid under Part D. We finalized the one-time 
addition of the CY 2011 Part D per treatment amount of $0.49 to the 
composite rate (76 FR 70231). For the second part, we explained that we 
computed a factor that would make the estimated total amount of 
payments under the ESRD PPS, including payments under the transition, 
equal to the estimated total amount of payments that would otherwise 
occur without such a transition.
    Given that the transition budget-neutrality adjustment required 
under section 1881(b)(14)(E)(iii) of the Act applies in each year of 
the transition, we must update the transition budget-neutrality 
adjustment for CY 2013, the third year of the transition. As discussed 
in detail below, and in accordance with section 1881(b)(14)(E)(iii) of 
the Act, an adjustment is made to payments so that estimated total 
payments under the transition equal estimated total payment amounts 
without such a transition.
    In the CY 2013 ESRD PPS proposed rule, we did not propose to change 
the methodology used to calculate either part of the transition budget-
neutrality adjustment factor. We did, however, propose to use updated 
data to calculate the second part of the transition budget-neutrality 
adjustment factor. The first part, which is the Part D payment amount 
added to the composite rate, is updated annually by the ESRDB market 
basket reduced by the productivity adjustment. The second part is 
updated as described below.
    For CY 2013, we started with 2011 utilization data from claims, as 
2011 is the latest complete year of claims data available. In the CY 
2013 ESRD PPS proposed rule, we used the December 2011 claims file. In 
this final rule, we used the June 2012 claims file. We updated the CY 
2011 utilization data to CYs 2012 and 2013 payments by using the price 
growth factors for CYs 2012 and 2013, as discussed in the impact 
analysis in section VI.C of this final rule. We then took the estimated 
payments under the full CY 2013 ESRD PPS and the blended payments under 
the transition based on actual facility election data and compared 
these estimated payments to the total estimated payments in CY 2013 as 
if all facilities had elected to receive payment under the ESRD PPS. We 
then calculated the transition budget-neutrality factor to be 1 minus 
the ratio of estimated payments under the ESRD PPS as if there were no 
transition to the total estimated payments under the transition, which 
results in a zero percent reduction factor for CY 2013. In the CY 2013 
ESRD PPS proposed rule, we proposed a zero percent reduction to all 
payments made to ESRD facilities (that is, the zero percent adjustment 
would be applied to both the blended payments made under the transition 
and payments made under the 100 percent ESRD PPS) for renal dialysis 
items and services furnished January 1, 2013 through December 31, 2013 
(77 FR 40957). We solicited comments on the proposed second part of the 
CY 2013 transition budget-neutrality adjustment.
    We received three comments as set forth below.
    Comment: All of the commenters supported using updated data and 
maintaining a zero percent budget-neutrality transition adjustment for 
CY 2013.
    Response: We thank the commenters for their support of our proposed 
use of updated data and a transition budget-neutrality factor of zero 
percent for renal dialysis services furnished during January 1, 2013 
through December 31, 2013. As we indicated above, for the proposed 
rule, we used the December 2011 claims file to compute the transition 
budget-neutrality adjustment factor. For this final rule, we used the 
June 2012 claims file. As a result of using the June 2012 claims file, 
we calculated the transition budget-neutrality factor to be a reduction 
of 1 minus the ratio of estimated payments under the ESRD PPS as if 
there were no transition to the total estimated payments under the 
transition, which results in a 0.1 percent increase factor for CY 2013. 
We believe the claims data we used to perform our analysis resulted in 
the change in the transition budget-neutrality adjustment factor from 
the zero factor used in previous years to the 0.1 percent increase 
factor for CY 2013. We note that in past years, the transition budget-
neutrality factor has not always been an absolute zero, but was rounded 
to zero percent. The June 2012 claims file represents 2011 data, the 
first year of the PPS. In 2011, the utilization for separately billable 
drugs, laboratory tests and other items dropped significantly. For ESRD 
facilities that are paid under the transition, the decrease in 
utilization contributed to the payment for the composite rate portion 
of the blended payment being lower than the payment for the ESRD PPS 
portion of the blended payment. Therefore, total payments for all 
facilities under the transition were lower than what payments would 
have been under the ESRD PPS, if there were no transition. This 
widening difference resulted in the transition budget-neutrality 
adjustment rounding to 0.1 for CY 2013. We are finalizing for CY 2013 a 
transition budget-neutrality adjustment of 0.1 percent.

[[Page 67459]]

5. Updates to the Wage Index Values and Wage Index Floor for the 
Composite Rate Portion of the Blended Payment and the ESRD PPS Payment
    Section 1881(b)(14)(D)(iv)(II) of the Act provides that the ESRD 
PPS may include such other payment adjustments as the Secretary 
determines appropriate, such as a payment adjustment by a geographic 
wage index, such as the index referred to in section 1881(b)(12)(D) of 
the Act. In the CY 2011 ESRD PPS final rule (75 FR 49117), we finalized 
the use of the OMB's core-based statistical area (CBSA) based 
geographic area designations to define urban/rural areas and 
corresponding wage index values. In the CY 2012 ESRD PPS final rule (76 
FR 70241), we finalized the wage index policy that is used under the 
ESRD PPS. Under the ESRD PPS, we have adopted the same method and 
source of wage index values used previously to compute the wage index 
values for the basic case-mix adjusted composite payment system. 
Specifically, we finalized our policies to continue to utilize the 
methodology established under the composite payment system for updating 
the wage index values using the OMB's CBSA-based geographic area 
designations to define urban and rural areas and corresponding wage 
index values; the gradual reduction of the wage index floor during the 
transition; and the policies for areas with no hospital data. For CY 
2013, we did not propose any changes to the methodology finalized in 
the CY 2012 final rule and will update the wage index values using the 
FY 2013 Inpatient Prospective Payment System (IPPS) pre-floor, pre-
reclassified hospital wage data.
    In the CY 2012 ESRD PPS final rule (76 FR 70242), we explained that 
we would continue to use the labor-related share of 53.711 finalized in 
the 2005 PFS final rule (70 FR 70168) for the composite rate portion of 
the blended payment during the transition and continue to use a labor-
related share of 41.737 for the ESRD PPS payment for CY 2012. We also 
discussed that the wage data used to construct the wage index under the 
ESRD PPS is updated annually, based on the most current data available 
and based on the Office of Management and Budget's (OMB's) urban and 
rural definitions and corresponding wage index values. Additional 
discussion on the labor-related share can be found in section II.c.3 of 
this final rule. For CY 2013, we did not propose to change the labor-
related shares, as finalized in the CY 2012 rule, as discussed in 
section II.C.3 of this final rule.
    In the CY 2012 ESRD PPS final rule (76 FR 70240), we discussed that 
during the transition we would continue to update the composite rate 
portion of the ESRD PPS blended payment, including adjusting payments 
for geographic differences in area wage levels, as noted above. We also 
discussed the application of the wage index budget-neutrality 
adjustment factor to the area wage index values for the composite rate 
portion of the ESRD PPS blended payment. In the proposed rule, for CY 
2013 we did not propose any changes to the methodology for the wage 
index used to adjust the composite rate portion of the ESRD PPS blended 
payment.
a. Reduction to the ESRD Wage Index Floor
    In the CY 2012 ESRD PPS final rule (76 FR 70239 through 70241), we 
finalized that we will continue to reduce the wage index floor by 0.05 
for each of the remaining years of the transition. That is, we 
finalized the 0.05 reduction to the wage index floor for CYs 2012 and 
2013, resulting in a wage index floor of 0.550 and 0.500, respectively. 
The wage index floor value is used in lieu of wage index values below 
the floor. The wage index floor is applied to both the composite rate 
portion of the blend and to the ESRD PPS. In the CY 2013 ESRD PPS 
proposed rule, we did not propose any changes to the wage index floor 
methodology or reduction. Consequently, for CY 2013 we indicated in the 
proposed rule that we would continue to reduce the wage index floor by 
0.05, which will reduce the wage index value for the wage index floor 
from 0.550 to 0.500. For CY 2013, the wage index floor of 0.500 only 
applies to areas located in Puerto Rico because those are the only 
areas that have wage index values below the wage index floor value of 
0.500. In the CY 2012 ESRD PPS final rule (76 FR 70241), we explained 
that continuing to artificially adjust the wage index values after the 
transition by substituting a wage index floor is not an appropriate 
method to address low wages in certain geographic locations. Therefore, 
we would no longer apply a wage index floor beginning January 1, 2014.
b. Policies for Areas With No Wage Data
    In the CY 2012 ESRD PPS final rule (76 FR 70241), we explained that 
we adopted the CBSA designations for the basic case-mix adjusted 
composite rate payment system and for the ESRD PPS. We also discussed 
and finalized the methodologies we use to calculate wage index values 
for ESRD facilities that are located in urban and rural areas where 
there are no hospital data. That is, for urban areas with no hospital 
data we compute the average wage index value of all urban areas within 
the State and use that value as the wage index. For rural areas with no 
hospital data, we compute the wage index using the average wage index 
values from all contiguous CBSAs to represent a reasonable proxy for 
that rural area. For rural Puerto Rico, we use the wage index floor as 
the wage index value, since all rural Puerto Rico areas are below the 
floor.
    We further explained that for rural Massachusetts, we determined 
that the borders of Dukes and Nantucket Counties are contiguous with 
Barnstable and Bristol counties. Under the methodology, the values for 
these counties are averaged to establish the wage index value for rural 
Massachusetts.
    After the CY 2012 ESRD PPS final rule was published, we determined 
that for CY 2012 there was a rural hospital with wage data on which to 
base an area wage index for rural Massachusetts. We note that the wage 
index value for rural Massachusetts was correctly identified on the 
wage index table for CY 2012 based on the wage data for that rural 
hospital. Consequently, in the CY 2013 ESRD PPS proposed rule we 
corrected the statement in the CY 2012 final rule that ``For rural 
Massachusetts, we determined that the borders of Dukes and Nantucket 
Counties are contiguous with Barnstable and Bristol counties. Under the 
methodology, the values for these counties are averaged to establish 
the wage index value for rural Massachusetts'' (76 FR 70241). 
Therefore, for CY 2012 and subsequent years, the area wage index value 
for rural Massachusetts is based on wage data of the rural hospital.
    For CY 2013, we will continue to use the statewide urban average 
based on the average of all urban areas within the state for urban 
areas without hospital data. We note that Yuba City, California now has 
hospital data to calculate a wage index. Therefore, the methodology for 
computing a wage index for urban areas without hospital data no longer 
applies to that area. The only urban area without wage index data is 
Hinesville-Fort Stewart, GA.
c. Wage Index Budget-Neutrality Adjustment
    In the CY 2012 ESRD PPS final rule (76 FR 70241 and 70242), we 
explained that we have broad discretion under section 
1881(b)(14)(D)(iv)(II) of the Act to develop a geographic wage index. 
We explained that in addition to being

[[Page 67460]]

given broad discretion, the section cites the wage index under the 
basic case-mix adjusted composite payment system as an example. We have 
previously interpreted the statutory requirement in section 
1881(b)(12)(D) of the Act for the geographic adjustment for the basic 
case-mix adjusted composite payment system as requiring that the 
geographic adjustment be made in a budget-neutral manner.
    In the CY 2012 ESRD PPS final rule (76 FR 70241 and 70242), we 
finalized the policy to apply the wage index in a budget-neutral manner 
under the ESRD PPS using a wage index budget-neutrality adjustment 
factor. We further explained that in the first year of the ESRD PPS, CY 
2011, we did not apply a wage index budget-neutrality adjustment factor 
under the ESRD PPS because budget-neutrality was achieved through the 
overall 98 percent budget-neutrality requirement in section 
1881(b)(14)(A)(ii) of the Act. In the CY 2012 ESRD PPS final rule (76 
FR 70242), we finalized that for CYs 2012 and 2013 we will apply the 
wage index budget-neutrality adjustment to the wage index values for 
the composite rate portion of the blended payment and that for CY 2012 
and subsequent years we will apply the wage index budget-neutrality 
adjustment to the ESRD PPS base rate for purposes of the ESRD PPS 
portion of the blended payment during the transition and the ESRD PPS 
payment. We did not propose any changes to the wage index budget-
neutrality adjustment methodology for CY 2013.
    In the CY 2012 ESRD PPS final rule (76 FR 70242), we also finalized 
the methodology for computing the wage index budget-neutrality 
adjustment factor for CY 2012 and subsequent years. For CY 2013, we did 
not propose any changes to the methodology. Consequently, for the CY 
2013 wage index budget-neutrality adjustment factors, we use the fiscal 
year (FY) 2013 pre-floor, pre-reclassified, non-occupational mix-
adjusted hospital data to compute the wage index values, 2011 
outpatient claims (paid and processed as of December 31, 2011), and 
geographic location information for each facility, which can be found 
through Dialysis Facility Compare (DFC). The DFC can be found at the 
Dialysis Facility Compare Web page on the Medicare.gov Web site at 
www.Medicare.gov/Dialysis. The FY 2013 hospital wage index data for 
each urban and rural locale by CBSA may also be accessed on the CMS Web 
site at http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/list.asp. The 
wage index data are located in the section entitled, ``FY 2013 Proposed 
Rule Occupational Mix Adjusted and Unadjusted Average Hourly Wage and 
Pre-Reclassified Wage Index by CBSA''.
    To compute the CY 2013 wage index budget-neutrality adjustment 
factor for this final rule, we used treatment counts from the 2011 
claims and facility-specific CY 2012 payment rates; we computed the 
estimated total dollar amount that each ESRD facility would have 
received in CY 2012. The total of these payments became the target 
amount of expenditures for all ESRD facilities for CY 2013. Next, we 
computed the estimated dollar amount that would have been paid for the 
same ESRD facilities using the final ESRD wage index for CY 2013. The 
total of these payments becomes the new CY 2013 amount of wage-adjusted 
expenditures for all ESRD facilities.
    After comparing these two dollar amounts (target amount divided by 
the new CY 2013 amount), we calculated two wage index budget-neutrality 
adjustment factors that, when multiplied by the applicable CY 2013 
estimated payments, would result in aggregate payments to ESRD 
facilities that would remain budget-neutral when compared to the target 
amount of expenditures. The first factor was applied to the ESRD PPS 
base rate. The second factor was applied to the wage index values for 
the composite rate portion of the blended payment. Therefore, in this 
final rule, we are finalizing for CY 2013, the wage index budget-
neutrality adjustment factor for the composite portion of the ESRD PPS 
blended payment of 1.001141, which is applied directly to the ESRD wage 
index values. For the ESRD PPS (that is, for the full ESRD PPS payments 
and the ESRD PPS portion of the blended payments during the 
transition), we are finalizing the wage index budget-neutrality 
adjustment factor of 1.000613 that will be applied to the ESRD PPS base 
rate. Because we apply the wage index budget-neutrality adjustment 
factor to the wage index values to ensure budget-neutrality under the 
composite rate portion of the blended payment, we also apply the wage 
index budget-neutrality adjustment factor to the wage index floor. We 
note that this would apply to areas in Puerto Rico, subject to the 
floor. Therefore, for the composite rate portion of the blended 
payment, we are finalizing for CY 2013, to apply the wage index budget-
neutrality adjustment factor to the wage index floor of 0.500 which 
results in an adjusted wage index floor of 0.501 (1.001141 x 0.500) 
because under the composite rate, the wage index budget-neutrality 
adjustment is applied to the wage index value. Under the ESRD PPS, the 
wage index budget-neutrality adjustment factor is applied to the base 
rate.
d. ESRD PPS Wage Index Tables
    The CY 2013 ESRD PPS proposed wage index tables, referred to as 
Addendum A (ESRD facilities located in urban areas), and Addendum B 
(ESRD facilities located in rural areas) are posted on the CMS Web site 
at http://www.cms.gov/vESRDPayment/PAY/list.asp. The wage index tables 
list two separate columns of wage index values. One column represents 
the wage index values for the composite rate portion of the blended 
payment to which the wage index budget-neutrality adjustment factor has 
been applied. The other column lists the wage index values for the ESRD 
PPS, which does not reflect the application of the wage index budget-
neutrality adjustment factor, because we finalized for CY 2012 and 
subsequent years that we will apply the wage index budget-neutrality 
adjustment factor to the ESRD PPS base rate.
    We received one comment. The comment and our response are set forth 
below.
    Comment: We received a comment from an LDO that expressed concern 
about the negative impact of the wage index floor on dialysis providers 
in Puerto Rico. The commenter expressed concern that wages for dialysis 
facilities in Puerto Rico are not accurately captured by the current 
hospital wage index methodology. The commenter urged CMS to determine 
an alternate basis for calculating the wage index floor in Puerto Rico, 
stating that it does not believe that the wage index as reported for 
Puerto Rico is representative of the wage levels of dialysis providers 
in Puerto Rico relative to a sample of other states. Specifically, the 
commenter provided its own analysis of its random sampling of cost 
report salaries comparing ESRD facilities in Puerto Rico with ESRD 
facilities in Florida, Georgia, Ohio, South Carolina and Virginia. The 
commenter recommended that reimbursement for Puerto Rico be based on 
``some measure other than the hospital wage index, such as basing the 
wage index on cost report salaries relative to other state salaries.'' 
The commenter further explained that Puerto Rico requires that only 
registered nurses (RN) provide dialysis therapy, and therefore, in the 
dialysis setting, the occupational mix would be weighted more toward 
RNs than the mix for hospital.
    Response: We understand that the commenter is concerned about wage

[[Page 67461]]

index values in Puerto Rico, however, it is our policy to use wage 
indices for all ESRD facilities that are based on the IPPS pre-floor, 
pre-reclassified hospital wage data. We discuss this in detail above. 
We believe that this is an appropriate mechanism for obtaining wage 
index values to be used to geographically adjust the ESRD PPS base rate 
for all ESRD facilities. It has been the same method that we have used 
previously for the basic case-mix adjusted composite rate payment 
system. We refer the commenter to the discussion on the methodology 
used to determine wage index values in the CY 2013 IPPS final rule (77 
FR 53365 through 55367). We will, however, consider the commenter's 
recommended approach if we determine in the future that a change to the 
methodology for determining geographic wage index values is warranted.
    In the CY 2012 ESRD PPS proposed rule (76 FR 40509 and 40510), we 
proposed to continue to reduce the wage index floor by 0.50 for each of 
the remaining years of the transition (that is, CYs 2012 and 2013). We 
also stated that ``we continue to believe that artificially adjusting 
wage index values by substituting a wage index floor is not an 
appropriate method to address low wages in certain geographic 
locations'' and that, accordingly, we will no longer apply a wage index 
floor beginning January 1, 2014 (76 FR 70241). We will include in the 
CY 2014 ESRD PPS proposed rule, the methodology we propose to use to 
address wages in rural Puerto Rico when we no longer apply the wage 
index floor.
    Therefore, we are finalizing the wage index floor value of 0.500 
for CY 2013.
6. Drug Policy Changes
a. Daptomycin
    In the CY 2011 ESRD PPS final rule (75 FR 49050 through 49052), we 
stated that antibiotics used for the treatment of vascular access 
infections and peritonitis are renal dialysis services under the ESRD 
PPS. Payments for anti-infective drugs in injectable forms (covered 
under Part B) and oral or other forms of administration (formerly 
covered under Part D) used for the treatment of ESRD, were included in 
computing the final ESRD PPS base rate and, therefore, would not be 
separately paid under the ESRD PPS. We further stated that any anti-
infective drug or biological used for the treatment of ESRD-related 
conditions would be considered a renal dialysis service and not 
eligible for separate payment. We noted that this policy also applies 
to any drug or biological that may be developed in the future.
    In the CY 2012 ESRD PPS final rule (76 FR 70243), we explained that 
subsequent to the publication of the CY 2011 ESRD PPS final rule, we 
received numerous comments indicating that vancomycin is indicated in 
the treatment of both ESRD and non-ESRD conditions, such as skin 
infections. In the CY 2012 ESRD PPS final rule (76 FR 70243), we 
allowed ESRD facilities to receive separate payment for vancomycin when 
furnished to treat non-ESRD related conditions. When ESRD facilities 
furnish vancomycin to treat non-ESRD related conditions, they place the 
AY modifier on the claim. We stipulated that in accordance with ICD-9-
CM guidelines as described in the CY 2011 ESRD PPS final rule (75 FR 
49107), an ESRD facility must report on the claim the diagnosis code 
for which vancomycin is indicated. We also reiterated that treatment of 
any skin infection that is related to renal dialysis access management 
would be considered a renal dialysis service paid under the ESRD PPS, 
and that no separate payment would be made (76 FR 70243). Finally, in 
response to comments, we stated that we would consider allowing 
separate payment for daptomycin (76 FR 70243).
    In the CY 2013 ESRD PPS proposed rule (77 FR 40963), we explained 
that after consultation with our medical experts, we proposed to allow 
ESRD facilities to receive separate payment for daptomycin when 
furnished to treat non-ESRD related conditions for CY 2013 and 
subsequent years. When ESRD facilities furnish daptomycin to treat non-
ESRD-related conditions, they would place the AY modifier on the claim. 
We also explained that if ESRD facilities submitted claims for 
daptomycin with the AY modifier, then the ESRD facility would also be 
required to report the diagnosis code for which the daptomycin is 
indicated in accordance with ICD-9-CM diagnostic coding guidelines. We 
sought public comments on our proposal to permit separate payment for 
daptomycin when furnished to treat non-ESRD-related conditions. As we 
discussed in the proposed rule, we will continue to monitor the use of 
anti-infectives furnished by ESRD facilities including those that are 
identified as non-ESRD related (77 FR 40963). The comments we received 
and our responses are set forth below.
    Comment: We received eight comments in support of our proposal to 
allow for separate payment for daptomycin when furnished for non-ESRD 
related conditions. One commenter encouraged CMS to consider the 
appropriateness of other anti-infective drugs and biologicals which 
could be used in the future for both ESRD and non-ESRD conditions, with 
the primary goal to help reduce drug resistance in this compromised and 
susceptible patient population.
    Response: We thank the commenters for their support. We believe 
that the commenter is suggesting that CMS should frequently consider 
whether other drugs should be included in the ESRD PPS. We will 
consider allowing separate payment for other anti-infective drugs and 
biologicals as we may determine appropriate.
    We are finalizing the proposal to eliminate the restriction on 
daptomycin to allow ESRD facilities to receive separate payment by 
placing the AY modifier on the claim for daptomycin when furnished to 
treat non-ESRD related conditions. In accordance with ICD-9-CM 
diagnostic coding guidelines as described in the CY 2011 ESRD PPS final 
rule (75 FR 49107), the ESRD facility must indicate on the claim the 
diagnosis code for which the daptomycin is indicated.
    During our monitoring of claims we have noted that there are ESRD 
facilities that are indicating a type of organism rather than a 
diagnosis that would indicate that the anti-infective was furnished for 
non-ESRD-related conditions. We reiterate that the diagnosis code for 
which vancomycin or daptomycin is used must be indicated on the claim. 
We also reiterate that treatment of any skin infection that is related 
to renal dialysis access management will be considered a renal dialysis 
service and will continue to be paid under the ESRD PPS, and no 
separate payment will be made. We will continue to monitor the use of 
anti-infectives furnished by ESRD facilities including those that are 
identified as non-ESRD related to ensure proper billing of these drugs.
b. Alteplase and Other Thrombolytics
    In the CY 2012 ESRD PPS final rule (76 FR 70246 through 70247), we 
explained that after the CY 2011 ESRD PPS final rule was published, our 
clinical review of the 2007 ESRD claims used to develop the ESRD PPS 
revealed that dialysis facilities routinely used alteplase and other 
thrombolytic drugs for access management purposes. We explained that 
under the Medicare Benefit Policy Manual, Pub. 100-02, chapter 11, 
section 30.4.1, drugs used as a substitute for any of the listed items 
or used to accomplish the same effect were covered under the composite 
rate. We further explained that because

[[Page 67462]]

heparin is a composite rate drug and could be used for access 
management, any drug or biological used for the same purpose may not be 
separately paid. Medicare regulations at 42 CFR 413.237(a)(2) through 
(a)(6), and (b) specify the methodology used to calculate outlier 
payments. An ESRD facility is eligible for an outlier payment if its 
actual or imputed Medicare Allowable Payment (MAP) amount per treatment 
for ESRD outlier services exceeds a threshold. The MAP amount 
represents the average incurred amount per treatment for services that 
were or would have been considered separately billable services prior 
to January 1, 2011. The discussion on the outlier policy is in section 
II.C.7 of this final rule. Section 413.237(a)(1) provides the 
definition of ESRD outlier services. Specifically, Sec.  
413.237(a)(1)(i) includes ``ESRD related drugs and biologicals that 
were or would have been, prior to January 1, 2011, separately billable 
under Medicare Part B.''
    Because outlier payments are restricted under Sec.  413.237(a) to 
those items or services that were or would have been separately 
billable prior to January 1, 2011, in the CY 2012 ESRD PPS final rule 
(76 FR 70249), we excluded thrombolytic drugs from the outlier policy 
and we recomputed the outlier MAP amounts to reflect this change. 
However, we noted in the CY 2012 ESRD PPS final rule (76 FR 70249), 
that for CY 2012 we had not proposed to exclude separate payment of 
thrombolytic drugs under the composite rate portion of the blended 
payment and therefore, separate payment would be made for thrombolytics 
for the composite rate portion of the blended payment in CY 2012.
    For CY 2013, we proposed that thrombolytic drugs would not be 
considered eligible for separate payment under the composite rate 
portion of the blended payment for those ESRD facilities that are 
receiving a blended payment under the transition (77 FR 40963). We 
believe that this is consistent with the changes we made to our outlier 
policy regarding excluding thrombolytic drugs from outlier eligibility 
as discussed above. We note that these conclusions are specific to 
ESRD. We solicited comments on our proposal to exclude thrombolytic 
drugs from separate payment under the composite rate portion of the 
blended payment during the transition.
    The comments and our responses are set forth below.
    Comment: We received five comments pertaining to our proposal to no 
longer provide separate payment for thrombolytic drugs under the 
composite rate portion of the blended payment in CY 2013. In general, 
commenters agreed with CMS that both heparin and alteplase or other 
thrombolytic drugs are used for access management, but a few commenters 
disagreed with our assertion that heparin and alteplase are used for 
the same purpose. Some commenters specifically noted that CMS's 
proposal not to allow separate payment for alteplase and thrombolytic 
drugs under the composite rate portion of the blended payment during 
the transition period for CY 2013 is flawed because the drugs are used 
to achieve different clinical results and utilize different mechanisms 
of action. In particular, the commenters noted that heparin is used to 
prevent clotting whereas alteplase is used to avoid a poorly 
functioning catheter. Some commenters provided examples of the efficacy 
of alteplase and thrombolytics, as compared to heparin. Some 
commenters, including a renal organization and a pharmaceutical 
manufacturer, disagreed that heparin can be used as a substitute for 
alteplase, citing the different mechanisms of action for the two drugs. 
One commented that because heparin and thrombolytics achieve different 
clinical results, they should not be treated as substitutes for payment 
purposes.
    Response: We believe alteplase and heparin are used for the same 
renal dialysis-related purpose, namely, vascular access management. In 
the CY 2012 ESRD PPS final rule (76 FR 70246 through 70249), we 
addressed similar comments regarding the use of alteplase and heparin 
in the context of our proposal to eliminate thrombolytics from the 
outlier policy. We noted that in the development of the ESRD PPS, we 
recognized that alteplase and heparin were pharmacologically different 
(that one is a thrombolytic that lyses clots and the other is an 
anticoagulant that prevents clots, respectively) (76 FR 70248). We 
further stated, however, that we believed that both drugs enable the 
catheter or graft to function either through clot prevention or clot 
degradation, thereby providing effective dialysis vascular access. We 
further believe that, for purposes of payment for renal dialysis 
services, it is sufficient that these products can be used for the 
purpose of providing dialysis vascular access. Consistent with the ESRD 
Benefit Policy Manual, Pub. 100-02, chapter 11, section 30.4.1, drugs 
used as substitutes for any of the listed items, or used to accomplish 
the same effect, are covered under the composite rate and are not 
separately payable. Because heparin is a composite rate drug and 
thrombolytics are used to achieve the same renal dialysis-related 
clinical outcome, we believe it is appropriate to exclude thrombolytic 
drugs from separate payment under the composite rate portion of the 
blended payment during the transition.
    Comment: One ESRD facility commented that the high cost of 
alteplase compared to heparin would prevent substitution of alteplase 
for heparin. The commenter argued that CMS's policy in the ESRD Benefit 
Policy Manual, Pub. 100-02, chapter 11, section 30.4.1 of covering 
under the composite rate drugs used as substitutes for composite rate 
drugs, or used to accomplish the same effect, is without regard to 
innovation, cost, effectiveness, and efficiencies, and may result in 
increased cost to the Medicare program. The commenter also noted that 
the cost of thrombolytics is included in the ESRD PPS for those not in 
the transition and that elimination of separate payment for those in 
the transition would negatively impact reimbursement. A pharmaceutical 
company stated that the proposed changes may negatively affect catheter 
care because disallowing outlier payments and separate payment for 
thrombolytics creates a financial incentive for facilities to avoid 
restoring patency with alteplase.
    Response: In the CY 2012 ESRD PPS final rule (76 FR 70247), we 
explained that the ESRD PPS provides an opportunity for ESRD facilities 
to make decisions based on the medical needs of patients and not on the 
basis of financial gain. We further explained that we are not implying 
that thrombolytics or any access management drug should not be used 
when clinically indicated. We noted that Medicare payment policy is not 
intended to dictate, determine, or influence clinical practice or favor 
one course of treatment over another. Rather, by accounting in the ESRD 
PPS base rate for the cost of drugs and biologicals that had been 
separately payable under the composite rate system, we believe that we 
provide adequate payment to maintain patency of the access site 
regardless of whether patency is maintained using heparin or a 
thrombolytic. For additional information regarding this issue, we refer 
the commenters to the comment responses in the CY 2012 ESRD PPS final 
rule (76 FR 70247 through 70249).
    We disagree with the commenter that ESRD facilities receiving 
blended payments during the transition are unfairly disadvantaged 
because they will not receive separate payment for thrombolytics for 
the portion of the

[[Page 67463]]

blended payment based on the composite rate. Even when the composite 
rate system was in place before the ESRD PPS was implemented, it was 
our policy not to pay separately for drugs that could be used to 
accomplish the same effect as composite rate drugs. Accordingly, it is 
consistent with that policy not to provide separate payment for 
thrombolytics for the composite rate portion of blended payments during 
the remainder of the transition.
    For all of the reasons stated above, we continue to believe that 
alteplase and other thrombolytics should not be eligible for separate 
payment under the composite rate portion of the blended payment. After 
consideration of public comments, we are finalizing our CY 2013 
proposal to exclude alteplase and other thrombolytics from separate 
payment, which we believe is consistent with the CY 2012 ESRD PPS 
changes made to the outlier policy to exclude thrombolytic drugs from 
outlier payments.
c. Part B Drug Pricing
    In the CY 2011 ESRD PPS proposed rule (74 FR 49991), with respect 
to estimating the imputed MAP amounts of ESRD outlier services that are 
separately billable under Part B, we proposed to use Average Sales 
Price (ASP) data for Part B ESRD-related drugs (which is updated 
quarterly). We did not make any changes to this proposed methodology in 
the CY 2011 final rule. In the CY 2012 ESRD PPS final rule (76 FR 
70243), we explained that ESRD facilities receiving blended payments 
under the transition would receive payments based on ASP for separately 
billable ESRD drugs and biologicals for the composite rate portion of 
the blend. In the CY 2012 ESRD PPS final rule (76 FR 70244), we stated 
that under the outlier policy, we will use the ASP methodology.
    In the CY 2013 ESRD PPS proposed rule (77 FR 40963), we proposed 
for CY 2013 and subsequent years to continue to use the ASP 
methodology, including any modifications finalized in the PFS final 
rules, to compute our outlier MAP amounts, the drug add-on, and any 
other policy that requires the use of payment amounts for drugs and 
biologicals that would be separately paid absent the ESRD PPS and for 
the composite rate portion of the blended payment during the 
transition. We explained that we would use this methodology for payment 
analyses that CMS may perform. We did not receive public comments on 
our proposal to apply the ASP methodology or any modifications to the 
ASP for these purposes, as updated in the PFS rule or in updating the 
ASP pricing. Therefore, we are finalizing that for CY 2013 and 
subsequent years we will continue to use the ASP methodology, including 
any modifications finalized in the Physician Fee Schedule (PFS) final 
rules, to compute outlier MAP amounts, the drug add-on, and any other 
policy that requires the use of payment amounts for drugs and 
biologicals that would be separately paid absent the ESRD PPS and for 
the composite rate portion of the blended payment during the 
transition.
7. Revisions to the Outlier Policy
    Section 1881(b)(14)(D)(ii) of the Act requires that the ESRD PPS 
include a payment adjustment for high cost outliers due to unusual 
variations in the type or amount of medically necessary care, including 
variability in the amount of erythropoiesis stimulating agents (ESAs) 
necessary for anemia management. Our regulations at 42 CFR 
413.237(a)(1) provide that ESRD outlier services include: (i) ESRD-
related drugs and biologicals that were or would have been, prior to 
January 1, 2011, separately billable under Medicare Part B; (ii) ESRD-
related laboratory tests that were or would have been, prior to January 
1, 2011, separately billable under Medicare Part B; (iii) medical/
surgical supplies, including syringes used to administer ESRD-related 
drugs, that were or would have been, prior to January 1, 2011, 
separately billable under Medicare Part B; and (iv) renal dialysis 
service drugs that were or would have been, prior to January 1, 2011, 
covered under Medicare Part D, excluding ESRD-related oral-only drugs.
    In the CY 2011 ESRD PPS final rule, we stated that for purposes of 
determining whether an ESRD facility would be eligible for an outlier 
payment, it would be necessary for the facility to identify the actual 
ESRD outlier services furnished to the patient by line item on the 
monthly claim (75 FR 49142).
    In the CY 2013 ESRD PPS proposed rule (77 FR 40964), we explained 
that drugs, laboratory tests, and medical/surgical supplies that we 
would recognize as outlier services are specified in Attachment 3 of 
Change Request 7064, Transmittal 2033 issued August 20, 2010 and 
rescinded and replaced by Transmittal 2094, dated November 17, 2010. We 
also explained that with respect to the outlier policy, Transmittal 
2094 identified additional drugs and laboratory tests that may be 
eligible for ESRD outlier payment. Transmittal 2094 was rescinded and 
replaced by Transmittal 2134, dated January 14, 2011 which was issued 
to correct the subject on the Transmittal page and made no other 
changes.
    In the CY 2012 ESRD PPS final rule (76 FR 70246), we finalized our 
proposal to stop issuing a specific list of eligible outlier service 
drugs which were or would have been separately billable under Medicare 
Part B prior to January 1, 2011. We stated in that rule that we planned 
to use separate guidance to continue to identify renal dialysis service 
drugs which were or would have been covered under Part D for outlier 
eligibility purposes in order to provide unit prices for calculating 
imputed outlier services. In the CY 2013 ESRD PPS proposed rule (77 FR 
40964), we explained that we planned to identify, through our 
monitoring efforts, those items and services that are incorrectly being 
identified as eligible outlier services. Any updates to the list of 
renal dialysis items and services that qualify as outlier services will 
be made through administrative issuances, if necessary.
    We indicated in the CY 2013 ESRD PPS proposed rule (77 FR 40964), 
that Medicare regulations at 42 CFR 413.237(a)(2) through (a)(6), and 
(b) specify the methodology used to calculate outlier payments. We 
explained that an ESRD facility is eligible for an outlier payment if 
its actual or imputed Medicare Allowable Payment (MAP) amount per 
treatment for ESRD outlier services exceeds a threshold. We further 
explained that the MAP amount represents the average incurred amount 
per treatment for services that were or would have been considered 
separately billable services prior to January 1, 2011. We also stated 
that the threshold is equal to the ESRD facility's predicted ESRD 
outlier services MAP amount per treatment (which is case-mix adjusted) 
plus the fixed dollar loss amount. Finally, we explained that in 
accordance with 42 CFR 413.237(c), facilities are paid 80 percent of 
the per treatment amount by which the imputed MAP amount for outlier 
services (that is, the actual incurred amount) exceeds this threshold 
and that ESRD facilities are eligible to receive outlier payments for 
treating both adult and pediatric dialysis patients.
    In the CY 2011 ESRD PPS final rule, using 2007 data, we established 
the outlier percentage at 1.0 percent of total payments (75 FR 49142 
through 49143). We also established the fixed dollar loss amounts that 
are added to the predicted outlier services MAP amounts. The outlier 
services MAP amounts and fixed dollar loss amounts are different for 
adult and pediatric patients due to

[[Page 67464]]

differences in the utilization of separately billable services among 
adult and pediatric patients (75 FR 49140).
    As we explained in the CY 2011 ESRD PPS final rule (75 FR 49138 and 
49139), the predicted outlier services MAP amounts for a patient would 
be determined by multiplying the adjusted average outlier services MAP 
amount by the product of the patient-specific case-mix adjusters 
applicable using the outlier services payment multipliers developed 
from the regression analysis to compute the payment adjustments. The 
average outlier services MAP amount per treatment for CY 2011 was based 
on payment amounts reported on 2007 claims and adjusted to reflect 
projected prices for 2011. For CY 2012, the outlier services MAP 
amounts and fixed dollar loss amounts were based on 2010 data (76 FR 
70250). That is, for CYs 2011 and 2012, the MAP and fixed dollar loss 
amounts were computed based on pre-ESRD PPS claims data and 
utilization.
    Comment: Several commenters agreed that no changes need to be made 
to the methodology and commended CMS for its transparency regarding the 
data and methodology used to update the MAP and fixed dollar loss 
thresholds. Some commenters expressed appreciation of CMS's clear 
explanation of eligible outlier services.
    Response: We thank the commenters for their support. We will 
continue to issue guidance regarding the renal dialysis items and 
services that could qualify for outlier payment.
a. Impact of Changes to the Outlier Policy
    In the CY 2013 ESRD PPS proposed rule (77 FR 40964), we explained 
that we did not propose any changes to the methodology used to compute 
the MAP or fixed dollar loss amounts. Rather, we explained that we were 
updating the outlier services MAP amounts and fixed dollar loss amounts 
to reflect the utilization of outlier services reported on the 2011 
claims using the December 2011 claims file. In this final rule, for CY 
2013, we used the June 2012 update of the CY 2011 National Claims 
History File to update the outlier services MAP amounts and fixed 
dollar loss amounts. That is, for CY 2013, the MAP and fixed dollar 
loss amounts are based on utilization data from the 2011 ESRD PPS 
claims. For this final rule, the impact of this update is shown in 
Table 1, which compares the outlier services MAP amounts and fixed 
dollar loss amounts used for the outlier policy in CY 2012 with the 
updated estimates. The estimates for the CY 2013 outlier policy, which 
are included in Column III of Table 1, were inflation-adjusted to 
reflect projected 2013 prices for outlier services.

               Table 1--Outlier policy: Impact of Using Updated Data To Define the Outlier Policy
----------------------------------------------------------------------------------------------------------------
                                    Column I  Outlier policy     Column II  Updated         Column III  Final
                                      for CY2012 (based on     outlier estimates based     outlier policy for
                                    2010 data price inflated     on 2011 data price       CY2013 (based on 2011
                                           to 2012) *            inflated to 2012 *      data price inflated to
                                   ----------------------------------------------------          2013) *
                                                                                       -------------------------
                                      Age < 18    Age > = 18    Age < 18    Age > = 18    Age < 18    Age > = 18
----------------------------------------------------------------------------------------------------------------
Average outlier services MAP             $46.26       $81.73       $37.84       $59.49       $38.65       $61.38
 amount per treatment \1\.........
Adjustments
    Standardization for outlier          1.0024       0.9738       1.0927       0.9878       1.0927       0.9878
     services \2\.................
    MIPPA reduction...............         0.98         0.98         0.98         0.98         0.98         0.98
    Adjusted average outlier             $45.44       $78.00       $40.52       $57.59       $41.39       $59.42
     services MAP amount \3\......
Fixed dollar loss amount that is         $71.64      $141.21       $44.16      $103.47       $47.32      $110.22
 added to the predicted MAP to
 determine the outlier threshold
 \4\..............................
Patient months qualifying for              5.7%         5.4%         7.8%         5.2%         7.6%         5.1%
 outlier payment..................
----------------------------------------------------------------------------------------------------------------
* The outlier services MAP amounts and fixed dollar loss amounts were inflation adjusted to reflect updated
  prices for outlier services (that is, 2012 prices in Columns I and II and projected 2013 prices in Column
  III).
\1\ Excludes patients for whom not all data were available to calculate projected payments under an expanded
  bundle. The outlier services MAP amounts are based on 2011 data. The medically unbelievable edits of 400,000
  units for epoetin and 1,200 mcg for Aranesp that are in place under the ESA claims monitoring policy were
  applied.
\2\ Applied to the average outlier MAP per treatment. Standardization for outlier services is based on existing
  Case Mix Adjusters for adult and pediatric patient groups.
\3\ This is the amount to which the separately billable (SB) payment multipliers are applied to calculate the
  predicted outlier services MAP for each patient.
\4\ The fixed dollar loss amounts were calculated using 2011 data to yield total outlier payments that represent
  1% of total projected payments for the ESRD PPS.

     As seen in Table 1, the estimated fixed dollar loss amounts that 
determine the 2013 outlier threshold amounts (Column III) are lower 
than those used for the 2012 outlier policy (Column I). The main reason 
for these reductions is the lower utilization of epoetin and other 
outlier services in CY 2011, the first year of the PPS. This can be 
seen by comparing the outlier service MAP amounts in Column I (which 
are based on 2010 data) with the outlier service MAP amounts in Column 
II (which are based on 2011 data).
    The fixed dollar loss amounts which are added to the predicted MAP 
amounts per treatment to determine the outlier thresholds are being 
updated from the CY 2012 amount. Based on the use of the most recently 
available data, the fixed-dollar loss amount for pediatric patients 
will decrease from $71.64 to $47.32 and the MAP amount will decrease 
from $45.44 to $41.39 as compared to CY 2012 values. For adult 
patients, the fixed-dollar loss amount drops from $141.21 to $110.22 
and the MAP amount drops from $78.00 to $59.42.
    We estimate that the percentage of patient months qualifying for 
outlier payments under the current policy will be 5.1 percent and 7.6 
percent for adult and pediatric patients, respectively, based on our 
use of 2011 data. The pediatric outlier MAP and fixed dollar loss 
amounts continue to be lower for pediatric patients than adults due to 
the continued lower use of outlier services (primarily reflecting lower 
use of epoetin and other injectable drugs).
    Comment: All of the commenters supported CMS's decision to lower 
the threshold for both the fixed dollar loss

[[Page 67465]]

and MAP amounts for pediatric and adult patients. The commenters stated 
that they believed that outlier payment mechanisms are fundamental to 
the long-term success of prospective payment systems to ensure patients 
get the care they need, even when there are financial disincentives. 
The commenters further expressed that it is important for CMS to ensure 
that the information it uses to determine the outlier thresholds each 
year is as current as possible and agreed with CMS in using the 2011 
ESRD claims and utilization for CY 2013.
    Response: We thank the commenters for their support.
    Comment: Several commenters expressed concern that some ESRD 
facilities may not have the necessary resources available to identify 
outlier services on the claim, and therefore are not receiving the 
outlier payments to which they are entitled. One commenter suggested 
that CMS make available data indicating that the outlier policy is 
beneficial to small ESRD facilities. The commenter further explained 
that this policy could be detrimental to small facilities because, 
although the facilities' base rate is reduced by 1 percent to account 
for outlier services, the facilities may be unable recoup this amount 
because of resource limitations.
    Response: Outlier services are the items and services that were 
separately paid prior to the implementation of the ESRD PPS and are 
also separately paid under the composite rate portion of the blended 
payment for those ESRD facilities under the transition. We do not 
believe that it should be difficult for small facilities to identify 
outlier services on claims because these facilities should have had 
experience identifying these items on claims before the PPS was 
implemented. Specifically, the items eligible for outlier payments 
under the ESRD PPS are the same items that had been separately paid 
under the basic case-mix adjusted composite rate system and are 
separately paid under the composite rate portion of the blended payment 
for ESRD facilities receiving payment under the transition. 
Consequently, we believe that identifying items eligible for outlier 
payment is not an additional burden nor do we believe that it is 
difficult for small ESRD facilities.
    In terms of demonstrating that the outlier policy is beneficial to 
small ESRD facilities, we note that the outlier policy is intended to 
account for the cost of beneficiaries with high resource utilization; 
it is not intended to account for facility size. Instead, our low-
volume adjustment accounts for facility size by adjusting for the cost 
of treating a low volume of ESRD patients. Although we will continue to 
monitor the impact of our outlier policy, as noted above, we believe 
that all facilities, regardless of size, should be able to identify 
outlier services on claims and be compensated for the cost of treating 
beneficiaries with high resource utilization.
b. Outlier Policy Percentage
    In the CY 2013 ESRD PPS proposed rule (77 FR 40965), we explained 
that 42 CFR 413.220(b)(4) stipulates that the per treatment base rate 
is reduced by 1 percent to account for the proportion of the estimated 
total payments under the ESRD PPS that are outlier payments. We further 
explained that because of the decrease in utilization associated with 
the implementation of the ESRD PPS, the 1 percent target for outlier 
payments was not achieved in CY 2011. For this final rule, using the 
June 2012 update of the CY 2011 National Claims History File, we found 
that outlier payments represented approximately 0.3 percent of total 
payments. That is, the historical data previously used to set the 
outlier thresholds for CY 2011 projected greater use of outlier 
services than was observed under the expanded ESRD PPS, leading to 
lower outlier payments than expected. Use of 2011 data to recalibrate 
the thresholds, reflecting lower utilization of epoetin and other 
outlier services, will result in aggregate outlier payments close to 
the 1 percent target in CY 2013. We believe this update to the outlier 
MAP and fixed dollar loss amounts for CY 2013 will increase payments 
for ESRD beneficiaries requiring higher resource utilization in 
accordance with a 1 percent outlier policy.
    We note that recalibration of the fixed dollar loss amounts in this 
final rule for CY 2013 outlier payments results in no change in 
payments to ESRD facilities for beneficiaries with renal dialysis items 
and services that are not eligible for outlier payments, but raises 
payments to providers for beneficiaries with renal dialysis items and 
services that are eligible for outlier payments. Therefore, beneficiary 
co-insurance obligations would increase for renal dialysis services 
eligible for outlier services and would remain unchanged for those not 
eligible.
    Comment: One commenter recommended that CMS estimate and publish 
the amount of the shortfall in outlier payments paid during CY 2011. 
The commenters recommended that CMS develop a mechanism to return these 
funds to the ESRD facilities so that these funds may be used to offset 
the costs associated with numerous ``unfunded mandates'' imposed on 
these facilities. One commenter suggested that CMS set less than 1 
percent aside for outliers and allocate the leftover funds to the ESRD 
PPS base rate.
    Response: We disagree that the shortfall in outlier payments should 
be used to make additional payments to ESRD facilities to account for 
not achieving the 1 percent threshold. The 1 percent outlier policy is 
a prospective payment mechanism in which thresholds are established and 
adjusted on a yearly basis based on historical data. In the FY 1997 
Inpatient Prospective Payment System (IPPS) final rule (61 FR 46229 and 
46230), we explained that we believe our outlier policies are 
consistent with the statute and the goals of the prospective payment 
system. Many of the factors used to set prospective payment amounts for 
a given year are based on estimates. These factors include not only the 
outlier thresholds, but also the market basket rate of increase, the 
update factors and the required budget-neutrality provisions. We do not 
believe that Congress intended that the standardized amounts should be 
adjusted (upward or downward) to reflect differences between projected 
and actual outlier payments for a given year. Moreover, retroactive 
adjustments would be extremely difficult or impracticable (if not 
impossible) to administer. We further explained that the thresholds for 
a given year reflect certain levels of costs, so that if costs are held 
down, fewer cases qualify for outlier payments and outlier payments are 
lower than expected. We believe that the same explanation applies to 
the ESRD PPS.

D. Clarifications Regarding the ESRD PPS

1. Reporting Composite Rate Items and Services
    In the CY 2011 ESRD PPS final rule (75 FR 49036), we explained that 
section 1881(b)(14)(B)(i) of the Act requires that the ESRD PPS payment 
bundle include composite rate items and services. The basic case-mix 
adjusted composite payment system represented a limited PPS for a 
bundle of routine outpatient maintenance renal dialysis services. We 
defined composite rate services at Sec.  413.171 as ``items and 
services used in the provision of outpatient maintenance dialysis for 
the treatment of ESRD and included in the composite payment system 
established under section 1881(b)(7) [of the Act] and the basic case-
mix adjusted composite payment system established under section 
1881(b)(12) of the Act.'' In 42 CFR 413.171 we also defined renal

[[Page 67466]]

dialysis services as including, ``items and services included in the 
composite rate for renal dialysis services as of December 31, 2010.'' 
We further explained that currently services that are billed on the 
ESRD claim do not provide any detail of the composite rate items and 
services that are furnished to the patient. We indicated that, as we 
discussed in the Medicare Claims Processing Manual, Pub. 100-04, 
chapter 8, sections 50.1 and 50.2, laboratory tests and drugs covered 
under the facility's composite rate may not be billed separately (75 FR 
49173). We stated in the CY 2013 ESRD PPS proposed rule that the 
composite rate represented the routine items and services provided to 
Medicare beneficiaries for outpatient maintenance dialysis and 
therefore was full payment for those items and services. Therefore, it 
would not have been appropriate for ESRD facilities to bill for items 
and services in the composite rate because this would result in 
duplicate payments by Medicare (77 FR 40965).
    We also explained in the CY 2011 ESRD PPS final rule (75 FR 49048), 
that in our analysis of the ESRD claims we identified drugs and 
biologicals that were included in the composite payment rate but for 
which ESRD facilities received separate payment in addition to the 
composite rate payment. Because these composite rate drugs and 
biologicals were listed separately on the ESRD claims, separate payment 
was inadvertently made. We further explained that we excluded those 
inadvertent payments from the final ESRD PPS base rate calculation. We 
also noted that the Medicare Benefit Policy Manual, Pub. 100-02, 
chapter 11, section 30.4.1 lists the drugs and fluids that were 
included under the composite payment system and explicitly states, ``* 
* * drugs used in the dialysis procedure are covered under the 
facility's composite rate and may not be billed separately. Drugs that 
are used as a substitute for any of these items, or are used to 
accomplish the same effect, are also covered under the composite 
rate.'' The manual further provides that ``administration of these 
items (both the staff time and supplies) is covered under the composite 
rate and may not be billed separately'' (75 FR 49048).
    In the CY 2012 ESRD PPS final rule (76 FR 70243), with regard to 
antibiotics, we provided for separate payment for vancomycin when 
furnished to treat non-ESRD related conditions. We also eliminated the 
payment distinction for antibiotics furnished in an ESRD facility or in 
the home used to treat access infections or peritonitis. We finalized 
that antibiotics furnished in the home to treat access site infections 
and peritonitis would be eligible for outlier payment (76 FR 70246). In 
the CY 2013 ESRD PPS proposed rule (77 FR 40963), we proposed to allow 
for separate payment for daptomycin if furnished for non-ESRD-related 
conditions and finalized in section II.C.6.2 of this final rule.
    As described at 42 CFR 413.239, there are ESRD facilities receiving 
reimbursement under the transition, that is, receiving a blended 
payment of the basic case-mix adjusted composite rate payment system 
and the ESRD PPS. If an ESRD facility receives payment under the 
transition and reports a drug, biological, or laboratory test that was 
included in the composite rate on the ESRD claim, it could 
inadvertently receive separate payment for that item or service within 
the portion of the blended payment that is based on the basic case-mix 
adjusted composite payment system.
    As mentioned above and defined at 42 CFR 413.237, ESRD-related 
drugs, biologicals, and laboratory tests that were or would have been 
separately payable under the basic case-mix adjusted composite payment 
system qualify as eligible outlier services. In the CY 2012 ESRD PPS 
final rule (76 FR 70246), we finalized that as of CY 2012, we would no 
longer issue a specific list of eligible outlier service drugs which 
were or would have been separately billable under Medicare Part B prior 
to January 1, 2011. If an ESRD facility reports a drug or biological 
that was included in the basic case-mix adjusted composite payment 
system on the ESRD claim, it would inappropriately be applied toward an 
outlier calculation because all drugs and biologicals with a rate 
available on the ASP pricing file when the modifier AY is not present 
may be eligible for outlier consideration.
    We explained in the CY 2013 ESRD PPS proposed rule, that as a 
result of our monitoring efforts, we continue to find composite rate 
drugs reported on ESRD claims and reiterated that composite rate items 
and services are not to be reported on the ESRD facility claims. We 
noted that we are instituting measures to ensure that composite rate 
drugs are prevented from being applied to the outlier payment. These 
measures will be discussed through administrative issuances, as 
appropriate. We also noted that we would continue to monitor the 
reporting of composite rate items and services on ESRD claims and plan 
to take actions to recoup inappropriate and duplicative payments. 
Finally, we noted that if the inclusion of composite rate items and 
services such as laboratory tests, drugs and supplies on claims will be 
required to be reported, we will discuss this requirement in future 
rulemaking (77 FR 40966).
    We received one comment on this issue. The comment and our response 
are set forth below.
    Comment: One commenter concluded that any action to recoup 
inappropriate and duplicative payments for reporting composite rate 
items and services should be pursued on a going forward basis rather 
than retrospectively.
    Response: CMS has a fiduciary responsibility to ensure that 
accurate payments are made. If we were to identify inappropriate 
payments that had been made because composite rate items and services 
were reported on claims for the purpose of receiving separate payment 
we would pursue recoupment of those payments in accordance with 
applicable laws and regulations.
2. ESRD Facility Responsibilities for ESRD-Related Drugs and 
Biologicals
    In the CY 2013 ESRD PPS proposed rule (77 FR 40966), we indicated 
that we had become aware that some ESRD facilities are requiring ESRD 
beneficiaries to purchase renal dialysis drugs from the ESRD facility 
and are instructing beneficiaries not to use their Part D plan for 
their purchases. We explained that section 1866(a)(1)(A) of the Act, as 
codified in regulations at 42 CFR 489.21, prohibits providers from 
billing beneficiaries for services for which the beneficiary would have 
been entitled to have payment made under Medicare if the provider 
appropriately filed claims for those services. Furthermore, section 
1881(b)(2)(A) of the Act states that payments shall be made to an ESRD 
facility only if it agrees to accept such payments as payment in full 
for covered services except for the beneficiary co-insurance and 
deductible amounts.
    Furthermore, in the CY 2011 ESRD PPS final rule (75 FR 49045), we 
explained that the ESRD PPS bundled base rate reflects Medicare payment 
for the average ESRD patient. We stated that we had incorporated 
payments under the basic case-mix adjusted composite rate payment 
system as well as payments for separately billable items and services 
into the ESRD PPS base rate. As a result, we believe the ESRD PPS 
payments are sufficient and reflect the average cost of providing care 
to the average patient with ESRD and therefore, we expect that, on 
average, high cost patients would be offset by low cost patients. In 
the CY 2011 ESRD PPS final rule (75 FR 49045), we also explained that 
we had provided for

[[Page 67467]]

higher acuity patients with patient case-mix adjusters and outlier 
payments for high-cost patients. We further cited 42 CFR 494.90 of the 
ESRD Conditions for Coverage which requires the development of an 
individualized patient plan of care to address patient needs and 
concluded that we believe ESRD facilities should make medical decisions 
based on patient needs and not solely on a financial basis.
    In the CY 2011 ESRD PPS final rule (75 FR 49050), we stipulated 
that any drug or biological (that is, injectable, oral or other forms 
of administration) furnished for the purpose of access management, 
anemia management, vascular access or peritonitis, cellular management 
or bone and mineral metabolism would be considered renal dialysis 
services under the ESRD PPS. Any drug or biological used as a 
substitute for a drug or biological that was included in the ESRD PPS 
bundled base rate would also be a renal dialysis service and would not 
be eligible for separate payment. Antiemetics, anti-infectives, 
antipruritics, anxiolytic, excess fluid management, fluid and 
electrolyte management and pain management drugs and biologicals could 
be used for dialysis purposes and therefore, are considered ESRD-
related when used for those purposes. We indicated that we presumed 
these drugs and biologicals to be renal dialysis services in whatever 
form they are furnished, unless indicated on the claim that they are 
used for non-ESRD-related conditions. Drugs and biologicals paid under 
Part D that are furnished by an ESRD facility for ESRD-related purposes 
are considered renal dialysis services (75 FR 49050 and 49051).
    In the CY 2013 ESRD PPS proposed rule, we reiterated that ESRD 
facilities are responsible for furnishing renal dialysis items and 
services that are required to meet patient needs. This would include 
oral or other forms of administration of injectable drugs and 
biologicals that are furnished for ESRD-related conditions. We also 
expect that ESRD facilities will not restrict access to necessary drugs 
for financial purposes by requiring patients to purchase medically 
necessary drugs and biologicals. We expect that ESRD facilities will 
furnish drugs and biologicals that had been considered medically 
necessary prior to the implementation of the ESRD PPS and not exclude 
them because the ESRD facility is now financially responsible for these 
drugs and biologicals. Because of the reasons cited above, ESRD 
facilities may not require, induce or coerce beneficiaries to purchase 
any renal dialysis item or service.
    We received no comments on the clarification of our policy 
regarding ESRD facility responsibilities for ESRD-related drugs and 
biologicals.
3. Use of AY Modifier
    As we indicated in the CY 2013 ESRD PPS proposed rule (77 FR 
40967), in the CY 2011 ESRD PPS final rule, we developed a mechanism to 
be used by ESRD facilities to identify and be paid separately for non-
ESRD-related items and services, such as drugs, biologicals, and 
equipment and supplies (75 FR 49052 and 75 FR 49168). We provided this 
mechanism in order to support a Medicare beneficiary's need for non-
ESRD-related items and services (that is, predominantly drugs and 
laboratory tests) during a dialysis treatment and to mitigate the need 
for the beneficiary to receive additional injections or health care 
visits. We further stated that in the event that supplies or equipment 
are not ESRD-related, ESRD facilities would be required to place a 
modifier on the claim for those supplies and equipment, signifying that 
they were used for services that were not ESRD-related and eligible for 
separate payment outside of the ESRD PPS (75 FR 49168). Change Request 
7064, Transmittal 2033, titled ``End Stage Renal Disease (ESRD) 
Prospective Payment System (PPS) and Consolidated Billing for Limited 
Part B Services'', issued on August 20, 2010, re-issued November 17, 
2010 under Transmittal 2094, and re-issued January 14, 2011 under 
Transmittal 2134, provided instructions on the use of the modifier. In 
that Change Request, we indicated that the claim lines for laboratory 
tests and drugs provided to a beneficiary for reasons other than the 
treatment of ESRD must be submitted with the AY modifier to signal 
separate payment outside of the ESRD PPS. In the CY 2012 ESRD PPS final 
rule, we provided for the use of the AY modifier with vancomycin if 
used for non-ESRD-related conditions and with the requirement that the 
ESRD facilities include the diagnosis code of the condition on the 
claim (76 FR 70243). In the CY 2013 ESRD PPS proposed rule (77 FR 
40967), we proposed to allow the use of the AY modifier for separate 
payment when daptomycin is furnished by an ESRD facility to an ESRD 
Medicare beneficiary for non-ESRD related conditions. We are finalizing 
this policy above. ESRD facilities are required to indicate an 
appropriate diagnosis code on the claim that reflects the condition 
requiring the use of daptomycin.
    We explained in the CY 2013 ESRD PPS proposed rule (77 FR 40967) 
that our monitoring activities have identified that ESRD facilities and 
clinical laboratories are appending the AY modifier for items that we 
believe are ESRD-related. We noted in the proposed rule (77 FR 40967) 
that some ESRD facilities and clinical laboratories appear to be 
appending the AY modifier on many items and services reported on 
claims. We reiterated in the proposed rule that the purpose of the AY 
modifier is to allow beneficiaries the convenience to receive non-ESRD-
related items (for example, drugs and laboratory tests) during their 
dialysis treatment and to allow the ESRD facility to receive a separate 
payment for furnishing those items. The AY modifier is also intended to 
allow separate payment to laboratories in the event an ESRD-related 
laboratory test is required for non-ESRD-related conditions. The AY 
modifier is not intended to be used to receive a separate payment for 
items that are ESRD-related and therefore included in the ESRD PPS base 
rate. We further stated that we would continue to monitor the use of 
the AY modifier and intend to take steps to recoup inappropriate 
payments. In the event that we believe the AY modifier is not being 
used for the purpose intended, we may be forced to discontinue the AY 
modifier and cease to provide separate payment for any non-ESRD-related 
drug or laboratory test furnished.
    We received several comments on our clarification of this policy 
and our responses are set forth below.
    Comment: We received six comments regarding the AY modifier. 
Commenters supported maintaining the AY modifier for non-ESRD 
conditions. Several commenters provided reasons for supporting the AY 
modifier. For example, some commenters concurred that the AY modifier 
is intended to allow Medicare beneficiaries the convenience of 
receiving non-ESRD related items and services during the course of 
dialysis treatment; and to allow the ESRD facility or laboratory to 
receive a separate payment when furnishing non-ESRD items or services. 
It also enables optimal coordinated care to Medicare beneficiaries by 
minimizing their need for additional doctor visits and duplicative or 
unnecessary lab tests. Five commenters largely encouraged CMS to 
continue the use of the modifier for reporting non-ESRD related items 
or services for payment and to furnish supporting data on AY modifier 
misuse. A few commenters suggested that CMS should consider drafting 
guidance on the appropriate use of the AY modifier.
    A few commenters expressed concern over the possible elimination of 
the AY modifier and identified possible resulting hardships for 
Medicare ESRD

[[Page 67468]]

beneficiaries. One commenter noted that the elimination of the AY 
modifier would force facilities to send dialysis patients to labs or 
infusion centers to receive IV medications that would risk the vascular 
access and add transportation and time burdens for the beneficiary.
    Response: We thank commenters for their support of the use of the 
AY modifier. We agree that the elimination of the AY modifier could 
result in additional hardships for ESRD beneficiaries.
    Comment: One commenter suggested that, rather than eliminating the 
AY modifier, CMS should rely upon the contractors to educate providers, 
audit payments for AY items, and request documentation when 
appropriate. Another commenter encouraged CMS to provide data on the 
exact abuses or the scope of modifier misuse noting that patients 
should not suffer because of modifier abuse, but rather CMS should work 
with facilities and providers to ensure policy compliance.
    Response: With regard to the suggestion that the responsibility for 
AY modifier monitoring education should rest on the CMS contractors 
(that is, the Medicare Administrative Contractors (MACs)), we note that 
we do provide education and instructions to the A/B MACs through 
administrative issuances and MedLearn articles that they can then use 
to educate providers. For example, CMS Change Request 7064 and 
subsequent Medicare Learning Network Matters (MLN) article  
MM7064, published on January 14, 2011, notifies contractors that ESRD-
related laboratory services, drugs and supplies will be subject to Part 
B consolidated billing edits and no longer separately payable when 
furnished to ESRD beneficiaries. However, these consolidated billing 
edits do not apply when the items and services are not ESRD-related. 
When items and services are furnished to an ESRD beneficiary for 
conditions other than ESRD, the AY modifier must be present on the 
claim to bypass billing edits and allow for a separate payment outside 
of the ESRD PPS. CMS MLN MM7064 may be viewed at http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM7064.pdf. Finally, we are in the process 
of updating the ESRD Benefit Policy Manual, Pub 100-02, chapter 11, to 
reflect the policy requirements under the ESRD PPS, including the use 
of the AY modifier.
    With regard to the comment concerning monitoring the use of the AY 
modifier and the suggested functions to be performed by the MACs, as we 
discussed in the CY 2013 ESRD PPS proposed rule (77 FR 40967), we are 
continuing to monitor the use of the AY modifier and intend to take 
steps to recoup inappropriate payments. Although we are updating our 
manual, we believe that we have provided adequate instructions as to 
the appropriate use of the AY modifier. We expect that the contractors 
will convey information regarding the proper use of the AY modifier to 
the ESRD facilities, and will also audit payments and request 
documentation as necessary. However, CMS has the responsibility to 
ensure that payments are made appropriately. Therefore, we will 
continue to monitor the use of the AY modifier. If we believe that the 
AY modifier is not being used as intended, or it is being used in order 
to receive separate payment for renal dialysis items and services that 
are in the bundled payment, we will be forced to reconsider its use.

E. Miscellaneous Comments

    We received thirty-five comments from Medicare beneficiaries, 
family members, ESRD facilities, nurses, physicians, professional 
organizations, renal organizations, and manufacturers related to issues 
that were not specifically addressed in the CY 2013 ESRD PPS proposed 
rule.
    Comment: We received comments from patients, their families, renal 
associations and manufacturers requesting changes in how CMS pays for 
home dialysis and home dialysis training. Many of these commenters 
described the benefits of home dialysis. Most commenters asked CMS to 
increase the number of weekly allowable dialysis sessions and eliminate 
the medical justification requirement for additional sessions. One 
commenter questioned why payment for in-facility dialysis was the same 
as for home dialysis, noting the differences between staff and supply 
use between in-facility and home dialysis. Some commenters contended 
that patient requests for home dialysis are being denied. Commenters 
also stated that beneficiaries with ESRD are not provided with the same 
home training opportunities as beneficiaries whose care is covered by 
other payment sources. Many of the commenters stated that payment for 
home dialysis training is insufficient and does not reflect the true 
cost of training. Some commenters indicated various ranges of time 
required for home training in terms of time per day and number of 
training sessions. One home dialysis organization stated that ESRD 
facilities only receive payment for 18, rather than 25, training 
sessions for new patients.
    Response: CMS developed a reimbursement mechanism with the 2011 
implementation of the ESRD PPS that we believe supports home-based 
dialysis. That is, the ESRD PPS payment, which includes drugs, 
laboratory tests, staff time, supplies, patient-level adjustments, 
facility-level adjustments and outlier payments, is the same regardless 
of the location where the dialysis services are furnished or the 
dialysis modality, which we believe supports beneficiaries' ability to 
elect to receive dialysis at home, where appropriate. It is not, 
however, CMS's intent to encourage, discourage or require any 
particular dialysis modality. Rather, we believe that decisions 
regarding whether to receive dialysis and which dialysis modality to 
use should be made by beneficiaries in consultation with their 
physicians. This includes the decision whether to receive home 
hemodialysis or home peritoneal dialysis, rather than in-facility 
dialysis. We believe that the decision to perform home dialysis 
includes determining the beneficiary's abilities, the beneficiary's 
desire to perform home dialysis and the beneficiary's physical and 
emotional status.
    With regard to the comment asking why the payment is the same for 
in-facility as home dialysis, we believe that our policy to pay the 
same amount, including the patient-level and facility-level 
adjustments, as well as the outlier policy for home and in-facility 
dialysis, provides adequate payment to account for the short-term 
increase in staff time necessary to train beneficiaries for home 
dialysis. Training costs are included in the ESRD PPS base rate, 
however, we also provide an add-on adjustment for each training session 
that represents one hour of nursing time to conduct one-on-one training 
treatments for each training treatment furnished by a Medicare 
certified home dialysis training facility. The add-on payment for one 
hour of training per training session does not imply that it takes only 
one hour per training session to properly educate a beneficiary to 
perform home dialysis. We believe that our payment is adequate for 
training and home dialysis.
    We have been and will continue to monitor and analyze trends in 
home dialysis and home dialysis training. We have seen a continuing 
increase in overall home dialysis since mid-2009, including in 2011. In 
particular, we have observed an increase in home hemodialysis and a 
decline in home peritoneal dialysis with an overall higher rate of home 
peritoneal dialysis. In addition, our monitoring shows that

[[Page 67469]]

ESRD facilities receive payments for more treatments for home 
hemodialysis than for in-facility hemodialysis. We also have seen an 
increase in home training in 2011, particularly in retraining. 
Consequently, we do not believe that the ESRD PPS and our training 
adjustment discourage beneficiaries from receiving home dialysis.
    Commenters also requested that we increase the maximum number of 
dialysis sessions and eliminate the medical justification requirement 
for dialysis treatments after a beneficiary has received three sessions 
in one week. We note that, although three is the maximum number of 
sessions that we will cover without a showing of medical necessity, we 
will cover additional sessions where those sessions are medically 
necessary. We are aware that there are observational studies that 
support additional weekly dialysis treatments and that there is some 
industry support for additional treatments. We have and will continue 
to monitor and analyze the number of dialysis treatments that Medicare 
beneficiaries receive to determine whether a change in this 
longstanding policy is warranted.
    In addition, in the CY 2011 ESRD PPS final rule (75 FR 49064) we 
stated in response to a MedPAC comment that we would consider whether 
it would be appropriate to utilize a larger unit of payment, rather 
than a per treatment payment, after the transition period. We further 
stated that ``we may evaluate whether the ERSD PPS has resulted in 
improved outcomes, the degree to which home dialysis has increased, and 
whether interested stakeholders would favor an alternative to the per 
treatment approach.'' We will continue to monitor the impact of the 
ESRD PPS and will take these comments into consideration if we 
determine that any changes to the per treatment payment approach are 
warranted.
    With regard to the comment that ESRD facilities receive payment for 
18 rather than 25 training treatments for new patients, we believe that 
the commenter is confusing the adjustment for beneficiaries who are 
receiving home dialysis training but are not in their first four months 
of dialysis, with beneficiaries who have been newly diagnosed with ESRD 
and are receiving their first four months of dialysis. The home 
dialysis training adjustment applies to those beneficiaries who are not 
in their first four months of dialysis treatments. This adjustment does 
not apply for those beneficiaries newly diagnosed with ESRD. Instead, 
facilities receive the onset of dialysis adjustment for these 
beneficiaries. As we explained in the CY 2011 ESRD PPS final rule (75 
FR 49094), we believe that the costs associated with the onset of 
dialysis adjustment and the training add-on adjustment overlap (that 
is, costs for services could be accounted for in both adjustments). 
Accordingly, we finalized a policy that ESRD facilities will not 
receive the home dialysis training adjustment when they are receiving 
the onset of dialysis adjustment. This does not mean that an ESRD 
facility may not furnish home training services during the onset 
period. Rather, the onset of dialysis payment adjustment of 51 percent 
per treatment accounts for the administrative and labor costs 
associated with new patients, including the costs to train patients.
    We are unable to address the comment contending that ESRD 
beneficiaries are not offered the same home dialysis training 
opportunities as those offered to ESRD beneficiaries covered by private 
payers because we are not familiar with these payment sources.
    Comment: One patient support group recommended that CMS use revenue 
code 0820 when reporting home dialysis instead of revenue code 0821, 
which is currently used to describe both in-facility and home dialysis 
services. The commenter contends that this will correctly identify 
patients on home dialysis in Medicare claims data.
    Response: Our current Medicare policy for reporting home dialysis 
services with revenue code 0821 appended with ESRD condition code 74 
(Dialysis in the Home) allows us to distinguish beneficiaries receiving 
dialysis at home from those receiving treatment in an ESRD facility.
    Comment: We received twelve comments regarding the Agency's plan to 
include oral-only drugs in the ESRD PPS bundled payment for CY 2014. 
Commenters expressed concern about the administrative burden, 
compliance with state laws, and associated costs in furnishing oral-
only drugs within the scope of the ESRD service. A few commenters 
requested that CMS ask for community input so that the inclusion of the 
oral-only drugs will be an uneventful transition for patients. ESRD 
industry associations cautioned that the inclusion of oral-only drugs 
into the ESRD PPS CY 2014 bundled payment may limit patient access to 
the most clinically appropriate drugs and threaten optimal health 
outcomes for ESRD Medicare beneficiaries. Some commenters recommended 
that CMS include patient protections to ensure patient care is not 
compromised and that oral-only drugs continue to be furnished at the 
recommended doses. Many commenters requested that the Agency share 
advance information about the methodology and data sources that the 
Agency will use to calculate the reimbursement rates for drugs and 
therapies and encouraged CMS to use the most recent year of available 
data to establish a payment rate for oral-only drugs. Other commenters 
requested that CMS adopt a methodology that measures the actual 
utilization on a per treatment basis and includes costs associated with 
drug administration when reimbursing oral-only drugs as part of the 
ESRD PPS.
    Response: We thank the commenters for their comments. In the CY 
2011 ESRD PPS final rule (75 FR 49038 through 49044), we responded to 
comparable comments regarding the inclusion of oral-only drugs in CY 
2014. We received many suggestions from stakeholders on how oral-only 
drugs should be included in the ESRD PPS bundled payment. We have 
reviewed and will continue to review all of the comments, which we will 
consider as we formulate our proposals on this issue. We intend to 
address the inclusion of oral-only drugs in the ESRD PPS in the CY 2014 
ESRD PPS proposed rule.
    Comment: We received three comments from industry associations 
requesting that CMS release the rate-setting file to allow the industry 
to test the Agency's assumptions and complete its own analysis of the 
payment policies set forth in the CY 2013 ESRD PPS proposed rule. One 
commenter encouraged CMS to make data available to the public 
generally, not just dialysis facilities in particular, to allow for a 
more complete assessment of the ESRD PPS program.
    Response: We received comparable requests and comments in response 
to the CY 2012 ESRD PPS proposed rule and responded to those comments 
in the CY 2012 ESRD PPS final rule (76 FR 70254 to 70255). We believe 
that we have provided and will provide data sufficient to analyze the 
payment policies included in the proposed rule, by posting the impact 
file for CY 2012 on the ESRD PPS Payment Web site. We will also post a 
provider-level impact file and the wage index file for CY 2013 shortly 
after publication of this final rule. We also explained that we have 
not made the rate setting file available ``because the release of 
patient identifiable data is not necessary to accomplish the purpose of 
analyzing our proposals. Applicable Federal privacy laws and 
regulations, including the Privacy Act and HIPPA Privacy Rule only 
permit us to disclose personal

[[Page 67470]]

identifiable information when it is necessary to administer the 
program, or for health care operations and payment.''
    Comment: We received 8 comments requesting modification to the 
standardization factor methodology and calculation for CY 2013. Many of 
these commenters encouraged CMS to use the most current data available 
in order to establish the standardization factor, rather than 
historical estimates. Some commenters indicated that because we had 
adjusted the outlier fixed dollar loss and MAP amounts to account for 
outlier payments below the 1 percent threshold in CY 2011, we should 
provide a comparable adjustment to the standardization factor and the 
ESRD PPS base rate to account for payments for patient- and facility-
level adjusters that were not utilized. Some commenters continue to 
contend that the ESRD PPS base rate established in CY 2011 is incorrect 
and that CMS should return the payment amounts removed from the base 
rate to account for the adjusters, thereby increasing the base rate. 
Other commenters stated that the ESRD PPS base rate should be adjusted 
to account for payments allocated for the patient- and facility-level 
adjusters that had not ultimately been paid to the ESRD facilities. A 
few commenters requested that CMS modify the payment for case-mix and 
co-morbidity adjustments.
    Response: In the CY 2011 ESRD PPS final rule, we described the data 
sources that were used in constructing the ESRD PPS payment bundle, the 
development of the ESRD PPS base rate, and the payment adjusters (75 FR 
49064 through 49127). In the CY 2013 ESRD PPS proposed rule, we 
proposed to update the base rate by the rate of increase in the ESRD 
market basket, reduced by the productivity adjustment (77 FR 40959). 
The base rate was developed using 2007 claims, in accordance with 
section 1881(b)(14)(A)(ii) of the Act, which requires CMS to use the 
lowest per patient utilization year. We also explained the methodology 
used to determine the case-mix adjustment amount, including co-
morbidities (75 FR 49087 through 49116). In the CY 2013 ESRD PPS 
proposed rule, we stated that we were not proposing any changes to the 
methodology used to compute the MAP or fixed dollar loss amounts, but 
were updating the outlier services MAP amounts and fixed dollar loss 
amounts to reflect the utilization of outlier services reported on the 
2011 claims, using the December 2011 claims file (77 FR 40964). The 
methodology for calculating and updating the base rate was finalized 
last year through notice and comment rulemaking, as were the 
methodologies for updating the outlier threshold. In the CY 2013 ESRD 
PPS proposed rule, we did not propose to change how the base rate is 
calculated or updated. We also did not propose in the CY 2013 ESRD PPS 
proposed rule to modify the payment adjusters. We do not believe that 
because we lowered the MAP and fixed dollar loss amounts to adjust for 
outlier payment expenditures that were below the 1 percent target, we 
must adjust the standardization factor for the ESRD PPS base rate. We 
will, however, continue to monitor our payments and consider if any 
changes need to be made in the future.
    Comment: One commenter requested clarification when billing 
Medicare for Lipid Profile laboratory services furnished to ESRD 
beneficiaries. Another commenter encouraged CMS to furnish guidance for 
blood draws and laboratory collections under the ESRD PPS.
    Response: ESRD-related laboratory tests may not be billed with the 
AY modifier and no separate payment shall be made when an ESRD facility 
or laboratory furnishes ESRD-related laboratory tests to an ESRD 
beneficiary. We discuss laboratory tests furnished under the PPS in our 
CY 2011 and CY 2012 ESRD PPS final rules (75 FR 49053 through 49056 and 
76 FR 70249 through 70250, respectively). Furthermore, the Lipid 
Profile laboratory test is appropriately included in the ESRD PPS 
payment bundle when Lipid abnormalities result from, or are related to 
the beneficiary's ESRD. For example, some forms of dialysis, 
particularly peritoneal dialysis, are associated with increased 
cholesterol and triglyceride levels, and a Lipid Profile laboratory 
test to assess these levels would be included in the bundled payment. 
If, however, the Lipid Profile laboratory test is furnished for reasons 
other than for the treatment of ESRD, the laboratory services may be 
billed with the AY modifier and are eligible for separate payment. With 
regard to the comment requesting guidance for blood draws and 
laboratory collections, we refer the commenter to Change Request 7617, 
Transmittal 150, entitled, ``Implementation of Changes in End Stage 
Renal Disease Payment for Calendar Year 2012'' issued on November 16, 
2011.
    Comment: One commenter requested that CMS consider the 
implementation of pediatric co-morbidities to the pediatric case mix 
adjustments, while another commenter requested consideration of a case-
mix adjustment for race. One association called for CMS to establish a 
new technology adjuster in a non-budget-neutral manner, stating that 
new technologies have the potential to lead to better diagnosis, 
treatment, and patient outcomes.
    Response: We thank the commenters for their suggestions, but note 
that we did not propose to implement these adjusters in the CY 2013 
ESRD PPS proposed rule. We refer the commenters to the CY 2011 ESRD PPS 
final rule (75 FR 49128 through 49134; 75 FR 49108 and 49115; 75 FR 
49174), in which we explained the methodology used to develop the ESRD 
PPS for the pediatric population, discussed the reasons for not 
including a patient-level case mix adjuster for race, and responded to 
comments suggesting that we provide separate payment for new and 
innovative drugs and technologies.
    Comment: Some commenters requested that the cost reports be amended 
to reflect the actual cost of care. Some of the recommendations 
included that the cost report should provide flexibility to allow for 
innovation, eliminate the limitation on medical director fees, 
recognize the cost of supporting the ESRD networks, and allow immediate 
recognition on cost reports of ``new or innovative items/services,''
    Response: We thank the commenters for their suggestions. We plan to 
analyze the cost reports to determine if there are any changes required 
and will consider the suggestions provided.
    We received a number of other comments on a variety of topics that 
we believe are outside the scope of the proposed rule. The commenters 
requested that ESRD beneficiaries be able to maintain disability 
benefits while employed; expressed concern about the ``corporate 
practice of medicine'' by dialysis facilities; noted that securing the 
necessary documentation for acute co-morbidities is problematic and 
urged CMS to furnish co-morbidity claims data from the CMS database; 
advocated for inclusion of their product in the ESRD PPS payment; and 
disputed over payment changes to its product under Part D. We 
appreciate the comments; however, because these comments were not in 
response to any proposals or discussions in the proposed rule, they are 
beyond the scope of this final rule. We refer the commenters to the CY 
2011 ESRD PPS final rule, where we believe that we addressed many of 
these issues (75 FR 49030).

[[Page 67471]]

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

A. Background

    For over 30 years, monitoring the quality of care provided to end-
stage renal disease (ESRD) patients by dialysis providers or facilities 
(hereinafter referred to collectively as ``facility'' or 
``facilities'') has been an important component of the Medicare ESRD 
payment system. The ESRD quality incentive program (QIP) is the most 
recent step in fostering improved patient outcomes by establishing 
incentives for dialysis facilities to meet or exceed performance 
standards established by CMS. The ESRD QIP is authorized by section 
153(c) of MIPPA, which added section 1881(h) to the Act. CMS 
established the ESRD QIP for PY 2012, the initial year of the program 
in which ESRD payment reductions based on quality performance are being 
made to dialysis facilities, in two rules published in the Federal 
Register on August 12, 2010 and January 5, 2011 (75 FR 49030 and 76 FR 
628, respectively). On November 10, 2011, CMS published a final rule in 
the Federal Register outlining the PY 2013 and PY 2014 ESRD QIP (76 FR 
70228).
    Section 1881(h) of the Act requires the Secretary to establish an 
ESRD QIP, which we have implemented by (i) selecting measures; (ii) 
establishing the performance standards that apply to the individual 
measures; (iii) specifying a performance period with respect to a year; 
(iv) developing a methodology for assessing the total performance of 
each facility based on the performance standards with respect to the 
measures for a performance period; and (v) applying an appropriate 
payment reduction to facilities that do not meet or exceed the 
established Total Performance Score. In this final rule, we describe 
each of these elements, as applicable, and our final policies for their 
application to PY 2015 and future payment years of the ESRD QIP.

B. Summary of the Proposed Provisions and Responses to Comments on the 
ESRD QIP for PY 2015

    A proposed rule, entitled ``Medicare Program; End-Stage Renal 
Disease Prospective Payment System, Payment System, Quality Incentive 
Program, and Bad Debt Reductions for All Medicare Providers'' (77 FR 
40952), hereinafter referred to as the CY 2013 ESRD PPS proposed rule, 
appeared in the Federal Register on July 11, 2012, with a comment 
period that ended on August 31, 2012. In that proposed rule, we made 
proposals for the ESRD QIP, including introducing and expanding 
measures, refining the scoring methodology, modifying the program's 
public reporting requirements, establishing how the ESRD QIP payment 
reduction applies to facilities whose ownership has changed, and 
initiating a data validation pilot program. We received approximately 
55 public comments on these proposals from many interested parties 
including dialysis facilities, organizations representing dialysis 
facilities, nephrologists, nurses, dietitians, home health advocacy 
groups, pharmaceutical manufacturers, patients, advocacy groups, and 
the Medicare Payment Advisory Commission (MedPAC). In this section of 
the final rule, we provide a summary of each proposed requirement, a 
summary of the public comments received on these requirements, our 
responses to these comments, and the final policies that we will adopt 
for the program.

C. Considerations in Updating and Expanding Quality Measures Under the 
ESRD QIP for PY 2015 and Subsequent PYs

1. Value-Based Purchasing (VBP) Overview
    Throughout the past decade, Medicare has been transitioning from a 
program that pays for healthcare based solely on the number of services 
furnished to a beneficiary to a program that ties payments to providers 
and suppliers to the quality of care of the services they deliver. By 
paying for the quality of care, rather than merely the quantity of 
care, we believe we are strengthening the healthcare system while also 
advancing the National Quality Strategy and the three part aim which 
promote (i) better care for the individual thereby (ii) advancing the 
health of the entire population while also (iii) reducing costs. CMS 
specifies the domains and specific measures of quality for our VBP 
programs and we are working to link the aims of the National Quality 
Strategy with our payment policies on a national scale.
    There are currently six domains of measurement for our VBP 
programs, based on the six priorities of the National Quality Strategy: 
(i) Care coordination; (ii) population/community health; (iii) 
efficiency and cost reduction; (iv) safety; (v) patient- and caregiver-
centered experience and outcomes; and (vi) clinical care. Together 
these domains not only encourage better care at the facility level, but 
also encourage different care settings to interface to comprehensively 
improve healthcare overall. Although currently none of the VBP programs 
measure quality across all of the six domains, we are working to ensure 
that each program considers measures supporting the six national 
priorities where feasible. Furthermore, we are working in partnership 
with facilities, beneficiaries, the National Quality Forum (NQF), the 
Measures Application Partnership, sister agencies in the Department of 
Health and Human Services (HHS), and other stakeholders to develop new 
measures where gaps exist, refine measures requiring adjustment, and 
remove measures when appropriate. We are also working with stakeholders 
to ensure that the ESRD QIP serves the needs of our beneficiaries and 
also advances the goals of the National Quality Strategy.
    We believe that the development of an ESRD QIP that is successful 
in promoting the delivery of high quality healthcare services in 
dialysis facilities is paramount. We seek to adopt measures for the 
ESRD QIP that promote high-quality, safer, and more efficient care. In 
addition to the priorities of the National Quality Strategy, our 
measure development and selection activities for the ESRD QIP take into 
account other national priorities, such as those established by the 
National Priorities Partnership (http://www.qualityforum.org/npp/), HHS 
Strategic Plan (http://www.hhs.gov/secretary/about/priorities/priorities.html), the National Strategy for Quality Improvement in 
Healthcare (http://www.healthcare.gov/center/reports/quality03212011a.html), and the HHS National Action Plan to Prevent 
Healthcare Associated Infections (HAIs) (http://www.hhs.gov/ash/initiatives/hai/esrd.html). To the extent practicable, we have sought 
to adopt measures that have been endorsed by a national consensus 
organization, recommended by multi-stakeholder organizations, and 
developed with the input of facilities, purchasers/payers, 
beneficiaries, and other stakeholders.
2. Brief Overview of Proposals
    For PY 2014, we adopted measures for the ESRD QIP that fall under 
three of the six VBP measure priority domains based on the National 
Quality Strategy:
     Safety: National Healthcare Safety Network (NHSN) Dialysis 
Event reporting;
     Patient- and caregiver-centered experience: In-Center 
Hemodialysis Consumer Assessment of Healthcare Providers and Systems 
(ICH CAHPS) survey reporting; and
     Clinical quality of care: (i) Hemoglobin Greater Than 12 
g/dL; (ii) Hemodialysis Adequacy (Urea Reduction Ratio (URR)); (iii) 
Vascular

[[Page 67472]]

Access Type; (iv) and Mineral Metabolism reporting (76 FR 70228).
    For PY 2014, we also proposed to change the requirements for the 
Mineral Metabolism reporting measure.
    For PY 2015, we proposed to add new measures in the clinical 
quality of care domain and to expand the scope of the NHSN Dialysis 
Event reporting measure (safety domain) and the Mineral Metabolism 
reporting measure (clinical quality of care domain). We believe that 
the PY 2015 ESRD QIP should not only promote the health of ESRD 
patients, but also uphold the goals of the National Quality Strategy 
(NQS). To that end, we proposed to include 11 measures in the PY 2015 
ESRD QIP. We also proposed to include these measures and measure topics 
in subsequent payment years. The proposed measures would evaluate 
facilities on the following topics that fall under the NQS clinical 
quality of care measure domain:

 For purposes of evaluating anemia management:
    [cir] Hemoglobin Greater Than 12 g/dL, a clinical measure.
    [cir] Anemia Management, a reporting measure.*
 To evaluate dialysis adequacy:
    [cir] A clinical Kt/V measure for adult hemodialysis patients.*
    [cir] A clinical Kt/V measure for adult peritoneal dialysis 
patients.*
    [cir] A clinical Kt/V measure for pediatric hemodialysis patients.*
 To determine whether patients are treated using the most 
beneficial type of vascular access:
    [cir] An arteriovenous fistula measure.
    [cir] A catheter measure.
 To address effective bone mineral metabolism management:
    [cir] Hypercalcemia, a clinical measure.*
    [cir] Mineral Metabolism, a reporting measure (expansion proposed).
    Additionally, we proposed to expand a previously adopted reporting 
measure addressing safety:
 NHSN Dialysis Event reporting measure.
    We also proposed to continue using a previously adopted reporting 
measure assessing patient- and caregiver-centered experience:
 ICH CAHPS survey reporting measure.

*Indicates that the measure is new to the ESRD QIP.

    Although we did not propose to adopt measures that address care 
coordination, population/community health, or efficiency and cost of 
care, we solicited comments in the proposed rule on potential measures 
that would fall into each of these areas. We discussed the following 
measures that are under consideration for possible adoption in 
subsequent payment years: a 30-Day Hospital Readmission measure to 
address care coordination; an access to care measure to address 
population/community health; and an efficiency measure. We also 
discussed the Standardized Hospitalization Ratio Admissions (SHR) 
measure and the Standardized Mortality Ratio (SMR) measure that we are 
considering for program adoption in future years. We welcomed, and 
continue to welcome, further comments on these and other potential 
measures for future payment years.
3. Measures Application Partnership Review
    In addition to the considerations discussed above, in selecting 
measures for the PY 2015 ESRD QIP, we considered input from the multi-
stakeholder group, the Measures Application Partnership (http://www.qualityforum.org.map/). Section 1890A(a)(1) of the Act, as added by 
section 3014(b) of the Affordable Care Act, requires the entity with a 
contract under section 1890(a) of the Act, currently NQF, to convene 
multi-stakeholder groups to provide input to the Secretary on the 
selection of quality and efficiency measures for use in certain 
programs. Section 1890A(a)(2) of the Act requires the Secretary, not 
later than December 1 of each year, to make available to the public a 
list of quality and efficiency measures that are under consideration 
for use in certain programs. Section 1890A(a)(3) of the Act requires 
the entity with a contract under section 1890(a) of the Act to transmit 
the input of the multi-stakeholder groups to the Secretary not later 
than February 1 of each year, beginning in 2012. Section 1890A(a)(4) of 
the Act requires the Secretary to take into consideration the input of 
the multi-stakeholder groups in selecting quality and efficiency 
measures. The Measures Application Partnership is the public-private 
partnership comprised of multi-stakeholder groups convened by NQF for 
the primary purpose of providing input on measures as required by 
sections 1890A(a)(1) and (3) of the Act. The Measures Application 
Partnership's input on the quality and efficiency measures under 
consideration for adoption in CY 2012 was transmitted to the Secretary 
on February 1, 2012 and is available at (http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=69885). As required by 
section 1890A(a)(4) of the Act, we considered these recommendations in 
selecting quality and efficiency measures for the ESRD QIP.
    Four proposed measures for the PY 2015 ESRD QIP (that is, three for 
dialysis adequacy and one for hypercalcemia) were made publicly 
available in accordance with section 1890A(a)(2) of the Act and were 
reviewed by the Measures Application Partnership. The Measures 
Application Partnership gave support to two of the proposed measures, 
NQF 1454: Proportion of patients with hypercalcemia and NQF 
1423: Minimum spKt/V for Pediatric Hemodialysis Patients. The 
Measures Application Partnership supported the direction of a proposed 
composite measure comprised of two NQF-endorsed measures, NQF 
0249: Hemodialysis Adequacy Clinical Performance Measure III: 
Hemodialysis Adequacy--HD Adequacy--Minimum Delivered Hemodialysis Dose 
and NQF 0318: Peritoneal Dialysis Adequacy Clinical 
Performance Measure III--Delivered Dose of Peritoneal Dialysis Above 
Minimum. The Measures Application Partnership recommended that the 
composite measure comprised of the two NQF dialysis adequacy measures 
be tested to ensure feasibility. We took these comments into 
consideration when we proposed measures for the PY 2015 ESRD QIP.
4. PY 2014 Mineral Metabolism Measure
    In the CY 2012 ESRD PPS final rule, we adopted the Mineral 
Metabolism reporting measure for the PY 2014 ESRD QIP which requires 
each facility to attest that it monitored serum calcium and serum 
phosphorus at least once a month for each Medicare ESRD patient (76 FR 
70271). We have since realized, however, that it may be difficult for 
some facilities to make this attestation if, for example, a patient is 
seen at the beginning of the month, his or her blood is not drawn, and 
then he or she is hospitalized or transient for the remainder of the 
month. While it is our intention to encourage facilities to put systems 
and processes into place to ensure at least monthly serum calcium and 
phosphorus monitoring, we believe it is reasonable to give 
consideration to situations where the monthly blood draw does not 
happen within the dialysis facility given these scenarios. Therefore, 
for PY 2014, we proposed to change the Mineral Metabolism reporting 
requirement.
    We considered proposing to require facilities to report the 
required information for less than 100 percent of their patients. There 
are circumstances, however, that are beyond a facility's control 
wherein it may not be able to

[[Page 67473]]

draw a sample for this patient. Therefore, for purposes of scoring the 
measure, we proposed to modify the PY 2014 measure to require that, in 
order for a facility to receive 10 points on the PY 2014 Mineral 
Metabolism measure, it must attest that it monitored on a monthly basis 
the serum calcium and serum phosphorus levels for every Medicare ESRD 
patient provided that: (i) The patient is alive for the entirety of the 
applicable month; (ii) if the patient is treated in-center, that 
patient was treated at that facility at least twice during the claim 
month; and (iii) if the patient receives dialysis at home, a facility 
must report this information regardless of the number of treatments, 
provided that a claim is submitted for that patient. We also proposed 
that if a patient is hospitalized or transient during a claim month, 
the facility could monitor the serum calcium and serum phosphorus 
readings for that patient for the month if a patient has labs drawn by 
another provider/facility, those labs are evaluated by an accredited 
laboratory (a laboratory that is accredited by, for example, Joint 
Commission, College of American Pathologists, AAB (American Association 
of Bioanalysts), or State or Federal agency), and the dialysis facility 
reviews the serum calcium and serum phosphorus readings. We stated our 
belief that these proposals will provide more flexibility for 
facilities and will also prevent facilities from drawing blood, even 
when not necessary, each time a patient visits for fear that he or she 
will fail to come to the facility again during that month. We requested 
comment on this proposal.
    We also requested comment on our consideration to lower the 
attestation to monthly monitoring of 98 percent of Medicare ESRD 
patients. We chose 98 percent in order to encourage improvement, and to 
ensure that we do not undermine the current level of high-reporting 
(based on the CROWNWeb pilot data). We recognize that 100 percent might 
not be appropriate due to some individual cases that may not fit 
specified criteria.
    Additionally, for purposes of clarification, we noted that the PY 
2014 attestations for both the Mineral Metabolism and ICH CAHPS 
measures will become available in CROWNWeb in December 2012. As noted 
in the CY 2012 ESRD PPS final rule, these attestations must be made 
before January 31, 2013 (76 FR 70269, 70271).
    We received the following comments on these proposals:
    Comment: Many commenters were appreciative of our willingness to 
revisit our requirements for the PY 2014 Mineral Metabolism 
attestation. Some commenters suggested that we modify the exclusion to 
include the following patients: (i) Beneficiaries who are regularly 
treated at the facility and who fit into one of these categories: (a) 
Beneficiaries who die within the applicable month; (b) beneficiaries 
that receive fewer than 7 treatments in a month; and (c) beneficiaries 
receiving home dialysis therapy who miss their in-center appointments 
when there is a documented, good faith effort to have them participate 
in such a visit during the applicable month; (ii) transient dialysis 
patients; (iii) pediatric patients (unless the measure is specific to 
this population); and (iv) kidney transplant recipients with a 
functioning graft. Commenters stated that these exclusions are 
consistent with our own measures, CROWNWeb, and the URR reporting 
specifications; additionally, these exclusions seek to hold facilities 
accountable only for those beneficiaries to whom they regularly give 
care and for whose care they can affect. One commenter believed that 
home dialysis patients should only be included if they attend their 
monthly visit. One commenter requested that we use NQF inclusion 
criteria for purposes of defining the exclusions of the Mineral 
Metabolism reporting measure.
    Response: Upon further review, we agree with commenters who believe 
that the exclusions should be modified. We recognize that treating a 
patient twice may not provide enough time to effectuate quality patient 
care. We agree with the commenters who suggested that an in-center 
hemodialysis patient should be excluded if treated by a facility fewer 
than seven times during the month, regardless of whether the patient is 
officially admitted to that facility. With seven treatments, we believe 
that a facility should have had adequate opportunities to draw blood 
necessary to measure serum calcium and phosphorus levels. We also 
believe that the threshold of seven will discourage unnecessary testing 
of in-center hemodialysis patients by facilities because they will know 
that, since in-center patients are typically treated three times per 
week, a patient must have been treated by the facility for at least two 
weeks to be included; thus, the facility need not feel pressure to draw 
blood for every in-center patient during the first few visits of the 
month. Based on these considerations, we will not finalize our proposal 
to exclude only in-center patients who have been treated fewer than two 
times by the facility during the claim month. Instead, we will exclude 
any patient who is treated by the facility fewer than seven times 
during the reporting month.
    We do not believe that it is necessary to specifically exclude 
transient patients from this measure because, as noted, any patient 
that is treated by the facility at least seven times during the 
applicable reporting month is present at the facility for enough time 
that the facility should be held accountable for that patient. 
Likewise, for the same reasons mentioned above, we do not believe we 
need to separately exclude patients who are deceased at the end of the 
reporting month. Provided that the patient is treated by the facility 
at least seven times during that month, the facility should be able to 
draw blood necessary to monitor serum calcium and serum phosphorus 
levels even if the patient is deceased at the end of the month.
    We continue to believe that facilities should be required to attest 
that they monitored the serum calcium and phosphorus levels of home 
dialysis patients irrespective of whether those patients attend a 
monthly appointment. We believe that it is incumbent upon a facility to 
make home dialysis patients aware that they must attend monthly 
appointments to be properly treated. In addition, since the mechanisms 
that cause cardiovascular and bone disease do not differ between home 
and in-center hemodialysis patients, we believe that the inclusion of 
home dialysis patients in the Mineral Metabolism reporting measure is 
appropriate. Therefore we will finalize our proposal that we will 
include any home hemodialysis patient for which a facility submits a 
claim with respect to the reporting month in this measure.
    We also believe it is important to include transplant patients 
until they are officially discharged from a facility; regular 
monitoring can help ensure that a transplant remains effective and that 
the facility is continuing to provide the best care possible.
    We believe it is important to monitor serum calcium and serum 
phosphorus levels in adult and pediatric patients alike because 
improper bone mineral metabolism management can lead to serious, 
negative outcomes, including death, in both populations. Although we 
are aware that specific target values for calcium and phosphorus have 
not been set for the pediatric population, we still believe that this 
measure will lead to better observation of mineral metabolism in these 
patients if one or both of these values are unusually high or low. 
Additionally, we believe that the inclusion of pediatric patients in 
this measure is consistent with current guidelines on the frequency of 
mineral

[[Page 67474]]

metabolism testing as reported in KDIGO guidelines chapter 3 
``Diagnosis of CKD-MBD: biochemical abnormalities.'' Thus, we believe 
that this measure is appropriate for both adult and pediatric patients.
    Finally, we do not believe that we must use NQF inclusion criteria 
for this measure. Although we seek to align our measures and our 
selection criteria with NQF as much as possible, as we stated in the CY 
2011 ESRD PPS Final Rule, we believe it is appropriate, at this time to 
employ a measure that has not been NQF-endorsed (76 FR 70271 through 
72).
    For the reasons stated above, we are finalizing that to earn 10 
points on the Mineral Metabolism reporting measure, facilities must 
attest in CROWNWeb that they have monitored the serum calcium and serum 
phosphorus levels on a monthly basis for (i) in-center Medicare 
patients who have been treated at least seven times by the facility; 
and (ii) home hemodialysis Medicare patients for whom the facility 
submits a claim.
    Comment: Several commenters encouraged us to not adopt a percentage 
reporting threshold because it does not distinguish between 
beneficiaries legitimately excluded and those that were merely missed. 
Other commenters requested that we use both exclusions and a threshold, 
recognizing that there are some circumstances preventing blood draws 
that facilities cannot control; one commenter suggested a threshold of 
90 percent or an allowance of two patients to ensure that small 
facilities are not disproportionally affected. Another commenter 
recommended that we use a threshold of 95 percent. Another commenter 
stated that requiring 98 percent reporting may make it difficult for 
patients to travel because dialysis facilities may encourage them 
otherwise to ensure compliance with the measure.
    Response: We agree with the commenters who argued that, even with 
exclusions, there are circumstances in which facilities cannot attest 
to monitoring the serum calcium and serum phosphorus levels for every 
patient at least once per month. For example, a facility may wait until 
later to draw blood from a patient because it believes that patient 
will be treated by the facility for the entirety of the month, but 
learns that the patient has been hospitalized unexpectedly for all or 
part of the applicable month. Therefore, we believe that we should not 
require an attestation of 100 percent monitoring. Based on data from 
the CROWNWeb pilot, we believe that facilities report serum calcium and 
serum phosphorus levels for approximately 96 percent of their patients. 
Therefore, we will finalize that facilities must attest to monitoring 
calcium and phosphorus on a monthly basis for at least 96 percent, in 
total, of (i) in-center Medicare patients who have been treated at 
least seven times by the facility; and (ii) home hemodialysis Medicare 
patients for whom the facility submits a claim.\1\
---------------------------------------------------------------------------

    \1\ We note that the reporting requirements are somewhat 
different for CROWNWeb. All patients must be reported for CROWNWeb 
purposes, even if those patients would not be included in the 
measure for purposes of the ESRD QIP.
---------------------------------------------------------------------------

    We are concerned that small facilities may be disproportionately 
impacted by this 96 percent reporting threshold because, for example, a 
facility with 10 patients could miss monitoring for only one patient 
and fail to meet the threshold. We have previously stated that, to 
disincentivize cherry picking, we seek to ensure that one patient does 
not skew a facility's score. We do, however, seek to ensure the highest 
quality of care regardless of the facility size. Taking these two 
competing interests into consideration, we believe that it is 
appropriate to allow facilities that treat less than 11 Medicare 
patients during the performance period to attest that they have met the 
requirements for this measure if they monitored the serum calcium and 
serum phosphorus levels on a monthly basis for at least all but one of 
its (i) in-center Medicare patients who have been treated at least 
seven times by the facility; and (ii) home hemodialysis Medicare 
patients for whom the facility submits a claim. We believe 11 is the 
appropriate cut-off because, as we explain below, a case minimum of 11 
allows us to include as many facilities as possible while also taking 
into account privacy and reliability. We believe that one is the 
appropriate number because, as noted above, although we seek to ensure 
the highest quality of care regardless of facility size, we also seek 
to mitigate cherry-picking by ensuring that one patient does not skew a 
facility's score.
    Comment: Many commenters noted that it is impractical for 
facilities to obtain labs from other providers because other providers 
are not required to measure these data, do not share data with dialysis 
facilities, and, even if facilities could obtain these data, they could 
not be sure that the labs were consistent or reported under the same 
standards.
    Response: We recognize that it may be difficult for facilities to 
coordinate with hospitals and other care providers in order to obtain 
lab values. Accordingly, we are not mandating facilities to do so. In 
the proposed rule (77 FR 40969), we stated that facilities may obtain 
lab values from other providers. This proposal was specifically 
designed to afford facilities more flexibility in acquiring serum 
calcium and phosphorus values. Facilities are highly encouraged to 
coordinate with other providers, but this measure does not mandate them 
to do so. We believe that the commenters' concerns about inconsistent 
lab data are mitigated by the requirement that the lab must be 
accredited. Facilities can use these values for the purpose of 
monitoring the serum calcium and phosphorus levels of their patients; 
additionally, collecting these data may encourage providers to engage 
one another about the patient's conditions and care.
    Comment: Several commenters asked for clarification on the 
following points: (1) Are only Medicare patients included in the 
denominator, (2) are Medicare Railroad and Medicare Advantage (MA) 
patients included in the denominator, (3) could CMS give an example of 
an accurate application of the exclusions and/or threshold, (4) if CMS 
institutes a threshold, would it be rounded, (5) if a patient is 
excluded from the measure for attestation purposes, must his or her 
values still be reported in CROWNWeb, and (6) how does CMS plan on 
counting the number of treatments for home patients.
    Response: We will address these questions in turn.
    First, a facility treating at least 11 Medicare patients during the 
performance period is required to monitor serum calcium and serum 
phosphorus on a monthly basis for all (i) in-center Medicare patients 
who have been treated at least seven times by the facility; and (ii) 
home hemodialysis Medicare patients for whom the facility submits a 
claim. These patients include Medicare Advantage and Medicare Railroad 
beneficiaries.
    As an example of the application of the exclusions and threshold, 
assume the following: (i) A facility treats 30 Medicare patients in 
month X; (ii) patient A is an in-center hemodialysis patient who was 
treated by the facility seven times during the first two weeks of month 
X, but the facility failed to obtain a blood draw during this period, 
and the patient is in the hospital for the next two weeks of month X 
but the facility monitors the patient's serum phosphorus and calcium by 
obtaining these values from the hospital; (iii) patient B and C are 
both in-center hemodialysis patients who were treated by the facility 
at least seven times during month X, but the facility fails to monitor 
the serum calcium and serum phosphorus of these patients during

[[Page 67475]]

month X; (iv) patient D was visiting the facility and was treated by 
the facility only 4 times during month X; and (v) the facility monitors 
the serum calcium and serum phosphorus on a monthly basis for every 
other (i) in-center Medicare patient who had been treated at least 
seven times by the facility during month X; and (ii) home hemodialysis 
Medicare patient for whom the facility submitted a claim during month 
X. The facility is considered to have monitored the serum calcium and 
serum phosphorus during month X for every patient except B and C 
because patient D was only treated four times during the month and the 
facility obtained the values for patient A from another provider. The 
facility's monitoring rate for month X is 27/29, or 93.1 percent 
(rounded to 93 percent). A facility with 30 patients must attest that 
it monitored on a monthly basis the serum calcium and serum phosphorus 
for all (i) in-center Medicare patients who have been treated at least 
seven times by the facility; and (ii) home hemodialysis Medicare 
patients for whom the facility submits a claim. Therefore, this 
facility could not attest that it successfully monitored the serum 
calcium and serum phosphorus in total for at least 96 percent of its 
(i) in-center Medicare patients who had been treated at least 7 times 
by the facility; and (ii) home hemodialysis Medicare patients for whom 
the facility submitted a claim.\2\ For purposes of this measure, 
facilities may round up to a whole percentage point when calculating 
whether they met the 96 percent threshold.
---------------------------------------------------------------------------

    \2\ Note that, for ease, we provided an example for only one 
month. However, to make the attestation, a facility must monitor for 
the duration of the performance period the serum calcium and serum 
phosphorus levels on a monthly basis for all (i) in-center Medicare 
patients who have been treated at least seven times by the facility; 
and (ii) home hemodialysis Medicare patients for whom the facility 
submits a claim.
---------------------------------------------------------------------------

    Finally, for the reasons discussed above, facilities will be 
required to monitor the serum calcium and serum phosphorus at least 
once per month for every home hemodialysis patient for whom it submits 
a claim regardless of the number of treatments during that month.
    Comment: Many commenters requested that we revisit various aspects 
of the PY 2014 ESRD QIP.
    Response: The PY 2014 ESRD QIP was finalized on November 1, 2011 
(76 FR 70228). Although we requested comment regarding the PY 2014 
Mineral Metabolism reporting measure in the proposed rule, we did not 
propose to reconsider any other elements of the PY 2014 program. 
Therefore, we consider these comments to be outside the scope of the 
proposed rule. We refer readers to the 2012 ESRD PPS final rule for 
more information on the finalized PY 2014 ESRD QIP (76 FR 70228).
    For the reasons stated above, we finalize that a facility treating 
at least 11 Medicare patients during the performance period can attest 
to meeting the requirements of the PY 2014 Mineral Metabolism reporting 
measure if it monitors on a monthly basis the serum calcium and serum 
phosphorus for at least 96 percent in total of all (i) in-center 
Medicare patients who have been treated at least seven times by the 
facility; and (ii) home hemodialysis Medicare patients for whom the 
facility submits a claim. We also finalize that a facility treating 
fewer than 11 Medicare patients during the performance period can 
attest to meeting the requirements of the PY 2014 Mineral Metabolism 
reporting measure if it monitors on a monthly basis the serum calcium 
and serum phosphorus levels for at least all but one of its (i) in-
center Medicare patients who have been treated at least seven times by 
the facility; and (ii) home hemodialysis Medicare patients for whom the 
facility submits a claim.

D. Proposed Measures for the PY 2015 ESRD QIP and Subsequent PYs of the 
ESRD QIP

    Similar to our other quality reporting and pay for performance 
programs, we proposed that once a quality measure is selected and 
finalized for the ESRD QIP through rulemaking, the measure would 
continue to remain part of the program for all future years, unless we 
remove or replace it through rulemaking or notification (if the measure 
raises potential safety concerns). We believe that this will streamline 
the rulemaking process, provide continuity of quality measurement, and 
allow ESRD facilities to plan both quality reporting and quality 
improvement activities. In general, we anticipate considering quality 
measures for removal or replacement if: (1) Measure performance among 
the majority of ESRD facilities is so high and unvarying that 
meaningful distinctions in improvements or performance can no longer be 
made; (2) performance or improvement on a measure does not result in 
better or the intended patient outcomes; (3) a measure no longer aligns 
with current clinical guidelines or practice; (4) a more broadly 
applicable (across settings, populations, or conditions) measure for 
the topic becomes available; (5) a measure that is more proximal in 
time to desired patient outcomes for the particular topic becomes 
available; (6) a measure that is more strongly associated with desired 
patient outcomes for the particular topic becomes available; or (7) 
collection or public reporting of a measure leads to negative 
unintended consequences. If there is reason to believe that a measure 
raises potential safety concerns, we proposed that we would take 
immediate action to remove the measure from the ESRD QIP and not wait 
for the annual rulemaking cycle. We proposed that such measures would 
be promptly removed from the measure set, and we would confirm the 
removal in the next ESRD QIP rulemaking cycle. ESRD facilities and the 
public would be immediately notified of our decision to remove a 
measure that raises potential safety concerns through the usual ESRD 
program communication channels, including memos, email notification, 
and web postings.
    Many of the quality measures used in different Medicare and 
Medicaid reporting programs are endorsed by NQF. As part of its regular 
maintenance process for endorsed performance measures, the NQF requires 
measure stewards to submit annual measure maintenance updates and 
undergo maintenance of endorsement review every 3 years. Under the 
measure maintenance process, the measure steward (owner/developer) is 
responsible for updating and maintaining the currency and relevance of 
the measure and confirming specification changes to NQF on an annual 
basis. NQF solicits information from measure stewards for annual 
reviews in order to review measures for continued endorsement in a 
specific 3-year cycle. Non-NQF-endorsed measures may also go through 
similar maintenance by their measure stewards; such maintenance 
includes reviewing and updating measures.
    Through the measure maintenance process, measures are sometimes 
updated to incorporate changes that we believe do not substantially 
change the nature of the measures. Examples could be changes to 
exclusions to the patient population, changes to definitions, or 
extension of the measure endorsement to apply to other settings. We 
believe these types of maintenance changes are distinct from more 
substantive changes to measures that result in what are considered new 
or different measures, and that they do not trigger the same agency 
obligations under the Administrative Procedure Act.
    We proposed that if a measure that we have adopted for the ESRD QIP 
is updated in a manner that we consider to not substantially change the 
nature of the measure, we would use a

[[Page 67476]]

subregulatory process to incorporate those updates to the measure 
specifications that apply to the program. Specifically, we would revise 
our previously adopted measure specifications to clearly identify the 
updates made by the NQF or other measure steward and either post the 
updates directly on the CMS Web site or provide links to where the 
updates can be found. We would also provide sufficient lead time for 
facilities to implement the changes where changes to the data 
collection systems would be necessary.
    We proposed to continue to use the rulemaking process to adopt 
changes to a measure that we consider to substantially change the 
nature of the measure. We stated our belief that this proposal 
adequately balances our need to incorporate updates to ESRD QIP 
measures in the most expeditious manner possible, while preserving the 
public's ability to comment on updates that so fundamentally change an 
endorsed measure that it is no longer the same measure that we 
originally adopted. We invited public comment on this proposal and on 
our proposal that once a quality measure is adopted, it is retained for 
use in the subsequent ESRD QIP payment years unless we remove or 
replace it as discussed above.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Commenters requested clarification regarding the removal 
or replacement criteria for measures, specifically the criteria listed 
in (2) and (5) and the process for removal or replacement. Commenters 
suggested that CMS provide illustrative scenarios and consider 
convening an emergency technical expert panel (TEP) to identify and 
analyze removal or replacement issues. Commenters also encouraged us to 
add two criteria for removal or replacement: (i) Negative unintended 
consequences to the Medicare ESRD system as a whole; and (ii) if data 
for a measure cannot be collected reliably and accurately or if 
collecting the data places an undue burden on facilities. One commenter 
asked that CMS confirm that we will use rulemaking to retire or remove 
measures from the ESRD QIP. Finally, the commenters stated that some of 
the measures proposed meet the replacement and removal criteria and 
suggested that CMS implement only new measures that meet the proposed 
criteria.
    Response: We thank those commenters who provided suggestions 
regarding the criteria and process for measure replacement or removal 
from the ESRD QIP. We concur with those commenters who argue in favor 
of implementing measures that meet the proposed criteria. We do not 
believe that an emergency technical expert panel (TEP) is an 
appropriate part of the removal process, as we typically convene TEPs 
in order to obtain expert stakeholder input as part of the measure 
development process. These TEPs are convened as needed during the 
measure maintenance cycle and can provide any necessary comment 
regarding the clinical appropriateness of implemented measures. 
Emergency TEPs would also be difficult and expensive to employ quickly, 
such as in response to public comments in support of measure removal. 
We will consider the inclusion of additional removal criteria such as 
those suggested by commenters through future rulemaking, but will 
finalize the proposed criteria to remain consistent with similar 
criteria implemented for other quality reporting and pay-for-
performance programs, such as the Hospital Inpatient Quality Reporting 
Program and Hospital Outpatient Quality Reporting Program. The second 
criterion we proposed, the availability of alternative measures with a 
stronger relationship to patient outcomes, is intended to allow us to 
implement new measures in the ESRD QIP that have a stronger association 
with relevant health outcomes. Such measures may better assess the 
quality of care provided by dialysis facilities and in such cases, we 
believe it would be appropriate to reflect this in the ESRD QIP. Our 
use of the fifth criterion is consistent with this principal, and would 
be applied in those circumstances where we believe existing measures 
are not as temporally proximal to health outcomes of interest as are 
newly available measures. We believe that in such cases, it would be 
appropriate to remove these measures, rather than simply increase the 
volume of quality measures for which dialysis facilities are 
responsible under the ESRD QIP.
    Except for measures that raise potential safety concerns, any 
decisions to remove or replace measures under the ESRD QIP will be made 
through the rulemaking process. Each year, we will assess whether any 
measures should be removed or replaced under the ESRD QIP, and we will 
make appropriate proposals during the rulemaking cycle. Stakeholders 
will then have the opportunity to provide feedback regarding the 
proposed removal or replacement of these measures, and the rationale 
behind our proposals. Any measure removal will then be finalized as 
part of the ESRD PPS final rule.
    We take the suggestion that we implement only new measures that 
meet the proposed criteria to mean that we should implement only 
measures that do not meet the proposed removal criteria. We recognize 
the potential value in taking these criteria into consideration for 
measure implementation, and believe we do so to the extent practicable. 
However, we believe that we must take into consideration additional 
criteria, such as statutory requirements governing the ESRD QIP and 
emergent public health and safety issues, when determining what 
measures to propose and finalize for the program. In some cases, it is 
possible that these issues will take precedence over the criteria 
proposed for measure removal.
    Comment: Several commenters urged us to adopt measure 
specifications and data definitions that are clear, modifying this 
information through rulemaking alone. Commenters argued that it is only 
appropriate to use sub-regulatory processes to aid facilities in 
interpreting the specifications and definitions, and suggested that we 
develop a regular and transparent process for collecting and responding 
to these questions, ideally on a quarterly basis with a schedule set 
forth in rules.
    Response: We thank those commenters who provided feedback to our 
proposal to update NQF-endorsed measures using a subregulatory process. 
We concur that measure specifications and data definitions should be 
clear. However, we believe that using a subregulatory process to make 
certain types of updates to measures is appropriate. The NQF regularly 
maintains its endorsed measures through annual and triennial reviews, 
which may result in the NQF making updates to the measures. We believe 
that it is important to have in place a subregulatory process to 
incorporate non-substantive updates made by the NQF to the measure 
specifications we have adopted for the ESRD QIP so that these measures 
remain up-to-date and clinically relevant. We also recognize that some 
changes the NQF might make to its endorsed measures are substantive in 
nature and might not be appropriate for adoption using a subregulatory 
process. Therefore, we are finalizing a policy under which we will use 
a subregulatory process to make non-substantive updates to NQF-endorsed 
measures used for the ESRD QIP. With respect to what constitutes 
substantive versus non-substantive changes, we expect to make this 
determination on a case-by-case basis. Examples of non-substantive 
changes might include updated diagnosis or procedure codes, medication 
updates for categories of medications, broadening of age ranges,

[[Page 67477]]

and exclusions for a measure (such as the addition of a hospice 
exclusion to the 30-day mortality measures used in the Hospital IQR 
Program). We believe that non-substantive changes may include updates 
to NQF-endorsed measures based upon changes to guidelines upon which 
the measures are based.
    We will continue to use rulemaking to adopt substantive updates 
made by the NQF to the endorsed measures we have adopted for the ESRD 
QIP. Examples of changes that we might consider to be substantive would 
be those in which the changes are so significant that the measure is no 
longer the same measure, or when a standard of performance assessed by 
a measure becomes more stringent (for example, changes in the 
acceptable timing of medication, procedure/process, or test 
administration). Another example of a substantive change would be where 
the NQF has extended its endorsement of a previously endorsed measure 
to a new setting, such as extending a measure from the inpatient 
setting to hospice. These policies regarding what is considered 
substantive versus non-substantive would apply to all ESRD QIP 
measures. We also note that the NQF process incorporates an opportunity 
for public comment and engagement in the measure maintenance process.
    We aim to be as transparent as possible in implementing the ESRD 
QIP. Occasionally, questions arise related to measures that have been 
adopted. We plan to publish these questions and answers on a publicly 
available Web site. We will consider standardizing a timeline for 
submission of and answers to these questions as the program evolves.
    For the reasons discussed above, we are finalizing our proposal 
regarding continued use of measures in the ESRD QIP unless we remove or 
replace them. We are also adopting a policy under which we will use a 
subregulatory process to make non-substantive updates to measures, and 
will use the rulemaking process to make substantive updates to 
measures.
1. PY 2014 Measures Continuing for PY 2015 and Subsequent PYs
    We previously finalized six measures including one measure with two 
measure sub-components (see Table 2 below) for the PY 2014 ESRD QIP (76 
FR 70228). We proposed to continue to use five of these measures for 
the PY 2015 ESRD QIP; however, we also proposed to augment two (NHSN 
Dialysis Event reporting and Mineral Metabolism reporting) of these 
five measures used in PY 2014 to continue to promote improvement in the 
PY 2015 ESRD QIP. We proposed to remove the PY 2014 URR Dialysis 
Adequacy measure. In addition, we proposed to add three new measures of 
dialysis adequacy, an anemia management reporting measure, and a 
hypercalcemia clinical measure (Table 3).

           Table 2--Measures Adopted for the PY 2014 ESRD QIP
------------------------------------------------------------------------
 
------------------------------------------------------------------------
           NQF No.             Measure title
------------------------------------------------------------------------
N/A..........................  Percent of Patients with Hemoglobin
                                Greater Than 12 g/dL*
------------------------------------------------------------------------
N/A..........................  URR Hemodialysis Adequacy
------------------------------------------------------------------------
N/A for composite measure....  Vascular Access  Hemodialysis Vascular
                                Type.            Access-Maximizing
                                                 Placement of Arterial
                                                 Venous Fistula (AVF)*
                                                 (NQF0257).
                                                Hemodialysis Vascular
                                                 Access-Minimizing use
                                                 of Catheters as Chronic
                                                 Dialysis Access*
                                                 (NQF0256).
------------------------------------------------------------------------
N/A\1\.......................  NHSN Dialysis Event Reporting*\+\
                               Enroll and report 3 months of dialysis
                                event data.
------------------------------------------------------------------------
N/A\2\.......................                   In-Center Hemodialysis
                                                 Consumer Assessment of
                                                 Healthcare Providers
                                                 and Systems (ICH CAHPS)
                                                 Survey Reporting*
                                                Facilities are required
                                                 to attest that they
                                                 administered the ICH
                                                 CAHPS survey via a
                                                 third party during the
                                                 performance period.
------------------------------------------------------------------------
N/A\3\.......................                   Mineral Metabolism
                                                 Reporting
                                                Facilities are required
                                                 to attest that they
                                                 have monitored each of
                                                 their Medicare
                                                 patient's phosphorus
                                                 and calcium levels
                                                 monthly throughout the
                                                 performance period.*\+\
------------------------------------------------------------------------
\1\ We note that an NQF-endorsed bloodstream infection measure
  (NQF1460) exists, and data for this measure is collected as
  part of dialysis event reporting in NHSN. It is our intention to use
  this measure in future years of the ESRD QIP. We believe that a
  reporting measure is a necessary step in reaching our goal to use
  NQF1460.
\2\ We note that a related measure utilizing the results of this survey
  has been NQF-endorsed (0258), and it is our intention to use
  this measure in future years of the ESRD QIP. We believe that a
  reporting measure is a necessary step in reaching our goal to use
  NQF0258.
\3\ We note that the NQF has previously endorsed phosphorus and calcium
  monitoring measures (0261 and 0255) upon which this
  measure is based. NQF has since withdrawn its endorsement of the
  calcium measure.
* Indicates a measure we are proposing for PY 2015 and future years of
  the ESRD QIP.
\+\ Indicates a measure we are proposing to augment for PY 2015 and
  future years of the ESRD QIP.


Table 3--New Measures Proposed for the ESRD QIP PY 2015 and Future Years
                             of the Program
------------------------------------------------------------------------
        NQF No.                           Measure title
------------------------------------------------------------------------
N/A....................  Anemia Management Reporting.
0249...................  Hemodialysis Adequacy Clinical Performance
                          Measure III: Hemodialysis Adequacy--HD
                          Adequacy--Minimum Delivered Hemodialysis Dose.
0318...................  Peritoneal Dialysis Adequacy Clinical
                          Performance Measure III--Delivered Dose of
                          Peritoneal Dialysis Above Minimum.
1423...................  Minimum spKt/V for Pediatric Hemodialysis
                          Patients.
1454...................  Proportion of Patients with Hypercalcemia.
------------------------------------------------------------------------


[[Page 67478]]

    We proposed to continue using two measures and one measure topic 
adopted in PY 2014 for the PY 2015 ESRD QIP and subsequent payment 
years of the program. For the reasons stated in the CY 2012 ESRD PPS 
final rule (76 FR 70262, 70264 through 65, 70269), we proposed to 
continue using: (i) The Hemoglobin Greater than 12 g/dL measure; (ii) 
the Vascular Access Type measure topic comprised of two measures, (a) 
the Hemodialysis Vascular Access-Maximizing Placement of AVF (NQF 
0257) measure, and (b) the Hemodialysis Vascular Access-
Minimizing use of Catheters as Chronic Dialysis Access (NQF 
0256) measure; and (iii) the ICH CAHPS survey reporting 
measure. The technical specifications for these measures can be found 
at http://www.dialysisreports.org/pdf/esrd/public-measures/AnemiaManagement-HGB-2015-NPRM.pdf; http://www.dialysisreports.org/pdf/esrd/public-measures/VascularAccess-Catheter-2015-NPRM.pdf; http://www.dialysisreports.org/pdf/esrd/public-measures/VascularAccess-Fistula-2015-NPRM.pdf; and http://www.dialysisreports.org/pdf/esrd/public-measures/ICHCAHPS-2015-NPRM.pdf. We requested comment on the 
proposed continuation of these measures.
    The comments we received on these proposals and our responses are 
set forth below. We will separately discuss each of the measures and 
the comments received on these measures.
a. Hemoglobin Greater Than 12 g/dL
    Comment: Many commenters strongly supported the continuation of 
this measure, specifically because proper anemia management can prevent 
patients from developing serious, life threatening conditions. Other 
commenters, however, asked that we consider removing the measure or 
reducing its weight since high hemoglobin and ESA overuse no longer 
pose a realistic concern because of the economic incentives of the ESRD 
PPS payment bundle and the new clinical evidence and FDA-approved label 
for ESAs (http://www.fda.gov/Drugs/DrugSafety/ucm259639.htm). One 
commenter noted that the TREAT study and its own research indicate that 
large ESA doses, rather than high hemoglobin levels, result in adverse 
effects. Finally, one commenter believes that the Hemoglobin Greater 
Than 12 g/dL measure leads to confusion because physicians begin 
increasing ESA dosage only after hemoglobin levels have fallen far 
below 12 g/dL, resulting in an increase in patients with low hemoglobin 
levels. The same commenter noted that it is difficult to incentivize 
clinics to provide proper ESA dosage with the ESRD PPS payment bundle 
and the Hemoglobin Greater than 12 g/dL measure combined. Finally, one 
commenter urged us to individualize anemia management measures.
    Response: We appreciate feedback relating to the use of the 
Hemoglobin Greater Than 12 g/dL measure in the ESRD QIP. We recognize 
that changes in the incentive structure for ESA therapy may have 
consequences for ESA utilization. We feel, however, that because of the 
negative clinical outcomes that can result from high hemoglobin levels 
in the ESRD population, this measure is still important in ensuring 
that facilities provide quality care.
    We also appreciate the need to consider dosage and clinical 
practice when ascertaining the potential adverse effects of ESA 
therapy. We have begun to develop additional anemia management measures 
that account for ESA dose. These measures are focused on utilization of 
ESAs and transfusion avoidance to further incentivize proper care. We 
intend to propose to adopt one or more of these measures for the ESRD 
QIP in future rulemaking.
    Finally, we agree that it is important to individualize care for 
each beneficiary. We believe that the Hemoglobin Greater than 12 g/dL 
measure both allows facilities discretion to properly manage hemoglobin 
levels in each patient and prevents adverse patient outcomes associated 
with hemoglobin levels that are too high. However, we recognize that 
greater individualization may be possible and are currently working to 
develop additional anemia management measures that will enhance this 
aspect of the ESRD QIP.
    Comment: Several commenters supported the measure, generally, but 
asked us to make refinements. One commenter suggested that we measure 
hemoglobin on a three or 6-month rolling basis rather than monthly 
because monthly measurement does not provide a comprehensive assessment 
of the care patients are receiving; studies show that although 
hemoglobin levels can fluctuate greatly within short periods of time, 
the mean hemoglobin level can remain in the measure target range. 
Another commenter stated that, as the measure is currently conceived, 
facilities cannot act on its results. Because it takes time for 
hemoglobin levels to change, one commenter recommended excluding 
patients who have been on ESA therapy for one month or less and 
patients whose ESA therapy was promptly discontinued once the facility 
became aware that their hemoglobin levels were over 12 g/dL. Finally, 
one commenter noted that hemoglobin levels at high altitude facilities 
are more likely to be greater than 12 g/dL.
    Response: We thank the commenters who made suggestions regarding 
the refinement of the Hemoglobin Greater Than 12 g/dL measure. 
Addressing the concern commenters raised with the high degree of 
variability in hemoglobin from month to month, the measure rate is 
calculated using the average hemoglobin of a patient over 4-12 months. 
For example, if a patient is treated for 4 months, then we use the 
average of the 4-month period to calculate the measure rate. If a 
patient is treated for 5 months, we use the average from that 5-month 
period and so on. Relevant to concerns raised about the exclusion of 
patients who have just begun ESA therapy, the measure currently 
excludes new patients (less than 90 days since ESRD onset), and 
excludes claims for which there is no evidence of ESA use. We believe 
these exclusions address the commenters' concerns. Regarding the 
comment that hemoglobin levels at high altitude facilities are more 
likely to reach the measure threshold, we do not currently employ risk 
adjustment for the measure for this or other environmental factors that 
could conceivably have similar impacts. However, we plan to conduct 
monitoring and surveillance of our quality measures for issues such as 
geographical variation.
    Comment: One commenter argued that using patients' yearly averages 
for measures fails to test the actionability of the measures because it 
is difficult to identify areas of improvement until the end of the 
year. Instead, the commenter suggests ``per-facility averaging,''--
averaging of end-of-month hemoglobin results for each facility's 
patients, each month, then averaging up to 12 of those facility monthly 
averages, which this commenter argued allows facilities to know their 
year-to-date numerators and denominators, fostering ongoing quality 
incentive and process improvement.
    Response: We appreciate the commenter's suggestion regarding per-
facility averaging and all feedback to improve the usefulness of our 
quality measures to facilities. However, we believe that averaging 
hemoglobin over multiple patients in a facility would be inconsistent 
with medical guidance, which deals with patient specific situations. We 
believe that facilities should strive to provide the best care to each 
patient treated by the facility.
    Comment: One commenter requested confirmation that patients who are 
not

[[Page 67479]]

on ESA therapy are not included in the Hemoglobin Greater than 12 g/dL 
measure.
    Response: The measure rate is calculated using claims that include 
a hemoglobin level and ESA dosing information.
    Comment: Several commenters requested that we include a measure in 
the ESRD QIP that establishes a floor for hemoglobin, specifically 
noting that, because of the bundle, there may be a perceived financial 
incentive to underutilize ESAs. They argued that studies have shown 
that as hemoglobin drops below 10, mortality and hospitalization 
increase, and that hemoglobin levels affect a patient's quality of life 
(both empirically and anecdotally). Some commenters stated that we 
should reinstate the Hemoglobin Greater than 10 g/dL measure that we 
used in the PY 2012 ESRD QIP, arguing that the measure is reliable and 
is consistent with the FDA-approved labeling which recognizes the 
importance of transfusion avoidance and recommends that initiation of 
ESA therapy be considered when the hemoglobin level falls below 10 g/
dL. One commenter argued that patients should be allowed to make 
decisions about their quality of life and safety, even if that means 
keeping the hemoglobin level higher than recommended. Other commenters 
noted that patients with hemoglobin less than 10 g/dL are increasing, 
as are the rate of transfusions, and increased transfusions can 
decrease the chances of a successful transplant; in turn, failed 
transfusions can increase the cost of care since patients with 
transplants cost less than those on dialysis. One commenter stated that 
we should specifically consider reinstituting a hemoglobin floor if the 
United States Renal Data Service information shows that transfusion 
rates have risen significantly. Other commenters suggested that even if 
we do not adopt a measure for low hemoglobin, we report hemoglobin 
levels, transfusion rates, and ESA dosage on DFC and include the 
Hemoglobin Less than 10 g/dL measure on DFC. Finally, other commenters 
urged us to continue to monitor and support metrics such as 
transfusions, quality of life, reactivity to antibodies preventing 
transfusions, and underutilization of ESAs.
    Response: We thank the commenters for bringing to us their concerns 
about the ESRD PPS payment bundle potentially increasing the risk for 
underutilization of ESA therapy. As noted in the CY 2012 ESRD PPS final 
rule (76 FR 70257), we could not at the time identify a specific 
hemoglobin lower bound level that has been proven safe for all patients 
treated with ESAs, and the state of evidence supporting such a lower 
bound remains weak. For these reasons, we believe that the rationale 
for removing the Hemoglobin Less Than 10 g/dL measure from the ESRD QIP 
measure set remains valid. However, we recognize that the potential for 
ESA underutilization is an important issue. As noted in the CY 2012 
ESRD PPS final rule (76 FR 70257), we will continue to monitor the 
Medicare ESRD population for evidence of underutilization of ESAs, a 
rise in blood transfusions, and the replacement of ESA therapy with 
transfusions. Although we are no longer including the Hemoglobin Less 
than 10 g/dL measure in the ESRD QIP (and will no longer be publicly 
reporting it on DFC beginning January 2013), the results will be 
available via a downloadable file for facilities to provide for 
continued monitoring of the measure. Finally, we continue to work with 
stakeholders through a consensus-based measure development process to 
produce measures capable of addressing ESA underutilization and blood 
transfusions, while remaining consistent with the existing relevant 
guidelines and evidence base.
    We also appreciate comments encouraging us to move toward 
implementing quality of life and other patient-centered measures that 
address anemia management. These measurement domains are important to 
us and we plan to develop appropriate measures to be implemented in the 
ESRD QIP during future rulemaking.
    For the reasons stated above, we will continue to use the 
Hemoglobin Greater than 12 g/dL measure for PY 2015 and future years of 
the ESRD QIP. The technical specifications for this finalized measure 
can be found at http://www.dialysisreports.org/pdf/esrd/public-measures/AnemiaManagement-HGB-2015-FR.pdf
b. Vascular Access Type (VAT) Measure Topic
    Comment: Many commenters strongly supported our continued inclusion 
of the VAT measure topic in the PY 2015 ESRD QIP. Many commenters, 
however, also expressed concern that the composite measure over-
emphasizes fistulae, underemphasizes grafts, and, therefore, promotes 
inappropriate care in some cases. Commenters noted that fistulae are 
not suitable for some patients, fistulae take time to mature, and 
grafts are sometimes the most clinically appropriate. Several 
commenters asked us to decrease the emphasis on fistulae by developing 
a graft measure and, in the meantime, weight the catheter measure at 
\2/3\ of the VAT measure topic and the fistula measure at \1/3\ of the 
VAT measure topic. Other commenters urged us to take a ``fistula first, 
catheter last'' approach that would award some points for patients with 
grafts. Commenters were also concerned that the fistula standards are 
too stringent and could cause unintended consequences such as ``cherry-
picking'' patients who are not eligible for a fistula. Commenters 
suggested that we exclude or allow doctors to exclude certain patients 
from the measure's denominator providing for more individualized care, 
noting that studies show that facilities are unlikely to ``game'' such 
an exception.
    Response: As discussed in the CY 2011 ESRD PPS Final Rule, we 
continue to believe that the VAT measure topic and its respective 
weights incentivize the best care for ESRD beneficiaries (76 FR 70265, 
70275). Catheters are undesirable due to their high rate of 
complications, such as infections, and we discourage their use through 
the catheter measure. We believe that the preferred type of vascular 
access is an AV fistula due to lower rates of complications, which we 
promote through the fistula measure. Although grafts do decrease the 
risk of infections and complications when compared to catheters, grafts 
do not decrease these risks as much as fistulae. We, therefore, do not 
believe that grafts are either beneficial enough to be specifically 
rewarded or harmful enough to be specifically penalized. Furthermore, 
we do not believe it is in the best interest of patients to weight the 
fistula measure more than the catheter measure because our primary goal 
is to promote fistula use; we believe that both measures are equally 
important in promoting the best clinical practices with respect to VAT.
    We recognize that the catheter measure could incentivize ``cherry-
picking'' of patients, leading to access to care issues for patients 
with catheters. We are actively monitoring access to care and other 
potential issues associated with ``cherry-picking,'' and it is our 
intent to engage the community as we monitor these issues.
    Comment: One commenter encouraged us to promote fistulae in 
pediatric patients as well as adults.
    Response: We thank the commenter who encouraged the promotion of 
fistulae use in pediatric patients. The NQF-endorsed fistula measure 
excluded pediatric patients. Children on chronic dialysis have a 
fundamentally different psychosocial profile than adults. Fistula use, 
with its attendant frequent painful needle sticks are less commonly 
used in

[[Page 67480]]

children than adults. In addition, there are technical issues that make 
fistula creation more difficult in children. We will continue to 
investigate whether there are measures in existence or that could be 
developed for the purpose of appropriately addressing vascular access 
among pediatric patients and may propose to adopt one or more of these 
measures in future rulemaking.
    For the reasons listed above, we will continue to use the VAT 
measure topic for PY 2015 and future years of the ESRD QIP. The 
technical specifications for the finalized measures in this measure 
topic can be found at http://www.dialysisreports.org/pdf/esrd/public-measures/VascularAccess-Catheter-2015-FR.pdf and http://www.dialysisreports.org/pdf/esrd/public-measures/VascularAccess-Fistula-2015-FR.pdf.
c. In-center Hemodialysis Consumer Assessment of Healthcare Providers 
and Systems (ICH CAHPS)
    Comment: Many commenters supported the measure in its entirety. 
Many commenters supported monitoring patients' experiences, but believe 
the ICH CAHPS survey, with 57 questions, is too burdensome and lengthy 
for beneficiaries to complete. These commenters requested that we 
minimize this burden and suggested that the ICH CAHPS survey be parsed 
into three parts, with each patient receiving one of these parts and a 
group of core questions. Commenters also suggested that CMS allow 
facilities to give patients the survey and allow patients to return 
surveys via a ``drop-box'' at the facility or by mail to the third-
party administrator; commenters believe this approach will improve the 
response rate as patients are less likely to ignore the survey and one 
commenter noted that, without such an approach, the experiences of 
homeless patients will not be recorded.
    Response: As we noted in the 2012 ESRD PPS Final Rule, we continue 
to believe that assessing the experiences of patients is vital to 
quality care (76 FR 70269 through 70). Patient surveys can, and should, 
draw a facility's attention to issues that can only be raised by those 
receiving care. Although commenters may consider the survey to be 
burdensome to patients, the CAHPS tool went through extensive testing 
during development including focus groups and one-on-one patient 
sessions which assessed this burden and created specifications 
accordingly. Furthermore, we believe that concerns about patient burden 
can be at least partially mitigated without decreasing the number of 
questions on the survey or how the survey is administered. For example, 
as the specifications indicate,\3\ patients may take a break during the 
administration of the survey or take the survey in multiple sittings if 
they feel that the number of questions is too great to answer at one 
time. Finally, we do not believe that facilities should be permitted to 
give patients the survey at the facility and allow patients to submit 
these surveys via a ``drop box'' or any other method. We believe that 
patients are much more likely to truthfully respond to the surveys if 
they are perceived to be in no way connected to the facility; providing 
the surveys at the facility and allowing patients to return them by any 
means may lead to the patient to believe that his or her answers can be 
traced to him or her, and this thought may bias the surveys. Thus, we 
believe that this survey as it is currently specified is the best 
method available at this time to measure patient experience.
---------------------------------------------------------------------------

    \3\ See https://www.cahps.ahrq.gov/content/products/ICH/PROD_ICH_Intro.asp?p=1022&s=222.
---------------------------------------------------------------------------

    We thank commenters for bringing to our attention the hardships 
homeless patients may face in accessing the survey. Although we believe 
that the survey most accurately represents patients' experiences of 
care at this time, we will continue to evaluate how we can accurately 
capture all patient populations, including the homeless.
    Comment: One commenter suggested that CMS define a threshold for 
patients at which a facility would not need to administer the survey.
    Response: We recognize that there are many small dialysis 
facilities for which hiring a third-party administrator to fulfill the 
ICH CAHPS survey requirements is impractical or prohibitively costly. 
Therefore, beginning PY 2015, we will exempt any facilities that have 
treated (whether that patient was visiting the facility or otherwise) 
10 patients during the performance period or fewer that are qualified 
to take the survey. Patients are qualified to take the survey if they 
are adult, in-center hemodialysis patients. We believe that 11 patients 
(regardless of the number of times these patients were treated) is an 
appropriate threshold for applying the measure because it is consistent 
with the policy that we are finalizing for all measures in which we 
recognize that facilities with 10 or fewer patients in the denominator 
of a measure should be exempt from that measure. Although we are not 
requiring facilities to submit actual ICH CAHPS data at this time, we 
are considering collecting it in the future. We also intend to use the 
information collected from reporting measures for purposes of scoring 
clinical measures based on the same data in subsequent payment years 
and want to adopt a minimum reporting threshold that we can apply to 
all measures. For these reasons, we are finalizing that facilities must 
attest to administering the ICH CAHPS survey if they treat during the 
performance period at least 11 adult, in-center hemodialysis patients. 
We also finalize that we will consider a facility to have met the 11 
patient threshold unless it affirmatively attests in CROWNWeb that it 
treated 10 or fewer in-center, adult hemodialysis patients during the 
performance period. If a facility does not affirmatively attest to 
having treated 10 or fewer in-center, adult hemodialysis patients 
during the performance period, we will score it on this measure. 
Additionally, we are applying this policy to the NHSN Dialysis Event 
reporting measure, discussed below, because we intend to use the data 
from that measure to adopt a clinical measure in subsequent payment 
years. Unlike the ICH CAHPS measure, the NHSN measure applies to both 
adult and pediatric in-center hemodialysis patients. Therefore, we 
finalize that a facility must treat at least 11 in-center hemodialysis 
patients (whether adult or pediatric) during the performance period to 
be scored on the NHSN Dialysis Event reporting measure. To be 
considered a facility which has treated 10 or fewer in-center 
hemodialysis patients (whether adult or pediatric) during the 
performance period, the facility must make an attestation in CROWNWeb 
to this effect. If a facility does not make this attestation, we will 
score it on this measure.
    Comment: One commenter expressed concern that patients often do not 
answer the surveys honestly for fear of retaliation and the validity of 
the survey should be questioned.
    Response: We recognize that patients may feel pressure to answer 
questions in the survey favorably. We believe, however, this concern is 
mitigated because under the measure specifications, a third-party must 
administer the survey. These third-party administrators are not 
associated with facilities and do not report patient-specific data to 
the facilities. Therefore, the facility would have no knowledge of 
patient's answers.
    Comment: Several commenters expressed concern about CROWNWeb's 
ability to provide an adequate reporting system for this measure.
    Response: CROWNWeb was launched nationally in June of 2012, and we 
recognize that some facilities may still be familiarizing themselves 
with the

[[Page 67481]]

new system. As discussed, facilities are not required to report ICH 
CAHPS data to CROWNWeb or any other system; they are only required to 
make an attestation that they administered the surveys according to the 
specifications. The attestations for the ICH CAHPS measure for PY 2015 
are not due until the end of January 2014. We have no reason to believe 
that the attestation function will not be ready by the end of January 
2013, the PY 2014 deadline. We believe that by this time, facilities' 
transition period should have ended, and facilities will be able to 
successfully submit their attestations. Therefore, because the 
attestations should be ready in CROWNWeb by January 2013 for the PY 
2014 ESRD QIP, they should also be available in CROWNWeb for the PY 
2015 program.
    Comment: Many commenters noted that the ICH CAHPS measure's third-
party administration requirement imposes significant costs on 
facilities and that facilities should be allowed to include these costs 
in their cost reports.
    Response: Facilities may report allowable operating expenses in 
their Medicare cost reports. We believe that it is consistent with this 
payment policy for facilities to include the ICH CAHPS costs on their 
cost reports because they are allowable operating expenses.
    Comment: Several commenters urged us to adopt the ICH CAHPS measure 
as an outcome measure rather than a reporting measure. One commenter 
believes that, if we cannot implement the measure as an outcome measure 
for PY 2015, we should do the following in order to facilitate our 
adoption of an ICH CAHPS outcome measure as soon as possible: (i) 
Develop a standardized protocol and quality assurance guidelines for 
survey administration that are more detailed than the AHRQ 
requirements; (ii) contract with an experienced organization that can 
provide oversight for the ICH CAHPS program; and (iii) approve survey 
vendors. Another commenter argued that the survey should be limited to 
questions about the facility rather than the physician.
    Response: Currently, we are not able to include the ICH CAHPS 
survey as an outcome measure because we do not possess data from which 
we can set performance standards. We believe that it is important to 
adopt an outcome-based measure as soon as possible, and we are 
diligently working to ensure that it is a part of the program as soon 
as possible. To that end, we will be working to set up a survey vendor 
approval program; we believe that the specifications are appropriately 
detailed, but we will continue to assess whether they should be refined 
before we propose to adopt this survey as an outcome-based measure. 
Regarding the survey questions, the majority of the survey is limited 
to questions about the facility. Only seven of the 58 core questions 
are about the patients' nephrologists. There are 22 questions about the 
staff at the facility (not including the doctor), three about the 
center, and nine about treatment; the remaining questions capture 
demographic information. The continuous care received by dialysis 
patients makes them keenly aware of their primary doctors' involvement. 
To the extent that the questions are about the physician, we believe 
that they are appropriate because they are targeted at the nephrologist 
who is most involved in the patient's dialysis care.
    Comment: Commenters requested that we develop new measures of 
patient's experiences. One commenter argued that a measure should be 
developed that evaluates a patient's experience during each dialysis 
session because each experience can vary, and further argued that this 
type of evaluation would allow facilities to better assess why patients 
do not stay for entire treatments or miss treatments. Many commenters 
requested that we develop a CAHPS measure for home hemodialysis and 
peritoneal dialysis patients. Commenters also suggested that we make 
the responses to the surveys public.
    Response: We remain dedicated to developing and adopting measures 
of patient experiences of care in the ESRD QIP, specifically those 
patients who are treated at home. At this time we cannot operationally 
make the responses to the ICH CAHPS survey public because, as noted 
above, we do not possess the data; however, we will consider making 
these surveys public in future years if facilities are required to 
submit their ICH CAHPS data to CMS.
    For the reasons discussed above, we are finalizing the ICH CAHPS 
reporting measure for use in the PY 2015 ESRD QIP and future years of 
the program. We are also finalizing that the measure applies to 
facilities that treat a minimum of 11 in-center, adult hemodialysis 
patients during the performance period. We will consider a facility to 
have met the 11 in-center, adult hemodialysis patient threshold unless 
it affirmatively attests in CROWNWeb to having treated 10 or fewer 
adult, in-center hemodialysis patients during the performance period. 
If a facility does not make the attestation, we will score it 
accordingly. The technical specifications for this finalized measure 
can be found at http://www.dialysisreports.org/pdf/esrd/public-measures/ICHCAHPS-2015-FR.pdf.
2. Expansion of Two PY 2014 Measures for PY 2015 and Subsequent PYs
    As stated earlier, we believe it is important to continue using 
measures from one payment year to the next payment year of the program 
to encourage continued improvements in patient care. Therefore, we 
proposed to expand the requirements under two reporting measures that 
we adopted for the PY 2014 ESRD QIP. These proposed expanded 
requirements would apply to the measures for PY 2015 and subsequent 
payment years of the ESRD QIP.
a. Expanded National Healthcare Safety Network (NHSN) Dialysis Event 
Reporting Measure
    Hospital Acquired Infections (HAIs) are a leading cause of 
preventable mortality and morbidity across different settings in the 
healthcare sector, including dialysis facilities. In a national effort 
to reduce HAIs outcome, HHS agencies, including CMS and the Centers for 
Disease Control and Prevention (CDC) are working together to encourage 
facilities to report to the NHSN as a way to track and facilitate 
action intended to reduce HAIs. The NHSN is currently a secure, 
internet-based surveillance system that integrates patient and 
healthcare personnel safety surveillance systems managed by the 
Division of Healthcare Quality Promotion at the CDC. NHSN has been 
operational since 2006 and tracks data from acute care hospitals, long-
term care hospitals, psychiatric hospitals, rehabilitation hospitals, 
outpatient dialysis centers, ambulatory surgery centers, and long term 
care facilities. We believe that reporting dialysis events to the NHSN 
by all facilities supports national goals for patient safety, 
particularly goals for the reduction of HAIs.
    For the reasons stated above, we proposed to retain the NHSN 
Dialysis Event reporting measure that we adopted for the PY 2014 ESRD 
QIP (76 FR 70268 through 70269), but with an expanded reporting period. 
For PY 2014, ESRD facilities were required to: (i) Enroll in the NHSN 
and complete any training required by the CDC related to reporting 
dialysis events via the NHSN system; and (ii) submit three or more 
consecutive months of dialysis event data to the NHSN. For the PY 2015 
ESRD QIP and future payment years, we proposed to retain the NHSN 
measure and expand the reporting period to a full 12 months of dialysis 
event data. Although we expect most

[[Page 67482]]

facilities to have enrolled and trained in the NHSN dialysis event 
system by the end of CY 2012, we proposed that facilities that have not 
done so by January 1, 2013 or facilities that receive a CMS 
certification number (CCN) during 2013 must enroll and complete this 
training before reporting the data in order to fulfill the requirements 
of this reporting measure. The information reported to NHSN would be 
provided by the CDC to CMS for use in the ESRD QIP.
    As discussed in more detail below, we proposed that the performance 
period for the PY 2015 ESRD QIP would be CY 2013. We proposed that 
facilities must report dialysis event data monthly to the NHSN for this 
measure. We also proposed that facilities be granted a ``grace period'' 
of one month to report these data. For further information regarding 
the NHSN's dialysis event reporting protocols, please see http://www.cdc.gov/nhsn/psc_da_de.html. This link provides general 
information and links to more detailed, specialized information.
    We note that this proposed measure only applies to facilities 
treating patients in-center. For purposes of the NHSN Dialysis Event 
reporting measure, we determine whether a facility treats patients in-
center by referencing the facility's information in CMS data sources 
(that is, SIMS and CROWNWeb). Facilities report the types of patients 
that they serve in these data sources. If a facility lists in-center 
services, we proposed that the facility would be required to comply 
with the NHSN dialysis event reporting measure.
    Section 1881(h)(2)(B)(i) of the Act requires that, unless the 
exception set forth in section 1881(h)(2)(B)(ii) of the Act applies, 
the measures specified for the ESRD QIP under section 
1881(h)(2)(A)(iii) of the Act must have been endorsed by the entity 
with a contract under section 1890(a) of the Act (which is currently 
NQF). Under the exception set forth in 1881(h)(2)(B)(ii) of the Act, in 
the case of a specified area or medical topic determined appropriate by 
the Secretary for which a feasible and practical measure has not been 
endorsed by the entity with a contract under section 1890(a) of the 
Act, the Secretary may specify a measure that is not so endorsed so 
long as due consideration is given to measures that have been endorsed 
or adopted by a consensus organization identified by the Secretary.
    An NQF-endorsed bloodstream infection measure (NQF1460) 
exists and is collected by the CDC as part of dialysis event reporting 
in NHSN. This measure assesses the number of hemodialysis patients with 
positive blood cultures. This measure differs from the dialysis event 
reporting measure that we adopted for the PY 2014 ESRD QIP and proposed 
to expand beginning with the PY 2015 program because it evaluates the 
number of hemodialysis outpatients with positive blood cultures over a 
specified time period. By contrast, the NHSN Dialysis Event reporting 
measure that we proposed assesses facilities based on whether they 
enroll and report dialysis event data to the NHSN, not based on what 
the data reported are. We intend to propose to adopt NQF 1460 
once facilities have reported enough data to enable us to compute 
performance standards, achievement thresholds, improvement thresholds, 
and benchmarks for the measure.
    For the reasons stated in the CY 2012 ESRD PPS final rule (76 FR 
70268 through 69), we proposed to retain the measure and expand the 
reporting period for PY 2015 and future payment years of the program. 
We requested comment on this proposal, and noted that the technical 
specifications for this measure are located at http://www.dialysisreports.org/pdf/esrd/public-measures/NHSNDialysisReporting-2015-NPRM.pdf.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Many commenters supported the expansion of the NHSN 
Dialysis Event reporting measure, stating that monitoring the number of 
patients with access-related infections for an entire year will help 
the community better understand ways to reduce infection rates. Some 
commenters expressed concern with certain aspects of the measure. 
Several commenters expressed their concern about the burden of this 
measure, specifically highlighting the burden of manual data-entry and 
the staff hours demanded for this entry and oversight; one commenter 
noted that NQF criteria related to feasibility favor electronic 
collection and data collected during the course of care. Commenters 
argued further that manual data entry affects reliability, further 
affecting the baseline calculations for future measures. Many 
commenters suggested a batch download system. Some commenters noted 
that the CDC intends to make a Clinical Document Architecture (CDA) 
system available for batch entries, but expressed concern that the CDC 
CDA system will be available for individual facilities only (rather 
than for an entire corporation); others stated that they did not 
believe the CDA system will be ready for data entry by the end of CY 
2012. Commenters also stated that the NHSN system is yet another Web 
site to which ESRD facilities must report, reducing time staff can 
spend caring for patients. Finally, some commenters support the 
expansion of the measure, but only if the required monthly reporting is 
at the facility rather than the patient level.
    Response: We do not believe that this measure is unnecessarily 
burdensome. Monitoring vascular access infections following uniform 
definitions and utilizing the comparative rate data to evaluate and 
improve performance is part of providing good patient care. Although 
enrollment and training can be time-consuming, approximately 90 percent 
of all hemodialysis centers have already enrolled in NHSN. Furthermore, 
we believe that any burden a facility may face is outweighed by the 
importance of this measure since infections can often lead to serious 
complications, including death. Further to help decrease the burden, 
the CDC began allowing facilities to report to NHSN through imported 
CDA files on September 14, 2012. Using this function, any individual 
with Administrative Rights for a facility will be able to import that 
facility's specific CDA files that meet NHSN's formatting requirements. 
This includes large dialysis organizations that have given 
Administrative Rights to a single person for purposes of the entire (or 
some portion of) the organization. However, at this time each 
facility's files must be submitted separately. Because we are aware 
that large dialysis organizations (as well as many other dialysis 
companies) have given Administrative Rights to a single representative 
of the organization, we recognize that they will eventually be able to 
submit CDA data for a number of individual facilities, from a single 
central location, all through a single batch submission process. This 
batch data submission process is expected to be available in August 
2013. Finally, the monthly reporting required by the NHSN is at the 
facility level. Facility-level review of the data in NHSN is expected, 
whether the data are reported by facility staff or by a corporate 
representative. We believe that facilities have a direct role in 
preventing infections by collecting the NHSN Dialysis Event data, 
actively assessing their data, and regularly feeding back this 
information to clinical staff to improve practices.
    Comment: One commenter argued that the NHSN Dialysis Event 
reporting measure will not improve care because the system is not 
efficient and is not correlated to CROWNWeb. Many commenters urged us 
to synchronize NHSN and CROWNWeb data

[[Page 67483]]

requirements. Commenters also requested that CMS continue to use the 
same reporting schedule for PY 2015 as it will for PY 2014, allowing 
facilities to report quarterly with all data being required by March 
31, 2014. Commenters noted that quarterly reporting is important 
because this timeframe will allow facilities ample time to submit data 
correctly, stating that some infections take more than a month to 
identify and capture. One commenter recommended that we modify the 
requirements of this provision to allow a facility to report a full 12 
months of data by January 31, 2014. Other commenters urged us to ensure 
that the NHSN Dialysis Event reporting measure allows the NHSN system 
to remain a surveillance system.
    Response: We disagree with the comment that the NHSN Dialysis Event 
reporting measure will not improve care. Requiring facilities to report 
through the NHSN will allow us to monitor and better understand the 
causes of infections. Additionally, as we stated in the proposed rule 
(77 FR 40971 through 72), we intend to use the information gathered by 
this reporting measure to adopt a clinical measure in future years; 
this measure will encourage facilities to decrease the circumstances 
which lead to infections. Although we intend to use data from the NHSN 
to adopt a clinical measure, we will work with the CDC to ensure that 
the ESRD QIP does not unnecessarily limit the surveillance purposes of 
the NHSN system.
    Commenters are correct in that the NHSN Dialysis Event reporting 
measure data is not correlated to CROWNWeb. We recognize that CROWNWeb 
and the NHSN are two distinct systems which require reporting. At this 
time, we do not require infection reporting in CROWNWeb. We believe 
that it is more beneficial for both facilities and CMS to require 
infection reporting through the NHSN. The NHSN is a well-established 
secure, internet-based surveillance system that integrates patient and 
healthcare personnel safety surveillance systems managed by the 
Division of Healthcare Quality Promotion at the CDC; it is used by many 
other types of providers to report infections. We believe that NHSN's 
history and wide-spread surveillance make it the best mode of reporting 
dialysis events at this time.
    We do not agree with commenters' suggestions to extend the 
reporting timeline for the PY 2015 NHSN Dialysis Event reporting 
measure. The NHSN system recommends monthly reporting, and we believe 
it is important to adhere to the NHSN requirements as much as possible. 
However, to maximize data completeness and accuracy, facilities will be 
allowed to add to and modify the reported data until the performance 
period reporting deadline. Data for the entire performance period must 
be reported by April 15, 2014. We chose April 15, 2014 because this 
date allows facilities a full quarter after the performance period to 
review their data for completeness and accuracy. After consulting with 
the CDC, we believe that such a timeframe will maximize the reliability 
of the data and allow facilities to report any infections that 
developed during the performance period but that are identified after 
the performance period has ended.
    Comment: One commenter is concerned with the proposed expansion of 
this measure if NHSN data is not validated or audited for completeness. 
This commenter expressed specific concern that there could be 
surveillance bias in interpreting submitted data.
    Response: We recognize that bias exists because some facilities may 
be more likely to identify and report dialysis events than others. 
Varying degrees of completeness of the data could lead to inaccurate 
comparisons between facilities. The CDC and CMS are beginning to 
formulate a strategy to validate data for purposes of the ESRD QIP; we 
are committed to rigorous validation to identify inaccuracies and 
ensure reliability of the data.
    Comment: One commenter suggested that CDC standardize and clarify 
data definitions to ensure ``apples-to-apples'' comparisons and allow 
corporate oversight of data entered into the system for verification 
and reliability purposes. Another commenter stated that it does not 
support the adoption of a future NHSN Dialysis Event clinical measure 
because facility policies and procedures and physician practices vary 
widely with respect to the circumstances under which blood cultures are 
obtained and results are reported; this commenter requested that 
reporting be standardized before the measure is adopted.
    Response: The CDC develops protocols, definitions, and criteria for 
the purposes of standardizing reporting, and expects that all NHSN 
users strictly adhere to the protocol guidance for data that are 
reported into NHSN. The dialysis event surveillance reporting protocol 
is available on CDC's NHSN Web site and includes data definitions 
(http://www.cdc.gov/nhsn/PDFs/pscManual/8pscDialysisEventcurrent.pdf). 
Users may contact the NHSN help desk (NHSN@cdc.gov) for clarifications 
to these data definitions. We will continue to work with the CDC to 
monitor these concerns while we consider adopting a measure based on 
NHSN data for future years of the program.
    Comment: One commenter requested clarification regarding whether 
facilities are required to report infections occurring in the dialysis 
unit only, exempting the facilities for infections that result from 
care in other environments.
    Response: The measure specifications, which are available at 
(http://www.cdc.gov/nhsn/PDFs/pscManual/8pscDialysisEventcurrent.pdf), 
provide that positive blood cultures occurring within one calendar day 
after a hospital admission must also be reported. For further 
clarification on reportable event definitions and considerations 
surrounding attribution, please contact the NHSN help desk 
(NHSN@cdc.gov).
    Comment: One commenter asked us to confirm that, as long as the 
census data is reported every month, the facility may attest to having 
met the requirements for the NHSN measure.
    Response: For the reasons discussed above, we finalize that a 
facility may attest for purposes of being exempt from reporting for the 
NHSN dialysis event measure if it treats fewer than 11 in-center 
hemodialysis patients during the performance period. If a facility 
treats 11 or more in-center hemodialysis patients, we will score the 
facility based on whether it reported data to the NHSN.
    Comment: One commenter urged us to develop a measure which targets 
the cause of the infections. Another commenter suggested that CMS 
consider adding NHSN dialysis specific indicators, perhaps in stages, 
such as local access site infection, access-related bloodstream 
infection, and vascular access infection to the NHSN surveillance data.
    Response: We thank commenters for these suggestions. We acknowledge 
that preventing and monitoring infections is crucial to patient care. 
We will continue to work with the dialysis community to include robust 
infection measures in the ESRD QIP.
    Comment: Many commenters support our proposed transition of the 
NHSN Dialysis Event reporting measure to a clinical measure using the 
NQF-endorsed measure 1460. Some commenters urged us to adopt 
the clinical measure in PY 2015. Other commenters, however, suggested 
that we allow sufficient time to ensure that NHSN data can be reported 
without additional burden to providers. One commenter suggested that, 
once the measure is adopted as a clinical measure, we interpret the 
rate of positive blood cultures against the

[[Page 67484]]

facility's rate of empiric antibiotic treatment, since some facilities 
treat empirically rather than through taking blood cultures.
    Response: We thank commenters for supporting our proposal to adopt 
the NQF-endorsed infection measure for future years of the program. We 
are unable to adopt the NQF-endorsed clinical measure for PY 2015 
because we have not yet gathered data on which we can base performance 
standards. For purposes of the ESRD QIP, facilities began reporting to 
the NHSN during 2012; to receive full points on the measure for PY 
2014, facilities need only to report three months of data. We do not 
believe it is appropriate to base performance standards on three months 
of data for purposes of an infection measure because infections can 
vary by season. We believe that using a 12-month period for setting 
these standards will prove more accurate. Because we are requiring 12 
months of data for the PY 2015 ESRD QIP, we believe we can use this 
information to adopt standards for a clinical measure in future years. 
Additionally, we agree with the commenters who believe that it may be 
necessary for facilities to become more familiar with the NHSN system 
before we adopt a clinical measure.
    We thank the commenter who suggested that we interpret the rate of 
positive blood cultures against the facility's rate of empiric 
antibiotic treatments to account for facilities that might treat 
patients empirically for infection without drawing cultures. The NHSN 
collects information on IV antimicrobial starts, in part, for this 
reason. Providers are expected to adhere to standards of clinical 
practice, which include obtaining blood cultures prior to antibiotic 
administration for suspected bloodstream infections.
    Comment: One commenter stated its support for the adoption of an 
MRSA standardized infection rate clinical measure.
    Response: We thank the commenter for providing this suggestion and 
will take it into consideration in future measure development and 
rulemaking.
    For the reasons stated above, we finalize the NHSN Dialysis Event 
reporting measure as proposed except for the following; a facility must 
treat at least 11 in-center hemodialysis patients (both adult and 
pediatric) during the performance period to be scored on the NHSN 
Dialysis Event reporting measure, as noted above. To be considered a 
facility which has treated 10 or fewer in-center hemodialysis patients 
during the performance period, the facility must make an attestation in 
CROWNWeb to this effect. If a facility does not make this attestation, 
we will score it accordingly. Additionally, we recommend that 
facilities report monthly to the NHSN. Data for the entire performance 
period must be reported by April 15, 2014. The technical specifications 
for this finalized measure can be found at http://www.dialysisreports.org/pdf/esrd/public-measures/NHSNDialysisReporting-2015-FR.pdf.
b. Expanded Mineral Metabolism Reporting Measure
    Undertreatment of bone mineral metabolism disease can cause severe 
consequences for ESRD patients. For PY 2014, it was not yet feasible 
for us to adopt a clinical measure evaluating facilities based on their 
patients' bone mineral metabolism rates because facilities did not 
report serum phosphorus and serum calcium values during the baseline 
and performance periods that we finalized with respect to that year. 
Instead, for PY 2014, we finalized a measure assessing whether 
facilities routinely monitored the serum calcium and serum phosphorus 
levels in their patients. For PY 2015, we proposed to expand this 
measure by requiring facilities to report a serum calcium and serum 
phosphorus level for each qualifying patient each month according to 
the requirements in CROWNWeb. Facilities would be required to enter 
these values into CROWNWeb on a monthly basis. Facilities would be 
granted a ``grace period'' of one month to enter the data. For example, 
we would require a facility to report serum calcium and serum 
phosphorus data for January 2013 on or before February 28, 2013. The 
final month of data from the performance period would be reported on or 
before January 31, 2014.
    We do not intend for this measure to encourage unnecessary testing 
or unduly burden a facility. Consequently, for purposes of scoring the 
measure, we considered proposing to require facilities to report the 
required information for less than 100 percent of their patients. 
Specifically, we considered lowering the threshold to reporting 98 
percent of patients for a month in order to receive credit for that 
month. We chose 98 percent in order to encourage improvement, and to 
ensure that we do not undermine the current level of high-reporting 
(based on the CROWNWeb pilot data). We recognize that 100 percent might 
not be appropriate due to some individual cases that may not fit 
specified criteria. We ultimately proposed that a facility should be 
required to take and report these values for every patient at least 
once per month so that each beneficiary receives the highest standard 
of care. We noted, however, that there are circumstances beyond a 
facility's control wherein it may not be able to draw a sample for this 
patient. Therefore, we did not propose that the facility itself must 
draw the serum phosphorus and serum calcium levels. If, for example, a 
patient is hospitalized or transient during a claim month, we proposed 
that the facility may report the serum calcium and serum phosphorus 
readings for the patient for a month if a patient has labs drawn by 
another provider/facility and those labs are evaluated by an accredited 
laboratory (a laboratory that is accredited by, for example, the Joint 
Commission, the College of American Pathologists, the AAB (American 
Association of Bioanalysts), or State or Federal agency), and the 
dialysis facility obtains the serum calcium and serum phosphorus 
readings. Additionally, we proposed to only consider a patient 
qualified for this measure (i) if the patient is alive at the end of 
the month; (ii) if the patient is treated in-center, that patient was 
treated at that facility at least twice during the claim month; and 
(iii) if the patient receives dialysis at home, a claim is submitted 
for that patient. We stated our belief that that these proposals will 
provide more flexibility for facilities and will also discourage 
facilities from drawing blood, even when not necessary, for fear that 
the patient will fail to come to the facility again during that month. 
We requested comment on these proposals. We also requested comment on 
whether facilities should only have to report data for 98 percent of 
their patients.
    Section 1881(h)(2)(B)(i) of the Act requires that, unless the 
exception set forth in section 1881(h)(2)(B)(ii) applies, the measures 
specified for the ESRD QIP under section 1881(h)(2)(A)(iii) of the Act 
must have been endorsed by the entity with a contract under section 
1890(a) of the Act (which is currently NQF). Under the exception set 
forth in 1881(h)(2)(B)(ii) of the Act, in the case of a specified area 
or medical topic determined appropriate by the Secretary for which a 
feasible and practical measure has not been endorsed by the entity with 
a contract under section 1890(a) of the Act, the Secretary may specify 
a measure that is not so endorsed so long as due consideration is given 
to measures that have been endorsed or adopted by a consensus 
organization identified by the Secretary.
    An NQF-endorsed measure assessing hypercalcemia exists (NQF 
1454) and we proposed to adopt this measure for the PY 2015 
ESRD QIP and subsequent

[[Page 67485]]

payment years, as further discussed below. The NQF-endorsed 
hypercalcemia measure, however, does not score facilities based only on 
whether or not that facility reported serum calcium values. The Mineral 
Metabolism reporting measure, unlike the Hypercalcemia measure, would 
assess only whether facilities report serum calcium and serum 
phosphorus values. It would not score facilities based on the actual 
values that they report. We stated our belief that it is important to 
continue to encourage reporting independent of a measure that scores 
based on the actual values reported because we need such values to 
monitor aspects of bone mineral metabolism, for example phosphorus 
management, independent of hypercalcemia; we noted that this 
information will allow us to develop comprehensive bone mineral 
metabolism measures for use in future years of the ESRD QIP.
    In the CY 2012 ESRD PPS final rule, we discussed the basis for the 
Mineral Metabolism reporting measure (76 FR 70270 through 71). We 
stated that ``the NQF has previously endorsed phosphorus and calcium 
monitoring measures (NQF 0261 and NQF 0255) and, in 
2008, we adopted serum calcium and serum phosphorus monitoring as 
Clinical Performance Measures (http://www.dialysisreports.org/ESRDMeasures.aspx).'' The NQF measures referenced above call for 
monitoring these serum calcium and serum phosphorus values, but they do 
not require actual reporting of these values, as is the intent of the 
Mineral Metabolism reporting measure.
    For these reasons, we proposed to expand the Mineral Metabolism 
reporting measure for PY 2015 and subsequent payment years under 
1881(h)(2)(B)(ii) of the Act. The technical specifications for this 
measure can be found at http://www.dialysisreports.org/pdf/esrd/public-measures/MineralMetabolism-Reporting-2015-NPRM.pdf. We further noted 
that requiring the reporting of serum calcium and serum phosphorus 
levels for the PY 2015 ESRD QIP will allow us to develop mineral 
metabolism measures based on clinical data in the future. We requested 
comment on these proposals to expand the Mineral Metabolism reporting 
measure.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Many commenters generally supported this measure, but 
requested that we make modifications to our proposed exclusions. These 
commenters suggested that we exclude, for all of the reporting 
measures, the following patients: (i) Beneficiaries who are regularly 
treated at the facility and who fit into one of these categories: (a) 
Beneficiaries who die within the applicable month; (b) beneficiaries 
that receive fewer than 7 treatments in a month; and (c) beneficiaries 
receiving home dialysis therapy who miss their in-center appointments 
when there is a documented, good faith effort to have them participate 
in such a visit during the applicable month; (ii) transient dialysis 
patients; (iii) pediatric patients (unless the measure is specific to 
this population); and (iv) kidney transplant recipients with a 
functioning graft. Commenters stated that these exclusions are 
consistent with our own measures reported on DFC. Additionally, 
commenters stated that these exclusions seek to hold facilities 
accountable only for those beneficiaries to whom they regularly give 
care and for whose care they can affect. Another commenter, however, 
stated that we should not implement other commenters' suggestions that 
we exclude beneficiaries receiving home dialysis therapy who miss their 
in-center appointments when there is a documented, good faith effort to 
have them participate in such a visit during the applicable month; this 
commenter stated that it is the responsibility of the facilities to 
educate patients on the importance of making and keeping appointments. 
Additionally the commenter argued that ``good faith'' is too vague; 
commenter requested that, if we did adopt this exclusion, we clearly 
define a ``good faith effort.''
    Response: Upon further review, we agree with commenters who believe 
that the exclusions should be modified. We recognize that treating a 
patient twice may not provide enough time to effectuate quality patient 
care. We agree with the commenters who suggested that an in-center 
hemodialysis patient should be excluded if treated by a facility fewer 
than seven times during the month, regardless of whether the patient is 
officially admitted to that facility. With seven treatments, we believe 
that a facility should have had adequate opportunities to draw blood 
necessary to report serum calcium and phosphorus levels. We also 
believe that the threshold of seven will discourage unnecessary testing 
of in-center hemodialysis patients by facilities because they will know 
that, since in-center patients are typically treated three times per 
week, a patient must have been treated by the facility for at least two 
weeks to be included; thus, the facility need not feel pressure to draw 
blood for every patient for the first few visits of the month. Based on 
these considerations, we will not finalize our proposal to exclude only 
in-center patients who have been treated fewer than two times by the 
facility during the claim month. Instead, we will exclude any in-center 
patient who is treated by the facility fewer than seven times during 
the reporting month.
    We do not believe that it is necessary to specifically exclude 
transient patients from this measure because, as noted, any patient 
that is treated by the facility at least seven times during the 
applicable reporting month is present at the facility for enough time 
that the facility should be held accountable for that patient. 
Likewise, for the same reasons mentioned above, we do not believe we 
need to separately exclude patients who are deceased at the end of the 
reporting month. Provided that the patient is treated by the facility 
at least seven times during that month, the facility should be able to 
draw blood necessary to report serum calcium and serum phosphorus 
levels even if that patient is deceased at the end of the month.
    We continue to believe that facilities should be required to report 
the serum calcium and phosphorus levels of home dialysis patients 
irrespective of whether those patients attend a monthly appointment. We 
believe that it is incumbent upon a facility to make home dialysis 
patients aware that they must attend monthly appointments to be 
properly treated. In addition, since the mechanisms that cause 
cardiovascular and bone disease do not differ between home and in-
center hemodialysis patients, we believe that the inclusion of home 
dialysis patients in the Mineral Metabolism reporting measure is 
appropriate. Therefore we will finalize our proposal that we will 
include any home hemodialysis patient for which a facility submits a 
claim with respect to the reporting month in this measure.
    We also believe it is important to include transplant patients 
until they are officially discharged from a facility; regular 
monitoring can help ensure that a transplant remains effective and that 
the facility is continuing to provide the best care possible.
    We believe it is important to monitor serum calcium and serum 
phosphorus levels in adult and pediatric patients alike because 
improper bone mineral metabolism management can lead to serious, 
negative outcomes, including death, in both populations. Although we 
are aware that specific target values for calcium and phosphorus have 
not been set for the pediatric population, we still believe that this 
measure will lead to

[[Page 67486]]

better observation of mineral metabolism in these patients if one or 
both of these values are unusually high or low. Additionally, we 
believe that the inclusion of pediatric patients in this measure is 
consistent with current guidelines on the frequency of mineral 
metabolism testing as reported in KDIGO guidelines chapter 3 
``Diagnosis of CKD-MBD: biochemical abnormalities.'' Thus, we believe 
that this measure is appropriate for both adult and pediatric patients.
    For the reasons stated above, we finalize that facilities must 
report in CROWNWeb the serum calcium and serum phosphorus levels on a 
monthly basis for (i) in-center Medicare patients who have been treated 
at least seven times by the facility; and (ii) home hemodialysis 
Medicare patients for whom the facility submits a claim.
    Comment: Several commenters encouraged us to not adopt a percentage 
reporting threshold because it would not distinguish between 
beneficiaries legitimately excluded and those that were merely missed. 
Other commenters requested that we use both exclusions and a threshold; 
one commenter suggested a threshold of 90 percent or an allowance of 
two patients to ensure that small facilities are not disproportionally 
affected. Another commenter stated that requiring 98 percent reporting 
may make it difficult for patients to travel because dialysis 
facilities may encourage them otherwise to ensure compliance with the 
measure. One commenter requested that we provide guidance regarding the 
standardization of blood-draws so that data can be reliable before we 
implement a reporting threshold.
    Response: We agree with the commenters who argued that, even with 
exclusions, there are circumstances in which facilities cannot report 
the serum calcium and serum phosphorus levels for every patient at 
least once per month. For example, a facility may wait to draw blood 
from a patient because it believes that the patient will be treated for 
the entirety of the month, but learns that the patient has been 
hospitalized unexpectedly for all or part of the applicable month. 
Therefore, we believe that we should not require an attestation of 100 
percent monitoring. Based on data from the CROWNWeb pilot, we believe 
that facilities are generally able to report serum calcium and serum 
phosphorus for approximately 96 percent of their patients. As 
commenters have argued, the information in CROWNWeb, however, was 
voluntarily reported which may mean that the data is biased toward 
facilities that value reporting; additionally, the data from the 
CROWNWeb pilot was mainly supplied by LDOs that may be more likely to 
have more resources and corporate policies that require reporting 
compliance. Furthermore, such a high percentage requirement may 
disadvantage small facilities. For example, if a facility has 10 
patients, failure to report for one patient will drop that facility's 
reporting rate to below 90 percent.
    Taking all of these issues into consideration, we finalize a 
normative reporting threshold for this measure; facilities will be 
required to report at the rate of the 50th percentile of all facilities 
in 2013 for each month of the performance period in order to gain 10 
points on the measure. However, if the 50th percentile of all 
facilities in 2013 is greater than 97 percent, facilities will only be 
required to report monthly for 97 percent, in total, of their (i) in-
center Medicare patients who have been treated at least seven times by 
the facility; and (ii) home hemodialysis Medicare patients for whom the 
facility submits a claim. This floor ensures that facilities are not 
penalized as long as they improve by one percent above the reporting 
rates in the CROWNWeb pilot; that is, facilities know that, provided 
they reach 97 percent for each month of the performance period, they 
will meet the requirements of the measure. We believe that it is 
important to adopt a reporting rate of 97 percent in PY 2015 to ensure 
continued improvement. We believe that this methodology fairly balances 
the concerns that the reporting in CROWNWeb is skewed with our desire 
to encourage continued improvement in the community.
    We are concerned that small facilities may be disproportionately 
impacted by the reporting threshold because, for example, a facility 
with 10 patients could fail to report for only one patient and, 
therefore, fail to meet the threshold. As we have stated, we intend to 
use the information collected from reporting measures for purposes of 
scoring clinical measures based on the same data in subsequent payment 
years. Therefore, we will not require a facility to report this measure 
if it treats fewer than 11 (i) in-center Medicare patients who have 
been treated at least seven times by the facility; and (ii) home 
hemodialysis Medicare patients for whom the facility submits a claim. 
If a facility does not treat at least 11 of these patients during the 
performance period, it will be required to attest to this fact via 
CROWNWeb. If a facility does not make the attestation, we will score it 
accordingly.
    Comment: Some commenters did not support including this measure in 
PY 2015. One commenter argued that it is inappropriate to adopt this 
measure because it is not-NQF endorsed, nor. One commenter stated that 
it is inappropriate to adopt this measure under the exception set forth 
in the statute for measures which are not NQF-endorsed; this commenter 
stated that the NQF process ensures that measures have gone through a 
rigorous evaluation process, including reliability and validity. Some 
commenters argued that this measure should be deferred because we have 
not articulated the intent of the data collection or explained the 
measure for which we intend to ultimately use these data. Several 
commenters do not support this measure because facilities already 
collect these data so the measure is unlikely to improve care, and they 
requested that we adopt a measure based on outcomes. One commenter does 
not support adoption of this measure because, it contends, Kidney 
Disease: Improving Global Outcomes (KDIGO) has not indicated that serum 
calcium and serum phosphorus must be reported on a monthly basis. 
Further, the commenter argues that although it is customary to measure 
serum calcium and phosphorus monthly, there is no evidence that it 
indicates quality care.
    Response: KDIGO recommends monthly measurements (see Table 13 on 
internet document titled ``Kidney Disease Improving Global Outcomes 
Clinical Practice Guideline for the Diagnosis, Evaluation, Prevention, 
and Treatment of Chronic Kidney Disease-Mineral and Bone Disorder (CKD-
MBD)'' at http://www.kdigo.org/guidelines/mbd/guide3.html#chap31)). 
KDIGO also emphasizes the importance of following trends versus single 
measurements, thus supporting relatively frequent measurements (for 
example, monthly). There is evidence that calcium and phosphorus levels 
may be associated with clinical outcomes. Monthly measurements will 
serve to identify elevated levels of serum calcium and phosphorus and 
trigger therapeutic interventions, thus contributing to high quality 
care. Because of these important considerations, and for the reasons 
stated above, we believe that it is important to adopt this measure 
even though it is not NQF-endorsed. We disagree that it is 
inappropriate to adopt a measure not endorsed by NQF under the 
exception set forth in the statute. We believe the exception language 
was intended for such a circumstance where an endorsed measure is not 
available for implementation to address key issues described in the 
statute, such as mineral

[[Page 67487]]

metabolism. We will continue to work toward the development and 
implementation of appropriate, NQF-endorsed measures to support the 
ESRD QIP.
    Comment: Many commenters noted that it is impractical for 
facilities to obtain lab values from other providers because other 
providers are not required to measure these data, do not share data 
with dialysis facilities, and, even if facilities could obtain these 
data, they could not be sure that the lab values were consistent or 
reported under the same standards. Finally, these commenters stated 
that CROWNWeb does not permit facilities to submit data obtained from 
other providers if the lab result is outside the admission or discharge 
date.
    Response: We recognize that it may be difficult for facilities to 
coordinate with hospitals and other care providers in order to obtain 
lab values. Therefore, we are not mandating facilities to do so. In the 
CY 2013 ESRD PPS proposed rule (77 FR 40969), we stated that facilities 
may obtain lab values from other providers. This proposal was 
specifically designed to afford facilities more flexibility in 
acquiring and reporting serum calcium and serum phosphorus values. As 
discussed previously in this preamble, facilities are highly encouraged 
to coordinate with other providers, but the ESRD QIP does not mandate 
them to do so. We believe that the commenters' concerns about 
inconsistent lab data are mitigated by the requirement that the lab 
must be accredited. Finally, the commenter is right in that CROWNWeb 
does not allow facilities to submit data obtained from other providers 
if the lab result is outside the admission or discharge date. As long 
as the patient is treated at least seven times by the facility during 
the applicable reporting month, however, the facility will be required 
to report the patient's serum phosphorus and calcium levels regardless 
of whether the patient also has blood drawn elsewhere (for example, as 
a result of a hospitalization) during the month.
    Comment: Many commenters encouraged us to monitor, in addition to 
phosphorus and calcium, serum levels of parathyroid hormone (PTH), 
arguing that proper bone mineral management must take all three factors 
into account. Commenters also encouraged us to adopt measures in all of 
these areas.
    Response: We thank those commenters who advocated the monitoring of 
PTH. We recognize the important role played by parathyroid hormone in 
mineral metabolism in the ESRD population, and will pursue avenues by 
which we may monitor serum levels of parathyroid hormone in the future.
    As explained above, we are modifying our proposed exclusions and 
finalizing that any facility must report serum calcium and serum 
phosphorus levels for all (i) in-center Medicare patients who have been 
treated at least seven times by the facility; and (ii) home 
hemodialysis Medicare patients for whom the facility submits a claim 
least once per month via CROWNWeb at the lesser of the 50th percentile 
of facilities in 2013 or 97 percent per month to receive 10 points on 
the measure. We also finalize that we will only apply this measure to 
facilities with at least 11 (i) in-center Medicare patients who have 
been treated at least seven times by the facility; and (ii) home 
hemodialysis Medicare patients for whom the facility submits a claim. 
Facilities who treat less than 11 of these patients during the 
performance period must attest to this fact in CROWNWeb. If they do not 
make this attestation, we will score them accordingly. The technical 
specifications for this finalized measure can be found at http://www.dialysisreports.org/pdf/esrd/public-measures/MineralMetabolism-Reporting-2015-FR.pdf.
3. New Measures for PY 2015 and Subsequent PYs of the ESRD QIP
    As the program evolves, we believe it is important to continue to 
evaluate and expand the measures selected for the ESRD QIP. Therefore, 
for the PY 2015 ESRD QIP and subsequent payment years, we proposed to 
adopt five new measures. The proposed new measures include: Three 
measures of dialysis adequacy (together comprising one dialysis 
adequacy measure topic); one measure of hypercalcemia; and one 
reporting measure related to hemoglobin and ESA dosages for all 
patients.
a. Kt/V Dialysis Adequacy Measure Topic
    Section 1881(h)(2)(A)(i) states that the ESRD QIP must evaluate 
facilities based on measures of ``dialysis adequacy.'' For PYs 2012 
through 2014, the ESRD QIP included a hemodialysis adequacy measure 
evaluating the number of patients with a URR of at least 65 percent. 
For the PY 2015 ESRD QIP, and future payment years, we proposed to 
remove the URR Hemodialysis Adequacy measure. In its place, we proposed 
to adopt three measures of dialysis adequacy (together comprising one 
dialysis adequacy measure topic) based on Kt/V (K = clearance, t = 
dialysis time, and V = volume of distribution) for the PY 2015 ESRD QIP 
and future payment years of the program. Kt/V is a widely accepted 
measure of dialysis adequacy in the ESRD community because it takes 
into account the amount of urea removed with excess fluid. Further, 
while the URR Hemodialysis Adequacy measure only applies to in-center 
hemodialysis patients, we stated that the proposed Kt/V measures will 
allow us to evaluate dialysis adequacy in adult hemodialysis (HD) 
patients (in-center and home hemodialysis (HHD)) receiving three 
treatments weekly, adult peritoneal dialysis (PD) patients, and 
pediatric HD patients receiving three to four treatments weekly. We 
proposed to adopt the following NQF-endorsed Kt/V measures of dialysis 
adequacy, each one applicable to a different patient population:
    (i) NQF 0249: Hemodialysis Adequacy Clinical Performance 
Measure III: Hemodialysis Adequacy--HD Adequacy--Minimum Delivered 
Hemodialysis Dose;
    (ii) NQF 0318: Peritoneal Dialysis Adequacy Clinical 
Performance Measure III--Delivered Dose of Peritoneal Dialysis Above 
Minimum; and
    (iii) NQF 1423: Minimum spKt/V for Pediatric Hemodialysis 
Patients. The proposed measures assess whether Medicare dialysis 
patients (PD, HD, and pediatric hemodialysis) meet the modality 
specific Kt/V threshold. Performance on the measures is expressed as a 
proportion of patient-months meeting the measure threshold. The 
technical specifications for these measures can be found at http://www.dialysisreports.org/pdf/esrd/public-measures/PediatricHemodialysisAdequacy-ktv-2015-NPRM.pdf; http://www.dialysisreports.org/pdf/esrd/public-measures/PeritonealDialysisAdequacy-ktv-2015-NPRM.pdf; and http://www.dialysisreports.org/pdf/esrd/public-measures/HemodialysisAdequacy-ktv-2015-NPRM.pdf.
    We requested comment on these proposals. The comments we received 
on these proposals and our responses are set forth below.
i. Adult Hemodialysis Adequacy
    Comment: The majority of commenters strongly supported the adoption 
of this measure and the removal of URR as a measure of dialysis 
adequacy, stating that the measure is more accurate and used more 
widely by the dialysis community. Other commenters, however, stated 
that URR is a more appropriate measure of dialysis adequacy because Kt/
V is dependent upon many factors, including mid-week sampling, accurate 
urine collection, and dialysis

[[Page 67488]]

prescriptions, whereas URR needs only pre- and post-blood draws. One 
commenter did not support a Kt/V measure because it only promotes 
``adequacy'' rather than optimal health, urea is not associated with 
toxicity, it does not take into account ultrafiltration, and it is only 
a point in time measurement. Some commenters supported the adoption of 
Kt/V as a measure of dialysis adequacy for hemodialysis patients, but 
requested that we delay implementation until PY 2016 so that we can 
ensure the data we are using to calculate achievement thresholds, 
benchmarks, and performance standards were calculated using consistent 
methodology. One commenter suggested that we include Kt/V in PY 2015, 
but calculate rates for performance standards, benchmarks, and 
thresholds based on data from January 1, 2012-June 30, 2012 since these 
dates would include only data that were calculated using the NQF-
endorsed formulae. Finally, one commenter stated that we should request 
raw data from facilities and calculate Kt/V to ensure consistency.
    Response: We thank those commenters who supported the 
implementation of these measures. We note that the published literature 
suggests there is insufficient evidence to support the superiority of 
alternative measures of small solute clearance over spKt/V. The KDOQI 
Clinical Practice Guideline for Methods for Measuring and Expressing 
Hemodialysis Dose (CPG 2) also state that ``the delivered Kt/V 
determined by single-pool urea kinetic modeling continues to be 
preferred as the most precise and accurate measure of dialysis'' (page 
12, KDOQI 2006 Update). Furthermore, the minimum delivered hemodialysis 
dose for both adult and pediatric patients, spKt/V>=1.2, was endorsed 
by NQF in 2007. Regarding concerns about the use of consistent 
methodology in the calculation of performance standards, beginning in 
January 2012, the measure specifications for adult and pediatric 
hemodialysis Kt/V state that single-pool Kt/V be measured using 
Daugirdas II or Urea Kinetic Modeling. We anticipate that these 
specifications will provide valid and consistent spKt/V values.
    We thank the commenter for the suggestion of utilizing data from 
January 1, 2012-June 30, 2012 to set achievement thresholds, 
benchmarks, and performance standards. We believe, however, that 
whenever possible, these values should be based on a full year of data 
since these data, although not necessarily calculated using the same 
NQF-endorsed methodology, represent any changes that may occur as a 
result of seasonality. Additionally, utilizing this timeframe will 
enable us to post the numerical values of the performance standards as 
soon as they are available in December 2012 or January 2013.
    We thank the commenter for the suggestion of collecting raw data 
rather than calculated spKt/V values. At this time, we are not 
operationally able to request these elements on claims. We will 
consider this suggestion in future years of the program.
    Comment: Several commenters supported the measure but requested 
that we refine it to specify that the calculated spKt/V include 
estimates of residual renal function (RRF) to avoid incentivizing 
improper, longer dialysis sessions for these patients; one commenter 
recommended that, consistent with KDOQI guidance, RRF be included in 
spKt/V only if the urine collection used to measure it was within the 
previous 90 days. Commenters also requested that we exclude patients 
dialyzing four or more times per week or overnight and include patients 
with Kt/V less than 2.5 since many patients achieve these values.
    Response: Consistent with the 2006 KDOQI Clinical Guidelines for 
hemodialysis adequacy, we do not find published, medical evidence to 
support the inclusion of RRF in defining the minimum target spKt/V. 
Additionally, effective January 2012, the Medicare claims processing 
instructions specifically state that the reported spKt/V should not 
include RRF. We currently exclude patients dialyzing four or more times 
per week from the adult HD measure because this exclusion was NQF-
endorsed.
    According to the measure specifications, overnight dialysis 
patients are included in the HD spKt/V measure unless they are 
dialyzing less than two or greater than four times per week, or if they 
are in the first 90 days of ESRD treatment. We do not currently have 
the ability to identify patients who are receiving thrice weekly in-
center nocturnal hemodialysis and do not have a measure specific to 
this population. We are currently working with stakeholders to develop 
adequacy measures to address frequent, home, and nocturnal hemodialysis 
patients for future years of the ESRD QIP.
    Finally, patients with spKt/V less than 0.5 or greater than 2.5 are 
excluded from the Kt/V adult hemodialysis dialysis adequacy measure. 
Patients with HD spKt/V values greater than 2.5 are excluded from the 
measure calculation as these values are considered implausible for most 
hemodialysis patients.
    Comment: Commenter stated that spKt/V does not reflect patients on 
short daily, frequent, and nocturnal dialysis and should be updated 
accordingly. Another commenter requested that we develop a spKt/V 
measure for home dialyzers.
    Response: We are currently working with stakeholders to develop 
adequacy measures to address other members of the ESRD population (i.e. 
frequent, home, and nocturnal hemodialysis patients) for future years 
of the ESRD QIP.
    Comment: One commenter requested that we specify that the lab draw 
for this measure should be done mid-week to better reflect patients' 
actual conditions.
    Response: Under the measure specifications for the Kt/V adult 
hemodialysis adequacy measure, facilities are required to report the 
last spKt/V measurement of the month. The NQF-endorsed measures for 
minimum dialysis adequacy for both pediatric and adult patients do not 
adjust for the day of the week; a minimum target value of spKt/V 
greater than or equal to 1.2 should be achieved regardless of when this 
is measured. We appreciate your suggestion and will take it under 
consideration during our ongoing measure maintenance.
    Comment: One commenter stated that ``dialysis adequacy'' is a 
misnomer because it does not provide a full picture of dialysis 
adequacy. Instead, the commenter suggests it be called a measure of 
``urea removal,'' encouraging stakeholders to develop measures that are 
more comprehensive of dialysis adequacy. Another commenter asked us to 
recognize that ``adequacy'' is not synonymous with optimal levels.
    Response: ``Dialysis adequacy'' is used in the ESRD QIP to 
represent the quantification of urea removal by dialysis, one widely 
accepted measurement of adequacy of this treatment. We recognize there 
are other aspects of dialysis adequacy, and we are currently working 
with stakeholders to develop additional measures for future years of 
the ESRD QIP. Additionally, we emphasize that these minimum spKt/V 
target levels may not be optimal levels for all patients. Therefore we 
encourage clinicians to consider targeting higher spKt/V targets on an 
individual patient basis as clinically indicated.
ii. Peritoneal Dialysis Adequacy
    Comment: Many commenters supported the adoption of this measure and 
asked us to finalize the measure along with the formula and methodology 
for its calculation. One commenter explicitly asked us to finalize a 
methodology for obtaining

[[Page 67489]]

dialysate, blood, and urine sampling. Other commenters, however, did 
not support the measure, stating that we have not yet specified a 
consistent reporting methodology. These commenters suggested that we 
finalize this measure as a reporting measure only for PY 2015, define a 
methodology for calculating the values in the final rule, and use data 
from CY 2013 for purposes of adopting this measure as a clinical 
measure in future years. One commenter stated that we should request 
raw data from facilities and calculate Kt/V to ensure consistency. 
Finally, some commenters stated that they did not support the measure.
    Response: We thank the commenters who supported the adoption of 
this measure. There is more than one method that may be used by 
facilities to calculate PD Kt/V. Methods for reporting PD Kt/V on 
Medicare claims were specified prior to the start of data collection in 
July 2010 and are based on measure specifications endorsed by the 
National Quality Forum in 2007. Measurement of peritoneal dialysis Kt/V 
is based on timed (24 hour) dialysate collection to measure urea 
clearance (k). Time (t) is specified in the definition (week or per 
week). The only component of Kt/V measurement in peritoneal dialysis 
that is formula-based is the estimation of total body water (V). V is 
estimated from either of two formulae (Watson or Hume) predictive 
equations that are based on patient anthropometric and demographic 
information. We will consider the standardization of estimating total 
body water as part of our annual ongoing measure maintenance process, 
but we note that we believe it is appropriate to adopt this measure 
without this standardization because the Watson and Hume formulae yield 
substantially similar results. Moreover, NQF approved the measure with 
the specification to use the Watson or Hume formula to estimate ``V.'' 
We choose to collect reported Kt/V, rather than the data elements for 
Kt/V, due to the limitations of collecting data on Medicare claims and 
to minimize burden on facilities.
    Comment: One commenter supported the use of Kt/V as a measure of 
dialysis adequacy for peritoneal dialysis patients, but suggested that 
we refine it in the final rule. This commenter stated that we need to: 
(i) Clarify in the technical measure specifications that a patient is 
only included in the measure population if he/she has been on 
peritoneal dialysis for 90 days or more so that a patient transferring 
from hemodialysis to peritoneal dialysis will not be immediately 
counted in the measure; and (ii) exclude patients in the first month 
they are eligible to be included in the denominator if no Kt/V 
measurement is taken until the fourth month since the measure specifies 
Kt/V need only be measured once every 4 months. One commenter noted 
that a monthly measurement period for the measure is problematic 
because Kt/V is assessed throughout the month in home training clinics; 
this commenter suggested that there be a 30-day window from the time of 
the adequacy measure to adjust the prescription and repeat the adequacy 
measure.
    Response: We thank commenters for their feedback regarding the 
exclusion criteria for Kt/V for adult peritoneal ESRD patients. To the 
first point, patients are excluded from this measure if they are in the 
first 90 days of treatment for ESRD. If a patient changes from 
hemodialysis to peritoneal dialysis during a month, the patient would 
be included in both the HD and PD Kt/V measure calculations. The 2006 
KDOQI Clinical Practice Guidelines for peritoneal dialysis adequacy 
(Guideline 2.1.2) state ``the total solute clearance (residual kidney 
and peritoneal, in terms of Kt/V) should be measured within the first 
month after initiating dialysis therapy and at least once every 4 
months thereafter.'' While this measure is consistent with the 
guideline, we acknowledge that a patient may be included in the PD Kt/V 
measure calculation in the same month their modality changed to PD. 
However, after switching from hemodialysis to peritoneal dialysis, 
peritoneal dialysis clearance typically is not measured right away or 
even in the same month as the PD catheter insertion, as the peritoneal 
membrane is in a state of flux and its membrane transport 
characteristics are unstable for a few weeks. In several clinical 
scenarios it may not be appropriate to measure PD Kt/V within the first 
several weeks after initiation of peritoneal dialysis. Therefore, we 
believe that the PD unit personnel will not have measured PD adequacy 
in the 30 days following the transition from HD to PD. With regard to 
the comment on excluding patients from the denominator for the first 
month if no measurement is taken until the fourth month, we use the 
data reported in conjunction with Medicare dialysis facility claims 
value code D5: Result of last Kt/V reading and occurrence code 51: Date 
of last Kt/V reading. The claims reporting instructions indicate that 
for PD patients this should be within the last 4 months of the claim 
date of service. All monthly claims with valid PD Kt/V values will be 
used in the calculation. In response to the monthly measurement period 
comment, for PD patients, facilities are only required to report Kt/V 
once every 4 months.
    Comment: One commenter urged us to develop a pediatric peritoneal 
dialysis adequacy measure in collaboration with stakeholders.
    Response: We are currently working with stakeholders to develop a 
pediatric peritoneal dialysis adequacy measure as part of a consensus-
based measure development process, and we will consider implementing 
such a measure through future rulemaking.
iii. Pediatric In-Center Hemodialysis Adequacy
    Comment: Several commenters supported the adoption of a Kt/V 
hemodialysis adequacy measure for pediatric patients even if we do not 
adopt the adult Kt/V measures. Other commenters, however, argued that 
we should not finalize the pediatric in-center hemodialysis adequacy 
measure because (i) the measure does not exclude RRF patients; and (ii) 
the measure applies to 4 times per week hemodialysis. These commenters 
believe that adoption of the proposed measure would, in effect, raise 
the pediatric dialysis dose above the adult dialysis dose in a 
substantial number of children who either have a significant RRF or are 
treated with dialysis four days a week; they caution that we should 
avoid incentivizing improper, longer dialysis sessions for these 
patients. Some commenters urged us to harmonize the adult and pediatric 
spKt/V hemodialysis adequacy measures, specifically regarding the 
required number of dialysis sessions for inclusion in the measure and 
the inclusion of RRF. Another commenter stated that we should consider 
changing the measure so that it is based on weekly dose. Other 
commenters stated, generally, that spKt/V is not appropriate for 
pediatric patients and encouraged us to work with stakeholders to 
develop a suitable pediatric dialysis measure.
    Response: We thank the commenters who supported the implementation 
of the spKt/V hemodialysis adequacy measure for pediatric patients and 
those who provided feedback for its implementation. The measure 
methodology was developed through a consensus-based process 
incorporating the input of a Technical Expert Panel and was endorsed by 
NQF in 2011. The pediatric hemodialysis adequacy measure differs from 
the corresponding adult adequacy measure in that the measure applies to 
patients receiving four dialysis treatments a week.

[[Page 67490]]

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

   Table 4--Dialysis Sessions per Patient Week Among All HD Pediatric
                         Patients < 20 Years Old
------------------------------------------------------------------------
                                             Number of
            Sessions per week              patient-weeks      Percent
------------------------------------------------------------------------
1.......................................             211             2.6
2.......................................             614             7.5
3.......................................            6712            82.2
4.......................................             533             6.5
5.......................................              60             0.7
6.......................................              36             0.4
7.......................................               3            0.04
------------------------------------------------------------------------

    N=312 patients with first Medicare dialysis claim on or before 
January 1, 2007.
    With regard to the incorporation of RRF in the calculation of 
adequacy, the TEP did not agree that RRF should be added to the measure 
description for several reasons: (i) Published studies evaluating 
dialysis adequacy in the pediatric population do not include residual 
renal function; (ii) RRF changes continuously with age in the pediatric 
population; and (iii) RRF is difficult to measure among pediatric 
patients. Neither the NQF-endorsed measure specifications nor the KDOQI 
guidelines support measuring spKt/V in pediatric patients based on a 
weekly dose. Furthermore there is no evidence to support a minimum 
target value for a weekly Kt/V dose. We will continue to consider other 
measurements of dialysis adequacy for the pediatric population; at this 
time, we believe that this measure is the most suitable.
    For the reasons stated above, we are adopting the Kt/V measure 
topic as proposed. The technical specifications for each of the 
finalized measures in this measure topic can be found at http://www.dialysisreports.org/pdf/esrd/public-measures/HemodialysisAdequacy-ktv-2015-FR.pdf (adult hemodialysis), http://www.dialysisreports.org/pdf/esrd/public-measures/PeritonealDialysisAdequacy-ktv-2015-FR.pdf 
(adult peritoneal dialysis), and http://www.dialysisreports.org/pdf/esrd/public-measures/PediatricHemodialysisAdequacy-ktv-2015-FR.pdf 
(pediatric in-center hemodialysis).
b. Hypercalcemia
    Section 1881(h)(2)(A)(iii) of the Act states that the measures 
specified for the ESRD QIP shall include other measures as the 
Secretary specifies, including, to the extent feasible, measures of 
bone mineral metabolism. Abnormalities of bone mineral metabolism are 
exceedingly common and contribute significantly to morbidity and 
mortality in patients with advanced Chronic Kidney Disease (CKD). 
Numerous studies have associated disorders of mineral metabolism with 
morbidity, including fractures, cardiovascular disease, and mortality. 
Therefore, we believe it is necessary to adopt a clinical measure that 
encourages proper bone mineral metabolism management.
    One indicator of bone mineral metabolism management is ensuring 
normal calcium levels in the blood. Therefore, we proposed to use the 
NQF-endorsed measure, NQF 1454: Proportion of patients with 
hypercalcemia, to evaluate ESRD facilities for the PY 2015 and future 
payment years of the ESRD QIP. This measure assesses the number of 
patients with uncorrected serum calcium greater than 10.2 mg/dL for a 
3-month rolling average. ``Uncorrected'' means not corrected for serum 
albumin concentration. Performance on this measure is expressed as a 
proportion of patient-months for which the 3-month rolling average 
exceeds the measure threshold. Because the NQF-endorsed measure calls 
for a 3-month rolling average, we also proposed that the first measure 
rate for this measure would be calculated using the first 3 months of 
data collected during the proposed performance period (that is, there 
would be no measure rate for the first 2 months of the performance 
period; we would calculate the first measure rate for the performance 
period using the first 3 months of data and would then calculate a rate 
each successive month, dropping the oldest month and adding the newest 
month). Because we proposed to adopt this measure not only for PY 2015, 
but also subsequent payment years, we also proposed that, beginning 
with the PY 2016 program, we would measure hypercalcemia beginning in 
January of the applicable performance period. This would allow us to 
have a 3-month rolling average for all months in the performance 
period. We proposed that the 3-month rolling average rate for January 
would be calculated using the rates from November and December of the 
previous year as well as January of that year. Likewise, we proposed 
that the rate for February would be calculated using the rates from 
December, January and February to calculate the 3-month rolling 
average, and so on. Technical specifications for this measure can be 
found at http://www.dialysisreports.org/pdf/esrd/public-measures/MineralMetabolism-Hypercalcemia-2015-NPRM.pdf.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Several commenters supported this measure, noting that it 
is consistent with KDIGO guidelines and is especially necessary given 
that we will include oral-only drugs in the bundle beginning in PY 
2014; some commenters specifically argued that that there is sufficient 
validity and reliability of the data collected in CROWNWeb to establish 
an appropriate clinical measure for PY 2015, and noted that this 
measure is in keeping with Congress' intent to include a measure of 
bone mineral metabolism in the ESRD QIP. Other commenters, however, 
stated their belief that, despite its NQF-endorsement, the measure is 
not aligned with clinical standards, is contrary to KDIGO guidelines, 
and does not advance the aims of the National Quality Strategy. 
Additionally, several commenters, both those supporting and opposing 
the measure, argued that it is inappropriate to use CROWNWeb data to 
define performance standards, achievement thresholds, and benchmarks 
because the data underrepresents small- and mid-sized dialysis 
organizations, does not account for the differences in reporting which 
may exist when data are voluntarily reported (and data were voluntarily 
reported in the CROWNWeb pilot), was submitted with the understanding 
that it was test data and would not be used by CMS programs, and 
because it suffers from serious data collection problems, a lack of 
definitions, and a lack of reporting requirements in CROWNWeb. Many 
commenters suggested that we adopt this measure as a reporting measure 
only for PY 2015. Several other commenters believe that the proposed 
hypercalcemia measure is only appropriate if we include similar 
clinical measures for serum phosphorus, parathyroid hormone (PTH), and 
other mineral metrics because a hypercalcemia measure alone represents 
a piecemeal approach to bone and mineral metabolism that will not be 
sufficient to ensure quality care for ESRD patients and may even 
incentivize

[[Page 67491]]

inappropriate care. Finally, commenters recommended that CMS monitor 
secondary parathyroid hormone and not include oral-only drugs in the 
bundle until such measures and monitoring are in place.
    Response: Commenters rightly state that the performance standards, 
achievement thresholds, and benchmarks for the proposed Hypercalcemia 
measure were not calculated using data from all facilities. Because it 
is possible that these calculations could contain a systemic bias, and 
we have no effective means of addressing that bias in the ESRD QIP as 
this time, we will not finalize a clinical measure for hypercalcemia, 
as discussed above, until valid data from all facilities are accessible 
for the purpose of establishing performance standards, achievement 
thresholds, and benchmarks. We are not finalizing a clinical 
Hypercalcemia measure at this time. We do, however, continue to believe 
that hypercalcemia is an important indicator of bone mineral 
metabolism, and we intend to use this measure in subsequent payment 
years.
    Comment: One commenter stated that, generally, we should not use 
data from CROWNWeb for the ESRD QIP until the validity of CROWNWeb data 
is confirmed. Commenters also urged us to find solutions for the 
CROWNWeb issues which the community has been experiencing in order to 
ensure that, as measures increasingly rely on CROWNWeb data, there is 
no question as to the data's validity.
    Response: We thank the commenters who expressed concern regarding 
the use of CROWNWeb data for the ESRD QIP. Given the potential risk to 
validity of ESRD QIP clinical measures calculated using CROWNWeb data, 
we will not finalize the proposed clinical measure for hypercalcemia 
that depends on those data, as noted above.
    Comment: One commenter urged us to exclude patients who have 
hypercalcemia for reasons other than ESRD treatment (for example, 
medication and malignancy) from the Hypercalcemia measure. The 
commenter requests confirmation that the Hypercalcemia measure includes 
all patients rather than just Medicare patients, and is concerned with 
CMS' move to include the total facility population in the measure 
collection process. One commenter seeks clarification regarding whether 
a lower or higher rate is desirable for the Hypercalcemia measure.
    Response: We thank the commenters for raising these issues with the 
Hypercalcemia measure, and we will incorporate them in discussions 
during future rulemaking, when the Hypercalcemia measure is considered 
as a measure for the ESRD QIP in future payment years.
    For the reasons discussed above, we will not finalize the 
Hypercalcemia measure for use in the PY 2015 ESRD QIP or subsequent 
years until indicated otherwise in rulemaking.
c. Anemia Management Reporting Measure
    Section 1881(h)(2)(A)(i) requires ``measures on anemia management 
that reflect the labeling approved by the Food and Drug Administration 
(FDA) for such management.'' Although the current FDA-approved label 
for ESAs only specifically addresses hemoglobin levels greater than 11 
g/dL, previous FDA-approved labels suggested patients on ESAs maintain 
a hemoglobin level of 10-12 g/dL. As we noted in the CY 2012 ESRD PPS 
final rule, upon further research, the FDA determined that there is no 
evidence suggesting a lower target level at which hemoglobin does not 
cause increased risks of death, serious adverse cardiovascular 
reactions, and stroke and, therefore, changed its approved label on 
June 24, 2011 (76 FR 70257).
    As a result of the changes in the FDA approved-label and the 
implementation of the ESRD QIP, we are monitoring trends and indicators 
of anemia management for the Medicare ESRD population. We have found 
that the average monthly blood transfusion rate increased from 2.7 
percent in 2010 to 3.2 percent in 2011. We are working through our ESRD 
QIP monitoring and evaluation program to further assess the effect of 
the ESRD PPS. We believe that it is important that we continue 
monitoring hemoglobin levels in patients to ensure that anemia is 
properly treated, and we, therefore, proposed to adopt a measure for PY 
2015, and future payment years, which requires facilities to report ESA 
dosage (if applicable) and hemoglobin and/or hematocrit levels for 
patients on at least one monthly claim. In addition to this measure, 
proposed below, we plan to continue to monitor the rate of transfusions 
and may consider the adoption of relevant quality measures through 
future rulemaking if necessary.
    Since January 1, 2012, facilities have been required to report 
hemoglobin or hematocrit \4\ levels for each patient on every claim (CR 
7640). Beginning April 1, 2012, if a hemoglobin or hematocrit value is 
not included in the claim, the claim is returned to the facility (CR 
7593). If a hemoglobin or hematocrit value is not available for a 
patient, a facility can enter a default value of 99.99 on the claim and 
the claim will not be returned, provided the facility is not billing 
for an ESA. The default value is not acceptable when the claim includes 
an ESA, in such a case, the claim will be returned to the facility.
---------------------------------------------------------------------------

    \4\ Hematocrit values are used to calculate hemoglobin levels by 
taking the hematocrit value and dividing by three.
---------------------------------------------------------------------------

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

[[Page 67492]]

highest standard of care. We realize, however, that there are 
circumstances beyond a facility's control wherein it may not be able to 
draw a sample for this patient. Therefore, we did not propose that the 
facility itself must draw blood for each patient. If, for example, a 
patient is hospitalized or transient during a claim month, the facility 
may report the hemoglobin/hematocrit readings and ESA dosage (if 
applicable) for the patient for a month if a patient has labs drawn by 
another provider/facility and those labs are evaluated by an accredited 
laboratory (a laboratories that is accredited by, for example, the 
Joint Commission, the College of American Pathologists, the AAB 
(American Association of Bioanalysts), or State or Federal agency), and 
the dialysis facility obtains the hemoglobin/hematocrit readings and 
ESA dosage. Additionally, we proposed to only consider a patient 
qualified for this measure (i) if the patient is alive at the end of 
the month; (ii) if the patient is treated in-center, that patient was 
treated at that facility at least twice during the claim month; and 
(iii) if the patient receives dialysis at home, a claim is submitted 
for that patient. We believe that these proposals will provide more 
flexibility for facilities and will also discourage facilities from 
drawing blood, even when not necessary for fear that the patient will 
fail to come to the facility again during that month. We requested 
comment on this proposal. We also requested comment on whether 
facilities should only have to report data for 98 percent of their 
patients.
    The proposed Anemia Management reporting measure was not included 
in the list of measures under consideration in accordance with section 
1890A(a)(2) of the Act because we had not yet fully assessed the impact 
of the new FDA-approved ESA labeling on the ESRD population. We have 
since received and analyzed more, but still incomplete, anemia 
management data; we believe it is necessary to require facilities to 
provide complete data so that we may fully understand the effect of the 
changes to ESA labeling and other factors. The proposed Anemia 
Management reporting measure will play a critical role in patient 
safety. As noted above, our monitoring activities indicate that there 
has been a slight but noticeable increase in transfusions since the 
adoption of the ESRD PPS. Additionally, a United States Renal Data 
System analysis presented in May 2012 found an increase in blood 
transfusion rates among ESRD patients concurrent with the 
implementation of the ESRD PPS. Although the association of changes in 
transfusion rates with the ESRD PPS, FDA labeling changes, and other 
factors are not yet known, we believe proactive facility engagement in 
regular monitoring of patient hemoglobin or hematocrit levels 
regardless of ESA use is critical to maintaining safe care, protecting 
the safety of beneficiaries, and monitoring the program effectively. We 
further believe that the data collected from the proposed measure are 
necessary for measure development in a clinical area of critical 
significance to patient safety--anemia and transfusion. A delay in 
proposing to adopt this reporting measure may prevent us from creating 
clinical measures for use in future years of the program and pose a 
risk to patients. Finally, we noted that section 1881(h) of the Act 
specifically highlights the importance of anemia management measures, 
and we do not believe it would be in the best interest of the program 
to wait an additional year to propose this measure.
    For the reasons stated above, we proposed to adopt an Anemia 
Management reporting measure for the PY 2015 ESRD QIP and subsequent 
payment years. We provided the technical specifications for this 
measure, at http://www.dialysisreports.org/pdf/esrd/public-measures/AnemiaManagement-Reporting-2015-NPRM.pdf. We requested public comment 
on these proposals.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Some commenters supported the measure, stating that they 
believe this measure will allow us to closely monitor the 
underutilization of ESAs and the increase in transfusions. Commenters 
also stated that they believe that this measure will assist in 
explaining and monitoring timely ESA discontinuation and studying the 
potential effect of altitude on patients. Many commenters supported 
this measure, but requested that we make modifications to our proposed 
exclusions. These commenters suggested that we exclude, for all of the 
reporting measures, the following patients: (i) Beneficiaries who are 
regularly treated at the facility and who fit into one of these 
categories: (a) beneficiaries who die within the applicable month; (b) 
beneficiaries that receive fewer than 7 treatments in a month; and (c) 
beneficiaries receiving home dialysis therapy who miss their in-center 
appointments when there is a documented, good faith effort to have them 
participate in such a visit during the applicable month; (ii) transient 
dialysis patients; (iii) pediatric patients (unless the measure is 
specific to this population); and (iv) kidney transplant recipients 
with a functioning graft. Commenters stated that these exclusions would 
be consistent with our own measures reported on DFC; commenters also 
stated that these exclusions seek to hold facilities accountable only 
for those beneficiaries to whom they regularly give care and for whose 
care they can affect. Another commenter, however, stated that we should 
not implement other commenters' suggestions that we exclude 
beneficiaries receiving home dialysis therapy who miss their in-center 
appointments when there is a documented, good faith effort to have them 
participate in such a visit during the applicable month; this commenter 
stated that it is the responsibility of the facilities to educate 
patients on the importance of making and keeping appointments. 
Additionally this commenter argued that ``good faith'' is too vague; 
commenter requested that, if we did adopt this exclusion, we clearly 
define a ``good faith effort.'' Another commenter stated that 
peritoneal dialysis patients do not need to be seen at a facility once 
per month and the measure should be accordingly revised.
    Response: Consistent with the Mineral Metabolism reporting measure, 
we agree with commenters who believe that the exclusions should be 
modified. We recognize that treating a patient twice may not provide 
enough time to effectuate quality patient care. We agree with the 
commenters who suggested that an in-center hemodialysis patient should 
be excluded if treated by a facility fewer than seven times during the 
month, regardless of whether the patient is officially admitted to that 
facility. With seven treatments, we believe that a facility should have 
had adequate opportunities to draw blood necessary to report 
hemoglobin/hematocrit. We also believe that the threshold of seven will 
discourage unnecessary testing of in-center hemodialysis patients by 
facilities because they will know that, since in-center patients are 
typically treated three times per week, a patient must have been 
treated by the facility for at least two weeks to be included; thus, 
the facility need not feel pressure to draw blood for every patient 
during the first few visits of the month. Based on these 
considerations, we will not finalize our proposal to only exclude in-
center patients who have been treated fewer than two times by the 
facility during the claim month. Instead, we will exclude any patient 
who is treated by the facility

[[Page 67493]]

fewer than seven times during the reporting month.
    We do not believe that it is necessary to specifically exclude 
transient patients from this measure because, as noted, any patient 
that is treated by the facility at least seven times during the 
applicable reporting month is present at the facility for enough time 
that the facility should be able to measure that patient's hemoglobin/
hematocrit. Likewise, for the same reasons, we do not believe we need 
to separately exclude patients who are deceased at the end of the 
reporting month. Provided that the patient was treated by the facility 
at least seven times during that month, the facility should be able to 
draw blood necessary to obtain hemoglobin/hematocrit values even if the 
patient is deceased at the end of the month.
    Additionally, we do not agree that facilities should not be held 
accountable for drawing blood from home dialysis patients who fail to 
attend a monthly appointment. We believe that it is incumbent upon a 
facility to make home dialysis patients aware that they must attend 
monthly appointments to be properly treated. Therefore, we will 
finalize our proposal that we will include any home hemodialysis 
patient for which a facility submits a claim with respect to the 
reporting month in this measure.
    Finally, we believe it is important to include transplant patients 
until they are officially discharged from a facility; regular 
monitoring can help ensure that a transplant remains effective and the 
facility is continuing to provide the best care possible.
    For the reasons stated above, we will modify our proposals for the 
exclusions for this measure and finalize that, for the PY 2015 ESRD 
QIP, facilities must report hemoglobin/hematocrit at least once per 
month via claims for (i) in-center Medicare patients who have been 
treated at least seven times by the facility; and (ii) home 
hemodialysis Medicare patients for whom the facility submits a claim. 
If the facility administers an ESA to these patients, it must also 
report the HCPCS code and corresponding unit for that patient. We will 
interpret an empty HCPCS field to mean that no ESA was administered.
    Comment: Several commenters encouraged us to not adopt a percentage 
reporting threshold because it does not distinguish between 
beneficiaries legitimately excluded and those that were merely missed. 
Other commenters requested that we use both exclusions and a threshold; 
one commenter suggested a threshold of 90 percent or an allowance of 
two patients to ensure that small facilities are not disproportionally 
affected. Another commenter stated that requiring 98 percent reporting 
may make it difficult for patients to travel because dialysis 
facilities may encourage them otherwise in order to ensure compliance 
with the measure. One commenter requested that we provide guidance 
regarding the standardization of blood-draws so that data can be 
reliable before we implement a reporting threshold.
    Response: We agree with the commenters who argued that, even with 
exclusions, there are circumstances in which facilities cannot report 
the hemoglobin/hematocrit and ESA dosage, as applicable, for every 
patient at least once per month. It is possible that these exclusions 
alone may hold a facility responsible for a patient who was technically 
treated by the facility but who did not receive actual treatment from 
the facility during the applicable month. For example, a facility may 
wait to draw blood from a patient because it believes that the patient 
will be treated there for the entirety of the month, but learns that 
the patient has been hospitalized unexpectedly for all or part of the 
applicable month. Therefore, we believe that we should not require 
facilities to report for 100 percent of their patients. Based on data 
from CROWNWeb, we believe that facilities report hemoglobin/hematocrit 
and ESA dosage for approximately 99 percent of their patients on a 
monthly basis. We believe it is appropriate to assume that a similar 
percentage was reported via claims. Although, as commenters have argued 
with regard to the Mineral Metabolism reporting and the Hypercalcemia 
measures, this information in CROWNWeb was voluntarily reported which 
may mean that the data is biased toward facilities that value 
reporting; additionally, the data from the CROWNWeb pilot was mainly 
supplied by LDOs that may be more likely to have more resources and 
corporate policies that require reporting compliance.
    Taking all of these issues into consideration, we finalize a 
normative reporting threshold for this measure; facilities will be 
required to report at the lesser of the 50th percentile of all 
facilities in 2013 or 99 percent, in total, of their (i) in-center 
Medicare patients who have been treated at least seven times by the 
facility; and (ii) home hemodialysis Medicare patients for whom the 
facility submits a claim. This floor ensures that facilities are not 
penalized as long as they report at a high rate that is consistent with 
CROWNWeb data; that is, facilities know that, provided they reach 99 
percent for each month of the performance period, they will meet the 
requirements of the measure. We believe that this methodology fairly 
balances the concerns that the reporting in CROWNWeb is skewed with our 
desire to encourage continued excellence in the community.
    We are concerned that small facilities may be disproportionately 
impacted by the reporting threshold because, for example, a facility 
with 10 patients could fail to report for only one patient and, 
therefore, fail to meet the threshold. As we discuss below, we believe 
that 11 cases is an appropriate minimum for purposes of scoring 
clinical measures. As we have stated, we intend to use the information 
collected from reporting measures for purposes of scoring clinical 
measures based on the same data in subsequent payment years. Therefore, 
we will not require a facility to report this measure if it treats less 
than 11 (i) in-center Medicare patients who have been treated at least 
seven times by the facility; or (ii) home hemodialysis Medicare 
patients for whom the facility submits a claim. If a facility does not 
treat at least 11 of these patients during the performance period, it 
will be required to attest to this fact via CROWNWeb. If a facility 
does not make the attestation, we will score it accordingly.
    Comment: Several commenters do not support this measure because 
facilities already collect these data so the measure is unlikely to 
improve care. Some of these commenters asked us to require facilities 
to report this information separate from the ESRD QIP on at least one 
monthly claim to ensure anemia is properly treated.
    Response: As we noted in the proposed rule (77 FR 40974), we 
believe that this measure will discourage underreporting of ESAs and 
hemoglobin. Currently, facilities may report a value of 99.99 as 
default hemoglobin for claims that do not include an ESA. Since the 
bundle includes ESAs, it may not be financially beneficial for a 
facility to report an ESA, especially if a patient's hemoglobin is 
greater than 12--negatively affecting its Hemoglobin Greater than 12 g/
dL measure score. Additionally, we are concerned that the 99.99 value 
will be overutilized and will not allow us to properly monitor 
hemoglobin levels across the ESRD population. If we are able to closely 
and accurately monitor ESA dosage and hemoglobin, we believe we will be 
able to improve care by using this information to monitor the effects 
of the bundle and the ESRD QIP on beneficiaries; we also believe we may

[[Page 67494]]

utilize these data in the future to develop an anemia management 
clinical measure.
    Comment: Many commenters noted that it is impractical for 
facilities to obtain lab values from other providers because other 
providers are not required to measure these data, do not share data 
with dialysis facilities, and, even if facilities could obtain these 
data, they could not be sure that the labs were consistent or reported 
under the same standards. Additionally, one commenter argued that 
hemoglobin levels from other facilities will be of little use without 
further information regarding why the patient was at that facility. One 
commenter agreed that hemoglobin/hematocrit values can be supplied by 
another provider provided the labs are evaluated by an accredited 
facility.
    Response: We recognize that it may be difficult for facilities to 
coordinate with hospitals and other providers in order to obtain lab 
values. We, however, are not mandating facilities to do so. In the 
proposed rule (77 FR 40974), we stated that facilities may obtain lab 
values from other providers. This proposal was specifically designed to 
afford facilities more flexibility in acquiring and reporting 
hemoglobin and hematocrit values, as well as ESA dosage. Facilities are 
highly encouraged to coordinate with other providers, but this measure 
does not mandate them to do so. We believe that the commenters' 
concerns about inconsistent lab data are mitigated by the requirement 
that the lab must be accredited. Further, we do not believe that data 
from another provider will be of little use. We can use these values to 
monitor hemoglobin and hematocrit levels of ESRD patients, as well as 
ESA dosage; additionally, collecting these data may encourage providers 
to engage one another about the patient's conditions and care.
    Comment: One commenter noted that hemoglobin values on claims are 
from the prior month; therefore the 99.99 is used for the claim in the 
first month of a patient's dialysis or if a patient had a transplant. 
The commenter requested clarification on what it should report in these 
circumstances. Other commenters argued that 99.99 should be available 
without penalty to facilities because in some instances, it is 
appropriate. One commenter supported disincentivizing 99.99 reporting 
in order to stop facilities from not reporting patients with high 
hemoglobin.
    Response: The commenter is correct in that the Erythropoietin 
Monitoring Policy (2006) \5\ requests that the hemoglobin/hematocrit 
reading reported on claims be defined as ``the most recent reading 
taken before the start of this billing period. For patients beginning 
dialysis, use the most recent value prior to the onset of treatment.'' 
We recognize that, for some patients, specifically those new to 
dialysis, this hemoglobin/hematocrit values may not be available. 
Therefore, we will not require a facility to report a hemoglobin/
hematocrit value for a patient if that patient has been on dialysis for 
less than one month (including when dialysis is resumed after a 
transplant); facilities may report the default value without being 
penalized in this circumstance. We remind facilities that if an ESA is 
reported on a claim, the facility must also report a hemoglobin/
hematocrit level, regardless of whether that patient is new to dialysis 
(CR 7460).
---------------------------------------------------------------------------

    \5\ http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM4135.pdf.
---------------------------------------------------------------------------

    Comment: One commenter asked us to include Omontys, an ESA new to 
the market, in this measure. Other commenters generally requested that 
we monitor new ESAs and their effects on hemoglobin levels.
    Response: We intend to monitor ESA dosage for all ESAs used by 
dialysis facilities. Using HCPCS codes, a facility must indicate which 
ESA it administered, including Omontys.
    Comment: One commenter noted that it supports the reporting of 
hemoglobin, but not hematocrit because the data set should be 
standardized to require only hemoglobin reporting.
    Response: Facilities can report either hemoglobin or hematocrit on 
claims. Either will count for the purpose of this measure. (For the 
Hemoglobin Greater than 12 g/dL measure, hematocrit values are changed 
to hemoglobin by dividing by 3). As of 2011, only 14 percent of 
facilities reported hemoglobin, while 70 percent reported hematocrit. 
We believe that requiring 70 percent of all facilities to alter their 
reporting method would generate undue burden on the dialysis facility 
community, for relatively little gain, as we have an established method 
for incorporating both hemoglobin and hematocrit into the measure 
calculation.
    Comment: Some commenters asked us to state the purposes of the 
anemia management reporting measure with more specificity. Some 
commenters requested that we clarify how we intend to report and make 
publicly available hemoglobin/hematocrit levels and ESA dosages. 
Commenters asked us to clarify the plans for the use of the information 
and how we will account for patient weight in our analyses.
    Response: We believe that the anemia management reporting measure 
emphasizes the importance of anemia management for the ESRD population 
and will support efforts to establish more meaningful, evidence-based 
clinical measures of anemia management in the future. We intend to 
publicly report the anemia management reporting measure rates in the 
same manner that we use to publicly report other measure rates under 
the ESRD QIP but will not score facilities based on those rates. 
Facilities will be able to preview the reporting data to be publicly 
reported before we post it on DFC. At present, the Anemia Management 
reporting measure does not take patient weight into account, but we 
will consider whether this type of adjustment is appropriate for future 
years of the ESRD QIP. We would also like to clarify that we will use 
HCPCS codes that indicate ESA administration and their corresponding 
units for assessing whether an ESA was administered. We will interpret 
an empty HCPCS field to mean that no ESA was administered.
    Comment: One commenter supports this measure but suggests that the 
data be captured in CROWNWeb since hemoglobin levels are only reported 
on claims with ESA doses.
    Response: The commenter is correct that CROWNWeb only requires a 
hemoglobin/hematocrit if an ESA is entered.
    Since January 1, 2012, however, facilities have been required to 
report hemoglobin/hematocrit on claims regardless of whether an ESA 
dose was administered (CR 7460). Facilities are expected to report the 
anemia management reporting measure on their claims.
    Comment: One commenter supports the measure but only for patients 
with hemoglobin less than 10 g/dL. It is more likely, the commenter 
argues, that one will identify a patient with a low hemoglobin (even if 
that patient is not on ESAs) if a new reporting measure is instituted. 
The commenter believes that reporting hemoglobin for patients not on 
ESAs who have a hemoglobin greater than 12 g/dL is not necessary 
because these patients are not at risk for the complications that arise 
from targeting high hemoglobin levels using ESAs.
    Response: It is our intention to use the data we collect from this 
reporting measure to develop an anemia management clinical measure and 
monitor anemia management trends. In order to better understand the 
ESRD population as a whole and collect a

[[Page 67495]]

robust data set, we believe it is important to collect hemoglobin/
hematocrit levels for patients regardless of their values or if an ESA 
was administered. Using this information, we can, among other things, 
assess trends across the entire population and use these data for 
measure development and monitoring purposes.
    As explained above, we are modifying our proposed exclusions and 
finalizing that a facility must report hemoglobin/hematocrit and ESA 
dosage (via HCPCS codes and their units) for the lesser of the 50th 
percentile of facilities in 2013 or 99 percent, in total, of its (i) 
in-center Medicare patients who have been treated at least seven times 
by the facility; and (ii) home hemodialysis Medicare patients for whom 
the facility submits a claim. We will interpret an empty HCPCS field to 
mean that no ESA was administered. We also finalize that we will only 
apply this measure to facilities with at least 11 (i) in-center 
Medicare patients who have been treated at least seven times by the 
facility; and (ii) home hemodialysis Medicare patients for whom the 
facility submits a claim. Facilities who treat less than 11 of these 
patients during the performance period must attest to this fact in 
CROWNWeb. If they do not make this attestation, we will score them 
accordingly. Additionally, we will not penalize facilities for using 
the default 99.99 value for a patient in his/her first month of 
treatment at that facility. The technical specifications for this 
finalized measure can be found at http://www.dialysisreports.org/pdf/esrd/public-measures/AnemiaManagement-Reporting-2015-FR.pdf.
4. Measures Under Consideration for Future PYs of the ESRD QIP
    In addition to the PY 2015 ESRD QIP, we noted in the proposed rule 
that we are considering measures for future payment years of the 
program. We are specifically considering whether we should propose in 
future rulemaking to adopt the following two measures,
     NQF 1463: Standardized Hospitalization Ratio for 
Admissions (SHR) and
     NQF 0369: Dialysis Facility Risk-adjusted 
Standardized Mortality Ratio (SMR).

We stated that we intend to adopt these measures for future payment 
years of the ESRD QIP, possibly beginning with the PY 2018 program. We 
notified facilities of our intent and solicited comments on 
incorporating these measures into future payment years of the ESRD QIP.
a. Standardized Hospitalization Ratio (SHR)
    Hospitalizations are an important indicator of patient quality of 
life and morbidity. The SHR is an NQF-endorsed (1463), risk-
adjusted measure of hospitalization for dialysis patients. The measure 
is claims-based and describes, as a ratio, the number of ESRD Medicare 
patient actual admissions versus expected hospitalizations adjusted for 
the facility's Medicare patient case mix. Please refer to the NQF Web 
site (www.qualityforum.org) to obtain more detail about this measure.
b. Standardized Mortality Ratio (SMR)
    The SMR measure is an NQF-endorsed (0396) critical 
patient-centered, outcome measure of overall patient care furnished by 
facilities. We believe that the SMR measure would encourage appropriate 
overall patient care by facilities and incentivize facilities to 
examine the holistic health of the patient rather than treating the 
patient based on an individual measure-by-measure basis. The SMR 
measure describes, as a ratio, the number of ESRD Medicare patient 
actual deaths versus expected deaths adjusted for the facility's 
Medicare patient case mix. Please refer to the NQF Web site 
(www.qualityforum.org) to obtain more detail about this measure.
c. Public Reporting of SHR and SMR Measures
    Although the SHR and SMR measures may not be adopted for the ESRD 
QIP until a future payment year, we intend to publicly report these 
measure ratios to the public via Dialysis Facility Compare (DFC) to 
encourage facilities to improve their care. Section 4558(b) of the 
Balanced Budget Act of 1997 (Pub. L. 105-33) (BBA) directs the 
Secretary to develop, not later than January 1, 1999, and implement, 
not later than January 1, 2000, a method to measure data reflective of 
the quality of renal dialysis services provided under the Medicare 
program. Under this authority, we began reporting the SMR measure on 
DFC in January, 2001 as a survival measure and used three categories to 
rate facility performance: ``as expected,'' ``worse than expected,'' 
and ``better than expected.'' The SMR measure that we are considering 
adopting for the ESRD QIP was developed in 1999 and facilities are 
required to submit these data via form 2746. The SHR measure that we 
are considering adopting for the ESRD QIP was developed in 1995, 
presented to a Technical Expert Panel after modifications to risk 
adjustment and statistical modeling in 2007, and received NQF-
endorsement in 2011. The data needed to calculate the SHR measure have 
been regularly reported to DFR since 1995 and have been used by 
facilities for quality improvement activities. We plan to add the SHR 
data to the DFC effective January 2013; additionally we will report the 
actual SMR rates/ratio on the DFC beginning January 2013.
    We originally proposed to adopt the SHR measure for the PY 2014 
ESRD QIP, but did not finalize the proposal, in part, because 
commenters voiced concerns regarding the accuracy of the co-morbidity 
data used in the calculation of the measures. Details on public 
comments and why we did not adopt the SHR measure are articulated in 
the CY 2012 ESRD PPS final rule (76 FR 70267). Since that time, we have 
identified that the claim form UB 92 with the type of bill (TOB) field 
72x allows a facility to input up to 17 co-morbid conditions per claim 
submission. We acknowledge that patient co-morbidities can change with 
time and since the capability already exists on the UB 92 TOB, we 
believe the best means for facilities to update patient co-morbidities 
is through the ESRD 72x claims form. Details on this form can be found 
in the Medicare Claims Processing Manual, Chapter 8--Outpatient ESRD 
Hospital, Independent Facility, and Physician/Supplier Claims (https://www.cms.gov/manuals/downloads/clm104c08.pdf).
    In addition, because the NQF-endorsed SHR and SMR measures are 
risk-adjusted for ESRD patients that reside in nursing homes, in order 
to calculate the measure rates on DFC, we will utilize data from the 
Minimum Data Set (MDS) to identify those individuals in nursing homes. 
We would use these data not only for reporting the measure rates on DFC 
at present, but also for calculating the measures if we adopted them 
for use in future years of the ESRD QIP. The Omnibus Budget 
Reconciliation Act (OBRA) of 1987 requires that all Medicare and 
Medicaid certified nursing homes complete MDS assessments on all of 
their patients.
    We requested comment regarding the feasibility of adopting these 
measures for future payment years of the ESRD QIP.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Although most commenters agreed that measures for 
hospitalization are important for quality reporting purposes, many 
commenters strongly opposed that the SHR measure be included in the 
ESRD QIP in subsequent payment years. These

[[Page 67496]]

commenters argued that the SHR measure is a measure over which 
facilities have little control because patients often follow the advice 
of their primary care physician or visit a hospital without consulting 
the facility to receive treatments that could be furnished in the 
outpatient setting. Commenters expressed concern that the measure could 
lead to cherry-picking, disincentivize appropriate hospitalization, and 
is not transparent enough for facilities to make improvements in this 
area because of they are confused about the risk-adjustment 
methodology. Other commenters stated that the measure needs further 
refinement and validation, specifically regarding risk adjustment for 
frail patients such as those in nursing homes, cultural factors, 
socioeconomic factors, and health factors specific to the ESRD 
population. Commenters asked that these adjusters be made public. One 
commenter believes that this measure would create a bias for facilities 
on the basis of location. Some commenters suggested that, instead of 
implementing this measure, CMS consider a coordinated care model. Other 
commenters requested that we adopt a pilot for this measure wherein 
only aggregate data is reported until the measure can be further 
assessed and validated. Several commenters suggested that we implement 
an SHR measure focused on admissions that could have been prevented by 
interventions from dialysis facilities; one commenter suggested that 
the SHR measure be modified to calculate a ``risk-adjusted standardized 
hospitalization ratio for dialysis access-related infections and fluid 
overload,'' since these are elements facilities can control.
    Response: We thank commenters for these opinions. We will take 
these comments into consideration as we further assess the 
appropriateness of adopting the SHR measure for the ESRD QIP.
    Comment: Many commenters strongly supported the consideration of 
SHR for future years of the ESRD QIP. One commenter requested that we 
implement the measure as soon as possible. Commenters also supported 
reporting measure rates on DFC beginning in CY 2013. One commenter 
supports the addition of SHR data to DFC as long as a caveat is 
included explaining that dialysis facilities can influence but do not 
control hospitalization rates. This commenter also requested that the 
``expected,'' ``better than expected,'' and ``less than expected'' 
categories remain on DFC. One commenter argued that there is not enough 
data on SHR to report rates on DFC.
    Response: We thank the commenters who supported the future 
consideration of the SHR for implementation. We intend to begin public 
reporting of the SHR on DFC as of January 2013 to indicate the relative 
performance of facilities. We believe that dialysis facilities own 
partial responsibility for the rate at which their patients are 
hospitalized, in particular when that rate is substantially higher than 
at other peer facilities and may not be explained by variation in the 
illness of patients. We do acknowledge that care provided by dialysis 
facilities is not the sole determinant of the hospitalization of ESRD 
patients and this measure would not support the assertion that they 
are. The SHR is only shown for patients with at least 5 patient years 
at risk, which corresponds to approximately 10 expected 
hospitalizations. The confidence interval for the SHR will also be 
reported on DFC to show the uncertainty in the value due to random 
variation, which will help to address the issue of limited data for the 
SHR. We appreciate these suggestions and will take them into 
consideration as we further assess the appropriateness of adopting the 
SHR measure for the ESRD QIP.
    Comment: Some commenters strongly support using the 72x claims as 
indicators of risk factors for facilities and patients. One commenter 
suggested that this information could be used in creating an access to 
care measure/adjustment in the future. Other commenters, however, 
believe that reporting comorbidities on the 72x claim could be a huge 
administrative burden for facilities, including time associated with 
validating that the data they submit on these claims is valid.
    Response: We recognize that reporting co-morbidities on 72x claims 
could be burdensome to some facilities. We believe, however, that this 
information is valuable, specifically in the context of future measure 
development. We will continue to assess the best means available for 
risk-adjustment for both the SHR and SMR measures, taking both the 
benefits of the information and the burden to facilities into account, 
should we propose to adopt these measures in future rulemaking.
    Comment: One commenter argued that SHR is not a measure whereby 
facilities can make meaningful improvement because the measure's rates 
cannot be calculated in real-time; the commenter asked that claims be 
made available to the facility in a timely manner if the measure is 
adopted so that they can become aware of hospitalizations and other co-
morbidities and calculate their SHR in real-time.
    Response: We will consider this suggestion if we decide to propose 
to adopt the SHR measure for the ESRD QIP in future rulemaking.
    Comment: One commenter noted that the SHR measure should be at 
least a two to three year measure as 1 year of data is not sufficient 
for an accurate assessment.
    Response: We recognize that the NQF-specifications call for a 
measurement period that is longer than 1 year, and we continue to 
assess how to implement such an extended measure period effectively in 
the ESRD QIP if we propose to adopt the SHR measure in future 
rulemaking.
    Comment: Many commenters opposed the use of SMR in future years for 
reasons similar to that of SHR. Commenters expressed concern that the 
measure could lead to cherry-picking and is not transparent enough for 
facilities to make improvements in this area because of they are 
confused about the risk-adjustment methodology. Other commenters stated 
that the measure needs further refinement and validation, specifically 
regarding risk adjustment for frail patients such as those in nursing 
homes, cultural factors, socioeconomic factors, and health factors 
specific to the ESRD population. Commenters asked that these adjusters 
be made public. One commenter believes that this measure would create a 
bias for facilities on the basis of location. Another commenter argued 
that the measure should only account for catheter/dialysis 
complications and should not include ``sudden deaths.'' One commenter 
stated that literature suggests that the measure is invalid in small 
facilities and only valid in large facilities when averaged over 
several years. Some commenters suggested that, instead of implementing 
this measure, CMS consider a coordinated care model. Other commenters 
requested that we adopt a pilot for this measure wherein only aggregate 
data is reported until the measures can be further assessed and 
validated.
    Response: We thank the commenters who shared concerns and provided 
suggestions regarding the future consideration of the SMR for 
implementation in the ESRD QIP. We will continue to consider these 
suggestions as we decide whether to propose to adopt the SMR measure. 
In the DFR, we limit reporting to facilities with at least 3 expected 
events for the time period. Similarly, we only calculated SHR based on 
at least 5 patient years at risk, which corresponds

[[Page 67497]]

to approximately 10 expected hospitalizations. We incorporated these 
limitations on the measures to account for potentially imprecise 
estimates resulting from small facility size.
    Comment: One commenter stated that the SMR measure should not be 
adopted until CMS can articulate how it fits into the ESRD QIP's 
strategic vision.
    Response: While we recognize that the ESRD population is at high 
risk for mortality by definition, we believe that mortality rates are 
susceptible to the quality of care provided by dialysis facilities. We 
believe the SMR may help distinguish the quality of care offered by 
dialysis facilities as determined by mortality, a key health care 
outcome used to assess quality of care in other settings, such as 
hospitals. We believe the SMR may also fill an important gap in the 
ESRD QIP by assessing the outcome of all ESRD care provided at the 
dialysis facilities, rather than individual processes of care. For 
these reasons, we will continue to consider the inclusion of the SMR in 
future rulemaking cycles.
    Comment: Many commenters strongly supported the consideration of 
SMR for future program years, noting that death is the most important 
measurement of negative outcomes. One commenter requested that we 
implement the measure as soon as possible. One commenter suggested that 
the measure specifically focus on patients within their first 90-120 
days of dialysis since these patients are generally more likely to die. 
Commenters also supported reporting measure rates on DFC beginning in 
CY 2013.
    Response: We thank commenters for their support of this measure. At 
this time, we do not believe it should be included in the PY 2015 ESRD 
QIP due to the concerns voiced by other commenters. We will consider 
the measure's assessment of patients in their first months of dialysis 
for future rulemaking. Finally, we will begin reporting the SMR measure 
rates on DFC in 2013 and are attempting to address potential 
shortcomings pointed out by commenters that we described in the CY 2012 
ESRD PPS final rule (76 FR 70267) prior to proposing the measure for 
ESRD QIP.
    Comment: One commenter argued that SMR is not a measure whereby 
facilities can make meaningful improvement because the measure's rates 
cannot be calculated in real-time; the commenter asked that claims be 
made available to the facility in a timely manner if the measure is 
adopted so that they can become aware of hospitalizations and other co-
morbidities and may calculate their SMR in real-time.
    Response: We will consider this suggestion if we decide to propose 
to adopt the SMR measure for the ESRD QIP in future rulemaking.
    Comment: One commenter noted that the SMR measure should be at 
least a two to three year measure as 1 year is not sufficient for an 
accurate assessment.
    Response: We recognize that the NQF-specifications call for a 
measurement period that is longer than 1 year, and we continue to 
assess how to implement this measurement period effectively in the ESRD 
QIP if we decide to propose to adopt the SMR measure.
    Comment: One commenter requested clarification regarding whether 
the facility's rates would be compared to current or past national 
averages when assessing the number of expected deaths.
    Response: The SMR measure estimates the relative death rate ratio 
for a facility, as compared to the national death rate. The relative 
death rate ratio and the national results are all determined during the 
same (current) time period.
    In response to comments, we will continue to consider the SMR and 
SHR measures for future years of the program. We will, as proposed, 
begin displaying the rates/ratios for these measures on DFC beginning 
in early 2013.
5. Other Potential Future Measures Under Development
    As part of our effort to continuously improve the ESRD QIP, we are 
working on developing additional, robust measures that provide valid 
assessments of the quality of care furnished to ESRD patients by ESRD 
facilities. Some areas of measure development are discussed below. In 
addition, we are considering the feasibility of developing quality 
measures in other areas such as kidney transplantation, quality of 
life, health information technology for quality improvement at the 
point of care and the electronic exchange of information for care 
coordination, and transfusions. We requested comment on these potential 
areas of future measurement and welcomed suggestions on other topics 
for measure development.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: We received suggestions for many future measures. These 
included: (i) A CAHPS/experience of care measure for home dialysis and 
pre-dialysis patients; (ii) a measure assessing catheter access site 
infections; (iii) a measure for adequate serum albumin; (iv) a measure 
promoting immunizations; (v) measures assessing iron management; (vi) 
patient fluid management measures; (vii) measures incentivizing home 
hemodialysis; (viii) an NHSN measure for home patients that includes 
peritonitis; (ix) measures that specifically monitor nursing sensitive 
indicators; (x) a measure that tracks which modalities a facility 
offers; (xi) a measure that tracks whether a facility exceeds the 
average percentage of patients between 18 and 54 who are employed; 
(xii) a measure that tracks whether facilities have shifts after 5:00 
p.m.; (xiii) an emergency department use measure; (xiv) a measure on 
transplantations/referrals; (xv) a measure on dialysis adequacy for 
frequent dialyzers; (xvi) measures on phosphorus and PTH; (xvii) a 
composite measure which takes into account the interdependability of 
calcium, phosphorus, and parathyroid hormone in bone mineral 
metabolism; (xviii) measures assessing quality of life; and (xix) 
palliative care measures.
    Response: We thank the commenters for your comments regarding 
measure implementation. We will take these suggestions into 
consideration during future measure development and rulemaking.
    Comment: Some commenters specifically requested that we broaden the 
use of pediatric measures in the ESRD QIP. These commenters recommended 
that we (i) develop (a) a dialysis adequacy measure for peritoneal 
pediatric patients and (b) a CAHPS/experience of care measure for 
pediatric patients; and (ii) consider the following NQF-endorsed 
measures: (a) Measure 1418: Frequency of Adequacy Measurement for 
Pediatric Hemodialysis Patients; (b) Measure 1421: Method of Adequacy 
Measurement for Pediatric Hemodialysis Patients; (c) Measure 1425: 
Measurement of nPCR for Pediatric Hemodialysis Patients; (d) Measure 
1433: Use of Iron Therapy for Pediatric Patients; and (e) 1424: Monthly 
hemoglobin measurement for Pediatric Patients.
    Response: We thank the commenters for suggesting additional 
measures relevant to the pediatric portion of the ESRD population for 
future consideration in the ESRD QIP. We recognize the importance of 
assessing the quality of care furnished to pediatric ESRD patients. To 
this end, we are adopting in this final rule a measure of pediatric 
hemodialysis adequacy for PY 2015. We will consider whether it is 
appropriate to propose to adopt

[[Page 67498]]

additional pediatric measures for the ESRD QIP.
    Comment: Some commenters specifically discouraged us from 
considering certain measures for future ESRD QIP adoption. These 
included (i) a quality of life measure, because no research shows that 
facilities can improve this aspect of patient life and patients often 
refuse to take surveys; and (ii) measures on electronic information 
exchange because it is unclear what these measures would entail or how 
they could be carried-out.
    Response: We appreciate the comments and will take them into 
consideration during future measure development.
    Comment: Many commenters supported a measure on transfusions if 
this measure assessed transfusions that are within the control of ESRD 
facilities. One commenter suggested that, before the measure is 
adopted, we wait to see the results of studies looking at when 
transfusions are and are not within a facility's control. One commenter 
requested clarification regarding where CMS accesses transfusion data, 
whether the information shows the underlying reason for the 
transfusion, and the timeframe for CMS' access and analysis of the 
data.
    Response: We appreciate the comments and will take them into 
consideration during future measure development.
    Comment: Commenters also discussed the general principles CMS 
should embrace in future years of the program. Commenters encouraged us 
to work with the kidney care community to adopt a strategic vision for 
the ESRD QIP, specifically the criteria and process for the adoption of 
measures and domains. One commenter requested that CMS and other 
stakeholders agree on the timeline and process for future measure 
development. Commenters also urged us to provide the criteria used to 
select measures, recommending the NQF selection criteria, and engage 
the Measures Application Partnership in identifying measures to include 
in the program and their weighting. In selecting measures, commenters 
stated that every measure should (i) have a verified entity responsible 
to maintain and update it at least once every three years; and (ii) be 
fully and clearly specified and tested for reliability and validity. 
Commenters also recommended that we phase measures into the program, 
requiring reporting of the measure outside of the ESRD QIP for at least 
1year, and once a measure is added, we score facilities based on the 
lesser of the facility's performance or the national performance rate, 
at least for the first year. One commenter stated that all future 
measures should be NQF-endorsed before they are adopted. Another 
commenter noted that NQF-endorsement does not mean a measure is 
appropriate for the ESRD QIP.
    Response: We remain dedicated to a transparent, consensus-based 
measure development process that offers multiple opportunities for 
input from stakeholders. The measure development process that we 
currently use includes using Technical Expert Panels and public comment 
periods, seeking NQF endorsement, providing measures to the Measures 
Application Partnership for feedback, and the rulemaking process in 
which we respond to stakeholder comments. We encourage continued 
engagement by the kidney care community in this process, both in 
prioritizing additional measures, supporting ongoing measure 
development, and providing feedback for currently implemented measures.
    At present, we analyze all clinical measures for validity and 
reliability, and NQF endorsement is a key consideration we take into 
account when deciding whether to propose to adopt clinical measures. 
Where endorsed measures are not available to address key issues 
relevant to the ESRD population, we intend to consider unendorsed 
measures until such endorsed measures are available. We agree that 
clinical measures should be fully specified at the time they are 
proposed.
    We believe that, generally, it is helpful to both the ESRD QIP 
community and CMS to phase-in measures as the commenter suggests. We do 
not entirely understand the comment stating that we should score 
facilities based on the lesser of the facility's performance or the 
national performance rate. We take this to mean that we should use a 
scoring methodology similar to PY 2012 and PY 2013 for new measures. At 
this time, we believe the objectives of the program are best served by 
scoring facilities using the achievement and improvement scoring 
methodology for the reasons discussed below.
    Comment: Some commenters support additional measures but requested 
that they be implemented no sooner than PY 2018 since CROWNWeb has just 
launched and data collection would likely be through CROWNWeb.
    Response: We recognize that CROWNWeb is a new data collection 
system and plan to take that into consideration while developing and 
implementing ESRD QIP measures in the future.
    Comment: In designing future years of the ESRD QIP, commenters 
urged us to focus on the most important measures because adding 
measures could dilute each measure's weight in the calculation of the 
Total Performance Score.
    Response: We acknowledge the commenter's concern and note that we 
will seek to balance appropriateness of the measures, importance of the 
measures, and parsimony as we consider what measures to implement 
through future rulemaking.
    Comment: Some commenters made broad suggestions about measure 
adoption in the future, suggesting that we use a phased approach for 
measure implementation whereby the measures would be reported outside 
of the ESRD QIP for 1 year prior to adoption of the measure in the ESRD 
QIP; commenters argued that this reporting period will allow us to set 
a proper baseline for clinical measures.
    Response: We thank commenters for their suggestions. In general, we 
seek to collect at least 1 year of data through claims or CROWNWeb 
before adopting a measure for the ESRD QIP. However, we make this 
assessment on a case-by-case basis because of the importance of timely 
implementation of some measures (for example, measures that directly 
affect patient safety). We will continue to consider these issues as 
the ESRD QIP evolves.
    Comment: One commenter encouraged us to improve the program by 
maintaining a reasonable number of measures in order to reduce 
administrative costs and publicly reporting quality measures on DFC.
    Response: As the ESRD QIP evolves from year-to-year, we seek to 
continuously evaluate the effectiveness of the measure set, burden to 
providers, and clarity for beneficiaries.
a. Thirty-Day Hospital Readmissions
    One of the major areas our VBP programs seek to promote is care 
coordination. Care coordination measures assess caregivers not only on 
the care directly under their control, but also on their success in 
coordinating care with other providers and suppliers. Hospital 
readmission is often the outcome of uncoordinated care. Care 
coordination measures encourage primary caregivers, ESRD facilities, 
physicians, and hospitals to work together to improve the quality of 
care. A 30-day hospital readmissions measure is a primary example of 
care coordination. This measure is currently under development for the 
ESRD QIP, and we requested comment regarding our use of such a measure 
in future payment years.

[[Page 67499]]

    The comments we received on this topic and our responses are set 
forth below.
    Comment: Commenters made many suggestions with regard to a 30-Day 
Readmissions measure. Some commenters did not support the adoption of 
this measure for the ESRD QIP, arguing that facilities cannot always 
control hospitalization, and suggested that facilities would be better 
suited to use this type of measure in a coordinated care setting. One 
commenter encouraged us to adopt this measure in place of an SHR 
measure because a 30-Day Readmission measure is more likely to increase 
care coordination and less likely to encourage cherry-picking. One 
commenter suggested that a 30-Day Readmission measure include a grace 
period of 10-14 days for which the facility would not be held 
responsible, preventing facilities from being penalized if the patient 
received low-quality care in the hospital, and limiting the possibility 
that facilities could turn away patients who have recently been 
hospitalized. This commenter also pointed out that the hospital 30-Day 
Readmissions measure does not include ESRD patients and argued that 
hospitals should be held responsible for readmissions during the grace 
period the commenter suggests. One commenter requested that the 
community be able to review the findings of the Hospitalization TEP 
that CMS held in May 2012 before this type of measure is adopted.
    Response: We appreciate the comments regarding our consideration of 
a 30-day readmission measure and will take them into consideration in 
future rulemaking. We note that it is our policy to make publicly 
available the results of measure development TEPs through http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TechnicalExpertPanels.html.
b. Efficiency
    One of the main goals of our VBP programs is not only to enhance 
quality of care but also improve efficiency in providing that care. At 
present, we are not aware of an efficiency measure that is appropriate 
for the ESRD population. We noted, however, that we were interested in 
receiving comments regarding this concept.
    The comments we received on this topic and our responses are set 
forth below.
    Comment: We received many comments regarding our proposal of 
developing and adopting an efficiency measure in future years. Several 
commenters noted that an efficiency measure is not necessary because of 
the bundled payment. Many commenters asked that, if such a measure is 
developed, it be case-mix adjusted for nursing home residents, homeless 
patients, and drug and alcohol abuse to discourage cherry-picking. One 
commenter cautioned us to explore the unintended consequences which may 
result from this measure, and another commenter requested that we 
engage in more studies defining ``efficiency'' before we adopt a 
measure.
    Response: We thank our commenters for their input regarding the 
consideration of an efficiency measure for implementation in the ESRD 
QIP. We will take these suggestions into account as we develop measures 
for future years of the ESRD QIP.
c. Population/Community Health
    We are aware that unintended consequences, specifically those 
involving access to care, may result from the ESRD QIP. To address 
these concerns, we are currently monitoring access to care and 
exploring the development of new measures or adjustments to existing 
measures that would mitigate the unintended consequences and/or 
incentivize facilities caring for patients who may, generally, 
contribute to lower facility measure rates. We requested comment on 
developing such a measure or adjustments to measures, specifically with 
regard to access to care issues.
    The comments we received on this topic and our responses are set 
forth below.
    Comment: Many commenters provided feedback on a possible access to 
care measure. Some commenters encouraged the development of such 
measures. Many of these commenters suggested that, instead of creating 
a measure to assess access to care, we develop comorbidity adjustments 
for quality measures that would ease facilities' concerns about 
treating these patients. Commenters who serve aging patients with 
multiple comorbidities believe there needs to be further consideration 
for facilities caring for these types of patient populations. Other 
commenters noted that present and future measures should exclude 
homeless patients, nursing home patients, and patients with 
comorbidities of drug/alcohol abuse and mental health issues to protect 
access to care for these patients. Several commenters believe that care 
coordination is important but is not practical due to data timing 
issues and knowledge of staff; these commenters suggested that CMS fund 
additional staff and technology prior to implementing care coordination 
measures. One commenter suggested that we analyze the following factors 
when assessing access to care: (i) Miles traveled to facility; (ii) 
time required to commute to facility; and (iii) method of 
transportation/responsible party.
    Response: We thank the commenters for expressing interest in 
addressing the issue of access to care. We are sensitive to the 
particular role access to care can play for ESRD patients, and the 
limitations encountered in collecting relevant data. Clinical measures 
assessing mortality and hospitalization in the ESRD population were 
proposed in the PY 2014 ESRD QIP, and we have incorporated risk 
adjustment for comorbidities in the specifications for these measures, 
but it is not clear to us how effectively this risk-adjustment can 
address problems with access. Factors such as distance traveled are not 
captured by claims data. We believe that exclusion of the suggested 
groups (homeless, nursing home patients, etc.) from quality measures 
may protect access for these groups, but would fail to adequately 
address issues for quality of care in those patients who are most at 
risk for poor health outcomes. We are also concerned that such 
exclusions may excuse facilities from taking steps toward more 
effective coordination of care. We respectfully disagree that care 
coordination is not practical. Rather, we believe it is a vital element 
of care for a population that is by definition at particular risk for 
transitions into and out of care settings such as acute care hospitals. 
It is particularly important for those patients who reside in long-term 
care facilities such as nursing homes, or who must seek care for 
chronic conditions related to mental health issues or drug/alcohol 
abuse to receive care that is coordinated since these individuals often 
receive extensive care from various types of providers.
6. Scoring Background and General Considerations for the PY 2015 ESRD 
QIP
    Section 1881(h)(3)(A)(i) of the Act requires the Secretary to 
develop a methodology for assessing the total performance of each 
facility based on the performance standards established with respect to 
the measures selected for the performance period. For the PY 2014 ESRD 
QIP, we adopted a performance scoring methodology that assessed 
facilities on both their achievement and improvement on clinical 
measures. We stated that we believe that this scoring methodology will 
more accurately reflect a facility's performance on the measures 
because it

[[Page 67500]]

will enable us to differentiate between facilities that simply meet the 
performance standards, those that exceed the performance standards by 
varying amounts, and those that fall short of the performance 
standards. We also stated that we believe that the PY 2014 methodology 
appropriately incentivizes facilities to both achieve high Total 
Performance Scores and improve the quality of care they provide (76 FR 
70272). We believe that the methodology set forth for PY 2014 continues 
to incentivize facilities to meet the goals of the ESRD QIP; therefore, 
with the exception of the proposed changes in the proposed rule (77 FR 
40976), we proposed to adopt a scoring methodology for the PY 2015 ESRD 
QIP that is nearly identical to the PY 2014 ESRD QIP.
    The comments we received on this proposal and our responses are set 
forth below.
    Comment: Several commenters supported our proposal to use the PY 
2014 scoring methodology in the PY 2015 ESRD QIP.
    Response: We thank commenters for their support. We will finalize 
our proposals to use the PY 2014 scoring methodology for use in the PY 
2015 program with the modifications discussed below. We believe that 
these modifications improve the efficacy of the program for the reasons 
discussed.
7. Performance Period for the PY 2015 ESRD QIP
    Section 1881(h)(4)(D) of the Act requires the Secretary to 
establish the performance period with respect to a year. For the PY 
2014 ESRD QIP, we finalized a performance period of CY 2012. We stated 
that we believe that, at this point, a 12-month performance period is 
the most appropriate for the program because this period accounts for 
any potential seasonal variations that might affect a facility's score 
on some of the measures, and also provides adequate incentive and 
feedback for facilities and Medicare beneficiaries (76 FR 70271). We 
continue to believe that a 12-month performance period will best meet 
these policy objectives, and we considered what 12-month period would 
be closest in time to the payment year but would still allow us to time 
to operationalize the program, calculate scores, and allow facilities a 
period of time to preview and ask questions regarding these scores 
before they are published and impact payment. We determined that CY 
2013 is the latest period of time during which we can collect a full 12 
months of data and still implement the payment reductions beginning 
with January 1, 2015 services. Therefore, for the PY 2015 ESRD QIP, we 
proposed to establish CY 2013 as the performance period for all of the 
measures. We requested comments on this proposal.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Commenters supported our proposal to use CY 2013 as the 
performance period for the PY 2015 ESRD QIP; some commenters 
specifically supported a performance period that allows us to set 
standards before the performance period begins. Some commenters, while 
supporting this performance period, cautioned us against using data 
from CROWNWeb from this period since CY 2013 will be the first full 
year CROWNWeb is implemented.
    Response: We thank commenters for their support. We note that, 
because we are not finalizing the Hypercalcemia measure, we are no 
longer using data from CROWNWeb for purposes of scoring any clinical 
measure for the PY 2015 ESRD QIP. For purposes of the PY 2015 ESRD QIP, 
we will be using CROWNWeb to collect data only for the Mineral 
Metabolism reporting measure. We believe that this is appropriate since 
facilities will only be required to report data, but will not be scored 
based on these data for PY 2015. We believe that CROWNWeb is 
sufficiently implemented to allow successful reporting for CY 2013. We 
will continue to assess the appropriateness of CROWNWeb data for 
inclusion for purposes of clinical measures in the ESRD QIP.
    Comment: Many commenters asked us to shorten the data lag between 
the performance period and the payment reduction/public reporting of 
the data so that the data can remain relevant. Commenters suggested 
that CROWNWeb could be used to reduce these data lag.
    Response: For PY 2015, we have determined that data derived from 
claims is the most appropriate source on which to score facilities on 
clinical measures because this source is the most complete and 
representative of the greatest number of facilities. Because claims 
take more time to compile and calculate than other data sources to 
ensure reliability, there is a lag between the time when the claims are 
submitted for processing and the time that the claims become available 
to calculate ESRD QIP measure rates. We also believe it is important to 
allow facilities a period of time to review their scores before the 
payment adjustments take place. We are considering how we might be able 
to shorten this timeline in the future. We believe that CROWNWeb will 
be valuable in this effort once it has been successfully launched for a 
period of time, and we are confident that the data submission and 
validity issues have been resolved.
    Comment: One commenter suggested that we consider employing rolling 
12-month performance periods with payment updated quarterly.
    Response: At this time, we are not able to implement a rolling 12-
month performance period that is updated on a quarterly basis because 
we do not have the systems or resources in place to calculate scores, 
answer inquiries, and provide Performance Score Certificates more than 
once per year. We will, however, continue to consider this suggestion 
as the ESRD QIP evolves.
    For the reasons stated above, we finalize CY 2013 as the 
performance period for the PY 2015 ESRD QIP as proposed.
8. Performance Standards for the PY 2015 ESRD QIP
    Similar to the PY 2014 ESRD QIP, we proposed to adopt performance 
standards for the PY 2015 ESRD QIP measures under section 1881(h)(4)(A) 
of the Act. This section provides that ``the Secretary shall establish 
performance standards with respect to measures selected * * * for a 
performance period with respect to a year.'' Section 1881(h)(4)(B) of 
the Act further provides that the ``performance standards * * * shall 
include levels of achievement and improvement, as determined 
appropriate by the Secretary.'' We use the performance standards to 
establish the minimum score a facility must achieve to avoid a payment 
reduction.
a. Clinical Measure Performance Standards
    With respect to the seven proposed clinical measures, we proposed 
to set the PY 2015 improvement performance standard and achievement 
performance standard (collectively, the ``performance standard'') for 
each measure at the national performance rate (which we would define as 
the 50th percentile) of all facilities' performance on the measure 
during CY 2011 (the proposed comparison period--discussed in more 
detail below).
    For the PY 2014 ESRD QIP, we set the performance standards at the 
national performance rate during a baseline period of July 1, 2010-June 
30, 2011. This period of time, however, did not allow us to publish the 
numerical values for the performance standards concurrently with the 
final rule because of the length of time needed for us to compile 
claims-based measure data at

[[Page 67501]]

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

    \6\ http://www.esrdnet11.org.
---------------------------------------------------------------------------

    Uniform Kt/V reporting for hemodialysis patients did not begin 
until January 1, 2012 (CR 7640). Before this time, facilities could use 
a number of different methodologies to calculate Kt/V values, with the 
result that the values could be different depending on which 
methodology was used. We stated in the proposed rule that we have 
analyzed the data collected during the CROWNWeb pilot and found that 88 
percent of facilities that reported to CROWNWeb had reported Kt/V 
values using a NQF specified calculation method (this method is also 
specified in Change Request 7640) that yields consistent results and 
that is part of the specifications for each of the hemodialysis Kt/V 
measures that we proposed to adopt for the PY 2015 program. Though we 
are not able to tell what calculation method a facility used by 
reviewing a claim, we believe it is reasonable to assume that roughly 
the same percentage of facilities reported Kt/V on their claims prior 
to 2012 using the same formula that they used to report it under the 
CROWNWeb pilot. For this reason, we proposed to calculate the 
performance standards for the three proposed Kt/V measures using CY 
2011 claims data. This is the best data we have available at this time 
to set reliable performance standards for Kt/V. We stated that we 
understand that stakeholders may be concerned about the nuances of the 
data and we invited public comment on this proposal.
    We noted that if, after consideration of the comments, we decided 
to not adopt the adult, hemodialysis Kt/V measure for PY 2015, we would 
continue to use URR as a measure of hemodialysis adequacy for this 
population. We also noted that the NQF-endorsed measure for Kt/V 
measure for peritoneal dialysis adequacy does not specify the body 
surface area formulae or the total body water formulae to utilize; and 
we would accept the submission of peritoneal adequacy Kt/V values that 
utilize the methods currently in use as industry standards. We believe 
it is important to include peritoneal dialysis patients in the ESRD QIP 
and we solicited comments on the inclusion of the peritoneal dialysis 
Kt/V adequacy measure. We proposed that, were we to retain the URR 
measure for adult hemodialysis, we would still adopt the Kt/V 
peritoneal dialysis measure. We proposed that these measures would 
still comprise a Dialysis Adequacy measure topic and would be scored in 
the same manner as we proposed for the Kt/V measures, below.
    Even with the challenges outlined above, we believed that the 
advantages of adopting the Kt/V hemodialysis measure for PY 2015 
outweigh the disadvantages. Therefore, we proposed Kt/V as the measure 
for hemodialysis adequacy for PY 2015, but we specifically solicited 
comments regarding whether we should continue to use URR for adult 
hemodialysis patients for PY 2015.\7\
---------------------------------------------------------------------------

    \7\ Note that, as further explained below, the issue we have 
discussed with respect to the reporting of Kt/V values prior to CY 
2012 would not be an issue for the calculation of improvement scores 
because we proposed CY 2012 as the period used to calculate the 
improvement threshold; beginning January 1, 2012, all facilities are 
required to report Kt/V uniformly on their claims.
---------------------------------------------------------------------------

    We also considered calculating performance standards for the Kt/V 
Dialysis Adequacy measure topic based on data from January 1, 2012-June 
30, 2012, to ensure that the data was calculated consistently. We are, 
however, aware that a shortened data period may affect the measure 
rates' reliability. Therefore, we proposed to calculate performance 
standards based

[[Page 67502]]

on the data from CY 2011 discussed above, but we invited comment on an 
alternative 6 month period beginning on or after the date on which 
uniform reporting began, January 1, 2012.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Many commenters agreed with our proposal to use CY 2011 as 
the comparison period for purposes of calculating the performance 
standards because this period will allow facilities to view these 
standards when the final rule is published. Others, however, expressed 
support for using data from July 1, 2011-June 30, 2012 to calculate the 
performance standards because this period is closest in time to the 
performance period. Some commenters did not have a preference for the 
comparison period, but requested that we be consistent in the time 
periods we choose. Many commenters suggested that, regardless of the 
time period, we do not use CROWNWeb data to calculate performance 
standards because the data in CROWNWeb from this time period is largely 
from large dialysis organizations (LDOs).
    Response: Although we appreciate that July 1, 2011-June 30, 2012 is 
closer in time to the performance period, we believe that it will be 
more beneficial to facilities if they are familiar with the performance 
standards against which their performance will be evaluated before the 
performance period begins. We will continue to evaluate whether it will 
be feasible in the future to adopt performance standards using data 
from a period closer in time to the performance period and also make 
those standards public before the beginning of the performance period. 
Additionally, as we stated above, we will not be finalizing the 
Hypercalcemia measure for PY 2015. All of the other clinical measures 
we are adopting for PY 2015 are claims-based, and we can set the 
performance standards for those measures without using CROWNWeb data.
    Comment: One commenter expressed concern that the standards are too 
rigid and we expect perfection.
    Response: We believe that the standards that we are setting are 
appropriate. It is the past performance of facilities nationally which 
determine the performance standards; thus, ESRD facilities have 
demonstrated their ability to achieve these standards. Additionally, to 
avoid a payment reduction, facilities need only meet the minimum Total 
Performance Score. As discussed below, a facility need not have a 
perfect score on all, or any, of the measures to meet this minimum. 
Furthermore, we believe it is important to incentivize the best care 
possible.
    For these reasons, we finalize our proposal to establish 
performance standards for the PY 2015 ESRD QIP clinical measures at the 
50th percentile of national performance during CY 2011. The numerical 
values for the performance standards are set forth below in Table 5.
b. Performance Standards

  Table 5--Finalized Numerical Values for the Performance Standards for
                 the PY 2015 ESRD QIP Clinical Measures
------------------------------------------------------------------------
                                                            Performance
                         Measure                            standard  %
------------------------------------------------------------------------
Hemoglobin > 12 g/dL....................................               1
Vascular Access Type....................................  ..............
  % Fistula.............................................              60
  % Catheter............................................              13
Kt/V                                                      ..............
  Adult Hemodialysis....................................              93
  Adult, Peritoneal Dialysis............................              84
  Pediatric Hemodialysis................................              93
------------------------------------------------------------------------

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

[[Page 67503]]

achievement and improvement scoring methodology for purposes of 
assessing their performance on the clinical measures. Under the PY 2014 
ESRD QIP scoring methodology, a facility's performance on each of the 
clinical measures is determined based on the higher of (i) an 
achievement score or (ii) an improvement score (76 FR 70273). We 
proposed to use a similar methodology for purposes of scoring facility 
performance on each of the clinical measures for the PY 2015 ESRD QIP.
    As in PY 2014, in determining a facility's achievement score for 
the PY 2015 program, we proposed that facilities would, based on their 
performance in CY 2013 (the proposed performance period), receive 
points along an achievement range, which we would define as a scale 
that runs from the achievement threshold to the benchmark. We proposed 
to define the achievement threshold for each of the proposed clinical 
measures as the 15th percentile of national facility performance during 
CY 2011. We stated our belief that this achievement threshold will 
provide an incentive for facilities to continuously improve their 
performance while not reducing the incentives to facilities that score 
at or above the national performance rate for the clinical measures (76 
FR 70276). We proposed to define the benchmark as the 90th percentile 
of the national facility performance during CY 2011 because it 
represents a demonstrably high but achievable standard of excellence 
that the best performing facilities reached. We further proposed that, 
for the proposed Kt/V Dialysis Adequacy measures and the proposed 
Hypercalcemia measure, we would use the same data we proposed above to 
calculate the performance standards for purposes of calculating the 
achievement thresholds and the benchmarks for these measures. We 
requested comment on these proposals.
    In determining an improvement score for the clinical measures, we 
proposed that facilities would receive points along an improvement 
range, defined as a scale running between the improvement threshold and 
the benchmark. We proposed to define the improvement threshold as the 
facility's rate on the measure during CY 2012. The facility's 
improvement score would be calculated by comparing its performance on 
the measure during CY 2013 (the proposed performance period) to its 
performance on the measure during CY 2012. We proposed to base the 
improvement threshold on data from CY 2012 rather than CY 2011 (the 
period of time we had proposed to use to calculate the performance 
standards, achievement thresholds, and benchmarks) because, as we 
explained above, we do not have complete facility level CY 2011 data 
that we can use to calculate an improvement threshold for every 
facility on the Kt/V Dialysis Adequacy measures. Rather than proposing 
to adopt a policy under which no facility could receive an improvement 
score on these measures, we proposed to use data from CY 2012 to 
calculate the improvement thresholds. Additionally, we stated our 
belief that by using CY 2012 to calculate the improvement thresholds, 
we will more closely align timing of the payment reduction with the 
period of time we use to calculate improvement thresholds. We requested 
comments on our proposal to use data from CY 2012 to calculate 
improvement thresholds.
    When considering the time period we would use to calculate 
improvement thresholds, we sought to mitigate data lag issues as much 
as possible by selecting a period in time as close as possible to the 
performance period. However, to entirely mitigate this data lag, we 
also considered a period that would take place during the performance 
period. Using this approach, to calculate an improvement score, we 
would derive an improvement threshold from either the first quarter of 
CY 2013 or the first 6 months of CY 2013 and compare it to the 
facility's measure rate in the last quarter of CY 2013 or the last 6 
months of CY 2013, respectively. We ultimately decided to not propose 
this approach because, when possible, we prefer to use 12 months of 
data to calculate measure rates to ensure more reliable rates, 
particularly for low-volume facilities. Additionally, using this 
approach, part of the performance period for purposes of calculating 
the facility's performance rate and achievement score (all of CY 2013) 
could overlap with the data we use to calculate the improvement 
threshold (first quarter or 6 months of CY 2013). Although we proposed 
to calculate improvement thresholds based on data from CY 2012, we also 
requested comment regarding use of these alternative periods for 
purposes of calculating the improvement thresholds.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: One commenter stated that, to foster continued 
improvement, we should consider raising the achievement threshold over 
time to a level greater than 15 percent.
    Response: We believe that, at this time, it is appropriate to set 
the achievement threshold at the 15th percentile so that lower-
performing facilities are incentivized to provide high quality care; if 
the thresholds are set too high, it is possible that a facility would 
not be incentivized to perform well because the cost to meet the 
achievement threshold would be so high that it would outweigh the 
overall loss of revenue resulting from the ESRD QIP payment reduction. 
Although we do not believe we should award low-performing facilities a 
large number of points, we do believe it is important to set the 
standards to incentivize all facilities to perform better.
    Comment: One commenter suggested that we rename the achievement 
threshold the ``Statistical Performance Floor'' because ``achievement'' 
seems misleading if the floor is set at the 15th percentile. This 
commenter also recommended that the facility performance rate be 
renamed the ``Facility's Current Year Performance Rate,'' the benchmark 
be renamed the ``Exceptional Performance Rate'' since it is at the 90th 
percentile, and the performance standard be renamed the ``National 
Average/Median Performance Rate in the Base Year.''
    Response: One of the ways we can make the ESRD QIP transparent is 
by seeking to achieve consistency from year-to-year, provided there is 
not a contravening interest. Changing the terminology of the 
achievement threshold, performance rate, performance standards, and 
benchmark could unnecessarily confuse both facilities and 
beneficiaries. Additionally, we seek to harmonize CMS' value-based 
purchasing programs as much as possible, and we use these naming 
conventions across programs.
    Comment: Several commenters argued that we are creating 
inconsistencies between the Conditions for Coverage (CfCs) and the ESRD 
QIP; these commenters specifically argued that the CfCs state that a 
facility cannot be penalized for patient non-compliance, but many of 
the ESRD QIP measures effectively penalize facilities for patient non-
compliance. The commenter suggested that we make allowances for patient 
noncompliance in the ESRD QIP's design; one commenter specifically 
recommended that we should require only 90 percent compliance from 
patients that visit the facility at least seven times per month to 
reconcile the CfCs and the ESRD QIP.
    Response: We do not believe that we are creating inconsistencies 
between the CfCs and the ESRD QIP, nor do we believe that the ESRD QIP 
penalizes facilities for patient non-compliance. Although patients' 
compliance with the plan of care is a factor in some of the

[[Page 67504]]

measures, the quality of care is largely controlled by the facility's 
treatment of patients. Additionally, to the extent that patient non-
compliance may be a factor, facilities are not required to obtain 
perfect results for every patient. To avoid a payment reduction, as we 
explain below, a facility need only meet the performance standards 
(that is, the 50th percentile of national performance) for each 
clinical measure during the comparison period (for PY 2015, this will 
be CY 2011) and score half of the possible points for the reporting 
measures.
    Comment: Commenters agreed with our proposal to use the facility's 
rate in CY 2012 to calculate improvement thresholds.
    Response: We thank the commenters for their support.
    Comment: One commenter suggested that the improvement threshold be 
renamed the ``Facility's Base Year Performance Rate'' since the 
improvement threshold does not represent a gain or level of 
improvement.
    Response: As noted above, we believe it is important to use 
consistent terminology from year-to-year to ensure transparency and 
comprehension in both the ESRD QIP and across CMS' VBP programs.
    For the reasons discussed above, we finalize our proposed 
definitions of the achievement thresholds, benchmarks, and improvement 
thresholds. We have calculated the numerical values for the achievement 
threshold and benchmarks based on data from CY 2011; we will calculate 
the numerical values for the improvement thresholds based on individual 
facilities' data from CY 2012. The numerical values for the achievement 
thresholds and benchmarks for the PY 2015 ESRD QIP clinical measures 
are set forth below in Table 6.

    Table 6--Finalized Numerical Values of Achievement Thresholds and
          Benchmarks for the PY 2015 ESRD QIP Clinical Measures
------------------------------------------------------------------------
                                            Achievement
                 Measure                     threshold       Benchmark
                                             (percent)       (percent)
------------------------------------------------------------------------
Hemoglobin > 12 g/dL....................               5               0
Vascular Access Type:
    % Fistula...........................              47              75
    % Catheter..........................              22               5
Kt/V:
    Adult Hemodialysis..................              86              97
    Adult, Peritoneal Dialysis..........              63              94
    Pediatric Hemodialysis..............              83              97
------------------------------------------------------------------------

    In accordance with our statements in the CY 2012 ESRD PPS final 
rule (76 FR 70273), if the final PY 2015 numerical values for the 
achievement thresholds and benchmarks are worse than PY 2014 for a 
measure, we proposed to substitute the PY 2014 achievement thresholds 
and benchmarks for that measure. We believe that the ESRD QIP should 
not have lower standards than previous years. We requested comments on 
this proposal.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: One commenter did not support our proposal to keep 
achievement thresholds and benchmarks at least as high as they were the 
previous year and suggests that we, instead, investigate why these 
values would drop. Another commenter agreed with our proposal and 
stated that the only reason that performance standards should be lower 
than they were the previous year is if we discover a major technical 
issue with the previous year's standards, such as that the performance 
standards were miscalculated.
    Response: We believe it is important to encourage improvement as 
the ESRD QIP evolves to ensure that beneficiaries continue to receive 
quality care at achievable levels. Therefore, we will finalize our 
proposal to utilize previous years' achievement threshold and 
benchmarks if they are higher than those of the next year. The 
achievement thresholds and benchmarks for the measures used in previous 
years of the ESRD QIP (the Hemoglobin Greater than 12 g/dL measure and 
the Vascular Access Type measure topic) have not declined. Therefore, 
for PY 2015, we will use the performance standards in the above table. 
If we discover that performance on any of the measures is declining in 
future years, we also intend to investigate the precipitating causes 
and modify the ESRD QIP as necessary to ensure high quality care for 
beneficiaries.
a. Scoring Facility Performance on Clinical Measures Based on 
Achievement
    We proposed to award between 0 and 10 points for each of the 
clinical measures. As noted, we proposed that this score be based upon 
the higher of an achievement or improvement score on the measure. For 
purposes of scoring achievement for the measures, we proposed to base 
the score on where a facility's performance falls relative to the 
achievement threshold and the benchmark for that measure. We proposed 
that, identical to PY 2014, if a facility's measure rate during the 
performance period is:
     Equal to or greater than the benchmark, the facility would 
receive 10 points for achievement;
     Less than the achievement threshold, the facility would 
receive 0 points for achievement; or
     Equal to or greater than the achievement threshold, but 
below the benchmark, the following formula would be used to derive the 
achievement score:
    [9 * ((Facility's performance period rate--achievement threshold)/
(benchmark--achievement threshold))] + .5, with all scores rounded to 
the nearest integer, with half rounded up. Using this formula, a 
facility would receive a score of 1 to 9 points based on a linear scale 
disturbing all points proportionately between the achievement threshold 
and the benchmark so that the interval in performance between the score 
needed to receive a given number of achievement points and one 
additional achievement point is the same throughout the range of 
performance from the achievement threshold to the benchmark.
b. Scoring Facility Performance on Clinical Measures Based on 
Improvement
    We proposed that facilities would earn between 0 and 9 points for 
each of

[[Page 67505]]

the clinical measures based on how much their performance on the 
measure during CY 2013 improved from their performance on the measure 
during CY 2012. A unique improvement range for each measure would be 
established for each facility. We proposed that if a facility's measure 
rate during the performance period is:
     Less than the improvement threshold, the facility would 
receive 0 points for improvement; or
     Equal to or greater than the improvement threshold, but 
below the benchmark, the following formula would be used to derive the 
improvement score:
    [10 * ((Facility performance period rate--Improvement threshold)/
(Benchmark--Improvement threshold))]--.5, with all scores rounded to 
the nearest integer, with half rounded up.

We note that if the facility's score is equal to or greater than the 
benchmark, it would receive 10 points on the measure per the 
achievement score methodology discussed above.
    The comment we received on these proposals and our responses are 
set forth below.
    Comment: One commenter requested clarification on whether (i) a 
facility can earn points if its performance rate is below the 
improvement threshold but above the achievement threshold and (ii) a 
facility can earn points if its performance rate is below the 
achievement threshold but above the improvement threshold. A commenter 
also requested clarification regarding whether, when scoring 
improvement, we multiply the ((Facility performance period rate--
Improvement threshold)/(Benchmark--Improvement threshold))] by 10 
before or after we subtract 0.5. Likewise, this commenter requested 
clarification for the achievement scoring on whether we multiply the 
((Facility's performance period rate--achievement threshold)/
(benchmark--achievement threshold))] by 9 before or after we add 0.5.
    Response: It is possible for a facility to earn achievement points 
even if that facility did not improve during the performance period as 
long as that facility's performance period rate exceeds the improvement 
threshold. Likewise, a facility can earn improvement points even if its 
measure rate during the performance period is below the achievement 
threshold provided that facility improved during the performance 
period. Additionally, the 0.5 is added or subtracted, for achievement 
and improvement respectively, as the last step in the equations.
    For the reasons stated above, we will finalize the proposed 
methodology for scoring measures on achievement and improvement.
c. Calculating the Reporting Measure Scores
    As noted, reporting measures differ from clinical measures in that 
they are not scored based on clinical values, but rather, are scored 
based on whether facilities are successful in achieving the reporting 
requirements associated with each of the measures. The criteria that 
would apply to each reporting measure are discussed below.
    With respect to the proposed Anemia Management, Mineral Metabolism, 
and NHSN Dialysis Event reporting measures, for each measure, we 
proposed to award facilities:
    (i) 0 points for meeting the reporting requirements for less than 
6-consecutive months during the performance period;
    (ii) 5 points for meeting the reporting requirements for at least 
6-consecutive months during the performance period; and
    (iii) 10 points for meeting the reporting requirements for all 12 
months of the performance period.
    We believe that requiring 6-consecutive months of data rather than 
6 non-consecutive months of data for a facility to receive points on 
these measures will hold facilities to the highest level of quality, 
therefore, facilities will be encouraged to continue to improve their 
reporting mechanisms throughout the performance period. We are 
concerned that awarding points for 6 non-consecutive months of 
reporting may cause facilities to be less diligent in their reporting 
efforts overall. We specifically requested comment regarding whether 
the proposed 6-consecutive month reporting requirement will improve 
quality more than a non-consecutive month reporting requirement. We 
also proposed, as discussed in more detail below, that facilities would 
need to receive a CCN prior to July 1, 2013 in order to receive a score 
on a reporting measure. Finally, for purposes of the NHSN Dialysis 
Event reporting measure, we proposed that to be awarded 5 or 10 points, 
any facility that has not yet enrolled and trained in the NHSN dialysis 
event system must do so and must agree to the required consent (http://www.cdc.gov/nhsn/PDFs/PurposesEligibilityRequirementsConfidentiality.pdf).
    With respect to the proposed ICH CAHPS reporting measure, we 
proposed to retain the PY 2014 scoring methodology for the PY 2015 ESRD 
QIP. An in-center hemodialysis facility will receive a score of 10 
points if it attests that it successfully administered the ICH CAHPS 
survey via a third party during the performance period according to the 
specification found at https://www.cahps.ahrq.gov/Surveys-Guidance/ICH.aspx. Eligible facilities (facilities providing adult, in-center 
hemodialysis) that do not provide such an attestation would receive 0 
points on the measure. We proposed that this attestation must be 
entered via CROWNWeb by January 31, 2014. We note that the ICH CAHPS 
survey is only available to adult patients who are treated in-center. 
For purposes of the ICH CAHPS reporting measure, we determine whether a 
facility treats adult, in-center patients by referencing the facility's 
information in CMS data sources (that is, SIMS and CROWNWeb). 
Facilities report the types of patients that they serve in these data 
sources. If a facility lists adult in-center services, we proposed that 
the facility would be required to comply with the ICH CAHPS reporting 
measure.
    We requested comment on the proposed methodology for scoring the PY 
2015 ESRD QIP reporting measures. We also requested comment regarding 
whether facilities should receive points for partially reporting data 
and whether such reporting need be for consecutive months.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Several commenters requested that we award points for 
partial or non-consecutive reporting of data. Other commenters 
recommended that we modify our scoring of the NHSN Dialysis Event, 
Anemia Management, and Mineral Metabolism reporting measures to allow 
facilities to gain points for non-consecutive reporting on a point 
scale of 0-10. Commenters suggested that two should be subtracted from 
the number of months for which the dialysis facility successfully meets 
the reporting requirements (rounding negative scores to zero), meaning 
that a facility would have to report two months of data before 
receiving points on the measure. Commenters argued that this approach 
will encourage facilities to consistently report even if consecutive 
reporting is not possible. One commenter argued that facilities should 
be required to report for all months in order to receive any points on 
this measure; alternatively, this commenter urged us to require 
facilities to report consecutive months of data.
    Response: We thank commenters for these suggestions. The NHSN 
participation requirements state that facilities must report at least 6 
months of data during a calendar year to the

[[Page 67506]]

dialysis event module to maintain active status in the NHSN. We believe 
it is important to align the scoring requirements for the NHSN dialysis 
event reporting measure for the ESRD QIP with the NHSN requirements, 
which are intended to improve the quality of the data submitted to the 
NHSN. Furthermore, we believe the severity of bloodstream infections 
and other vascular access-related infections among dialysis patients 
warrants more extensive monitoring in order to prevent future events. 
We will, therefore, require a minimum of 6 months of NHSN Dialysis 
Event reporting before awarding facilities points. We believe that 
facilities should receive credit for reporting non-consecutive months 
for this measure; we agree with commenters that this approach will 
encourage reporting because, even if a facility misses a month or many 
months, it can still receive points on the measure. Additionally, NHSN 
requirements allow non-consecutive reporting, but strongly encourage 
regular monthly reporting. We also agree with the commenters who stated 
that facilities should be awarded points on an incremental scale to 
incentivize reporting as much as possible. Therefore, we will begin 
awarding points for 6 months of reporting, and will not require 
consecutive monthly reporting during the performance period. 
Additionally, we will award incremental points for reporting more than 
6 months of data. We will award points to facilities as follows:
    (i) 0 points for reporting less than 6 months of data;
    (ii) 5 points for reporting 6 months of data; and
    (iii) 10 points for reporting 12 months of data.
    (iv) If the facility reports more than 6 but less than 12 months of 
data, we will award incremental points using the following formula:
[GRAPHIC] [TIFF OMITTED] TR09NO12.000

We will round the result of this formula (with half rounded up) to 
generate a measure score from 5-10 points; as noted, facilities will 
earn points for reporting non-consecutive months.
    As we discuss below, because of the time it takes to train and 
enroll in the NHSN Dialysis Event module, we do not believe that it is 
feasible for all facilities receiving a CCN in the performance period 
to report at least 6 months of data. We will not apply the 6 month 
minimum requirement on these newly opened facilities, as we believe 
this requirement would place significant undue burden on these 
facilities to report data during their initial year of operation 
starting up their care delivery and administration. Therefore, the NHSN 
Dialysis Event reporting measure will not apply to any facility 
receiving a CCN on or after January 1, 2013.
    For the Mineral Metabolism and Anemia Management reporting 
measures, we believe that it is beneficial to encourage less than 6 
months of reporting so that we can receive data from as many facilities 
as possible and use this data to develop a robust clinical measure in 
these areas. We believe that the Anemia Management and Mineral 
Metabolism reporting measures should also allow facilities to receive 
credit for reporting non-consecutive months because we believe that 
this approach will encourage reporting even if a facility fails to 
report for a month or more. We agree with commenters that a facility 
should be required to report at least two months before it is awarded 
points. Two months of reporting translates to reporting at a rate 
roughly equal to our achievement threshold for clinical measures--15 
percent. We have determined that this threshold is an appropriate 
marker for where a facility should start earning achievement points on 
the clinical measures, and we believe it should also apply to these 
reporting measures. Additionally, as we discuss below, we will apply 
the scoring methodology for the Anemia Management and Mineral 
Metabolism reporting measures to facilities that receive a CCN during 
the first 6 months of the performance period. Taking all of these 
elements into consideration, we are finalizing a scoring methodology 
that will allow facilities to score points on the Mineral Metabolism 
and Anemia Management reporting measures provided that they receive a 
CCN before July 1, 2013. In order to score above a zero on these 
measures, a facility must report at least three months of data.
    Therefore, we finalize that facilities receiving a CCN before July 
1, 2013 will score 0-10 points on the Anemia Management and Mineral 
Metabolism reporting measures using the following formula:
[GRAPHIC] [TIFF OMITTED] TR09NO12.001

We will round the result of this formula (with half rounded up) to 
generate a measure score from 0-10, and we will allow facilities to 
earn points using the same formula for reporting non-consecutive 
months.
    Additionally, we finalize the ICH CAHPS measure scoring as 
proposed.
10. Weighting the PY 2015 ESRD QIP Measures and Calculation of the PY 
2015 ESRD QIP Total Performance Score
    Section 1881(h)(3)(A)(iii) of the Act provides that the methodology 
for assessing facility total performance shall include a process to 
weight the performance scores with respect to individual measures to 
reflect priorities for quality improvement such as weighting the scores 
to ensure that facilities have strong incentives to meet or exceed 
anemia management and dialysis adequacy performance standards, as 
determined appropriate by the Secretary. In determining how to

[[Page 67507]]

appropriately weight the PY 2015 ESRD QIP measures for purposes of 
calculating Total Performance Scores, we considered two criteria. 
Specifically, we considered the number of measures we had proposed to 
include in the PY 2015 ESRD QIP as well as the National Quality 
Strategy priorities.
a. Weighting Individual Measures To Compute Measure Topic Scores for 
the Kt/V Dialysis Adequacy Measure Topic and the Vascular Access Type 
Measure Topic
    Because the Kt/V Dialysis Adequacy measure topic and the Vascular 
Access Type measure topic are comprised of multiple measures, it is 
necessary for us to discuss how we will derive an overall score for 
each measure topic. For these measure topics, we proposed that each 
measure be scored separately for each facility using the achievement 
and improvement methodology discussed above. After calculating the 
individual measure scores within a measure topic, we proposed to 
calculate a measure topic score using the following steps: (1) Dividing 
the number of patients in the denominator of each measure by the sum of 
the denominators for all of the applicable measures in the measure 
topic; (2) multiplying that figure by the facility's score on the 
measure; (3) summing the results achieved for each measure; and (4) 
rounding this sum (with half rounded up). We proposed that, if a 
facility does not have enough patients to receive a score on one of the 
measures in the measure topic (this proposal is discussed below), that 
measure would not be included in the measure topic score for that 
facility. Only one measure within the measure topic need have enough 
cases to be scored in order for the measure topic to be scored and 
included in the calculation of the Total Performance Score. We stated 
that we believe it is important to proportionately weight the measures 
within a measure topic because we seek to give equal importance to each 
patient. Finally, we proposed that the measure topic score would be 
equal to one clinical measure in the calculation of the Total 
Performance Score.
    For additional explanation of our proposals to calculate measure 
topic scores, we provided the following examples:

    Example 1:  Facility X serves hemodialysis (HD), peritoneal 
dialysis (PD), and pediatric patients. For HD patients, Facility X's 
Kt/V measure rate is 50/60. For PD patients, Facility's X's Kt/V 
measure rate is 15/20. For pediatric patients, Facility X's Kt/V 
measure rate is 10/20. There are 100 patients included in the 
measure topic (60+20+20). Assume that the facility's measure rates 
lead to the following measure scores: HD--7; PD--8; pediatric--5. To 
compute the Kt/V Dialysis Adequacy measure topic score for Facility 
X, we would calculate the following: (7*60/100)+(8*20/100)+(5*20/
100) = 6.8, which we would round to 7. The Kt/V Dialysis Adequacy 
measure topic score would then be treated as one clinical measure 
when calculating the Total Performance Score.
    Example 2:  Facility Y serves HD patients and PD patients. For 
HD patients, Facility Y's Kt/V measure rate is 50/60; assume that 
this rate leads to a score of 6. For PD patients, Facility Y's Kt/V 
measure rate is \4/7\. Facility Y has no Kt/V measure rate for 
pediatric patients because it does not serve this population. Assume 
that the minimum case number for scoring a measure is 11. Because 
there are only seven cases in Facility Y's denominator, Facility Y 
would not receive a PD Kt/V measure score. Furthermore, Facility Y 
did not treat any pediatric patients, so it would not receive a 
pediatric Kt/V measure score. Therefore, the Kt/V Dialysis Adequacy 
measure topic score for Facility Y would be 6. The Kt/V Dialysis 
Adequacy would then be treated as one clinical measure when 
calculating the Total Performance Score.

    We requested comment on the proposed method of weighting individual 
measure scores to derive a measure topic score.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Some commenters supported our proposals for weighting 
measure topics. Some commenters, however, raised concerns that, given 
the small number of pediatric patients relative to adult patients, 
combining the adequacy measures might result in a score that does not 
accurately reflect the quality of care provided to pediatric patients 
treated in adult dialysis facilities. Other commenters suggested that 
the measure topics should be weighted consistently across facilities to 
allow meaningful comparisons between facilities; these commenters 
requested that we modify the weighting so that each measure is weighted 
based on clinical relevance, importance, and the number of patients in 
a ``typical'' facility's population.
    Response: We disagree with the commenters' statement that combining 
the adequacy measures might not reflect the quality of care given to 
certain patients. The weighting scheme ensures that emphasis on each 
measure in the Kt/V measure topic is proportionate to the number of 
patients that facility treats. If we were to weight the measure topics 
consistently across facilities or base the weight on clinical relevance 
or the typical facility, the scoring methodology would not equally 
weight the quality of care provided to each, individual patient. That 
is, one patient's results could count for more points than another 
patient's results, perhaps incentivizing better care for only certain 
ESRD populations. It is the goal of the ESRD QIP to provide the best 
care for every patient, and we believe the proposed weighting for 
measure topics meets this goal. Therefore, we are finalizing the 
methodology of weighting measure topics as proposed.
b. Weighting the Total Performance Score
    In the proposed rule we stated our belief that weighting the 
finalized clinical measures/measure topics equally will incentivize 
facilities to improve and achieve high levels of performance across all 
of the measures, resulting in overall improvement in the quality of 
care provided to ESRD patients. We also stated our belief that, while 
the reporting measures are valuable, the clinical measures value actual 
patient outcomes and therefore justify a higher combined weight. We 
did, however, propose to weight the clinical measures slightly less for 
the PY 2015 ESRD QIP than we did for the PY 2014 ESRD QIP. For the PY 
2015 ESRD QIP, we believe it is important to begin to more rigorously 
incentivize reporting, specifically since for three of the four 
reporting measures, we now require actual data submission. We intend to 
use these data for purposes of developing and creating clinical 
measures in the future; thus, complete and correct data submission in 
these areas is essential to the program's overall goal of continued and 
improved ESRD quality care. For these reasons, we proposed to equally 
weight the clinical measures/measure topics for which a facility 
receives a score equal to 80 percent of the Total Performance Score; we 
also proposed to equally weight the reporting measures for which a 
facility receives a score as 20 percent of the Total Performance Score. 
We requested comment on this proposed methodology for weighting the 
clinical and reporting measures.
    We have also considered the issue with awarding a Total Performance 
Score to facilities that do not report data on the proposed minimum 
number of cases with respect to one or more of the finalized measures/
measure topics. As we stated in the CY 2012 ESRD PPS final rule, we 
believe it is important to include as many facilities as possible in 
the ESRD QIP. We did, however, revisit our policy of including any 
facility that receives a score on one measure, whether that measure is 
a clinical or reporting measure, and we proposed a different approach 
for PY 2015. We stated our belief that it is preferable to

[[Page 67508]]

require a facility to have at least one clinical and one reporting 
measure to receive a Total Performance Score. By requiring this 
minimum, we ensure that a facility is not included in the program 
unless it meets the minimum case requirement for at least one clinical 
measure/measure topic. In the case of a facility that has sufficient 
data (11 cases, as discussed below) from the performance period, but 
lacks sufficient data (11 cases, as discussed below) to calculate the 
improvement threshold, we proposed to only calculate its achievement 
score, because it would not be possible to calculate its improvement 
score. We requested comment on our proposals to require a facility to 
qualify for a score on at least one reporting and one clinical measure 
in order to receive a Total Performance Score.
    Finally, we proposed that all Total Performance Scores be rounded 
to the nearest integer, with half being rounded up, and we requested 
comment on this proposal. For further examples regarding the proposed 
measure and Total Performance Score calculations, we refer readers to 
the figures below.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Many commenters supported our proposed scoring 
methodology. Commenters specifically supported our proposal to require 
a facility to have a score for both a clinical and a reporting measure 
to receive a Total Performance Score. One commenter stated that, 
because of the importance of preventing HAIs, we should weight the 
reporting measures at 50 percent of the Total Performance Score. Some 
commenters stated their belief that we should maintain the 90/10 Total 
Performance Score weighting because clinical outcomes are more 
important than simply tracking and relaying information.
    Response: We believe, at this time, that it is appropriate to 
weight all of the clinical measures topics equally and all of the 
reporting measures equally in order to equally incentivize quality in 
all of these areas of care. We do, however, agree with the commenter 
that noted that because of the importance of reporting measures, such 
the NHSN Dialysis Event measure which tracks HAIs, we should give 
greater weight to the reporting measures in calculating the Total 
Performance Score. As stated above, we are not finalizing the 
Hypercalcemia clinical measure due to our lack of consistent baseline 
data. Instead, we will collect calcium data through the Mineral 
Metabolism reporting measure until we have baseline data that is robust 
enough to support a clinical measure's adoption. Because of our need to 
collect data from not only LDOs, as we did in the CROWNWeb pilot, but 
all types of dialysis facilities, our decision to not finalize the 
Hypercalcemia measure, and the importance of collecting HAI data 
through the NHSN Dialysis Event reporting measure, we believe it is 
appropriate to weight the reporting measures more than we had proposed. 
We continue to believe, however, that clinical outcomes should 
constitute the majority of the Total Performance Score. Therefore, we 
finalize that, for the PY 2015 ESRD QIP, each clinical measure/measure 
topic will be equally weighted to comprise 75 percent of the Total 
Performance Score, and the reporting measures will be equally weighted 
to comprise 25 percent of the Total Performance Score.
c. Examples of the PY 2015 ESRD QIP Scoring Methodology
    Below, we provide examples to illustrate the scoring methodology 
for the PY 2015 ESRD QIP. Figures 1-3 illustrate the scoring for a 
clinical measure. Figure 1 shows Facility A's performance on an example 
clinical measure. Note that for this example clinical measure, the 
facility is attempting to achieve a high rate (that is, the higher the 
measure rate, the higher the measure score). The example benchmark 
(which is the 90th percentile of performance nationally in CY 2011) 
calculated for this measure is 74 percent, and the example achievement 
threshold (which is the 15th percentile of performance nationally in CY 
2011) is 46 percent. Facility A's performance rate of 86 percent during 
the performance period meets or exceeds the benchmark of 76 percent, so 
Facility A would earn 10 points (the maximum) for achievement for this 
measure. (Because, in this example, Facility A has earned the maximum 
number of points possible for this measure, its improvement score is 
irrelevant.)
[GRAPHIC] [TIFF OMITTED] TR09NO12.002

Figure 2 shows the scoring for another facility, Facility B. As 
illustrated below, the facility's performance on the example clinical 
measure improved from 26 percent in CY 2012 to 54 percent during the 
performance period. The achievement threshold is 46 percent, the 
performance standard is 58 percent, and the benchmark is 74 percent.

[[Page 67509]]

[GRAPHIC] [TIFF OMITTED] TR09NO12.003

Because the facility's performance during the performance period is 
within both the achievement range and the improvement range, we must 
calculate both the improvement and achievement score to find the 
example clinical measure score. To calculate the achievement score, we 
would employ the formula discussed above.
[GRAPHIC] [TIFF OMITTED] TR09NO12.004

The result of this formula for this example is [9 * ((54 - 46)/(74 - 
46))] + .5, which equals 3.07 and we round to 3.
    Likewise, to calculate the improvement score, we employ the 
improvement formula discussed above.
[GRAPHIC] [TIFF OMITTED] TR09NO12.005

The result of this formula for this example is [10 * ((54 - 26)/(74 - 
26))] - .5, which equals 5.33 and we round to 5. Therefore, for this 
example clinical measure, Facility B's achievement score is 3, and its 
improvement score is 5. We award Facility B the higher of the two 
scores. Thus, Facility B's score on this example measure is 5.
    In Figure 3 below, Facility C's performance on the example clinical 
measure drops from 53 percent in CY 2012 to 40 percent in CY 2013, a 
decline of 13 percent.

[[Page 67510]]

[GRAPHIC] [TIFF OMITTED] TR09NO12.006

Because Facility C's performance during the performance period falls 
below the achievement threshold of 46 percent, it receives 0 points for 
achievement. Facility C also receives 0 points for improvement because 
its performance during the performance period was lower than its 
improvement threshold (its performance during CY 2012). Therefore, in 
this example, Facility C would receive 0 points for the example 
clinical measure.
    The method illustrated above would be applied to each clinical 
measure in order to obtain a score for each measure. Scores for 
reporting measures are calculated based upon their individual criteria, 
as proposed.
    After calculating the scores for each measure, we calculate the 
Total Performance Score. As an example, applying the weighting criteria 
to a facility that receives a score on all finalized measures, we would 
calculate the facility's Total Performance Score using the following 
formula:

Total Performance Score = [(.25 * Hemoglobin Greater Than 12g/dL 
Measure) + (.25 * Kt/V Dialysis Adequacy Measure Topic) + (.25 * 
Vascular Access Type Measure Topic) + (..0625 * NHSN Dialysis Event 
Reporting Measure) + (.0625 * ICH CAHPS Survey Reporting Measure) + 
(.0625 * Mineral Metabolism Reporting Measure) + (.0625 * Anemia 
Management Reporting Measure)] * 10.

The Total Performance Score would be rounded to the nearest integer 
(and any individual measure values ending in .5 would be rounded to the 
next higher integer).
    However, if, for example, a facility did not receive a score on the 
Vascular Access Type measure topic, the facility's Total Performance 
Score would be calculated as follows:

Total Performance Score = [(.375 * Hemoglobin Greater Than 12g/dL 
Measure) + (.375 * Kt/V Dialysis Adequacy Measure Topic) + (.0625 * 
NHSN Dialysis Event Reporting Measure) + (.0625 * ICH CAHPS Survey 
Reporting Measure) + (.0625 * Mineral Metabolism Reporting Measure) + 
(.0625 * Anemia Management Reporting Measure)] * 10

Again, the Total Performance Score would be rounded to the nearest 
integer (and any individual measure values ending in .5 would be 
rounded to the next higher integer).
    Finally, if, for example, a facility qualified for only two of the 
reporting measures, the facility's Total Performance Score would be 
calculated as follows:

Total Performance Score = [(.25 * Hemoglobin Greater Than 12g/dL 
Measure) + (.25 * Kt/V Dialysis Adequacy Measure Topic) + (.25 * 
Vascular Access Type Measure Topic) + (.125 * Mineral Metabolism 
Reporting Measure) + (.125 * Anemia Management Reporting Measure)] * 
10.

Again, the Total Performance Score would be rounded to the nearest 
integer (and any individual measure values ending in .5 would be 
rounded to the next higher integer).
11. Minimum Data for Scoring Measures for the PY 2015 ESRD QIP
    We proposed to only score facilities on clinical measures for which 
they have a minimum number of cases during the performance period. We 
assessed how reliable each clinical measure is using the currently 
available data. Specifically, we studied the degree the measures assess 
the actual differences in performance among facilities as opposed to 
the variation within a facility. Thus, in order for a facility to be 
scored on any clinical measure, we proposed that the facility must 
report a minimum number of cases qualifying for that measure over the 
course of the 12-month performance period. This proposed minimum seeks 
to ensure that facilities are being evaluated based on the care they 
provide.
a. Minimum Data for Scoring Clinical Measures for the PY 2015 ESRD QIP
    Dialysis facilities tend to have a small, relatively stable patient 
census, with each facility reporting on an average of 50-60 cases per 
measure. In previous rules, commenters have asked that we consider the 
effect of case size on measure reliability in the context of the ESRD 
QIP. We recognize that as a general principle, reliability improves 
with increasing case size; that is, the reliability of a measure or 
score describes numerically to what extent that measure or score 
assesses the actual differences in performance among facilities as 
opposed to the random variation within facilities. Furthermore, we wish 
to be responsive to public comment and to ensure that dialysis 
facilities with extremely small numbers of patients are not penalized 
by the ESRD QIP due to random variation in their patient samples. Thus, 
we developed and proposed a new methodology to make favorable 
adjustments to the clinical measure rates of facilities with very small 
numbers of patients. We also proposed a case minimum \8\ for clinical 
measures to protect patient privacy, which we believe could be 
compromised if the

[[Page 67511]]

publicly reported data for a facility is based on a small patient 
population.
---------------------------------------------------------------------------

    \8\ For clarification purposes, as in previous years, a ``case'' 
refers to a patient that is included in the measure.
---------------------------------------------------------------------------

    Given the ESRD QIP's potential to encourage quality improvement, 
our goal is to ensure the full participation of as many facilities as 
possible in the program. However, we must ensure that all measure rates 
capture a large enough number of patients so that the privacy of each 
patient is protected. A case minimum allows us to achieve these policy 
objectives of measurement reliability and patient privacy.
    For the first 3 payment years of the ESRD QIP, we set the minimum 
number of cases to be scored on a clinical measure at 11. Eleven cases 
has historically been the case minimum for displaying measures on DFC. 
We have determined that in the context of DFC, 11 cases will meet the 
requirement that individual patients are not identifiable in the 
aggregate measure rate. Given that we believe that 11 cases is 
sufficient to address privacy concerns and that our policy objective is 
to maximize the number of facilities that participate in the ESRD QIP, 
we proposed to set a proposed case minimum threshold of 11 cases. Under 
this proposal, facilities must report at least 11 qualifying cases over 
the course of the 12-month performance period to be scored on a given 
clinical measure. We sought public comment on this proposal.
    We indicated in the CY 2012 ESRD PPS final rule that we would 
continue to assess the reliability of our measures in future payment 
years of the program (76 FR 70259). To further explore this issue in 
response to comments, we evaluated the reliability of measure rates and 
the Total Performance Score for facilities of various sizes using the 
PY 2014 program clinical measures. Specifically, we performed a 
simulation of the PY 2014 QIP to calculate the Inter-Unit Reliability 
(IUR) stratified by facility size. The IUR is a statistic commonly 
adopted for assessing the reliability of measures or scores, and is the 
ratio of the between-facility variance to the sum of the between-
facility variance and the within-facility variance.
    We found the reliability of the Total Performance Score to be 
acceptable for all strata (IUR>0.6). However, we recognize that 
facilities with very small numbers of patients are more likely to have 
a lower IUR. In a facility with a low IUR, the case mix might 
potentially shift its measure rate higher or lower than the rate the 
same facility would report if it were treating an ``average'' ESRD 
population. In the context of the ESRD QIP, a favorable skew would not 
have a negative effect on facility payment, but an unfavorable skew 
potentially could result in the facility receiving a payment reduction. 
We cannot identify which specific facilities will have a low IUR until 
after the performance period has concluded. However, in performing the 
stratification analysis, we found that a favorable adjustment to the 
two strata with the lowest number of cases would reduce the risk of 
penalizing facilities in those strata for random within-facility 
variation. The average number of cases contributing to the Total 
Performance Score in the second stratum is 25. Accordingly, we 
developed and proposed below a favorable adjustment to the measure 
rates for facilities with at least the minimum case threshold of 11 and 
fewer than the adjustment threshold of 26 cases. This methodology would 
give facilities ``the benefit of the doubt'' and ensure that any error 
in measure rates due to a small number of cases will not adversely 
affect payment.
    Specifically, we proposed that if a facility reports at least 26 
cases during the 12-month performance period on a measure, it would be 
scored based on its raw performance rate on the measure. If the 
facility reports between 11 and 25 cases during the 12-month 
performance period, it would be scored based on its raw performance 
rate plus a favorable reliability adjustment to account for a possible 
unfavorable skew in the measure rate due to small sample size.
    We proposed the following methodology to adjust the measure rate 
used to score facilities with 11-25 cases for a given measure. The 
adjustment factors in facility size and the standard error of the 
measure, which can be estimated using an analysis of variance (ANOVA). 
This analysis allows us to estimate how much better the measure rate 
could have been if that facility were treating an ``average'' 
population of patients and make a favorable adjustment to the 
facility's score in that amount. For example, as a facility treats more 
patients, the reliability of the measure rate improves, and the 
difference between the facility's measure rate and the measure rate we 
statistically would expect to see if the facility were treating an 
``average'' panel of patients decreases. Thus, the magnitude of the 
adjustment factor increases as the number of cases decreases from 25 to 
11.
    Because the adjustment factor takes into account a facility's 
performance (standard error of the measure) and the number of cases for 
the measure, it is computed separately for each measure. The specific 
methodology we proposed follows:
     ANOVA provides an estimate sw of the square root of within 
facility variance, given by the within subject mean square.
     Then for the ith facility, the standard error of the 
average measure (denoted by  xi is given by
[GRAPHIC] [TIFF OMITTED] TR09NO12.007

where ni is the number of patients in the ith facility. Now denote C as 
the minimum case number. We proposed the following adjustment for the 
original score  xi by introducing a weight depending on facility size.
[GRAPHIC] [TIFF OMITTED] TR09NO12.019

where C is the lower bound of cases for facilities that will not 
receive any adjustment.
     For measures where large values of xi are good (that is, 
for the PY 2015 ESRD QIP, the fistula measure and the Kt/V Dialysis 
Adequacy measure topic):
    o The new score is: ti = xi + wi * SE(xi). (If ti > 100%, we set ti 
= 100%).
     In cases where lower values of xi are better (that is, for 
the PY 2015 ESRD QIP, the Hemoglobin Greater Than 12g/dL and catheter 
measures):
    o The new score is: ti = xi - wi * SE(xi). (If ti < 0%, we set ti = 
0%).
    We stated our belief that this approach gives facilities an 
allowance to account for the uncertainty in the estimate xi by 
accounting for the size of the patient population in both weights and 
standard errors. As explained above, this allowance decreases when the 
case size increases (from 11 to 26 or more)--the larger the case size, 
the smaller the allowance. For example, when C=26, this implies that 
for measures with 26 cases and above, no allowance is made. We sought 
public comment on this methodology and the proposed adjustment 
threshold. While one model is presented above, we invited comment on 
alternative approaches that are consistent with our intent to include 
as many facilities as possible in the ESRD QIP and at the same time 
address concerns from stakeholders regarding the reliability of

[[Page 67512]]

measures where there are small numbers of cases. We stated our belief 
that this adjustment is appropriate for the ESRD QIP considering the 
particular measure set and scoring methodology for PY 2015. As the 
program grows and evolves, we noted that we will continue to assess 
reliability based on the measures and scoring methodology for that 
payment year.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Many commenters supported our proposal to use an 
adjustment for measure rates, especially because aging patients and 
patients with comorbidities can negatively affect a small facility's 
score. Commenters also supported our proposal to use the adjuster for 
measures with 11-25 cases. Other commenters did not support the 
proposed adjustment because it is overly complicated, could mislead 
patients, and could make low-volume facilities appear better than high-
volume facilities when they are not, in fact; these commenters 
suggested that we raise the case minimum to at least 25 cases instead 
of employing the proposed adjustment methodology. Some commenters 
expressly stated that the proposed case minimum is not sufficient; 
other commenters argued that the proposed case minimum should be 
lowered because the proposal could preclude participation from many 
low-volume facilities, specifically pediatric facilities.
    Response: Were we to set the case minimum at 26 rather than 11, we 
estimate that an additional 520, or an additional 10 percent of, 
facilities would be excluded from the program. Although lowering the 
case minimum would include even more facilities, we do not believe it 
is appropriate to do so because of not only reliability but also 
privacy concerns. As we stated in the proposed rule (77 FR 40984), we 
believe the adjustment balances the competing concerns of reliability, 
privacy, and inclusion.
    Although it can be difficult to understand the adjustment 
methodology, we do not believe that this concern alone should prevent 
us from finalizing it as proposed. The adjustment will result in no 
harm to any facility; although a facility may not be able to predict 
its Total Performance Score if some of its measures are subject to the 
adjustment, the facility will know that the adjuster will not 
negatively affect its score. It could continue to predict its minimum 
score and use this score as a baseline for assessing whether or not it 
will receive a payment reduction. Additionally, we believe that the 
argument that the adjuster could allow smaller facilities to seem 
better than they are is of little concern. Although the adjuster will 
affect the measure score, it will not affect the measure rate. The 
rates that are displayed to the public will be shown without an 
adjustment. Thus, a beneficiary could continue to meaningfully compare 
facilities, regardless of the number of patients these facilities 
serve.
    Comment: Some commenters requested that, if we adopted the proposed 
adjustment, we publish tables with the values of sw to make the ESRD 
QIP as transparent and predictable as possible.
    Response: The sw values represent the within facility variation. It 
is specific to each facility and, because it will be based on 2013 
data, it cannot be derived until the end of the performance period. 
Therefore, we are not able to publish the sw values at this time.
    Comment: Some commenters encouraged us to continue to conduct 
analyses to determine the appropriate reliability of measures and the 
minimum case number for future years of the program. Some commenters 
suggested that, if we are concerned with reliability and minimum case 
numbers, we employ longer performance periods spanning multiple years. 
Commenters also encouraged us to align the ESRD QIP minimum case number 
with other VBP programs.
    Response: We will continue to study the reliability of measures and 
the Total Performance Score. We have and will continue to consider 
using longer performance periods on a measure-by-measure basis. 
Although we strive to align the VBP programs as much as possible, each 
program has unique measures which may necessitate different minimum 
case numbers. We will continue to look for harmonization as much as is 
appropriate.
    For the reasons stated above, we finalize the case minimum and 
adjustment for clinical measures as proposed.
b. Minimum Data Requirements for Reporting Measures by New Facilities
    For purposes of the PY 2014 ESRD QIP, we stated that a facility 
that receives a CCN on or after July 1, 2012 has the option to choose 
whether or not it is scored on each reporting measure (76 FR 70275). We 
considered using the same approach for PY 2015 as we did in PY 2014 
(that is, allowing new facilities to choose whether or not they will be 
scored on each reporting measure). Under that approach, if a new 
facility reports enough information to receive 10 points on a reporting 
measure, the facility is scored on that measure. If a new facility 
scores zero or 5 points on a reporting measure, it is not scored on 
that measure. As the program evolves, we believe it is important to 
continuously push improvement in all facilities--both old and new. 
Additionally, we wish to incentivize new facilities to put reporting 
mechanisms in place as soon as possible. For these reasons, we proposed 
to modify the reporting measure minimum data requirement from that of 
PY 2014.
    For PY 2015, we proposed that any facility receiving a CCN before 
July 1, 2013 be scored on the reporting measures. However, since a 
facility receiving a CCN after January 1, 2013 would not be able to 
report a full 12 months of data, we stated our belief that it is not 
appropriate to require it to do so in order to receive a full 10 points 
on the reporting measures. Instead, we proposed to score these 
facilities proportionately for the time for which they have a CCN 
during the performance period. To earn 10 points on the ICH CAHPS 
reporting measure, we proposed to require that a facility receiving a 
CCN between January 1, 2013 and June 30, 2013 attest that it 
successfully administered the survey during the time for which it had a 
CCN during the performance period. For purposes of the Anemia 
Management, NHSN Dialysis Event, and Mineral Metabolism reporting 
measures, we proposed that if a facility receives a CCN on or after 
January 1, 2013, but before July 1, 2013, it would receive 10 points 
for reporting for all months for which it has a CCN and 5 points for 
consecutively reporting half of the months for which it has a CCN 
during the performance period. If a facility has a CCN for an odd 
number of months, we proposed to round down to calculate the number of 
months for which it must report to receive 5 points. Finally, we 
proposed to begin counting the number of months for which a facility is 
open on the first day of the month after the facility receives a CCN. 
For example, assume a facility receives a CCN on March 15, 2013. In 
order for this facility to receive 10 points on the applicable 
reporting measure, we proposed that it must report data from April 1, 
2013-December 31, 2013 (or 9 months of data). In order for it to 
receive 5 points, we proposed that it must report half of the months 
for which it is open, consecutively. For the example facility to 
receive 5 points, it would need to report 4.5 months of data. Since we 
proposed to round down, this facility

[[Page 67513]]

would be required to report 4 months of data to receive 5 points.
    We realized that facilities receiving a CCN on or after July 1, 
2013, may have difficulty meeting the requirements of the reporting 
measures, such as enrolling and training for the NHSN Dialysis Event 
reporting measure or hiring a third-party to administer the ICH CAHPS 
survey, because of the short period of time left in the performance 
period. We also stated our belief that it is appropriate to reduce 
payment for a 1-year period based on less than 6 months of performance. 
Therefore, we proposed to exclude facilities receiving a CCN on or 
after July 1, 2013 from the requirements of the reporting measures. 
Because we finalized, as discussed above, that a facility will not 
receive a Total Performance Score unless it receives a score on at 
least one clinical and one reporting measure, finalizing this proposal 
would result in facilities not being eligible for a payment reduction 
if they receive a CCN on or after July 1, 2013. We requested comment 
regarding these proposals. We also elicited comments regarding whether 
there would be a more appropriate way to score these new facilities on 
reporting measures so that they may be eligible for inclusion in the 
ESRD QIP.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Commenters supported our proposals regarding the reporting 
measures' minimum data requirements for new facilities; specifically, 
commenters supported our proposal to exempt facilities receiving a CCN 
after June 30, 2013 from the reporting measures. Some commenters 
suggested that a facility that receives a CCN between January 2013 and 
June 2013 should be required to begin reporting on the first day of the 
third month after the facility receives a CCN to allow the facility to 
deploy its IT system and enroll in CROWNWeb and NHSN.
    Response: Consistent with our change to allow facilities to score 
0-10 incremental points on the Anemia Management and Mineral Metabolism 
reporting measures, we will finalize changes to our proposed scoring 
methodology for these measures for facilities receiving a CCN between 
January 1, 2013 and June 30, 2013. Facilities receiving a CCN between 
January 1, 2013 and June 30, 2013, will be able to score points in 
proportion to their overall rate of monthly reporting on the Anemia 
Management and Mineral Metabolism reporting measures. As we noted 
above, we believe it is important to require a minimum threshold for 
facilities to earn points on this measure. Thus, we finalize that a 
facility receiving a CCN after January 1, 2013 but before June 30, 2013 
can score points on the Mineral Metabolism and Anemia Management 
reporting measures using the following formula:
[GRAPHIC] [TIFF OMITTED] TR09NO12.008

We will round the result of this formula (with half rounded up) to 
achieve a measure score from 0-10.
    For purposes of the Anemia Management and Mineral Metabolism 
reporting measures, we do not agree with commenters that facilities 
should be required to report the first day of the third month after 
they receive their CCN. A facility with a CCN may submit claims to 
Medicare. If a facility is submitting claims, it should be reporting 
hemoglobin and ESA levels. It should also be reporting in CROWNWeb. 
Therefore, we do not believe it is necessary to allow facilities more 
time on these measures, and we finalize that facilities must begin 
reporting for these measures on the first day of the month after they 
receive their CCN.
    As we have previously noted, we believe that a facility needs a 
period of time after it receives its CCN to ensure that its systems are 
in place to report to the NHSN system. As we explained above, we are 
requiring facilities to report 6 non-consecutive months of data to 
receive points on the NHSN Dialysis Event measure. Because of the time 
required to enroll and train in the NHSN system, we do not believe it 
is equitable to require facilities receiving a CCN during the 
performance period to comply with this measure. Therefore, we are 
finalizing that a facility that receives a CCN during the performance 
period will be not be scored on the NHSN Dialysis Event reporting 
measure.
    For the ICH CAHPS measure, we believe that facilities receiving a 
CCN before July 1, 2013 should be able to hire a third-party 
administrator in time to administer the ICH CAHPS survey. Although it 
may take some time for facilities to put this administrator in place, 
it can begin doing so before it receives a CCN. Therefore, we finalize 
our proposals that, to earn 10 points on the ICH CAHPS reporting 
measure, a facility receiving a CCN between January 1, 2013 and June 
30, 2013 must attest that it successfully administered the survey 
during the time for which it had a CCN during the performance period.
    We also finalize that facilities receiving a CCN after June 30, 
2013 will be exempt from the Mineral Metabolism, Anemia Management, and 
ICH CAHPS reporting measures. For the NHSN Dialysis Event reporting 
measure, facilities will be exempt if they receive a CCN on or after 
January 1, 2013.
12. Payment Reductions for the PY 2015 ESRD QIP
    Section 1881(h)(3)(A)(ii) of the Act requires the Secretary to 
ensure that the application of the scoring methodology results in an 
appropriate distribution of payment reductions across facilities such 
that facilities achieving the lowest Total Performance Scores receive 
the largest payment reductions. For PY 2014, we adopted an approach 
under which a facility did not have to meet or exceed the performance 
standards with respect to each of the finalized clinical measures to 
avoid receiving a payment reduction under the ESRD QIP. Rather, even if 
a facility failed to meet or exceed the performance standards with 
respect to one or more of these measures, the facility could avoid a 
payment reduction if it achieved a minimum Total Performance Score that 
is equal to or greater than the minimum Total Performance Score it 
would receive if it had met the performance standards for each of the 
clinical measures or, in the case of the Vascular Access Type Measure, 
for the two subcomponent measures.
    For PY 2014, in calculating this minimum Total Performance Score, 
we excluded the reporting measures

[[Page 67514]]

because we believed this approach best underscored the importance of 
the clinical measures. For PY 2015, we proposed to retain the same 
approach as in PY 2014. We discuss the methodology for deriving the 
performance standards for the measure topics, above. We requested 
comments on these proposals.
    Alternately, in order to better incentivize compliance with 
reporting measures, we also considered raising the minimum Total 
Performance Score to include 50 percent of the total points a facility 
could have received had it met all of the reporting requirements for 
each measure. In other words, because a facility could receive up to 40 
points in PY 2015 for meeting all of the reporting measure 
requirements, we considered raising the minimum Total Performance Score 
by 20 points (one-half of 40). This approach would ensure that 
facilities receiving a CCN before August 1, 2013 could still achieve 
the minimum Total Performance Score by meeting, on average, the 
performance standards for the clinical measures and achieving as many 
points on the reporting measures as is possible. We requested comment 
regarding whether the reporting measures should be scored at greater 
than 0 when calculating the minimum Total Performance Score.
    Section 1881(h)(3)(A)(ii) of the Act requires that facilities 
achieving the lowest Total Performance Scores receive the largest 
payment reductions. For PY 2014, we adopted an approach we intend to 
continue for PY 2015. We believe that this consistency will allow the 
program to be more understandable to both facilities and the general 
public. Accordingly, we proposed that the payment reduction scale be 
the same as the PY 2014 program. Therefore, for each 10 points a 
facility falls below the minimum Total Performance Score, it would 
receive an additional 0.5 percent payment reduction on its ESRD 
payments for PY 2015, with a maximum reduction of 2.0 percent. As we 
stated in the CY 2012 ESRD PPS final rule (76 FR 70281), we believe 
that such a sliding scale will incentivize facilities to meet the 
performance standards and continue to improve their performance because 
even if a facility fails to achieve the minimum Total Performance 
Score, the facility will still be incentivized to strive for, and 
attain, better performance rates in order to reduce the amount of its 
payment reduction. We requested comments on the proposed payment 
reduction scale.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Commenters agreed with our proposal to use the PY 2014 
payment reductions scale for the PY 2015 ESRD QIP. Some commenters, 
however, supported placing more emphasis on the reporting measures in 
calculating the minimum Total Performance Score since these are the 
measures over which facilities have the most control. Some commenters 
suggested that we base payment reductions on actual impact rather than 
projections of impact, setting tiers of reductions by percentage of 
facilities we wish to be in each tier. Another commenter urged us to 
create a more individualized approach to payment reductions because 
high quality care is markedly different from patient to patient.
    Response: At this time, we do not believe it is in the best 
interest of the program to base payment reductions on actual impact and 
the percentage of facilities to which we wish to provide payment 
reductions. Regardless of the impact, we believe that facilities that 
do not meet the performance standards for each of the clinical measures 
should face a payment reduction. Were we to base reductions on 
percentages, the result could be that some high performing facilities 
receive a payment reduction. Our current payment reduction scale allows 
every facility to avoid a payment reduction provided that they meet the 
minimum Total Performance Score.
    We agree that it is important to provide individualized care to 
patients. We believe that the program, incentivizes facilities to 
furnish individualized care within a certain range of established, 
clinical acceptable guidelines.
    Finally we agree with the commenters that requested we place more 
emphasis on the reporting measures when calculating the minimum Total 
Performance Score. We specifically believe that this approach is 
appropriate now that we have weighted the reporting measure to comprise 
25 percent of the Total Performance Score. Were we to continue to score 
the reporting measures at zero when calculating the minimum Total 
Performance Score, by increasing the weight of the reporting measures, 
we would be decreasing the minimum Total Performance Score. This result 
is contrary to our belief stated in this final rule that the reporting 
measures should be afforded more importance. Therefore, we will 
finalize the alternative approach we requested comment on in the 
proposed rule to include the reporting measures in the minimum Total 
Performance Score at 50 percent of the total points a facility could 
have received had it met all of the reporting requirements. As noted 
above, it is possible to gain a total of 40 points from the reporting 
measures; thus, we will include half, or 20 of these points, in our 
calculation of the minimum Total Performance Score. We believe this 
approach is consistent with our methodology for the clinical measures 
since we calculate the clinical measure component of the minimum Total 
Performance Score as the score a facility would have received if it had 
reached the 50th percentile for all clinical measures.
    Comment: One commenter suggested that the 2 percent payment 
reduction be revisited since such a small percentage will not be a 
worthwhile incentive as new measures are added. Several commenters 
expressed concern that the ESRD QIP works as a penalty system and 
suggested that the ESRD QIP provide incentives as well as penalties, 
and on balance, be budget-neutral. One commenter suggested that the 
payment reductions be returned to the penalized facilities for use only 
to improve care in the areas where they failed to meet quality 
standards.
    Response: Section 1881(h) of the Act does not provide us with the 
authority to issue bonus payments to facilities based on their 
performance under the ESRD QIP, to make reductions of more than 2.0 
percent, or to redistribute the payment reductions to the originally 
penalized facilities.
    For the reasons stated above, we finalize our proposals for 
calculating payment reductions except that we will include reporting 
measures in calculating the minimum Total Performance Score. The 
reporting measure component of the minimum Total Performance Score will 
equal the score a facility would have received if it is awarded half of 
the maximum points it could have received on the reporting measures 
(that is, 5 points on each measure). Based on this approach, the 
minimum Total Performance Score is 60 points. Facilities failing to 
meet this minimum will receive payment reductions in the amounts 
indicated in Table 7 below.

         Table 7--Finalized Payment Reduction Scale for PY 2015
------------------------------------------------------------------------
                Total performance score                   Reduction (%)
------------------------------------------------------------------------
100-60.................................................              0
59-50..................................................              0.5
49-40..................................................              1.0
39-30..................................................              1.5
29-0...................................................              2.0
------------------------------------------------------------------------


[[Page 67515]]

13. Data Validation
    One of the critical elements of the ESRD QIP's success is ensuring 
that the data submitted to calculate measure scores and Total 
Performance Scores is accurate. To that end, we have procured the 
services of a data validation contractor who will be tasked with 
validating a national sample of facilities' records as they report data 
under the ESRD QIP. Beginning in CY 2013, we proposed to begin a pilot 
data validation program for the ESRD QIP. Because data validation for 
the ESRD QIP is new to both facilities as well as CMS, we believe that 
the first year of validation should result in no payment reductions to 
facilities. Accordingly, we proposed that, beginning in CY 2013, we 
would randomly sample the records of approximately 750 facilities. We 
anticipate that a CMS-designated contractor would request approximately 
10 records from each of these facilities. We proposed that the facility 
must comply with this request for records within 60-days of receiving 
notice. The contractor would review these records to ensure accuracy 
and reliability of the data reported by the facility for purposes of 
the ESRD QIP.
    As noted above, we proposed that, in the first year of this 
program, no facility will receive a payment reduction resulting from 
the data validation process. In future years of the program, we noted 
our intent to evolve our pilot program into a full, data validation 
effort. We are also discussing a data validation measure whereby 
facilities would be scored based on the accuracy of their records. 
Finally, we are contemplating increasing a facility's payment reduction 
by one tier (for example, from 0.5 percent to 1.0 percent) if its data 
are incorrect beyond a certain threshold. In future years, we stated 
our intention to propose more detailed procedures regarding our data 
validation process that may result in penalties. We requested comment 
on our data validation proposals for PY 2015 and the methods we are 
considering for PY 2016.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Many commenters supported our proposal to have a data 
validation pilot program that would result in no payment reductions. 
Some commenters suggested that we continue the pilot until we can 
evaluate the data from the program, and some commenters suggested that 
we should share the results of the pilot with the dialysis community 
before the official program is launched. One commenter requested that, 
before the pilot program begins, we define the errors being sought and 
publish these for public comment. Another commenter stated that, before 
data validation efforts are initiated, CMS should provide clear 
specifications, data definitions, and reporting requirements because it 
would be inappropriate to penalize facilities when clarification 
questions or reporting issues have not been resolved. Commenters also 
recommended that CMS include the initial data validation in the routine 
Comprehensive Error Rate Testing (CERT) request for RACs (Recovery 
Audit Contractors), but cautioned against paying auditors on a 
contingency fee.
    Response: We thank commenters for their support of the pilot data 
validation program. At this time, we are still finalizing the processes 
and procedures for the pilot. We will provide this information before 
the pilot program begins on a publicly available Web site. We will 
consider the commenters' suggestions as we continue this process. 
Additionally, as discussed in the sections of this rule outlining the 
measures, we believe that the specifications, data definitions, and 
reporting requirements are clear and transparent. If it becomes 
apparent that there is some significant confusion as to any of these 
elements, we will clarify these them using the most appropriate means.
    Comment: One commenter stated that it does not believe it is 
appropriate for CMS to develop a data validation measure for the ESRD 
QIP. This commenter argued that CMS must first explain the scope of 
accuracy and errors (for example, does it include missing values, 
transcriptional errors) that CMS requires. Other commenters requested 
that, before payment is tied to validation, CMS should publish for 
comment the relationship of errors to payment reductions (with some 
accorded more weight than others depending on their scope and type) and 
allow the dialysis community to review the results of the pilot.
    Response: We thank commenters for these suggestions. We believe 
that ensuring data accuracy of reported data is an important component 
to ensure accurate performance scores and corresponding payments. We 
continue to consider whether and how we will tie payment to any data 
validation issues. We will publish any future proposals in rulemaking 
for public comment.
    Comment: Some commenters expressed concern with the burden data 
validation may place on facilities. One commenter is concerned that 
producing records within 60 days is too monetarily burdensome and 
suggests a 120 day period. Another commenter requested that we limit 
the number of document requests based on provider size and resources 
and reimburse facilities for data requests. One commenter suggested 
that the requested data sample be a percentage of patients rather than 
a fixed number so that small facilities are not disproportionally 
affected. One commenter asked that the requested records be as current 
as possible so that they can be easily accessed by facilities that many 
have data storage protocols. Another commenter specifically noted its 
support for HAI data validation, but stated its concern that we 
underestimated the burden on facilities; this commenter requested that 
we provide more detail on the validation process, specifically the 
facilities' responsibilities, and encouraged us to partner with NHSN 
and state and public health partners in developing a standardized 
process for the validation of HAI data.
    Response: We do not believe that our proposals place an undue 
burden on facilities. We proposed to request only ten records, and we 
will provide the facility 60 days to produce these records. We do not 
believe that collecting such a small amount of documentation in such a 
great deal of time should pose problems for facilities. As we explain 
later in this rule, we estimate that it will take each facility only 
2.5 hours to comply with the requests for these records and will cost 
approximately $83.08 per facility. We do not believe that 2.5 hours in 
the span of 2 months (or 2.5 minutes per day) is too little time to 
comply with these requests nor do we believe it warrants an additional 
60 days for compliance. Further, we do not agree that we should request 
a percentage of documents from facilities rather than a fixed number. 
If a facility is large, asking for even one percent of its records 
could prove to be a large burden. Alternatively, requesting that a 
small facility provide even 10 percent of its records would not provide 
our data contractor with enough information to assess the validity of 
the data. By requesting 10 records from each facility, we can ensure a 
similar burden (2.5 hours and approximately $83.08) for each facility 
and an analysis of its validity based on the same volume of 
information.
    As noted above, at this time, we are still finalizing the processes 
and procedures for the pilot. We will provide further information on a 
publicly available Web site. As we finalize these procedures, we intend 
to engage various stakeholders to encourage the development of a

[[Page 67516]]

standardized process for the validation of data, including data from 
the CDC for HAIs.
    Comment: One commenter requested that we specify a data validation 
appeals process.
    Response: We will consider proposing a data validation appeals 
process in future rulemaking. Because the proposed program is a pilot 
and will not have any impact on payment, we do not believe an appeals 
process is necessary at this time.
    Comment: One commenter believes that the various technological 
resources facilities have should be taken into account when evaluating 
data validity. This commenter encouraged us to evaluate manual/
electronic medical records (EMR) data entry in CROWNWeb.
    Response: We will consider commenter's suggestion when we evaluate 
the data in the pilot program. We will specifically consider if there 
are variations in the accuracy of data because of the mode of data 
entry.
    Comment: One commenter encouraged us not to implement a payment 
reduction until all facilities have been asked to submit medical 
records for purposes of data validation at least one time. Another 
commenter stated that each facility should have the opportunity to 
identify data transmission/download errors without the risk of payment 
penalty.
    Response: We thank commenters for the suggestions and will consider 
them as our pilot program advances.
    For the reasons stated above, we finalize our pilot data validation 
program as proposed, and we will specify the processes and procedures 
of this pilot on http://www.dialysisreports.org.
14. Scoring Facilities Whose Ownership Has Changed
    During our first year of implementation of the ESRD QIP, PY 2012, 
facilities requested guidance regarding how a change in ownership 
affects any applicable ESRD QIP payment reduction. We proposed that, 
for all future years of the ESRD QIP, the application of an ESRD QIP 
payment reduction would depend on whether the facility retains its CCN 
after the ownership transfer. If the facility's CCN remains the same 
after the facility is transferred, for purposes of the ESRD QIP, we 
would consider the facility to be the same facility (despite the change 
in ownership) and we would apply any ESRD QIP payment reduction for the 
transferor to the transferee. Likewise, as long as the facility retains 
the same CCN, we would calculate the measure scores using the data 
submitted during the applicable period regardless of whether the 
ownership changed during one of these periods. If, however, a facility 
receives a new CCN as a result of a change in ownership, we would treat 
the facility as a new facility for purposes of the ESRD QIP as of the 
date it received the new CCN. We stated our belief that these proposals 
are the most operationally efficient and will allow facilities the most 
certainty when they change ownership. We proposed to apply these rules 
beginning with the PY 2014 ESRD QIP, and we requested public comment on 
these proposals.
    The comments that we received and our responses to these comments 
are set forth below.
    Comment: Many commenters strongly supported our proposals for 
scoring transferred facilities. One commenter expressed concern that 
the proposals will change the marketplace in ways that are not yet 
known.
    Response: We thank commenters for their support. We realize that 
this proposal may impact how dialysis facilities are acquired in the 
future. However, we believe that creating rules around how we will 
treat transferred facilities for purposes of the ESRD QIP will create a 
marketplace that is more predictable. Therefore, we finalize these 
rules for transferred facilities as proposed.
15. Public Reporting Requirements
    Section 1881(h)(6)(A) of the Act requires the Secretary to 
establish procedures for making information regarding facilities' 
performance under the ESRD QIP available to the public, including 
information on the Total Performance Score (as well as appropriate 
comparisons of facilities to the national average with respect to such 
scores) and performance scores for individual measures achieved by each 
facility. Section 1881(h)(6)(B) of the Act further requires that a 
facility have an opportunity to review the information to be made 
public with respect to that facility prior to such information's 
publication. In addition, section 1881(h)(6)(C) of the Act requires the 
Secretary to provide each facility with a certificate containing its 
Total Performance Score to post in patient areas within the facility. 
Finally, section 1881(h)(6)(D) of the Act requires the Secretary to 
post a list of facilities and performance-score data on the CMS Web 
site.
    In the PY 2012 ESRD QIP final rule, we adopted uniform requirements 
based on sections 1881(h)(6)(A) through 1881(h)(6)(D) of the Act, 
establishing procedures for facilities to review the information to be 
made public and the procedures for informing the public through 
facility-posted certificates for the first 3 payment years of the ESRD 
QIP (76 FR 636 through 639). We proposed that these requirements 
generally apply to PY 2015 and subsequent payment years. However, we 
proposed to make some modifications, as outlined below, to these 
requirements and that these modifications become effective upon the 
effective date of this final rule. Thus, these requirements, if 
finalized, would apply in PY 2014 and for subsequent payment years. All 
other previously finalized requirements would remain the same.
    First, for the first year of the program, PY 2012, we did not 
explicitly state that we would be publishing a list of facility 
performance on or after December 1 of the year before the payment 
consequence year. We did, however, make this list available for the 
pubic via the CMS Web site. For the PY 2013 ESRD QIP and subsequent 
payment years, and in accordance with section 1881(h)(6)(D) of the Act, 
we proposed to publish such aggregate list on the CMS Web site at 
www.cms.gov and any other Web site controlled by CMS. This list will 
include information on the facility, specifically:
    (i) Name and address;
    (ii) Measure rates (which may include numerators and denominators) 
and scores;
    (iii) And Total Performance Scores.

This list will also indicate those facilities that do not have enough 
data to calculate one or more measure rates and/or a Total Performance 
Score. We believe it is important to publish such a list because it 
allows beneficiaries, the public, and facilities access to this 
information without having to individually download a certificate for 
each facility, and, because of such access, we believe it will 
ultimately improve quality. The data will be more accessible, Medicare 
beneficiaries and their families will have the information more easily 
to make choices about their care, and facilities can more readily 
compare their performance to other facilities or across facilities. 
Therefore, beginning in January 2013, we proposed to publish a list of 
facility information described above for each payment year after 
facilities have the ability to review their scores.
    Second, for PY 2012, we required facilities to prominently post 
certificates within 5 days of us making these certificates available 
for download from www.dialysisreports.org in accordance with section 
1881(h)(6)(C) of the Act (76 FR 637). We proposed to modify the

[[Page 67517]]

previously finalized requirements for posting certificates in two ways. 
We no longer believe it is necessary for facilities to post these 
certificates within 5 days of their availability. The certificates are 
provided in late December, and it was our experience in the PY 2012 
program that many individuals responsible for the certificates were 
away on holiday during this period of time. Therefore, we proposed to 
change this requirement so that, beginning with the PY 2014 program, 
facilities will be required to post their certificates on or before the 
first business day after January 1 of each payment year. Certificates 
are typically available for download on or around December 15, and we 
believe that this two week amount of time is long enough to allow 
facilities to post them. Therefore, beginning PY 2014, we proposed that 
facilities be required to post their Performance Score Certificates 
(PSCs) on or before the first business day after January 1 of each 
payment year in a prominent place for the duration of that payment year 
and otherwise comply with the requirements listed in the PY 2012 final 
rule (76 FR 637).
    Third, for the PY 2012 ESRD QIP, we required facilities to post one 
copy of the certificate in their facility (76 FR 637). Beginning in PY 
2014, we proposed to require facilities to post two copies of this 
certificate, one copy in English and one copy in Spanish. Both of these 
certificates (which are posted as a single file) will be provided by 
CMS, both must be posted by the first business day after January 1 of 
the payment year, and both must be posted for the entirety of such year 
in a prominent location. We proposed to require the certificate to be 
posted in both English and Spanish to make the certificate more 
understandable to native Spanish speakers. Thus, to best serve a 
greater number of ESRD patients, we proposed to finalize the 
requirement that facilities must post both an English and a Spanish 
certificate prominently in their facility. The only additional burden 
for facilities in adding this Spanish certificate is its printing and 
posting.
    The comments we received on these proposals and our responses are 
set forth below.
    Comment: Commenters supported our proposal to allow facilities 
until the first business day after January 1 to post certificates. Most 
commenters agreed with our proposal to require facilities to post both 
English and Spanish versions of the PSC beginning in PY 2014, stating 
that the additional burden is very small; one commenter argued that 
Spanish versions of the PSC are not necessary in all locations and 
recommended that individual facility administrators determine whether 
posting a PSC in Spanish is necessary or beneficial based upon the 
population that the facility serves. Another commenter suggested not 
only requiring a Spanish PSC but also developing Spanish-language 
materials explaining the PSCs.
    Response: We agree with commenters that the burden of posting a 
Spanish as well as an English PSC is very little and far outweighs the 
benefits it could convey upon beneficiaries. We do not agree that it is 
appropriate for facility administrators to determine whether posting 
the Spanish PSC is necessary. A facility that does not furnish services 
to native Spanish speaking patients in 1 year could begin to do so 
during the next year. As the ESRD QIP evolves, we seek to make the 
program as transparent as possible for all beneficiaries.
    Comment: Some commenters believe that the ESRD QIP should be 
clearer, and we should develop and make public guidance documents for 
patients and clinics. These commenters also suggested that we hold open 
door forums specifically for patients so that they do not interpret the 
quality of care information incorrectly.
    Response: As we noted above, we seek to make the program as 
transparent as possible, specifically to beneficiaries. We intend to 
continue to assess the modes and efficacy of our communications to 
beneficiaries. We will take these comments into account as we do so.
    Comment: Some commenters requested that we make available on our 
Web site individual measure scores (including the numerator and 
denominator) and the Total Performance Scores; commenters stated that 
these scores should be organized by facility and state to facilitate 
choice in care. One commenter requested that this information be 
published in both English and Spanish. One commenter encouraged us to 
create a ``one-stop-shop'' for quality information on the internet.
    Response: Since the PY 2012 program, we have made aggregate 
information on measure scores and Total Performance Scores available on 
http://www.cms.gov/Medicare/End-Stage-Renal-Disease/ESRDQualityImproveInit/index.html. This information includes numerators 
and denominators for each clinical measure, the scores for each 
measure, and Total Performance Scores for every facility. The 
information is organized in alphabetical order by state and facility. 
We will consider publishing this information in Spanish in future 
years. Additionally, we seek to align the ESRD QIP with CMS' other VBP 
program; we continue to assess how information across programs should 
be presented, and we will considering creating a ``one-stop-shop'' for 
information related to CMS' programs. At present, a great deal of 
information on these programs can be found here: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/index.html.
    Comment: One commenter believes that the NHSN measure should be 
included in DFC because it is key to patient safety.
    Response: We thank comments and will consider the appropriateness 
for inclusion of this measure on DFC in future Web site releases.
    Comment: One commenter requested that we confirm that there is 
consistency in measures reported in DFR, DFC, PSR, and for ESRD QIP 
purposes.
    Response: We thank the commenter for its inquiry regarding the 
consistency of measures reported through DFR, DFC, the Performance 
Score Reports (PSR), and for ESRD QIP purposes. There are some 
differences in the measure descriptions between DFR, DFC, and QIP 
because each serves its own purposes; the measure rates for the ESRD 
QIP that are posted on DFR, DFC, and in the PSR are the same. For 
example, for DFR/DFC, the denominators for the Kt/V measures include 
out of range values, whereas the ESRD QIP Kt/V measure denominators do 
not. We seek to align reporting mechanisms as much as possible, but, in 
some cases, we believe that it is appropriate to present this 
information differently.
    Comment: One commenter recommended that we timely monitor quality 
data and intervene if trends indicate a decrease in the quality of 
care.
    Response: We are committed to monitoring and evaluating the impacts 
of the ESRD QIP.
    Comment: One commenter urged us to prioritize the development and 
implementation of a single system to which facilities would report 
their data in order to simplify reporting and minimize unnecessary 
burdens on providers, particularly staff members otherwise providing 
direct care to patients.
    Response: We continue to evaluate our reporting systems; we seek to 
minimize provider burden as much as possible, and we will continue to 
evaluate ways in which we can do so as the program moves forward.

[[Page 67518]]

IV. Limitation on Payments to All Providers, Suppliers and Other 
Entities Entitled to Bad Debt

A. Background

    In accordance with section 1861(v)(1) of the Act and current 
regulations at 42 CFR 413.89, Medicare pays some or all of the 
uncollectible deductible and coinsurance amounts to those entities 
eligible to receive reimbursement for bad debt. To determine if bad 
debt amounts are allowable, the requirements at Sec.  413.89 must be 
met. Chapter 3 of the Provider Reimbursement Manual (PRM) (CMS Pub. 15, 
Part I) provides additional guidance on the standards governing bad 
debt reimbursement.
    Prior to the passage of the Middle Class Tax Extension and Job 
Creation Act of 2012 (Pub. L. 112-96), under section 1861(v)(1)(T) of 
the Act and Sec.  413.89(h)(1) of our regulations, Medicare payments 
for allowable bad debt amounts for hospitals were reduced by 30 percent 
for cost reporting periods beginning on or after October 1, 2001. 
Likewise, under section 1861(v)(1)(V) of the Act and Sec.  413.89(h)(2) 
of our regulations, Medicare payments for allowable bad debt amounts 
for patients in skilled nursing facilities (SNFs) that were not dual 
eligible individuals beginning with cost reporting periods beginning on 
or after October 1, 2005, were reduced by 30 percent. Section 
413.89(h)(2) defines a dual eligible individual for bad debt purposes 
as an individual that is entitled to benefits under Part A of Medicare 
and is determined eligible by the State for Medical Assistance under 
Title XIX of the Act as described in 42 CFR 423.772 paragraph (2) under 
the definition of a ``full-benefit dual eligible individual.''
    For all other providers, suppliers, and entities eligible to 
receive bad debt payment, including critical access hospitals (CAHs), 
rural health clinics (RHCs), Federally qualified health centers 
(FQHCs), community mental health centers (CMHCs), end stage renal 
diease (ESRD) facilities, swing bed hospitals, as defined at 42 CFR 
413.114(b), and patients that are dual eligible individuals in SNFs, 
Medicare paid 100 percent of allowable bad debt amounts. Additionally, 
for health maintenance organizations (HMOs) reimbursed on a cost basis 
and competitive medical plans (CMPs) defined under section 1876 of the 
Act, and for health care prepayment plans (HCPPs) defined under section 
1833(a)(1)(A) of the Act, Medicare pays a portion of bad debt amounts 
under 42 CFR 417.536(f) of our regulations. Although Medicare 
previously paid ESRD facilities 100 percent of allowable bad debt 
amounts, these payments were capped at the facility's reasonable cost 
in accordance with Sec.  413.178(a). In the proposed rule, we proposed 
to maintain the cap on bad debt reimbursement to an ESRD facility up to 
the facility's unrecovered costs. We also proposed to apply the bad 
debt reduction percentages mandated by section 3201 of the Middle Class 
Tax Extension and Job Creation Act of 2012 (Pub. L. No. 112-96), prior 
to applying the cap up to the ESRD facility's unrecovered costs.

B. Section 3201 of The Middle Class Tax Extension and Job Creation Act 
of 2012 (Pub. L. 112-96)

    Sections 3201(a) and (b) of the Middle Class Tax Extension and Job 
Creation Act of 2012 (Pub. L. 112-96) amended section 1861(v)(1)(T) and 
section 1861(v)(1)(V) of the Act, respectively, by further reducing the 
percentage of allowable bad debt attributable to the deductibles and 
coinsurance amounts payable to hospitals (section 1861(v)(1)(T)) and 
SNFs (section 1861(v)(1)(V)). Section 3201(b) of Public Law 112-96 also 
revised the SNF bad debt reductions to include both dual eligible 
beneficiaries and non-dual eligible beneficiaries under section 
1861(v)(1)(V) of the Act, and to apply such reductions to swing bed 
hospitals for cost reporting periods beginning during fiscal year 2013 
and subsequent fiscal years.
    Finally, section 3201(c) of The Middle Class Tax Extension and Job 
Creation Act of 2012 added a new subparagraph 1861(v)(1)(W) to the Act, 
which applied a reduction in bad debt payments to ``providers'' not 
addressed under subparagraphs 1861(v)(1)(T) or 1861(v)(1)(V) of the 
Act. For the purpose of subparagraph 1861(v)(1)(W) of the Act, section 
3201(c) Public Law 112-96 defined ``providers'' as those providers not 
previously described in subsections 3201(a) or (b), suppliers, or any 
other type of entity that receives payment for bad debts under the 
authority of section 1861(v)(1)(A) of the Act. These providers include, 
but are not limited to, CAHs, RHCs, FQHCs, CMHCs, HMOs reimbursed on a 
cost basis, CMPs, HCPPs and ESRD facilities.

C. Summary of Provisions of This Final Rule

1. Self-Implementing Provisions of Section 3201 Public Law 112-96
    The provisions of subsections 3201(a), (b), and (c) of The Middle 
Class Tax Extension and Job Creation Act of 2012 permit no discretion 
on the part of the Secretary and thus, are self implementing, with the 
exception of the proposal to maintain the cap on bad deb reimbursement 
for ESRD facilities, as discussed below.
    Comment: We received comments from commenters suggesting that the 
bad debt reduction percentages be implemented in single digit percent 
reductions instead of the double digit percent reductions, as mandated 
by section 3201 of the Middle Class Tax Extension and Job Creation Act 
of 2012.
    Response: While we appreciate the concerns of the provider 
community regarding bad debt payments to providers eligible to receive 
bad debt, the percent reductions of bad debt payments are statutorily 
mandated by section 3201 of the Middle Class Tax Extension and Job 
Creation Act of 2012 and do not provide for discretion. Therefore, we 
are codifying these provisions, as summarized below, in our 
regulations.
     Payment of allowable bad debt to hospitals for cost 
reporting periods beginning during fiscal year 2013 and subsequent 
fiscal years will be reduced by 35 percent.
     Payment of allowable bad debt to SNFs and swing bed 
hospitals for cost reporting periods beginning during fiscal year 2013 
or a subsequent fiscal year will be reduced by 35 percent for 
coinsurance amounts for services furnished to a beneficiary who is not 
a dual eligible individual.
     Payment of allowable bad debt to SNFs and swing bed 
hospitals for coinsurance for services furnished to a beneficiary who 
is a dual eligible individual will be:
     For cost reporting periods beginning during fiscal year 
2013, reduced by 12 percent;
     For cost reporting periods beginning during fiscal year 
2014, reduced by 24 percent and;
     For cost reporting periods beginning during fiscal year 
2015, reduced by 35 percent.
     Payment of allowable bad debt to all other providers, 
suppliers and any other entity that receives payment for bad debts 
under the authority of section 1861(v)(1)(A) of the Act will be:
     For cost reporting periods beginning during fiscal year 
2013, reduced by 12 percent;
     For cost reporting periods beginning during fiscal year 
2014, reduced by 24 percent;
     And for cost reporting periods beginning during fiscal 
year 2015 and subsequent fiscal years, by 35 percent.
    A summary of the changes in Medicare bad debt payment percentages 
required by section 3201 of The Middle Class Tax Extension and Job 
Creation

[[Page 67519]]

Act of 2012 is reflected in Table 8 below:

   Table 8--Summary of Medicare Bad Debt Reimbursement by Provider Types for Cost Reporting Periods That Begin
                                 During FY 2013, 2014, 2015 and Subsequent Years
----------------------------------------------------------------------------------------------------------------
                                                                                                 Allowable bad
                                        Allowable bad      Allowable bad      Allowable bad       debt amount
            Provider type                debt amount        debt amount        debt amount      during FY 2015 &
                                        during FY 2012     during FY 2013     during FY 2014     subsequent FYs
                                          (percent)          (percent)          (percent)          (percent)
----------------------------------------------------------------------------------------------------------------
Hospitals...........................                 70                 65                 65                 65
SNFs: Non-Full Dual Eligibles.......                 70                 65                 65                 65
Swing Bed Hospitals: Non-Full Dual                  100                 65                 65                 65
 Eligibles..........................
SNFs: Full Dual Eligibles...........                100                 88                 76                 65
Hospital Swing Beds: Full Dual                      100                 88                 76                 65
 Eligibles..........................
CAHs................................                100                 88                 76                 65
ESRD Facilities.....................                100                 88                 76                 65
CMHCs...............................                100                 88                 76                 65
FQHCs...............................                100                 88                 76                 65
RHCs................................                100                 88                 76                 65
Cost Based HMOs.....................                100                 88                 76                 65
Health Care Pre-Payment Plans.......                100                 88                 76                 65
Competitive Medical Health Plans....                100                 88                 76                 65
----------------------------------------------------------------------------------------------------------------

2. ESRD Bad Debt Cap and Remove and Reserve Sec.  413.178
    In the proposed rule, we proposed to maintain the cap on bad debt 
reimbursement up to an ESRD facility's unrecovered costs. Bad debt 
payments are made under section 1861(v)(1)(A) of the Act to prevent 
non-Medicare patients from subsidizing Medicare patients and vice-
versa, also known as the anti-cross subsidization principle. The cap at 
an ESRD facility's unrecovered costs for bad debt reimbursement was 
originally implemented to assure that the combination of the composite 
rate payment and the bad debt payment did not exceed the ESRD 
facility's total allowable costs of providing services to Medicare 
beneficiaries, as well as to avoid violating the anti-cross 
subsidization principle. Thus, by applying the cap, an ESRD facility 
would not be paid for bad debt amounts that exceeded its unrecovered 
costs under the composite rate payment system implemented in 1983.
    Comment: We received comments from commenters suggesting the 
maintenance of the cap on bad debt reimbursement to ESRD facilities up 
to the facilities' unrecovered costs was inconsistent with the bad debt 
reimbursement policies for all other types of providers eligible to 
receive bad debt reimbursement and was also inconsistent with Federal 
court rulings.
    Response: After careful consideration of the policy implications of 
removing the cap on bad debt reimbursement at an ESRD facility's 
unrecovered costs, we have decided to eliminate the cap. The 
elimination of the cap on bad debt reimbursement to ESRD facilities 
will allow ESRD facilities to claim bad debts at an amount exceeding 
unrecovered costs incurred under a prospective payment system. In 
addition, removal of the cap on bad debt reimbursement to ESRD 
facilities complies with the order of the D.C. Circuit Court in Kidney 
Center of Hollywood, et al. v. Shalala, 133 F.3d 78 (D.C. Circuit 
1998), and will allow us to apply our bad debt policies consistently 
across all the types of providers eligible to receive bad debt 
payments. Therefore, we believe the removal of the bad debt 
reimbursement cap at an ESRD facility's unrecovered cost, is an 
equitable and reasonable policy choice with respect to bad debt 
reimbursement to ESRD facilities.
    We are eliminating the cap for ESRD facilities for cost reporting 
periods beginning on or after January 1, 2013, the effective date of 
this final rule. With this change, ESRD facilities will be reimbursed 
for bad debt reduced as outlined in the proposed changes to Sec.  
413.89(h)(3), described above. However, because the new bad debt 
reductions for ESRD facilities become effective October 1, 2012, and 
the removal of the cap on bad debt reimbursement to ESRD facilities 
will not be effective until January 1, 2013, for cost reporting periods 
beginning between October 1, 2012 and December 31, 2012, the cap on bad 
debt reimbursement to ESRD facilities will be calculated with both the 
required bad debt reductions and the cap on bad debt reimbursement to 
ESRD facilities. For illustrative purposes only, the following examples 
present the interaction of the application of the cap on ESRD bad debt 
payments until January 1, 2013 and the ESRD bad debt reduction 
effective October 1, 2012:

    Example (A), for cost reporting periods beginning before October 
1, 2012, only the cap applies as follows:
    1. Unrecovered costs = $100.00
    2. Aggregate Gross bad debt = $110.00
    3. Bad debt amount of $110.00 is capped at the unrecovered costs 
of $100.00, therefore, the facility receives $100.00.

    Example (B), for cost reporting periods beginning between 
October 1, 2012 and December 31, 2012, the 12 percent reduction 
applies up to the facilities' unrecovered costs as follows:
    1. Unrecovered costs = $100.00
    2. Aggregate Gross bad debt = $110.00
    3. Bad debt amount of $110.00 is reduced by 12 percent (bad debt 
reduction in FY 2013) which equals $96.80. Since the reduction is 
less than the cap, the facility receives $96.80.

    Example (C), for cost reporting periods beginning on or after 
January 1, 2013 and before October 1, 2013, only the 12 percent 
reduction applies:
    1. Unrecovered costs = $100.00
    2. Aggregate Gross bad debt = $110.00
    3. The $110.00 bad debt amount is reduced by 12 percent (bad 
debt reduction in FY 2013). The facility receives $96.80 with no cap 
applied.

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

[[Page 67520]]

and in the Medicare cost report instructions in the PRM Part II.
    In addition, we are moving the bad debt exception provision 
applicable to ESRD facilities discussed at Sec.  413.178(d)(2) to 
proposed Sec.  413.89(i)(2). For consistency, we are also moving the 
current general bad debt exception set out at Sec.  413.89(i) to new 
paragraph Sec.  413.89(i)(1).
    We are removing and reserving Sec.  413.178.
3. Technical Corrections
    We are making a technical correction to 42 CFR 417.536(f)(1) to 
refer to 42 CFR 413.89 as the appropriate cross reference to Medicare 
bad debt reimbursement policy, to revise the existing language 
describing bad debt to conform to Sec.  413.89(a), and to remove 
requirements that already are set out at Sec.  413.89.

D. Changes to Medicare Bad Debt Policy

    In this rule, we are conforming existing regulations text found at 
Sec.  413.89(h) to the self-implementing provisions of section 3201 of 
Public Law 112-96. Previously, bad debt reimbursement to an ESRD 
facility was capped up to the facility's reasonable costs under Sec.  
413.178(a). In this final rule, we are moving the current provision at 
Sec.  413.178(a) to Sec.  413.89(h)(3), and adding ESRD facilities to 
the list of facilities to which Sec.  413.89 ``Bad debts, charity, and 
courtesy allowances,'' applies. We are also eliminating duplicate 
provisions in Sec.  413.178 and reserving Sec.  413.178 for future use. 
In addition, we are making a technical correction to Sec.  
417.536(f)(1) to clarify Medicare bad debt reimbursement policy.
1. Changes to 42 CFR 413.89(h)
    Under each paragraph of our existing regulations at Sec.  
413.89(h), we describe the limits on bad debt payment to be reductions 
to the amount of bad debt otherwise treated as allowable costs. Under 
Sec.  413.89(a), bad debts are deductions from revenue and are not to 
be included in allowable cost. Therefore, we are clarifying that the 
limits on bad debt payments are reductions to amount of allowable bad 
debt.
    We are revising Sec.  413.89(h)(1)(iv) to set forth the percentage 
reduction in reimbursable bad debt payments to hospitals for cost 
reporting periods beginning during fiscal years 2001 through 2012.
    We are adding a new Sec.  413.89(h)(1)(v), which will set forth the 
percentage reduction in reimbursable bad debt payments required by 
section 1861(v)(1)(T)(v) of the Act to hospitals for cost reporting 
periods beginning during fiscal year 2013 and subsequent fiscal years.
    We are revising Sec.  413.89(h)(2) to add paragraphs (h)(2)(i) and 
(h)(2)(ii). Paragraph (h)(2)(i) will set forth the percentage reduction 
in reimbursable bad debt payments required by section 1861(v)(1)(V)(ii) 
of the Act for SNFs and swing bed hospitals for cost reporting periods 
beginning during fiscal years 2006 through 2012 for a patient that was 
not a dual eligible individual. Paragraph (h)(2)(ii) will set forth the 
reduction in reimbursable bad debt payments for SNFs and swing bed 
hospitals, for cost reporting periods beginning during fiscal year 2013 
and subsequent fiscal years, for a patient that was a dual eligible 
individual.
    We are revising Sec.  413.89(h)(3) to set forth the percentage 
reduction in allowable bad debt payments required by section 
1861(v)(1)(W) of the Act for ESRD facilities for cost reporting periods 
beginning during fiscal year 2013, fiscal year 2014 and subsequent 
fiscal years. We are also revising Sec.  413.89(h)(3) to set forth the 
applicability of the cap on bad debt reimbursement to ESRD facilities 
for cost reporting periods beginning between October 1, 2012 and 
December 31, 2012.
    We are adding a new Sec.  413.89(h)(4) to set forth the percentage 
reduction in reimbursable bad debt payments for all other entities 
required by section 1861(v)(1)(W) of the Act not described in Sec.  
413.89(h)(1), (h)(2), or (h)(3) that are eligible to receive 
reimbursement of bad debt for cost reporting periods beginning during 
fiscal year 2013, fiscal year 2014, and subsequent fiscal years.
2. Rationale for Removing 42 CFR 413.178
    Previously, Sec.  413.178(a) stated that CMS will reimburse each 
ESRD facility its allowable Medicare bad debts, as defined in Sec.  
413.89(b), up to the facility's costs, as determined under Medicare 
principles, in a single lump sum payment at the end of the facility's 
cost reporting period. This cap on bad debt reimbursements will be 
eliminated and the new reductions in bad debt reimbursements will be 
applied, as discussed above.
    We are revising Sec.  413.89(h)(3) to implement the ESRD 
facilities' bad debt reduction effective October 1, 2012 in accordance 
with section 1861(v)(1)(W) of the Act.
    We are also removing and reserving Sec.  413.178, since the revised 
provisions already are set out at Sec.  413.89, in Chapter 3 of the PRM 
Part I, and in the Medicare cost report instructions in the PRM Part 
II. We are moving the current general bad debt exception at Sec.  
413.89(i) to new paragraph Sec.  413.89(i)(1) in order to move the ESRD 
facilities' bad debt exception provision previously discussed at Sec.  
413.178(d)(2) to new paragraph Sec.  413.89(i)(2).
3. Technical Corrections to 42 CFR 417.536(f)(1)
    In this final rule, we are revising the regulations text at 
417.536(f)(1) to correct the cross-reference to the Medicare bad debt 
reimbursement regulation, so that Sec.  417.536(f)(1) will reference 42 
CFR 413.89 instead of the outdated reference to Sec.  413.80. In 
addition, we are revising the language at 42 CFR 417.536(f)(1) to 
conform to the description of bad debt in Sec.  413.89(a) and we are 
removing Sec.  417.536(f)(1)(i) and (ii) since these provisions already 
are set out at Sec.  413.89, in Chapter 3 of the PRM Part I, and in the 
Medicare cost report instructions in the PRM Part II.

V. Collection of Information Requirements

A. Legislative Requirement for Solicitation of Comments

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.

B. Requirements in Regulation Text

    We did not propose and therefore are not finalizing any changes to 
regulatory text for the ESRD PPS in CY 2013.

C. Additional Information Collection Requirements

    This final rule does not impose any new information collection 
requirements in the regulation text, as specified above. However, this 
final rule does make reference to several associated information 
collections that

[[Page 67521]]

are not discussed in the regulation text contained in this document. 
The following is a discussion of these information collections. We are 
soliciting public comment on each of these issues.
1. ESRD QIP
a. Display of Certificates for the PY 2015 ESRD QIP
    Section III.D.15 of this final rule discusses a disclosure 
requirement for the PY 2014 and PY 2015 ESRD QIP. As stated earlier in 
this final rule, section 1881(h)(6)(C) of the Act requires the 
Secretary to provide certificates to dialysis care providers and 
facilities with their Total Performance Scores under the ESRD QIP. This 
section also requires each facility that receives an ESRD QIP 
certificate to display it prominently at the facility.
    To comply with this requirement, we proposed to issue one English 
and one Spanish ESRD QIP certificate beginning in PY 2014 to facilities 
via a generally accessible electronic file format. We had previously 
finalized other display requirements for the program, including that 
each facility prominently display the applicable ESRD QIP certificate 
in the patient area, take the necessary measures to ensure the security 
of the certificate in the patient areas, and have staff available to 
answer questions about the certificate in an understandable manner, 
taking into account that some patients might have limited English 
proficiency.
    The burden associated with the aforementioned requirements is the 
time and effort necessary for facilities to print the applicable ESRD 
QIP certificates, display the certificates prominently in patient 
areas, ensure the safety of the certificates, and respond to patient 
inquiries in reference to the certificates. We do not anticipate that 
posting the Spanish certificate will add more time or burden to the 
Collection of Information requirements outlined in the CY 2011 ESRD PPS 
final rule (76 FR 70298 through 70299) for the PY 2014 ESRD QIP. 
Therefore, this analysis only applies to the burden associated with the 
PY 2015 and beyond requirements.
    We estimate that approximately 5,726 facilities will receive ESRD 
QIP certificates in PY 2015 and will be required to display them. We 
also estimate that it will take each facility 10 minutes per year to 
print, prominently display, and secure the ESRD QIP certificates, for a 
total estimated annual burden of 954 hours (10/60 hours *5,726 
facilities). According to the Bureau of Labor Statistics, the mean 
hourly wage of a registered nurse is $33.23.\9\ Since we anticipate 
nurses (or administrative staff) will post these certificates, we 
estimate that the aggregate cost of this requirement will be $31,701 
($33.23/hour x 954 hours). We estimate that approximately one-third of 
ESRD patients, or 100,000 patients, will ask a question about the ESRD 
QIP certificate. We further estimate that it will take each facility 
approximately 5 minutes to answer each patient's question about the 
applicable ESRD QIP certificate, or 1.52 hours per facility each year. 
The total estimated annual burden associated with this requirement is 
8,704 hours (1.52 hours/facility x 5,726 facilities). The total 
estimated annual burden for both displaying the ESRD QIP certificates 
and answering patients' questions about the certificates is 9,658 hours 
(8,704 hours + 954 hours). While the total estimated annual burden 
associated with both of these requirements as discussed is 9,658 hours, 
we do not believe that there will be a significant cost associated with 
these requirements because we are not requiring facilities to complete 
new forms. We estimate that the total cost for all ESRD facilities to 
comply with the collection of information requirements associated with 
the certificates each year would be less than $320,935 ($33.23/hour x 
9,658 hours).
---------------------------------------------------------------------------

    \9\ This hourly wage is absent any fringe benefits.
---------------------------------------------------------------------------

b. NHSN Dialysis Event Reporting Requirement for the PY 2015 ESRD QIP
    As stated above in section III.D.2.a of this finalrule, we 
finalized a measure requiring facilities to reporting dialysis events 
to the NHSN for he PY 2015 ESRD QIP. Specifically, we will require 
facilities to submit 12 months of dialysis event data to the NHSN to 
receive 10 points on the measure. The burden associated with this 
requirement for existing facilities is the time and effort necessary 
for facilities to submit 12 months of data in order to receive the 
maximum number of points. According to our most recent data, 5,525 
facilities treat adult in-center hemodialysis and/or pediatric in-
center hemodialysis patients and are, then, eligible to receive a score 
on this measure; therefore, we estimate that approximately 5,525 
facilities will submit the required data. Based on data previously 
collected, we further estimate that the average number of dialysis 
events is 0.008 per patient per month and that each facility has 
approximately 75 patients. Accordingly, we estimate the number of 
dialysis events in a 12-month period for all facilities to be 397,800 
(0.09 events/patient/month x 75 patiens/facility x 5,525 facilities x 
12 mohths) for the PY 201 ESRD QIP performance period. We estimae it 
will require 10 minutes to collect and submit data on these events, and 
the estimated burden for submiting 12 mohths of data will be 66,300 
hours (397,800 dialysis events x 10/60 minute). If the dialysis events 
were distributed evenly across all 5,525 facilities, the reporting 
would result in an additional 12 hour (66, 300 hours/5,525 facilities), 
burden for each facility at a cost of $399 ($33.23/hour x 12 hours) per 
facility. Again, we estimate the mean hourly wage of a registered nurse 
is $33.23, and we anticipate nurses (for administrative staff) will be 
responsible for this reporting. In total, we believe that the cost for 
all ESRD facilities to comply with the reporting requirements 
associated with NHSN Dialysis Event reporting measure will be 
approximately $2.2 million ($399 x 5,525 facilities= $2,204,475) per 
year.
c. ICH CAHPS Survey Attestation Requirement for the PY 2015 ESRD QIP
    As stated above in section III.D.1.c of this final rule, we 
finalized a measure that assesses facility usage of the ICH CAHPS 
survey as a reporting measure for the PY 2015 ESRD QIP. The burden 
associated with this requirement is the time and effort necessary for 
facilities to administer the ICH CAHPS survey through a third party and 
submit an attestation to CMS that they successfully administered the 
survey.
    We estimate that approximately 5,523 facilities treat adult, in-
center hemodialysis patients and are, therefore, eligible to receive a 
score on this measure. We estimate that all 5,523 facilities will 
administer the ICH CAHPS survey through a third-party and submit an 
attestation to that effect. We estimate that it will take each 
facility's third-party administrator 16 hours per year to be trained on 
the survey features. We further estimate that it will take each 
facility approximately 5 minutes to submit the attestation each year. 
The estimated total annual burden on facilities is 88,829 hours ((16 
hours x 5,523 facilities) + ((5/60 minutes) x 5,523 facilities) which 
is equal to $2,952,818 (88,829 hours x $33.23), or $534 per facility 
($2,952, 818/5,523). Again, we estimate the mean hourly wage of a 
registered nurse is $33.23, and we anticipate nurses (or administrative 
staff) will be responsible for this reporting. We estimate that it 
would take each patient 30 minutes to complete the survey (to account 
for variability in education levels) and that approximately 75 surveys 
per year

[[Page 67522]]

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

    \10\ Last year, we stated that we believed that 200 surveys 
would be administered per facility per year (76 FR 70299). Upon 
further review, however, we note that the ICH CAHPS specifications 
require a sample of 200 surveys only for those facilities with a 
large patient population. Faculties with fewer than 200 patients are 
required to survey all patients, aiming for a 40 percent response 
rate. (http://www.cahps.ahrq.gov/~/media/Files/SurveyDocuments/ICH/
Admin--Survey/53--fielding--the--ich--survey.pdf). Since we estimate 
that each facility serves approximately 75 patients, we believe that 
the average facility, at most, would survey 75 patients per year.
---------------------------------------------------------------------------

d. Data Validation Requirements
    Section III.D.13 of this final rule outlines the data validation 
processes we are finalizing. We will randomly sample records from 750 
facilities; each sampled facility would be required to produce 
approximately 10 records. The burden associated with this validation 
requirement is the time and effort necessary to submit validation data 
to a CMS contractor. Because we anticipate that the sampled facilities 
will be reimbursed by our validation contractor for the costs 
associated with copying and mailing the requested records, we only 
estimate the burden of retrieving and submitting the necessary records. 
We estimate that it will take each facility approximately 2.5 hours to 
comply with these requirements. If 750 facilities are tasked with 
providing the required documentation, the estimated annual burden 
across all facilities will be 1,875 hours (750 facilities x 2.5 hours) 
at a total of $62,307 (1,875 hours x $33.23/hour) or $83.08 ($62,307/
750) per facility in the sample. Again, we estimate the mean hourly 
wage of a registered nurse is $33.23, and we anticipate nurses (or 
administrative staff) will be responsible for providing this 
information.
    The comments we received on this analysis are set forth below.
    Comment: One commenter believes that the underlying premise for the 
CAHPS burden analysis is incorrect. This commenter stated that if the 
average facility serves 75 patients, it would survey at most 75 
patients per year.
    Response: We believe that this assumption is a good approximation 
for this analysis. We realize that facilities may have more than 75 
patients or less than 75 patients. Across the ESRD population, however, 
we believe 75 patients per facility is accurate. According to the ICH 
CAHPS specifications, if a facility has less than 200 patients, it must 
draw a census of patients from this facility. Therefore, if the average 
facility has 75 patients, we believe it would survey at most 75 
patients.
    Comment: One commenter expressed concern that responding to 
questions from patients about the Performance Score Certificates (PSCs) 
could consume too many staff hours.
    Response: We recognize that patients may have questions about the 
PSCs. The ESRD QIP is designed not only to incentivize care, but also 
to stimulate discussion about the quality of dialysis care. Therefore, 
we believe that these questions and answers are important in promoting 
the goals of the program and improvement in care in that they promote 
patient awareness and understanding of the care they are receiving. 
Additionally, we believe that these questions will be answered during 
the course of usual patient care. We will continue to monitor the 
burden these questions may place upon facilities.
    To obtain copies of the supporting statement and any related forms 
for the paperwork collections referenced above, access CMS' Web site at 
http://www.cms.gov/PaperworkReductionActof1995/PRAL/list.asp#TopOfPage.
    If you comment on these information collection and recordkeeping 
requirements, please submit your comments to the Office of Information 
and Regulatory Affairs, Office of Management and Budget, Attention: CMS 
Desk Officer, [CMS-1352-F]; Fax: (202) 395-6974; or Email: OIRA_submission@omb.eop.gov.
2. Reductions to Bad Debt Payments for All Medicare Providers
    The statutorily mandated reductions of bad debt payments to 
providers, suppliers, and other entities that are currently receiving 
bad debt payments will not result in any changes to or any additional 
collection of information requirements. The removal of the cap on bad 
debt reimbursement to ESRD facilities will result in fewer collection 
of information requirements for ESRD facilities.

VI. Economic Analyses

A. Regulatory Impact Analysis

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

[[Page 67523]]

Extension and Job Creation Act of 2012 adds a new subparagraph--
1861(v)(1)(W) to the Act and applies a reduction in bad debt payments 
to ``providers'' not addressed under subparagraphs 1861(v)(1)(T) or 
1861(v)(1)(V) of the Act. For the purpose of subparagraph 1861(v)(1)(W) 
of the Act, section 3201(c) of The Middle Class Tax Extension and Job 
Creation Act of 2012 defined ``providers'' as a supplier or any other 
type of entity that receives payment for bad debts under the authority 
of section 1861(v)(1)(A) of the Act. These providers include, but are 
not limited to, CAHs, RHCs, FQHCs, CMHCs, HMOs reimbursed on a cost 
basis, CMPs, HCPPs and ESRD facilities.
3. Overall Impact
    We estimate that the final revisions to the ESRD PPS will result in 
an increase of approximately $250 million in payments, from Medicare, 
to ESRD facilities in CY 2013, which includes the amount associated 
with the increase in the ESRDB market basket reduced by the 
productivity adjustment, updates to outlier amounts, and the effect of 
changing the blended payments from 50 percent under the composite rate 
payment and 50 percent under the ESRD PPS to 25 percent under the 
composite rate payment and 75 percent under the ESRD PPS.
    We estimate that the requirements related to the ESRD QIP for PY 
2015 will cost approximately $12.4 million and the predicted payment 
reductions will equal about $12.1 million to result in a total impact 
from the proposed ESRD QIP requirements of $24.6 million.
    In section IV of this final rule, we discuss the provisions 
required by section 3201 of The Middle Class Tax Extension and Job 
Creation Act of 2012, which apply percentage reductions in bad debt 
reimbursement to all providers eligible to receive bad debt 
reimbursement; these provisions are specifically prescribed by statute 
and thus, are self-implementing. Table 9 in section IV.C.1 of the CY 
2013 proposed rule (77 FR 40988) depicts a comparison of the bad debt 
payment percentages prior to and after FY 2013. We estimate these self 
implementing provisions of section 3201 of The Middle Class Tax 
Extension and Job Creation Act of 2012 will result in savings to the 
Medicare program of $10.92 billion over the period from 2012 through 
2022.

------------------------------------------------------------------------
                                         Medicare program savings from
             Fiscal year                     reductions in bad debt
------------------------------------------------------------------------
2013.................................  240 million.
2014.................................  600 million.
2015.................................  900 million.
2016.................................  1.06 billion.
2017.................................  1.14 billion.
2018.................................  1.21 billion.
2019.................................  1.30 billion.
2020.................................  1.39 billion.
2021.................................  1.49 billion.
2022.................................  1.59 billion.
                                      ----------------------------------
  Aggregate FY Total Savings.........  10.92 billion.
------------------------------------------------------------------------

    Additionally, in section IV of this final rule, we discuss the 
removal of the cap on bad debt reimbursement to ESRD facilities. We 
estimate the removal of this cap will result in a cost to the Medicare 
program in the amount of $170 million from 2013 through 2022.

------------------------------------------------------------------------
                                        Medicare program cost resulting
             Fiscal year                        from cap removal
------------------------------------------------------------------------
2013.................................  10 million.
2014.................................  20 million.
2015.................................  10 million.
2016.................................  10 million.
2017.................................  20 million.
2018.................................  20 million.
2019.................................  20 million.
2020.................................  20 million.
2021.................................  20 million.
2022.................................  20 million.
                                      ----------------------------------
  Aggregate FY Total Cost............  170 million.
------------------------------------------------------------------------

B. Detailed Economic Analysis

1. CY 2013 End-Stage Renal Disease (ESRD) Prospective Payment System 
(PPS)
a. Effects on ESRD Facilities
    To understand the impact of the changes affecting payments to 
different categories of ESRD facilities, it is necessary to compare 
estimated payments (that is, payments made under the 100 percent ESRD 
PPS and those under the ESRD PPS blended payment during the transition) 
in CY 2012 to estimated payments in CY 2013. To estimate the impact 
among various classes of ESRD facilities, it is imperative that the 
estimates of payments in CY 2012 and CY 2013 contain similar inputs. 
Therefore, we simulated payments only for those ESRD facilities for 
which we are able to calculate both current payments and new payments.
    For this final rule, we used the June 2012 update of CY 2011 
National Claims History file as a basis for Medicare dialysis 
treatments and payments under the ESRD PPS. We updated the 2011 claims 
to 2012 and 2013 using various updates. The updates to the ESRD PPS 
base rate and the base composite rate portion of the blended rate 
during the transition are described in section II.C of this final rule. 
In addition, in order to prepare an impact analysis, since some ESRD 
facilities opted to be paid the blended payment amount during the 
transition, we made various assumptions about price growth for the 
formerly separately billable drugs and laboratory tests with regard to 
the composite portion of the ESRD PPS blended payment during the 
transition. These rates of price growth are briefly outlined below, and 
are described in more detail in the CY 2011 ESRD PPS final rule (75 FR 
49078 through 49080).
    We used the CY 2011 amounts for the CYs 2012 and 2013 amounts for 
Supplies and Other Services, since this category primarily includes the 
$0.50 administration fee for separately billable Part B drugs and this 
fee continues to be an appropriate amount. Because some ESRD facilities 
will receive blended payments during the transition and receive payment 
for ESRD drugs and biologicals based on their average sales price plus 
6 percent (ASP+6), we estimated price growth for these drugs and 
biologicals based on ASP+6 percent. We updated the last available 
quarter of actual ASP data for the top twelve drugs (the fourth quarter 
of 2012) thru 2013 by using the quarterly growth in the Producer Price 
Index (PPI) for Drugs, consistent with the method for addressing price 
growth in the ESRDB market basket. This resulted in increases of 3.0 
percent, 0.2 percent, 1.4 percent and 1.0 percent, respectively, for 
the first quarter of 2013 thru the fourth quarter of 2013. Since the 
top twelve drugs account for over 99 percent of total former separately 
billable Part B drug payments, we used a weighted average growth of the 
top twelve drugs for the remainder. Table 8 below shows the updates 
used for the drugs.
    We updated payments for laboratory tests paid under the laboratory 
fee schedule to 2012 and 2013 using the statutorily required update of 
the CPI-U increase with any legislative adjustments. For this final 
rule, the growth from 2011 to 2012 is 0.7 percent and the growth from 
2011 to 2013 is -1.1 percent.

[[Page 67524]]



  Table 9--Price Increases From 2011 to 2012 and 2011 to 2013 of Former
                    Separately Billable Part B Drugs
------------------------------------------------------------------------
                              Total growth 2011 to  Total growth 2011 to
  Separately billable drugs      2012  (percent)       2013  (percent)
------------------------------------------------------------------------
EPO.........................                  -0.3                   5.0
Paricalcitol................                 -31.6                 -36.5
Sodium--ferric--glut........                 -24.8                 -33.3
Iron--sucrose...............                 -14.7                 -14.2
Levocarnitine...............                  12.2                  -2.3
Doxercalciferol.............                 -68.3                 -68.5
Calcitriol..................                  64.6                  15.7
Vancomycin..................                 -12.4                 -15.4
Alteplase...................                  15.5                  24.4
Aranesp.....................                   6.5                  12.3
Daptomycin..................                  11.5                  19.0
Ferumoxytol.................                  -7.8                  -4.3
Weight for others...........                  -8.1                  -4.6
------------------------------------------------------------------------

    Table 10 below shows the impact of the estimated CY 2013 ESRD 
payments compared to estimated payments to ESRD facilities in CY 2012.

           Table 10--Impact of Changes in Payments to ESRD Facilities for the CY 2013 ESRD Final Rule
             [Percent change in total payments to ESRD facilities (both program and beneficiaries)]
----------------------------------------------------------------------------------------------------------------
                                         A               B               C               D               E
                                 -------------------------------------------------------------------------------
                                                                  Effect of 2013  Effect of 2013     Effect of
                                     Number of       Number of      changes in      changes in      total 2013
                                    facilities    treatments (in  outlier policy   wage indexes     changes \4\
                                                     millions)     \3\ (percent)     (percent)       (percent)
Facility type
----------------------------------------------------------------------------------------------------------------
All Facilities..................           5,726            41.4             0.4             0.0             3.0
Type
    Freestanding................           5,176            38.0             0.5             0.0             2.9
    Hospital based..............             550             3.4             0.3             0.1             3.6
Ownership Type
    Large dialysis organization.           3,719            27.3             0.5             0.0             2.9
    Regional chain..............             926             7.1             0.3             0.1             3.0
    Independent.................             636             4.4             0.2             0.0             3.0
    Hospital based \1\..........             434             2.6             0.3             0.2             3.6
Unknown.........................              11             0.0             0.3             1.5             4.4
Geographic Location
    Rural.......................           1,267             6.8             0.5            -0.2             2.9
    Urban.......................           4,459            34.6             0.4             0.0             3.0
Census Region
    East North Central..........             941             6.3             0.5             0.1             3.1
    East South Central..........             472             3.1             0.6            -0.5             2.5
    Middle Atlantic.............             641             5.1             0.4             0.0             3.1
    Mountain....................             335             1.9             0.3            -0.3             2.6
    New England.................             171             1.4             0.5             0.5             3.5
    Pacific.....................             667             5.6             0.2             0.6             3.4
    Puerto Rico and Virgin                    41             0.3             0.2            -2.4             0.6
     Islands....................
    South Atlantic..............           1,259             9.5             0.6            -0.2             2.8
    West North Central..........             416             2.2             0.4             0.1             3.2
    West South Central..........             783             6.0             0.5            -0.2             2.8
Facility Size
    Less than 4,000 treatments             1,105             2.5             0.4             0.0             3.0
     \2\........................
    4,000 to 9,999 treatments...           2,225            11.6             0.5             0.0             3.0
    10,000 or more treatments...           2,370            27.2             0.4             0.0             3.0
    Unknown.....................              26             0.0             0.2             0.1             3.2
Percentage of Pediatric Patients
    Less than 2%................           5,616            41.0             0.5             0.0             3.0
    Between 2% and 19%..........              44             0.4             0.3            -0.1             3.0
    Between 20% and 49%.........               8             0.0             0.1            -0.1             4.1
    More than 50%...............              58             0.1            -0.2             0.0             2.2
----------------------------------------------------------------------------------------------------------------
\1\ Includes hospital based facilities not reported to have large dialysis organization or regional chain
  ownership.
\2\ Of the 1,105 Facilities with less than 4,000 treatments, only 332 qualify for the low-volume adjustment. The
  low-volume adjustment is mandated by Congress, and is not applied to pediatric patients. The impact to these
  Low volume Facilities is a 3.3% increase in payments.
\3\ Includes the effects of the final payment policy on thrombolytics for those facilities that are paid under
  the blend.

[[Page 67525]]

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

    Column A of the impact table indicates the number of ESRD 
facilities for each impact category and column B indicates the number 
of dialysis treatments (in millions). The overall effect of the final 
changes to the outlier payment policy described in section II.C.7 of 
this final rule is shown in column C. For CY 2013, the impact on all 
facilities as a result of the changes to the outlier payment policy 
would be a 0.4 percent increase in estimated payments. The estimated 
impact of the changes to outlier payment policy ranges from a 0.2 
percent decrease to a 0.6 percent increase. Most ESRD facilities are 
anticipated to experience a positive effect in their estimated CY 2013 
payments as a result of the final outlier policy changes.
    Column D shows the effect of the wage index on ESRD facilities and 
reflects the CY 2013 wage index values for the composite rate portion 
of the blended payment during the transition and the ESRD PPS payments. 
Facilities located in the census region of Puerto Rico and the Virgin 
Islands would receive a 2.4 percent decrease in estimated payments in 
CY 2013. Since most of the facilities in this category are located in 
Puerto Rico, the decrease is primarily due to the reduction in the wage 
index floor, (which only affects facilities in Puerto Rico in CY 2013). 
The other categories of types of facilities in the impact table show 
changes in estimated payments ranging from a 0.5 percent decrease to a 
1.5 percent increase due to the update of the wage index.
    Column E reflects the overall impact (that is, the effect of the 
final outlier policy changes, the effect of the final wage index, the 
effect of the ESRDB market basket increase minus productivity 
adjustment, the effect of the change in the blended payment percentage 
from 50 percent of payments based on the composite rate system and 50 
percent based on the ESRD PPS in 2012, to 25/75, respectively, for 
2013, for those facilities that opted to be paid under the transition, 
and the effect of the 0.1 percent transition budget-neutrality 
adjustment increase). We expect that overall, ESRD facilities will 
experience a 3.0 percent increase in estimated payments in 2013. ESRD 
facilities in Puerto Rico and the Virgin Islands are expected to 
receive a 0.6 percent increase in their estimated payments in CY 2013. 
This smaller increase is primarily due to the negative impact of the 
wage index. The other categories of types of facilities in the impact 
table show positive impacts ranging from an increase of 2.2 percent to 
4.4 percent in their 2013 estimated payments.
b. Effects on Other Providers
    Under the ESRD PPS, ESRD facilities are paid directly for the renal 
dialysis bundle and other provider types such as laboratories, DME 
suppliers, and pharmacies, may no longer bill Medicare directly for 
renal dialysis services. Rather, effective January 1, 2011, such other 
providers can only furnish renal dialysis services under arrangements 
with ESRD facilities and must seek payment from ESRD facilities rather 
than Medicare. Under the ESRD PPS, Medicare pays ESRD facilities one 
payment for renal dialysis services, which may have been separately 
paid to suppliers by Medicare prior to the implementation of the ESRD 
PPS. Therefore, in CY 2013, the third year of the ESRD PPS, we estimate 
that the final ESRD PPS will have zero impact on these other providers.
c. Effects on the Medicare Program
    We estimate that Medicare spending (total Medicare program 
payments) for ESRD facilities in 2013 will be approximately $8.4 
billion. This estimate is based on various price update factors 
discussed in section VI.B in this final rule and takes into account a 
projected increase in fee-for-service Medicare dialysis beneficiary 
enrollment of 4.0 percent in CY 2013.
d. Effects on Medicare Beneficiaries
    Under the ESRD PPS, beneficiaries are responsible for paying 20 
percent of the ESRD PPS payment amount or blended payment amount for 
patients treated in facilities going through the ESRD PPS transition. 
As a result of the projected 3.0 percent overall increase in the ESRD 
PPS payment amounts in CY 2013, we estimate that there will be an 
increase in beneficiary co-insurance payments of 3.0 percent in CY 
2013, which translates to approximately $60 million.
e. Alternatives Considered
    We considered eliminating the AY modifier use by ESRD facilities in 
CY 2013, which could address program integrity concerns but could also 
require Medicare beneficiaries to incur additional injections, medical 
visits and co-insurance liabilities and accordingly, we did not pursue 
this alternative. Rather, we decided to monitor the use of the AY 
modifier and consider the elimination of the AY modifier in future 
rulemaking if we determine that it is being used inappropriately.
2. ESRD QIP
a. Effects of the PY 2015 ESRD QIP
    The ESRD QIP provisions are intended to prevent possible reductions 
in the quality of ESRD dialysis facility services provided to 
beneficiaries as a result of payment changes under the ESRD PPS by 
implementing an ESRD QIP that reduces ESRD payments by up to 2 percent 
for dialysis facilities that fail to meet or exceed a Total Performance 
Score with respect to performance standards established by the 
Secretary with respect to certain specified measures. The methodology 
that we are finalizing to determine a facility's Total Performance 
Score is described in section III.D.9 and III.D.10 of this final rule. 
Any reductions in ESRD payments would begin on January 1, 2015 for 
services furnished on or after January 1, 2015.
    As a result, based on the ESRD QIP outlined in this final rule, we 
estimate that, of the total number of dialysis facilities (including 
those not receiving an ESRD QIP Total Performance Score), approximately 
20 percent or 1,093 of the facilities would likely receive a payment 
reduction for PY 2015. Facilities that do not receive a TPS are not 
eligible for a payment reduction.
    The ESRD QIP impact assessment assumes an initial count of 5,726 
dialysis facilities paid through the ESRD PPS. Table 11 shows the 
overall estimated distribution of payment reductions resulting from the 
PY 2015 ESRD QIP.

[[Page 67526]]



 Table 11--Estimated Distribution of PY 2015 ESRD QIP Payment Reductions
------------------------------------------------------------------------
                                                Number of    Percent of
         Payment reduction (percent)           facilities    facilities
------------------------------------------------------------------------
0.0.........................................          4308          79.8
0.5.........................................           599          11.1
1.0.........................................           309           5.7
1.5.........................................            97           1.8
2.0.........................................            88           1.6
------------------------------------------------------------------------
* Note: this table excludes 325 facilities that did not receive a score
  because they did not have enough data to receive a Total Performance
  Score.

To estimate whether or not a facility would receive a payment reduction 
under the proposed approach, we scored each facility on achievement and 
improvement for each of the proposed clinical measures using the most 
recent data available for each measure shown in Table 12.

                       Table 12--Data Used To Estimate PY 2015 ESRD QIP Payment Reductions
----------------------------------------------------------------------------------------------------------------
                                      Period of time used to  calculate
                                    achievement  thresholds, performance
             Measure                     standards, benchmarks, and                  Performance period
                                           improvement thresholds
----------------------------------------------------------------------------------------------------------------
Hemoglobin Greater Than 12 g/dL..  Jan 2010-Dec 2010.....................  Jan 2011-Dec 2011.
Vascular Access Type
    % Fistula....................  Oct 2010-Apr 2011.....................  May 2011-Dec 2011.
    % Catheter...................  Oct 2010-Apr 2011.....................  May 2011-Dec 2011.
Kt/V
    Adult HD.....................  Jul 2010-Mar 2011.....................  Apr 2011-Dec 2011.
    Adult PD.....................  Jul 2010-Mar 2011.....................  Apr 2011-Dec 2011.
    Pediatric HD.................  Jul 2010-Mar 2011.....................  Apr 2011-Dec 2011.
----------------------------------------------------------------------------------------------------------------

    We used claims data for these calculations. Clinical measures with 
less than 11 cases for a facility were not included in that facility's 
Total Performance Score. Clinical measures with 11-25 cases for a 
facility received an adjustment as outlined in section III.C.11.a of 
this final rule. Each facility's Total Performance Score was compared 
to the estimated minimum Total Performance Score and the payment 
reduction table found in section III.D.12 of this final rule. 
Facilities were required to have a score on at least one clinical 
measure to receive a Total Performance Score. For these simulations, 
reporting measures were not included due to lack of data availability. 
Therefore, the simulated facility Total Performance Scores were 
calculated using only the clinical measure scores.
    To estimate the total payment reductions in PY 2015 for each 
facility resulting from this final rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2011 and December 2011 by the facility's estimated payment 
reduction percentage expected under the ESRD QIP, yielding a total 
payment reduction amount for each facility: (Total ESRD payment in 
January 2011 and December 2011 times the estimated payment reduction 
percentage). For PY 2015 the total payment reduction for all of the 
1,093 facilities expected to receive a reduction is approximately $12 
million ($12,087,940). Further, we estimate that the total costs 
associated with the collection of information requirements for PY 2015 
described in section V.C. of this final rule would be approximately 
$12.4 million for all ESRD facilities. As a result, we estimate that 
ESRD facilities will experience an aggregate impact of $24.5 million 
($12,087,940 + 12,424,180 = $24,512,120) as a result of the PY 2015 
ESRD QIP.
    Table 13 below shows the estimated impact of the finalized ESRD QIP 
payment reductions to all ESRD facilities for PY 2015. The table 
details the distribution of ESRD facilities by facility size (both 
among facilities considered to be small entities and by number of 
treatments per facility), geography (both urban/rural and by region), 
and by facility type (hospital based/freestanding facilities). Given 
that the time periods used for these calculations will differ from 
those we will use for the PY 2015 ESRD QIP, the actual impact of the PY 
2015 ESRD QIP may vary significantly from the values provided here.

                 Table 13--Impact of ESRD QIP Payment Reductions to ESRD Facilities for CY 2015
----------------------------------------------------------------------------------------------------------------
                                                                                     Number of        Payment
                                                     Number of                      facilities       reduction
                                     Number of       Medicare        Number of      expected to      (percent
                                    facilities      treatments      facilities       receive a       change in
                                                     2009 (in     with QIP score      payment       total ESRD
                                                     millions)                       reduction       payments)
----------------------------------------------------------------------------------------------------------------
All Facilities..................           5,726            41.4           5,401           1,093           -0.17
Facility Type:
    Freestanding................           5,176            38.0           4,989             931           -0.15
    Hospital-based..............             550             3.4             412             162           -0.41
Ownership Type:
    Large Dialysis..............           3,719            27.3           3,612             662           -0.14
    Regional Chain..............             926             7.1             882             151           -0.14

[[Page 67527]]

 
    Independent.................             636             4.4             584             150           -0.22
    Hospital-based (non-chain)..             434             2.6             318             128           -0.43
    Unknown.....................              11             0.0               5               2           -0.30
Facility Size:
    Large Entities..............           4,645            34.4           4,494             813           -0.14
    Small Entities \1\..........           1,070             7.0             902             278           -0.30
    Unknown.....................              11             0.0               5               2           -0.30
Urban/Rural Status:
    1) Rural....................           1,267             6.8           1,188             263           -0.18
    2) Urban....................           4,459            34.6           4,213             830           -0.16
Census Region:
    Northeast...................             810             6.5             752             166           -0.20
    Midwest.....................           1,352             8.5           1,238             310           -0.21
    South.......................           2,510            18.7           2,420             445           -0.15
    West........................           1,001             7.5             952             154           -0.13
    U.S. Territories \2\........              53             0.3              39              18           -0.37
Census Division:
    East North Central..........             941             6.3             856             227           -0.23
    East South Central..........             472             3.1             451              77           -0.15
    Middle Atlantic.............             641             5.1             593             143           -0.22
    Mountain....................             335             1.9             321              64           -0.15
    New England.................             171             1.4             159              23           -0.13
    Pacific.....................             667             5.6             631              90           -0.11
    South Atlantic..............           1,259             9.5           1,217             236           -0.16
    West North Central..........             416             2.2             382              83           -0.17
    West South Central..........             783             6.0             752             132           -0.13
    U.S. Territories \2\........              41             0.3              39              18           -0.37
Facility Size (# of total
 treatments):
    Less than 4,000 treatments..           1,105             2.5             864             214           -0.27
    4,000-9,999 treatments......           2,225            11.6           2,190             420           -0.15
    Over 10,000 treatments......           2,370            27.2           2,345             459           -0.14
    Unknown.....................              26             0.0               2               0           -0.00
----------------------------------------------------------------------------------------------------------------
\1\ Small Entities include hospital-based and satellite facilities and non-chain facilities based on DFC self-
  reported status.
\2\ Includes Puerto Rico and Virgin Islands.

    The comments we received on this analysis are set forth below.
    Comment: Several commenters requested that we provide, for both PY 
2014 and PY 2015, the data, assumptions, and methodology used to 
calculate the rate of improvement, performance standards, achievement 
thresholds, and benchmarks for all measures to allow stakeholders to 
have the opportunity to assess the impact on facilities so that the 
community may provide meaningful comment. Commenters also argued that 
we have underestimated the PY 2014 average payment reduction (i.e., by 
36 percent), and requested that we provide the model, data, and 
assumption we used for these estimates.
    Response: As we noted above, the PY 2014 final rule was finalized 
on November 1, 2011 (76 FR 70228). We direct commenters to this rule 
for our analysis of the PY 2014 ESRD QIP. The methodology and 
assumptions that we used to calculate the estimated rate of 
improvement, performance standards, achievement thresholds, and 
standards are set forth in this section.
    b. Alternatives Considered for the PY 2015 ESRD QIP In developing 
the PY 2015 ESRD QIP, we selected measures that we believe are 
important indicators of patient outcomes and quality of care as 
discussed in sections III.C, and III.D of this final rule. Poor 
management of anemia and inadequate dialysis, for example, can lead to 
otherwise-avoidable hospitalizations, decreased quality of life, and 
death. Infections are also a leading cause of hospitalization and death 
among hemodialysis patients, but there are proven infection control 
methods that have been shown effective in reducing morbidity and 
mortality. We also considered proposing to adopt the Standardized 
Hospitalization Ratio Admissions (SHR) measure and the Standardized 
Mortality Ratio (SMR) measures as part of the PY 2015 ESRD QIP. While 
we decided not to propose to adopt the SHR and SMR measures for the PY 
2015 ESRD QIP, we will publicly report these measure rates/ratios via 
DFC to encourage facilities to improve their care. We believe the 
measures selected for the ESRD QIP will allow us to continue focusing 
on improving the quality of care that Medicare beneficiaries receive 
from ESRD dialysis facilities.
    In developing the scoring methodology for the PY 2015 ESRD QIP, we 
considered a number of alternatives including various improvement 
ranges, achievement thresholds, and benchmarks. We also considered 
whether some of the new measures should be scored based only on 
achievement. We also discussed scoring some of the clinical measures 
using a binary methodology (that is, facilities receive either zero or 
10 points for missing or achieving a standard, respectively). We 
ultimately decided to mirror the PY 2014 ESRD QIP scoring methodology 
as closely as possible. We aim to design a scoring methodology that is 
straightforward and transparent to facilities, patients, and other 
stakeholders, and we believe that one of

[[Page 67528]]

the ways to obtain this transparency is to be as consistent as possible 
from year-to-year of the program. We believe that this consistency will 
allow us to better assess the impacts of the ESRD QIP upon facilities 
and beneficiaries. Finally, we believe that all scoring methodologies 
for Medicare VBP programs should be aligned as appropriate given their 
specific statutory requirements, and the scoring methodology for the 
ESRD QIP is similar to the Hospital Inpatient VBP Program.
    When deciding upon how to best score the Vascular Access Type and 
Kt/V Dialysis Adequacy measure topics, we considered combining all of 
the measures within the measure topic into one composite measure (that 
is, having one, combined numerator and one, combined denominator for 
all of the measures within the topic) rather than individually scoring 
each measure and weighting it appropriately in the measure topic. We 
believe that it is important to mirror the NQF specifications for each 
measure as much as possible; we also heeded the suggestion of the 
Measures Application Partnership to further test composite measures 
before implementing them. Therefore, we decided to score measure topics 
where each measure within the measure topic is scored individually and 
then weighted appropriately.
    We considered requiring facilities to report data for 100 percent 
of their patients for the Mineral Metabolism and Anemia Management 
reporting measures in order to ensure complete, accurate data 
collection. We ultimately decided that, because there are some 
situations where a facility cannot control whether a patient's blood is 
drawn (for example, hospitalization), we should adopt a reporting 
threshold of less than 100 percent.
    We also considered multiple baseline periods for purposes of 
scoring facilities on achievement and improvement. We considered 
periods of the same time and duration, periods occurring at different 
times, and periods with various durations. We ultimately decided that a 
baseline period of 12-months for both the achievement and improvement 
scores is best because it is consistent with the PY 2014 program. 
Additionally, a 12-month baseline period prevents issues related to 
seasonality. We finalized achievement and improvement baseline periods 
occurring over different periods of time because we believe that this 
approach mitigates data lag as much as possible and also allows us to 
score all of the measures on both achievement and improvement. Finally, 
we finalized an achievement baseline period spanning a calendar year 
(CY 2011) because this approach allows us to publish the numerical 
values for the performance standards before the beginning of the 
performance period.
    In deciding upon the minimum number of cases required for a 
facility to be scored on a measure, we reviewed and discussed many 
options. We considered keeping the program the same as PY 2014 by 
excluding measures with less than 11 cases and applying no adjustment. 
We also discussed including an adjustment for measures with 11-25 
cases. Finally, we discussed an adjustment applicable to measures with 
26-50 cases. We believe that we should set the case minimum at 11 and 
adopt an adjustment for measures with 11-25 cases.
    Finally, in deciding upon the calculation of the minimum Total 
Performance Score, we considered scoring the reporting measures at 
zero, consistent with PY 2014. We decided, however, to finalize a 
minimum Total Performance Score that includes half of the maximum score 
a facility could receive on these measures. We believe that this 
methodology appropriately places emphasis on complete reporting from 
all facilities.
    We did not receive any comments related to this analysis of the 
alternatives that we considered for the PY 2015 ESRD QIP.
3. Reductions to Bad Debt Payments for All Medicare Providers
    Section 3201 of The Middle Class Tax Extension and Job Creation Act 
of 2012 that requires reductions in bad debt reimbursement to all 
providers, supplies and other entities eligible to receive bad debt 
reimbursement will have a significant impact on the operations of all 
affected entities. However, these provisions are specifically 
prescribed by statute and thus, are self-implementing. It is estimated 
that these provisions will result in savings in CY 2013 of $330 
million. Removal of the cap on bad debt reimbursement to ESRD 
facilities up to a facility's unrecovered cost will have an impact on 
ESRD facilities by increasing their bad debt reimbursement amounts. It 
is estimated that the removal of this cap will result in $10 million in 
increased payments to ESRD facilities for CY 2013. Therefore, it is 
estimated that the combined overall savings in the CY 2013 would be 
$320 million.

C. Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars_a004_a-4), in Table 14 below, we 
have prepared an accounting statement showing the classification of the 
transfers and costs associated with the various provisions of this 
final rule.

  Table 14--Accounting Statement: Classification of Estimated Transfers
                            and Costs/Savings
                          ESRD PPS for CY 2013
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $250 million.
From Whom to Whom......................  Federal government to ESRD
                                          providers.
Increased Beneficiary Co-insurance       $60 million.
 Payments.
From Whom to Whom......................  Beneficiaries to ESRD
                                          providers.
------------------------------------------------------------------------
                          ESRD QIP for PY 2015
------------------------------------------------------------------------
Annualized Monetized Transfers.........  -$12.1 million.*
From Whom to Whom......................  Federal government to ESRD
                                          providers.
------------------------------------------------------------------------
                Category                              Costs
------------------------------------------------------------------------
Annualized Monetized ESRD Provider       12.4 million.**
 Costs.
------------------------------------------------------------------------

[[Page 67529]]

 
Savings from Congressionally Mandated Reductions of Bad Debt Payments in
                                 CY 2013
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Bad Debt Payments.  $-320 million.
From Whom to Whom......................  Federal government to Medicare
                                          providers.
------------------------------------------------------------------------
* It is the reduced payment to the ESRD facilities, which fall below the
  quality standards as stated in section III.D.12 of this proposed rule.
 
** It is the cost associated with the collection of information
  requirements for all ESRD facilities.

VII. Regulatory Flexibility Act Analysis

    The Regulatory Flexibility Act (September 19, 1980, Pub. L. 96-354) 
(RFA) requires agencies to analyze options for regulatory relief of 
small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Approximately 19 percent of ESRD dialysis 
facilities are considered small entities according to the Small 
Business Administration's (SBA) size standards, which classifies small 
businesses as those dialysis facilities having total revenues of less 
than $34.5 million in any 1 year. Individuals and States are not 
included in the definitions of a small entity. For more information on 
SBA's size standards, see the Small Business Administration's Web site 
at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf (Kidney Dialysis Centers are listed as 621492 with a size 
standard of $34.5 million).
    The claims data used to estimate payments to ESRD facilities in 
this RFA analysis and RIA do not identify which dialysis facilities are 
part of a large dialysis organization (LDO), regional chain, or other 
type of ownership because each individual dialysis facility has its own 
provider number and bills Medicare using this number. Therefore, in 
previous RFA analyses and RIAs presented in proposed and final rules 
that updated the basic case-mix adjusted composite payment system, we 
considered each ESRD facility to be a small entity for purposes of the 
RFA analysis. However, we conducted a special analysis for this final 
rule that enabled us to identify the ESRD facilities that are part of 
an LDO or regional chain and therefore, were able to identify 
individual ESRD facilities that will be considered small entities.
    We do not believe ESRD facilities are operated by small government 
entities such as counties or towns with populations of 50,000 or less, 
and therefore, they are not enumerated or included in this estimated 
RFA analysis. Individuals and States are not included in the definition 
of a small entity.
    For purposes of the RFA, we estimate that approximately 19 percent 
of ESRD facilities are small entities as that term is used in the RFA 
(which includes small businesses, nonprofit organizations, and small 
governmental jurisdictions). This amount is based on the number of ESRD 
facilities shown in the ownership category in Table 9. Using the 
definitions in this ownership category, we consider the 636 facilities 
that are independent and the 434 facilities that are shown as hospital-
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 $34.5 million in any year when the total revenues for all 
locations are combined for each business (individual LDO or regional 
chain), and are not, therefore, included as small entities.
    For the ESRD PPS updates in this rule, a hospital-based ESRD 
facility (as defined by ownership type) is estimated to receive a 3.6 
percent increase in payments for CY 2013. An independent facility (as 
defined by ownership type) is estimated to receive a 3.0 percent 
increase in payments for 2013.
    Based on the ESRD QIP payment reduction impacts to ESRD facilities 
for PY 2015, we estimate that of the 1,093 ESRD facilities expected to 
receive a payment reduction, 278 ESRD small entity facilities will 
experience a payment reduction (ranging from 0.5 percent up to 2.0 of 
total payments). We anticipate the payment reductions to average 
approximately $11,059 per facility among the 1,093 facilities receiving 
a payment reduction, with an average of $12,866 per small entity 
facilities receiving a payment reduction. The projected impacts for 
these small entities are estimates based on current data. The actual 
impacts may differ. Using our projections of facility performance, we 
then estimated the impact of anticipated payment reductions on ESRD 
small entities, by comparing the total payment reductions for the 278 
small entities expected to receive a payment reduction, with the 
aggregate ESRD payments to all small entities. We estimate that there 
are a total of 1,070 small entity facilities. For this entire group of 
1,070 ESRD small entity facilities, a decrease of 0.30% percent in 
aggregate ESRD payments is observed.
    The comment we received on this analysis is set forth below.
    Comment: One commenter expressed concern that we have not provided 
additional funding for the ESRD QIP COI requirements to alleviate the 
aggregate associated cost; commenter is specifically concerned of the 
impact on small facilities.
    Response: We recognize that a facility may have additional costs 
resulting from the ESRD QIP. We believe that these costs, however, are 
necessary in improving care and do not outweigh the utility of the 
program. We will continue to monitor these costs, paying specific 
attention to their effect upon small facilities.
    Therefore, the Secretary has determined that this final rule will 
not have a significant economic impact on a substantial number of small 
entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. Any 
such regulatory impact analysis must conform to the provisions of 
section 604 of the RFA. For purposes of section 1102(b) of the Act, we 
define a small rural hospital as a hospital that is located outside of 
a metropolitan statistical area and has fewer than 100 beds. We do not 
believe this final rule will have a significant impact on operations of 
a substantial number of small rural hospitals because most dialysis 
facilities are freestanding. While there are 180 rural hospital-based 
dialysis facilities, we do not know how many of them are based at 
hospitals with fewer than 100 beds. However, overall, the 180 rural 
hospital-based dialysis facilities will experience an estimated 3.5 
percent increase in payments. As a result, this final rule is estimated 
to not have a significant impact on small rural hospitals. Therefore, 
the Secretary has determined that this final rule will not have a 
significant economic impact on a substantial number of small entities.

[[Page 67530]]

    Section 3201 of The Middle Class Tax Extension and Job Creation Act 
of 2012 that requires reductions in bad debt reimbursement to all 
providers, supplies and other entities eligible to receive bad debt 
reimbursement will have a significant impact on the operations of a 
substantial number of small entities and small rural hospitals. 
However, these provisions are specifically prescribed by the Congress 
and thus, are self-implementing. Additionally, we do not believe that 
the removal of the cap on bad debt reimbursements to ESRD facilities up 
to their unrecovered costs will have a significant impact on the 
operations of a substantial number of small entities and small rural 
hospitals. Thus, we are not providing a Regulatory Flexibility Act 
Analysis to codify the statutorily mandated reductions in bad debt 
payments, nor for the removal of the cap on bad debt reimbursement as 
it pertains to ESRD facilities.

VIII. Unfunded Mandates Reform Act Analysis

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
(Pub. L. 104-4) also requires that agencies assess anticipated costs 
and benefits before issuing any rule whose mandates require spending in 
any 1 year $100 million in 1995 dollars, updated annually for 
inflation. In 2012, that threshold is approximately $139 million. This 
final rule does not include any mandates that will impose spending 
costs on State, local, or Tribal governments in the aggregate, or by 
the private sector, of $139 million.

IX. Federalism Analysis

    Executive Order 13132 on Federalism (August 4, 1999) establishes 
certain requirements that an agency must meet when it promulgates a 
final rule that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. We have reviewed this final rule under the threshold 
criteria of Executive Order 13132, Federalism, and have determined that 
it will not have substantial direct effects on the rights, roles, and 
responsibilities of States, local or Tribal governments.

X. Files Available to the Public via the Internet

    This section lists the Addenda referred to in the preamble of this 
final rule. Beginning in CY 2012, the Addenda for the annual ESRD PPS 
proposed and final rulemakings will no longer appear in the Federal 
Register. Instead, the Addenda will be available only through the 
Internet. We will continue to post the Addenda through the Internet.
    Readers who experience any problems accessing the Addenda that are 
posted on the CMS Web site at http://www.cms.gov/ESRDPayment/PAY/list.asp, should contact Michelle Cruse at (410) 786-7540.

List of Subjects

42 CFR Part 413

    Health facilities, Kidney diseases, Medicare, Reporting and 
recordkeeping requirements.

42 CFR Part 417

    Administrative practice and procedure, Grant programs--health, 
Health care, Health insurance, Health maintenance organizations (HMO), 
Loan programs--health, Medicare, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services amends 42 CFR chapter IV as follows:

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR 
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED 
PAYMENT RATES FOR SKILLED NURSING FACILITIES

0
1. The authority citation for part 413 is revised to read as follows:

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

Subpart F--Specific Categories of Costs


0
2. Section 413.89 is amended by revising paragraphs (h)(1) introductory 
text, (h)(1)(iv), (h)(2), (h)(3), and (i), and by adding paragraphs 
(h)(1)(v) and (h)(4) to read as follows:


Sec.  413.89  Bad debts, charity, and courtesy allowances.

* * * * *
    (h) * * *
    (1) Hospitals. In determining reasonable costs for hospitals, the 
amount of allowable bad debt (as defined in paragraph (e) of this 
section) is reduced:
* * * * *
    (iv) For cost reporting periods beginning during fiscal years 2001 
through 2012, by 30 percent.
    (v) For cost reporting periods beginning during a subsequent fiscal 
year, by 35 percent.
    (2) Skilled nursing facilities and swing bed hospitals. For the 
purposes of this paragraph (h)(2), a dual eligible individual is 
defined as an individual that is entitled to benefits under Part A of 
Medicare and is determined eligible by the State for medical assistance 
under Title XIX of the Act as described under paragraph (2) of the 
definition of a ``full-benefit dual eligible individual'' at Sec.  
423.772 of this chapter. In determining reasonable costs for a skilled 
nursing facility and for post-hospital SNF care furnished in a swing 
bed hospital, as defined in Sec.  413.114(b), the amount of allowable 
bad debt (as defined in paragraph (e) of this section) is reduced:
    (i) For non-dual eligible individuals--(A) For cost reporting 
periods beginning during fiscal years 2006 through 2012, by 30 percent, 
for a patient in a skilled nursing facility.
    (B) For cost reporting periods beginning during a subsequent fiscal 
year, by 35 percent, for a patient in a skilled nursing facility or 
receiving post-hospital SNF care in a swing bed hospital.
    (ii) For dual eligible individuals--(A) For cost reporting periods 
beginning during fiscal year 2013, by 12 percent, for a patient in a 
skilled nursing facility or a patient receiving post-hospital SNF care 
in a swing bed hospital.
    (B) For cost reporting periods beginning during fiscal year 2014, 
by 24 percent, for a patient in a skilled nursing facility or a patient 
receiving post-hospital SNF care in a swing bed hospital.
    (C) For cost reporting periods beginning during a subsequent fiscal 
year, by 35 percent, for a patient in a skilled nursing facility or a 
patient receiving post-hospital SNF care in a swing bed hospital.
    (3) End-stage renal dialysis facilities. In determining reasonable 
costs for an end-stage renal dialysis facility, the amount of allowable 
bad debt (as defined in paragraph (e) of this section) is:
    (i) For cost reporting periods beginning before October 1, 2012, 
reimbursed up to the facility's costs.
    (ii) For cost reporting periods beginning on or after October 1, 
2012 and before January 1, 2013, reduced by 12 percent with the 
resulting amount reimbursed up to the facility's costs.
    (iii) For cost reporting periods beginning on or after January 1, 
2013 and before October 1, 2013, reduced by 12 percent.

[[Page 67531]]

    (iv) For cost reporting periods beginning during fiscal year 2014, 
reduced by 24 percent.
    (v) For cost reporting periods beginning during a subsequent fiscal 
year, reduced by 35 percent.
    (4) All other providers. In determining reasonable costs for all 
other providers, suppliers and other entities not described elsewhere 
in paragraph (h) of this section that are eligible to receive 
reimbursement for bad debts under this section, the amount of allowable 
bad debts (as defined in paragraph (e) of this section) is reduced:
    (i) For cost reporting periods beginning during fiscal year 2013, 
by 12 percent.
    (ii) For cost reporting periods beginning during fiscal year 2014, 
by 24 percent.
    (iii) For cost reporting periods beginning during a subsequent 
fiscal year, by 35 percent.
    (i) Exceptions applicable to bad debt reimbursement. (1) Bad debts 
arising from covered services paid under a reasonable charge-based 
methodology or a fee schedule are not reimbursable under the program.
    (2) For end-stage renal dialysis services furnished on or after 
January 1, 2011 and paid for under the end-stage renal dialysis 
prospective payment system described in Sec.  413.215, bad debts 
arising from covered items or services that, prior to January 1, 2011 
were paid under a reasonable charge-based methodology or a fee 
schedule, including but not limited to drugs, laboratory tests, and 
supplies are not reimbursable under the program.


Sec.  413.178  [Removed and Reserved]

0
3. Section 413.178 is removed and reserved.

PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL 
PLANS, AND HEALTH CARE PREPAYMENT PLANS

0
4. The authority citation for part 417 continues to read as follows:

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

Subpart O--Medicare Payment: Cost Basis

0
5. Section 417.536 is amended by revising paragraph (f)(1) to read as 
follows:


Sec.  417.536  Cost payment principles.

* * * * *
    (f) * * *
    (1) Bad debts attributable to Medicare deductible and coinsurance 
amounts are allowable only if the requirements of Sec.  413.89 of this 
chapter are met, subject to the limitations described under Sec.  
413.89(h) and the exceptions for services described under Sec.  
413.89(i).
* * * * *

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)


    Dated: October 26, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2012-26903 Filed 11-2-12; 4:15 pm]
BILLING CODE 4120-01-P