Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics,…
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Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
Final rule.
CFR Part: "42 CFR Parts 413 and 414"
RIN Number: "RIN 0938-AR55"
Citation: "78 FR 72156"
Document Number: "CMS-1526-F"
"Rules and Regulations"
SUMMARY: This rule updates and makes revisions to the End-Stage Renal Disease (ESRD) prospective payment system (PPS) for calendar year (CY) 2014. This rule also sets forth requirements for the ESRD quality incentive program (QIP), including for payment year (PY) 2016 and beyond. In addition, this rule clarifies the grandfathering provision related to the 3-year minimum lifetime requirement (MLR) for Durable Medical Equipment (DME), and provides clarification of the definition of routinely purchased DME. This rule also implements budget-neutral fee schedules for splints and casts, and intraocular lenses (IOLs) inserted in a physician's office. Finally, this rule makes a few technical amendments and corrections to existing regulations related to payment for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) items and services.
   EFFECTIVE DATE: Effective Date: These regulations are effective on
   FOR FURTHER INFORMATION CONTACT:
   Stephanie Frilling, (410) 786-4507, for issues related to the ESRD PPS wage index, home dialysis training, and the delay in payment for oral-only drugs under the ESRD PPS.
   Heidi Oumarou, (410) 786-7942, for issues related to the ESRD bundled market basket.
   Anita Segar, (410) 786-4614, for issues related to the ESRD QIP.
   Sandhya Gilkerson, (410) 786-4085, for issues related to the clarification of the grandfathering provision related to the 3-year MLR for DME.
   Anita Greenberg, (410) 786-4601, for issues related to the clarification of the definition of routinely purchased DME.
   Christopher Molling, (410) 786-6399, for issues related to DMEPOS technical amendments and corrections.
   Hafsa Vahora, (410) 786-7899, for issues related to the implementation of budget neutral fee schedules for splints and casts, and IOLs inserted in a physician's office.
   SUPPLEMENTARY INFORMATION: This
Addenda Are Only Available Through the Internet on the CMS Web Site
   In the past, a majority of the Addenda referred to throughout the preamble of our proposed and final rules were available in the
Table of Contents
I. Executive Summary
   A. Purpose
   1. End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)
   2. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP)
   3. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
   B. Summary of the Major Provisions
   1. ESRD PPS
   2. ESRD QIP
   3. DMEPOS
   C. Summary of Costs and Benefits
   1. Impacts of the Final ESRD PPS
   2. Impacts for ESRD QIP
   3. Impacts for DMEPOS
   II. Calendar Year (CY) 2014 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 2014 ESRD PPS
   C. Routine Updates and Policy Changes to the CY 2014 ESRD PPS
   1. Composite Rate Portion of the ESRD PPS Blended Payment
   2. ESRD PPS Base Rate
   a. Adjustment to the ESRD PPS Base Rate To Reflect the Change in Utilization of ESRD-Related Drugs and Biologicals
   i. Methodology for Reducing the CY 2014 ESRD PPS Base Rate
   ii. Determining Utilization of ESRD-Related Drugs and Biologicals
   iii. Pricing of ESRD-Related Drugs and Biologicals
   iv. Calculation of the Amount of the Per Treatment Reduction
   v. Final Amount of the Drug Utilization Adjustment
   3. ESRD Bundled Market Basket
   a. Overview and Background
   b. Market Basket Update Increase Factor and Labor-related Share for ESRD Facilities for CY 2014
   c. Productivity Adjustment for CY 2014
   d. Calculation of the Final ESRDB Market Basket Update, Adjusted for Multifactor Productivity for CY 2014
   4. The CY 2014 Wage Index
   a. Payment under the ESRD PPS for Facilities Located in
   b. Policies for Areas With No Wage Data
   c. Reduction to the ESRD Wage Index Floor
   d. Wage Index Budget-Neutrality Adjustment
   5. Application of the International Classification of Diseases (ICD), Tenth Revision, to the Comorbidity Payment Adjustment Codes
   a. One ICD-9-CM Code Crosswalks to One ICD-10-CM Code
   b. One ICD-9-CM Code Crosswalks to Multiple ICD-10-CM Codes
   c. Multiple ICD-9-CM Codes Crosswalk to One ICD-10-CM Code
   6. Revisions to the Outlier Policy
   a. Impact of Changes to the Outlier Policy
   b. Outlier Policy Percentage
   D. The Self-Dialysis and Home Dialysis Training Add On Adjustment
   a. Medicare Policy for Self-Dialysis Training, Home Dialysis Training, and Retraining
   b. Payment Methodology
   E. Delay of Payment for Oral-Only Drugs Under the ESRD PPS
   F. Miscellaneous Comments
III. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP)
   A. Background
   B. Summary of the Proposed Provisions and Responses to Comments on the ESRD QIP for PY 2016
   C. Considerations in Updating and Expanding Quality Measures Under the ESRD QIP for PY 2016 and Subsequent PYs
   1. Value-Based Purchasing (VBP) Overview
   2. Brief Overview of Proposed PY 2016 Measures
   3. Measures Application Partnership Review
   D. Measures for the PY 2016 ESRD QIP and Subsequent PYs of the ESRD QIP
   1. PY 2015 Measures Continuing in PY 2016 and Future Payment Years
   2. Expansion of One PY 2015 Measure and Revision of Two PY 2015 Measures for PY 2016 and Subsequent Payment Years
   a. Expanded ICH CAHPS Reporting Measure
   b. Revised Mineral Metabolism Reporting Measure
   c. Revised Anemia Management Reporting Measure
   3. New Measures for PY 2016 and Subsequent Payment Years of the ESRD QIP
   a. Anemia Management Clinical Measure Topic and Measures
   i. Anemia Management: Hgb >12
   ii. Anemia of Chronic Kidney Disease: Patient Informed Consent for Anemia Treatment
   b. Hypercalcemia
   c. Use of Iron Therapy for Pediatric Patients Reporting Measure
   d. NHSN Bloodstream Infection in Hemodialysis Outpatients Clinical Measure
   e. Comorbidity Reporting Measure
   4. Other
   5. Scoring for the PY 2016 ESRD QIP and Future Payment Years
   6. Performance Period for the PY 2016 ESRD QIP
   7. Performance Standards for the PY 2016 ESRD QIP and Future Payment Years
   a. Clinical Measure Performance Standards
   b. Performance Standards for Clinical Measures
   c. Performance Standards for Reporting Measures
   8. Scoring for the PY 2016 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 Facility Performance on Reporting Measures
   9. Weighting the PY 2016 ESRD QIP Measures and Calculating the PY 2016 ESRD QIP Total Performance Score
   a. Weighting Individual Measures To Compute Measure Topic Scores for the Kt/V Dialysis Adequacy Measure Topic, the Vascular Access Type Measure Topic, and the Anemia Management Clinical Measure Topic
   b. Weighting the Total Performance Score
   c. Examples of the PY 2016 ESRD QIP Scoring Methodology
   10. Minimum Data for Scoring Measures for the PY 2016 ESRD QIP and Future Payment Years
   11. Payment Reductions for the PY 2016 ESRD QIP and Future Payment Years
   12. Data Validation
   13. Scoring Facilities Whose Ownership Has Changed
   14. Public Reporting Requirements
IV. Clarification of the Definition of Routinely Purchased Durable Medical Equipment (DME)
   A. Background
   1. Background for DME
   2. Medicare Guidance and Rulemaking Regarding Definition of Routinely Purchased DME
   3. Payment for Inexpensive or Routinely Purchased Items and Capped Rental Items
   B. Current Issues
   C. Responses to Comments on the Clarification of the Definition of Routinely Purchased Durable Medical Equipment (DME)
V. Clarification of the 3-Year Minimum Lifetime Requirement (MLR) for DME
   A. Current Issues
   B. Scope of the 3-Year MLR for DME
   C. Response to Comments on the 3-Year MLR for DME
VI. Implementation of Budget-Neutral Fee Schedules for Splints, Casts and Intraocular Lenses (IOLs)
   A. Background
   1. Payment Under Reasonable Charges
   2. Payment Under Fee Schedules
   B. Summary of the Proposed Provisions and Responses to Comments on the Implementation of Budget Neutral Fee Schedules for Splints, Casts and IOLs
VII. DMEPOS Technical Amendments and Corrections
   A. Background
   B. Summary of the Proposed Provisions and Responses to Comments on the Proposed Technical Amendments and a Correction
VIII. Waiver of Delayed Effective Date
IX. Collection of Information Requirements
   A. Legislative Requirement for Solicitation of Comments
   B. Requirements in Regulation Text
   C. Additional Information Collection Requirements
X. Economic Analyses
   A. Regulatory Impact Analysis
   1. Introduction
   2. Statement of Need
   3. Overall Impact
   B. Detailed Economic Analysis
   1. CY 2014 End-Stage Renal Disease Prospective Payment System
   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. End-Stage Renal Disease Quality Incentive Program
   a. Effects of the PY 2016 ESRD QIP
   b. Alternatives Considered for the PY 2016 ESRD QIP
   3. DMEPOS Provisions
   a. Effects of the Implementation of Fee Schedules for Splints, Casts and IOLs
   b. Clarification of the 3-Year MLR for DME
   c. Definition of Routinely Purchased DME
   C. Accounting Statement.
XI. Regulatory Flexibility Act Analysis
XII. Unfunded Mandates Reform Act Analysis
XIII. Federalism Analysis
XIV. Congressional Review Act
XV. 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:
ASP Average Sales Price
ATRA American Taxpayer Relief Act of 2012
CBSA Core Based Statistical Area
CCN CMS Certification Number
CKD Chronic Kidney Disease
CY Calendar Year
DFC Dialysis Facility Compare
DME Durable Medical Equipment
DMEPOS Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
ESA Erythropoiesis Stimulating Agent
ESRD End-Stage Renal Disease
ESRDB End-Stage Renal Disease bundled
ESRD PPS End-Stage Renal Disease Prospective Payment System
GEM General Equivalence Mappings
HAIs Healthcare-Acquired Infections
HCPCS Healthcare Common Procedure Coding System
ICD International Classification of Diseases
ICD-9-CM International Classification of Disease, 9th Revision, Clinical Modification
ICH CAHPS In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems
IGI IHS Global Insight
IOLs Intraocular Lenses
IPPS Inpatient Prospective Payment System
MAP Medicare Allowable Payment
MFP Multifactor Productivity
MLR Minimum Lifetime Requirement
NCD National Coverage Determination
NHSN National Health Safety Network
PFS Physician Fee Schedule
QIP Quality Incentive Program
SHR Standardized Hospitalization Ratio Admissions
SMR Standardized Mortality Ratio
TPS Total Performance Score
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) 2014. 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) (Public Law 110-275), and section 1881(b)(14)(F) of the Act, as added by section 153(b) of MIPPA and amended by section 3401(h) of the Affordable Care Act (Public Law 111-148), established that beginning CY 2012, and each subsequent year, the Secretary shall reduce the market basket increase factor by a productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act.
   In addition, section 1881(b)(14)(I) of the Act, as added by section 632(a) of the American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240), requires the Secretary, by comparing per patient utilization from 2007 with such data from 2012, to reduce the single payment amount to reflect the Secretary's estimate of the change in the utilization of ESRD-related drugs and biologicals. Section 632(b) of
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) 2016. 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. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
   This final rule clarifies the definition of routinely purchased equipment covered under the DME benefit category and the scope of the 3-year minimum lifetime requirement (MLR) for DME. In addition, this final rule implements budget neutral fee schedules for splints and casts, and intraocular lenses (IOLs) inserted in a physician's office. Finally, this final rule makes a few technical amendments and corrections to existing regulations related to payment for DMEPOS items and services.
B. Summary of the Major Provisions
1. ESRD PPS
    * Update to the ESRD PPS base rate for CY 2014: For CY 2014, the ESRD PPS base rate is
    * The CY 2014 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. We did not propose any changes to the application of the wage index adjustment factor for CY 2014, and we will continue to apply the adjustment to the ESRD PPS base rate. For CY 2014 and CY 2015, we are continuing our policy for the gradual phase-out of the wage index floor and reducing the wage index floor values to 0.45 and 0.40, respectively.
    * The outlier policy: We are updating the outlier services fixed dollar loss amounts for adult and pediatric patients and Medicare Allowable Payments (MAPs) for adult patients for CY 2014 using 2012 claims data. Based on the use of more current data, the fixed-dollar loss amount for pediatric beneficiaries would increase from
    * Application of ICD-10-CM Diagnosis Codes to the comorbidity payment adjustment codes: Effective
    * The self-dialysis and home dialysis training add-on adjustment: In response to public comments, we are finalizing an increase in the amount of the self-dialysis and home dialysis training add-on adjustment of 50 percent for both peritoneal dialysis (PD) and home hemodialysis (HHD) training treatments furnished on or after
2. ESRD QIP
   This final rule implements requirements for the ESRD QIP. With respect to the PY 2016 ESRD QIP, we are continuing some of the previous ESRD QIP measures, adding new measures, and expanding the scope of some of the existing measures to cover the measure topics as follows:
* To evaluate anemia management:
    . Hemoglobin Greater Than 12 g/dL, a clinical measure
    . Anemia Management, a reporting measure +
* To evaluate dialysis adequacy:
    . A Kt/V measure for adult hemodialysis patients, a clinical measure
    . A Kt/V measure for adult peritoneal dialysis patients, a clinical measure
    . A Kt/V measure for pediatric hemodialysis patients, a clinical measure
* To determine whether patients are treated using the most beneficial type of vascular access:
    . An arteriovenous fistula measure, a clinical measure
    . A catheter measure, a clinical measure
* To address effective bone mineral metabolism management:
    . Hypercalcemia, a clinical measure*
    . Mineral Metabolism, a reporting measure +
* To address safety:
    . National Healthcare Safety Network (NHSN) Bloodstream Infection in Hemodialysis Outpatients, a clinical measure *
* To assess patient experience:
    . ICH CAHPS survey reporting measure +
   * Denotes that this measure is new to the ESRD QIP.
   + Denotes that this measure is revised in the ESRD QIP.
   + Denotes that this measure is expanded in the ESRD QIP.
   We also establish CY 2014 as the performance period for the PY 2016 ESRD QIP, establish performance standards for each measure, and adopt scoring and payment reduction methodologies that are similar to those finalized for the PY 2015 ESRD QIP.
3. DMEPOS
* Definition of routinely purchased DME: This final rule clarifies the definition of routinely purchased DME set forth at section
* Clarification of to the 3-year MLR and Related Grandfathering Policy: This final rule provides further clarification about how we will apply the 3-year MLR set forth at
* Implementation of budget neutral fee schedules for splints and casts, and IOLs inserted in a physician's office: For CY 2014, we are implementing budget neutral fee schedule amounts for splints and casts, and IOLs inserted in a physician's office. Section 1842(s) of the Act authorizes CMS to implement fee schedule amounts for these items if they are established so that they are initially budget neutral. In 2011, total allowed charges for splints and casts were
C. Summary of Costs and Benefits
   In section XI. 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 XI.B.1.a. of this final rule displays the estimated change in payments to ESRD facilities in CY 2014 compared to estimated payments in CY 2013. The overall impact of the CY 2014 changes is projected to result in an average increase in payments of 0.0 percent from CY 2013 to CY 2014. Hospital-based ESRD facilities have an estimated 0.8 percent increase in payments compared with freestanding facilities with an estimated 0.0 percent increase.
   We estimate that there will be no change in aggregate ESRD PPS expenditures from CY 2013 to CY 2014. This reflects a
2. Impacts for ESRD QIP
   The overall economic impact of the proposed ESRD QIP is an estimated
   The ESRD QIP will continue to incentivize facilities to provide higher quality care to beneficiaries. The reporting measures associated with the collection of information requirements are critical to better understanding the quality of care beneficiaries receive, particularly patients' experience of care, and will be used to incentivize improvements in the quality of care provided.
3. Impacts for DMEPOS
   The overall impact of implementing fee schedules for splints and casts, and IOLs inserted in a physician's office is insignificant. The reasonable charge amounts that we convert to fee schedule amounts will be budget neutral the first year and will be updated annually thereafter based on the consumer price index for all consumers (CPI-U) for the 12-month period ending
   We expect that the overall impact of clarifying the definition of routinely purchased DME and finalizing our proposal to classify certain expensive items as cap rental will be a decrease in expenditures because payment on a 13-month capped rental basis rather than a lump sum purchase basis for certain, very expensive items will lower total payments for these items and because many beneficiaries would not rent the items for as long as 13 months.
II. Calendar Year (CY) 2014 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)
A. Background on the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)
   On
   On
   On
B. Summary of the Proposed Provisions and Responses to Comments on the CY 2014 ESRD PPS
   The proposed rule, titled "Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies" (78 FR 40836 through 40890), (hereinafter referred to as the CY 2014 ESRD PPS proposed rule), was published in the
   In this final rule, we provide a summary of each proposed provision, a summary of the public comments received and our responses to them, and the policies we are finalizing for the CY 2014 ESRD PPS. Comments related to the paperwork burden are addressed in the "Collection of Information Requirements" section in this final rule. Comments related to the impact analysis are addressed in the "Economic Analyses" section in this final rule.
C. Routine Updates and Policy Changes to the CY 2014 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 fourth 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 services furnished beginning in CY 2014, under 42 CFR 413.239(a)(4), 100 percent of the payment amount will be determined in accordance with section 1881(b)(14) of the Act. Accordingly, a blended rate will no longer be provided, all facilities will be paid 100 percent under the ESRD PPS, and there will no longer be a transition budget neutrality adjustment factor applied to these payments starting on
2. ESRD PPS Base Rate
   In the CY 2011 ESRD PPS final rule (75 FR 49071 through 49083), we discussed the development of the ESRD PPS per treatment base rate that is codified in the
   As discussed in section II.C.3. of this final rule, section 1881(b)(14)(F)(i) of the Act, as added by section 153(b) of MIPPA and amended by section 3401(h) of the Affordable Care Act, provides that, beginning in 2012, the ESRD PPS payment amounts are required to be annually increased by the rate of increase in the ESRD market basket, reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II). Accordingly, we applied the 2.8 percent increase factor, that is the ESRDB market basket (3.2 percent) minus productivity (0.4 percent) to the CY 2013 ESRD PPS base rate of
   In addition, as discussed in section II.C.4.d. of this final rule, we apply the wage index budget-neutrality adjustment factor of 1.000454 to the CY 2014 ESRD PPS base rate (that is,
a. Adjustment to the ESRD PPS Base Rate To Reflect the Change in Utilization of ESRD-Related Drugs and Biologicals
   Section 1881(b)(14)(I) of the Act, as added by section 632(a) of the
i. Methodology for Reducing the CY 2014 ESRD PPS Base Rate
   In the CY 2014 ESRD PPS proposed rule (78 FR 40841 through 40843), we discussed the methodology used for calculating the drug utilization adjustment that will reduce the ESRD PPS base rate. Because the ESRD PPS base rate is a per treatment base rate, the adjustment is calculated on a per treatment basis. We proposed to calculate the amount of the per treatment adjustment by applying CY 2014 prices for ESRD-related drugs and biologicals to the utilization data for CY 2007 and CY 2012. We noted that the CY 2014 ESRD PPS base rate is reflective of 2007 utilization because the base rate was derived from CY 2007 data. We explained that using prices for drugs and biologicals inflated to 2014 levels allows us to appropriately measure changes that are attributable to utilization patterns as opposed to differences in pricing for drugs and biologicals in 2007 and 2012. In addition, because we proposed to make the reduction in CY 2014, we priced the ESRD-related drugs and biologicals for the year in which the adjustment applies. We explained that for purposes of this analysis, we view utilization of drugs and biologicals as units of an ESRD-related drug or biological furnished to a patient on a per treatment basis. We took the estimated amount of the per treatment difference between the estimated spending on drugs and biologicals in CY 2007 and CY 2012 and reduced this amount by the same adjustment factors that were used to calculate the ESRD PPS base rate from the CY 2007 unadjusted rate per treatment, which are the standardization, outlier, and the 98 percent budget-neutrality adjustments. A detailed explanation of these adjustment factors is provided in the CY 2011 ESRD PPS final rule (75 FR 49081 through 49082). We proposed to reduce the CY 2014 ESRD PPS base rate by the resulting amount.
ii. Determining Utilization of ESRD-Related Drugs and Biologicals
   In the CY 2014 ESRD PPS proposed rule (78 FR 40841 through 40842), we explained how we determined utilization of ESRD-related drugs and biologicals. Section 1881(b)(14)(I) of the Act requires the single payment amount to be reduced by an amount that "reflects the Secretary's estimate of the change in utilization of drugs and biologicals described in clauses (ii), (iii), and (iv) of subparagraph (B) (other than oral-only ESRD-related drugs, as such term is used in the final rule promulgated by the Secretary in the
   Section 1881(b)(14)(I) of the Act requires the Secretary to compare per patient utilization data from 2007 with per patient utilization data from 2012. For the CY 2007 utilization data for ESRD-related drugs and biologicals, we proposed to use the data analysis prepared for the CY 2011 ESRD PPS final rule. In the CY 2011 ESRD PPS final rule (75 FR 49071 through 49083), we discuss in detail the development of the ESRD PPS base rate and, as we stated above, the base rate represents the average MAP for composite rate and separately billable services, which was derived from 2007 claims data. We also explained in the CY 2011 ESRD PPS final rule that in order to comply with section 1881(b)(14)(A)(ii) of the Act, we determined that 2007 was the year with the lowest per patient utilization of renal dialysis services by Medicare ESRD beneficiaries among the years 2007, 2008, and 2009. Therefore, utilization data for ESAs and other drugs and biologicals including the oral-equivalent forms of those drugs and biologicals furnished for the treatment of ESRD was readily available for purposes of analyzing 2007 utilization.
   For the CY 2012 utilization data for ESRD-related drugs and biologicals, we proposed to use the latest available claims data based on the CY 2012 ESRD facility claims. For the proposed rule, we used CY 2012 ESRD facility claims updated through
   Comment: Several commenters agreed with CMS that claims data from 2007 and 2012 are reliable sources for ESRD-related drugs and biologicals utilization.
   Response: We thank the commenters for their support. For this final rule, we used the CY 2007 claims data that was used in preparation of the CY 2011 ESRD PPS final rule. In addition, we used the CY 2012 claims file updated through
   In the CY 2014 ESRD PPS proposed rule (78 FR 40842), we explained that because section 1881(b)(14)(I) requires that we compare per patient utilization of ESRD-related drugs and biologicals in 2007 with per patient utilization in 2012, we would also include utilization of drugs and biologicals furnished in ESRD facilities located in
   We solicited comments on the proposal to include data on the utilization of drugs and biologicals furnished in ESRD facilities located in the
iii. Pricing of ESRD-Related Drugs and Biologicals
   In the CY 2014 ESRD PPS proposed rule (78 FR 40842 through 40843), we explained how we priced ESRD-related drugs and biologicals to CY 2014 to allow for an accurate comparison between utilization of those drugs and biologicals furnished in CY 2007 with utilization in CY 2012. In order to price ESRD-related drugs and biologicals based on CY 2014 prices, we started with CY 2011 prices as established and published in the CY 2011 ESRD PPS final rule.
   In developing the CY 2011 ESRD PPS base rate, we included the MAP amounts for ESRD-related drugs and biologicals that were, prior to
   We proposed to inflate the prices established in the CY 2011 ESRD PPS final rule for ESRD-related drugs and biologicals and their oral equivalents to CY 2014 by applying the ESRD bundled (ESRDB) market basket, the productivity adjustment, and the wage index budget neutrality adjustment factors. Because the base rate and the ESRDB market basket account for ESRD-related drugs and biologicals and we have updated all components of the base rate annually using a market basket minus productivity with wage index budget neutrality adjustment factor, we believe that using these inflation factors is consistent with how these services are paid under the ESRD PPS. The drug component of the ESRDB market basket uses the PPI for prescription drugs as a proxy for the growth in drug prices. We believe using the ESRDB market basket to price drugs and biologicals for CY 2014 complies with the requirement in section 1881(b)(14)(I) that the Secretary take into account the changes in prices for drugs and biologicals reflected in the ESRDB market basket percentage increase factor. The ESRDB market basket minus productivity increase factors were 2.1 percent and 2.3 percent for CY 2012 and CY 2013, respectively. The proposed CY 2014 update was 2.5 percent. The wage index budget neutrality adjustment factors for the same years are 1.001520, 1.000613, and a CY 2014 proposed factor of 1.000411. Therefore, we proposed to use a total growth update factor of 7.3 percent (1.021 * 1.023 * 1.025 * 1.001520 * 1.000613 * 1.000411 = 1.073) to inflate prices for ESRD-related drugs and biologicals from CY 2011 levels to CY 2014 levels. We solicited comments on the use of the ESRDB market basket percentage increase factor to inflate prices for drugs and biologicals to CY 2014 levels. The comment and our response is set forth below.
   Comment: A few commenters expressed concern that inflating the prices from 2007 levels does not capture the true cost of the drugs and biologicals for small and independent ESRD facilities and small dialysis organizations (SDOs). One commenter stated that if the price is an average number, then SDOs and mid-sized dialysis organizations (MDOs) would be at a disadvantage because their prices are far greater than the prices paid by large dialysis organizations. Therefore, the commenters did not believe that the costs incurred by SDOs and MDOs were accounted for by using 7.3 percent to inflate prices for ESRD-related drugs and biologicals from CY 2011 levels to CY 2014 levels and urged CMS to use actual drug costs reported on ESRD facility cost reports.
   Response: The drug utilization adjustment is a per treatment reduction to the single ESRD PPS base rate, which is a payment amount that reflects the average cost for an ESRD facility to furnish a dialysis treatment. Because the drug utilization adjustment is a reduction to the average payment, the drug utilization analysis needs to be performed at an aggregate level, that is, across all facilities using the same sources of data regardless of ownership type. In addition, we do not believe that it would be beneficial to SDOs/MDOs to use drug costs that are reported in ESRD facility cost reports. Even if we were to use cost report drug data, the SDO/MDO costs for drugs would continue to be averaged out by that of the large dialysis organizations (LDOs), which furnish the majority of dialysis treatments. More importantly, we would only be able to consider the ESRD facility cost reports for cost reporting periods ending in 2011 and in 2012 for the drug utilization adjustment analysis, We would not have the information for cost reporting periods ending in 2013, which is when significant price increases have reportedly occurred.
   For these reasons, we continue to believe using the ESRDB market basket to price drugs and biologicals for CY 2014 complies with the requirement in section 1881(b)(14)(I) that the Secretary take into account the changes in prices for drugs and biologicals reflected in the ESRDB market basket percentage increase factor and provides the most accurate way to price drugs at 2014 levels. Therefore, in this final rule we are finalizing the use of the ESRDB market basket percentage increase factor to inflate prices for drugs and biologicals to CY 2014 levels.
   To determine the final growth update factor's value, we used the methodology discussed above with one modification (described below) and updated the calculation using the final CY 2014 ESRDB market basket minus the CY 2014 multifactor productivity adjustment and the final CY 2014 wage index budget neutrality adjustment factor, which are based on the most recently available data. The ESRDB market basket minus productivity increase factors were 2.1 percent and 2.3 percent for CY 2012 and CY 2013, respectively. The final ESRDB market basket minus productivity increase factor for CY 2014 is 2.8 percent. The wage index budget neutrality adjustment factors for the same years are 1.001520, 1.000613, and a final CY 2014 factor of 1.000454.
   In addition to the ESRDB market basket minus productivity increase factor and the wage index budget neutrality adjustment factor, to account for the home dialysis training add-on increase for CY 2014 we applied an additional factor of 0.999912. We made this modification so that the methodology for developing the growth update factor is consistent with the way we update the ESRD PPS base rate. For CY 2014, we are increasing the home dialysis training add-on in a budget-neutral manner, and therefore, we needed to include an adjustment that accounts for the increase. We are finalizing a total growth update factor of 7.64 percent (1.021 * 1.023 * 1.028 * 1.001520 * 1.000613 * 1.000454 * 0.999912 = 1.0764) to inflate prices for ESRD-related drugs and biologicals from CY 2011 levels to CY 2014 levels. For more information regarding the increase in the home dialysis training add-on payment, see section II.D.b. of this final rule.
   In addition to proposing the use of the ESRDB market basket percentage increase factor to inflate prices for drugs and biologicals to CY 2014 levels, in the CY 2014 ESRD PPS proposed rule (78 FR 40843) we discussed an alternative method of using ASP instead of the PPI. Specifically, section 1881(b)(14)(I) requires the Secretary to "take into account the most recently available data on average sales prices and changes in prices for drugs and biologicals reflected in the ESRDB market basket percentage increase factor" in making the reduction to the ESRD PPS base rate to reflect the change in utilization of ESRD-related drugs and biologicals from CY 2007 to CY 2012. While we could have chosen to inflate prices for drugs and biologicals to 2014 levels with more recently available ASP data, we stated that we believed using a growth based on the ESRDB market basket is more appropriate because it reflects what
   In the CY 2014 ESRD PPS proposed rule (78 FR 40843), we discussed an alternative analysis using prices based on the first quarter 2013 ASP+6 percent prices and the National Drug Code (NDC) prices published on the CMS Web site located at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Outlier_Services.html that are used for outlier calculations, and the PPI to project to CY 2014. The results were minimally different (a difference of
   Comment: An SDO expressed concern that the alternative analysis of comparing ASP to PPI is not accurate because there is an inherent problem with using ASP data. The commenter stated that ASP data does not accurately reflect the cost of epogen because the ASP data reports the combined price of epogen and procrit. The commenter further explained that procrit has a lower price than epogen but it is not a drug that ESRD facilities can purchase as an ESA to furnish to their patients because it is indicated for non-ESRD use. The commenter stated that while the average cost of procrit has diminished since 2007, the cost of epogen has risen significantly for SDOs and therefore the commenter believes that this results in a lower overall ASP amount because procrit dilutes the ASP price. A national organization for SDOs and an MDO expressed concern that due to the lag in the reporting and publishing of ASP data, the price increases that they have experienced were not fully reflected in the analysis.
   Response: We thank the commenters for this information. The ASP+6 payment limits are based on actual marketplace prices submitted by manufacturers to CMS. Given that the ASP is an average price, some National Drug Codes (NDCs) in a given HCPCS code will be available at prices below the payment limit and others will be above the payment limit. The payment limits are evaluated and updated on a quarterly basis. We will initiate discussions with appropriate staff regarding the ASP for epogen to gain a better understanding of how including procrit impacts the ASP. We agree that the lag in reporting price increases in the ASP system as well as the combination of ASP data for Epoetin with that of procrit makes the use of ASP+6 prices to update the prices of drugs and biologicals to 2014 levels less desirable.
   After consideration of the comments that we received on the use of ASP versus PPI, we continue to believe that using a growth based on the ESRDB market basket is more appropriate because it reflects what
iv. Calculation of the Amount of the Per Treatment Reduction
   In the CY 2014 ESRD PPS proposed rule (78 FR 40843), we provided detail on how the drug utilization reduction amount was calculated. We applied the 2014 prices to the CY 2007 and CY 2012 drug and biological utilization data to calculate aggregate amounts for each year. For drugs and biologicals for which we have utilization data for CY 2012, but that were not present on CY 2007 claims, we priced those drugs using the ASP+6 percent price for 2012, which is an average of the four quarter prices, and inflated it using the CY 2013 and the CY 2014 proposed ESRDB market basket, productivity, and wage index budget neutrality adjustment factors. We noted that while most of these drugs had minimal utilization, feraheme was the only significant exception. Specifically, feraheme was not available until
   Next, we divided each year's estimated aggregate amount for drugs and biologicals by that year's count of treatments furnished to
   Comment: We received comments from national organizations and a drug manufacturer that stated they were unable to determine if the methodology CMS used to calculate the reduction was proper because they did not have access to the same data that was used in the calculation.
   Response: We disagree with commenters who contend that they were unable to determine whether CMS's methodology was proper because they did not have access to all of the data used to calculate the amount of the reduction. Our methodology for calculating the drug utilization adjustment required by section 1881(b)(14)(I) was described in substantial detail in the CY 2014 ESRD PPS proposed rule. As a result, we do not believe that it was necessary for commenters to have every data point used in our calculations in order to have commented meaningfully on the methodological approach to the adjustment. Nonetheless, between the information provided in the proposed rule and included in the CY 2011 ESRD PPS final rule, commenters did have data we used in calculating the drug utilization adjustment. Moreover, shortly after the CY 2014 ESRD PPS proposed rule was published we posted a table titled, "Drug Utilization Adjustment" onto the CMS Web site as a convenience to stakeholders following requests for the data points used in our calculation of the drug utilization adjustment amount. This table includes the data we used to perform the calculation of the reduction amount for the proposed rule and it is posted with the rule's addenda. Addendum C titled, "Calculation of the Amount of the Per Treatment Reduction Using the End-Stage Renal Disease Bundled Market Basket" contains updated data and the methodology used for this final rule. The Addendum can be found on the CMS Web site: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices.html.
   Comment: We received a comment from the
   Response: We thank the MedPAC for their support.
v. Final Amount of the Drug Utilization Adjustment
   Using the methodology we proposed in the 2014 ESRD PPS proposed rule, we are updating the drug utilization adjustment based on the most current claims data available, that is, CY 2012 claims with dates of service from
   Next, we divided each year's estimated aggregate amount for drugs and biologicals by that year's count of treatments furnished to
   Comment: Several national organizations representing the dialysis industry and dialysis patients believe our CY 2011 ESRD PPS base rate is incorrect and recommended that we correct the base rate prior to application of the drug utilization adjustment to account for overstated estimates of payment adjustments, especially the comorbidity case-mix adjusters, the outlier policy, and the low-volume adjuster. Because these adjustments have been paid out at a rate less than anticipated, the commenters stated that we have not met our obligation under section 1881(b)(14)(A)(ii) of the Act, which requires the Secretary to ensure that the estimated total amount of payments for 2011 for renal dialysis services equals 98 percent of the estimated total amount of payments that would have been made for services furnished in 2011 if the ESRD PPS had not been implemented. Furthermore, these commenters indicated that they were unable to receive discharge information from hospitals to document the comorbid conditions, which is necessary to seek reimbursement for the comorbidity payment adjustments. In order to the make the comorbidity adjustments more accessible, the commenters urged us to revisit the documentation requirements or remove the comorbidity adjustments entirely and return the dollars to the base rate.
   Dialysis organizations also encouraged CMS to substantially reduce the percentage of the outlier pool or eliminate it entirely. One commenter is concerned that SDO and non-profit providers are disproportionately impacted by this provision because they do not have the infrastructure of larger providers and therefore are less likely to capture all of the costs for a patient. The commenter went on to state the net effect of the outlier policy is that a provision that was originally put into place to protect small providers is actually penalizing them by decreasing the base rate. This same commenter recommended that CMS either suspend or, if that is not feasible, lower the outlier withhold from 1.0 percent to 0.5 percent.
   Finally, several commenters referenced the GAO report 13-287, entitled, "End-Stage Renal Disease: CMS Should Improve Design and Strengthen Monitoring of Low-Volume Adjustment" and published
   Response: In developing the final ESRD PPS base rate for 2011, in accordance with section 1881(b)(14)(A)(ii) of the Act, we standardized the rate to account for the payment adjustments and the outlier policy. As stated in the 2011 ESRD PPS final rule (75 FR 49081), to account for the overall effects of the proposed ESRD PPS case-mix patient and facility adjustment factors and wage indexes, we had to standardize payments in order to ensure that total projected PPS payments were equal to what would otherwise have been paid had the ESRD PPS not been implemented, prior to application of the 98 percent budget-neutrality adjustment. The standardization factor was calculated by dividing total estimated payments in 2011 under the basic case-mix adjusted composite rate payment system by estimated payments under the final ESRD PPS in 2011. We do not intend to revise the standardization factor that was applied to the 2011 ESRD PPS base rate to reflect actual payments made under each of the adjustments and therefore we did not propose to re-standardize the CY 2014 ESRD PPS base rate. Rather, we used the best data available and made a good faith effort to simulate payments under the ESRD PPS to determine the standardization factor that was applied to the CY 2011 ESRD PPS base rate. The final standardization adjustment was .9407 or a reduction of 5.93 percent from the unadjusted per treatment base rate.
   Since the ESRD PPS began, organizations representing LDOs have expressed concern about the comorbidity adjustments and requested that we return the 5.93 percent standardization factor to the base rate. In response to this concern, in preparation for this final rule, we performed an analysis of the composition of the standardization factor and determined that the bulk of the 5.93 percent standardization reduction to the base rate arises from factors other than the comorbidities. Age adjustments account for approximately 3.0 percent, the onset of dialysis adjustment accounts for approximately 2.4 percent, the low volume adjustment accounts for approximately 0.3 percent, the body size adjustments account for approximately 0.2 percent, and the wage adjustment accounts for approximately -0.7 percent (this was negative and partially offset the effects of the other adjustments because the average wage adjustment was less than 1.00, unlike the other adjustments). The comorbidity adjustments jointly account for approximately 0.8 percent.
   Section 632(c) of
   In responses to the comments regarding the comorbidity adjustments, we will consider whether changes to documentation requirements are warranted with respect to qualifying for the comorbidity payment adjustment.
   In regards to the outlier policy, as we explained in section II.C.6. of this final rule, 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 variations in the amount of erythropoiesis stimulating agents necessary for anemia management. Each year, we simulate payments under the ESRD PPS in order to set the outlier fixed dollar loss and MAP amounts for adult and pediatric patients to try to achieve the 1 percent outlier policy. We would not increase the base rate in years where outlier payments were less than 1 percent of total ESRD PPS payments, nor would we reduce the base rate if the outlier payments exceed 1 percent of total ESRD PPS payments. Rather, we would simulate payments in the following year and adjust the fixed dollar loss and MAP amounts to try to achieve outlier payments that meet the 1 percent outlier percentage. This approach to updating the outlier policy is consistent with how we update outlier policies in other
   Comment: A national organization representing large dialysis organizations (LDOs) and ESRD facilities recommended that prior to making any adjustment to reduce payments to reflect changes in utilization of drugs and biologicals, CMS should take into consideration what these commenters believe to be a cross subsidization of items and services that were previously paid for under the basic case-mix adjusted composite rate payment system with payments for formerly separately billable items. The commenters believe that because the composite rate, which historically did not have annual market basket increases, was underfunded, payments for separately billable drugs, laboratory tests, and supplies offset those losses. The organization provided a report that estimates that
   Response: Section 1881(b)(14)(I) of the Act requires that the single payment amount be reduced by an amount that reflects the Secretary's estimate of the change in utilization of drugs and biologicals. It does not provide for the reduction to account for cross-subsidization of other components of the base rate. We do not believe we would be in compliance with section 1881(b)(14)(I) if we were to eliminate most of the drug utilization reduction to reflect the purported need for cross-subsidization of the composite rate with separately billable services.
   Comment: In making the reduction to the ESRD PPS base rate, national organizations representing the dialysis industry and dialysis patients recommended that we factor in the 2 percent reduction already made to the original ESRD PPS base rate in 2011 as required by section 1881(b)(14)(A)(ii), which was implemented in the form of the 98 percent budget neutrality adjustment. The comments indicated that this reduction accounts for the anticipated reduction in drug utilization and has already been built into the payment rate. The commenters stated that CMS has the authority to temper the drug utilization adjustment because section 1881(b)(14)(I) does not require a dollar-for-dollar adjustment. Rather, the statute indicates that the adjustment should "reflect" the Secretary's estimate of the change in utilization of drugs and biologicals. Therefore, the commenters contended, CMS has the authority to consider the 2 percent reduction implemented in 2011 as part of the drug utilization adjustment.
   Response: In the CY 2014 ESRD PPS proposed rule (78 FR 40843), we explained that once we determined the per-treatment difference in utilization of drugs and biologicals (
   Comment: Several national dialysis organizations indicated that CMS has an obligation to ensure that the single payment amount is consistent with the factors set forth in section 1881(b)(2)(B) of the Act, which provides that payment amounts for renal dialysis services be determined on a "cost-related basis or other economical and equitable basis." The commenters submitted data that displayed profit margins for ESRD facilities prior to the proposed one-time reduction and then what the profit margins would look like after the one-time reduction. The comments stated that if payment rates do not reflect the cost of providing care, then they are neither economical nor equitable. Also, since section 1881(b)(14)(I) did not repeal section 1881(b)(2)(B) and the sections do not conflict with one another, both must be considered. In addition, because
   Response: We disagree with the commenters that section 1881(b)(2)(B) of the Act applies to the ESRD PPS. The MIPPA revisions to section 1881 of the Act did not specify that we must take section 1881(b)(2) of the Act into account in implementing the ESRD PPS. Instead, it required that we base the ESRD PPS on the lowest per patient utilization year out of 2007, 2008, and 2009 and that the system should result in payments that are 98 percent of what would otherwise have been paid. Once we established that 2007 was the lowest per patient utilization year, we used cost report and claims data to compute the base rate. Section 1881(b)(14)(I) requires the Secretary to compare per patient utilization data for 2007 with such data for 2012 and then make reductions to the ESRD PPS single payment amount to reflect the Secretary's estimate of the change in utilization of drugs and biologicals. We do not believe this very specific statutory provision gives us discretion to mitigate the amount of the reduction based on the very general authority of section 1881(b)(2)(B), which, moreover, we believe no longer applies to payment for renal dialysis services.
   Other commenters pointed out that the prospective payment systems should protect beneficiary access while conserving beneficiaries' and taxpayers' resources. Accordingly, in addition to proposing a full reduction of
   Comment: We received a comment from MedPAC providing the details from their
   Specifically, MedPAC recommended that the Secretary take action to freeze the payment rates for 2014 at 2013 levels, consistent with their recommendation to the
   Response: We agree with the MedPAC suggestion that freezing payments could ensure access to essential ESRD services while not further perpetuating overpayments. However, we believe that section 1881(b)(14)(I) of the Act requires that, effective
   To implement a portion of the drug utilization adjustment in CY 2014, we adjusted the CY 2013 ESRD PPS base rate by the CY 2014 ESRDB market basket minus productivity increase factor, the wage index budget-neutrality factor, and the home dialysis training add-on budget-neutrality factor. As we mentioned above, we took into consideration other impacts (provided in Table 12 presented in section XI.B.1.a. of this final rule) of the CY 2014 ESRD PPS that will cause a change in average payments to ESRD facilities in order to create and overall impact of zero percent. Specifically, for CY 2014, we are accounting for the changes to outlier payments and the movement from a 75/25 blend of PPS and pre-PPS payments to 100 percent ESRD PPS payments (for those ESRD facilities transitioning to the ESRD PPS) to create a zero percent average impact for facilities from the CY 2013 estimated payments. As indicated in Table 12, the average increase resulting from changes to the fixed dollar loss threshold and
   For CY 2016, we will evaluate how to apply the balance of the adjustment when we conduct an analysis of the case-mix adjustments required by section 632(c) of
   Comment: We received several comments from national organizations representing ESRD facilities stating that they were unable to provide useful or constructive comments on the nature, extent and operation of a transition until they understand how CMS intends to correct the base rate to reflect cross-subsidization of the composite rate services with separately billable services, standardization, comorbidity case-mix adjusters, the low-volume adjuster, and the outlier policy. However, the commenters stated that the transition should not be viewed as a substitute for making necessary corrections to the current payment system.
   The commenters suggested that if CMS does utilize a transition to implement the drug utilization adjustment, then it should do so over a period of 2 to 4 years to minimize system disruption for beneficiaries, assess the impact on access, and correct course, as needed. The commenters further explained that a transition would allow providers to adjust to the payment reduction and engage in a more thoughtful process to evaluate and close facilities that cannot be made viable, reduce service, and change staffing. The commenters also explained that the transition would allow CMS to evaluate the impact of the payment reduction.
   Response: As stated previously, we do not intend to offset the drug utilization adjustment amount to reflect purported cross-subsidization of items and services paid for under the composite rate with formerly separately billable services, nor do we intend to update the standardization and outlier reductions made to the 2011 ESRD PPS base rate to reflect actual payments of the adjustments. However, the transition approach we are adopting will spread the reduction over a 3- to 4-year period to minimize system disruption.
   Comment: One national organization that represents small dialysis organizations and several independent ESRD facilities suggested that we treat small dialysis organizations differently from large dialysis organizations when implementing a transition of the reduction to the base rate because we determined in the CY 2014 ESRD PPS proposed rule (78 FR 40888) that a one-time reduction to the base rate would have a significant economic impact on a substantial number of small entities. The commenter explained that ESRD facilities that are owned by small dialysis organizations have less flexibility and working capital to withstand a substantial decrease in revenue. The commenter urged CMS to hold off on implementing the reduction for the first 6 months of CY 2014 because the rule is not likely to be finalized until
   Another national organization that represents not-for-profit ESRD facilities with support from several ESRD facilities recommended a transition under which the base rate is not reduced by more than
   Another commenter suggested that CMS create a differential payment for non-profit and SDOs. The commenter pointed out that the Regulatory Flexibility Act allows CMS to assess the impact of the regulation on small entities. A medium dialysis organization that was created as a result of a divestiture requirement imposed by the
   Response: We agree with the commenters that implementing the full amount of the drug utilization adjustment in CY 2014 would have a significant impact on access to ESRD services. We believe that the transition approach we are taking, which will apply the drug utilization adjustment amount to the base rate over several years, will allow ESRD facilities an opportunity to plan for and adjust their future operations accordingly. Because facilities are currently operating efficiently under the CY 2013 payment rates and we are largely offsetting future increases to achieve an average impact of zero percent for ESRD facilities in CYs 2014 and 2015, we do not believe a 6-month grace period is necessary. We note that the dollar value of the 3.3 percent drug utilization reduction for CY 2014 is
   In regards to the commenters that suggested that CMS create a different payment amount or transition scheme for non-profit ESRD facilities and SDOs, as well as for those ESRD facilities that were created due to FTC-ordered divestiture, we believe that we must provide for a single payment rate in accordance with section 1881(b)(14)(A)(i) of the Act, but that the transition will mitigate the potential negative effects of the adjustment that commenters pointed out. In addition, any other adjustments to the payment rate, such as an adjustment for non-profit facilities and SDOs would be established through regression analysis.
   Comment: One patient advocacy group supported the drug utilization reduction but pointed out that the industry got the benefit of a base rate that included higher utilization of ESRD-related drugs and biologicals since CY 2011, but CMS did not make an adjustment to the payment until CY 2014 and continued to increase the base rate using the ESRDB market basket. The commenter further pointed out that prior to implementation of the ESRD PPS, annual increases to the composite rate were sporadic.
   Response: We share the commenter's view that small, medium, and large dialysis facilities have benefited from an inflated base rate since CY 2011. As noted previously, there is historical evidence that implementation of PPSs has resulted in providers quickly reducing use of services included in the bundle, thereby creating periods of overpayment in which providers benefit from the change in practice patterns and the
   Comment: Several commenters expressed concern that with the implementation of the ESRD PPS and QIP have come a significant number of unfunded mandates that the Agency has not acknowledged in any specific way and the market basket does not address. The commenters recommended that a thorough analysis of costs should include those that have increased since the initiation of the bundle when calculating the drug utilization reduction. Notable among these are the costs of new IT requirements for participation in CROWNWeb, administration of Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys, participation in the National Healthcare Safety Network (NHSN), and transitioning to ICD-10-CM coding. One small dialysis organization indicated that the costs of these initiatives are as much as
   Response: We understand the commenter's concerns. Nonetheless, section 1881(b)(14)(I) of the Act requires us to make reductions to the single payment amount to reflect the Secretary's estimate of the change in utilization of drugs and biologicals from 2007 to 2012. Section 1881(b)(14)(I) does not give us authority to take into account any additional factors that may impact the cost of care, such as the sequestration, and the QIP requirements. We note that entering data in CROWNWeb is a Condition for Coverage for dialysis facilities (42 CFR SEC 494.180(h)), and that CROWNWeb was implemented in accordance with the 1995 Paperwork Reduction Act. In regards to the transition to ICD-10-CM coding scheme, this is a requirement that is shared by all Health Insurance Portability and Accountability Act of 1996 covered entities and is not unique to ESRD facilities.
   Comment: Hundreds of comments from ESRD patients, their family members, friends and caregivers, to national organizations representing dialysis patients and facilities, to ESRD facility staff expressed grave concerns about steps facilities would take if we were to adopt the proposed drug utilization adjustment. They were concerned about facility closures, staffing cuts, cuts to hours of operation, loss of transportation services, and their continued access to life-saving ESRD treatment. Some commenters indicated that facilities have already begun to shift costs to patients and cut back staffing and programs even though the reduction will not be applied until
   Commenters expressed concern about facility closures and their continued access to quality ESRD services, especially in rural and inner city areas. Many commenters noted the burden and expense of traveling long distances should their facilities close. Another commenter stated that the drug utilization adjustment threatens the networks of dialysis facilities where profitable facilities allow organizations to subsidize those facilities that operate at a loss in underserved areas. Conversely, a few comments indicated support for the proposed drug utilization adjustment, stating that facilities are primarily interested in higher profits and high corporate salaries at the expense of patient care.
   One patient advocacy group expressed concern about the corporate practice by ESRD facilities of shifting the responsibility of prescribing therapy and medication from the nephrologist to the dialysis organization. Another commenter representing nephrology nurses expressed concern that the proposed reduction will cause ESRD facilities to curtail the number of nursing positions and no longer maintain staff education and competencies. Other commenters pointed out that many commercial payers use
   Response: We believe that the approach we have taken to transition the drug utilization reduction over a 3 to 4-year timeframe will minimize disruption in the delivery of ESRD services and will hopefully lead facilities to reverse cuts they may have already implemented in anticipation that the full amount of the drug utilization adjustment would be applied to the base rate in CY 2014. In addition, part of our rationale for the transition was to enable facilities to maintain their current programs and services. We developed a comprehensive claims-based monitoring system when we implemented the ESRD PPS in 2011 and will use that system to identify changes in practice patterns, prescribing patterns, health outcomes, and ownership that may impact the furnishing of ESRD services. We have provided sufficient information in this final rule about how we plan to transition the drug utilization adjustment so that ESRD facilities can assess whether to participate in the CMMI Comprehensive ESRD Care model.
   Comment: One commenter recommended that CMS specify how it plans to ensure that access to and quality of care is not compromised by the drug utilization adjustment. They provided a list of monitoring elements including ESA and other drug utilization rates, hospital admission/readmission rates, transfusion rates, availability to patients of dietitian and social worker services, changes in numbers of shifts per facility, changes in staffing ratios or staffing composition (that is, fewer nurses), consolidation/sales of dialysis facilities in markets with limited numbers of providers, and facility closures. The commenter recommended that CMS post quarterly updates on monitored aspects of care that are feasible to report publically.
   Response: We intend to monitor access through the comprehensive claims monitoring program we implemented when the ESRD PPS began in 2011. We believe that the transition approach we are adopting for implementing the drug utilization reduction will mitigate many of the unintended consequences identified by the commenters. We note that many of the suggested monitoring elements are already part of the comprehensive claims monitoring program (for example, ESA and other drug utilization rates, use of inpatient hospital services, and transfusion rates). Other elements suggested by the commenters warrant additional review by CMS to assess the burden associated with collecting the information. We currently provide a workbook that displays several key trends from CY 2011 through CY 2013 on the CMS Web site: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Spotlight.html. This workbook is updated on a quarterly basis.
   Comment: Comments from ESRD patients indicated that they believe
   Response: We want to reassure ESRD patients, their families, and caregivers that
   In summary, to comply with section 1881(b)(14)(I) of the Act we have computed the drug utilization adjustment to be
   To determine the final growth update factor's value, we used the methodology discussed above resulting in a 7.64 percent growth update factor to inflate prices for ESRD-related drugs and biologicals from CY 2011 levels to CY 2014 levels. The 7.64 percent growth update factor represents the ESRDB market basket minus the multifactor productivity adjustments finalized in CYs 2012, 2013, and 2014, the wage index budget-neutrality adjustment factors finalized in CYs 2012, 2013, and 2014, and the home dialysis training add-on budget neutrality adjustment factor finalized for CY 2014. We applied the CY 2014 prices to the CY 2007 and CY 2012 drug utilization data to calculate aggregate amounts for each year. Next, we divided each year's estimated aggregate amount for drugs and biologicals by that year's count of treatments furnished to
   In response to comments we are finalizing the following approach for implementing the amount of the drug utilization adjustment over a 3- to 4-year transition period. For CYs 2014 and 2015, we are implementing a transition of the drug utilization adjustment by offsetting the payment update, that is the ESRDB market basket minus productivity increase factor and other impacts (such as, changes to the outlier thresholds), by a portion of the reduction amount necessary to create an overall impact of zero percent for ESRD facilities from the previous year's payments. We relied on the impact chart provided in the impact analysis section of our annual rules to determine the impact of various policy changes on aggregate ESRD facility payments and took those values into consideration to determine the drug utilization adjustment for this year, and we will do the same for next year.
   For CY 2014, this approach results in a base rate reduction of
   For CY 2016, we will evaluate how to apply the balance of the reduction when we conduct an analysis of the case-mix adjustments as required by section 632(c) of
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 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 also provides that the market basket increase factor should reflect the changes over time in the prices of an appropriate mix of goods and services used to furnish renal dialysis services.
b. Market Basket Update Increase Factor and Labor-related Share for ESRD Facilities for CY 2014
   As required under section 1881(b)(14)(F)(i) 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 for ESRD treatment, this term is also commonly used to denote the input price index (that is, cost categories, their respective weights, and price proxies combined) derived from a market basket. Accordingly, the term "ESRDB market basket," as used in this document, refers to the ESRDB input price index.
   We proposed to use the CY 2008-based ESRDB market basket described in the CY 2011 ESRD PPS final rule (75 FR 49151 through 49162) to compute the CY 2014 ESRDB market basket increase factor and labor-related share based on the best available data. Consistent with historical practice, we estimate the ESRDB market basket update based on
   Using this methodology and the IGI forecast for the first quarter of 2013 of the CY 2008-based ESRDB market basket (with historical data through the fourth quarter of 2012), and consistent with our historical practice of estimating market basket increases based on the best available data, the proposed CY 2014 ESRDB market basket increase factor was 2.9 percent.
   For the CY 2014 ESRD payment update, we proposed to continue using a labor-related share of 41.737 percent for the ESRD PPS payment, which was finalized in the CY 2011 ESRD final rule (75 FR 49161).
   Comment: Several commenters supported the ESRDB proposed market basket update.
   Response: We appreciate the commenters support and are finalizing our update to the ESRDB market basket for CY 2014 based on the most recent forecast of the ESRDB market basket.
c. Productivity Adjustment for CY2014
   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 as 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").
   CMS notes that the proposed and final 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
   Accordingly, are finalizing the CY 2014 MFP adjustment to the ESRDB market basket for CY 2014 based on the most recent forecast available.
d. Calculation of the Final ESRDB Market Basket Update, Adjusted for Multifactor Productivity for CY 2014
   Under section 1881(b)(14)(F) of the Act, beginning in CY 2012, ESRD PPS payment amounts shall be annually increased by an ESRD market basket percentage increase factor reduced by the productivity adjustment. We proposed to use 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) and based on the most recent forecast of the data.
   It is our policy that if more recent data are available after publication of the proposed rule (for example, a more recent estimate of the market basket or MFP adjustment), we will use such data, if appropriate, to determine the CY 2014 market basket update and MFP adjustment in the CY 2014 ESRD PPS final rule. Thus, in accordance with section 1881(b)(14)(F)(i) of the Act, the final ESRDB market basket percentage increase factor for CY 2014 is based on the 3rd quarter 2013 forecast of the CY 2008-based ESRDB market basket, which is estimated to be 3.2 percent. This market basket percentage is then reduced by the MFP adjustment (the 10-year moving average of MFP for the period ending CY 2014) of 0.4 percent, which is based on IGI's 3rd quarter 2013 forecast. The resulting final MFP-adjusted ESRDB market basket update for CY 2014 is equal to 2.8 percent, or 3.2 percent less 0.4 percentage point.
4. The CY 2014 Wage Index
   Section 1881(b)(14)(D)(iv)(II) of the Act provides that the ESRD PPS may include a payment adjustment by geographic wage index payment adjustment, such as the index referred to in section 1881(b)(12)(D) of the Act. In the CY 2011 ESRD PPS final rule (75 FR 49117), we finalized the use of the
   OMB publishes bulletins regarding
   For CY 2014, we will continue to use the same methodology as finalized in the CY 2011 ESRD PPS final rule (75 FR 49117), for determining the wage indices for ESRD facilities in CY 2014. Specifically, we proposed to adjust wage indices for CY 2014 to account for annually updated wage levels in areas in which ESRD facilities are located. We proposed to use the most recent, FY 2014 IPPS pre-floor, pre-reclassified hospital wage index, which, as discussed above, does not reflect OMB's new area delineations based on the 2010 Census. The ESRD PPS wage index values are calculated without regard to geographic reclassifications authorized under section 1886(d)(8) and (d)(10) of the Act and utilize pre-floor hospital data that are unadjusted for occupational mix. The CY 2014 wage index values for urban areas are listed in Addendum A (Wage Indices for
   In the CY 2011 ESRD PPS final rule (75 FR 49117), we finalized a policy to use the labor-related share of 41.737 for the ESRD PPS portion of the payment. For the CY 2014 ESRD PPS, we did not propose any changes to the labor-related share of 41.737. However, because all providers that elected to participate in the transition are entering the fourth year of the transition and will begin being paid 100 percent under the ESRD PPS, the 53.711 labor-related share that was applied to the composite rate portion of the blended payment is no longer applicable. We discuss the methodology for the ESRD PPS labor-related share in our CY 2011 ESRD PPS final rule (75 FR 49161), where we noted that the labor-related share is typically the sum of Wages and Salaries, Benefits, Housekeeping and Operations, Professional Fees, Labor-related Services, and a portion of the
   Comment: We received several comments expressing concern about applying the same labor-related share in CY 2014, as was finalized in CY 2011. Many commenters suggested that CMS review the labor-related share and update the factor to reflect 2012 cost report data. Other commenters noted that smaller providers cannot "offset negative impacts across a national market base" and therefore are disadvantaged by rising salary costs in labor markets that compete regionally. A few commenters suggested that CMS has erred in not updating the labor-related share for CY 2014 to appropriately reflect the decrease in pharmaceutical spending identified in ESRD facility cost reports for 2011 and 2012. One commenter noted that the current labor-related share calculation is based upon 2008 cost report data, and the decrease in pharmaceutical spending since that time has resulted in an "understated labor-related share" used to adjust wages when making ESRD PPS payments.
   Response: The ESRD bundled labor-related share is based on the cost weights for wages and salaries, benefits, housekeeping and operation, professional fees, labor-related services and a portion of the capital-related building and equipment expenses. Because we did not propose to rebase or revise the ESRDB market basket for CY 2014, the labor-related share will remain 41.737 percent. At the time of preparing the CY 2014 ESRD PPS proposed rule we had access to cost report data through 2010. The 2011 cost report data was captured on the revised ESRD cost report form and complete data files were not available in time to estimate cost shares on the 2011 data in time for the proposed rule. In order to estimate if any major changes had occurred since 2008 (the current base years of the ESRDB market basket) we did produce ESRD market basket cost shares based on the Medicare Cost Report data for 2009 and 2010 (which were the latest, complete year of data we had available at the time) and we did not have access to the files in order to estimate the cost weights based on data from 2011 or later. We did run the cost report data for 2009 and 2010 and found that the cost share weights for the market basket and the estimated labor-related share as described in the CY 2011 ESRD PPS final rule (75 FR 49161) did not change significantly. We understand that under the bundled payment system the relative shares of wages and salaries and pharmaceuticals may change. We will be rebasing and revising the ESRD market basket for CY 2015 based on the most up-to-date and complete year of cost report data available, which will be based on data from a year after 2011. This will reflect the costs for ESRD services that were reported in a payment year under the bundled system.
a. Payment Under the ESRD PPS for Facilities Located in
   It came to our attention after the ESRD PPS was implemented that ESRD facilities located in
   Comment: We received two comments suggesting that the ESRD PPS does not sufficiently account for the unique economic circumstances faced by dialysis facilities located in the Territory of
   Response: We appreciate the concern expressed by commenters' regarding the payment change. However, section 1881(b)(14)(A)(i) of the Act requires the Secretary to implement a payment system under which a single payment is made to a renal dialysis facility for renal dialysis services in lieu of any other payment. In order to comply with the statute, ESRD facilities located in the
b. Policies for Areas With No Wage Data
   In the CY 2011 ESRD PPS final (75 FR 49116 through 49117), 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 is no hospital data. We further explained our approach for areas with no hospital data in the CY 2012 ESRD PPS final rule (76 FR 70241). 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. Therefore, we use our established methodology to compute an appropriate wage index using the average wage index values from contiguous CBSAs, to represent a reasonable proxy.
   As stated previously, the FY 2014 IPPS pre-floor, pre-reclassified hospital wage data does not include wage data for
   For CY 2014, the only urban area without wage index data is
   We received no public comments regarding our proposal to use the wage index value for
   We received no comments on our proposal to apply the computed statewide urban average wage index value for
c. Reduction to the ESRD Wage Index Floor
   A wage index floor value has been used in lieu of the calculated wage index values below the floor in making payment for renal dialysis services under the ESRD PPS. In the CY 2011 ESRD PPS final rule (75 FR 49116 through 49117), we finalized that we would continue to reduce the wage index floor by 0.05 for each of the remaining years of the transition. In the CY 2012 ESRD PPS final rule (76 FR 70241), 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. Most recently, in the CY 2013 ESRD PPS final rule (77 FR 67459 through 67461), we discussed the elimination of the wage index floor beginning in CY 2014, noting that we would propose a new methodology in CY 2014 to address wages in rural
   As described above, our intention has been to provide a wage index floor only through the transition to 100 percent implementation of the ESRD PPS (75 FR 49116 through 49117; 76 FR 70240 through 70241). However, the CY 2014 wage index values for both urban and rural
   Comment: We received a few comments requesting that CMS review hospital wage data and consider the appropriateness of a wage index floor. For example, a commenter from
   Response: We thank the commenters for their comments and we appreciate their concerns regarding the impact of a wage index floor on dialysis facilities. We have committed to reviewing the appropriateness of applying a wage index floor for CY 2016. However, for CY 2014 and CY 2015, we are finalizing our proposal. We will continue our policy of gradually reducing the wage index floor by 0.05 per year. Accordingly, we are finalizing in this rule a wage index floor value of 0.450 for CY 2014, and a wage index floor value of 0.400 for CY 2015. This policy will benefit ESRD facilities located in
   In summary, for CY 2014, we will continue to use the same wage index methodology as finalized in the CY 2011 ESRD PPS final rule (75 FR 49117). That is, we will use the most recent IPPS pre-floor, pre-reclassified hospital wage index to calculate the ESRD PPS wage index values. Thus, for CY 2014, we will use the FY 2014 IPPS pre-floor, pre-reclassified hospital wage index to calculate the CY 2014 ESRD PPS waged index. The 2014 wage index values for urban areas, Addendum A (Wage Indices for
   Lastly, for CY 2014 and CY 2015, we are continuing our policy of gradually reducing the wage index floor by 0.05 per year. That is, we are finalizing a wage index floor value of 0.450 for CY 2014, and a wage index floor value of 0.400 for CY 2015.
d. Wage Index Budget-Neutrality Adjustment
   Section 1881(b)(14)(D)(iv)(II) of the Act gives us broad discretion to implement payment adjustments to the ESRD PPS, including an adjustment of the ESRD PPS by a geographic index. Section 1881(b)(14)(D)(iv)(II) specifically refers to section 1881(b)(12)(D) as an example of such a geographic index, and in the CY 2011 ESRD PPS final rule, we finalized the use of the same wage index methodology that we utilized under the basic case-mix adjusted composite rate payment system (75 FR 49116). We had applied a wage index budget-neutrality adjustment factor under the basic case-mix adjusted composite payment system, and accordingly, in the CY 2012 ESRD PPS final rule, we finalized a policy for CY 2012 and future years to apply wage index budget-neutrality adjustment factors to the composite rate portion of the ESRD PPS blended payments for facilities participating in the transition as well as to the base rate for the ESRD PPS portion of the blended payment and the full ESRD PPS for those facilities that elected to receive 100 percent of their payment under that system (76 FR 70241 and 70242). We also finalized the methodology for computing the wage index budget-neutrality adjustment factors for CY 2012 and subsequent years (76 FR 70242).
   For CY 2014, we did not propose any changes to the methodology, but we noted that we will no longer compute a wage index budget-neutrality adjustment factor for the composite rate portion of the ESRD PPS blended payment because all facilities will be paid 100 percent under the ESRD PPS in CY 2014. For ease of reference, we explain the methodology for computing the budget-neutrality adjustment factor here. For the CY 2014 wage index budget-neutrality adjustment factor, we use the fiscal year (FY) 2014 pre-floor, pre-reclassified, non-occupational mix-adjusted hospital data to compute the wage index values, 2012 outpatient claims (paid and processed as of
   We computed the proposed CY 2014 wage index budget-neutrality adjustment factor using treatment counts from the 2012 claims and facility-specific CY 2013 payment rates to estimate the total dollar amount that each ESRD facility would have received in CY 2013. The total of these payments became the target amount of expenditures for all ESRD facilities for CY 2014. Next, we computed the estimated dollar amount that would have been paid for the same ESRD facilities using the ESRD wage index for CY 2014. The total of these payments becomes the new CY 2014 amount of wage-adjusted expenditures for all ESRD facilities.
   The wage index budget-neutrality factor is calculated as the target amount divided by the new CY 2014 amount. When we multiplied the wage index budget-neutrality factor by the applicable CY 2014 estimated payments, aggregate payments to ESRD facilities would remain budget neutral when compared to the target amount of expenditures. That is, the wage index budget-neutrality adjustment factor ensures that wage index adjustments do not increase or decrease aggregate
   We received no public comments on this proposal, and therefore, we are finalizing the proposed CY 2014 wage index budget-neutrality adjustment factor as updated with the most recently available data. In the proposed rule, the CY 2014 wage index budget-neutrality adjustment factor was computed at 1.000411. This calculation was based upon the use of the FY 2014 pre-floor, pre-reclassified, non-occupational mix-adjusted hospital data computed for wage index values and the CY 2012
5. Application of the International Classification of Diseases (ICD), Tenth Revision, to the Comorbidity Payment Adjustment Codes
   In the CY 2011 ESRD PPS final rule (75 FR 49094), we explained that section 1881(b)(14)(D)(i) of the Act, as added by section 153(b) of MIPPA, requires that the ESRD PPS include a payment adjustment based on case-mix that may take into account, among other things, patient comorbidities. Comorbidities are specific patient conditions that coexist with the patient's principal diagnosis that necessitates dialysis. The comorbidity payment adjustments recognize the increased costs associated with comorbidities and provide additional payment for certain conditions that occur concurrently with the need for dialysis.
   To develop the comorbidity payment adjustments, we used a stepwise regression model to analyze comorbidity data and found that certain comorbidities are predictors of variation in payments for ESRD patients. Details on the development of the comorbidity categories eligible for a comorbidity payment adjustment, including an explanation of the stepwise regression model that we used to analyze comorbidity data, is discussed in the CY 2011 ESRD PPS final rule (75 FR 49094 through 49108). We analyzed the comorbidity categories and excluded those categories from the comorbidity payment adjustments that met any of three exclusion criteria (75 FR 49095 through 49100): (1) Inability to create accurate clinical definitions; (2) potential for adverse incentives regarding care; and (3) potential for ESRD facilities to directly influence the prevalence of the comorbidity either by altering dialysis care, changing diagnostic testing patterns, or liberalizing the diagnostic criteria.
   We finalized six comorbidity categories that are eligible for a comorbidity payment adjustment, each with associated International Classification of Disease, 9th Revision, Clinical Modification (ICD-9-CM) diagnosis codes (75 FR 49100). Among these categories are three acute, short-term diagnostic categories (pericarditis, bacterial pneumonia, and gastrointestinal tract bleeding with hemorrhage) and three chronic diagnostic categories (hereditary hemolytic anemia with sickle cell anemia, myelodysplastic syndrome, and monoclonal gammopathy). The comorbidity categories eligible for an adjustment and their associated ICD-9-CM codes were published in the Appendix of the CY 2011 ESRD PPS final rule as Table E: ICD-9-CM Codes Recognized for a Comorbidity Payment Adjustment (75 FR 49211).
   In the CY 2012 ESRD PPS final rule (76 FR 70252), we clarified that the ICD-9-CM codes eligible for a comorbidity payment adjustment are subject to the annual ICD-9-CM coding updates that occur in the hospital IPPS final rule and are effective
   Effective
   We crosswalked the ICD-9-CM codes that are eligible for a comorbidity payment adjustment to ICD-10-CM codes using the General Equivalence Mappings (GEM) tool, which is the authoritative source for crosswalking developed by the
   In our clinical evaluation, we found the ICD-9-CM codes generally crosswalked to one ICD-10-CM code that codes for the same diagnosis, has the same code descriptor, and does not meet any of our exclusion criteria. Accordingly, with the exceptions noted below, we proposed that ICD-10-CM codes will be eligible for a comorbidity payment adjustment where they crosswalk from ICD-9-CM codes that are eligible for a comorbidity payment adjustment. There are, however, two instances where ICD-9-CM codes crosswalk to ICD-10-CM codes that we believe meet one or more of the exclusion criteria described above, and we proposed to exclude these codes from eligibility for a comorbidity payment adjustment.
a. One ICD-9-CM Code Crosswalks to One ICD-10-CM Code
   Table 1 lists all the instances in which one ICD-9-CM code crosswalks to one ICD-10-CM code. We proposed that all of those ICD-10-CM codes would receive a comorbidity payment adjustment with the exception of K52.81 Eosinophilic gastritis or gastroenteritis. Currently, 535.71 Eosinophilic gastritis with hemorrhage is one of 40 ICD-9-CM diagnosis codes under the acute comorbidity category of Gastrointestinal (GI) Bleeding. The descriptor of K52.81, the ICD-10-CM code to which this ICD-9-CM code crosswalks, does not include the word "hemorrhage." In the CY 2011 ESRD PPS final rule (75 FR 49097), we specifically limited the GI bleeding category for the comorbidity payment adjustment to GI bleed with hemorrhage because we believed that the gastrointestinal tract bleeding category met our first exclusion criterion--inability to create accurate clinical definitions--because it was overly broad. We also believed that use of this diagnosis category could lead to gaming consistent with the second and third exclusion criteria listed above. For these reasons, we limited the gastrointestinal tract bleeding diagnosis category to gastrointestinal tract bleeding with hemorrhage, which we believe creates accurate clinical definitions and mitigates the potential for adverse incentives in ESRD care. Accordingly, we proposed to exclude ICD-10-CM code K52.81 Eosinophilic gastritis or gastroenteritis from eligibility for the comorbidity payment adjustment because the code descriptor does not indicate the diagnosis of a hemorrhage. We proposed that all of the other ICD-10-CM codes listed in the Table 1 below would be eligible for a comorbidity payment adjustment.
Agency name Organization Position title Authorization Effective date name No. DEPARTMENT OF Rural Business Confidential DA130225 10/18/2013 AGRICULTURE Service Assistant Office of the Confidential DA130226 10/23/2013 Under Secretary Assistant Farm and Foreign Agricultural Service Office of the Director of the DA140001 10/30/2013 Secretary Office of Faith Based and Neighborhood Outreach DEPARTMENT OF Office of Press Assistant DC130098 10/21/2013 COMMERCE Public Affairs Office of Under Director of DC130102 10/22/2013 Secretary External Affairs DEPARTMENT OF Office of Special DD130129 10/17/2013 DEFENSE Assistant Assistant Secretary of Defense (Legislative Affairs) Office of Senior Public DD140003 10/31/2013 Assistant Affairs Advisor Secretary of Defense (Public Affairs) DEPARTMENT OF Office of the Special DB140002 10/28/2013 EDUCATION Under Secretary Assistant Office of Press Secretary DB140003 10/29/2013 Communications and Outreach Office of the Confidential DB140004 10/29/2013 Under Secretary Assistant DEPARTMENT OF Office of Director of DE130108 10/18/2013 ENERGY Public Affairs Digital Strategy Deputy Director DE130111 10/18/2013 Assistant Press DE130119 10/18/2013 Secretary Chief DE130107 10/22/2013 Speechwriter Office of the Special Advisor DE130109 10/18/2013 Secretary of Energy Advisory Board Office of Senior Advisor DE130112 10/18/2013 Fossil Energy Office of the Special Advisor DE130115 10/22/2013 Deputy Secretary Office of the Special Advisor DE130116 10/18/2013 Secretary Special Advisor DE140003 10/28/2013 for Finance ENVIRONMENTAL Office of the Deputy White EP140001 10/23/2013 PROTECTION Administrator House Liaison AGENCY DEPARTMENT OF Office of the Deputy White DH140002 10/21/2013 HEALTH AND Secretary House Liaison HUMAN SERVICES for Political Personnel, Boards and Commissions DEPARTMENT OF Office of the Special Policy DU130044 10/22/2013 HOUSING AND Secretary Advisor URBAN DEVELOPMENT Office of the Advance DU130047 10/22/2013 Chief Human Coordinator Capital Officer Office of Congressional DU130046 10/22/2013 Congressional Relations and Inter- Officer (2) governmental Relations DU130048 10/22/2013 Associate DU130049 10/22/2013 Director of Intergovern- mental Relations General Deputy DU130050 10/22/2013 Assistant Secretary for Congressional Relations Office of Deputy Press DU130051 10/22/2013 Public Affairs Secretary DEPARTMENT OF National Park Special DI140002 10/24/2013 THE INTERIOR Service Assistant, National Park Service NATIONAL Office of the Executive NN140002 10/29/2013 AERONAUTICS AND Administrator Officer SPACE ADMINISTRATION NATIONAL CREDIT Office of the Senior Policy CU140001 10/18/2013 UNION Board Advisor ADMINISTRATION SMALL BUSINESS Office of Special Advisor SB130025 10/18/2013 ADMINISTRATION Investment DEPARTMENT OF Bureau of Director of DS140001 10/28/2013 STATE Conflict and Overseas Stabilization Operations Operations DEPARTMENT OF Public Affairs Speechwriter DT140001 10/22/2013 TRANSPORTATION UNITED STATES Office of Confidential TC140001 10/24/2013 INTERNATIONAL Commissioner Assistant TRADE Kieff COMMISSION Staff Assistant TC140002 10/24/2013 (Legal) (2) TC140003 10/24/2013
b. One ICD-9-CM Code Crosswalks to Multiple ICD-10-CM Codes
   Table 2 lists all of the instances in which one ICD-9-CM code crosswalks to multiple ICD-10-CM codes. In those instances, we proposed that all the crosswalked ICD-10-CM codes would receive a comorbidity payment adjustment, with the exception of D89.2 Hypergammaglobulinemia, unspecified. ICD-9-CM code 273.1 Monoclonal paraproteinemia is the only ICD-9-CM code eligible for the comorbidity payment adjustment under the chronic comorbidity category of Monoclonal gammopathy. ICD-9-CM code 273.1 Monoclonal paraproteinemia crosswalks to two ICD-10-CM codes: D47.2 Monoclonal gammopathy and D89.2 Hypergammaglobulinemia, unspecified. We analyzed both of these ICD-10-CM codes and determined that D47.2 Monoclonal gammopathy should be eligible for the comorbidity payment adjustment because, like ICD-9-CM code 273.1 Monoclonal paraproteinemia, it indicates that there is an excessive amount of a single monoclonal gammaglobulin. When we analyzed the comorbidity category for the CY 2011 ESRD PPS final rule, single monoclonal gammaglobulin was shown to have an association with higher ESA usage, thereby resulting in higher costs to dialysis facilities. After clinical evaluation of D89.2 Hypergammaglobulinemia, unspecified, however, we determined that this ICD-10-CM code should not be eligible for the comorbidity payment adjustment because D89.2 Hypergammaglobulinemia, unspecified indicates only that 1 or more immunoglobulins are elevated, but does not identify which immunoglobulin(s) are elevated. We believe that the lack of specificity of this particular code results in an inability to create an accurate clinical definition, which is the first of the three exclusion criteria. Accordingly, we proposed that D89.2 Hypergammaglobulinemia, unspecified would not be eligible for the comorbidity payment adjustment. We proposed that all of the other ICD-10-CM codes listed in Table 2 below would be eligible for the comorbidity payment adjustment.
Agency name Organization Position title Authorization Effective date name number DEPARTMENT OF Office of the Executive DA130122 8/6/2013 AGRICULTURE Secretary Assistant Office of the Confidential DA130126 8/8/2013 Under Secretary Assistant for Marketing and Regulatory Programs Office of the Senior Advisor DA130176 8/16/2013 Under Secretary for Marketing and Regulatory Programs Office of the Policy DA130209 8/21/2013 Secretary Assistant Office of Deputy Director DA130210 8/21/2013 Communications of Scheduling DEPARTMENT OF Office of the Senior Policy DC130077 8/7/2013 COMMERCE Under Secretary Advisor Assistant Director of DC130086 8/20/2013 Secretary and Outreach Director General for United States and Foreign Commercial Service Office of Special DC130089 8/26/2013 Policy and Assistant Strategic Planning COMMISSION ON Commissioners Special CC130004 8/15/2013 CIVIL RIGHTS Assistant DEPARTMENT OF Office of the Special DD130114 8/20/2013 DEFENSE Assistant Assistant for Secretary of Special Defense Operations and (Special Low-Intensity Operations/Low- Conflict Intensity Conflict and Interdependent Capabilities) Office of the Special DD130118 8/20/2013 Assistant Assistant for Secretary of International Defense Security (International Affairs Security Affairs) Office of the Special DD130119 8/29/2013 Assistant Assistant for Secretary of Russia, Ukraine Defense and Eurasia (International Security Affairs) DEPARTMENT OF Office of the Special DW130054 8/30/2013 THE ARMY Assistant Assistant Secretary of (Alternate) the Army (Acquisition, Logistics and Technology) DEPARTMENT OF Office of the Special DN130007 8/9/2013 THE NAVY Assistant Assistant Secretary of the Navy (Manpower and Reserve Affairs) DEPARTMENT OF Office of the Special DB130064 8/21/2013 EDUCATION Secretary Assistant DEPARTMENT OF Associate Deputy Director DE130092 8/2/2013 ENERGY Administrator for for External Communications Affairs Office of the Deputy Director DE130085 8/9/2013 Secretary of Secretarial Energy Advisory Boards and Board Council Office of the Special DE130090 8/20/2013 Deputy Assistant Secretary Office of Special DE130106 8/26/2013 Assistant Assistant Secretary for Policy and International Affairs Office of Scheduler DE130105 8/28/2013 Management ENVIRONMENTAL Office of the Special EP130037 8/6/2013 PROTECTION Administrator Assistant AGENCY Special EP130038 8/6/2013 Assistant for Public Engagement The Deputy Special EP130033 8/21/2013 Administrator Assistant for Policy and Operations Policy Advisor EP130034 8/28/2013 EXPORT-IMPORT Export Finance Senior Vice EB130004 8/26/2013 BANK President of Export Finance FARM CREDIT Office of the Executive FL130005 8/5/2013 ADMINISTRATION Board Assistant (2) FL130004 8/6/2013 DEPARTMENT OF Health Special DH130111 8/7/2013 HEALTH AND Resources and Assistant HUMAN SERVICES Services Administration Office of the Administrator Office of the Director of DH130110 8/9/2013 Assistant Speechwriting Secretary for Public Affairs Office of the Policy Advisor DH130114 8/22/2013 Assistant Secretary for Health DEPARTMENT OF Office of the Assistant Press DM130147 8/1/2013 HOMELAND Assistant Secretary SECURITY Secretary for Public Affairs Federal Director, DM130157 8/20/2013 Emergency Intergovernment Management al Affairs Agency U.S. Customs Senior Advisor DM130160 8/23/2013 and Border Protection DEPARTMENT OF Secretary's White House DI130054 8/30/2013 THE INTERIOR Immediate Liaison Office DEPARTMENT OF Office of Public Affairs DJ130078 8/1/2013 JUSTICE Public Affairs Specialist Office of Senior Advisor DJ130084 8/20/2013 Justice Programs Antitrust Counsel DJ130086 8/20/2013 Division DEPARTMENT OF Office of the Chief DL130042 8/5/2013 LABOR Deputy Innovation Secretary Officer Office of Press Secretary DL130053 8/19/2013 Public Affairs OFFICE OF Legislative Deputy for BO130027 8/8/2013 MANAGEMENT AND Affairs Legislative BUDGET Affairs OVERSEAS Overseas Deputy Chief of PQ130003 8/15/2013 PRIVATE Private Staff INVESTMENT Investment CORPORATION Corporation PENSION BENEFIT Office of the Chief of Staff BG130001 8/8/2013 GUARANTY Executive CORPORATION Director Office of Deputy Chief BG130002 8/20/2013 Policy and Policy Officer External Affairs DEPARTMENT OF Office of the Special DS130107 8/6/2013 STATE Secretary Assistant UNITED STATES Office of Staff Assistant TC130015 8/9/2013 INTERNATIONAL Commissioner (Legal) TRADE Johanson COMMISSION
c. Multiple ICD-9-CM Codes Crosswalk to One ICD-10-CM Code
   Table 3 displays the crosswalk where multiple ICD-9-CM codes crosswalk to one ICD-10-CM code. For the reasons explained above, we propose that all of the crosswalked ICD-10-CM codes listed below would be eligible for a comorbidity payment adjustment.
[TB] Table 3--Multiple ICD-9-CM Codes Crosswalk to One ICD-10-CM Code GASTROINTESTINAL BLEEDING ICD-9 Descriptor ICD-10 Descriptor 533.20 Acute peptic ulcer of K27.2 Acute peptic ulcer, site unspecified site with unspecified, with both hemorrhage and perforation, hemorrhage and perforation without mention of obstruction 533.21 Acute peptic ulcer of unspecified site with hemorrhage and perforation, with obstruction 533.40 Chronic or unspecified K27.4 Chronic or unspecified peptic ulcer of unspecified peptic ulcer, site site with hemorrhage, unspecified, with hemorrhage without mention of obstruction 533.41 Chronic or unspecified peptic ulcer of unspecified site with hemorrhage, with obstruction 533.60 Chronic or unspecified K27.6 Chronic or unspecified peptic ulcer of unspecified peptic ulcer, site site with hemorrhage and unspecified, with both perforation, without mention hemorrhage and perforation of obstruction 533.61 Chronic or unspecified peptic ulcer of unspecified site with hemorrhage and perforation, with obstruction 534.00 Acute gastrojejunal ulcer K28.0 Acute gastrojejunal ulcer with hemorrhage, without with hemorrhage mention of obstruction 534.01 Acute gastrojejunal ulcer, with hemorrhage, with obstruction 534.20 Acute gastrojejunal ulcer K28.2 Acute gastrojejunal ulcer with hemorrhage and with both hemorrhage and perforation, without mention perforation of obstruction 534.21 Acute gastrojejunal ulcer with hemorrhage and perforation, with obstruction 534.40 Chronic or unspecified K28.4 Chronic or unspecified gastrojejunal ulcer with gastrojejunal ulcer with hemorrhage, without mention hemorrhage of obstruction 534.41 Chronic or unspecified gastrojejunal ulcer, with hemorrhage, with obstruction 534.60 Chronic or unspecified K28.6 Chronic or unspecified gastrojejunal ulcer with gastrojejunal ulcer with hemorrhage and perforation, both hemorrhage and without mention of perforation obstruction 534.61 Chronic or unspecified gastrojejunal ulcer with hemorrhage and perforation, with obstruction BACTERIAL PNEUMONIA ICD-9 Descriptor ICD-10 Descriptor 482.30 Pneumonia due to J15.4 Pneumonia due to other Streptococcus, unspecified streptococci 482.31 Pneumonia due to Streptococcus, group A 482.39 Pneumonia due to other Streptococcus 482.81 Pneumonia due to anaerobes J15.8 Pneumonia due to other specified bacteria 482.89 Pneumonia due to other specified bacteria [TE]
   In summary, based on our clinical evaluation of the ICD-10-CM codes to which the eligible ICD-9-CM codes crosswalk, we proposed that both D89.2 Hypergammaglobulinemia, unspecified and K52.81 Eosinophilic gastritis or gastroenteritis would not be eligible for the comorbidity payment adjustment. We proposed that all other ICD-10-CM codes to which eligible ICD-9-CM codes crosswalk that are listed in the Tables above would be eligible for a comorbidity payment adjustment effective
   Comment: We received a few comments that acknowledged the implementation of the ICD-10-CM coding scheme. Two commenters supported our proposal to exclude D89.2 Hypergammaglobulinemia, unspecified and K52.81 Eosinophilic gastritis or gastroenteritis from eligibility for a comorbidity payment adjustment.
   Response: We thank commenters for their support. We are finalizing our proposal that the ICD-10-CM codes listed in the Tables above are eligible for a comorbidity payment adjustment, and that ICD-10-CM codes D89.2 Hypergammaglobulinemia, unspecified and K52.81 Eosinophilic gastritis or gastroenteritis are excluded from eligibility for a comorbidity payment adjustment.
   Comment: One commenter questioned why CMS includes monoclonal gammopathy but excludes multiple myeloma and plasma cell leukemia. The commenter encouraged CMS to determine methods for proper disease identification as myeloma is the most common malignancy leading to ESRD.
   Response: In the CY 2011 ESRD PPS final rule (75 FR 49099), we discuss the exclusion of the cancer comorbidity diagnostic category from eligibility for a comorbidity payment adjustment. We explained that providing a payment adjustment for the cancer comorbidity category could overstate costs for some patients whose dialysis treatment is no longer affected by their history of cancer and could understate the costs of patients whose current cancer diagnosis and treatment affect their dialysis treatments. Until we are able to differentiate the cost between the two groups, we are unable to accurately reflect the ESRD resources being used to determine a comorbidity payment adjustment for patients with multiple myeloma and leukemia.
   Comment: We received two comments stating that implementing ICD-10-CM in 2014 will be another unfunded mandate and small dialysis organizations will suffer the most.
   Response: We understand that the transition from ICD-9-CM to ICD-10-CM may present a challenge for some ESRD facilities; however, the compliance date for implementation of ICD-10-CM is
6. 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 SEC 413.237(a)(1) provide that ESRD outlier services are the following items and services that are included in the ESRD PPS bundle: (i) ESRD-related drugs and biologicals that were or would have been, prior to
   In the CY 2011 ESRD PPS final rule (75 FR 49142), we stated that for purposes of determining whether an ESRD facility would be eligible for an outlier payment, it would be necessary for the facility to identify the actual ESRD outlier services furnished to the patient by line item on the monthly claim. The ESRD-related drugs, laboratory tests, and medical/surgical supplies that we would recognize as outlier services were specified in Attachment 3 of Change Request 7064, Transmittal 2033 issued
   In the CY 2012 ESRD PPS final rule (76 FR 70246), we eliminated the issuance of a specific list of eligible outlier service drugs which were or would have been separately billable under Medicare Part B prior to
   Our regulations at 42 CFR SEC 413.237 specify the methodology used to calculate outlier payments. An ESRD facility is eligible for an outlier payment if its actual or imputed Medicare Allowable Payment (MAP) amount per treatment for ESRD outlier services exceeds a threshold. The MAP amount represents the average incurred amount per treatment for services that were or would have been considered separately billable services prior to
   In the CY 2011 ESRD PPS final rule, using 2007 data, we established the outlier percentage at 1.0 percent of total payments (75 FR 49142 through 49143). We also established the fixed dollar loss amounts that are added to the predicted outlier services MAP amounts. The outlier services MAP amounts and fixed dollar loss amounts are different for adult and pediatric patients due to differences in the utilization of separately billable services among adult and pediatric patients (75 FR 49140).
   As we explained in the CY 2011 ESRD PPS final rule (75 FR 49138 and 49139), the predicted outlier services MAP amounts for a patient are determined by multiplying the adjusted average outlier services MAP amount by the product of the applicable patient-specific case-mix adjusters 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). Thus, for CYs 2011 and 2012, the MAP and fixed dollar loss amounts were computed based on pre-ESRD PPS claims data and utilization. For CY 2013, the outlier services MAP amounts and fixed dollar loss amounts were based on 2011 data (77 FR 67464). Therefore, the outlier thresholds for CY 2013 were based on utilization of ESRD-related items and services furnished under the ESRD PPS. Because of the lower utilization of erythropoietin stimulating agents (ESA) and other outlier services in CY 2011, we lowered the MAP amounts and fixed dollar loss amounts for both adult and pediatric patients for CY 2013 to allow for an increase in payments for ESRD beneficiaries requiring higher resources.
a. Impact of Changes to the Outlier Policy
   In the CY 2014 ESRD PPS proposed rule (78 FR 40850 through 40852), we did not propose any changes to the methodology used to compute the MAP or fixed dollar loss amounts. Rather, we proposed to update the outlier services MAP amounts and fixed dollar loss amounts to reflect the utilization of outlier services reported on the 2012 claims using the
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   As shown in Table 4, the estimated fixed dollar loss amount that determines the 2014 outlier threshold amount for adults (Column II) is lower than that used for the 2013 outlier policy (Column I). The estimated fixed dollar loss amount that determines the 2014 outlier threshold amount for pediatric patients (Column II) is higher than that used for the 2013 outlier policy (Column I). The main reason for the reduction for adult patients is that the lower utilization of ESA and other outlier services continued to decline during the second year of the PPS. This can be seen by comparing the outlier service MAP amount per treatment for adult patients in Column I (
   For pediatric patients, the overall average outlier service MAP amount per treatment decreased from
   For this final rule, based on the use of the most recently available data, we are updating the fixed dollar loss amounts that are added to the predicted MAP amounts per treatment to determine the outlier thresholds for CY 2014 from
   We estimate that the percentage of patient months qualifying for outlier payments under the current policy will be 5.3 percent and 6.7 percent for adult and pediatric patients, respectively, based on the 2012 data. The pediatric outlier MAP and fixed dollar loss amounts continue to be lower for pediatric patients than adults due to the continued lower use of outlier services (primarily reflecting lower use of ESAs and other injectable drugs).
b. Outlier Policy Percentage
   42 CFR 413.220(b)(4) stipulates that the per treatment base rate is reduced by 1 percent to account for the proportion of the estimated total payments under the ESRD PPS that are outlier payments. For this final rule, based on analysis of the
   We note that recalibration of the fixed dollar loss amounts for CY 2014 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 increases payments to providers for beneficiaries with renal dialysis items and services that are eligible for outlier payments. Therefore, beneficiary co-insurance obligations increase for renal dialysis services eligible for outlier payments.
   We received the following comments on this proposal:
   Comment: Commenters generally supported CMS's proposal to use CY 2012 claims data to update and recalibrate the outlier policy with the most recent data available for adult and pediatric patients for CY 2014.
   Response: We thank the commenters for their support of our CY 2014 proposal to update the ESRD PPS outlier payment policy for adult and pediatric patients with the most recent data available. As stated previously, for this final rule, we used the
   Comment: A few commenters urged CMS to ensure with a "high level of probability" that the full one percent outlier holdback will be expended in CY 2014. One commenter contended that updating the outlier policy with recent data does not address the ongoing problem of "overstating the outlier" and "artificially" reducing the base rate. Some commenters suggested that the "chronic underpayment of the outlier pool" suggests that an outlier policy is unnecessary. Other commenters urged CMS to avoid future "underpayment" of the outlier policy by lowering or eliminating the threshold for CY 2014. A few commenters requested that CMS "consider giving back" the amounts not paid in CY 2012 by increasing the CY 2014 base rate to include outlier monies held back but not paid out in CY 2012.
   Response: We are unable to assure the commenters that the one percent outlier holdback will fully be expended in CY 2014. The total amount of outlier payments are dependent upon patient utilization of high cost outlier-eligible services (most significantly ESAs), that are furnished to
   We disagree with the commenter who contended that CMS is overstating the outlier and artificially reducing the base. We remind the commenter that updating the outlier payment policy for CY 2014 does not change payments for dialysis items and services that are not eligible for outlier payments. Rather, the outlier payment is a per treatment payment increase, available to ESRD facilities when they furnish
   We also disagree that with commenters that we should "give back" outlier monies to account for not achieving the 1 percent outlier threshold. As we explained in the CY 2013 ESRD PPS final rule (77 FR 67450, 67465), "[t]he 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 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
D. The Self-Dialysis and Home Dialysis Training Add-On Payment
a. Medicare Policy for Self-Dialysis Training, Home Dialysis Training, and Retraining
   The existing
   Our regulation at 42 CFR 494.70 (Condition: Patients' rights) requires that facilities inform patients (or their representatives) of their rights and responsibilities when they begin their treatment and protect and provide for the exercise of those rights. Our regulation at 42 CFR 494.70(a)(7) requires a facility to inform patients about all treatment modalities and settings, including but not limited to transplantation, home dialysis modalities, and in-facility hemodialysis. This includes the patient's right to receive resource materials for dialysis modalities not offered by the facility. We expect that all ESRD facilities comply with this regulation and furnish resource information on home dialysis, even if the home modality is not offered by the facility. When ESRD facilities are certified for home dialysis training, we expect the facility to provide training throughout the self-dialysis or home dialysis experience (42 CFR 494.100). Self-dialysis or home dialysis training services and supplies may include but are not limited to personnel services, dialysis supplies, written training manuals and materials, and ESRD-related items and services.
   We discuss
    * Home Hemodialysis Training
    * Intermittent Peritoneal Dialysis Training
    * Continuous Ambulatory Peritoneal Dialysis Training
    * Continuous Cycling Peritoneal Dialysis Training
   We would expect that patients who elect self-dialysis or home dialysis training will be good candidates for these modalities and that they will be successful in completing the training. We also expect facilities to comply with the patient assessment Condition of Participation including the requirement in 42 CFR 494.80(a)(9) to include in the assessment: "Evaluation of the patient's abilities, interests, preferences, and goals, including the desired level of participation in the dialysis care process; the preferred modality (hemodialysis or peritoneal dialysis), and setting (for example, home dialysis), and the patient's expectations of care outcomes."
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b. Payment Methodology
   In our CY 2011 ESRD PPS final rule (75 FR 49062 through 49064), we included training costs in computing the ESRD PPS base rate, but stated that the ESRD PPS base rate alone does not account for the staffing costs associated with training treatments furnished by a registered nurse. Thus, we finalized the training add-on payment, to be an additional payment made under the ESRD PPS, when one-on-one self or home dialysis training is furnished by a nurse working for a
   We discuss our policies for retraining sessions in the Medicare Benefit Policy Manual, Publication 100-02, Chapter 11, Section 30.2.E. The add-on payment is also applied for retraining sessions after a patient or caregiver has completed the initial training program and if the patient continues to be an appropriate candidate for self or home dialysis modalities. We would expect that most
   If a
   In CY 2011, we finalized the amount for the training add-on adjustment at
   In the CY 2013 ESRD PPS final rule (77 FR 67468 through 67469), we addressed comments on
   In the CY 2014 ESRD PPS proposed rule, we sought public comments on the costs associated with furnishing self or home dialysis training (78 FR 40854). We requested comments on the elements of PD vs. HHD training sessions, specifically the costs of furnishing such training, the appropriate number of training sessions, and the duration of the training sessions. Lastly, we sought comments on a "holdback" payment methodology, which we discussed in the CY 2011 ESRD PPS final rule (75 FR 49063). Under this methodology, a portion of the training payments would be withheld from the ESRD facility until the ESRD patient demonstrates that they have successfully transitioned to a home modality. Specifically, in the CY 2014 proposed rule (78 FR 40854), we sought comments on the costs associated with furnishing self or home dialysis training, the training elements of PD and HHD training, and the number of training sessions.
   Although we did not specifically propose to increase the training add-on payment amount in the CY 2014 ESRD PPS proposed rule (78 FR 40852 through 40854), we received several hundred comments from
   After a review of the considerable number of compelling public comments and MedPAC's "Report to
   Therefore, beginning
   We also note that the finalized per training treatment add-on payment amount of
   We received the following comments:
   Comment: The majority of commenters recognized the importance of dialysis training services and modality choice for a beneficiary's well-being. Many patient comments included personal stories about their ability to lead fulfilling lives after they transferred to HHD, including being able to return to work, travel, and participate in family activities. The commenters confirmed that the training elements for HHD are significant and require additional face-to-face nursing time. Commenters identified such elements as setting up and orienting the patient to the HHD unit; explaining safety alarms; troubleshooting alarms; and teaching the patient self cannualation as training elements that they do not believe were adequately paid for by the base rate and the training add-on payment.
   Some commenters noted that a single training add-on payment amount for both PD and HHD training services disincentives HHD training. The commenters contend that the training add-on payment amount is sufficient for PD training services, but that higher training costs are incurred by the facility when they furnish HHD training services. A few commenters urged CMS to "fix" this bias in the training payment so that more patients have access to the modality of HHD services. One commenter pointed out that
   Response: Again, we thank the patients for their willingness to share their home dialysis training experiences with CMS, and in particular, to patients for commenting on the importance of modality choice in returning to work and participating fully in their lives. While we did not propose to increase the home dialysis training add-on payment amount, we found the comments very compelling. In particular, we agree with commenters that the current home dialysis training add-on payment amount, together with the base rate, does not sufficiently cover the costs of providing the critical HHD training elements that commenters identified. We also agree with commenters that the single home dialysis training add-on payment could disincentivize training in HHD, as opposed to PD, as the cost of HHD training is higher than the cost of PD training. As we noted in the CY 2013 ESRD PPS final rule (77 FR 67468), we do not intend to encourage the use of one type of home dialysis modality over another; rather we believe that decisions regarding the appropriate home dialysis modality should be made by beneficiaries in consultation with their physicians. Where a beneficiary and his or her physician decide that HHD is the appropriate home dialysis modality, we do not want the amount of the home dialysis training add-on payment to discourage the use of that modality.
   We appreciate the comments detailing face-to-face nursing time and the training provided during that time. These comments noted significant face-to-face training time for the training elements of self cannualation, effective machine set-up, explaining warning alarms, troubleshooting alarms, and what the patient and caregiver should do in case of an emergency. We agree with the commenters that these training elements are significant to a patient's ability to safely and effectively dialyze in the home, and that these training elements are unique to HHD training services. HHD training elements were not included in the original training add-on payment adjustment because prior to the PPS, home training services furnished to
   We expect all ESRD facilities to comply with our regulation at 42 CFR 494.70(a)(7) and inform beneficiaries of the availability of HHD, even if this modality is not offered by the facility. Although we believe increasing the amount of the home dialysis training add-on payment adjustment in this final rule will further enable patients to dialyze at home, we also believe that the ESRD PPS, along with Medicare Conditions for Coverage requirements set forth in 42 CFR SEC 494.100(a), contributed to the increase in utilization rates for home modalities. In the CY 2011 ESRD PPS final rule, we stated that the ESRD PPS monitoring program would assess the effect of the expanded bundled payment on home dialysis utilization rates (75 FR 49058). We continue to monitor
   Comment: Commenters applauded CMS for seeking industry feedback for refinements to self and home dialysis training policies. In general, commenters requested that CMS increase the payment amount for dialysis training services to more accurately reflect the actual costs incurred by facilities when they furnish self or home dialysis training services to a
   Response: We thank the facility commenters who shared detailed analysis regarding their training costs. A few commenters furnished CMS with an "Updated Home Hemodialysis Cost Study: 2010 Medicare Cost Report Analysis." The analysis shows that current
   We note that patient and caregiver commenters indicated a training time for home dialysis training of 2 to 6 weeks in length, with face-to-face nursing time of 2 to 6 hours per training day. Commenters also acknowledged that many of the training days took place in the training facility, in a group setting, and not in the patient's home. In addition, some commenters reported that nursing staff were not present for the final week of training, as the patient had achieved total independent self-care. While we understand that training for home dialysis is specific to the patients' needs and that several factors, including a patient's health status and emotional and mental state, are considerations for the length and number of training services furnished, we are concerned about the wide-ranging variance in training times and the duration of training sessions indicated in the comments. While believe that an increase in the amount of the home dialysis training add-on payment is appropriate, we note that, based on the comments we received, training services furnished to
   Comment: A few commenters urged CMS to increase the training add-on payment amount without making a reduction to the base rate to maintain budget neutrality. One commenter noted that, "we believe that CMS has the discretion to independently make this change without adjustments for budget neutrality." A few commenters urged CMS to make no change to the training add-on payment amount that would further reduce the base rate for CY 2014.
   Response: We appreciate commenters concern for protecting the ESRD PPS base rate. However, we are not changing the payment methodology used to compute the training add-on adjustment and the training add-on payment will continue to be budget neutral, which means the base rate will be affected. We believe that an additional half hour per training session better reflects the costs facilities incurred when furnishing training services to
   We computed the final CY 2014 home dialysis training add-on budget-neutrality adjustment factor using treatment counts from the 2012 claims and facility-specific CY 2014 payment rates to estimate the total dollar amount that each ESRD facility would have received in CY 2014 with no adjustment to the training add-on factor. The total of these payments became the target amount of expenditures for all ESRD facilities for CY 2014. Next, we computed the estimated dollar amount that would have been paid for the same ESRD facilities using the final adjusted home dialysis training add-on of
   The training add-on budget-neutrality factor is calculated as the target amount divided by the new CY 2014 amount. When we multiplied the training add-on budget-neutrality factor by the applicable CY 2014 estimated payments, aggregate payments to ESRD facilities would remain budget-neutral when compared to the target amount of expenditures. The training add-on budget-neutrality factor ensures that training add-on adjustments do not affect aggregate
   Comment: A few commenters noted that the training add-on payment is a "fixed" payment and does not adjust from year to year for inflation or wages. One commenter noted that the training add-on payment is not included in the annual market basket used to update the ESRD PPS and that CMS should address this inconsistency.
   Response: We agree with comments that the training add-on payment adjustment is a fixed payment amount and is not updated by the annual wage data from the
   Comment: Several commenters discouraged CMS from considering a holdback payment methodology for making training add-on payments. One commenter expressed serious concerns regarding a holdback policy for home dialysis training, stating that the policy would "penalize facilities" for unsuccessful training. Another commenter contended that providers should not be held responsible for patients who decide that they are not able to adequately perform home dialysis.
   Response: We thank the commenters for their comments and note that CMS did not receive a single comment that endorsed the holdback payment methodology. We agree with commenters that a holdback payment methodology penalizes the facilities for patients who decide that they are not able to perform self or home dialysis and that this decision may not be a reflection of the quality of the training the patient received.
   In summary, in response to comments, CMS will finalize a payment increase of 50 percent for both PD and HD training treatments. Beginning
   Section 1881(b)(14)(A)(i) of the Act, as added by section 153(b) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), requires the Secretary to implement a payment system under which a single payment is made to a provider of services or a renal dialysis facility for "renal dialysis services" in lieu of any other payment. Section 1881(b)(14)(B) of the Act defines renal dialysis services, and subclause (iii) of that section states that these services include "other drugs and biologicals that are furnished to individuals for the treatment of ESRD and for which payment was (before the application of this paragraph) made separately under this title, and any oral equivalent form of such drug or biological[.]" We interpreted this provision as including not only injectable drugs and biologicals used for the treatment of ESRD (other than ESAs, which are included under clause (ii)), but also all non-injectable drugs used for the treatment of ESRD furnished under Title XVIII. We also concluded that, to the extent ESRD-related oral-only drugs do not fall within clause (iii) of the statutory definition of renal dialysis services, such drugs would fall under clause (iv), and constitute other items and services used for the treatment of ESRD that are not described in clause (i). Accordingly, we defined "renal dialysis services" at 42 CFR 413.174 as including, among other things, "[o]ther items and services that are furnished to individuals for the treatment of ESRD and for which payment was (prior to
   On
   Because we proposed that oral-only drugs will be included in the ESRD PPS starting in CY 2016, we also proposed to change the reference to
   We received the following comments on this proposal:
   Comment: A few comments supported our amended regulations codifying the delay of oral-only drugs paid under the ESRD PPS payment bundle until
   Response: We thank the commenters for their support in implementing section 632(b) of
   After consideration of the public comments we received, we are finalizing the proposed revisions to 42 CFR 413.174 and 413.237 without modification. We will delay the effective date for providing payment for oral-only ESRD-related drugs under the ESRD PPS at 42 CFR 413.174(f)(6) until
F. Miscellaneous Comments
   We received many comments from
   Comment: A few commenters requested that CMS amend the ESRD facility cost report and eliminate the cap on medical director fees. One commenter noted that the limitation for reporting medical director fees on
   Response: We thank commenters for their suggestions. We will consider these comments for future refinements. We note that CMS has already implemented several updates and enhancements to the ESRD facility
   Comment: Several commenters expressed confusion regarding eligibility requirements for the Low Volume Payment Adjustment (LVPA) available under the ESRD PPS. A few commenters requested clarification on the identification of free-standing and hospital-based low-volume facilities, while other commenters noted the
   Response: We agree with commenters that the LVPA is an important and significant payment adjustment for eligible facilities under the ESRD PPS. CMS discussed the eligibility requirements for the LVPA payment adjustment in the CY 2011 ESRD PPS final rule (75 FR 49117 through 49125), and codified the adjustment in our regulations at 42 CFR SEC 413.232. For specific inquiries regarding LVPA eligibility, we suggest that facilities contact their Medicare Administrative Contractor (MAC) directly. As part of potential future refinements, we plan to evaluate our current policies for the LVPA to ensure that we are effectively targeting low-volume facilities, in order to support access to dialysis services.
   Comment: Some commenters requested that CMS consider payment implications outside of the ESRD PPS payment methodology for dialysis services. For example, a few commenters cautioned CMS that a static payment policy may "dampen" incentives to develop innovations and new technologies in the treatment of ESRD and urged CMS to establish a new technology adjustment.
   Response: We thank the commenters and appreciate the suggestion that we consider different payment mechanisms that would encourage innovation for ESRD treatments and ensure quality patient care.
   Comment: A few commenters requested that CMS consider a "case-mix adjustor to address racial and ethnic disparities in ESRD treatment," and noted that some patient sub-groups require higher utilization of ESAs and other pharmaceuticals in furnishing quality patient care.
   Response: We thank the commenters for expressing their concern regarding possible racial and ethnic disparities in the treatment of ESRD, and note that we discuss our analysis of a potential race case-mix adjustor in our CY 2011 ESRD PPS final rule (75 FR 49108 through 49115). In that rule, we noted that while section 1881(b)(14)(D)(i) of the Act allows CMS to consider the implementation of race/ethnicity payment adjustments, we believed that other patient characteristics such as "body-size and co-morbidities," and not a patient's race contribute to higher treatment costs. We stated that "[i]n particular, we are not convinced that race or ethnicity adjustments are necessary to ensure beneficiary access to ESRD services. That is, we believe that there may be race-neutral biological factors that have not yet been identified in the ESRD PPS modeling that could explain the increased cost associated with providing renal dialysis services to members of certain racial or ethnic groups." (75 FR 49109.) We will continue to monitor the health outcomes for all Medicare ESRD beneficiaries, and assess the underlying clinical conditions that incur higher treatment costs for future analysis.
   Comment: A few facility commenters noted a geographic effect on "payer mix trends" for facilities located in inner city areas with nearly exclusive
   Response: We thank the commenters for sharing the economic perspective of inner city ESRD facilities and we agree that inner city communities may have unique economic or demographic factors to manage in furnishing ESRD services. However, we disagree that the ESRD PPS payment methodology does not appropriately recognize these unique circumstances when making payments for dialysis services. For example, the outlier policy is a payment mechanism specifically designed to recognize higher cost patients in terms of drug, laboratory services, and supply utilization. In addition, we provide a wage index adjustment to reflect geographic differences in wages. Likewise, patient case-mix (that is, body size and comorbidities) and the LVPA facility adjustments recognize patient and facility characteristics that contribute to higher costs of care. And lastly, ESRD facilities are allowed to recover a portion of uncollected beneficiary coinsurance as outlined in 42 CFR SEC 413.89. While we continue to believe that the ESRD PPS payment methodology appropriately recognizes high cost patients and high cost geographic areas, we will continue to monitor patient utilization for all
   Comment: One commenter noted that historical and future
   Response: We thank the commenter for sharing their concerns regarding
   Comment: An organization that represents kidney health professionals urged CMS to publicize ways for ESRD patients, their families, and care providers to alert CMS to changes in care delivery that raise concern about negative effects on the quality of care provided as a result of the drug utilization reduction. They suggested such mechanisms could include, but are not limited to; the
   Response: We appreciate the commenters' concern regarding ensuring quality care; however, because the implementation strategy for the drug utilization reduction will be transitioned over time, we believe that ESRD facilities should be able to maintain their current programs and services. We do not expect that the drug utilization reduction will negatively impact the quality of service a facility provides; therefore, we believe that our current methods (the 1-800 number system and the ESRD Network complaint and quality of care reporting system, as opposed to a dedicated email address) for beneficiaries, their families, and providers to communicate with CMS are adequate at this time.
   Comment: Several commenters expressed concern regarding data transparency in rate setting, and requested that CMS release a CY 2014 data rate setting file.
   Response: We agree with the commenters that a rate setting file would enhance transparency, and therefore, we are working to make such a file available in the future.
   Comment: A few national organizations representing dialysis facilities expressed concern that a change to the census process in the Consolidated Renal Operations in a Web-Enabled Network (CROWNWeb) has resulted in a delay in the date of first dialysis reconciliation and verification. The commenters noted that, as a result, facilities are unable to obtain, or there is a delay in receiving, the onset of dialysis payment adjustment.
   Response: We appreciate the commenters bringing the on-set payment adjustment issues to our attention. We will consider these comments and work with agency staff to ensure that the on-set payment adjustment is applied appropriately in the future.
   Comment: One commenter pointed out the significant payment difference in dialysis treatments furnished and paid through the hospital outpatient prospective payment system (OPPS) versus those paid under the ESRD PPS.
   Response: We agree with the commenter that the payment difference for emergency or unscheduled dialysis services and maintenance renal dialysis services is significant, and note that the OPPS payment amount is based upon hospital claims data and reflects a significantly higher level of effort and resources to treat the patient in the hospital.
   Comment: A commenter representing teaching hospitals expressed concern that the proposed drug utilization reduction would have a serious impact on teaching hospitals and the patients they treat. The commenter recommended that the regulatory impact analysis display the impact for hospital-based facilities according to teaching status for CY 2014.
   Response: We appreciate the commenter's recommendation. While we are unable to include this information for the CY 2014 impact analysis, we will consider modifying the impact table to identify hospital-based ESRD facilities that are part of teaching hospitals in the future.
III. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP)
A. Background
   For more than 30 years, monitoring the quality of care provided to patients with end-stage renal disease (ESRD) by dialysis 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 1881(h) of the Social Security Act (the Act), which was added by section 153(c) of Medicare Improvements for Patients and Providers Act (MIPPA). CMS established the ESRD QIP for payment year (PY) 2012, the initial year of the program in which payment reductions were applied, in two rules published in the
   Section 1881(h) of the Act requires the Secretary to establish an ESRD QIP by (i) selecting measures; (ii) establishing the performance standards that apply to the individual measures; (iii) specifying a performance period with respect to a year; (iv) developing a methodology for assessing the total performance of each facility based on the performance standards with respect to the measures for a performance period; and (v) applying an appropriate payment reduction to facilities that do not meet or exceed the established Total Performance Score (TPS). This final rule discusses each of these elements and the policies we are finalizing for their application to PY 2016 and future payment years of the ESRD QIP. As of
B. Summary of the Proposed Provisions and Responses to Comments on the ESRD QIP for PY 2016
   The proposed rule, entitled "Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies" (78 FR 40836), hereinafter referred to as the CY 2014 ESRD PPS proposed rule, appeared in the
   In this final rule, we provide a summary of each proposed provision, a summary of the public comments received and our responses to them, and the policies we are finalizing for the ESRD QIP. Comments related to the paperwork burden are addressed in the "Collection of Information Requirements" section in this final rule.
C. Considerations in Updating and Expanding Quality Measures Under the ESRD QIP for PY 2016 and Subsequent PYs
1. Value-Based Purchasing (VBP) Overview
   Throughout the past decade,
   FOOTNOTE 1 2012 Annual Progress Report to
   We believe that the development of an ESRD QIP that is successful in supporting the delivery of high-quality healthcare services in dialysis facilities is paramount. We seek to adopt measures for the ESRD QIP that promote better, safer, and more-efficient care. Our measure development and selection activities for the ESRD QIP take into account national priorities such as those established by the
2. Brief Overview of Proposed PY 2016 Measures
   For the PY 2016 ESRD QIP and future payment years, we proposed a total of 14 measures. We believe that the PY 2016 ESRD QIP proposed measures promote high-quality care for patients with ESRD, and also strengthen the goals of the National Quality Strategy. We proposed to adopt the following measures to evaluate facilities on the clinical quality of care:
    * To evaluate anemia management:
    . Hemoglobin Greater Than 12 g/dL, a clinical measure
    . Patient Informed Consent for Anemia Treatment, a clinical measure*
    . Pediatric Iron Therapy, a reporting measure*
    . Anemia Management, a reporting measure (revised)
    * To evaluate dialysis adequacy:
    . A Kt/V measure for adult hemodialysis patients, a clinical measure
    . A Kt/V measure for adult peritoneal dialysis patients, a clinical measure
    . A Kt/V measure for pediatric hemodialysis patients, a clinical measure
    * To determine whether patients are treated using the most beneficial type of vascular access:
    . An arterial venous (AV) fistula measure, a clinical measure
    . A catheter measure, a clinical measure
    * To address effective bone mineral metabolism management:
    . Hypercalcemia, a clinical measure*
    . Mineral Metabolism, a reporting measure (revised)
    * To address patient safety:
    . National Healthcare Safety Network (NHSN) Bloodstream Infection in Hemodialysis Outpatients, a clinical measure*
    * To address patient-centered experience:
    . In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS), a reporting measure**
    * To gather data regarding comorbidities:
    . Comorbidity, a reporting measure*
   * Indicates that the proposed measure would be new to the ESRD QIP.
   ** Indicates that the proposed measure is newly expanded in the ESRD QIP.
   At that time, we did not propose to adopt measures that address care coordination, efficiency, population and community health, or cost of care. However, we solicited comments on potential measures that would cover these areas. Our responses to these comments are discussed in section III.C.4 below.
3. Measures Application Partnership Review
   Section 1890A(a)(1) of the Act, as added by section 3014(b) of the Affordable Care Act, requires the entity with a contract (currently the NQF) under section 1890(a) of the Act 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 to make available to the public (not later than
   We publicly made available a number of measures in accordance with section 1890A(a)(2) of the Act, and these measures were reviewed by the
    * NQF-endorsed measure NQF #1454: Proportion of patients with hypercalcemia
    * NQF-endorsed measure NQF #1433: Use of Iron Therapy for Pediatric Patients (which forms the basis for the proposed Pediatric Iron Therapy reporting measure)
    * NQF-endorsed measure NQF #1460: National Healthcare Safety Network (NHSN) Bloodstream Infection Measure (which forms the basis for the proposed Bloodstream Infection in Hemodialysis Outpatients clinical measure)
    * NQF-endorsed measure NQF #0369: Dialysis Facility Risk-adjusted Standardized Mortality Ratio (the proposed Comorbidity reporting measure may assist in calculating performance on this measure, should we propose to adopt it in the future)
   
    * NQF-endorsed measure NQF #1463: Standardized Hospitalization Ratio for Admissions (the proposed Comorbidity reporting measure may assist in calculating performance on this measure, should we propose to adopt it in the future)
    * M2774: Blood Transfusion Appropriateness (which forms the basis for the Patient Informed Consent for Anemia Treatment clinical measure)
   We have taken comments from the
   Comment: Several commenters noted that four of the five new measures proposed for the PY 2016 ESRD QIP are not endorsed by the NQF. These commenters were also concerned that there are NQF-endorsed versions of some of these measures, and that the MAP reviewed the NQF-endorsed versions during its pre-rulemaking activities. The commenters believe that by proposing to adopt measures that the MAP did not actually review, CMS has not acted in accordance with the pre-rulemaking process set forth at section 1890A(a) of the Act. Commenters also believe that measures "based on" NQF-endorsed measures lack credibility. Some commenters recommended adopting the NQF-endorsed versions of the measures instead of the versions that we proposed to adopt in the proposed rule. Other commenters recommended that if CMS makes modifications to NQF-endorsed measures, CMS should resubmit the modified measures to the NQF for endorsement before proposing to adopt them for the ESRD QIP.
   Response: We agree that consensus-building is an essential part of measure development and implementation, but we disagree that the new measures proposed for the PY 2016 program circumvented the MAP pre-rulemaking review process. We note that one of the five newly proposed clinical measures, Hypercalcemia, has been NQF-endorsed (NQF #1454). Another one of the newly proposed clinical measures, NHSN Bloodstream Infection in Hemodialysis Outpatients, is not substantively different than NQF-endorsed measure #1460. As described in more detail below, the only differences between the NQF-endorsed NHSN measure and the proposed NHSN measure involve programmatic implementation (i.e., the requirement to complete the NHSN Dialysis Event Protocol and the requirement to submit 12 months of data to NHSN).
   As explained more fully below, we have decided not to finalize the Comorbidity reporting measure due to concerns raised in public comments submitted in response to the PY 2016 ESRD QIP proposed rule. However, we note that the measure would have required facilities to report data that could be incorporated into two NQF-endorsed measures that were reviewed by the MAP.
   A fourth measure, the Patient Informed Consent for Anemia Treatment clinical measure, is not being finalized due to concerns raised in public comments submitted in response to the proposed rule (explained in more detail below). Nevertheless, this measure did receive feedback from the MAP in
   The proposed Pediatric Iron Therapy reporting measure is also not being finalized in this final rule in response to comments received on the proposed rule (explained in more detail below). This measure, however, would have been based on NQF #1433, which received a time-limited endorsement from NQF and was supported by the MAP.
   Comment: Several commenters disapproved of the current processes used for measure development because (1) the current process is neither transparent nor consensus based; and (2) it was impossible to provide meaningful comment on the future measures described in the proposed rule because the preamble did not provide sufficient information to understand what CMS was proposing to do in the future. These commenters urged CMS to establish a systematic, phased-in process for incorporating new measures into the ESRD QIP, and to work with the community to identify a few domains that can be appropriately and explicitly prioritized.
   Response: We currently develop measures using the Measures Management System Blueprint (Blueprint), which is described in detail at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/MeasuresManagementSystemBlueprint.html. This process was used to develop some of the quality measures for use in the ESRD QIP. The development process we use is designed to be transparent and result in consensus-based measures that are appropriate for inclusion in our quality reporting and pay-for-performance programs. For example, we conduct extensive environmental scans and research other relevant evidence as part of measure development. We also seek advice from Technical Expert Panels (TEPs), which provide independent guidance on measures under development, and from the public through a comment solicitation process. We also ask the NQF to endorse many of the measures we develop, which gives the public another opportunity to provide input into the measures we are considering for our programs. When we consider adopting measures that we did not develop, we routinely consider measures that are NQF-endorsed because the NQF endorsement process ensures that measure specifications and testing remain transparent to the public. The NQF also provides the public with an opportunity to provide input and feedback prior to measure endorsement.
   We recognize that our list of potential future measures does not typically contain detailed information about measures that we are considering for future use. However, we nonetheless believe that the list further makes transparent our future policy goals. We also note that before we can adopt any measure on that list, we must complete the measure development process outlined above. We are always interested in hearing from the community regarding what measures should be prioritized for development and implementation and encourage a continued dialog.
   Comment: Several commenters recommended that nephrology nurses should be part of every TEP because, compared with physicians, they have a better understanding of the practical aspects of collecting and entering data.
   Response: We make an effort to include in our measure development process input from a variety of stakeholders, including nephrology nurses, who provide care to the ESRD population. We plan to continue this approach as we continue our measure development activities.
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   We previously finalized ten measures in the CY 2013 ESRD PPS final rule for the PY 2015 ESRD QIP and future PYs (77 FR 67471), and these measures are summarized in Table 6 below. We proposed to continue to use nine of the ten measures for the PY 2016 ESRD QIP and future payment years, modifying three of the measures as follows:
    * ICH CAHPS (reporting measure): Expand
    * Mineral Metabolism (reporting measure): Revise
    * Anemia Management (reporting measure): Revise
   For the PY 2016 ESRD QIP and future payment years, we proposed to add three new clinical measures (Patient Informed Consent for Anemia Treatment, Hypercalcemia, and NHSN Bloodstream Infection in Hemodialysis Outpatients) and two new reporting measures (Pediatric Iron Therapy, and Comorbidity). (See Table 7.) We believe that, collectively, these measures will continue to promote improvement in dialysis care in the PY 2016 ESRD QIP and in future payment years.
Table I-1--Required Applicable Volumes in Billion Gallons (bill gal) in the Clean Air Act for 2014 Cellulosic biofuel 1.75 *a Biomass-based diesel >/= 1.0 *b Advanced biofuel 3.75 *a Renewable fuel 18.15 fna *a Ethanol-equivalent volume. *b Actual volume. The ethanol-equivalent volume would be 1.5 if biodiesel is used to meet this requirement.
Table I-2--Proposed 2014 Volume Requirements *a Proposed volume Projected range Cellulosic biofuel 17 mill gal. 8-30 mill gal. Biomass-based diesel 1.28 bill gal. 1.28 bill gal. *b Advanced biofuel 2.20 bill gal 2.00-2.51 bill gal. Renewable fuel 15.21 bill gal 15.00-15.52 bill gal. *a All volumes are ethanol-equivalent, except for biomass-based diesel which is actual. *bEPA is requesting comment on alternative approaches and higher volumes.
   We received several comments on proposed measures for the PY 2016 ESRD QIP and future payment years. The comments and our responses are set forth below.
   Comment: One commenter urged CMS to find a way to incentivize quality attainment and improvement rather than solely focusing on penalizing facilities.
   Response: We do not have the statutory authority to award bonus payments to facilities for high performance under the ESRD QIP. Furthermore, we continue to believe that the structure of the ESRD QIP appropriately incentivizes improvements in the quality of care for patients with ESRD.
   Comment: Several commenters stated that the ESRD QIP should have consistent exclusions for all measures unless there is a specific clinical or operational reason to do otherwise. These commenters recommended the following exclusions for PY 2014, PY 2015, and subsequent years: (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) in-center hemodialysis patients who receive fewer than 7 treatments in a month (or home peritoneal dialysis patients with fewer than 14 days of treatment) because it is difficult to affect outcomes with fewer treatments or less treatment time, as patients may miss draws, and it is difficult to predict a hospitalization, 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 because it may be difficult for facilities to procure adherence, but the good-faith exception ensures that facilities will attempt to ensure proper patient education and compliance; (ii) transient dialysis patients; (iii) pediatric patients (unless the measure is specific to this population); and (iv) kidney transplant recipients with a functioning graft. These commenters stated that their recommended exclusions are "consistent with CMS' own measures that were NQF-endorsed in 2007, CROWNWeb, and the URR reporting specifications." Additionally, these commenters believe that their recommended exclusions would hold facilities accountable only for those patients to whom they regularly furnish care.
   Response: We thank the commenters for their recommendations regarding the uniform application of exclusion criteria to the ESRD QIP. We interpret the commenter's statement about CMS measures that were NQF-endorsed in 2007 to mean the Hemodialysis Adequacy (NQF #0249), Peritoneal Adequacy (NQF #0318), Vascular Access Type: Fistula (NQF #0257) and Vascular Access Type: Catheter (NQF #0256) measures. While we generally agree that exclusion criteria should be consistent where feasible, we also believe that exclusions should take into account the population to which a given measure applies. In addition, we believe that exclusions should take into account the settings (for example, in-center hemodialysis as opposed to home hemodialysis) for which the measures were developed. We will continue to look for ways to align exclusion criteria for measures in the ESRD QIP in future payment years as long as there is evidence to support such consistency.
   Comment: Several commenters expressed concerns that the ESRD QIP is adopting too many measures. These commenters noted that as more measures are adopted, the importance of any single measure to a facility's payment is reduced. The commenters also noted that CMS established criteria for retiring an ESRD QIP measure in the PY 2015 ESRD QIP, and the commenter is concerned that CMS has yet to propose the removal or retirement of any ESRD QIP measure while simultaneously continuing to propose the inclusion of new measures with little relative impact on patient outcomes (that is, patient informed consent of anemia treatment and reporting of comorbidities).
   Response: We recognize that as more measures are added to the ESRD QIP, the significance of a facility's score on any single measure in relation to the overall TPS is reduced. In the CY 2013 ESRD PPS final rule (77 FR 67475), we finalized a list of criteria we will use to make determinations about whether to remove or replace a measure: "(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." We are currently in the process of evaluating all of our ESRD QIP measures against these criteria, and based on our findings, we will consider removing or replacing one or more measures next year.
   Comment: One commenter expressed concerns that laboratory measures continue to be proposed for the ESRD QIP without reference to the sources, magnitude, and implications of unavoidable analytical variation. This commenter believes that between-laboratory variation renders laboratory-based clinical performance measures poor candidates for inclusion in a quality incentive program. The commenter recommended that the results of the same-sample, between-laboratory analysis should be shared with any TEP considering a laboratory-based performance measure.
   Response: In
1. PY 2015 Measures Continuing in PY 2016 and Future Payment Years
   We are continuing using six measures adopted in the CY 2013 ESRD PPS final rule for the PY 2016 ESRD QIP and future payment years of the program. We are also continuing to use two measure topics adopted. Our policies regarding the scoring of these measures are discussed in sections III.C.5 through III.C.11 and III.C.13. For the reasons stated in the CY 2012 ESRD PPS final rule (76 FR 70262, 70264 through 70265, 70269) and in the CY 2013 ESRD PPS final rule (77 FR 67478 through 67480, 67487 through 67490), we will continue using:
    * The Hemoglobin Greater than 12 g/dL measure.
   The Dialysis Adequacy measure topic, which is comprised of
    * Hemodialysis Adequacy Clinical Performance Measure III: Hemodialysis Adequacy--HD Adequacy--Minimum Delivered Hemodialysis Dose (NQF # 0249),
    * Peritoneal Dialysis Adequacy Clinical Performance Measure III--Delivered Dose of Peritoneal Dialysis Above Minimum (NQF #0318);
    * Minimum spKt/V for Pediatric Hemodialysis Patients (NQF #423); and
   The Vascular Access Type measure topic, which is comprised of
    * Vascular Access Type: Arterial Venous (AV) Fistula (NQF #0257); and
    * Vascular Access Type: Catheter >= 90 days (NQF #0256).
   The technical specifications for these measures can be found at: http://www.dialysisreports.org/ESRDMeasures.aspx.
   We received the following comments on measures continuing in the PY 2016 ESRD QIP:
   Comment: One commenter noted that measures appropriate for in-center hemodialysis are not necessarily appropriate for peritoneal dialysis or home hemodialysis. The commenter recommended accounting more fully for these distinctions in existing measure specifications, as well as the adoption of quality measures that focus on home hemodialysis.
   Response: We agree that the needs of patients receiving dialysis through different modalities must be considered while implementing quality measures, and we seek to take these issues into account through TEP feedback during measure development and maintenance, as well as via public feedback. We continue to pursue additional quality measures that will support quality assessment and improvement for all modalities.
   Comment: Many commenters expressed concerns that the ESRD QIP includes catheter and fistula measures without including a graft measure. These commenters stated that this creates a disincentive for using a clinically appropriate access (that is, a graft) even when it is in the best interest of a patient.
   Response: We are aware of the concern relating to the lack of a graft measure in the ESRD QIP measure set. We are in the process of determining whether to propose to revise the current Vascular Access Type measures, and/or whether it is feasible to develop and propose to adopt an independent graft measure.
   Comment: One commenter expressed concerns that the low performance standard and benchmark for the hemoglobin greater than 12 g/dL measure places facilities with large numbers of home peritoneal dialysis patients at a disadvantage. The commenter stated that home peritoneal dialysis patients are more likely than in-center hemodialysis patients to have hemoglobin levels greater than 12 g/dL, so facilities with large numbers of home peritoneal dialysis patients are disproportionately likely to have more than 1.2 percent of their patients with a hemoglobin level greater than 12 g/dL.
   Response: We disagree that the apparent difference in average hemoglobin levels for in-center hemodialysis and home peritoneal dialysis patients warrants a revision to the measure specifications for the Hemoglobin Greater Than 12 g/dL measure. First, the
   Comment: One commenter supported the continuation of the hemoglobin greater than 12 g/dL measure because of the potential problems stemming from the over-prescription of ESAs. However, the commenter stated that fewer ESRD QIP measures may be more effective in accurately and efficiently monitoring the quality of care delivered by dialysis facilities, and that CMS should focus more on a Hemoglobin Less Than 10g/dL measure as a means to monitor anemia management.
   Response: We agree that quality measurement and assessment should contribute to the ESRD QIP as parsimoniously as is feasible while capturing quality for the complex treatment of dialysis patients. We will continue to take this into consideration in future rulemaking. Our rationale for removing the Hemoglobin Less Than 10 g/dL measure was published in the CY 2012 ESRD PPS proposed rule (76 FR 40519), and we believe those concerns remain sufficiently valid to merit not reintroducing the measure to the ESRD QIP at this time.
   Comment: Several commenters recommended retiring the Hemoglobin Greater Than 12 g/dL measure. These commenters noted that the benchmark for the measure is 0 percent and the performance standard is 1.2 percent. The commenters believe that such a condensed performance range means the measure is incapable of distinguishing performance between facilities. The commenters also stated that the measure is no longer needed because facilities no longer have an incentive to overuse ESAs under the PPS.
   Response: We recognize that facility performance for the Hemoglobin Greater Than 12 g/dL measure is very high overall, and that this is likely a consequence of including ESAs in the ESRD PPS bundled payment. We decided to continue using the measure in the PY 2016 program because we continue to believe that over-prescription of ESA constitutes a significant risk for patients with ESRD, and we continue to believe that the Hemoglobin Greater than 12 g/dL measure helps ensure that patients are not over-prescribed ESAs.
2. Expansion of One PY 2015 Measure and Revision of Two PY 2015 Measures for PY 2016 and Subsequent Payment Years
   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 and revise the measures discussed below that we finalized in the CY 2013 ESRD PPS final rule. For all measures except for the ICH CAHPS reporting measure, these proposed requirements would apply to the measures for PY 2016 and future payment years. For the ICH CAHPS measure, certain proposed expanded requirements would apply to PY 2016, and some additional proposed requirements would apply to PY 2017 and future payment years.
a. Expanded ICH CAHPS Reporting Measure
   Patient-centered experience is an important measure of the quality of patient care. It is a component of the National Quality Strategy. The NQF endorses and the
   FOOTNOTE 2 Please note that the proposed rule initially included a typographical error, such that the measure was referred to as NQF #0285 instead of NQF #0258. We have revised the text here in response to a public comment, which is discussed below. END FOOTNOTE
   We are taking several steps to develop the baseline data necessary to propose and implement NQF #0258 as a clinical measure in the PY 2018 ESRD QIP. We expect to be able to certify ICH CAHPS survey vendors beginning in early CY 2014. We are also building the capacity to accept survey data; developing detailed specifications for administering the ICH-CAHPS survey in light of questions vendors asked about previous procedures; and developing specifications for submitting data to CMS, such as file specifications, structure and instructions that the survey vendors will use. We have taken these steps in order to make it possible for facilities to contract with third-party vendors to transfer survey data results to CMS, so that we might collect the baseline data necessary to propose and implement NQF #0258.
   For PY 2016, we proposed that each facility arrange by
   For PY 2017 and subsequent payment years, we proposed similar requirements except that each facility must arrange to have the survey administered twice during each performance period and must report the data (via its CMS-approved vendor) to CMS by the date specified on the ICH CAHPS Web site.
   Although we have required that other types of providers, including home health agencies and acute care hospitals, administer and submit CAHPS survey data on a monthly, continuous basis, we recognize that there are generally low rates of turnover in dialysis-facility patient populations. For this reason, we do not see the same need to require facilities to administer the survey as frequently and, as proposed above, we would require facilities to administer the survey once during the performance period for PY 2016 (in order to allow facilities enough time to select a vendor) and twice for subsequent payment years. We believe that this frequency of survey administration will enable us to gather sufficient data to adopt in future rulemaking a clinical version of this measure without unduly burdening facilities. The technical specifications for this proposed measure are located at http://www.dialysisreports.org/pdf/esrd/public-measures/ICHCAHPS-2016NPRM.pdf.
   We requested comments on this proposal. The comments we received on these proposals and our responses are set forth below.
   Comment: Many commenters supported monitoring patients' experiences. However, these commenters stated that the ICH CAHPS survey is too burdensome and lengthy for patients to complete. Commenters suggested that the ICH CAHPS survey be divided into three parts, with each patient receiving one of these parts and a group of core questions.
   Response: We do not agree that the ICH CAHPS survey is overly burdensome and we clarify that only 38 core survey questions are applicable to all respondents, plus 21 questions in the "About You" section. To be considered as complete, 19 of the 38 core questions must be answered. As we noted in the CY 2012 ESRD PPS final rule (76 FR 70269 through 70270) and the CY 2013 ESRD PPS final rule (77 FR 67480), we continue to believe that assessing the experiences of patients is vital to quality care. 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 ICH 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, 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.
   Additionally, there are no plans to change the measure specifications used in the AHRQ version, which received NQF endorsement in 2007. The ICH CAHPS survey underwent rigorous testing when it was being developed, and the testing refers to the survey in its entirety. The suggestion to parse the survey into three parts would make implementation too complex. In addition, the survey is designed to address many aspects of a patient's experience with in-center hemodialysis. Breaking the survey up into three separate components would mean that any single patient would not be asked about the full range of their experience.
   Comment: One commenter sought clarification on the measure specifications for the ICH CAHPS measure. The commenter asked if the case minimum for the measure pertains to total patients, eligible patients, or respondents to the survey. Another commenter requested clarification on the 30-case minimum for the ICH CAHPS measure. One commenter wanted to know the period of time used to determine numbers of eligible patients treated (for example, between January and the end of April).
   Response: The case minimum pertains to patients who are eligible for the survey, and patients over the age of eighteen with at least 3 months of experience on hemodialysis at their current facility are eligible. We further clarify that the performance period (for example, January through
   Comment: One commenter did not agree that the target number of completed ICH CAHPS surveys should be 200. The commenter stated this target number makes no sense, regardless of clinic size, and should be removed.
   Response: We selected 200 as the target number of completed surveys because we found that this was the number needed to reach a confidence interval of +/-0.07--a range that we believe ensures that facility scores will be accurate and comparable between facilities. We recognize that it will be difficult for smaller facilities to reach this target. We clarify that there are no penalties if a facility submits less than 200 complete surveys.
   Comment: A few commenters raised concerns about the inclusion of homeless persons and nursing home patients with respect to eligibility for the ICH CAHPS survey because these patients may be difficult to contact for purposes of administering the survey.
   Response: We are aware that it might be difficult to contact homeless and nursing home patients for any survey. However, these subgroups are important groups of people who may have different concerns than other dialysis patients. Although we have identified 200 completed surveys as a target response rate, there is no required minimum number of surveys that a facility must submit in order to satisfy the reporting requirements for the measure.
   Comment: Several commenters stated that facilities should not be held accountable, leading to a penalty, for low response rates from such populations for which CMS's contact information may be inaccurate and/or out-of-date or based on the number of responses in the survey. Some commenters stated that facilities have no way to ensure that patients' contact information is as accurate and up-to-date as possible because the survey is administered by a third-party vendor. Other commenters did not support the ICH CAHPS measure specifications that require each patient to fill out at least half of the survey for the survey to count as complete. Commenters were also concerned because patients often skip or refuse to answer survey questions, and the commenters do not believe that facilities should be penalized for this.
   Response: Facilities do not face any penalties for low-response rates. Survey vendors will receive contact information for patients sampled from a facility directly from CMS and its contractor, which will extract addresses and telephone numbers from CROWNWeb.
   There are only 38 core survey questions that are applicable to all respondents, plus 21 questions in the "About You" section. To be considered as complete, 19 of the 38 core questions must be answered. Answering the survey is voluntary, and respondents may refuse to answer specific questions. With pre-notification by the vendor of the importance of their input, we hope that sampled patients will be willing to participate. Nevertheless, we clarify that facilities will not be penalized if they submit incomplete surveys.
   Comment: Several commenters sought clarity on the ICH CAHPS measure specifications, which read that "survey responses will not be shared with individual facilities, even if the respondent were to provide permission to do so." These commenters recommended that the specifications should clearly state that aggregate responses will be provided, but individual survey responses will not be shared.
   Response: In an effort to protect the confidentiality of responses to the survey among this highly vulnerable population, in-center hemodialysis facilities must hire a third-party vendor to administer the survey. In addition, CMS will not allow vendors to share the responses of individual patients with in-center hemodialysis facilities. Vendors may provide aggregate results to facilities, but these results cannot include demographic data or other information that could be used to match patients and their survey responses. These measure specifications are consistent with the AHRQ specifications for fielding the survey and handling the survey responses.
   Comment: Several commenters did not support the proposal to adopt the ICH CAHPS measure because it is not appropriate to publicly publish scores that aggregate survey results when facilities have no means to impact responses to some of the questions. For example, cuts to the ESRD PPS payment rates may result in physicians spending less time with patients, and patients are also asked in the survey to comment on physicians that are not associated with the facility. Some commenters recommended including the physician component of the ICH CAHPS measure in the Physician Quality Reporting System instead of in the ESRD QIP.
   Response: We believe that the survey results, in the aggregate, will be sufficient to promote quality improvement and, as we explain above, also believe that the interest in protecting patient anonymity and confidentiality outweighs the cost of making public individual survey responses. We also note that ICH CAHPS has been in the public domain since 2007, and dialysis facilities are already using the survey (with the ARHQ specifications) to meet the requirements for the PY 2014 ESRD QIP.
   Questions about physicians are only one component of the ICH CAHPS survey, but we believe that the experience patients have with their physicians is critical to understanding and measuring their experience at the facility overall. We continue to believe that facilities can impact their performance on the physician component of the survey by encouraging physicians who see the facilities' patients to improve the quality of care they provide.
   Comment: Many commenters discussed the impact of facility size on survey administration. Some commenters stated that small facilities would likely have low response rates that could skew results. Other commenters did not support the proposal to exclude facilities with fewer than 30 eligible patients from ICH CAHPS survey. These commenters stated that in CY 2011, nearly 20 percent of all in-center dialysis facilities would have been excluded from the measure; that CMS should evaluate patient experience of care in small facilities; and that CMS should develop further methodologies to collect reliable data from small facilities. Commenters also did not support the measure specifications for the ICH CAHPS measure. Specifically, these commenters noted that while the measure specifications require facilities with more than 200 patients to minimize overlap between the random sample of patients who receive each semi-annual survey, it will be difficult for facilities with close to 200 patients to minimize sampling overlap because many patients will likely be sampled in both of the bi-annual surveys.
   Response: For our survey measures, we want to ensure that we are measuring true performance. In any measurement system there is a mixture of signal (true performance) and noise (random error). By using a case minimum of 30, we can increase reliability of the ICH CAHPS measure and the likelihood that it is measuring signal and not noise. Facilities with fewer than 30 eligible cases are excluded from the ICH CAHPS survey because results from these facilities might not be reliable. We recognize that when facilities have close to 200 patients, most of these patients will receive both of the semi-annual surveys in PY 2017 and future payment years. Nevertheless, these facilities should attempt to minimize overlapping patients by removing patients from the second survey if they were sampled in the first survey, and most facilities serve 99 or fewer unique patients per year.
   Comment: Many commenters did not support the proposal to require facilities to administer the ICH CAHPS survey twice annually, starting in PY 2017, particularly in light of the proposed cuts to the ESRD PPS. Some of these commenters stated that it makes sense for hospitals to conduct the survey regularly because they generally do not treat the same patients more than once; however, dialysis facilities see the same patients over the course of the year, so there is no need to conduct a second survey. Commenters also stated that there are no data demonstrating that semi-annual surveys improve the validity of survey results. Additionally, many commenters did not support the proposal to administer the ICH CAHPS survey twice annually because doing so will lead to "survey fatigue" by decreasing the response rates to the ICH CAHPS survey, and other surveys administered by dialysis facilities, including the Kidney Disease Quality of Life-36 survey, which commenter states are required by the ESRD Conditions for Coverage (CfC) regulations. These commenters recommended fielding the survey once annually.
   Response: We decided to require semi-annual administration of the survey in order to collect data about patients' experiences with dialysis care at different points in the calendar year, to ensure that patients could accurately recall their experience of care, and to ensure that survey responses were collected in timely fashion. Conducting the survey on an annual basis increases the likelihood of collecting outdated or inaccurate information, while making it more difficult to solicit information that accurately reflects the experiences of patients. Although we recognize that the requirement to conduct a second, semi-annual ICH CAHPS survey may decrease response rates to other surveys that facilities are required to complete (such as the Kidney Disease Quality of Life-36 survey), we believe that the drawbacks associated with the possibility of survey fatigue are outweighed by improvements in the reliability of the data collected through the ICH CAHPS survey.
   Comment: Several commenters disagreed with the proposal to adopt the expanded ICH CAHPS measure because the survey is too expensive to administer.
   Response: Although we acknowledge that there is a cost to administer the ICH CAHPS survey, we suggest that dialysis facilities compare several vendors before deciding on a vendor. We strongly believe that the information facilities gain from the ICH CAHPS survey outweighs the costs to administer the survey, because facilities can use this information to improve the care provided to patients with ESRD. Furthermore, as stated in the CY 2013 ESRD PPS final rule (77 FR 67481), "Facilities may report allowable operating expenses in their
   Comment: Some commenters suggested that CMS redesign the survey to account for special populations (for example, low literacy, hearing and vision impaired, elderly, and physically handicapped). Other commenters stated that the ICH CAHPS survey should not be administered in languages other than English and Spanish, as proper translation of surveys requires a complicated forward and backward translation process, and it is unlikely that surveys conducted in other languages can be properly compared to surveys conducted in English and Spanish because of the complexity of the translation process.
   Response: The survey administration procedures take into account the needs of special populations such as low literacy, hearing and vision impaired, elderly, and physically handicapped. Patients can get assistance in answering the survey as long as they, and not the assistor, actually answer the questions. In addition, for telephone as well as in-person interviews, the interviewer will be instructed to permit respondents to take breaks as needed and to call back at another time if a respondent becomes fatigued. Finally, participation in the survey is completely voluntary on the part of the patients. They may refuse to participate or refuse to answer any questions they do not wish to answer. Facilities are not required to administer the survey in languages other than English and Spanish. However, CMS-approved vendors may use other approved translations that are authorized and developed by CMS.
   Comment: A few commenters raised concerns about the administration of the survey and ways to ensure that sampled patients would/could complete the survey, especially those who may have lost their mail version of the survey or those with cognitive and/or language barriers.
   Response: Responsiveness might vary by survey mode, language barriers, cognitive issues, literacy, and health issues. We believe that the ICH CAHPS measure is designed to maximize patient response rates while retaining its voluntary nature. Every sampled patient will receive a pre-notification letter from CMS (on its letterhead) prior to receipt of the mail survey or initial telephone call. This letter will describe the survey and the patient's role in providing feedback to improve the quality of care at the facility. The survey methodology also allows for assistance for patients who might have difficulty completing the survey.
   The measure specifications suggest that survey vendors use current best practices to enhance response rates by (1) standardizing the survey materials; (2) improving readability; (3) allowing multiple contacts (up to 5) for follow-up in the telephone or mixed-mode; (4) offering call back times that are best suited for the sample patient; and/or (5) breaking up the survey over multiple calls.
   In all three modes of administration (mail-only, telephone-only, and mixed modes), a pre-notification letter will include both email addresses and telephone numbers to call CMS or its ICH CAHPS contractor if the respondent has questions or problems with the survey. For the mail-only sample patients, cover letters will include the contact information of the CMS-approved survey vendors, who can replace lost surveys. Lost surveys should not be an issue for the telephone-only mode. For the other modes, sample patients will receive multiple surveys during the follow-up period or may contact the vendor for replacements.
   Comment: A few commenters suggested making the survey available for patients online.
   Response: We are aware that online surveys are popular, but this capability does not currently exist. We will continue to investigate new modes of administration, and in the meantime will continue with more traditional efforts to reach patients.
   Comment: Many commenters expressed concerns that the ICH CAHPS survey only covers in-center hemodialysis patients. Many of these commenters recommended that CMS assess the experience of home dialysis patients and peritoneal dialysis patients as well.
   Response: We thank commenters for their feedback. Eighty-nine percent of all ESRD patients receive in-center hemodialysis. Even those receiving peritoneal or home dialysis, have their initial care at an in-center hemodialysis facility. Therefore, this survey was specifically designed to capture the experience of in-center hemodialysis patients. Surveys for peritoneal and home dialysis patients may be considered for future development.
   Comment: One commenter stated that there is a discrepancy between the proposed rule and the measure specifications for the ICH CAHPS measure. Specifically, the measure specifications establishes the survey periodicity for CY 2014 as "twice annually," yet the proposed rule establishes the survey periodicity for CY 2014 as annually.
   Response: We proposed that facilities would only have to administer the ICH CAHPS survey once in CY 2014. This is consistent with the measure specifications that appear at https://ichcahps.org/Portals/0/ICH_DifferencesBtwAHRQandICHCAHPSSurveySpecs.pdf.
   Comment: One commenter noted that on page 40857, second column, subsection a, there is a typographical error. NQF #285 should be NQF #258.
   Response: We thank the commenter for pointing out this typographical error. We have corrected it above.
   Comment: Several commenters requested clarification about whether each facility will need to register on the www.ichcahps.org Web site, or if umbrella organizations that include a number of facilities will be able to authorize a selected vendor to administer the survey and submit data on behalf of each its facilities. These commenters stated that the contracting for this process will be centralized, and it would be inefficient for individual facilities to complete these steps when they could be done on an organization-wide basis. Concerns were also raised about having time to meet the system requirements for submitting ICH CAHPS data to CMS.
   Response: Dialysis organizations may hire and authorize a single vendor to conduct the survey and submit data for all facilities under the corporate umbrella of the organization, but the corporate umbrella must report facility-level data to ensure that results can be attributed to individual facilities. The vendor may batch data from several facilities into a single zip file for submission.
   Because third-party vendors are already conducting ICH CAHPS surveys on behalf of multi-facility organizations, we believe that the facilities will be able to timely meet the system requirements for administering the survey.
   Comment: One commenter did not support the proposal to change the measure specifications for the ICH CAHPS measure from the AHRQ version to the CMS version. This commenter stated that doing so will make it hard to compare results between the two versions of the survey, and also cause confusion for facilities.
   Response: Changes to the AHRQ measure specifications, which received NQF endorsement in 2007, are not substantive. Rather, the CMS measure specifications provide more details about the field operations and data submission in order to standardize the procedures used by third-party vendors. These non-substantive changes to the measure specifications were made in response to requests for this standardization. We have found that it is easier for vendors to administer the survey when they have detailed specifications, and we believe that this standardization helps ensure that the data will be comparable across all facilities.
   For these reasons, we are finalizing the expanded ICH CAHPS reporting measure as proposed for the PY 2016 ESRD QIP and for future payment years. The technical specifications for this finalized measure can be found at http://www.dialysisreports.org/pdf/esrd/public-measures/ICHCAHPS-2016FR.pdf.
b. Revised Mineral Metabolism Reporting Measure
   Adequate management of bone mineral metabolism and disease in patients with ESRD continues to be a high priority because it can cause severe consequences such as osteoporosis, osteomalacia, and hyperparathyroidism. The PY 2015 ESRD QIP has a reporting measure focused on mineral metabolism (77 FR 67484 through 67487). We proposed two changes for PY 2016 and future payment years. First, when we finalized the measure in the CY 2013 ESRD PPS final rule, we inadvertently excluded home peritoneal dialysis patients from the measure specifications. For PY 2016 and future payment years, we proposed to include home peritoneal dialysis patients in the Mineral Metabolism reporting measure. Therefore, we proposed that a qualifying case for this measure will be defined as (i) an in-center
   Second, if the proposed Hypercalcemia clinical measure (described below) is finalized based on public comment, then we believe it would be redundant, and unduly burdensome, for facilities to also continue reporting serum calcium levels as part of the Mineral Metabolism reporting measure. Accordingly, in light of our proposal to adopt the Hypercalcemia measure, we proposed to change the specifications for the Mineral Metabolism measure such that it no longer requires facilities to report serum calcium levels. We solicited comments on this proposal, and in particular on whether we should retain the reporting of serum calcium levels as part of the Mineral Metabolism reporting measure if the proposed Hypercalcemia measure was not finalized.
   As described in more detail below (Proposed Minimum Data for Scoring Measures), we also proposed to eliminate the 11-case minimum for this measure, which was finalized in the CY 2013 ESRD PPS final rule (77 FR 67486). Because of the proposed revised case minimum, and because there are circumstances that might make it challenging for a facility to draw a sample from certain patients, such as those who are admitted to hospital during the month, we proposed that, in order to receive full points on this measure, facilities that treat 11 or more qualifying cases over the entire performance period will have to report at the lesser of the 50th percentile of facilities in CY 2013 or 97 percent per month, on a monthly basis, for each month of the performance period. We further proposed that facilities that treat fewer than 11 qualifying cases during the performance period will have to report on a monthly basis the specified levels for all but one qualifying case. If a facility only has one qualifying case during the entire performance period, a facility will have to attest to that fact in CROWNWeb by
   The comments we received on these proposals and our responses are set forth below.
   Comment: Several commenters supported the proposal to include home peritoneal dialysis patients in the Mineral Metabolism reporting measure.
   Response: We thank the commenters for their support.
   Comment: Many commenters supported removing calcium from the reporting requirements of the Mineral Metabolism reporting measure if the Hypercalcemia measure is finalized, and retaining calcium in the Mineral Metabolism measure if the Hypercalcemia measure is not finalized.
   Response: We thank the commenters for their support.
   Comment: One commenter supported the proposal to modify the Mineral Metabolism measure and asked whether the revised Mineral Metabolism reporting measure would also include home hemodialysis patients.
   Response: We thank the commenter for the support. We clarify that the measure includes home hemodialysis patients, as well as home peritoneal dialysis patients.
   Comment: Some commenters stated the Mineral Metabolism reporting measure should include an exclusion for patients not on chronic dialysis to make the measure consistent with the anemia management reporting measure.
   Response: We clarify that patients not on chronic dialysis have always been excluded from the Mineral Metabolism reporting measure, which is appropriate because the measure was designed for patients on chronic dialysis. We have updated the measure specifications to state this explicitly.
   Comment: Several commenters noted that there is an inconsistency between the proposed rule and the measure specifications for the Mineral Metabolism reporting measure. The proposed rule states that "if a facility only has 1 qualifying case during the entire performance period, a facility will have to attest to that fact in CROWNWeb by
   Response: We thank commenters for identifying this discrepancy. We have changed the measure specifications to state that the case minimum is one eligible patient. Facilities with two or more eligible patients will be scored on the measure, and facilities with one eligible patient will be scored on the measure unless they attest to this fact in CROWNWeb. We made this proposal to enable us to gather data on patients in small facilities.
   Comment: One commenter recommended that the Mineral Metabolism reporting measure specifications be modified to indicate that plasma and serum should both be acceptable blood samples for the measurement of calcium. The commenter stated that plasma testing is more stable and requires less manipulation, has been used since 2006, has been validated for most clinical chemistry analyzers, and has been deemed acceptable and equivalent by analyzer manufacturers.
   Response: We disagree that the measure specification should be modified to include plasma calcium measurements. This issue was discussed at length during the
   FOOTNOTE 3 Carothers, JE et. al. Clinical Chemistry, volume 22, Issue 11, 1976 (Table 3). END FOOTNOTE
   Comment: One commenter stated that the Mineral Metabolism measure will not improve patient care because it does not measure outcomes. The commenter recommended adopting an outcomes-based phosphorus measure in future payment years.
   Response: As stated in the CY 2013 ESRD PPS final rule (77 FR 67486), we continue to believe that the Mineral Metabolism reporting measure will help improve patient outcomes. Kidney Disease Improving Global Outcomes (KDIGO) recommends monthly measurements and emphasizes the importance of following trends versus single measurements, thus supporting relatively frequent measurements (for example, monthly). /4/ There is evidence that extreme phosphorus levels may be associated with poor clinical outcomes. Monthly measurements will identify elevated levels of serum phosphorus and trigger therapeutic interventions, thus contributing to high-quality care.
   FOOTNOTE 4 KDIGO recommends measurement of serum phosphorus every 1-3 months in Chapter 3, KDIGO Clinical Practice Guideline for the Diagnosis, Evaluation, Prevention, and Treatment of
   Comment: Many commenters supported the inclusion of home dialysis patients in the Mineral Metabolism reporting measure. However, these commenters expressed concern that the inclusion of these patients will discourage home hemodialysis, force home dialysis patients to visit a facility too frequently or otherwise present greater challenges for regular blood draws, and cause difficulties for small facilities that only treat home dialysis patients.
   Response: We disagree that the inclusion of home peritoneal dialysis patients in the Mineral Metabolism measure will force the patients to visit their dialysis facility too frequently, or otherwise discourage patients from receiving dialysis at home. Between
   Comment: One commenter stated that the language used to finalize the Mineral Metabolism reporting measure in the CY 2013 ESRD PPS was unclear about what was meant by "monthly basis." The commenter asked whether this means the percent of complete months in which 96 percent of eligible patients were tested, or if this means the percent of eligible patients for that facility who had monthly testing in excess of 96 percent. The commenter also sought clarification with respect to the equation used to calculate scores on the Mineral Metabolism measure.
   Response: By "monthly basis," we mean meeting the reporting threshold for each month during the performance period. Facilities are scored on the measure based on the number of months in which the facility successfully meets this reporting threshold. Measure scores are not determined by the percent of months in which the facility meets this reporting threshold, but rather according to the equation below, which appears in the CY 2013 ESRD PPS final rule (77 FR 67506). We also affirm that this methodology will be used to calculate scores on the Mineral Metabolism measure in the PY 2015 and PY 2016 programs, as well as future payment years.
See Illustration in Original Document.
   For the reasons stated above, and the reasons stated in section III.C.10 below, we are finalizing the Mineral Metabolism reporting measure for the PY 2016 ESRD QIP and for future payment years. Additionally, because we are finalizing the Hypercalcemia clinical measure (see Section III.C.3.b below), we are also finalizing the proposal to change the specifications for the Mineral Metabolism measure such that the measure no longer requires facilities to report serum calcium levels. Technical specifications for the revised Mineral Metabolism reporting measure can be found at: http://www.dialysisreports.org/pdf/esrd/public-measures/MineralMetabolism-Reporting-2016FR.pdf.
c. Revised Anemia Management Reporting Measure
   Section 1881(h)(2)(A)(i) requires "measures on anemia management that reflect the labeling approved by the
   We believe that there are circumstances that might make it challenging to draw a sample from certain patients. Therefore we proposed that, in order to receive full points on this measure, facilities that treat 11 or more qualifying cases over the entire performance period must report at the lesser of the 50th percentile of facilities in CY 2013 or 99 percent per month, on a monthly basis for each month of the performance period. In addition, we proposed that, in order to receive full points on this measure, facilities that treat fewer than 11 qualifying cases during the performance period must report on a monthly basis the specified levels for all but one qualifying case. If a facility only has one qualifying case during the entire performance period, a facility will have to attest to that fact in CROWNWeb by
   The comments we received on these proposals and our responses are set forth below.
   Comment: Many commenters supported the proposal to include home peritoneal dialysis patients in the Anemia Management reporting measure.
   Response: We thank the commenters for their support.
   Comment: Several commenters supported the inclusion of home peritoneal dialysis patients in the Anemia Management reporting measure. However, these commenters expressed some concern that the inclusion of these patients will discourage home hemodialysis, force home dialysis patients to visit a facility too frequently, and cause difficulties for small facilities that only treat home dialysis patients.
   Response: We disagree that the inclusion of home peritoneal dialysis patients in the Anemia Management reporting measure will force the patients to visit their dialysis facility too frequently, or otherwise discourage patients from receiving dialysis at home. Most home dialysis patients, including peritoneal dialysis patients, receive blood testing on a monthly basis. Furthermore, the CfCs require monthly testing for some labs (for example, Albumin, Hemoglobin/Hematocrit at
   Comment: Several commenters noted that there is an inconsistency between the proposed rule and the measure specifications for the Anemia Management reporting measure. The proposed rule states that "if a facility only has 1 qualifying case during the entire performance period, a facility will have to attest to that fact in CROWNWeb by
   Response: We thank commenters for identifying this discrepancy. We have changed the measure specifications to state that the case minimum is one eligible patient. Facilities with two or more eligible patients will be scored on the measure, and facilities with one eligible patient will be scored on the measure until they attest to this in CROWNWeb. We made this proposal to enable us to gather data on patients in small facilities.
   For these reasons, and the reasons stated in section III.C.10 below, we are finalizing the Anemia Management reporting measure as proposed for the PY 2016 ESRD QIP and for future payment years. Technical specifications for this proposed measure can be found at http://www.dialysisreports.org/pdf/esrd/public-measures/AnemiaManagement-Reporting-2016FR.pdf.
3. New Measures for PY 2016 and Subsequent Payment Years 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 2016 ESRD QIP and future payment years, we proposed to adopt five new measures. The proposed new measures include two measures on anemia management, one measure on mineral metabolism, one measure on bloodstream infection monitoring, and one measure on comorbidities.
a. Anemia Management Clinical Measure Topic and Measures
   Section 1881(h)(2)(A)(i) of the Act states that the measures specified for the ESRD QIP are required to include measures on "anemia management that reflect the labeling approved by the
i. Anemia Management: Hgb > 12
   For the PY 2016 ESRD QIP and future payment years of the program, we proposed to include the current Hgb > 12 measure in a new Anemia Management Clinical measure topic. In the event that the Patient Informed Consent for Anemia Treatment measure described below is not finalized, we proposed to retain the Hgb > 12 measure as an independent measure. We solicited comments on this proposal.
   We did not receive any comments on these proposals.
ii. Anemia of Chronic Kidney Disease: Patient Informed Consent for Anemia Treatment
   This is a measure of the proportion of dialysis patients for whom a facility attests that risks, potential benefits, and alternative treatment options for anemia were evaluated, and that the patient participated in the decision-making regarding an anemia treatment strategy. We believe that this measure is consistent with recent changes to the
   FOOTNOTE 5 http://www.fda.gov/Drugs/DrugSafety/ucm259639.htm. END FOOTNOTE
   FOOTNOTE 6 Kidney Disease: Improving Global Outcomes (KDIGO) Anemia Work Group. KDIGO Clinical Practice Guideline for Anemia in Chronic Kidney Disease. Kidney inter., Suppl. 2012 (2): 279-335. END FOOTNOTE
   We requested comments on these proposals. The comments we received on these proposals and our responses are set forth below.
   Comment: Many commenters expressed a variety of concerns about the proposed Patient Informed Consent of Anemia Treatment clinical measure and did not support its adoption for the ESRD QIP. Some commenters stated that obtaining informed patient consent is already a standard of clinical care, and that the measure would therefore not promote quality care, but would instead add more, unnecessary recordkeeping. Other commenters stated that the informed consent measure would be duplicative and possibly inconsistent with the
   Response: We appreciate the commenters' concerns. We continue to believe that this measure is a useful complement to the other anemia management measures currently used in the ESRD QIP, as those measures focus exclusively on hemoglobin levels and not the patient's knowledge of the risks and benefits of anemia treatment. We also believe that it is essential to provide patients with this information, in light of the lack of scientific evidence regarding ESAs and ideal hemoglobin levels in this patient population. Additionally, we disagree that this measures and the FDA REMS accomplish the same goal. The FDA REMS program is focused on ensuring that patients are aware of the risks associated with aspects of ESA use in overall anemia management, particularly in the setting of cancer chemotherapy. The informed consent measure, by contrast, would require facilities to provide a balanced discussion of both the risks and the potential benefits of a contemplated treatment.
   However, we agree with commenters who noted that providing informed consent is already a standard of care that is at least partially regulated through the ESRD CfCs. We do not want to create additional recordkeeping requirements for facilities when there is already an existing standard that facilities are required to meet. For this reason, we are not finalizing the Patient Informed Consent for Anemia Treatment clinical measure at this time. Because we are not finalizing this measure, we are also not finalizing the proposed Anemia Management Clinical measure topic. Instead, the Hemoglobin Greater Than 12 g/dL clinical measure will remain an independent clinical measure, unassociated with a clinical measure topic, as it has in previous payment years. Technical specifications for the Hemoglobin Greater Than 12 g/dL measure can be found at http://www.dialysisreports.org/pdf/esrd/public-measures/AnemiaManagement-HGB-2016FR.pdf.
b. Hypercalcemia
   Section 1881(h)(2)(A)(iii)(II) 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). Many studies have associated disorders of mineral metabolism with mortality, fractures, cardiovascular disease, and other morbidities. Therefore, we believe it is critical to adopt a clinical measure that encourages adequate management of bone mineral metabolism and disease in patients with ESRD.
   Elevated serum calcium level (or hypercalcemia) has been shown to be significantly associated with increased all-cause mortality in patients with advanced CKD. Both KDIGO Clinical Practice Guideline for the Diagnosis, Evaluation, Prevention, and Treatment of Chronic Kidney Disease-Mineral and Bone Disorder (CKD-MBD) and the
   FOOTNOTE 7 Wang A, Woo J, Law C, et al. Cardiac Valve Calcification as an Important Predictor for All-Cause Mortality and Cardiovascular Mortality in Long-Term Peritoneal Dialysis Patients: A Prospective Study. J Am. S. Nephrology 2011 (14/1): 159-168. END FOOTNOTE
   FOOTNOTE 8 Wang A, Ho S, Wang M, et al. Cardiac Valvular Calcification as a Marker of Atherosclerosis and Arterial Calcification in End-stage Renal Disease. JAMA 2005 (165/3): 327-332. END FOOTNOTE
   The proposed Hypercalcemia 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.) In order to enable us to calculate this measure, each facility will be required to enter in CROWNWeb, on a monthly basis, an uncorrected calcium level for each in-center and home dialysis patient over the age of eighteen.
   Performance on this measure is expressed as a proportion of patient-months for which the 3-month rolling average exceeds 10.2 mg/dL. The numerator is the total number of eligible patient-months where the 3-month rolling average is greater than 10.2 mg/dL, and the denominator is the total number of eligible patient-months. We proposed that facilities would begin to submit data on this measure based on
   Because we proposed to adopt this measure not only for PY 2016, but also for subsequent payment years, we also proposed that, beginning with the PY 2017 program, we would measure hypercalcemia beginning in January of the applicable performance period. This will 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.
   We requested comments on these proposals. The comments we received on these proposals and our responses are set forth below.
   Comment: One commenter supported the proposal to adopt the hypercalcemia measure because "this measure represents an incentive for maintaining this important standard of care and protecting patients" in light of the "intention to include oral drugs, such as phosphorus binders, in the PPS in 2016." The commenter also stated that there is no clinical rationale for needing a full year of baseline data for improvement and achievement scoring.
   Response: We thank the commenter for the support.
   Comment: Several commenters strongly supported the inclusion of mineral metabolism measures in the ESRD QIP, including the proposal to adopt the hypercalcemia measure. These commenters also supported the adoption of other mineral metabolism measures (for example, PTH and phosphorus), in future payment years because oral drugs used to regulate mineral metabolism are moving from Medicare Part D to the ESRD PPS bundled payment in CY 2016.
   Response: We thank the commenters for their support. Additionally, we agree that we should explore other measures to assess mineral metabolism for future payment years. We are currently developing such measures, and will continue to do so.
   Comment: Many commenters supported the proposal to adopt the hypercalcemia measure. However, some of these commenters stated that patients who present with other non-ESRD conditions that may cause hypercalcemia should be excluded from the 3-month rolling average. Commenters also stated that patients treated fewer than seven times by a facility should be excluded from the measure. Additionally, one commenter noted that the 10.2 mg/dL threshold used to evaluate the hypercalcemia measure is higher than the KDOQI and KDIGO guidelines, which recommend a threshold of 9.5 mg/dL. This commenter prefers the 9.5 threshold, but supports the adoption of the hypercalcemia measure because having an upper target for calcium is a valuable addition to the ESRD QIP.
   Response: We thank the commenters for the support. While we acknowledge that calcium levels in dialysis patients might be impacted by conditions unrelated to ESRD, we also believe it is appropriate to monitor and minimize the prevalence of hypercalcemia in all patients with ESRD, since mineral and bone disorder are highly prevalent in this population, and because some dialysis-related treatments impact serum calcium levels.
   We further note that patients are included in the denominator only if they are on dialysis for at least 90 days as of the first day of the most recent month of the "measurement period" (that is, the 3-month period used to calculate the rolling average for the measure) and are in the facility for at least 30 days as of the last day of the most recent month of the measurement period. These NQF-endorsed exclusion criteria will exclude the vast majority of in-center patients who are treated fewer than seven times by a facility. However, the NQF-endorsed exclusion criteria are broad enough to include home dialysis patients. We believe that the NQF-endorsed exclusion criteria are more appropriate because they will not exclude home dialysis patients, who are rarely treated at a facility seven or more times in a month.
   Finally, the 10.2 threshold is consistent with KDIGO guideline 4.1.2 [2009] "In patients with CKD stages 3-5D, we suggest maintaining serum calcium in the normal range," since 10.2 mg/dL is considered the upper limit of the normal range in the majority of clinical laboratories. This threshold is also consistent with the value discussed and supported by the 2006 TEP. The hypercalcemia measure using the 10.2 threshold was developed by the 2010 TEP as summarized in the final TEP report posted by CMS at http://www.cms.gov/Medicare/End-Stage-Renal-Disease/CPMProject/index.html.
   Comment: Several commenters did not support the proposal to adopt the hypercalcemia measure. These commenters stated that this metric is not the best measure in the mineral metabolism domain to impact patient outcomes, in the absence of clinical metrics for other related mineral disturbances, such as phosphorus and PTH. Some of these commenters recommended adopting the hypercalcemia measure as a reporting measure.
   Response: We believe that the hypercalcemia measure is the best measure supported by current evidence available for implementation in the ESRD QIP at this time. CMS has convened three discrete TEPs since 2006 charged with developing quality measures related to management of bone and mineral disorders in chronic dialysis patients. The 3-month rolling average hypercalcemia measure is the first outcome measure developed in this topic area that has received NQF endorsement. The measure is important because it addresses a potential healthcare-associated condition, hypercalcemia, that may result from treatments chosen by dialysis providers to treat CKD-related bone disease. However, we are currently exploring the feasibility of adopting in the future additional measures to address PTH monitoring to ensure that dialysis patients' bone and mineral disease laboratory outcomes are monitored at a frequency consistent with clinical consensus guidelines.
   Comment: Some commenters did not support the proposal to adopt the hypercalcemia measure because there is no consensus that the measure is appropriate. These commenters also stated that the measure should only apply to Medicare patients because CMS should not collect data on patients who are not enrolled in Medicare. Commenters recommended that calcium and phosphorus data continue to be collected via the mineral metabolism reporting measure.
   Response: The Hypercalcemia measure (NQF# 1454) has been endorsed by the NQF, and we believe that this endorsement reflects broad consensus that the measure is appropriate for assessing hypercalcemia within the ESRD population. In addition, the collection of all-patient data on this measure allows us to assess the quality of care provided to Medicare patients with ESRD, in part, by analyzing how that care compares to the quality of care provided to the ESRD population overall. Because we are finalizing the adoption of the Hypercalcemia measure for the ESRD QIP, facilities will not be required to submit calcium data for the Mineral Metabolism reporting measure.
   Comment: One commenter did not support the proposal to adopt the hypercalcemia measure because there is no evidence that facilities are not adequately managing hypercalcemia, and because there is no agreement on how calcium should be adjusted (if at all) for albumin levels.
   Response: The published literature indicates that large numbers of patients with ESRD are affected by hypercalcemia. /9/ /10/ /11/ /12/ /13/ In addition, patient-level analysis of CROWNWeb data collected for
   FOOTNOTE 9
   FOOTNOTE 10 Kidney Disease: Improving Global Outcomes (KDIGO) CKD-MBD Work Group: KDIGO Clinical Practice Guideline for the Diagnosis, Evaluation, Prevention, and Treatment of Chronic Kidney Disease-Mineral and Bone Disorder (CKD-MBD).
   FOOTNOTE 11 Block GA, Klassen PS, Lazarus JM, et al. Mineral metabolism, mortality, and morbidity in maintenance hemodialysis.
   FOOTNOTE 12 Young EW, Albert JM, Satayathum S, et al. Predictors and consequences of altered mineral metabolism: the Dialysis Outcomes and Practice Patterns Study. Kidney international 2005 67:1179-87. END FOOTNOTE
   FOOTNOTE 13 Kalantar-Zadeh K, Kuwae N, Regidor DL, et al. Survival predictability of time-varying indicators of bone disease in maintenance hemodialysis patients. Kidney international 2006 70:771-80. END FOOTNOTE
   Comment: Several commenters did not support the proposal to adopt the hypercalcemia measure because it may lead to unintended consequences (for example, sudden cardiac death) and because it will incentivize facilities to decrease calcium levels in patients with serum calcium levels near 10.2 mg/dL.
   Response: Although patients with serum calcium concentrations below the lower limit of normal may be at increased risk for cardiac arrhythmias, the available literature reviewed by KDIGO suggests that the risk of hypocalcemia occurs below 8.4 mg/dl calcium concentration, if at all. While facilities are incentivized to prevent patients from developing extremely high levels of calcium, we believe the threshold is sufficiently high that it is unlikely to incentivize facilities to cause hypocalcemia in patients. Therefore we do not anticipate an increased risk for sudden death, provided that clinicians properly monitor calcium levels.
   Comment: One commenter did not support the proposal to adopt the Hypercalcemia measure for a number of reasons: (1) The measure should exclude patients not on dialysis for at least 90 days to ensure that the 3-month rolling average is calculated using a consistent methodology; (2) the measure should provide a method for calculating a 3-month rolling average when data is only reported for months 1 and 3; and (3) the measure should specify that values were obtained during the current dialysis facility admission, and that samples must be obtained before hemodialysis treatment. The commenter recommends retaining the Mineral Metabolism reporting measure (to include reporting of serum calcium) until these issues are addressed.
   Response: We will respond to each issue in turn.
   First, the measure excludes patients not on dialysis for less than 90 days, as described in the proposed measure specifications. Patients are included in the denominator if they are 18 years or older as of the first day of the most recent month of the measurement period, are on dialysis for at least 90 days as of the first day of the most recent month of the measurement period, are in the facility for at least 30 days as of the last day of the most recent month of the measurement period, and have at least one serum calcium measurement within the measurement period.
   Second, the patient must have at least one serum calcium measurement in the three month period. If the patient only had one serum calcium measurement in the three month period, then the average serum calcium would be that value. If the patient only had serum calcium measurement for months 1 and 3 within the three month period, then the average would only use these two values.
   Third, the measure specifies that only patients who have been at the facility for at least 30 days should be included. In addition, this measure uses serum calcium concentrations reported in CROWNWeb. CROWNWeb data dictionary directions specify reporting of pre-dialysis serum calcium only. While not stated in the measure specifications, it is well understood that the vast majority of blood samples for serum calcium testing are drawn before the patient receives hemodialysis treatment on a particular treatment day.
   Comment: Several commenters did not support the proposal to adopt the Hypercalcemia measure. Commenters stated that CMS has not collected a full year of data that would support the performance standards, achievement thresholds, and benchmarks for the measure. These commenters stated that having at least one year of reporting data is a core criterion for moving structural reporting measures to clinical measures. Some of the commenters recommended adopting the Hypercalcemia measure as a reporting measure.
   Response: As stated in the CY 2013 ESRD PPS final rule (77 FR 67488), we believe that achievement thresholds, benchmarks, and performance standards should be based on a full year of data whenever possible. However, we also believe that in certain circumstances it is not practical or necessary to use a full year of baseline data. In this case, we only have data for the Hypercalcemia measure starting in
   Comment: One commenter did not support the proposal to adopt the Hypercalcemia measure because manually reporting calcium values is overly burdensome.
   Response: We do not agree that entering patients' calcium phosphorus levels into CROWNWeb on a monthly basis is overly burdensome. The Mineral Metabolism measure finalized in the CY 2012 ESRD PPS final rule (76 FR 70271) required facilities to enter this information, so the Hypercalcemia measure does not impose any additional burden for facilities.
   Comment: One commenter expressed concerns that CROWNWeb will not be able to accurately capture data needed to calculate the Hypercalcemia measure because it cannot handle situations when a patient switches modalities in the middle of a month, and because CROWNWeb is lacking data for roughly 10 percent of patients.
   Response: We recognize that CROWNWeb is currently experiencing issues if a patient switches modalities during a clinical month and the facility attempts to indicate this through the submission of batch data. This is a serious concern, and we are working to address it. However, this issue does not affect patient data when facilities manually enter the data. We therefore recommend that facilities manually enter patient data when patients switch modalities during a clinical month. Furthermore, we are currently conducting an analysis to determine what percentage of patient data are missing data in CROWNWeb. We recognize that CROWNWeb should not lack data for a high percentage of patients. Nevertheless, we continue to believe that CROWNWeb possesses valid data for the vast majority of patients, and we continue to affirm that facilities are responsible for ensuring that patient data are accurately reflected in CROWNWeb. For these reasons, we believe it is appropriate to use CROWNWeb as the primary data source for the Hypercalcemia clinical measure.
   For these reasons, we are finalizing the Hypercalcemia clinical measure (NQF #1454) as proposed for the PY 2016 ESRD QIP and for future payment years. Technical specifications for this measure can be found at http://www.dialysisreports.org/pdf/esrd/public-measures/MineralMetabolism-Hypercalcemia-2016FR.pdf
c. Use of Iron Therapy for Pediatric Patients Reporting Measure
   Section 1881(h)(2)(A)(i) states that the ESRD QIP must include measures on "anemia management that reflect the labeling approved by the
   FOOTNOTE 14 Seeherunvong W, Rubio L, Abitbol CL, et al. Identification of poor responders to erythropoietin among children undergoing hemodialysis. J Pediatr 2001 (138/5):710-714. END FOOTNOTE
   FOOTNOTE 15 Warady BA, Zobrist RH, Wu J, Finan E. Sodium ferric gluconate complex therapy in anemic children on hemodialysis. Pediatr Nephrol 20: 1320-7, 2005. END FOOTNOTE
   FOOTNOTE 16 Frankenfield DL, Neu AM, Warady BA, et al. Anemia in pediatric hemodialysis patients: results from the 2001
   We considered proposing an NQF-endorsed clinical measure on the use of iron therapy for pediatric patients as part of the proposed Anemia Management clinical measure topic (NQF #1433: Use of Iron Therapy for Pediatric Patients). This measure is an assessment of the percentage of all pediatric hemodialysis and peritoneal dialysis patients who received IV iron or were prescribed oral iron within three months of attaining the following conditions: (i) Patient had hemoglobin less than 11.0 g/dL; (ii) patient had simultaneous values of serum ferritin concentration less than 11.0; and (iii) patient's transferrin saturation (TSAT) was less than 20 percent. Upon investigation, we discovered that there were not enough patients who would qualify for this measure to establish reliable baseline data that would allow us to propose to adopt this measure as a clinical measure for PY 2016. We also note that the clinical measure currently presents other issues related to the minimum number of cases that would need to be reported for scoring, and we are considering the use of an adjuster that could be applied where the sample size is small. While we continue to consider these and other issues related to the adoption of a pediatric iron therapy clinical measure, we proposed a related reporting measure for PY 2016 and future payment years in order to acquire a sufficient amount of baseline data for the development of a clinical measure in the future.
   For PY 2016 and future payment years, we proposed that facilities must enter in CROWNWeb on a quarterly basis, for each qualifying case (defined in the next sentence): (i) Patient admit/discharge date; (ii) hemoglobin levels; (iii) serum ferritin levels; (iv) TSAT percentages; (v) the dates that the lab measurements were taken for items (ii)-(iv); (vi) intravenous IV iron received or oral iron prescribed (if applicable); and (vii) the date that the IV iron was received or oral iron was prescribed (if applicable). We proposed that qualifying cases for this measure would be defined as in-center and home dialysis patients under the age of eighteen.
   We proposed that each facility must report data on the Use of Iron Therapy for Pediatric Patients measure if it treats one or more qualifying cases during the performance period. Because this reporting measure requires that a facility enter data in CROWNWeb only once per quarter for each patient, we believe that the burden is appropriate and will not unduly impact small facilities, since it is proportionate to the number of patients that facilities treat. However, for the same reasons stated in the final description of the PY 2014 ESRD QIP Mineral Metabolism measure (which had a one patient minimum) (77 FR 67472 through 67474), we proposed that, in order to receive full points on this measure, facilities that treat 11 or more qualifying cases over the performance period will have to report at the lesser of the 50th percentile of facilities in CY 2013 or 97 percent per quarter, for each quarter of the performance period. We proposed that facilities that treat fewer than 11 qualifying cases during the performance period will have to report on a quarterly basis the specified data elements for all but one qualifying case. If a facility only has one qualifying case during the entire performance period, a facility will have to attest to that fact in CROWNWeb by
   We requested comments on these proposals. The comments we received on these proposals and our responses are set forth below.
   Comment: Several commenters expressed concerns about the proposal to adopt the pediatric iron therapy reporting measure. Some commenters recommended that facilities should only be required to report that they prescribed oral iron therapy or administered IV iron, since patients typically take over-the-counter iron supplements and the facility would not be able to verify that patients obtained non-prescription medications. Other commenters stated that the measure would unduly burden pediatric facilities, which are typically small and do not use batch data submissions.
   Response: We thank commenters for raising these concerns. We will consider alternate implementation of quality reporting for pediatric patients and facilities relating to iron therapy through future rulemaking. Independent of these concerns, we conducted an analysis of the scope and impact of the proposed pediatric iron therapy measure. Over the course of the analysis, we determined that fewer than 100 patients would be eligible for this measure if it was adopted as a clinical measure. We also determined that facilities would not be required to report data for many of these patients because the proposed measure specifications for the reporting measure excluded facilities with one or fewer eligible patients. The purpose of adopting the reporting measure would have been to collect the baseline data needed to adopt a clinical measure in future payment years, but our analysis suggests that this would not be feasible. These data were not available through CROWNWeb at the time the measure was proposed. Accordingly, we are not finalizing this measure for the ESRD QIP.
   Comment: Several commenters supported the proposal to adopt the Pediatric Iron Therapy reporting measure because it is important for measures in the ESRD QIP to cover pediatric patients.
   Response: We appreciate the commenters' support. However, we have concluded that it is not feasible to adopt the measure because very few patients would be eligible for the measure.
   For the reasons noted above, we are not finalizing the Pediatric Iron Therapy reporting measure at this time. However, we will continue to investigate measures on anemia management for pediatric patients, and we intend to adopt a measure on this topic in future payment years.
d. NHSN Bloodstream Infection in Hemodialysis Outpatients Clinical Measure
   Healthcare-acquired infections (HAI) are a leading cause of preventable mortality and morbidity across different settings in the healthcare sector, including dialysis facilities. Bloodstream infections are a pressing concern in a population where individuals are frequently immunocompromised and depend on regular vascular access to facilitate dialysis therapy. In a national effort to reduce infection rates, CMS has partnered with the CDC to encourage facilities to report to the NHSN as a way to track and facilitate action intended to reduce HAIs. The NHSN is a secure, internet-based surveillance system that is managed by the
   We have worked during the past 2 years to help dialysis facilities become familiar with the NHSN system through the adoption of an NHSN Dialysis Event reporting measure. We now believe that facilities are sufficiently versed in reporting this measure to the NHSN. In light of the importance of monitoring and preventing infections in the ESRD population, and because a clinical measure would have a greater impact on clinical practice by holding facilities accountable for their actual performance, we proposed to replace the NHSN Dialysis Event reporting measure that we adopted in the CY 2013 ESRD PPS final rule (77 FR 67481 through 67484) with a new clinical measure for PY 2016 and future payment years. This proposed measure, NHSN Bloodstream Infection in Hemodialysis Outpatients, is based closely on NQF #1460 in that it evaluates the number of hemodialysis outpatients with positive blood cultures per 100 hemodialysis patient-months.
   We proposed that facilities must submit 12 months of accurately reported dialysis event data (defined in the next sentence) to NHSN on a quarterly basis. In order to ensure that a facility submits data that can be used to identify the source of bloodstream infections, to preserve the internal validity of bloodstream infection data, and to help prevent future bloodstream infections, we proposed to define "accurately reported dialysis event data" as data reported by facilities that follow the NHSN enrollment and training guidelines specified by the CDC (available at http://www.cdc.gov/nhsn/dialysis/enroll.html and http://www.cdc.gov/nhsn/Training/dialysis/index.html), according to the reporting requirements specified within the NHSN Dialysis Event Protocol. (This protocol, which facilities are already using to meet the requirements of the NHSN Dialysis Event reporting measure, includes information about IV antimicrobial starts and evidence of vascular access site infection, as well as information about the presence of a bloodstream infection.)
   Additionally, we proposed that each quarter's data would be due 3 months after the end of that quarter. For example, data from
   We note that this proposed measure only applies to facilities treating in-center hemodialysis patients (both adult and pediatric). We will determine whether a facility treats in-center patients by referencing the facility's information in the Standard Information Management System and CROWNWeb.
   We recognize that the CDC has published Core Interventions for BSI Prevention in Dialysis, which are listed at http://www.cdc.gov/dialysis/prevention-tools/core-interventions.html. We encourage facilities to adopt the nine listed interventions in order to help prevent infections, but did not propose to require facilities to adopt any of these interventions at this time.
   We requested comments on this proposal, and in particular on the issue of whether it is appropriate at this time to convert the current NHSN Dialysis Event Reporting measure into a clinical measure. The comments we received on these proposals and our responses are set forth below.
   Comment: Several commenters supported the proposal to adopt the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure. These commenters stated that the monitoring of bloodstream infections and the adoption of CDC's core prevention interventions will reduce healthcare acquired infections in the ESRD patient population.
   Response: We thank the commenters for their support.
   Comment: Several commenters did not support the proposal to adopt the NHSN clinical measure because they believe that the measure does not reflect actual patient-exposure time each month. Specifically, these commenters stated that using a monthly census on the first two working days of the month ignores patient hospitalization during the month, and can be adversely impacted by an influx of new patients after the first two working days of the month.
   Response: CDC has conducted pilot validation work with a group of dialysis facilities and found that the census on the first two working days of the month was an accurate predictor of the entire month's census. The alternative of counting denominator data on a daily basis has been required in inpatient settings, but was determined by CDC to be unacceptably burdensome for the dialysis facility setting because this setting has a relatively stable patient population. Although patients with ESRD may be hospitalized at various times during a month, we have no reason to believe this would systematically be more likely to occur at a certain time relative to the first two working days of the month. Similarly, we are unaware of admission or transfer patterns whereby there is an increased likelihood of patient influx after the first two working days of the month.
   Comment: Many commenters expressed concerns that the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure will misattribute infections to a dialysis facility. Some of these commenters stated that the measurement of positive blood cultures is not specific enough to detect HAIs contracted at another facility, and may include blood cultures associated with another site or contaminated samples. Commenters also raised concerns that these types of issues will result in an overestimate of the number of dialysis-related bloodstream infections, limit the capacity to develop reliable benchmark data, and may increase the possibility that facilities will be improperly penalized.
   Other commenters stated that elderly, newly diagnosed dialysis patients with other chronic conditions and wounds are particularly likely to have infections that are unrelated to vascular access. Some commenters worried that infections in these patients will be inappropriately attributed to dialysis facilities because the NHSN measure does not focus on access-related bloodstream infections. Commenters also expressed concerns that the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure does not risk adjust for common comorbidities in the ESRD patient population.
   Another commenter stated that the rate of positive blood cultures should be interpreted in the context of the facility's rate of empiric antibiotic treatment, also recorded by NHSN, since some physicians and facilities may treat empirically rather than on the basis of culture results.
   Several commenters stated that culture results needed to designate the event as a bloodstream infection for NHSN reporting purposes are frequently not available to facilities. Therefore, between-facility differences in NHSN-reported BSI rates currently reflect differences not in infection rates, but rather in the availability and capture of blood culture results. Given this, the commenters believe that the measure will incentivize under-reporting of blood culture results, thereby undoing the great benefit that the current NHSN reporting metric has afforded dialysis facilities.
   One commenter stated that sufficient knowledge and infrastructure does not exist to determine the type of vascular access to which the infection was related. This commenter further stated that the TEP that reviewed the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure concluded that the "vascular access infection CPMs should not be used for reimbursement purposes."
   Commenters provided several recommendations in light of these perceived issues. Some commenters recommended retaining the NHSN reporting measure until these technical issues are resolved. Other commenters stated that it would be inappropriate to adopt the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure under any circumstances. Another commenter recommended adopting, in a staggered manner, three alternative HAI measures: Local access site infection, access-related bloodstream infection, and vascular access infection.
   Response: We do not believe that misattribution is a significant enough issue to warrant a delay in the adoption of the NHSN clinical measure. The NHSH Bloodstream Infection in Hemodialysis Outpatients clinical measure tracks infection events that present real dangers to patients. We believe that tracking these infection events and rewarding facilities for minimizing these events is of critical importance to protecting patient safety and improving the quality of care provided to patients with ESRD.
   First, NQF endorsed a bloodstream infection measure (NQF #1460, the measure upon which the proposed NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure is based) because bloodstream infections can be objectively identified. By contrast, NQF raised concerns about an access-related bloodstream infection measure because determining the source of infections (for example, determining whether an infection was related to vascular access) requires subjective assessments. The NHSH Bloodstream Infection in Hemodialysis Outpatients clinical measure avoids this subjectivity by including all positive blood cultures. This makes it simpler and more reliable than an access-related bloodstream infection measure. While we recognize that the NHSH Bloodstream Infection in Hemodialysis Outpatients clinical measure may occasionally misattribute bloodstream infections to dialysis facilities, we believe that the measure's objectivity, simplicity, and reliability make it the most appropriate measure for assessing facility performance. NHSN relies upon use of standard definitions to ensure that infection events are reported in the same manner across facilities. The vast majority of reported bloodstream infection events represent true, HAIs that are not the result of misclassification or misattribution. Therefore, considering the benefits to patients associated with strong incentives to reduce bloodstream infections, we believe that these technical issues are not significant enough to warrant a delay in adopting the NHSH Bloodstream Infection in Hemodialysis Outpatients clinical measure. CDC will continue to assess the possibility that certain facility-related factors could systematically overestimate infection rates, and it will consider risk-adjusting the measure to take these factors into account.
   Second, our goal is to eliminate all preventable HAIs, including those in elderly patients and patients with certain comorbidities. Therefore, we do not believe it is appropriate to risk-adjust the measure to account for those patient characteristics.
   Third, regardless of whether antibiotics are started before culture results become available, facilities are required to report positive blood culture results to NHSN. We recognize that additional information reported to NHSN, including antibiotic starts, provide useful contextual information to help interpret rates and facilitate prevention efforts. We believe that this information is important for identifying strategies to reduce bloodstream infections.
   Fourth, with respect to concerns about between-facility differences in NHSN-reported BSI rates, we are legitimately concerned about this issue of differential capture rate and the potential impact it could have on valid inter-facility comparisons. Facilities are expected to follow the NHSN reporting protocol, which includes reporting all positive blood cultures drawn from their patients in the outpatient setting or within one calendar day after a hospital admission. In both of these scenarios, facilities should have access to blood culture results to properly diagnose and treat patients under their care, and to include in the patient's medical record. Although results of blood cultures that were drawn outside of the dialysis center can sometimes be challenging to retrieve, facilities should be working to develop systems to enable complete capture of all positive blood cultures that meet reporting criteria.
   Fifth, we agree with the commenters' concerns about determining the type of vascular access to which the infection was related, and we reiterate that NQF endorsed a bloodstream infection measure and not an access-related bloodstream infection measure. The NQF endorsement process includes an expert review assessing the feasibility of implementing of the measure. The NQF determined that the infrastructure and clinical expertise needed to determine the source of bloodstream infections do exist in the dialysis-facility setting. Therefore, the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure only requires facilities to report positive blood culture results. It does not involve a clinical diagnosis of infection, nor does it rely upon a determination of vascular access-relatedness or identification of the access to which the infection is related. When an event is reported to NHSN, all vascular accesses the patient has in place at the time of the event are reported. The user is not asked to attribute the event to a particular access. This is consistent with the recommendations of the TEP that the commenter cited.
   Finally, we appreciate the commenters' recommendations. In light of the responses detailed above, and the urgent need to provide facilities with strong incentives to improve patient safety, we believe that the technical issues raised by commenters are not significant enough to warrant a delay in the adoption of the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure.
   Comment: Many commenters expressed concerns about the methodology used to score the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure. Some commenters did not support the proposal to use CY 2014 as the performance period for the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure. These commenters stated that under the proposed timeline, a facility will not be able to determine whether it is meeting the goals of the measures or still need to improve. Other commenters urged CMS to wait to penalize facilities until there are established performance standards, until facilities have a chance to adopt practices that demonstrably reduce infection rates, and until CMS has collected the data needed to calculate improvement scores. Other commenters did not support the proposal to use CY 2014 as the performance period and the baseline period for the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure, and to define the performance standard as the 50th percentile of facility performance in CY 2014. These commenters stated that this methodology guarantees a 50-percent "failure rate," which is inconsistent with quality improvement approaches to medicine. In light of these concerns, some commenters recommended postponing the adoption of the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure until CMS has collected one year of baseline data.
   Response: We appreciate the commenters' concerns about penalizing facilities for their performance on the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure before we have collected the data needed to establish both the achievement and improvement performance standards. We also recognize that, in so doing, we are deviating somewhat from the scoring methodology used in the PY 2014 and PY 2015 programs. However, as stated in the PY 2016 proposed rule (78 FR 40863), we believe it is important to begin assessing facilities on the number of these events as soon as possible, rather than on merely whether they report these events, because of the abnormally large impact HAIs have upon patients and the healthcare industry.
   Furthermore, when calculating the minimum TPS facilities need to achieve in order to avoid a payment reduction, we set the number low enough that a facility can meet the minimum TPS even if it receives zero achievement points on the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure, as long as it meets or exceeds the performance standard for each of the other finalized clinical measures and scores 5 points on each of the finalized reporting measures. We did this to balance our policy goal to provide facilities with strong incentives to improve patient safety as soon as possible against our recognition that we will not initially have enough data to award improvement points to facilities. In some circumstances, a facility may score zero points on the NHSN Bloodstream Infection in Hemodialysis Outpatients and receive a payment reduction. Nevertheless, the payment reduction a facility would receive in these circumstances (using the scoring methodology we are finalizing for the measure) would necessarily be no more than the payment reduction it would have received if the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure was not included in the minimum TPS calculations. Therefore, we strongly believe that these considerations should alleviate concerns associated with the atypical scoring methodology.
   Comment: One commenter approved of CMS's support of CDC's core prevention interventions, but stated that CMS should require facilities to follow core interventions 7 and 8 (that is (i) the use of alcohol-based chlorhexidine >0.5 percent, the first line skin antiseptic for central line insertions and dressing changes, and (ii) reducing risk of intraluminal biofilm by "scrubbing hubs" prior to accession or disconnection).
   Response: We thank the commenter for the support. We continue to encourage facilities to adopt all of CDC's core prevention interventions. However, they are not required under the ESRD QIP because we do not believe it is feasible at this time to design a performance measure that would accurately evaluate facility compliance.
   Comment: One commenter raised concerns that the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure, as proposed, will unduly penalize small facilities because these facilities will be disproportionately impacted by a small number of infections. Instead, the commenter recommends using the Standardized Infection Rate risk-adjustment method, along with the development of a publicized data validation process for NHSN data.
   Response: As stated in the proposed measure specifications, the measure will be calculated using a Standardized Infection Ratio with adjustment for volume of exposure to address this issue. We also agree with the need for a publicized data validation process for the NHSN data. As stated in the PY 2016 ESRD QIP proposed rule (78 FR 40872), we are considering a feasibility study for validating NHSN data, and we will publicize the data validation process after the conclusion of the feasibility study.
   Comment: Several commenters did not support the proposal that facilities must submit 12 months of data or receive a score of 0 on the NHSN measure. These commenters stated that facilities cannot improve in such an all-or-nothing environment.
   Response: We disagree that the requirement to report 12 months of NHSN data is an unreasonable expectation. Facilities began reporting NHSN data for the PY 2014 program during CY 2012, so they will have had two years of experience at the beginning of the performance period for the PY 2016 program. We strongly believe that two years is a sufficient amount of time for facilities to become acclimated to the NHSN system. We also note that it would be inappropriate to score facilities on less than 12 months of data because HAIs are subject to seasonal variability. Furthermore, given the critical importance of reducing HAIs and the NHSN system's capacity to address this pressing issue, we believe that it is appropriate to provide facilities with the strongest possible incentives to report NHSN data.
   Comment: One commenter did not support the proposal to adopt the NHSN clinical measure because NHSN was intended to be a surveillance system, not for scoring facilities on the ESRD QIP.
   Response: We believe that the NHSN system can be used for the purposes of incentivizing quality improvement. HAIs are implicated in significant clinical problems for patients, and they are an important source of increased medical costs. Given the importance of HAIs for patients and providers, we strongly believe that reducing HAIs is a central pillar in efforts to improve the quality of healthcare offered in the dialysis setting, and we continue to believe that facilities have the strongest incentive to improve when their performance is linked to payment. Furthermore, we note that facilities are scored based on their performance on NHSN infection measures in the Hospital Value Based Purchasing Program.
   Comment: One commenter recommends aligning the Vascular Access Type measure topic and census requirement for the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure to reduce administrative burden. Commenter notes that the Vascular Access Type measure topic is based on the last treatment of the month, while the NHSN census is based on the ESRD facility's first two working days of the month.
   Response: We appreciate the comment, and will further investigate whether the divergent dates for the two measures increases the reporting burden for facilities.
   Comment: One commenter did not agree with CMS's position that the urgency of reducing bloodstream infections warrants the adoption of the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure before two years of baseline data are available to calculate achievement and improvement scores. The commenter stated that central venous catheters present the greatest risk for bloodstream infections in the ESRD patient population, and that the ESRD QIP already has a measure that addresses this issue (Vascular Access Type--Catheter greater than 90 Days).
   Response: According to the 2012 Annual Data Report of the United States Renal Data System, hemodialysis patients experienced an adjusted hospitalization rate of 103 per 1,000 due to vascular access infection in 2010. We recognize that these rates have declined since 2005, but we believe they are still unacceptably high. Additionally, rates of adjusted hospitalizations due to bacteremia/sepsis in hemodialysis patients have increased significantly since 2000, rising to 116 per 1,000 in 2010. /17/ These and other indicators have led to the inclusion of ESRD facilities in the Assistant Secretary for Health's National Action Plan to Prevent Health Care-Associated Infections, and the inclusion of dialysis facilities in this report reflects the urgency of reducing HAIs in patients with ESRD. We agree with the commenter's observation that central venous catheters present the greatest risk for bloodstream infections in the ESRD patient population. However, considering that these rates increased at same time as the Fistula First Breakthrough Initiative sought to reduce the use of catheters, we do not believe that the Vascular Access Type measure topic is sufficient to reduce rates of HAIs. Additionally, for the reasons stated above, we believe the significance of HAIs warrants adopting a clinical measure before we have collected the baseline data needed to calculate achievement and improvement scores. Therefore, we strongly believe that Vascular Access Type measure topic and the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure are complimentary, not duplicative, because they address infections in different and equally valid ways.
   FOOTNOTE 17 United States Renal Data System, 2012 USRDS Annual Data Report, Volume 2: Atlas of End-Stage Renal Disease in the United States, pg. 240. END FOOTNOTE
   Comment: Some commenters did not support the proposal to adopt the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure because the measure is dependent upon voluntary reporting of data that is often subjective. These commenters stated that the identification of positive bloodstream infections often relies upon subjective assessments of whether a bacteremia is access-related. The commenters believed that facilities will be less likely to identify and report positive bloodstream infections if they will be financially penalized for doing so.
   Response: The NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure is an objective measure based solely on the presence of a positive blood culture. Although NHSN collects information on access-relatedness to provide additional information that is of use for prevention purposes, the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure does not rely upon assessments of whether the bloodstream infection was access-related. There may still be perceived disincentives to conduct thorough surveillance to identify all positive blood cultures that meet the bloodstream infection definitional criteria. For this reason, it is important that the data be validated in a rigorous manner, and we are in the process of evaluating the feasibility of launching a pilot program to validate NHSN data.
   For these reasons, we are finalizing the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure for the PY 2016 ESRD QIP and for future payment years. The technical specifications for this measure are located at http://www.dialysisreports.org/pdf/esrd/public-measures/NHSNBloodstreamInfection-2016FR.pdf.
e. Comorbidity Reporting Measure
   The NQF endorsed a clinical measure for Dialysis Facility Risk-Adjusted Standardized Mortality Ratio (#0369) in 2008, and a clinical measure for Standardized Hospitalization Ratio for Admissions (#1463) in 2011. We have long been interested in adding a Standardized Mortality Ratio (SMR) measure and a Standardized Hospitalization Ratio (SHR) measure to the ESRD QIP. As articulated in the CY 2013 ESRD PPS final rule, "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" (77 FR 67496). Similarly, we continue to believe that 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" (77 FR 67497).
   Although we believe that SHR and SMR capture important indicators of morbidity and mortality, we are considering whether and how we might be able to adopt them through future rulemaking in a way that properly takes into account the effect that comorbidities have on hospitalization and mortality rates for the ESRD population. We also acknowledge concerns raised by commenters in the past that the NQF-endorsed SMR and SHR measures are not adequately risk-adjusted (77 FR 67496). Currently, information about patient comorbidities is collected by CMS via the Medical Evidence Reporting Form 2728, which is typically only submitted by facilities to CMS when a new patient first begins to receive dialysis treatment. We also use Form 2728 to capture the date of first dialysis in order to help determine patient exclusions for all of the clinical measures finalized in the PY 2013 ESRD PPS final rule. However, facilities are not required to update this form, which makes it difficult to capture information about comorbidities that develop after the initiation of dialysis treatment. We acknowledge the concerns of commenters who stated that "there is currently no mechanism either for correcting or updating patient comorbidity data on CMS' Medical Evidence Reporting Form 2728, and these comorbidities affect the calculation of the measure" (76 FR 70267).
   We proposed to adopt a Comorbidity reporting measure for the PY 2016 ESRD QIP and future payment years of the ESRD QIP. The purpose of this measure is two-fold. First, the proposed reporting measure offers a mechanism for collecting annual information about patient comorbidities, thereby providing a reliable source of data that we can use to develop a risk-adjustment methodology for the SHR and SMR clinical measures, should we propose to adopt such measures in the future. Second, the reporting measure will make it possible to improve our understanding of the risk factors that contribute to morbidity and mortality in the ESRD patient population. The data we gather will enable us to develop risk-adjustment methodologies for possible use in calculating the SHR and SMR measures, should we propose to adopt those measures in the future, and therefore more reliably calculate expected hospitalization and mortality rates in future payment years of the ESRD QIP. When we examine updated data on comorbidities, we will determine the appropriateness of including that data as additional risk-adjustment factors for the SMR and SHR measures by considering the extent to which each comorbidity may be influenced by the quality of dialysis facility care, as opposed to factors outside of a facility's control.
   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 section 1881(h)(2)(B)(ii) of the Act, in the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) of the Act, the Secretary may specify a measure that is not so endorsed, so long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.
   NQF has not endorsed a measure for updating comorbidity information for patients with ESRD. We have given due consideration to endorsed measures, as well as those adopted by a consensus organization, and we are proposing this measure under the authority of 1881(h)(2)(B)(ii) of the Act. We believe that the proposed measure's potential to improve clinical understanding and practice outweighs the minimal burden it would impose upon facilities. Additionally, we believe that this measure will provide data that is currently unavailable through Form 2728 because the measure accounts for the most recent information about patient risk factors, which may change over time as a patient continues receiving dialysis.
   For this proposed reporting measure, we proposed each facility will annually update in CROWNWeb up to 24 comorbidities, or indicate "none of the above," for each qualifying case. For the purposes of this measure, we proposed to define a "qualifying case" as a hemodialysis or peritoneal dialysis patient being treated at the facility as of
Agency name Organization Position title Authorization Vacate date name number DEPARTMENT OF Office of the Special Advisor DC120158 8/2/2013 COMMERCE Assistant Secretary for Economic Development Office of Confidential DC100121 8/9/2013 Executive Assistant Secretariat Office of the Senior Advisor DC110135 816/2013 Assistant Secretary for Economic Development Office of Special DC120052 8/16/2013 Business Assistant Liaison Office of Confidential DC120044 8/25/2013 Legislative and Assistant Intergovernment al Affairs DEPARTMENT OF Office of the Special DB110019 8/4/2013 EDUCATION Deputy Assistant Secretary DEPARTMENT OF National Special DE120009 8/9/2013 ENERGY Nuclear Assistant Security Administration Office of the Special DE130042 8/16/2013 Secretary Assistant to the Chief of Staff DEPARTMENT OF U.S. Director of DM090458 8/10/2013 HOMELAND Immigration and Congressional SECURITY Customs Relations Enforcement Office of the Press Assistant DM110127 8/10/2013 Assistant Secretary for Public Affairs Office of the Program DM110192 8/23/2013 Under Secretary Coordinator for National Protection and Programs Directorate DEPARTMENT OF Office of Deputy Director DJ120009 8/2/2013 JUSTICE Public Affairs DEPARTMENT OF Office of the Senior Advisor DL100053 8/10/2013 LABOR Deputy Secretary DEPARTMENT OF Secretary's White House DI120009 8/10/2013 THE INTERIOR Immediate Liaison Office Special DI110049 8/16/2013 Assistant For Advance DEPARTMENT OF Assistant Special DY110094 8/10/2013 THE TREASURY Secretary Assistant (Legislative Affairs) DEPARTMENT OF General Counsel Special DT100050 8/2/2013 TRANSPORTATION Assistant to the General Counsel Public Affairs Associate DT120057 8/16/2013 Director for Speech-Writing Press Secretary DT120026 8/23/2013 ENVIRONMENTAL Office of the Deputy EP110039 8/10/2013 PROTECTION Associate Associate AGENCY Administrator Administrator for for Office of Congressional Congressional and Affairs Intergovernment al Relations Office of the Deputy White EP120008 8/24/2013 Administrator House Liaison EXPORT-IMPORT Export-Import Deputy Chief of EB110012 8/23/2013 BANK Bank Staff FEDERAL ENERGY Office of the Program Analyst DR110007 8/10/2013 REGULATORY Chairman COMMISSION FEDERAL MINE Office of the Attorney FR120001 8/7/2013 SAFETY AND Commissioners Advisor HEALTH REVIEW (General) COMMISSION
   Therefore, to receive full points on this measure, we proposed that facilities would be required to provide the updates in CROWNWeb by
   We requested comments on these proposals. The comments we received on these proposals and our responses are set forth below.
   Comment: While several commenters supported the proposal to adopt the Comorbidity reporting measure and the decision to collect more information before adopting the SMR and SHR measures, many commenters did not support the proposal. Several commenters stated that they did not think the Comorbidity reporting measure was a quality measure and expressed a concern that it had never been developed nor endorsed by a consensus-based organization or reviewed by the MAP. Commenters also stated that CMS should either use the ESRD CfCs or revise Form 2728 to accomplish this data collection, rather than using the ESRD QIP for this purpose.
   Response: We appreciate the many comments we received on the Comorbidity reporting measure. As a result of the significant concerns expressed about the measure, we have decided not to finalize the measure at this time. We will consider whether there is a better way to update this important comorbidity information, including the suggestion to collect comorbidity data under the CfCs, in the future.
   For these reasons, we are not finalizing the Comorbidity reporting measure as proposed for the PY 2016 ESRD QIP and for future payment years.
4. Other
   As part of our effort to continuously improve the ESRD QIP, we continue to work on developing additional robust measures that provide valid assessments of the quality of care furnished by facilities to patients with ESRD. We are considering the feasibility of developing quality measures in other topic areas (for example, blood transfusions, kidney transplantation, quality of life, and health information technology) for quality improvement at the point of care as well as for the electronic exchange of information in support of care coordination across providers and settings. Additional areas of potential interest include residual renal function, complications associated with ESRD, and frequently comorbid conditions (for example, diabetes and heart disease).
   We requested comments 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: Many commenters provided recommendations on potential areas of future measurement. Some commenters urged CMS to adopt measures on patient education (covering, for example, renal replacement therapies, diet, and access placements), health information technology, kidney transplants, fluid management, blood transfusions, quality of life, care coordination, symptom management, clinical depression, pain screening, dyspnea, advanced care planning, emergency department use, 30-day hospital readmissions, use of home dialysis, hospitalization rates, and mortality rates. Other commenters urged CMS to not adopt measures on blood transfusions, hospitalization rates, mortality rates, 30-day hospitalization readmissions, quality of life, kidney transplants, and care coordination.
   Response: We thank the commenters for their recommendations and will consider them as we develop our policies for future years of the ESRD QIP.
   Comment: Many commenters urged CMS to adopt a hemoglobin measure that establishes a minimum safe hemoglobin level for patients. These commenters stated that the use of the Hemoglobin Greater Than 12 g/dL measure has led to an increase in transfusions, which are not covered in the ESRD PPS bundled payment but remain an expense for Medicare. Some commenters believe that there is a consensus in the field that keeping hemoglobin levels above 10 g/dL yields optimal patient outcomes.
   Response: Using a Hemoglobin Less Than 10 g/dL measure without a corresponding measure that targeted high hemoglobin levels might place patients at increased risk for complications of aggressive ESA therapy. Furthermore, we note that randomized, controlled trials targeting patients to higher, rather than lower hemoglobin levels, or comparing the effect of ESAs against a placebo have indicated an increased risk of myocardial infarction, stroke, venous thromboembolism, thrombosis of vascular access, and overall mortality, and in patients with a history of cancer, tumor progression or recurrence. Because we cannot yet identify which patients would be included in this subset (and accordingly exclude them from the specifications of a Hemoglobin Less Than 10g/dL measure) we have concluded that it is not appropriate at this time to include such a measure in the ESRD QIP. Finally, we note that our rationale for removing the Hemoglobin Less Than 10 g/dL was published in the PY 2013 ESRD QIP proposed rule (76 FR 40519), and we believe those concerns remain sufficiently valid to merit not reintroducing the measure to the ESRD QIP at this time.
5. Scoring for the PY 2016 ESRD QIP and Future Payment Years
   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. We believe that the methodology set forth in the CY 2013 ESRD PPS final rule incentivizes facilities to meet the goals of the ESRD QIP; therefore, with the exception of the proposed changes further discussed in the applicable section below, we proposed to adopt a scoring methodology for the PY 2016 ESRD QIP and future payment years that is nearly identical to the one finalized in the CY 2013 ESRD PPS final rule. To the extent that the scoring methodology differs, those differences are discussed below.
   Comment: Many commenters recommended adding a provision to the rule to exempt facilities forced to close temporarily due to natural disaster or other extenuating circumstances from the requirements of all of the clinical and reporting measures (and the NHSN measure in particular). These commenters stated that such a provision exists in the Hospital Inpatient Quality Reporting Program. The commenters stated that adopting a similar policy for the ESRD QIP would allow facilities to avoid payment reductions due to circumstances they cannot control.
   Response: We agree that there are times when facilities are unable to submit required quality data due to extraordinary circumstances that are not within their control, and we do not wish to penalize facilities for such circumstances or unduly increase their burden during these times. We are developing a disaster/extraordinary circumstances exception process, and we intend to propose to adopt such a process in future rulemaking.
6. Performance Period for the PY 2016 ESRD QIP
   Section 1881(h)(4)(D) of the Act requires the Secretary to establish the performance period with respect to a year, and that the performance period occur prior to the beginning of such year. In the CY 2013 ESRD PPS final rule, we finalized a performance period of CY 2013. We stated our belief that, for most measures, 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. For the reasons outlined in the CY 2013 ESRD PPS final rule (77 FR 67500), we have determined for PY 2016 that CY 2014 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 renal dialysis services furnished on
   We requested comment on this proposal. We did not receive any comments on this proposal. We will, therefore, finalize that CY 2014 is the performance period for the PY 2016 ESRD QIP.
7. Performance Standards for the PY 2016 ESRD QIP and Future Payment Years
   We proposed to adopt performance standards for the PY 2016 ESRD QIP measures that are similar to what we finalized in the CY 2013 ESRD PPS final rule. Section 1881(h)(4)(A) provides that "the Secretary shall establish performance standards with respect to measures selected . . . for a performance period with respect to a year." Section 1881(h)(4)(B) of the Act further provides that the "performance standards . . . shall include levels of achievement and improvement, as determined appropriate by the Secretary." We use the performance standards to establish the minimum score a facility must achieve to avoid a Medicare payment reduction.
   We received several comments on performance standards for the PY 2016 ESRD QIP and future payment years. The comments and our responses are set forth below.
   Comment: Many commenters registered their concern with CMS's reliance on CROWNWeb data to establish performance benchmarks for achievement and improvement, particularly for the Hypercalcemia measure. These commenters stated that CROWNWeb is unreliable because (1) frequent changes to the business requirements have resulted in an inconsistent set of rules under which data are collected, making the data collected unreliable for setting performance standards and benchmarks; (2) CROWNWeb collects less than 100% of facility data, and a facility could be found not to meet the ESRD QIP performance standard because the CROWNWeb system "kicks out" a particular patient and/or data for a particular patient; (3) CROWNWeb defects open the possibility of "gaming the system" by manually and preferentially excluding the data for patients who fail to meet a particular goal; and (4) there is still a problem with accurate reconciliation with dialysis census data and the patient counts in CROWNWeb, which could result in the misattribution of patients to facilities. The commenters recommended that CROWNWeb should not be relied upon for setting performance standards and benchmarks or to collect individual patient-level data until (1) facility and CROWNWeb patient attribution lists are identical; (2) only 1 percent of the data are "kicked out" by CROWNWeb; and (3) clear business rules remain in place for at least one year to allow for the consistent collection data before the data are used for the ESRD QIP. Commenters also recommended that (1) CMS establish a CROWNWeb Help Desk to assist them in real time to resolve roster data discrepancies; (2) new data definitions be shared with the provider community for comment well in advance of including them in CROWNWeb; (3) CMS initiate a formal quality assessment and process improvement program that would field-test each CROWNWeb update before it is scheduled for general release; and (4) current CROWNWeb data not be shared for the purpose of measure development with CMS TEPs until and unless the recorded data have been carefully evaluated for completeness, accuracy, and reliability.
   Response: We appreciate commenters' concerns about CROWNWeb and we welcome the opportunity to respond. We will address each issue in turn.
   First, CROWNWeb has been updated six times since the national rollout in
 &#160; Second, CROWNWeb does not "kick out" patients or data once the patients have been entered into the CROWNWeb. Rather, patient data (such as, demographic information, clinical values, and information about vascular access) may not be allowed into CROWNWeb via the batch submission process if CROWNWeb determines that the data are inconsistent or invalid. Facilities entering data manually do not experience such issues, and we note that electronic data interchange (EDI) users are able to view and correct data that do not pass validations testing. We have already implemented two successful patches to alleviate CROWNWeb systems barriers to EDI, and we will continue to release patches to address additional areas of concern. Nevertheless, we affirm that facilities are responsible for ensuring that their patient censuses and patient clinical data in CROWNWeb is complete and accurate.
   Third, we understand there are concerns about "gaming the system," possibly due to the fact that facilities are not required to enter clinical data elements in order to proceed in the CROWNWeb system. We do not believe this is a system defect; in certain instances, it might not be appropriate to enter such data, and the system is not designed to make these determinations. Additionally, we are not aware of any defects that allow facilities to preferentially exclude patients. If facilities and submission organizations are aware of other defects, we encourage them to report this to the QualityNet Helpdesk or on EDI Data Discrepancy Support calls. If we receive such reports, we will investigate them immediately and prioritize patches for the next available CROWNWeb patch release.
   Fourth, we are aware that CROWNWeb is currently experiencing some issues related to the attribution of patients to facilities. We are in the process of implementing new business requirements that should address this known defect. We continue to encourage facilities to ensure that their patient censuses are accurately reflected in CROWNWeb.
   With respect to commenters' recommendations for improving the accuracy of CROWNWeb data, we agree that facility attribution lists should match patient censuses in CROWNWeb. As stated above, we are actively working to resolve this issue, and we encourage facilities to review their patient censuses in CROWNWeb to ensure that they match their attribution lists. Additionally, we agree that CROWNWeb should minimize the amount of accurate data that does not pass validation testing while ensuring that inaccurate data is not used to calculate scores on ESRD QIP clinical performance measures. As stated above, we affirm that facilities are responsible for ensuring that patient data is accurately reflected in CROWNWeb while we continue to improve the EDI submission process. Furthermore, we do not agree that business rules need to remain in place for one year before the data can be used to calculate scores on ESRD QIP clinical performance measures, as long as changes to the business rules are not significant enough to render data from the baseline period incomparable with data from the performance period. Finally, we note that facilities are able to report concerns about roster-data discrepancies to the QualityNet helpdesk. We note that new data definitions are regularly provided to the ESRD community.
   We appreciate the recommendation to not share CROWNWeb data with any CMS TEPs due to concerns about completeness, accuracy, and reliability. We will consider these concerns before sharing CROWNWeb data with CMS TEPs in the future. We also appreciate the recommendation to field-test CROWNWeb updates before they are scheduled for general release, and we are working on a process that would allow users and "beta testers" to test system functionalities in real-world settings.
   Comment: One commenter did not support the addition of other measures to the ESRD QIP until concerns about the program's complexity and the reliability of CROWNWeb are alleviated.
   Response: We appreciate the commenter's concerns about the complexity of the ESRD QIP and the reliability of CROWNWeb. We make every effort (e.g., through National Provider Calls, CROWN Memos, and other educational programs) to ensure that facilities receive the information they need to understand the ESRD QIP. We also work diligently to make reporting requirements and measurement methodologies as simple as possible. Additionally, we appreciate the commenter's concerns about the reliability of CROWNWeb, and we are working to address related concerns that have been raised by the ESRD community. However, given the fact that facilities are able to ensure that their data is accurately represented in CROWNWeb at any time, as well as the fact that CMS and its contractors check the validity of CROWNWeb data when calculating measure scores, we believe that there are processes in place to ensure that technical issues with CROWNWeb do not impact the measure scores that facilities receive. We therefore do not believe it is appropriate or necessary to postpone programmatic developments until these technical issues are completely resolved.
   Comment: Several commenters asked CMS to provide sufficient data and explanation to allow the kidney care community to understand the methodology underlying the models used to estimate ESRD QIP payment adjustments and the minimum TPS. These commenters stated that without this data, it is difficult to know the assumptions CMS uses in its modeling and to offer meaningful comments on the proposed rule.
   Response: We appreciate commenters' request. We will make publicly available facility-level data that is used to estimate ESRD QIP payment adjustments and the minimum TPS. Information used to estimate these values in the CY 2014 ESRD PPS proposed rule will be released by
   Comment: Some commenters noted that many of the measure specifications list SIMS as a data source. These commenters sought clarity on this, as SIMS has been decommissioned.
   Response: We thank commenters for noting this discrepancy. When the proposed rule was published, it was not clear that SIMS would be decommissioned. We have updated the final measure specifications to reflect the fact that SIMS has been decommissioned.
a. Clinical Measure Performance Standards
   For the same reasons stated in the CY 2013 ESRD PPS final rule (77 FR 67500 through 76502), we proposed for PY 2016 to set the performance standards (both achievement and improvement) based on the national performance rate (that is, the 50th percentile) of facility performance in CY 2012, except as specified below.
   With respect to the proposed NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure, we proposed to begin data collection beginning with CY 2014 events. We do not have data prior to CY 2014 for purposes of setting a performance standard based on the national performance rate of facility performance in CY 2012. For that reason, we proposed that the performance standard for the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure for PY 2016 be the 50th percentile of the national performance rate on the measure during CY 2014. Because we lack the baseline data needed to calculate an improvement score, we also proposed that, for PY 2016, facilities be scored only on achievement for this measure, and not on the basis of improvement. Although we recognize that with other measures that lacked baseline data we instituted a reporting measure to ensure that both an achievement and improvement score could be assessed, we believe that it is appropriate, in this case, to adopt a clinical measure without the baseline data necessary for an improvement score. Hospital Acquired Infections (HAIs) are a leading cause of preventable mortality and morbidity across different settings in the healthcare sector, including dialysis facilities, costing patient lives and billions of dollars. CMS has recognized that reducing HAIs is critically important to the Agency's three main goals of improving healthcare, improving health, and reducing healthcare costs. Because of the abnormally great impact HAIs have upon patients and the healthcare industry, we believe it is important to begin assessing facilities on the number of these events as soon as possible, rather than on merely whether they report these events. Additionally, the NHSN measure has been a reporting measure since PY 2014, which will give facilities 2 years to report data before they are scored on the data results. Thus, although we do not yet have complete baseline data to give improvement scores in PY 2016, we believe it is appropriate to implement this measure using only achievement scores because of the urgency in reducing these events and the time facilities have had to prepare themselves for such a measure. Finally, we proposed that facilities would receive a score of zero on the NHSN clinical measure if they do not submit 12 months of data, as defined in Section III.C.3.d above, and by the deadlines specified in Section III.C.3.d above.
   For the proposed Patient Informed Consent for Anemia Treatment, we stated that we believed that facilities should meet the standard 100 percent of the time. However, we recognized that unexpected events might make a 100 percent standard difficult to meet, so we proposed that facilities should be allowed to meet the standard for less than 100 percent of their patients. Because prior data are unavailable for the establishment of a performance standard, benchmark, and achievement threshold, we developed a methodology to determine appropriate achievement standards. As described in Section III.C.10 of the proposed rule, we proposed that a small facility adjuster would be applied to facilities with between 11 and 25 qualifying patients. Since facilities with between 11 and 25 patients would be subject to the favorable scoring modifications applied by the small-facility adjuster, these facilities would have an easier time achieving the proposed achievement standards. Therefore, the minimum number of cases a facility may have and not benefit from a small-facility adjuster would be 26. We calculated that if a facility with 26 cases failed to obtain consent for two qualifying cases, it would have obtained consent 92 percent of the time (rounded). If the facility failed to obtain consent for one case, it would have obtained consent 96 percent of the time (rounded). We believed that these values (92 and 96 percent) encourage a high consistency of care for patients with ESRD that is reasonably attainable by all facilities, while accounting for the possibility that facilities would be unable to obtain informed consent for reasons beyond their control. Therefore, we proposed that the achievement threshold be defined as obtaining informed consent for 92 percent of qualifying cases during the performance period, and that the benchmark would be defined as obtaining informed consent for 96 percent of such cases. Furthermore, we proposed to calculate the proposed performance standard using the average of the benchmark and achievement threshold, which is 94 percent. We sought comments on this performance standard.
   Because we lack the baseline data needed to calculate improvement scores for the Patient Informed Consent for Anemia Treatment measure, we also proposed that for PY 2016, facilities be scored only on achievement for this measure, and not on the basis of improvement. We recognized that with other measures where we lacked baseline data, we adopted a reporting measure to ensure that both an achievement and improvement score could be assessed. However, we stated that we believe that it is appropriate, in this case, to adopt a clinical measure without the baseline data necessary for an improvement score. Anemia management is a topic highlighted in the ESRD QIP authorizing statute, requiring measures that reflect labeling approved by the
   For the proposed Hypercalcemia measure, the first month that we can use to establish the baseline is
   We requested comments on these proposals. The comments we received on these proposals and our responses are set forth below.
   Comment: Several commenters stated that measures should have at least one year of reporting data available using consistent, well-defined data elements before being adopted as clinical measures.
   Response: As stated in the CY 2013 ESRD PPS final rule (77 FR 67488), we believe that achievement thresholds, benchmarks, and performance standards should be based on a full year of data whenever possible. However, we also believe that, in certain circumstances, it not practical or necessary to use a full year of baseline data. For example, as stated in the proposed rule, we believe the clinical importance of reducing HAIs warrants the adoption of the NHSN clinical measure without a full year of baseline data. Similarly, we believe that it is appropriate to use seven months of baseline data for the Hypercalcemia measure because serum calcium levels are not subject to seasonal variations, and because the seven-month time window offers a reliable representation of national facility performance.
   Comment: Several commenters stated that measures that lack the baseline data to calculate achievement and improvement scores should not be part of the ESRD QIP.
   Response: Although we believe that achievement and improvement scores should generally be based on two years of baseline data, we also believe that other considerations may warrant the adoption of clinical measures before this baseline data is available. In particular, we believe that the urgency of addressing substantial gaps in the quality of clinical care may outweigh the benefits associated with using two years of baseline data if these gaps present safety concerns for patients. Given the significant increases in healthcare acquired infections in dialysis patients discussed above, we believe the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure meets this criterion. As we explained above, we have taken steps to minimize the financial impact on facilities associated with adopting this measure in the PY 2016 ESRD QIP, and we will propose to award both achievement and improvement points to facilities on this measure as soon as the baseline data is available. We also note that the ESRD QIP has used reporting measures since the PY 2014 program. These measures are not scored on the basis of achievement and improvement. Rather, they exist in order to help facilities become familiar with different reporting mechanisms, ensure that facilities capture data that can improve the quality of care they provide, and collect the baseline data needed to calculate achievement and improvement scores.
   Comment: One commenter approved of the ESRD QIP overall. However, the commenter urged CMS to use measures that have been tested for reliability and validity, and that all clinical data should be retrieved from a single source.
   Response: We thank the commenter and affirm that all the measures in the ESRD QIP have been tested for reliability and validity. With respect to the suggestion that we limit clinical data to a single data collection source, it is infeasible at this time to collect all ESRD QIP data from a single source. Although we are mindful of the reporting burden for facilities, we strive to make use of existing data collection systems, and we consider the benefits and drawbacks of collecting data in different reporting systems.
   After consideration of the comments, we are finalizing the following performance standards for all of the PY 2016 clinical measures, except the Patient Informed Consent for Anemia Management clinical measure. We are not finalizing a performance standard for the Patient Informed Consent for Anemia Management clinical measure because we are not adopting that measure for the ESRD QIP.
b. Performance Standards for Clinical Measures
Table I.B.1-1--Projected Available Cellulosic Biofuel Plant Volumes in Million Gallons (mill gal) for 2014 Company Location Fuel type Annual First Projected production production 2014 capacity *a available volume *b Companies With Approved Pathways Abengoa Hugoton, KS Ethanol 24 1Q 2014 *c 0-18 DuPont Nevada, IA Ethanol 30 2H 2014 *c 0-2 INEOS Bio Vero Beach, Ethanol 8 3Q 2013 2-5 FL KiOR Columbus, MS Gasoline and 11 March 2013 0-9 Diesel Poet Emmetsburg, Ethanol 25 1H 2014 *c 0-6 IA Total for 8-30 *d companies with approved pathways Other Potential Cellulosic Biofuel Producers CNG/LNG Various CNG/LNG Various Various 35-54 Producers Edeniq Various Ethanol Various 1H 2014 *c 0-7 Ensyn Stanley, WI Heating Oil 3 2007 0-5 Total for 53-83 *d both companies with approved pathways and those with proposed pathways *a Facilities are generally designed to process a given quantity of feedstock and volume capacities may vary depending on yield assumptions. *b Volumes listed in million ethanol-equivalent gallons. *c Start-up dates for these facilities are projections. *d Total volumes are the result of Monte Carlo simulations rather than the sum of the low and high end of the range of projected available volume for each company. See Section II.C for more detail.
   FOOTNOTE 18 Medicare claims data from 2012 were used to calculate the performance standard for the Hemoglobin > 12 g/dL, Dialysis Adequacy, and Vascular Access Type clinical measures. CROWNWeb data from
   If the final numerical values for the PY 2016 performance standards are worse than PY 2015 for a measure, then we proposed to substitute the PY 2015 performance standard for that measure. We stated our belief that the ESRD QIP should not have lower standards than in previous years.
   We requested comment on this proposal. We did not receive any comments on this proposal. Using the most recent available data, we determined that the performance standard for the Kt/V Pediatric Hemodialysis Adequacy measure is 91.9%. Because this is lower than the performance standard of 93 percent from the PY 2015 ESRD QIP, we are finalizing a performance standard of 93 percent for the PY 2016 ESRD QIP. The finalized performance standards for the PY 2016 ESRD QIP clinical measures are set forth above in Table 8.
c. Performance Standards for Reporting Measures
   For the proposed ICH CAHPS reporting measure, we proposed to set the performance standard for PY 2016 as the facility's successful submission, by
   For the proposed Mineral Metabolism reporting measure, we proposed to set the performance standard as successfully reporting the measure for the number of qualifying cases specified in Section III.C.2.b for each month of the 12-month duration of the performance period.
   For the proposed Anemia Management reporting measure, we proposed to set the performance standard as successfully reporting the measure for the number of qualifying cases specified in Section III.C.2.c for each month of the 12-month duration of the performance period.
   For the proposed Anemia Management: Pediatric Iron Therapy reporting measure, we proposed to set the performance standard as successfully reporting for each qualifying case each quarter the following: (i) patient admit/discharge date; (ii) hemoglobin levels; (iii) serum ferritin levels; (iv) TSAT percentages; (v) the dates that the lab measurements were taken for items (ii)-(iv); (vi) intravenous IV iron prescribed or oral iron prescribed (if applicable); and (vii) the date that the IV iron or oral iron was prescribed (if applicable).
   For the proposed Comorbidity reporting measure, we proposed to set the performance standard as successfully updating in CROWNWeb at least once during the performance period for each qualifying case, the patient's comorbidities. We also proposed that the update be entered into CROWNWeb by the
   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 except for the Anemia Management: Pediatric Iron Therapy and the Comorbidity reporting measures, which we are not finalizing for adoption in the ESRD QIP.
8. Scoring for the PY 2016 ESRD QIP Measures
   In order to assess whether a facility has met the performance standards, we finalized a methodology for the PY 2014 ESRD QIP under which we separately score each clinical and reporting measure. We score facilities based on an achievement and improvement scoring methodology for the purposes of assessing their performance on the clinical measures (76 FR 70272 through 70273). We proposed to use a similar methodology for the purposes of scoring facility performance on each of the clinical measures for the PY 2016 ESRD QIP and future payment years, except that we proposed that there will only be an achievement score for the NHSN Bloodstream Infection in Hemodialysis Outpatients and Patient Informed Consent for Anemia Treatment clinical measures, because data are not available to calculate an improvement score.
   In determining a facility's achievement score for the PY 2016 program and future payment years, we proposed to continue using the current methodology described above, under which facilities would receive points along an achievement range based on their performance during the proposed performance period for each measure, which we define as a scale between the achievement threshold and the benchmark explained below. We proposed to define the achievement threshold for each of the proposed clinical measures as the 15th percentile of the national performance rate during CY 2012, except as otherwise specified below for the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure, the Patient Informed Consent for Anemia Treatment clinical measure, and the Hypercalcemia clinical measure. We believe that this achievement threshold will provide an incentive for facilities to continuously improve their performance, while not reducing incentives to facilities that score at or above the national performance rate for the clinical measures (77 FR 67503). We proposed to define the benchmark as the 90th percentile of the national performance rate during CY 2012, except as proposed below for the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure and the Patient Informed Consent for Anemia Treatment clinical measure, because it represents a demonstrably high but achievable standard of quality that the high performing facilities reached.
   For the proposed NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure, we proposed that the achievement threshold and benchmark be the 15th and 90th percentiles, respectively, of national performance during CY 2014.
   For the proposed Patient Informed Consent for Anemia Treatment clinical measure, and for the reasons described in Section III.C.7.a, we proposed that the achievement threshold be defined as obtaining informed consent for 92 percent of qualifying cases during the performance period, and that the benchmark be defined as obtaining informed consent for 96 percent of such cases.
   For the reasons described above, the first month that we can use to establish the baseline for the proposed Hypercalcemia measure is
   With the exception of the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure and the Patient Informed Consent Anemia Treatment clinical measure, we proposed that facilities receive points along an improvement range, defined as a scale running between the improvement threshold and the benchmark. We proposed to define the improvement threshold as the facility's performance on the measure during CY 2013. The facility's improvement score would be calculated by comparing its performance on the measure during CY 2014 (the proposed performance period) to its performance rate on the measure during CY 2013. Because we lack the baseline data needed to calculate improvement scores for the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure and the Patient Informed Consent for Anemia Treatment clinical measure, we proposed that facilities will not receive improvement scores for these measures for PY 2016.
   We requested comments on these proposals. The comments we received on these proposals and our responses are set forth below.
   Comment: Several commenters supported the achievement/improvement scoring methodology that is carried over from the PY 2015 program.
   Response: We thank the commenters for their support.
   Comment: Several commenters believed that the achievement/improvement scoring methodology is inappropriate for measures with compressed performance ranges. These commenters stated that in such cases, noncompliance for a single patient can easily result in a facility receiving 0 points instead of 10, resulting in a standard of perfection that is impossible to meet. In such cases, the commenters recommended giving a facility a pass for one noncompliant patient or otherwise altering the scoring methodology to award higher scores to facilities with very few noncompliant patients..
   Response: We recognize that measures with compressed performance scores, such as the Hemoglobin Greater Than 12 g/dL measure, present special challenges for the achievement/improvement methodology finalized in the CY 2013 ESRD PPS final rule. We will consider the commenters' suggestion as we work to address these challenges in future payment years.
   Comment: One commenter recommended that new facilities should be scored the first year they are open on all of the clinical and reporting measures, and that their scores should be publicly reported, but that they should not be eligible to receive a payment reduction. The commenter stated that this is a fair way to handle new facilities, because they will have to post a Performance Score Certificate, but they would not experience adverse financial consequences.
   Response: We appreciate the commenter's concerns about the difficulties new facilities face when meeting the requirements of the ESRD QIP. It is because of these concerns that facilities with CCN open dates after
   Comment: One commenter recommended that facilities be given a monthly report that previews the facility's performance rate on each of the measures in the ESRD QIP. The commenter believes this would provide facilities with a better opportunity to monitor and improve performance.
   Response: We appreciate the commenter's request for CMS to provide timely information about facilities' performance on the ESRD QIP. However, we believe that offering a monthly preview of a facility's performance rate may not provide an accurate estimate of a facility's actual score during the performance period. Most clinical measures require at least four months of data, and a monthly preview may not include enough data for the first several months. Additionally, case minimums for the clinical and reporting measures are based on numbers of patients treated during the performance period, so it would not be possible to determine if a facility were eligible to receive a score on each of the measures until the conclusion of the performance period. Furthermore, attestations through CROWNWeb are due by
   After consideration of the comments, we are finalizing the achievement thresholds, benchmarks, and improvement thresholds for the PY 2016 ESRD QIP clinical measures that are listed below. We are not finalizing achievement thresholds, benchmarks, and improvement thresholds for the Informed Consent for Anemia Management clinical measure because we are not adopting that measure for the ESRD QIP. We have calculated the numerical values for the achievement threshold and benchmarks based on data from the dates described above; we will calculate the numerical values for the improvement thresholds (where applicable) based on individual facilities' data from CY 2013. The numerical values for the achievement thresholds and benchmarks for the PY 2016 ESRD QIP clinical measures are set forth below in Table 9.
Table I.B.4-2--Proposed Percentage Standards for 2014 Cellulosic biofuel 0.010% Biomass-based diesel 1.16% Advanced biofuel 1.33% Renewable fuel 9.20%
   FOOTNOTE 19 Medicare claims data from 2012 were used to calculate the achievement threshold and benchmark for the Hemoglobin > 12 g/dL, Dialysis Adequacy, and Vascular Access Type clinical measures. CROWNWeb data from
   We proposed that if the final PY 2016 numerical values for the achievement thresholds and benchmarks are worse than PY 2015 for a given measure, we will substitute the PY 2015 achievement thresholds and benchmarks 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. We did not receive any comments on this proposal. Using the most recent available data, we determined that the achievement threshold for the Kt/V Adult Hemodialysis Adequacy measure is 85.6 percent. Because this is lower than the achievement threshold of 86 percent from the PY 2015 ESRD QIP, we are finalizing an achievement threshold of 86 percent for the PY 2016 ESRD QIP. Using the most recent available data, we determined that the achievement threshold for the Kt/V Pediatric Hemodialysis Adequacy measure is 71.3 percent. Because this is lower than the achievement threshold of 83 percent from the PY 2015 ESRD QIP, we are finalizing an achievement threshold of 83 percent for the PY 2016 ESRD QIP. We will, therefore, finalize the achievement thresholds and benchmarks set forth above in Table 9 for the PY 2016 ESRD QIP clinical measures.
a. Scoring Facility Performance on Clinical Measures Based on Achievement
   Using the same methodology we finalized in the CY 2013 ESRD PPS final rule, we proposed to award between 0 and 10 points for each of the proposed clinical measures (77 FR 67504). As noted, we proposed that the score for each of these clinical measures will be based upon the higher of an achievement or improvement score on each of the clinical measures, except for the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure and the Patient Informed Consent for Anemia Treatment clinical measure, which we proposed to score on achievement alone. For purposes of calculating achievement scores for the clinical measures, we proposed to base the score on where a facility's performance rate falls relative to the achievement threshold and the benchmark for that measure. (Performance standards do not enter into the calculation of improvement or achievement scores.) Identical to what we finalized in the CY 2013 ESRD PPS final rule, we proposed that if a facility's performance rate during the performance period is:
    * Equal to or greater than the benchmark, then the facility would receive 10 points for achievement;
    * Less than the achievement threshold, then the facility would receive 0 points for achievement; or
    * Equal to or greater than the achievement threshold, but below the benchmark, then the following formula would be used to derive the achievement score:
   [9 * ((Facility's performance period rate--achievement threshold)/(benchmark--achievement threshold))] + .5, with all scores rounded to the nearest integer, with half rounded up.
   Using this formula, a facility would receive a score of 1 to 9 points for a clinical measure based on a linear scale distributing all points proportionately between the achievement threshold and the benchmark, so that the interval in the performance between the score for 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.
   We did not receive any comments on this proposal. Therefore, we are finalizing the achievement scoring methodology for the PY 2016 ESRD QIP and future payment years, with the exception of the Informed Consent for Anemia Management clinical measure, because we are not adopting that measure for the ESRD QIP.
b. Scoring Facility Performance on Clinical Measures Based on Improvement
   Using the same methodology we have previously finalized for the ESRD QIP, we proposed that facilities would earn between 0 and 9 points for each of the clinical measures that will have an improvement score (that is, all clinical measures except the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure and the Patient Informed Consent for Anemia Treatment), based on how much their performance on the measure during CY 2014 improved from their performance on the measure during CY 2013 (77 FR 67504). A specific improvement range for each measure would be established for each facility. We proposed that if a facility's performance rate on a measure during the performance period is:
    * Less than the improvement threshold, then the facility would receive 0 points for improvement; or
    * Equal to or greater than the improvement threshold, but below the benchmark, then the following formula would be used to derive the improvement score:
   [10 * ((Facility performance period rate--Improvement threshold)/(Benchmark--Improvement threshold))]--.5, with all scores rounded to the nearest integer, with half rounded up.
   Note that if the facility score is equal to or greater than the benchmark, then it would receive 10 points on the measure based on the achievement score methodology discussed above.
   We did not receive any comments on this proposal. We will therefore finalize the improvement scoring methodology for the PY 2016 ESRD QIP and future payment years with the exception of the Informed Consent for Anemia Management clinical measure, because we are not adopting that measure for the ESRD QIP.
c. Calculating Facility Performance on Reporting Measures
   As noted above, reporting measures differ from clinical measures in that they are not scored based on clinical values; rather, they are scored based on whether facilities are successful in achieving the reporting requirements associated with each of these proposed measures. The criteria that we proposed would apply to each reporting measure are discussed below.
   With respect to the proposed Anemia Management reporting measure and the proposed Mineral Metabolism reporting measure, we proposed to award points to facilities using the same formula that we finalized in the CY 2013 ESRD PPS final rule for Mineral Metabolism and Anemia Management (77 FR 67506):
See Illustration in Original Document.
   With respect to the proposed Use of Iron Therapy for Pediatric Patients reporting measure, we proposed to award points to facilities using the following formula:
See Illustration in Original Document.
   We proposed to score the Pediatric Iron Therapy measure differently than the proposed Anemia Management reporting measure and the proposed Mineral Metabolism reporting measure because it requires quarterly rather than monthly reporting; therefore, scoring based on monthly reporting rates is not feasible.
   With respect to the proposed ICH CAHPS reporting measure and Comorbidity reporting measure, we proposed that a facility receive a score of 10 points if it satisfies the performance standard for the measure, and 0 points if it does not. We proposed to score these reporting measures differently than the other reporting measures because these measures require annual or biannual reporting, and therefore scoring based on monthly or quarterly reporting rates is not feasible.
   We requested comments on the proposed methodology for scoring the PY 2016 ESRD QIP reporting measures. We did not receive any comments on this proposal. We will, therefore, finalize the scoring methodology for the reporting measures as proposed, with the exception of the Pediatric Iron Therapy and Comorbidity reporting measures, because we are not adopting those measures for the ESRD QIP.
9. Weighting the PY 2016 ESRD QIP Measures and Calculating the PY 2016 ESRD QIP Total Performance Score
   Section 1881(h)(3)(A)(iii) of the Act provides that the methodology for calculating the facility TPS shall include a process to weight the performance scores with respect to individual measures to reflect priorities for quality improvement, such as weighting 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 appropriately weight the PY 2016 ESRD QIP measures for purposes of calculating the TPS, we considered two criteria: (1) the number of measures we proposed to include in the PY 2016 ESRD QIP; and (2) the National Quality Strategy priorities.
a. Weighting Individual Measures To Compute Measure Topic Scores for the Kt/V Dialysis Adequacy Measure Topic, the Vascular Access Type Measure Topic, and the Anemia Management Clinical Measure Topic
   In the CY 2013 ESRD PPS final rule, we established a methodology for deriving the overall scores for measure topics (77 FR 67507). For the reasons described in the CY 2013 ESRD PPS final rule, we proposed to use the same methodology in PY 2016 and future payment years to calculate the scores for the three measure topics. After calculating the individual measure scores within a measure topic, we proposed to calculate a measure topic score using the following steps: (i) Dividing the number of patients in the denominator of each measure by the sum of the number of patients in each denominator for all of the applicable measures in the measure topic; (ii) multiplying that figure by the facility's score on the measure; (iii) summing the results achieved for each measure; and (iv) 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 (as discussed below), then that measure would not be included in the measure topic score for that facility. Only one measure within the measure topic needs to have enough cases to be scored in order for the measure topic to be scored and included in the calculation of the TPS. We also proposed that the measure topic score would be equal to one clinical measure in the calculation of the TPS. For an additional explanation, see the examples provided at 77 FR 67507.
   We did not receive any comments on this proposal. We will therefore finalize this methodology of weighting individual measure scores to derive a measure topic score for the PY 2016 ESRD QIP and future payment years with the exception of the Anemia Management Clinical measure topic, because we are not adopting that measure topic for the ESRD QIP.
b. Weighting the Total Performance Score
   We continue to believe that weighting the clinical measures/measure topics equally will incentivize facilities to improve and achieve high levels of performance across all of these measures, resulting in overall improvement in the quality of care provided to patients with ESRD. We also continue to believe that, while the reporting measures are valuable, the clinical measures evaluate actual patient outcomes and therefore justify a higher combined weight (77 FR 67506 through 67508). For the reasons outlined in the CY 2013 ESRD PPS final rule, we proposed to continue weighting clinical measures as 75 percent and reporting measures as 25 percent of the TPS. We requested comments on this proposed methodology for weighting the clinical and reporting measures.
   We have also considered the issue of awarding a TPS to facilities that do not report data on the proposed minimum number of cases with respect to one or more of the measures or measure topics. For the reasons stated in the CY 2013 ESRD PPS final rule, for PY 2016 and future payment years, we proposed to continue to require a facility to have at least one clinical and one reporting measure score to receive a TPS (77 FR 67508). We requested comments on our proposals to require a facility to be eligible for a score on at least one reporting and one clinical measure in order to receive a TPS.
   Finally, we proposed that the TPSs be rounded to the nearest integer, with half of an integer being rounded up. We requested comments on this proposal. For further examples regarding measure and TPS calculations, we refer readers to the figures below.
   We requested comments on these proposals. The comments we received on these proposals and our responses are set forth below.
   Comment: Several commenters supported the proposed methodology for weighting measures in the TPS.
   Response: We thank the commenters for their support.
   Comment: One commenter did not support the adoption of the Hypercalcemia measure because hypercalcemia might not be an important clinical indicator, and the measure would dilute the effectiveness of the ESRD QIP by reducing the weight of other clinical measures. Other commenters did not support the adoption of the Hypercalcemia measure but recommended weighting it at 10 percent of the TPS if the measure was adopted.
   Response: Given commenters' concerns about the clinical significance of the Hypercalcemia measure (see Section III.C.3.b above), particularly because the measure does not incorporate other indicators of mineral metabolism, we agree with the recommendation to decrease the measure's weight in the TPS. We note that if the Hypercalcemia measure were weighted at 10 percent of the TPS, and the clinical measures continued to comprise 75 percent of the TPS overall, then the weight of the Hypercalcemia measure would be receive roughly two-thirds the weight of the four other clinical measures. We believe that decreasing the Hypercalcemia measure's weight by one-third appropriately reflects the fact that in the absence of other information about mineral management, the Hypercalcemia measure is less clinically significant than the other clinical measures.
   Therefore, for PY 2016 and future payment years, we are finalizing that the Hypercalcemia measure will weighted at two-thirds the weight of the other clinical measures, and that the clinical measures will continue to constitute 75 percent of the TPS. If a facility is not eligible for one or more of the clinical measures, we are finalizing that the Hypercalcemia measure will still be weighted at two-thirds the weight of the other clinical measures, and that the other measures will be equally weighted, such that the clinical measures comprise 75 percent of the TPS.
   Comment: Several commenters did not support either the proposal to equally weight all clinical measures or the proposal to equally weight all reporting measures. These commenters expressed concerns that this methodology over-weights new measures and may not place enough emphasis on measures that have the most clinical importance. The commenters recommended establishing a set of weighting principles that take into account (1) how long the measure has been included in the ESRD QIP; (2) whether room for improvement exists; (3) the measure's clinical significance; and (4) the number of patients affected by the measure. The commenters also recommended that CMS should collaborate with the MAP to determine measure weights.
   Response: We agree that it is not appropriate to equally weight all of the clinical measures if their clinical significance is not equal. That is why we are reducing the weight of the Hypercalcemia clinical measure, as explained above. Using this criterion, we do not agree that the reporting measures should be weighted differently because the reporting measures have similar clinical significance.
   Furthermore, we appreciate the recommended principles for weighting the measures' contribution to the TPS. We will consider these recommendations in future rulemaking except for the recommendation to collaborate with the MAP on measure weighting.
   Although the MAP provides input on measures under consideration, its statutorily authorized function does not include commenting on Medicare quality incentive program implementation policy.
   Comment: One commenter recommended that the clinical measures should constitute 90 percent of the TPS and the reporting measures should constitute 10 percent. The commenter stated that the ESRD QIP should evaluate providers' performance rather than their ability to track and report information, and that a 90 percent/10 percent weighting methodology would accomplish that.
   Response: We agree that it is important to weight the clinical measures significantly more than the reporting measures because the clinical measures evaluate provider's clinical performance, rather than their ability to track and report information. However, we also believe that the reporting measures should carry enough weight to provide facilities with an incentive to report data to CMS. We are finalizing 5 clinical measures/measure topics and 3 reporting measures. Since this ratio is not significantly different than our proposal to adopt 6 clinical measures/measure topics and 5 reporting measures we continue to believe that the 75 percent/25 percent distribution appropriately balances the need to incentivize performance with the need to incentive the reporting of data.
   For these reasons, we are finalizing that the clinical measures will be weighted at 75 percent of the TPS and that the reporting measures will be weighted at 25 percent of the TPS. We are also finalizing that the Hypercalcemia clinical measure will be weighted at two-thirds the weight of the other clinical measures, and that the reporting measures will be weighted equally.
c. Examples of the PY 2016 ESRD QIP Scoring Methodology
   In this section, we provide examples to illustrate the scoring methodology for PY 2016. Figures 1-3 illustrate the scoring for the Vascular Access Type--Fistula measure. Figure 1 shows Facility A's performance on the measure. Note that for this example, the facility has performed very well. The example benchmark (the 90th percentile of performance nationally in CY 2012) calculated for this clinical measure is 77 percent, and the example achievement threshold (which is the 15th percentile of performance nationally in CY 2012) is 50 percent. Therefore, Facility A's performance of 86 percent on the clinical measure during the performance period exceeds the benchmark of 77 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.)
See Illustration in Original Document.
   Figure 2 shows an example of scoring for another facility, Facility B. As illustrated below, the facility's performance on the Vascular Access Type--Fistula measure improved from 26 percent in CY 2013 to 54 percent during the performance period. The achievement threshold is 50 percent and the achievement benchmark is 77 percent. Because the facility's performance during the performance period is within the achievement range and the improvement range, we must calculate the improvement and achievement scores to determine the Vascular Access Type--Fistula measure.
   To calculate the achievement score, we would apply the formula discussed above. The result of this formula for this example is [9 * ((54--50)/(77--50))] + .5, which equals 1.83, and we round to the nearest integer, which is 2.
   Likewise, to calculate the improvement score, we apply the improvement formula discussed above. The result of this formula for this is example is [10 * ((54--26)/(77--26))]--.5, which equals 4.99 and we round to the nearest integer, which is 5.
   Therefore, for the Vascular Access Type--Fistula measure, Facility B's achievement score is 3, and its improvement score is 5. We award Facility B the higher of the two scores for this clinical measure. Thus, Facility B's score on this measure is 5.
See Illustration in Original Document.
   In Figure 3, Facility C's performance on the Vascular Access Type--Fistula measure drops from 26 percent in CY 2013 to 23 percent during the performance period, a decline of 3 percent. Because Facility C's performance during the performance period falls below the achievement threshold of 26 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 performance during CY 2013. Therefore, in this example, Facility C would receive 0 points for the Vascular Access Type--Fistula measure.
See Illustration in Original Document.
   The methods 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 discussed earlier.)
   After calculating the scores for each measure, we would calculate the TPS. As an example, by applying the weighting criteria to a facility that receives a score on all finalized measures, we would calculate the facility's TPS using the following formula:
Total Performance Score = [(.161 * Vascular Access Type Measure Topic) + (.161 * Kt/V Dialysis Adequacy Measure Topic) + (.161 * Hemoglobin Greater Than 12 g/dL) + (.107 * Hypercalcemia Measure) + (.161 * NHSN Bloodstream Infection in Hemodialysis Outpatients) + (.083 * ICH CAHPS Survey Reporting Measure) + (.083 * Mineral Metabolism Reporting Measure) + (.083 * Anemia Management Reporting Measure)] * 10.
The TPS would be rounded to the nearest integer (and any individual measure values ending in .5 would be rounded to the next higher integer).
   The formula changes in the event that a facility does not receive a score on a particular measure. If, for example, a facility did not receive a score (that is, did not have enough qualifying cases) on the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure, then the facility's TPS would be calculated as follows:
Total Performance Score = [(.205 * Vascular Access Type Measure Topic) + (.205 * Kt/V Dialysis Adequacy Measure Topic) + (.205 * Hemoglobin Greater Than 12 g/dL) + (.137 * Hypercalcemia) + (.083 * ICH CAHPS Survey Reporting Measure) + (.083 * Mineral Metabolism Reporting Measure) + (.083 * Anemia Management Reporting Measure)] * 10.
Again, the TPS would be rounded to the nearest integer (and any individual measure values ending in .5 would be rounded to the next higher integer).
   If, for example, a facility did not receive a score (that is, did not have enough qualifying cases) on the Hypercalcemia clinical measure, then the facility's TPS would be calculated as follows:
Total Performance Score = [(.188 * Vascular Access Type Measure Topic) + (.188 * Kt/V Dialysis Adequacy Measure Topic) + (.188 * Hemoglobin Greater Than 12 g/dL) + (.188 * NHSN Bloodstream Infection in Hemodialysis Outpatients) + (.083 * ICH CAHPS Survey Reporting Measure) + (.083 * Mineral Metabolism Reporting Measure) + (.083 * Anemia Management Reporting Measure)] * 10.
   If a facility is eligible for only two of the reporting measures, then the facility's TPS would be calculated as follows:
   Total Performance Score = [(.161 * Vascular Access Type Measure Topic) + (.161 * Kt/V Dialysis Adequacy Measure Topic) + (.161 * Hemoglobin Greater Than 12 g/dL) + (.107 * Hypercalcemia Measure) + (.161 * NHSN Bloodstream Infection in Hemodialysis Outpatients) + (.125 * ICH CAHPS Survey Reporting Measure) + (.125 * Anemia Management Reporting Measure)] * 10.
   Again, the TPS would be rounded to the nearest integer (and any individual measure values ending in .5 would be rounded to the next higher integer).
10. Minimum Data for Scoring Measures for the PY 2016 ESRD QIP and Future Payment Years
   For the same reasons described in the CY 2013 ESRD PPS final rule (77 FR 67510 through 67512), for PY 2016 and future payment years, we proposed to only score facilities on clinical and reporting measures for which they have a minimum number of qualifying cases during the performance period. For PY 2016 and future payment years, we proposed that a facility must have a threshold of at least 11 qualifying cases for the entire performance period in order to be scored on a clinical measure. We proposed that reporting measures other than ICH CAHPS will have a threshold of one qualifying case during the performance period. The 11-qualifying case minimum was intended to reduce burden on facilities with limited qualifying cases for earlier reporting measures (77 FR 67480, 67483, 67486 and 67493). We proposed to set the reporting measure case minimums at one because we plan to use data to permit future implementation of clinical measures. If patients in small facilities are systematically excluded, then we will not be able to gather the robust data we need to support the performance standard, benchmark, and achievement threshold calculations in future payment years. For those reasons, we proposed that the case minimum for all reporting measures except for ICH CAHPS be one.
   For the proposed expanded ICH CAHPS reporting measure, we proposed that facilities with fewer than 30 qualifying cases during the performance period not be scored on the measure. In the CY 2013 ESRD PPS final rule, we excluded facilities with 10 or fewer adult in-center hemodialysis patients from the ICH CAHPS measure because we recognized that, for many small dialysis facilities, hiring a third-party administrator to fulfill the ICH CAHPS survey requirements would have been impractical or prohibitively costly (77 FR 67480). As we move toward developing a clinical measure, we have determined that the survey results are more reliable if there are at least 30 surveys submitted per facility. Therefore, we proposed that for PY 2016 and future payment years, facilities that treat fewer than 30 qualifying cases (defined as adult in-center hemodialysis patients) during the performance period will be excluded from this measure. We further proposed that we will consider a facility to have met the 30-patient threshold unless it affirmatively attests in CROWNWeb by
   For the same reasons described in the CY 2013 ESRD PPS final rule (77 FR 67510 through 67512), for PY 2016 and future payment years, we proposed to apply to each clinical measure score for which a facility has between 11 and 25 qualifying cases the same adjustment factor we finalized in the CY 2013 ESRD PPS final rule (77 FR 67511). We solicited public comment on these proposals.
   For the PY 2016 ESRD QIP and future payment years, we also proposed to continue to begin counting the number of months or quarters, as applicable, for which a facility is open on the first day of the month after the facility's CCN open date. With the exception of the ICH CAHPS expanded reporting measure, we proposed that only facilities with a CCN open date before
   As discussed above, we proposed that a facility will not receive a TPS unless it receives a score on at least one clinical and one reporting measure. We noted that finalizing this proposal would result in facilities not being eligible for a payment reduction for the PY 2016 ESRD QIP and future payment years if they have a CCN open date on or after
   We requested comments on these proposals. The comments we received on these proposals and our responses are set forth below.
   Comment: Several commenters supported the proposed performance standards for the reporting measures, including the 30-case minimum for the ICH CAHPS reporting measure.
   Response: We thank the commenters for their support.
   Comment: Several commenters did not support the proposed reporting threshold of 97 and 99 percent for the Mineral Metabolism and Anemia Management reporting measures. These commenters stated that the threshold will unduly penalize small facilities. The commenters did not believe that that this possibility is mitigated by the alternative threshold of the 50th percentile of facility reporting in CY 2013, or by the requirement for facilities with fewer than 11 patients to report for all but one patient.
   Response: We disagree that the proposed reporting threshold for the mineral metabolism and anemia management reporting measures unduly penalizes small facilities. In proposing that facilities with between 10 and 2 eligible patients must report monthly serum phosphorus and hemoglobin/hematocrit levels for all but one patient, we effectively created a reporting threshold of 90 percent for facilities with 10 patients, and a reporting threshold of less than 90 percent for facilities with 9 or fewer patients. Because facilities with fewer than 11 patients must meet lower reporting thresholds than facilities with more than 11 patients, we believe that this provision adequately addresses the possibility that a small facility will not be able to report data for certain patients for reasons that are beyond the facility's control.
   Comment: Several commenters recommended applying a consistent case minimum (of either 11 or 26) to all ESRD QIP measures.
   Response: We disagree that it is appropriate to establish a consistent case minimum for all of the ESRD QIP measures. As stated in the CY 2014 ESRD PPS proposed rule (78 FR 40871), we proposed to "set the reporting measure case minimums at one because we plan to use data to permit future implementation of clinical measures. If patients in small facilities are systematically excluded, then we will not be able to gather the robust data we need to support the performance standard, benchmark, and achievement threshold calculations in future payment years." Additionally, due to the considerations about the reliability of ICH CAHPS data discussed above, we decided that 30 was the appropriate case minimum for the ICH CAHPS reporting measure. We therefore do not believe that an 11- or 26-case minimum is appropriate for any of the reporting measures.
   As stated in the CY 2013 ESRD PPS final rule (77 FR 67510 through 67511), we adopted an 11-case minimum for the clinical measures based on the minimum number of cases needed to protect patient privacy, which could be compromised by the public reporting of data for small facilities. Given our goal to encourage quality improvement, we want to ensure the full participation of as many facilities as possible in the program. We therefore do not believe that a 26 case minimum is appropriate for the clinical measures.
   Comment: One commenter expressed concerns that the 11-case minimum for the clinical measures excludes virtually all of the pediatric dialysis facilities from participation in the ESRD QIP. The commenter recognizes the this case minimum is important for the purposes of protecting patient confidentiality, but the commenter remained concerned that pediatric facilities will not have an opportunity to use the ESRD QIP to improve performance.
   Response: We are cognizant of the issues relating to inclusion of pediatric dialysis facilities in the ESRD QIP and continue to consider pathways to ensure that they are not excluded from participation. We appreciate the commenter's concerns and will continue to consider new pathways for incorporating pediatric dialysis facilities in the ESRD QIP.
   Comment: Some commenters did not support the proposal to use the small-facility adjuster for facilities with 11 to 26 patients. These commenters stated that (1) the volatility associated with small sample sizes may create unintended and harmful consequences for facilities; (2) the methodology to adjust results for small samples sizes is complex and opaque; and (3) very small differences in both sample size and SE (xi) can cause the achievement score to "jump" from 10 to 0 points (or vice versa).
   Response: We do not agree that the small-facility adjuster will create harmful consequences for facilities, or that small differences in sample size and SE (xi) can result in significant disparities in measure scores. While we recognize that the adjustment methodology is complex, we disagree that it is opaque. First, as illustrated below, the proposed small facility adjuster could only improve a facility's individual component score and will not create unintended and harmful consequences for small facilities (or facilities of any size). Second, the adjuster is transparent and straightforward, in that the adjustment explicitly depends on a facility's size (number of patients eligible for the measure), the unadjusted measure rate, and the standard error for that measure at the facility, which quantifies the amount of uncertainty in the unadjusted measure rate. Thirdly, even with small differences in both sample size and SE (xi), the adjustment will still be applied in favor of the facility, and it is impossible for a facility's measure score to be reduced as a result of the application of the adjuster. The following example illustrates how the small facility adjustment impacts the achievement score for the AV fistula measure.
See Illustration in Original Document.
   In the example above, the small-facility adjustment increased the AV fistula performance rate from 55 percent to 69 percent and the achievement score from 2 to 7.
   For these reasons, we are finalizing as proposed the minimum data requirements for scoring measures for the PY 2016 ESRD QIP and future payment years.
11. Payment Reductions for the PY 2016 ESRD QIP and Future Payment Years
   Section 1881(h)(3)(A)(ii) of the Act requires the Secretary to ensure that the application of the scoring methodology results in an appropriate distribution of payment reductions across facilities, such that facilities achieving the lowest TPSs receive the largest payment reductions. For PY 2016, we proposed that a facility would not receive a payment reduction if it achieves a minimum TPS that is equal to or greater than the total of the points it would have received if: (i) it performed at the performance standard for each clinical measure; (ii) it received zero points for each clinical measure that did not have a numerical value for the performance standard published with the PY 2016 final rule; and (iii) it received five points for each reporting measure. We requested comments on these proposals.
   Section 1881(h)(3)(A)(ii) of the Act requires that facilities achieving the lowest TPSs receive the largest payment reductions. For PY 2016 and future payment years, we proposed that the payment reduction scale be the same as the PY 2015 ESRD QIP (77 FR 67514 through 67516). We proposed that, for every 10 points a facility falls below the minimum TPS, the facility would receive an additional 0.5 percent reduction on its ESRD PPS payments for PY 2016 and future payment years, with a maximum reduction of 2.0 percent. As we stated in the CY 2012 ESRD PPS final rule, we believe that such a sliding scale will incentivize facilities to meet the performance standards established and continue to improve their performance; even if a facility fails to achieve the minimum TPS, such a facility will still be incentivized to strive for and attain better performance rates in order to reduce the percentage of its payment reduction (76 FR 70281).
   We requested comments on these proposals. The comments we received on these proposals and our responses are set forth below.
   Comment: Several commenters supported the payment reduction scale. However, these commenters remained concerned that "when a facility has a small number of patients, its TPS can be quickly reduced, causing financial harm to the facility."
   Response: We are aware that small facilities are more susceptible to the effects of outliers, due to their small sample sizes, and that this creates a real potential for them to be unfairly scored on measures in the ESRD QIP. It is for this reason that the ESRD QIP includes a small facility adjustment on the clinical measures for facilities that treat between 11 and 25 patients. We continue to believe that this adjustment provides a fairer and more precise way to account for the effects of outliers that could otherwise impact a small facility's TPS.
   For the reasons stated above, we are finalizing our proposals for calculating payment reductions for PY 2016 and future payment years. Based on this approach, the minimum TPS for PY 2016 is 54 points. Facilities failing to meet this minimum will receive payment reductions in the amounts indicated in Table 10 below.
[TB] Table 10--Finalized Payment Reduction Scale for PY 2016 Based on the Most Recently Available Data(20M) Total performance score Reduction (percent) 100-54 0 53-44 0.5 43-34 1.0 33-24 1.5 23-0 2.0 [TE]
12. Data Validation
   FOOTNOTE 20 Medicare claims data from 2012 were used to calculate the achievement threshold, benchmark, and performance standard for the Hemoglobin > 12 g/dL, Dialysis Adequacy, and Vascular Access Type clinical measures. CROWNWeb data from
   One of the critical elements of the ESRD QIP's success is ensuring that the data submitted to calculate measure scores and TPSs are accurate. We began a pilot data-validation program in CY 2013 for the ESRD QIP, and we are now in the process of procuring the services of a data-validation contractor, who will be tasked with validating a national sample of facilities' records as they report CY 2013 data to CROWNWeb. The first priority will be to develop a methodology for validating data submitted to CROWNWeb under the pilot data-validation program; once this methodology has been developed, CMS will publicize it through a CROWN Memo and solicit public comment. As part of the CY 2013 ESRD QIP PPS final rule (77 FR 67522 through 67523), we finalized a requirement to sample approximately 10 records from 750 randomly selected facilities; these facilities will have 60 days to comply once they receive requests for records. We proposed to extend this pilot data-validation program to include analysis of data submitted to CROWNWeb during CY 2014. For the PY 2016 ESRD QIP, sampled facilities will be reimbursed by our validation contractor for the costs associated with copying and mailing the requested records. Additionally, we proposed to reduce the annual random sample size from 750 to 300. We believe that this smaller sample size will still yield a sufficiently precise estimate of ESRD QIP reliability while imposing a smaller burden on ESRD QIP-eligible facilities and CMS alike. We proposed to extend our policy that no facility will receive a payment reduction resulting from the validation process for CY 2014 during PY 2016. Once we have gathered additional information based on these initial validation efforts, we will propose further procedures for validating data submitted in future years of the ESRD QIP. These procedures may include a method for scoring facilities based on the accuracy of the data they submit to CROWNWeb, and a method to assign penalties for submitting inaccurate data. We solicited comments on these proposals.
   We are also considering a feasibility study for validating data reported to CDC's NHSN Dialysis Event Module. Although this is still in the early stages of development, we anticipate that this study may incorporate the methodology used by CMS's Hospital Inpatient Quality Reporting Program (77 FR 53539 through 53553), as well as additional input from CDC. The feasibility study will likely: (i) Estimate the burden and associated costs to ESRD QIP-eligible facilities for participating in an NHSN validation program; (ii) assess the costs to CMS to implement an NHSN validation program on a statistically relevant scale; and (iii) develop and test a protocol to validate NHSN data in nine ESRD QIP-eligible facilities. Facilities would be selected on a voluntary basis. Based on the results of this study, we intend to propose more detailed requirements for validating NHSN data used in the ESRD QIP in the future.
   We requested comments on these proposals. The comments we received on these proposals and our responses are set forth below.
   Comment: Several commenters urged CMS to validate NHSN data and to publish the processes that will be used for data validation.
   Response: As noted above, we are considering a feasibility study for validating NHSN data submitted by facilities. If we proceed with the study, then we will publish the process used to validate NHSN data before the study is conducted.
   Comment: Several commenters supported the proposal to extend the data-validation pilot, to reduce the sample size from 750 to 300 facilities, and to not penalize facilities for submitting invalid data (particularly until CROWNWeb is fully functional). These commenters also appreciated the opportunity to comment on future validations methodologies. However, some commenters urged CMS to reimburse facilities for staff time, as well as for costs associated with copying and mailing patient records.
   Response: We thank the commenter for the support. Additionally, we note that CMS has not historically reimbursed provider staff or contractors for staff time spent in connection with copying and mailing patient records, and we believe these costs are minimal in comparison with the value of validating data used in the ESRD QIP.
   For the reasons stated above, we are finalizing our proposal to extend the data validation pilot as proposed, and we will post the methodology, procedures and results of the PY 2016 pilot on http://www.dialysisreports.org.
13. Scoring Facilities Whose Ownership Has Changed
   During PY 2012 (our first implementation year for the ESRD QIP), facilities requested guidance regarding how a change in ownership affects any applicable ESRD QIP payment reductions. Starting with the implementation of the PY 2015 ESRD QIP (the performance period of which is CY 2013), the application of an ESRD QIP payment reduction depended on whether the facility retained its CCN after the ownership transfer. If the facility's CCN remained the same after the facility was transferred, then we considered the facility to be the same facility (despite the change in ownership) for the purposes of the ESRD QIP, and we applied any ESRD QIP payment reductions that would have applied to the transferor to the transferee. Likewise, as long as the facility retained the same CCN, we calculated 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 received a new CCN as a result of a change in ownership, then we treated the facility as a new facility for purposes of the ESRD QIP based on the new facility's CCN open date. We believe that these policies are the most operationally efficient, and will allow facilities the greatest amount of certainty when they change ownership. We proposed to continue applying these rules during the PY 2016 ESRD QIP and future years of the program, and we requested public comments on this proposal.
   We did not receive any comments on this proposal. Therefore, we are finalizing our proposals for scoring facilities whose ownership has changed for the PY 2016 ESRD QIP and for future payment years.
14. Public Reporting Requirements
   Section 1881(h)(6)(A) of the Act requires the Secretary to establish procedures for making information available to the public about facility performance under the ESRD QIP, including information on the TPS (along with appropriate comparisons of facilities to the national average with respect to such scores) and 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 publication. In addition, section 1881(h)(6)(C) of the Act requires the Secretary to provide each facility with a certificate containing its TPS 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 a 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, thereby establishing procedures for facilities to review the information to be made public and for informing the public through facility-posted certificates. We proposed to maintain the public reporting requirements as finalized in the CY 2013 ESRD PPS final rule, except regarding the timing of when facilities must post their certificates.
   For PYs prior to PY 2014, we required facilities to post certificates within 5 business days of us making these certificates available for download from dialysisreports.org in accordance with section 1881(h)(6)(C) of the Act. (77 FR 67516 and 76 FR 637) In the CY 2013 ESRD PPS final rule, we noted that many individuals responsible for posting the certificates were away on holiday during the December time period when certificates typically become available, and finalized that, beginning in PY 2014, a facility must post copies of its certificates by the first business day after
   Since the CY 2013 ESRD PPS final rule was finalized, we have noted that a posting deadline of the first business day after
   The comments we received on these proposals and our response are set forth below.
   Comment: Several commenters supported the public-reporting proposal to require facilities to post performance score certificates fifteen business days after they are made available.
   Response: We thank the commenters for the support.
   For this reason, we are finalizing the public reporting requirements as proposed for the PY 2016 ESRD QIP and for future payment years.
IV. Clarification of the Definition of Routinely Purchased Durable Medical Equipment (DME)
A. Background
1. Background for DME
   Title XVIII of the Social Security Act (the Act) governs the administration of the Medicare program. The statute provides coverage for broad categories of benefits, including, but not limited to, inpatient and outpatient hospital care, skilled nursing facility care, home health care, physician services, and DME. "Medical and other health services," which is defined under section 1861(s)(6) of the Act to include DME, is a separate Medicare Part B benefit for which payment is authorized by section 1832 of the Act. In accordance with section 1861(n) of the Act, the term "durable medical equipment" includes iron lungs, oxygen tents, hospital beds, and wheelchairs used in the beneficiary's home, including an institution used as his or her home other than an institution that meets the requirements of section 1861(e)(1) or section 1819(a)(1) of the Act.
   Section 1834(a) of the Act, as added by section 4062 of the Omnibus Budget Reconciliation Act of 1987 (OBRA 87), Public Law 100-203, sets forth the payment rules for DME furnished on or after
2. Medicare Guidance and Rulemaking Regarding Definition of Routinely Purchased DME
   On
   In
   The Medicare definition of routinely purchased equipment under 42 CFR SEC 414.220(a)(2) specifies that routinely purchased equipment means "equipment that was acquired by purchase on a national basis at least 75 percent of the time during the period
3. Payment for Inexpensive or Routinely Purchased Items and Capped Rental Items
   Under SEC 414.220(b), payment for inexpensive or routinely purchased DME is made on a purchase or rental basis, with total payments being limited to the purchase fee schedule amount for the item. If an item is initially rented and then purchased, the allowed purchase charge is based on the lower of the actual charge or fee schedule amount for purchase of the item minus the cumulative allowed charge for previously paid rental claims. Under SEC 414.229(f), payment for capped rental items is made on a monthly rental basis for up to 13 months of continuous use. The supplier must transfer title to the equipment to the beneficiary on the first day following the 13th month of continuous use.
B. Current Issues
   Concerns have been raised about the application of the definition of and payment for routinely purchased DME, as it applies to expensive DME accessories. For example, recently one manufacturer of a new, expensive wheelchair accessory, included under a HCPCS code that would result in a corresponding Medicare fee schedule amount of approximately
   As a result of this review, we found some codes that are not classified consistent with the regulatory definition of routinely purchased equipment at section SEC 414.220(a)(2). We found that HCPCS codes added after 1989 for expensive, durable accessories used with base equipment, such as wheelchairs, have been classified as routinely purchased equipment. While section 1834(a)(2)(A)(iii) of the Act and 42 CFR SEC 414.220(a)(3) of the regulations allow payment for the purchase of accessories used in conjunction with nebulizers, aspirators, continuous positive airway pressure devices (CPAP), other items covered under the DME benefit, including DME other than nebulizers, aspirators, CPAP devices, respiratory assist devices and accessories used in conjunction with those items, are paid for in accordance with the rules at section 1834(a) of the Act and are classified under sections 1834(a)(3) thru (7) of the Act as inexpensive and other routinely purchased DME, items requiring frequent and substantial servicing, certain customized items, oxygen and oxygen equipment, other covered items other than DME, or other covered items of DME.
   Additionally, we found that in some cases, expensive items of DME were classified as routinely purchased based on information suggesting that payers other than Medicare were routinely making payment for the items on a purchase basis. We believe that classifying an item as routinely purchased equipment based on data and information from other payers for the purposes of implementing SEC 414.220(b) is inappropriate because other payers do not operate under the same payment rules as Medicare. Other payers may decide to purchase expensive items for reasons other than achieving a more economical alternative to rental, the basis Medicare contractors used in deciding whether to purchase items during
   DME and accessories used in conjunction with DME are paid for under the DME benefit and in accordance with the rules at section 1834(a) of the Act. In the proposed rule (78 FR 40874), we proposed to clarify the existing definition of routinely purchased equipment at SEC 414.220(a)(2) and provide notice that certain HCPCS codes for DME and DME accessories added to the HCPCS after 1989 that are currently classified as routinely purchased equipment would be reclassified as capped rental items (see Table 11 below). Under our proposal, this would apply to all expensive items for which Medicare claims data from
   We also solicited comments on the effective date(s) for reclassifying items previously classified as routinely purchased equipment to the capped rental payment class in order to be in compliance with current regulations. (78 FR 40874) Given that some items (HCPCS codes) may be included in the Round 2 and/or Round 1 Recompete phases of the competitive bidding program (CBP), we indicated we do not believe we could change the classification for items furnished under these programs until the contracts awarded based on these competitions expire on
    *
    *
    *
   We noted that this implementation strategy would allow the item to be moved to the payment class for capped rental items at the same time in all areas of the country without disrupting CBPs currently underway. For Round 1 Recompete items furnished in nine areas of the country for the six-month period from
   Alternatively, we noted the effective date for the reclassifications could be
   For this final rule, we have identified 78 HCPCS codes that will require reclassification from the inexpensive or routinely purchased DME payment class to the capped rental DME payment class (78 FR 40875 through 40876). The codes are shown in Table 11 below. As shown in Table 11, Column A of the table shows the type of DME, Columns B and C indicate the HCPCS level II codes and the short descriptor. The long descriptor for each code is available at http://www.cms.gov/Medicare/Coding/HCPCSReleaseCodeSets/Alpha-Numeric-HCPCS.html.
   As shown in Column A, the majority of codes relate to manual wheelchairs and wheelchair accessories. In the case of accessories used with complex rehabilitative power wheelchairs, the purchase option for complex rehabilitative power wheelchairs applies to these accessories because they are part of the complex rehabilitative power wheelchair.
Table II.C-1--Standard Distributions Used To Project Cellulosic Biofuel Production in 2014 Company Distribution curve 5th Percentile 95th Percentile volume volume (mill (mill ethanol-equivalent ethanol-equivalent gal) gal) Abengoa Half-Normal 0 18 DuPont Half-Normal 0 2 INEOS Bio Right-Skewed 2 5 KiOR Right-Skewed 0 9 Poet Half-Normal 0 6 CNG/LNG Producers Normal 35 54 Edeniq Half-Normal 0 7 Ensyn Normal 0 5
   In summary, we provided notice that certain HCPCS codes we proposed would be reclassified as capped rental items. We invited comments on this section.
C. Responses to Comments on the Clarification of the Definition of Routinely Purchased Durable Medical Equipment (DME)
   We received approximately 172 comments regarding the clarification of the definition of Routinely Purchased DME. CMS received comments from DME suppliers, manufacturers, professional, state and national trade associations, physicians, physical therapists (PTs), speech pathologists, occupational therapists (OTs), beneficiaries and their caregivers, the
   Comment: Several commenters noted the clarification of the definition of routinely purchased durable medical equipment relies on 1986/87 as the base year and instead suggested using 2010/11 as a base year for determining new items classified under routinely purchased category.
   Response: We do not agree with this comment. In this final rule, we are not revising the definition given our longstanding interpretation regarding section 1834(a)(2) of the Act. Although there have been numerous amendments to section 1834(a) over the years to address payment of certain DME, there have been no amendments to revise the definition of routinely purchased DME. Payment on a capped rental basis avoids lump sum purchases of expensive equipment that is only needed on a short term basis and is more economical than purchase. If the equipment is needed on a long term basis, beneficiaries will take over ownership following 13 months of continuous use. In addition, we did not propose to revise the base period in the definition for routinely purchased DME at 42 CFR SEC 414.220(a)(2). We are therefore not adopting this suggestion to revise the base period for the definition of routinely purchased DME equipment under 42 CFR SEC 414.220(a)(2).
   Comment: Many commenters contended that reclassifying certain codes from the routinely purchased DME category to capped rental DME would result in additional administrative burden for suppliers. Commenters reacted unfavorably to repeated billings for monthly rental claims for as long as the item is medically necessary up until title transfers at the end of the 13th month rental period.
   Response: While we understand certain billing procedures for capped rental items differ from and may be more administratively burdensome than billing procedures for routinely purchased items, this does not negate the fact that items must be classified in accordance with the rules of the statute and regulations.
   Comment: One commenter requested a delay in the implementation of the reclassification of the list of codes in our table from routinely purchased DME to capped rental DME. The commenter stated that more time is needed to educate practitioners and patients along with receipt of adequate program guidance. Another comment from a manufacturer requested a substantial delay in implementation of the capped rental system for Speech Generating Devices (SGDs).
   Response: Items that are not in compliance with the existing definition of routinely purchased DME will be classified as capped rental items and paid for in accordance with the rules set forth in 42 CFR 414.229 for items not currently included in a CBP that are furnished on or after
   Comment: Several commenters noted some of the codes proposed for reclassification include the term "replacement only", such as code E2376 Expandable controller, replacement and K0607 Automatic external defibrillator part; thus, the codes are most likely submitted for payment for beneficiary owned DME instead of DME owned by the supplier during a 13-month capped rental period. Commenters felt it was unrealistic to expect a supplier to rent these items and disable the patient owned equipment should the beneficiary become ineligible for Medicare payment. Another commenter mentioned that some of the transitioning codes are not covered or have lower utilization under Medicare.
   Response: We do not agree with these comments. The statute does not differentiate between items paid for under the DME benefit that are base equipment versus items paid for under the DME benefit that are replacement parts for base equipment. With the exception of drugs, which are paid in accordance with a separate payment methodology, all items covered under the DME benefit category are subject to the payment rules mandated by section 1834(a) of the Act. An item is not classified based on utilization, and, under our regulation at 42 CFR 414.229(f), if the beneficiary needs the item for 13 continuous months, title to the item is transferred to the beneficiary after 13 months. Lastly, our review of the codes for reclassification from routinely purchased DME to capped rental indicates coverage under Medicare although the extent of coverage differs by item.
   Comment: One commenter noted several of the listed codes have limited coverage under Medicare and so continuing to pay on a lump sum purchase basis for these items will have a minimal impact on Medicare expenditures.
   Response: The statute does not provide direction or discretion to classify items under section 1834(a)(2) thru (7) of the Act based on magnitude of expenditures.
   Comment: Numerous commenters opposed reclassifying the HCPCS codes for pediatric manual wheelchairs (codes E1232-E1238) and manual tilt in space wheelchairs (code E1161) from the payment class for inexpensive or routinely purchased items to the payment class for capped rental items. Some commenters stated many adult tilt in space wheelchair users require customization of equipment and require adjustment to reflect their unique postural and mobility needs. The commenters stated a concern that payment on a rental basis for these items will increase the risk for orthopedic deformities due to improper support, increase the risk of pressure sores from poorly managed skin integrity, and will contribute to overall costs of medical care. Many commenters stated these items are used for chronic conditions or permanent disabilities, such as quadriplegia, paraplegia, multiple sclerosis, head and spinal injuries, requiring wheelchairs and wheelchair accessories that are constructed of components that are not mass produced which reduces the profit margin compared to the furnishing of power mobility and acute adult manual wheelchairs.
   Response: Claims for "youth" or "pediatric" wheelchairs were submitted using HCPCS code E1091 (Youth Wheelchair, Any Type) from
   Response: This rule has no impact on items that meet the definition of customized items at 42 CFR 414.224. For items that are affected by this rule, we agree that some items may have a higher cost because they are not mass produced; however, such costs are accounted for in the fee schedule amounts that have been set based on supplier charges or price lists. We appreciate hearing about the concerns with these changes to payment policy for some durable medical equipment which persons with disabilities rely upon, including specialized wheelchairs. Although we do not anticipate disruptions resulting from the transition from purchase to a capped rental, we understand the important role that this technology plays in maximizing the independence of persons with disabilities and their ability to direct their own care. Accordingly, CMS is committed to carefully monitoring beneficiary access using real-time claims data to ensure that there isn't an adverse impact.
   Comment: There were concerns raised by many commenters regarding reclassification of wheelchair options and accessories added to individually configure wheelchairs to meet long-term mobility needs.
   Response: In this final rule, an exception is established so that wheelchair options and accessories furnished for use with purchased complex rehabilitative power wheelchairs can be paid under a routinely purchased basis consistent with 42 CFR 414.229(a)(5). Other expensive wheelchair options and accessories that are paid separate from the rental payments for the wheelchair base and were not routinely purchased from
   Comment: One commenter recommended CMS should establish that all manual wheelchairs should remain in the routinely purchased category and that options and accessories provided with/for a "routinely purchased" wheelchair base should be considered "routinely purchased" as well.
   Response: With the exception of ultralightweight manual wheelchairs, manual wheelchairs were not routinely purchased under the Medicare program from
   Comment: Many commenters complained that a capped rental payment method will result in a significant financial burden for suppliers who may face challenges securing capital/lines of credit in the current economic environment.
   Response: We do not agree with this comment. The capped rental payment method allows suppliers to reclaim capital equipment that is not needed for 13 months of continuous use. While Medicare payments may total 105 percent of the historic purchase price over 13 months of continuous use by a single beneficiary, the item could be rented for significantly more than 13 monthly payments and significantly more than 105 percent of the historic purchase price if it is used by multiple beneficiaries who do not need the item for the full 13 months.
   Comment: Commenters stated that the proposed change in payment rules will be adopted by payers other than Medicare and therefore should not be adopted.
   Response: Speculation about how other payers will pay for items that are also paid for by Medicare is beyond the scope of this rule and we have not taken such things into consideration when finalizing our policies. We must comply with the requirements of section 1834(a)(2) through (7) of the Act regarding how we classify and pay for DME items.
   Comment: Various commenters argued that since the ultralightweight wheelchair (HCPCS code K0005) is classified as routinely purchased equipment, other complex rehabilitative manual wheelchairs (HCPCS codes E1161 and E1232 through E1238) should similarly be classified as routinely purchased equipment.
   Response: The ultralightweight wheelchair was classified as routinely purchased equipment based on the regulatory standard (that is, it was acquired for purchase on a national basis at least 75 percent of the time from
   Comment: One commenter concurred with our proposal by indicating it is a waste for patients at end stage of life to purchase complex wheelchairs which they then would not use for more than 1-2 years, due to various life ending diseases or due to regression in function, or at an older terminal age. The commenter noted it is advisable to have a system of rental and return, so that the same equipment can be modified, then rented to someone else. This will greatly reduce waste in this area of assistive technology/wheelchair supply and demand.
   Response: We appreciate this comment.
   Comment: Several commenters supported our proposal permitting a supplier to give the beneficiary the option of purchasing a wheelchair accessory classified as a capped rental item and furnished for use with a complex rehabilitative power wheelchair (that is, furnished to be used as part of the complex rehabilitative power wheelchair) at the time the accessory is furnished. These wheelchair accessory items would be considered as part of the complex rehabilitative power wheelchair and associated purchase option set forth at SEC 414.229(a)(5).
   Response: We appreciate this comment.
   Comment: Several commenters urged CMS to extend our proposal to permit a supplier to give the beneficiary the option of purchasing a wheelchair accessory classified as a capped rental item and furnished for use with a complex rehabilitative power wheelchair (that is, furnished to be used as part of the complex rehabilitative power wheelchair) to accessories furnished for use with standard power wheelchairs.
   Response: We disagree with this comment. The statute does not provide a purchase option for standard power wheelchairs. Section 1834(a)(7)(A)(iii) provides the purchase agreement option only for complex, rehabilitative, power-driven wheelchairs.
   Comment: Some commenters were concerned that Part B coverage and payment for rented DME is no longer allowed when a beneficiary enters a hospital, so the beneficiary will be billed for equipment during the time the beneficiary is in the hospital because the provider would not be able to remove a tilt mechanism from their wheelchair without rendering their chair non-functional.
   Response: The Part B benefit for DME and the payment rules at section 1834(a) of the Act do not extend to DME items furnished for use in hospitals. Classification of items under the payment classes established in sections 1834(a)(2) through (7) is not affected by whether or not the item will later be available for use in a hospital. Medicare benefit payments for items used in hospitals may be available under other parts of the program other than the Part B benefit for DME. In addition, suppliers are responsible for submitting claims for payment under the Medicare Part B DMEPOS fee schedule in compliance with our regulations and program instructions, such as those in the Medicare Claims Processing Manual (Pub 100.04), chapter 20, section 30.5.4 which address such temporary interruptions
   Comment: Several commenters argued that the estimated program savings are not accurate primarily because the 8 month average use assumed for the items moved from routinely purchased to capped rental is in error because the 8 month average use was established for existing capped rental items, not routinely purchased.
   Response: We believe that Medicare data on the average number of monthly rental claims paid for items currently classified as capped rental items is a reasonable proxy for the average number of monthly rental claims that will be paid for items reclassified as a result of this rule and provides an accurate estimate of the impact of this rulemaking on Medicare part B expenditures for DME. Most of the items being reclassified are either wheelchairs or wheelchair accessories. In reviewing the data used to determine that an average of 8 monthly rental payments are made for items currently classified as capped rental items, the average number of paid monthly rental claims per beneficiary drops to 7 when only wheelchairs and wheelchair accessories currently classified as capped rental item are considered. Our goal is to create a reasonable model by which to estimate the fiscal impact of the policy. The method used to calculate the savings is as follows:
    * Sum the 2011 allowed charges for the HCPCS that are affected
    * Increase the allowed charges by Medicare Advantage add-on
    * Apply the annual increases for fee-for-service Medicare Part B population and for fee update to the total expenditures through the year 2023
    * Based on claims data, the average duration of use of capped rental equipment is approximately 8 months, which is 2/3 of purchase price.
    * So it is assumed that moving an item from routinely purchased to capped rental will on average save 33 percent of the purchased price, which is the factor applied to allowed charges to generate the savings indicated in the proposed rule.
   Comment: Several commenters argued that the estimated savings in the rule does not consider the cost of possible increased institutional care.
   Response: We do not believe the policy described in this final rule would increase the use of institutional care. We are not reducing the number of items that would be covered or reducing payment for certain DME items such that more institutional care may be needed.
   Comment: Some commenters recommended classifying equipment as routinely purchased equipment if any of the following conditions are met: 1) the item is routinely needed for a period exceeding 13 months; 2) the item is intended for use by people with permanent disabilities; 3) the item is designed, manufactured, or assembled for a single individual (not intended to be used by multiple individuals); 4) the item was previously classified as routinely purchased equipment; and 5) other payers routinely pay for the item on a purchase basis.
   Response: We disagree with this suggestion. We have interpreted the statutory definition of routinely purchased equipment, as set forth in the regulations, as "equipment that was acquired by purchase on a national basis at least 75 percent of the time during the period
   Comment: One commenter noted the
   Response: We do not concur that changing the payment classification of certain codes from routinely purchased DME to capped rental DME jeopardizes the spirit of the decision made in the Olmstead case. Our proposal is not designed to undermine payment of the items; rather it is clarifying the definition of routinely purchased equipment set forth at section SEC 414.220(a)(2) and reclassifying some codes that are not presently classified consistent with the regulatory definition. In addition, the proposal is not designed to have any impact on coverage of items and services under the Medicare Part B benefit for DME. Such items and services would continue to be available consistent with the statute and regulations. This rule is designed to clarify the payment provisions applicable to accessories used in conjunction with items paid for under section 1834(a) of the Act.
   Comment: Some commenters stated that speech generating devices (SGDs) (HCPCS codes E2500-E2510) should not be covered as DME but instead as prosthetic devices.
   Response: These comments are outside the scope of the proposed rule, and therefore are not addressed in this final rule. The process for reviewing coverage/benefit category for an item is not addressed in this rule. Information on the process can be found at the Web site http://www.cms.gov/Medicare/Coverage/DeterminationProcess/index.html
   Comment: Several commenters stated that certain patients may benefit from renting SGDs. One commenter wrote once an individual has the initial assessment, there is often a trial period with one or more devices. The average time for trials is 90 days. One commenter stated a rental may be appropriate for short-term use such as a temporary loss of natural speech due to a surgical procedure or when waiting to purchase one. Another commenter indicated patients may benefit from renting a device for up to 1 year. Furthermore, one commenter supported implementation of a rental payment basis for certain DME to prevent abuse of the purchase basis system and to help keep co-insurance costs lower when extended over the number of rental months.
   Response: We thank the commenters for their helpful comments and agree about the potential benefits of our capped rental policy. We are aware that some manufacturers make their SGC products available on a rental basis so that patients can try out the products to figure out which one best meets their needs. Under the capped rental payment system, the patient will have the ability to obtain a new physician order and change equipment during the rental period to equipment that better meets their medical needs while Medicare rental payments continue up to the point where title to the equipment transfers to the beneficiary after 13 months of continuous use.
   Comment: Numerous commenters opposed reclassification of SGDs, indicating that these devices are individually programmed based on each patient's need and access method (that is, eye-gaze, touch screen, switch) and language skills. The commenters stated that these devices are not similar to wheelchairs which are primarily generic in their design and can be used by a wide variety of individuals without significant modifications. Also, the commenters reviewed that patients' caregivers may be accustomed to specific devices used by their patients. One commenter suggested that a SGD is more appropriately analyzed as a complex rehabilitation tool, and as part of that analysis, the importance of integration and customization with the other rehab tools and medical needs of the patient must be considered. Other commenters reiterated that SGDs assist with communication that is essential for an individual's independence and functional living. Another commenter described an analysis of the diagnoses of the patients using SGDs, which shows that an estimate of eight months for a rental is unrealistic given that many SGD patients have a long term need for the device.
   Response: We recognize that patients may use long term DME such as SGDs because of chronic conditions or permanent disabilities; however, we believe assigning the appropriate payment category in accordance with the statute and regulations ensures appropriate payment, supplier responsibilities, and beneficiary safeguards. Our final policy is not designed to interfere with patient care or a practitioner's efforts to program SGDs.
   Comment: Many commenters claimed that reclassifying SGDs from routinely purchased DME to capped rental DME would cause suppliers to limit the amount of time and attention given to furnishing quality SGDs. Several commenters are concerned suppliers will require patients to switch devices and the devices would be taken away from patients who need them when the patient has reached maximum rental fees. Another commenter raised concerns that suppliers will not furnish SGDs that adequately serves patients who move from one location to another.
   Response: The HCPCS codes for SGDs and other DME describe different categories of items. The supplier must furnish the item ordered by the physician to meet the patient's medical needs as required by 42 CFR 424.57(c)(4). Suppliers that are found not in compliance with the DMEPOS supplier standards are not allowed to possess a supplier number and receive Medicare payment for DME in accordance with section 1834(j) of the Act. These standards and requirements are not affected by the methodology used to pay for the item. In addition, regulations at 42 CFR 414.229(g) require that suppliers furnishing capped rental items continue to furnish the item for the full 13-month capped rental period with very limited exceptions and are prohibited from switching the patient's equipment unless the physician orders different equipment, the beneficiary chooses to obtain a newer technology item or an upgraded item, or the equipment is replaced because of loss, theft, or irreparable damage or wear. If the device is used for 13 continuous months, then the supplier is required to transfer title to the equipment to the beneficiary. Regarding patients who relocate near the end of the capped rental period and need to find a new supplier, CMS has been able to work with suppliers of capped rental items in the past to ensure beneficiary access in these situations.
   Comment: Numerous comments were concerned that a rental payment method would impact access to SGDs in certain settings such as a hospital or nursing facility. As a result, commenters were concerned because the patient should not need to worry that the device will be taken away when circumstances require the patient to communicate to practitioners in the facilities. Commenters explained the patient may be forced to accept an inappropriate device because the right one for them is not available while in a facility resulting in practitioners and caregivers having difficulty in understanding the patient.
   Response: In accordance with the statute, we do not establish payment rules for DME based on how the item is furnished in institutional settings, especially in light of the definition of DME in section 1861(n) of the Act, which defines DME as equipment used in a patient's home.
   Comment: One commenter expressed concern that our proposal did not include codes for Accessory for Speech Generating Device, Not Otherwise Classified (HCPCS code E2599) and Accessory for Speech Generating Device, Mounting System (HCPCS code E2512).
   Response: We appreciate this comment, but we are not including codes E2599 and E2512 in our list of codes for reclassification at this time because fee schedule amounts for these codes have not been established. When fee schedules are developed, we will review the data for these accessory codes to ensure compliance with the Medicare definition of routinely purchased equipment set forth at 42 CFR SEC 414.220(a). If a change in payment category is required in the future, CMS expects to provide notice via program instructions.
   Comment: Some commenters recommended that the low volume of services for SGDs should exempt these codes from our proposal for reclassification from routinely purchased to capped rental. One commenter stated the proposal from CMS reports
   Response: The payment rules at section 1834(a) of the Act do not classify items under the payment classes based on volume of services. As discussed above, the Medicare definition of routinely purchased equipment is set forth at 42 CFR SEC 414.220(a)(2) and specifies that routinely purchased equipment means equipment that was acquired by purchase on a national basis at least 75 percent of the time during the period
   Comment: One commenter stated that the pneumatic compression trunk appliance (HCPCS code E0656) and the pneumatic compression chest appliance (HCPCS code E0657), both used in conjunction with pneumatic compression pumps for treatment of lymphedema, are considered routinely purchased because the common diagnosis that allows reimbursement is lymphedema. The commenter states lymphedema is not curable and can only be managed. When a person has been diagnosed with lymphedema and a pneumatic compression pump has been prescribed, it is never for short term use. Thus, the items should not be reclassified from routinely purchased to capped rental payment method.
   Response: The payment rules at section 1834(a) of the Act do not classify items under the payment classes based on diagnosis and intended use. As discussed above, the Medicare definition of routinely purchased equipment is set forth at 42 CFR SEC 414.220(a)(2) and specifies that routinely purchased equipment means equipment that was acquired by purchase on a national basis at least 75 percent of the time during the period
   Comment: One commenter requested reclassification of code K0730 controlled dose inhalation drug delivery system from the routinely purchased to the frequently serviced payment category. The commenter also requested CMS reclassify code E0574, which also describes a nebulizer item, to the frequently serviced payment category.
   Response: We are not adopting this suggestion to reclassify codes K0730 and E0574 to the frequently serviced payment category. Section 13543 of the Omnibus Budget Reconciliation Act of 1993 (OBRA 93) removed nebulizers from the statutory list of items classified under the frequent and substantial servicing payment class effective with respect to items furnished on or after
   Comment: One commenter opposed reclassification of code E0762 transcutaneous electrical joint stimulation system from the routinely purchased to the capped rental payment category because while significant relief is provided by the system within a short period of time, more significant results are achieved with increased use of the device.
   Response: We continue to believe it is appropriate to reclassify code E0762 from the routinely purchased to the capped rental payment category. As discussed above, the Medicare definition of routinely purchased equipment is set forth 42 CFR SEC 414.220(a)(2) and specifies that routinely purchased equipment means equipment that was acquired by purchase on a national basis at least 75 percent of the time during the period
   Comment: One commenter stated jaw motion rehabilitation system from Dynasplint (HCPCS code E1700) should not remain routinely purchased because it was previously billed under a capped rental miscellaneous code and it was assigned by the Medicare Pricing, Data Analysis and Coding (PDAC) contractor to code E1700 which contains other less expensive items.
   Response: Since HCPCS code assignment is outside the scope of the proposed rule which only concerns the reclassification of code E1700 from the routinely purchased payment category to the capped rental payment category, and we are not addressing this comment in this final rule.
   Comment: Some commenters stated that code E0760 for Osteogenesis Ultrasound Stimulator is not DME but is a therapeutic intervention similar to a drug treatment.
   Response: These comments are outside the scope of the proposed rule, and therefore are not addressed in this final rule. The process for reviewing coverage/benefit category for an item is not addressed in this rule. Information on the process can be found at the Web site http://www.cms.gov/Medicare/Coverage/DeterminationProcess/index.html
   Comment: Many commenters raised concerns that code E0760 for Osteogenesis Ultrasound Stimulator remains comparable to electric bone growth stimulators (codes E0747 and E0748) that also treat established nonunion of fractures of long bones and as adjunctive therapy to spinal fusion to improve fusion success rates, which are assigned to the routinely purchased category in accordance with the existing regulatory definition of routinely purchased items. Commenters pointed out the code used to describe osteogenesis stimulators in 1986 through 1987 did not specify the type of stimulator Medicare purchased. Also, commenters noted that code E0760 was initially classified as capped rental DME and reclassified by Medicare to routinely purchased DME based on data from other payers and claims submitted to Medicare.
   Response: We recognize the commenters' concerns and in this final rule, we will revise the list of codes by removing code E0760 from the final list of codes for reclassification to the capped rental DME. We agree that HCPCS codes used to routinely pay for the purchase of osteogenesis stimulators in 1986 and 1987 did not differentiate between types of osteogenesis stimulators and therefore, believe that the general category of osteogenesis stimulator are correctly classified as routinely purchase equipment in accordance with current regulations SEC 414.220(a)(2).
   Comment: Commenters noted that the proposed list of HCPCS codes that would be reclassified as capped rental items includes HCPCS codes that describe products cleared by the FDA for single patient use. Commenters stated that reclassifying these devices as capped rental items goes against their labeling as single patient use devices by the FDA and that some of these devices cannot be cleaned or refurbished for another patient's use. A commenter noted that a change in payment category could affect various levels of market availability including FDA clearance, product marketing or the company's business model. Commenters stated a significant investment of resources and time is required to seek a new FDA label to allow these items to be rented to multiple patients. One commenter objected that reclassification would essentially force devices currently labeled for single patient use to be used off-label as rental equipment. Additionally, one commenter recommended that we amend our regulation to provide that all devices cleared by the FDA as class III devices under the Federal Food, Drug, and Cosmetic Act are classified as routinely purchased equipment.
   Response: The payment rules under section 1834(a) of the Act do not classify items under the payment classes based on how they are cleared by the FDA. As discussed above, the Medicare definition of routinely purchased equipment under SEC 414.220(a)(2) specifies that routinely purchased equipment means equipment that was acquired by purchase on a national basis at least 75 percent of the time during the period
   After consideration of comments received on the proposed rule and for the reasons we discussed above and in the proposed rule, we are finalizing our proposals and reclassifying certain items identified in this final rule with the exception of code E0760 which will remain classified as routinely purchased equipment. We did not receive comments regarding the effective dates for the reclassifications of these items from the routinely purchased DME category to capped rental DME. For the reasons discussed in the proposed rule (78 FR 40875), we are finalizing the effective dates for the changes of this section in compliance with the required regulatory process as follows:
    *
    *
    *
   The
V. Clarification of the 3-Year Minimum Lifetime Requirement (MLR) for DME
   DME is covered by Medicare based, in part, upon section 1832(a) of the Act, which describes the scope of benefits under the supplementary medical insurance program (Medicare Part B), to include "medical and other health services," which is further defined under section 1861(s)(6) of the Act to include DME. In addition, section 1861(m)(5) of the Act specifically includes DME in the definition of the term "home health services." In accordance with section 1861(n) of the Act, the term "durable medical equipment" includes iron lungs, oxygen tents, hospital beds, and wheelchairs used in the patient's home whether furnished on a rental basis or purchased. The patient's home includes an institution used as his or her home other than an institution that meets the requirements of section 1861(e)(1) or section 1819(a)(1) of the Act. Besides being subject to this provision, the coverage of DME must meet the requirements of section 1862(a)(1)(A) of the Act, which in general excludes from payment any items or services that are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member, and section 1862(a)(6) of the Act, which (except for certain specified exceptions) precludes payment for personal comfort items.
   Section 414.202 defines DME as equipment furnished by a supplier or a home health agency that meets the following conditions: (1) Can withstand repeated use; (2) effective with respect to items classified as DME after
A. Current Issues
   On
   The 3-year MLR is designed to represent a minimum threshold for a determination of durability for a piece of equipment. The 3-year MLR is not an indication of the typical or average lifespan of DME, which in many cases is far longer than 3 years. The 3-year MLR does not apply to disposable supplies or accessories covered for use with DME such as masks, tubing, and blood glucose test strips. The 3-year MLR is prospective only and does not apply to equipment classified as DME before the regulation was effective, that is,
   We also determined that the 3-year MLR should not apply to equipment classified as DME before the effective date to allow for continued coverage of such equipment that healthcare industry and beneficiaries have come to rely on, regardless of whether those items met the 3-year MLR set forth at 42 CFR 414.202 (76 FR70288). Given that reliance, we indicated we did not intend to reopen those prior decisions and reclassify the equipment in light of the 3-year standard. We believe that continuing Medicare coverage for items that qualified as DME prior to the effective date helps avoid disrupting the continuity of care for the beneficiaries that received such items for medical treatment prior to
   Beneficiaries have been relying on these items for their treatment to the extent that the items have been covered as DME under Medicare. Furthermore, we believed that a vast majority of the categories of items that were classified as DME before
   In response to the public comments that requested further clarification on the application of the grandfathering provision for the 3-year MLR, we noted that we would consider issuing additional guidance to provide further clarification, if necessary (76 FR 70290). For purposes of providing additional guidance on the scope of the grandfathered items under the provision, we invited public comments on this issue.
B. Scope of the 3-Year MLR for DME
   Under SEC 414.202, effective with respect to items classified as DME after
   For the purpose of providing further guidance on the scope of the 3-year MLR, in the proposed rule (78 FR 40877), we provided clarification about how we would regard grandfathered items covered as DME prior to the effective date and we requested comments on that clarification. We proposed that if the product is modified (upgraded, refined, reengineered, etc.) after
   We sought comments on this proposed clarification.
C. Response to Comments on the 3-Year MLR for DME
   We received approximately 13 comments on the proposed regulation (78FR 40876-40877) regarding clarification of the grandfathering provision of the 3-year MLR for DME. Commenters included medical device manufacturers, suppliers, advocacy groups and coalitions.
   Comment: Most commenters acknowledged and appreciated that CMS proposed the clarification of the grandfathering provision of the 3-year MLR for DME.
   Response: We thank the commenters for their input and support. We note that the clarification regarding grandfathered items that are modified relates to the durability of the item under the definition, and in particular, whether the modified item has a shorter useful life than the expected lifetime for the items covered prior to
   Comment: Two commenters supported our clarification in the proposed rule of the grandfathering provision of the 3-year MLR for DME. The commenters believed that the proposed clarification to continue to cover grandfathered items if modified as long as the modification did not shorten its useful life was reasonable and encouraged CMS to adopt it.
   Response: We thank the commenters for their support. However, we wish to clarify that the proposed rule addressed how we would regard grandfathered items covered as DME prior to the effective date. We proposed that if a grandfathered product is modified (upgraded, refined, reengineered, etc.), the item would still be classified as a grandfathered item unless the product has been modified to be less durable, such that it now has an expected life that is shorter than the expected lifetime for the item covered as DME prior to
   Comment: Several commenters indicated that the proposed rule still leaves great uncertainty regarding which modifications will result in products that continue to be, or are no longer, grandfathered. Without specific vignettes or parameters that illustrate how CMS will address these matters when certain new products come onto the market, the guidance in the proposed rule will not resolve the questions that remain. Specifically,
   1. If application of new technology renders a product more effective but reduces its minimum lifetime; will the 3-year requirement be applied?
   2. It does not provide further details regarding the extent of changes that could be made to an existing DME product such that it would still be subject to grandfathering provision.
   3. Must a modified item fall within the same HCPCS code and/or DME product category as a grandfathered item in order for it to also fall within the grandfathering provision and not be considered a new item?
   4. If a modification of an existing product results in the designation of another HCPCS code; will this trigger the 3-year requirement?
   Response: We thank the commenters for their input. As noted in the final rule (76 FR 70289, 70290 (
   The change we made to the regulation to establish a 3-year MLR for DME was designed to further clarify the meaning of the term "durable." Based on our experience with the Medicare program, the vast majority of items covered as DME last for 3 years or longer; however, the purpose of the grandfathering provision is to ensure continued coverage for the items that were paid as DME before the effective date of the MLR requirement and, to avoid disruption of the continuity of care for the beneficiaries using such equipment. . . . In response to the specific concerns of the commenters, the parameters of the grandfathering provision are:
   1. An item paid for as DME on or before   2. A grandfathered item that is modified (upgraded, refined, reengineered, etc.), is still considered a grandfathered item rather than a new item unless the item is less durable, such that it now has an expected life that is shorter than the expected lifetime for the item covered as DME on or prior to
   Making individual determinations about whether a modified version of an item that was paid as DME on or prior to
   Comment: Some commenters stated that the proposed rule does not provide clarity on what is a completely "new product" that would never be subject to the grandfathering provision.
   Response: A new product is a product that was not paid for as DME on or prior to
   Comment: Some commenters indicated that it is unclear what would be considered a modified product that would be subject to the grandfathering provision provided that the modifications do not result in a reduced minimum lifetime of the product. Would a premarket approval product approved after
   Response: A grandfathered product is a specific product (make, manufacturer, model, model number, etc.) that was covered and paid for as DME on or prior to
   Comment: Several commenters voiced concerns that the final rule will serve as a major deterrent to future investments in new technologies. There may be desirable innovations made to a grandfathered product that would reduce the minimum lifetime of the product. If changes to a product that result in a different HCPCS code assignment or DME product category by definition do not fall within the grandfathering provision then manufacturers do not have the incentive to research and develop a grandfathered product's safety and effectiveness in treating. By eliminating reimbursement under Medicare DME benefit for modified grandfathered products containing innovations that are clinically beneficial to the patients but may reduce the minimum lifetime of those products, the proposed clarification discourages innovation of existing technologies.
   Response: We believe that the 3-year MLR to clarify the term durable and the grandfathering provision are reasonable given the 5 year reasonable lifetime requirement, general DME payment rules and industry standards which support the fact that DME items should be able to withstand repeated use. We do not believe the rule is a deterrent. The rule is designed to clarify the grandfathering provision and ensure that such products are not modified to be less durable.
   Based upon our experience with the Medicare program, the vast majority of items covered as DME last for 3 years or longer. The purpose of the grandfathering provision is to continue the Medicare coverage for the items that were paid as DME on or prior to the effective date, in order to avoid disruption of the continuity of care for the beneficiaries that had received items for medical treatment on or prior to
   Comment: A few commenters suggested that instead of using the MLR to determine whether modified DME is a "new" device, CMS should focus on whether the modified device has the same clinical application as the grandfathered DME. This criterion would be a better measure of whether the device is "new" than whether it meets what a few commenters characterized as an arbitrary MLR rule. CMS should instead establish reasonable parameters under which products should be considered comparable to existing DME products in order to be subject to the grandfathering provision-any modification, upgrade, redesign, improvement or new indication of an existing DME product that maintains the product's core clinical technology or mechanism of action should be eligible for reimbursement under the DME benefit category.
   Response: We thank the commenters for their input. However, our proposal regarding the 3-year MLR with regard to the definition of DME was to clarify the issue of durability as it relates to grandfathering status. Our proposal centered on the lifetime of the product as a result modification (upgraded, refined, reengineered, etc.). We do not believe that issues such as core clinical technology or clinical application to determine whether a modified grandfathered item is a new DME as suggested by the commenters, speaks to the issue of durability with regard to our interpretation of the statutory DME provisions.
   Comment: A few commenters expressed concerns that the proposed rule will require manufacturers to undertake expensive testing to demonstrate that their equipment continues to qualify under the grandfathering provision. They questioned whether there is a benchmark for deciding whether the modified device has an MLR that is shorter than the grandfathered device (e.g., is it an MLR that is a year shorter, 90 days shorter, or a day shorter than that of the grandfathered DME?). Commenters believe that, instead of providing clarity, CMS has injected even more subjectivity and ambiguity into the Medicare coverage and coding process and provides virtually no guidance when the minimum lifetime of a modified device does not conclusively meet the 3-year threshold. Commenters stated that, in the past, CMS has stated that it will base these decisions on a review of existing data, but the outcome in these cases ultimately will hinge on subjective interpretation of the data. The commenters note that this type of analysis will be useless in assessing new technologies, which typically are not included in independent comparative studies of the type CMS has said it plans to consult.
   Response: We thank the commenters for their input but do not believe that the proposed regulation injects subjectivity and ambiguity into the Medicare coverage and coding process. We are not proposing a new process to determine whether a modified device has an expected life that is shorter than the original grandfathered device; therefore, no new types of tests are needed to make determinations regarding the expected lifetime of products. As discussed previously, we will continue to follow the current BCD process to determine on an individual consideration basis if a modified grandfathered item falls within the grandfathering provision. We will review information and evidence, which a supplier/manufacturer may submit, consistent with the current BCD process to determine the expected life of the equipment. As discussed previously, the BCD process typically involves reviewing information from various sources including but not limited to information related to FDA pre-market clearance, product manuals, operating guides, warranty documents, and standardized test results. The NCD process is available at http://www.cms.gov/DeterminationProcess/Downloads/FR09262003.pdf. See also, 68 FR 55638 (
   Comment: Some commenters argued that in this case, CMS' original concern about disrupting patient care continues to hold true. Commenters claim that the proposal to modify the grandfathering provision of SEC 414.202 will disrupt the care of beneficiaries using the grandfathered DME. Beneficiaries who have been using the grandfathered DME will no longer have Medicare coverage for the medically necessary device they depend on. Physicians and other practitioners will be unable to order devices that have been proven therapeutically effective for the patients they treat. For these beneficiaries and providers, it will almost certainly be true that they will be left without an equally effective alternative for continuing their care.
   Response: We thank the commenters for their input, but we do not agree with the above comment. We note that the proposed rule was designed to clarify the grandfathering provision. The proposed clarification of the grandfathering provision is designed to address how grandfathered products could be modified without losing their grandfathered status. The commenters concerns that beneficiaries who have been using the grandfathered DME will no longer have Medicare coverage for the medically necessary device they depend on or that physicians will be unable to order devices that have been proven therapeutically effective for the patients are inaccurate. On the contrary, the purpose of the grandfathering provision for the 3-year MLR was to continue Medicare coverage for items that were classified as DME on or prior to the effective date, in order to avoid disruption of the continuity of care for the beneficiaries that had already received these items for medical treatment. For the reasons stated above, we do not believe that the clarification of the grandfathering provision will disrupt the continuing care for beneficiaries that are using the grandfathered DME.
   Comment: Some commenters urged CMS to convene a study panel to allow stakeholders to collaborate with the agency to examine a few central questions such as whether a modified item must fall within the same HCPCS code and/or DME product category as a grandfathered item in order for it to also fall within the grandfathering provision. Commenters asked CMS to consider convening a stakeholder meeting to solicit views from patients, healthcare providers, DME manufacturers and other health policy experts.
   Response: We appreciate the comment. We established the 3-year MLR effective with respect to items classified as DME on or after
   Comment: Some commenters stated that as other payers follow Medicare guidelines, it is important to revise ill-conceived Medicare policy now before regulations that harm people with disabilities and chronic conditions are replicated at the State level.
   Response: This comment is outside the scope of the proposed rule.
   Comment: One commenter stated that CMS proposes to clarify the scope and application of the MLR "grandfathering" provision by stipulating that products will lose the grandfather status if the modified product will have an expected life that is shorter than three years. In other words, the commenter believes the proposed rule would result in non-coverage of any grandfathered item that is modified.
   Response: We thank the commenter for the input. However, the statement in the above comment that a modified product that has an expected life that is shorter than three years will no longer be grandfathered and therefore, lose coverage status is inaccurate. We proposed that a product covered as DME prior to 2012 that is modified would still be grandfathered as long as the expected lifetime of the product is equal to or greater than the lifetime of the product covered prior to 2012. Under this proposal, if the product lost grandfathered status (because the modification reduced the expected lifetime of the product covered prior to 2012), the product would be subject to the 3-year MLR. The application of 3-year MLR would determine whether product would be otherwise covered under the definition. For grandfathered items that have a lifetime shorter than 3-years, modifications that reduce such lifetime generally would result in the product no longer meeting the definition given the application of the 3-year MLR (because the grandfathered status was lost). However, for grandfathered products that have a lifetime greater than 3 years, modifications that shorten such lifetime may or may not result in non-coverage under the definition when the 3-year MLR is applied. For example, if a grandfathered product covered as DME prior to 2012 with a lifetime of four years is modified, resulting in a product with a lifetime of two and a half years (and thereby losing grandfathering status), the product would no longer meet the definition of DME, because the 3-year MLR is not met given that the lifetime of the modified product is less than three years. In the same example, if the modification resulted in a reduced lifetime of the product to 3.5 years, the product, even though it lost grandfathering status, would satisfy the 3-year rule, and continue meet the definition of DME.
   After consideration of comments received on the proposed rule, we are finalizing the clarification of the grandfathering provision of the 3-year MLR for DME. The 3-year MLR applies, effective
VI. Implementation of Budget-Neutral Fee Schedules for Splints, Casts and Intraocular Lenses (IOLs)
A. Background
1. Payment Under Reasonable Charges
   Payment for most items and services furnished under Part B of the Medicare program is made through contractors known as Medicare Administrative Contractors (MACs). These contractors were previously referred to as carriers. Prior to 1988, in accordance with section 1842(b) of the Act, payment for most of these items and services was made on a reasonable charge basis by these contractors, with the criteria for determining reasonable charges set forth at 42 CFR part 405, subpart E of our regulations.
   Under this general methodology, several factors or "charge screens" were developed for determining the reasonable charge for an item or service. In accordance with SEC 405.503, each supplier's "customary charge" for an item or service, or the 50th percentile of charges for an item or service over a 12-month period, was one factor used in determining the reasonable charge. In accordance with SEC 405.504, the "prevailing charge" in a local area, or the 75th percentile of suppliers' customary charges for the item in the locality, was also used in determining the reasonable charge. For the purpose of calculating prevailing charges, a "locality" is defined at SEC 405.505 of our regulations and "may be a State (including the District of Columbia, a territory, or a Commonwealth), a political or economic subdivision of a State, or a group of States." The regulation further specifies that the locality "should include a cross section of the population with respect to economic and other characteristics." In accordance with SEC 405.506, for certain items, such as parenteral and enteral nutrients, supplies, and equipment, an additional factor referred to as the "lowest charge level" was used in determining the reasonable charge for an item or service. In accordance with section 5025 of the Medicare Carriers Manual (
2. Payment Under Fee Schedules
   Specific provisions have been added to the Act mandating replacement of the reasonable charge payment methodology with fee schedules for most items and services furnished under Part B of the Medicare program. The phase in of fee schedules to replace reasonable charges for Medicare payment purposes began with the fee schedule for clinical diagnostic laboratory tests in 1988. As of 1997, very few items and services were still paid on a reasonable charge basis, which is a very time consuming and laborious process. Contractors must collect new charge data each year, perform the various calculations, and maintain pricing files and claims processing edits for the various charge screens. For each item that is paid on a reasonable charge basis, administrative funding must be provided to contractors for the purpose of performing these calculations and maintaining these pricing files. Therefore, replacing reasonable charge payments with fee schedules eliminates the need to fund these efforts and saves money that can be used to implement other parts of the program. Section 4315 of the Balanced Budget Act of 1997 (BBA) amended the Act at section 1842 by adding a new subsection (s). Section 1842(s) of the Act provides authority for implementing statewide or other area wide fee schedules to be used for payment of the following services that were previously on a reasonable charge basis:
    * Medical supplies.
    * Home dialysis supplies and equipment (as defined in section 1881(b)(8) of the Act).
    * Therapeutic shoes.
    * Parenteral and enteral nutrients, equipment, and supplies (PEN).
    * Electromyogram devices.
    * Salivation devices.
    * Blood products.
    * Transfusion medicine.
   For Medicare payment purposes, we interpret the category "medical supplies" under section 1842(s) of the Act to include all other items paid on a reasonable charge basis as of 1997 that do not fall under any of the other categories listed in section 1842(s) of the Act. We believe that section 1842(s) of the Act is intended to provide authority for establishing fee schedules for all of the remaining, and relatively small number of items and services still paid for on a reasonable charge basis at the time of enactment in 1997. In light of this provision, we generally consider "intraocular lenses" to be paid as "medical supplies." Therefore, in addition to including splints and casts under this category, we also proposed to include intraocular lenses inserted in a physician's office for the purpose of implementing this specific section. Although we recognize the terms "intraocular lenses" and "medical supplies" are separately identified under SEC 414.202, we note that such terms are listed for purposes of defining what constitutes orthotic and prosthetic devices (that is, these terms are excluded from such definition), and not intended to suggest these are mutually exclusive things. Accordingly, we do not believe we are precluded from establishing fee schedules for IOLs under the category of medical supplies under section 1842(s) of the Act.
   Section 1842(s)(1) of the Act provides that the fee schedules for the services listed above are to be updated on an annual basis by the percentage increase in the CPI-U (United States city average) for the 12-month period ending with June of the preceding year, reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. Total payments for the initial year of the fee schedules must be budget-neutral, or approximately equal to the estimated total payments that would have been made under the reasonable charge payment methodology. As explained below, we used this authority to establish fee schedules for parental and enteral nutrition (PEN) items and services for use in paying claims with dates of service on or after
   On
B. Summary of the Proposed Provisions and Responses to Comments on the Implementation of Budget Neutral Fee Schedules for Splints, Casts and IOLs
   For the reasons we articulated above, we proposed (78 FR 40879), under section 1842(s) of the Act, to implement fee schedules for splints and casts, and IOLs inserted in a physician's office falling under the category of medical supplies. In addendum C of the proposed rule (78 FR 40879), which can be found on http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Downloads/CMS-1526-P-Addendum-C.pdf, we inserted the current 2013 reasonable charge amounts for splints, casts and IOLs inserted in a physician's office. The 2013 reasonable charge amounts for splints and casts are gap-filled reasonable charges updated by the CPI-U factor ending with June of the preceding year, in this case
   For splints and casts, we proposed national fee schedule amounts for items furnished from
   For IOLs inserted in a physician's office, we proposed national fee schedule amounts for items furnished from
   We received one comment on the proposal to implement budget-neutral fee schedules for splints, casts and IOLs inserted in a physician's office from an advocacy group representing doctors of optometry. The issues raised in the comment were specifically in regard to IOLs. We received no comments on the topic of splints and casts.
   Comment: The commenter indicated that the statute does not provide specific authority for implementing fee schedules for IOLs as part of the authority for implementing fee schedules for the general category of "medical supplies" listed under section 1842(s) of the Act. The commenter indicates that under 42 CFR 414.202, the list of items not considered prosthetics or orthotics separately identifies "medical supplies" and "intraocular lenses," and that if intraocular lenses were considered "medical supplies," they would not need to be separately listed in SEC 414.202.
   Response: We disagree with this comment. The terms "medical supplies" and "intraocular lenses" are listed in 42 CFR 414.202 for the purpose of implementing section 1834(h)(4)(C) of the Act. The regulation clearly states that the definitions in 42 CFR 414.202 are for the purposes of Subpart D--Payment for Durable Medical Equipment and Prosthetic and Orthotic Devices. The term "medical supplies" referred to in section 1834(h)(4)(C) of the Act include catheters, catheter supplies, ostomy bags, and supplies related to ostomy care that are specifically furnished by a home health agency. As a result, we implemented SEC 414.202 consistent with the payment rules under section 1834(h) of the Act, which identifies a different group of items of "medical supplies" than those addressed under section 1842(s) of the Act. As we stated in the proposed rule (78 FR 40878), although the terms "intraocular lenses" and "medical supplies" are separately identified under SEC 414.202 for purposes of defining what constitutes orthotic and prosthetic devices, the regulation is not intended to suggest these are mutually exclusive items. Indeed, under the Medicare statute and regulations, items and services are identified specifically and generally, as part of larger categories.
   We believe our interpretation of this statutory authority is reasonable and that we have been consistent in our interpretation of section 1842(s) of the Act in the past. As we noted above, we proposed to adopt fee schedules for IOLs under this authority in 1999, though we declined to finalize this proposal (64 FR 40534 (
   Comment: The commenter also suggested that if we continue with converting the IOLs to fee schedule amounts, then we should delay implementation of the fee schedule amounts so that suppliers of IOLs have more time to learn about and prepare for the change in payment.
   Response: We disagree that extra time is needed to prepare for implementation of fee schedule amounts that the statute specifies must be initially budget neutral. Our review of CY 2012 submitted charge data indicates that there is little variation in the charges submitted for the items that have enough claims data information to implement the fee schedule amounts.
   Comment: The commenter agreed with us that fee schedule amounts should be a national amount rather than local because several states have no suppliers of IOLs.
   Response: We appreciate this comment and have made the fee schedules of IOLs a national fee schedule amount.
   After careful review of the comment received and for the reasons we discussed previously, we are finalizing the implementation of budget-neutral fee schedules for splints, casts and IOLs inserted in a physician's office. Part 414, Subpart C of the regulations at 42 CFR are being revised to indicate that the fee schedule amounts for payment for splints and casts furnished in 2014, effective
Agency name Organization Position title Authorization Effective date name number DEPARTMENT OF Rural Housing State DA130150 9/19/2013 AGRICULTURE Service Director-- Hawaii Farm Service State Executive DA130190 9/19/2013 Agency Director--West Virginia State Executive DA130194 9/19/2013 Director-- Pennsylvania State Executive DA130202 9/19/2013 Director--New Jersey Office of the Special DA130218 9/5/2013 Under Secretary assistant for Rural Development Office of the Confidential DA130217 9/6/2013 Assistant Assistant Secretary for Congressional Relations Office of Deputy Director DA130220 9/19/2013 Communications DEPARTMENT OF Office of the Director, DC130090 9/4/2013 COMMERCE Director Office of Faith Based and Neighborhood Partnerships Office of the Director of DC130093 9/4/2013 Chief of Staff Scheduling and Advance Office of the Special DC130094 9/4/2013 Deputy Assistant Secretary Office of the Special DC130091 9/9/2013 General Counsel Assistant COMMISSION ON Commissioners Special CC130006 9/11/2013 CIVIL RIGHTS Assistant DEPARTMENT OF Office of the Special DD130120 9/6/2013 DEFENSE Assistant Assistant for Secretary of Europe and NATO Defense (International Security Affairs) Office of the Advance Officer DD130123 9/25/2013 Secretary DEPARTMENT OF Office of the Confidential DB130065 9/4/2013 EDUCATION General Counsel Assistant Office of the Special DB130059 9/11/2013 Under Secretary Assistant Executive DB130067 9/12/2013 Director Deputy DB130068 9/12/2013 Director, White House Initiative on Historically Black College Office of Deputy DB130069 9/13/2013 Elementary and Assistant Secondary Secretary for Education Policy and Programs Office of the Special Counsel DB130071 9/20/2013 Deputy Secretary Office of the Associate DB130072 9/20/2013 Under Secretary Assistant Deputy Secretary Office of Confidential DB130073 9/23/2013 Vocational and Assistant Adult Education DEPARTMENT OF Office of Special Advisor DE130101 9/4/2013 ENERGY Nuclear Energy Office of Speechwriter DE130102 9/4/2013 Public Affairs Office of Special DE130097 9/11/2013 Management Assistant Loan Programs Special Advisor DE130117 9/24/2013 Office Office of Director of DE130118 9/30/2013 Assistant External Secretary for Affairs Congressional and Intergovernment al Affairs Office of Senior Advisor DE130122 9/30/2013 Assistant Secretary for Congressional and Intergovernment al Affairs ENVIRONMENTAL Office of the Deputy EP130031 9/11/2013 PROTECTION Associate Associate AGENCY Administrator Administrator for for Office of Congressional Congressional and Affairs Intergovernment al Relations Office of the Senior Speech EP130049 9/19/2013 Associate Writer Administrator for External Affairs and Environmental Education FEDERAL ENERGY Office of the Program Analyst DR130007 9/6/2013 REGULATORY Chairman COMMISSION GENERAL Office of Director of GS130025 9/27/2013 SERVICES Communications Public ADMINISTRATION and Marketing Engagement DEPARTMENT OF Office of Regional DH130119 9/5/2013 HEALTH AND Intergovernment Director, HUMAN SERVICES al and External Chicago, Affairs Illinois-- Region V Office of the Director of DH130122 9/5/2013 Assistant Public Health Secretary for Policy (Office Planning and of Health Evaluation Reform) Administration Confidential DH130121 9/5/2013 for Community Assistant Living Office of the Associate DH130117 9/12/2013 Assistant Director Secretary for Health Office of the Confidential DH130120 9/5/2013 Assistant Assistant Secretary for Public Affairs Digital DH130129 9/27/2013 Communications Coordinator DEPARTMENT OF Office of the Press Secretary DM130168 9/13/2013 HOMELAND Assistant SECURITY Secretary for Public Affairs Office of the Advisor DM130166 9/16/2013 Under Secretary for National Protection and Programs Directorate Office of the White House DM130171 9/24/2013 Chief of Staff Liaison Federal Associate DM130178 9/30/2013 Emergency Director for Management Public Agency Affairs/Press Secretary DEPARTMENT OF Office of the Special DU130038 9/4/2013 HOUSING AND Secretary Assistant (2) URBAN DEVELOPMENT DU130041 9/11/2013 DEPARTMENT OF Office of Chief of Staff DJ130089 9/4/2013 JUSTICE Legislative and Attorney Affairs Advisor Office of Speechwriter DJ130093 9/5/2013 Public Affairs DEPARTMENT OF Office of Director of DL130056 9/5/2013 LABOR Public Affairs External Partnership Special DL130059 9/19/2013 Assistant Office of the Director of DL130058 9/13/2013 Secretary Public Engagement Special DL130063 9/26/2013 Assistant OFFICE OF Intergovernment Public QQ130004 9/16/2013 NATIONAL DRUG al Public Engagement CONTROL POLICY Liaison Specialist Office of the Policy and QQ130005 9/18/2013 Director Administrative Coordinator OFFICE OF Office of Executive TS130003 9/16/2013 SCIENCE AND Science and Assistant TECHNOLOGY Technology POLICY Policy OVERSEAS Office of the Deputy Chief of PQ130004 9/27/2013 PRIVATE President Staff INVESTMENT CORPORATION PRESIDENT'S President's Public WH130003 9/11/2013 COMMISSION ON Commission on Relations WHITE HOUSE White House Associate FELLOWSHIPS Fellowships SECURITIES AND Office of the IT Specialist SE130006 9/19/2013 EXCHANGE Chairman COMMISSION SMALL BUSINESS Office of the Deputy SB130023 9/5/2013 ADMINISTRATION Administrator Scheduler SOCIAL SECURITY Office of the Senior Advisor SZ130016 9/20/2013 ADMINISTRATION Commissioner DEPARTMENT OF Office of the Senior Advisor DS130122 9/6/2013 STATE Secretary Deputy Chief of DS130116 9/11/2013 Staff for Policy Bureau of Supervisory DS130060 9/11/2013 Consular Public Affairs Affairs Specialist Office of the Staff Assistant DS130124 9/18/2013 Under Secretary for Management Office of the Special DS130120 9/19/2013 Under Secretary Assistant for Arms Control and International Security Affairs TRADE AND Office of the Chief of Staff TD130004 9/26/2013 DEVELOPMENT Director AGENCY DEPARTMENT OF Office of the White House DT130041 9/9/2013 TRANSPORTATION Secretary Liaison
VII. DMEPOS Technical Amendments and a Correction
A. Background
   Medicare pays for various DMEPOS items and services based on payment rules that are set forth in section 1834 of the Act and 42 CFR Part 414, Subpart D. We proposed to make three minor, conforming technical amendments to the existing DMEPOS payment regulations (the title of Subpart D and 42 CFR SEC 414.200 and SEC 414.226) (78 FR 40879 through 40880).
B. Summary of the Proposed Provisions and Responses to Comments on the Proposed Technical Amendments and a Correction
   We proposed to make three minor, conforming technical amendments and a correction to the existing DMEPOS payment regulations as follows (78 FR 40879 through 40880):
    * We proposed to modify the title of "Subpart D--Payment for Durable Medical Equipment, Prosthetic and Orthotic Devices" to read "Subpart D--Payment for Durable Medical Equipment, Prosthetic and Orthotic Devices, and Surgical Dressings" to reflect that payment for surgical dressings is addressed under this subpart at SEC 414.220(g).
    * In subpart SEC 414.200, we proposed to modify the phrase "This subpart implements sections 1834 (a) and (h) of the Act by specifying how payments are made for the purchase or rental of new and used durable medical equipment and prosthetic and orthotic devices for Medicare beneficiaries." as follows: "This subpart implements sections 1834 (a), (h), and (i) of the Act by specifying how payments are made for the purchase or rental of new and used durable medical equipment, prosthetic and orthotic devices, and surgical dressings for Medicare beneficiaries." The Omnibus Budget Reconciliation Act of 1993 amended section 1834 of the Act by adding subsection (i), mandating payment on a fee schedule basis for surgical dressings. Although SEC 414.220(g) addresses this requirement, the regulation at SEC 414.200 was not updated to indicate that this subpart implements section 1834(i) in addition to sections 1834(a) and (h) of the Act.
    * Section 1834(a)(9)(D) of the Act provides authority for creating separate classes of oxygen and oxygen equipment. Section 1834(a)(9)(D)(ii) of the Act prohibits CMS from creating separate classes of oxygen and oxygen equipment that result in expenditures for any year that are more or less than expenditures which would have been made if the separate classes had not been created. In other words, the new classes and payment amounts for oxygen and oxygen equipment must be established so that creating the new classes is annually budget-neutral. In
    * We also proposed a technical correction to existing 42 CFR SEC 414.102(c) to conform the regulation governing parenteral and enteral (PEN) nutrients, equipment and supplies covered item fee schedule update with the statute. Although section 1842(s)(1)(B)(ii) of the Act is self-implementing, the PEN nutrients, equipment and supplies payment regulations at 42 CFR 414 Subpart C were not updated to reflect the application of the multifactor productivity adjustment to the CPI-U update factor for 2011 and subsequent calendar years. Therefore, we are revising SEC 414.102(c) of our regulations to specify that for years 2003 through 2010, the PEN items and services fee schedule amounts of the preceding year are updated by the percentage increase in the CPI-U for the 12-month period ending with June of the preceding year. For each year subsequent to 2010, the PEN items and services fee schedule amounts of the preceding year are updated by the percentage increase in the CPI-U for the 12-month period ending with June of the preceding year, reduced by the productivity adjustment describe in section 1886(b)(3)(B)(xi)(II) of the Act.
   We received no public comments on the DMEPOS proposals for technical amendments and a correction. Therefore, for the reasons we previously explained, we are finalizing our proposed modifications to the above regulations.
VIII. Waiver of Delayed Effective Date
   In the absence of an appropriation for FY 2014 or a Continuing Resolution, the federal government funding lapsed on
   We ordinarily provide a 60-day delay in the effective date of final rules after the date they are issued. The 60-day delay in effective date can be waived, however, if the agency finds for good cause that the delay is impracticable, unnecessary, or contrary to the public interest, and the agency incorporates a statement of the findings and its reasons in the rule issued. We believe it would be contrary to the public interest to delay the effective date of the ESRD PPS and ESRD QIP portions of this final rule. The ESRD PPS is a calendar-year payment system, and we typically issue the final rule by
IX. 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
    * The need for the information collection and its usefulness in carrying out the proper functions of our agency.
    * The accuracy of our estimate of the information collection burden.
    * The quality, utility, and clarity of the information to be collected.
    * Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.
B. Requirements in Regulation Text
   In section II.D. of this final rule, we changed the regulatory text for the ESRD PPS in CY 2014. However, the changes that are being made do not impose any new information collection requirements.
C. Additional Information Collection Requirements
   This final rule does not impose any new information collection requirements in the regulation text, as specified above. However, this final rule does make reference to several associated information collections that are not discussed in the regulation text contained in this document. The following is a discussion of these information collections.
1. ESRD QIP
a. Expanded ICH CAHPS Reporting Measure for PY 2016 and Future Payment Years of the ESRD QIP
   As stated above in section III.C.2.a of this final rule, we proposed to include in the PY 2016 ESRD QIP an expanded ICH CAHPS reporting measure, which assesses facility usage of the ICH CAHPS survey. Unlike the ICH CAHPS reporting measure finalized in the CY 2013 ESRD PPS final rule (77 FR 67480 through 67481), the proposed expanded ICH CAHPS reporting measure would require facilities to report (via a CMS-approved vendor) survey data to CMS once for PY 2016, and, for PY 2017 and beyond, to administer (via a CMS-approved vendor) a second ICH CAHPS survey and report the second set of survey data to CMS. Therefore, for PY 2016, we estimated the burden associated with this requirement to be the time and effort necessary for facilities to submit (via a CMS-approved vendor) survey results to CMS. For PY 2017 and future payment years, we estimated the burden associated with this requirement is the time and effort necessary for facilities to administer (via a CMS-approved vendor) a second ICH CAHPS survey and submit (via a CMS-approved vendor) the survey results to CMS.
   We estimated that approximately 5,506 facilities will treat adult, in-center hemodialysis patients in PY 2016 and, therefore, will be eligible to receive a score on this measure. We further estimated that all 5,506 facilities will report (via a CMS-approved vendor) survey results to CMS, and that it will take each vendor approximately 5 minutes to do so. Therefore, the estimated total annual burden associated with meeting the measure requirements in PY 2016 is 459 hours [(5/60) hours x 5,506 facilities). According to the
   We estimated that approximately 5,693 facilities will treat adult, in-center hemodialysis patients in PY 2017 and, therefore, will be eligible to receive a score on this measure. We estimated that all 5,693 facilities will administer the ICH CAHPS survey through a third-party vendor and arrange for the vendor to submit the data to CMS. We estimated that it would take each patient 30 minutes to complete the survey (to account for variability in education levels) and that approximately 103 surveys per year would be taken per facility. Interviewers from each vendor would therefore spend a total of approximately 52 hours per year with patients completing these surveys (0.5 hours * 103 surveys) or
   We requested comments on these proposals. The comments we received on these proposals and our responses are set forth below.
   Comment: One commenter asked CMS to take a global look at the burden placed on dialysis facilities for all aspects of the ESRD QIP.
   Response: We appreciate the commenter's suggestion and we clarify that we take an overarching view of provider burden each year during the rulemaking process when we conduct analyses associated with the Collection of Information Requirements.
   Comment: One commenter stated that the aggregate costs associated with the collection of information requirements are accurate, but that the costs are too high for facilities and amount to an unfunded mandate.
   Response: Although we recognize that the ESRD QIP imposes significant costs to providers, we disagree that those costs are too high or amount to an unfunded mandate. We continue to believe that the ESRD QIP drives improvements in the quality of care for patients with ESRD. We also believe that the benefits for patients far outweigh the costs for providers, and that the ESRD QIP does not amount to an unfunded mandate because it is tied to the reimbursements providers receive through the ESRD Prospective Payment System.
   Comment: A few commenters did not agree with the cost estimates in the collection of information requirements because it does not account for the burdens associated with entering data into CROWNWeb, as CROWNWeb is not fully functional.
   Response: We understand that members of the ESRD community have reported difficulties accessing and using the CROWNWeb system. As stated above, we are working to address known defects in CROWNWeb, and we look forward to continuing to work with facilities to minimize the burden of entering data into CROWNWeb. We note that entering data in CROWNWeb is a Condition for Coverage for dialysis facilities ( SEC 494.180(h)), and that CROWNWeb supports the 1995 Paperwork Reduction Act. We will take the commenters' suggestions under advisement in the future when estimating burdens associated with collection of information requirements
   Comment: Several commenters did not agree with the cost estimates for the collection of information requirements for the ICH CAHPS measure. These commenters stated that the cost estimates do not accurately capture the cost of using a third party vendor, and that these costs can vary significantly.
   Response: We agree that the cost estimates for the ICH CAHPS measure did not include the costs associated with contracting a third-party vendor to conduct the survey. As noted above (see Section III.C.2.a), the costs of these contracts vary significantly. Therefore, we assumed that third party vendors would employ registered nurses to administer the survey. We recognize the estimation method may not be entirely accurate, but we believe it is the most reliable way to generate a single cost estimate.
b. Data Validation Requirements for the PY 2016 ESRD QIP
   Section III.C.13 of the proposed rule outlines our data validation proposals. We proposed to randomly sample records from 300 facilities; each sampled facility would be required to produce up to 10 records; and the sampled facilities will be reimbursed by our validation contractor for the costs associated with copying and mailing the requested records. The burden associated with this validation requirement is the time and effort necessary to submit validation data to a CMS contractor. We estimate that it will take each facility approximately 2.5 hours to comply with these requirements. If 300 facilities are tasked with providing the required documentation, the estimated annual burden for these facilities across all facilities would be 750 hours (300 facilities x 2.5 hours) at a total of
   We requested comments on this proposal. We did not receive any comments on this proposal.
   2. The clarification of the definition of routinely purchased DME does not contain any new information collection requirements.
   3. The clarification of the 3-year MLR for DME does not contain any new information collection requirements.
   4. The implementation of Budget-Neutral Fee Schedules for Splints, Casts and IOLs does not contain any new information collection requirements.
X. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
   We examined the impacts of this final rule as required by Executive Order 12866 (
2. Statement of Need
   This rule finalizes a number of routine updates for renal dialysis services in CY 2014, implements the fourth year of the ESRD PPS transition, and makes several policy changes to the ESRD PPS. These include updates and changes to the ESRD PPS base rate, the wage index values, the wage index budget-neutrality adjustment factor, the home dialysis training add-on payment, and the outlier payment policy. This rule will also implement section 1881(b)(14)(I), which requires the Secretary, by comparing per patient utilization from 2007 with such data from 2012, to reduce the single payment amount to reflect the Secretary's estimate of the change in the utilization of ESRD-related drugs and biologicals. Failure to publish this final rule would result in ESRD facilities not receiving appropriate payments in CY 2014.
   This rule finalizes to implement the ESRD QIP for PY 2016 and beyond by finalizing proposals to adopt measures, scoring, and payment reductions to incentivize improvements in dialysis care as directed by section 1881(h) of the Act. Failure to finalize requirements for the PY 2016 ESRD QIP would prevent continuation of the ESRD QIP beyond PY 2015.
   In addition, this final rule clarifies the grandfathering provision related to the 3-year MLR for DME, provides clarification of the definition of routinely purchased DME and reclassifies certain items of DMEPOS, and implements budget-neutral fee schedules for splints and casts, and IOLs inserted in a physician's office. Finally, this final rule makes a few technical amendments and corrections to existing regulations related to payment for DMEPOS items and services.
3. Overall Impact
   We estimate that the revisions to the ESRD PPS will result in no increase in payments to ESRD facilities in CY 2014. This includes the amount associated with the increase in the ESRDB market basket reduced by the productivity adjustment, updates to outlier threshold amounts, the inclusion of the Pacific Rim ESRD facilities, updates to the wage index, the change from payments based on 25 percent composite rate system and 75 percent ESRD PPS to 100 percent ESRD PPS for those facilities that opted to be paid under the blend, and the drug utilization adjustment required by section 1881(b)(14)(I), as added by section 632(a) of ATRA.
   For PY 2016, we estimate that the requirements related to the ESRD QIP will cost approximately
   We estimate that the changes for implementing the fee schedule amounts from reasonable charge payments will be budget neutral and will have no impact to DMEPOS providers of splints, casts and IOLs inserted in a physician's office.
   We estimate that our clarification of the definition of routinely purchased DME and re-classification of certain items as cap rental items would impact certain DMEPOS providers. The estimated overall impact on payments to suppliers is furnished in table 17 below. In addition, suppliers will incur additional expenses in submitting monthly claims for payment on a rental basis versus a single claim for payment on a purchase basis. Suppliers will be positively impacted by this change because they will not have to replace equipment in their inventory as often since they retain title to rented items that are not used on a continuous basis for 13 months by Medicare beneficiaries. We estimate that the clarification of the 3-year MLR for DME would have no impact on DMEPOS suppliers.
B. Detailed Economic Analysis
1. CY 2014 End-Stage Renal Disease Prospective Payment System
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 in CY 2013 to estimated payments in CY 2014. To estimate the impact among various types of ESRD facilities, it is imperative that the estimates of payments in CY 2013 and CY 2014 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
Agency name Organization Position title Authorization Vacate date name number DEPARTMENT OF Office of the Confidential DB120017 9/7/2013 EDUCATION General Counsel Assistant Office of the Special DB120021 9/21/2013 Under Secretary Assistant DEPARTMENT OF Office of the Senior DH130040 9/6/2013 HEALTH AND Assistant Speechwriter HUMAN SERVICES Secretary for Public Affairs DEPARTMENT OF Office of the Director of DM100106 9/7/2013 HOMELAND Assistant Strategic SECURITY Secretary for Communications Public Affairs Office of the Special DM110195 9/7/2013 Assistant Assistant Secretary for Policy Immediate Confidential DM090285 9/21/2013 Office of the Assistant Deputy Secretary Office of the Deputy Press DM110234 9/21/2013 Assistant Secretary Secretary for Public Affairs DEPARTMENT OF Northwest/ Regional DU100045 9/7/2013 HOUSING AND Alaska Administrator URBAN (Seattle) DEVELOPMENT Office of the Senior Counsel DU110014 9/14/2013 General Counsel DEPARTMENT OF Office of Attorney DJ110034 9/7/2013 JUSTICE Legislative Advisor Affairs Civil Rights Counsel DJ100176 9/21/2013 Division DEPARTMENT OF Office of Special DL090126 9/7/2013 LABOR Public Affairs Assistant DEPARTMENT OF Office of the Staff Assistant DS120073 9/4/2013 STATE Under Secretary for Arms Control and International Security Affairs DEPARTMENT OF Secretary's Special DI120031 9/6/2013 THE INTERIOR Immediate Assistant Office Bureau of Senior Advisor DI110089 9/27/2013 Safety and Environmental Enforcement DEPARTMENT OF Office of the White House DT090059 9/9/2013 TRANSPORTATION Secretary Liaison ENVIRONMENTAL Office of the Senior Advisor EP130019 9/14/2013 PROTECTION Associate AGENCY Administrator for Congressional and Inter- governmental Relations Office of the Director, EP110021 9/21/2013 Associate Office of Administrator Public for External Engagement Affairs and Environmental Education EXPORT-IMPORT Export Finance Senior Vice- EB060001 9/30/2013 BANK President for Export Finance OFFICE OF Office of Executive TS100005 9/6/2013 SCIENCE AND Science and Assistant TECHNOLOGY Technology POLICY Policy TRADE AND Office of the Chief of Staff TD120001 9/28/2013 DEVELOPMENT Director AGENCY
   Column A of the impact table indicates the number of ESRD facilities for each impact category and column B indicates the number of dialysis treatments (in millions). The overall effect of the changes to the outlier payment policy described in section II.B.6. of this final rule is shown in column C. For CY 2014, 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 0.1 percent to a 0.6 percent increase. All ESRD facility types are anticipated to experience a positive effect in their estimated CY 2014 payments as a result of the outlier policy changes.
   Column D shows the effect of the wage index on ESRD facilities and reflects the CY 2014 wage index values for the ESRD PPS payments. ESRD facilities located in the census region of Puerto Rico and the Virgin Islands would receive a 2.3 percent decrease in estimated payments in CY 2014. 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 2014). The other categories of types of facilities in the impact table show changes in estimated payments ranging from a 0.3 percent decrease to a 0.6 percent increase due to the update of the wage index.
   Column E shows the effect of the change in the blended payment percentage from 25 percent of payments based on the composite rate system and 75 percent based on the ESRD PPS in CY 2013, to 100 percent based on the ESRD PPS in CY 2014, for those facilities that choose to be paid under the transition. The impact on all facilities would be a 0.2 percent increase in estimated payments. The estimated impacts of the change in the blend ranges from a 0.0 percent to 0.9 percent increase.
   Column F shows the effect of the ESRDB market basket increase minus productivity adjustment. The impact on all facilities would be a 2.8 percent increase.
   Column G shows the effect of the drug utilization adjustment required by section 1881(b)(14)(I) of the Act. For CY 2014, the impact on all facilities as a result of the
   Column H reflects the overall impact (that is, the effects of the outlier policy changes, the wage index, the effect of the blended payment percentage change, the effect of the ESRDB market basket increase minus productivity adjustment, and the effect of the drug utilization adjustment required by section 1881(b)(14)(I)). We expect that overall ESRD facilities will experience a 0.0 percent increase in estimated payments in 2014. ESRD facilities in Puerto Rico and the Virgin Islands are expected to receive a 2.1 percent decrease in their estimated payments in CY 2014. This larger decrease is primarily due to the negative impact of the wage index. The other categories of types of facilities in the impact table show impacts ranging from a decrease of 0.5 percent to an increase 0.8 percent in their 2014 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
c. Effects on the Medicare Program
   We estimate that Medicare spending (total Medicare program payments) for ESRD facilities in CY 2014 will be approximately
d. Effects on Medicare Beneficiaries
   Under the ESRD PPS, beneficiaries are responsible for paying 20 percent of the ESRD PPS payment amount. As a result of the projected 0.0 percent overall increase in the final ESRD PPS payment amounts in CY 2014, we estimate that there will be an increase in beneficiary co-insurance payments of 0.0 percent in CY 2014, which translates to approximately
e. Alternatives Considered
   For this final rule, we considered implementing the full drug utilization adjustment amount in CY 2014. In particular, we could have implemented a one-time reduction of
2. End-Stage Renal Disease Quality Incentive Program
a. Effects of the PY 2016 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 a ESRD QIP that reduces ESRD PPS payments by up to 2 percent for dialysis facilities that fail to meet or exceed a TPS with respect to performance standards established by the Secretary with respect to certain specified measures. The methodology that we proposed to determine a facility's TPS is described in section III.D.9 of this final rule. Any reductions in ESRD PPS payments as a result of a facility's performance under the PY 2016 ESRD QIP would begin with services furnished on
   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 TPS), approximately 24 percent or 1,390 of the facilities would likely receive a payment reduction in PY 2016. Facilities that do not receive a TPS are not eligible for a payment reduction.
   The ESRD QIP impact assessment assumes an initial count of 5,771 dialysis facilities paid through the PPS. Table 13 shows the overall estimated distribution of payment reductions resulting from the PY 2016 ESRD QIP.
Table IV-1--Proposed Volumes for 2014 [billion gallons] Proposed volume Statutory Range Mean volume Advanced biofuel 3.75 2.00-2.51 2.20 Total renewable fuel 18.15 15.00-15.52 15.21
   To estimate whether or not a facility would receive a payment reduction under the proposed approach, we scored each facility on achievement and improvement on several measures we have previously finalized and for which there were available data from CROWNWeb and Medicare claims. Measures used for the simulation are shown in Table 14.
Table IV.B-1--Reduced Gasoline Demand in 2014 Motor gasoline E85 Total energy Equivalent E10 (Quad Btu) *a (Quad Btu) *a (Quad Btu) *a volume (bill gal) *c AEO2007 *b 18.67 0.004 18.68 154.30 AEO2013 *b 15.84 0.097 15.94 131.67 Difference 22.63 *a Higher heating value. *b Table 2 of EIA's Annual Energy Outlook, total delivered energy consumption for all sectors. *c Assumes conversion factors of 3.561 mill Btu per barrel for ethanol and 5.253 mill Btu per barrel for gasoline.
   Clinical measures with less than 11 cases for a facility were not included in that facility's TPS. Each facility's TPS was compared to the estimated minimum TPS and the payment reduction table found in section III.C.11 of this proposed rule. Facilities were required to have a score on at least one clinical measure to receive a TPS. For these simulations, the NHSN Bloodstream Infection in Hemodialysis Outpatients and the reporting measures were not included due to lack of data availability. Therefore, the simulated facility TPSs were calculated using only some of the clinical measure scores. Additionally, since data for the reporting measures were not available, facilities were scored at the median, or 5, for each of the three reporting measures.
   To estimate the total payment reductions in PY 2016 for each facility resulting from this final rule, we multiplied the total Medicare payments to the facility during the one year period between
   Table 15 below shows the estimated impact of the finalized ESRD QIP payment reductions to all ESRD facilities for PY 2016. 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 propose to use for the PY 2016 ESRD QIP, the actual impact of the PY 2016 ESRD QIP may vary significantly from the values provided here.
[TB] Table 15--Impact of Finalized QIP Payment Reductions to ESRD Facilities for PY 2016 Number of Number of Number of Number of Payment facilities treatments facilities facilities reduction 2012 with QIP expected to (percent (in score receive a change in millions) payment total ESRD reduction payments) All Facilities 5,873 42.7 5,645 1,390 -0.17 Facility Type: Freestanding 5,362 39.6 5,248 1,259 -0.16 Hospital-based 511 3.1 397 131 -0.32 Ownership Type: Large Dialysis 4,023 29.7 3,963 966 -0.16 Regional Chain 813 6.2 789 149 -0.13 Independent 601 4.2 563 161 -0.23 Hospital-based 424 2.6 323 112 -0.34 (non-chain) Unknown 12 0.1 7 2 -0.28 Facility Size: Large Entities 4,836 35.9 4,752 1,115 -0.15 Small Entities 1,025 6.7 886 273 -0.27 *1 Unknown 12 0.1 7 2 -0.28 Rural Status: (1) Yes 1,283 7.0 1,233 288 -0.16 (2) No 4,590 35.7 4,412 1,102 -0.18
total
treatments) Less than 4,000 1,090 3.1 938 277 -0.26 treatments 4,000-9,999 2,167 11.1 2,147 440 -0.13 treatments Over 10,000 2,431 27.5 2,422 629 -0.17 treatments Unknown 185 1.0 138 44 -0.24 *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. *3 Based on claims data through December 2012.[TE]
Table II.B.4-1--Projected Available Cellulosic Biofuel for 2014 Company name Location Feedstock Fuel Domestic Facilities; Approved Pathways Abengoa Hugoton, KS Corn Stover Ethanol CoolPlanet TBD TBD Gasoline Biofuels DuPont Nevada, IA Corn Stover Ethanol Fiberight Blairstown, IA MSW Ethanol INEOS Bio Vero Beach, FL Vegetative Waste Ethanol KiOR Columbus, MS Wood Waste Gasoline and Diesel LanzaTech Soperton, GA Wood Waste Ethanol Poet Emmetsburg, IA Corn Stover Ethanol Sweetwater Energy Various Ag. Residue Ethanol Domestic Facilities; All Potential Producers Ensyn Stanley, WI Wood Waste Heating Oil CNG/LNG Producers Various Biogas from CNG/LNG Landfills Edeniq Various Corn Kernel Fiber Ethanol Beta Renewables Crescentino, Italy Wheat straw, Arundo Ethanol Donax Enerkem Edmonton, Alberta Separated MSW Methanol, Ethanol GranBio Sao Miguel dos Bagasse Ethanol Campos, Brazil Raizen Piracicaba, Brazil Bagasse Ethanol
Table II.B.4-1--Projected Available Cellulosic Biofuel for 2014 Company name Design First production 2014 Projected capacity available volume (MGY) *a (ethanol- equivalent) Domestic Facilities; Approved Pathways Abengoa 24 1st Quarter 2014 0-18 CoolPlanet 10 2nd Half 2014 0 Biofuels DuPont 30 2nd Half 2014 0-2 Fiberight 6 Unknown 0 INEOS Bio 8 3rd Quarter 2013 2-5 KiOR 11 1st Quarter 2013 0-5.5 (0-9) LanzaTech 5 1st Half 2015 0 Poet 25 1st Half 2014 0-6 Sweetwater Energy 7 1st Half 2014 0 Domestic Facilities; All Potential Producers Ensyn 3 2007 0-3 (0-5) CNG/LNG Producers Various N/A 35-54 Edeniq Various 1st Half 2014 0-7 Beta Renewables 20 2Q 2013 0 Enerkem 10 1st Half 2014 0 GranBio 22 1st Half 2014 0 Raizen 10.5 2nd Half 2014 0 *a Facilities are generally designed to process a given quantity of feedstock and volume capacities may vary depending on yield assumptions.
b. Alternatives Considered for the PY 2016 ESRD QIP
   In the proposed PY 2016 ESRD QIP, we selected measures that we believe are important indicators of patient outcomes and quality of care as discussed in section III.C of this final rule. Poor management of anemia, for example, can lead to avoidable hospitalizations, decreased quality of life, and death. In order to provide strong incentives to improve patient outcomes in this clinically important area, we considered proposing a clinical measure for Pediatric Iron Therapy. However, upon further review we recognized that we lacked the necessary baseline data to establish achievement thresholds, performance standards, and benchmarks. We, therefore, proposed a reporting measure in order to gather the data we will need to introduce a clinical measure in the future. In the case of the NHSN Bloodstream Event in Hemodialysis Outpatient measure, we considered proposing a reporting measure instead of a clinical measure, because we lacked the necessary baseline data to establish achievement thresholds, performance standards, and benchmarks. However, we decided not to do so. Due to the great impact hospital acquired infections have upon patients and the industry, we believe it is important to begin assessing facilities on the number of these events rather than on merely whether they report these events as soon as possible. Similarly, in the case of the Patient Informed Consent for Anemia Treatment measure, we considered proposing a reporting measure instead of a clinical measure, because we lacked the necessary baseline data to establish achievement thresholds, performance standards, and benchmarks. We decided not to do because we believe that providing counseling on the risks and benefits of anemia treatment, and seeking informed consent for such treatment, is already a standard of clinical care in the ESRD provider community. We also considered proposing the Standardized Hospitalization Ratio Admissions (SHR) measure and the Standardized Mortality Ratio (SMR) measure as reporting measures for the PY 2016 ESRD QIP. We decided not to do so due to outstanding concerns about the measures' validity and reliability. As an alternative, we proposed the Comorbidity reporting measure to provide a reliable source of data that we can use to properly risk-adjust SHR and SMR clinical measures (should we propose to adopt such measures in the future), and to improve our understanding of the risk factors that contribute to morbidity and mortality in the ESRD patient population.
   In developing the proposed scoring methodology for the PY 2016 ESRD QIP, we considered several alternatives. For example, we considered weighting the clinical measures at 80 percent and the reporting measures at 20 percent of the TPS. We ultimately decided to propose the weighting methodology used in the PY 2015 ESRD QIP because the ratio of clinical to reporting measures did not change significantly, and also because we wanted to retain a strong incentive for facilities to meet the requirements for the reporting measures. We also considered a number of ways to establish achievement thresholds and benchmarks for the NHSN clinical measure. For example, we considered using baseline data from CYs 2012 through 2013 to set achievement thresholds and benchmarks. However, we ultimately decided to propose to use data from CY 2014 when establishing baseline data for scoring purposes, because facilities were not required to submit twelve full months of NHSN data during CY 2012-2013, and rates of healthcare-acquired infections are susceptible to seasonal variability. In light of the importance of monitoring and preventing infections in the ESRD population, we decided that it would be preferable to propose a clinical measure with equivalent baseline and performance periods, rather than a reporting measure that would have less of a direct impact on clinical practice. We also considered a number of ways to score the Patient Informed Consent for Anemia Treatment clinical measure. In this case, we lacked baseline data that could be used to establish achievement thresholds and benchmarks, so we considered proposing a reporting measure in place of the clinical measure. In light of the importance of the measure, however, we ultimately decided to propose a clinical measure in order to provide a stronger incentive for facilities to obtain informed consent from patients receiving anemia treatment. In considering possible scoring methodologies for the measure, we specifically considered setting the achievement threshold at 100 percent because we believe that facilities should always obtain informed consent from patients receiving ESA. However, we recognized that unexpected events in the clinical setting might preclude the possibility of obtaining informed consent in every instance, so we ultimately decided to propose to set the achievement threshold for the measure at 92 percent. We selected 92 percent because this would allow facilities with 26 patients to meet the achievement threshold if they failed to obtain informed consent from 2 patients (see section III.C.8 for more details).
3. DMEPOS Provisions
a. Effects of the Implementation of Fee Schedules for Splints, Casts and IOLs
   The implementation of fee schedules for use in paying claims for splints, casts, and IOLs inserted in a physician's office would result in administrative savings associated with determining and implementing the Medicare allowed payment amounts for these items. As a result, the agency would save approximately
b. Clarification of the 3-Year MLR for DME
   We expect no significant impact regarding application of the 3-year MLR for DME. As we noted in the final rule implementing the 3-year MLR, we believe that a vast majority of the categories of items that were classified as DME before
c. Definition of Routinely Purchased DME
   As discussed in section IV of this final rule, this final rule clarifies the definition of routinely purchased equipment set forth at section SEC 414.220(a) and re-classifies an expensive item of DME or accessory (over
   This final rule identified the HCPCS codes requiring reclassification from routinely purchased DME to capped rental DME in section IV. The majority of codes relate to manual wheelchairs and wheelchair accessories. Also, accessories of complex rehabilitative power wheelchairs that will be classified as capped rental items and for which suppliers must also offer to the beneficiary on a lump sum purchase basis in accordance with SEC 414.229(h)(3) of the regulations are noted. Below are shown approximately 14 codes which will be reclassified in two stages effective
Biomass-based diesel volume requirement 1,280 IHS Global Insight report 1,540 Extrapolated 2013 production 1,570 All registered biodiesel facilities that operated at least 20% of 1,600 capacity in 2012 Additional soy oil production and diversion of exported corn oil to 1,620 biodiesel productionUniversity of Illinois estimate in their comments 1,700Darling International, Inc. estimate in their comments 1,900 Production capacity of all registered biodiesel facilities that 2,400 produced some biodiesel in 2012
   In Table 17 below, we show estimated savings associated with making payment on a capped rental basis rather than a lump sum purchase basis for items that will be reclassified.
Table IV.B.2.c-1--Other Non-Ethanol Advanced Biofuel Produced in 2012 [Million ethanol-equivalent gallons] Heating oil 0.2 Biogas 2.9 Renewable diesel 20.5 Total 23.6
   The decrease in expenditures is expected because the changes would eliminate the lump sum purchase method for the certain items, and instead payment would be made under the monthly rental method resulting in lower aggregate payments because many beneficiaries do not rent items for as long as 13 months. In order to prepare our impact on the Medicare program, we reviewed claims data and utilization for all items currently classified as capped rental items from 2009 through 2011 and determined that the weighted average number of allowed monthly rental services for beneficiaries receiving capped rental items during that period was 8 months. We therefore used 8 months as the estimated number of months beneficiaries would rent items in Table 11 of section IV of the preamble of this final rule that would not have a purchase option. All anticipated savings include the price growth for the covered item fee schedule update factors for DME mandated by section 1834(a)(14) of the Act. In addition, our estimate takes into account projected changes in DME beneficiary enrollment. Furthermore, we reflected the savings for these items that are currently included under any existing competitive bidding program and which will be reclassified from routinely purchased to capped rental effective
   Approximately
C. Accounting Statement
   As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars_a004_a-4), in Table 18 below, we have prepared an accounting statement showing the classification of the transfers and costs associated with the various provisions of this final rule.
Biogas 45.8 Naphtha 6.6 Renewable diesel 79.1 Total 131.7
Table IV.B.4-1--Volume Ranges for Estimating Total Renewable Fuel Volume for 2014 [Million ethanol-equivalent gallons] Ethanol that can be consumed 12,954-13,087 Available volumes of non-ethanol cellulosic biofuel 0-9 Available volumes of biomass-based diesel *a 1,920-2,400 Available volumes of non-ethanol advanced biofuel 24-132 Available volumes of non-ethanol non-advanced renewable fuel 1-25 *a Represents a physical volume range of 1.28-1.6 bill gal.
XI. Regulatory Flexibility Act Analysis **
   The Regulatory Flexibility Act (
   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 17 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 12. Using the definitions in this ownership category, we consider the 601 facilities that are independent and the 424 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
   For the ESRD PPS updates in this rule, a hospital-based ESRD facility (as defined by ownership type) is estimated to receive a 0.4 percent increase in payments for CY 2014. An independent facility (as defined by ownership type) is estimated to receive a 0.7 percent increase in payments for CY 2014.
   We solicited comment on the RFA analysis provided. The comments received and our responses are as follows.
   Comment: A few commenters requested that CMS improve the impact analysis for small entities. One association requested that we improve transparency for ESRD facilities and that we update our description of small entities. The association provided a study that identified all the ESRD facilities that have
   Response: We thank the commenters for their suggestions to enhance the RFA analysis. We will take these suggestions into consideration for future rulemaking. We note that CMS publishes a provider level impact table each year. The CY 2014 Final ESRD PPS Facility Level Impact File may be viewed at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices.html. We believe that this file for allows adequate transparency and identification for all ESRD facilities. For example, Medicare certified ESRD facilities are identified by provider number, Medicare payments, number of furnished treatments, as well as, rural or urban status.
   In section II.C.2.a.v. of this final rule we discuss the implementation of the drug utilization adjustment. Specifically, for CYs 2014 and 2015, we are implementing a transition of the drug utilization adjustment by offsetting the payment update, that is the ESRDB market basket minus productivity increase factor and other impacts (such as, changes to the outlier thresholds), by a portion of the reduction amount necessary to create an overall impact of zero percent for ESRD facilities from the previous year's payments. For CY 2016, we will evaluate how to apply the balance of the reduction when we conduct an analysis of the case-mix adjustments as required by section 632(c) of ATRA and implement the inclusion of oral-only ESRD-related drugs and biologicals as permitted by section 632(b) of ATRA. Following this evaluation, we will determine whether we should apply the balance of the reduction in CY 2016 or provide one additional transition year so that the full amount of the drug utilization adjustment will have been applied to the base rate over a 4-year transition period ending in CY 2017.
   Based on the finalized QIP payment reduction impacts to ESRD facilities for PY 2016, we estimate that of the 1,390 ESRD facilities expected to receive a payment reduction, 273 ESRD small entity facilities would experience a payment reduction (ranging from 0.5 percent up to 2.0 of total payments), as presented in Table 13 ("Estimated Distribution of PY 2016 ESRD QIP Payment Reductions") and Table 15 ("Impact of Proposed QIP Payment Reductions to ESRD Facilities for PY 2016") above. We anticipate the payment reductions to average approximately
   Splints and casts, and IOLs affected by this rule are generally furnished by physicians. Approximately 95 percent of physicians are considered to be small entities for the purposes of the RFA. Individuals and states are not included in the definition of a small entity. The reasonable charge payment amounts for splints and casts are based on national reasonable charge amounts increased each year by the 12-month percentage change in the CPI-U ending June of the previous year. These national inflation-indexed charges can easily be converted to fee schedule amounts with no impact on the national Medicare payment amounts for these items. Therefore, the fee schedule amounts that will take effect on
   We expect that the impact of moving certain expensive DME items from the routinely purchased payment class to the capped rental payment class on small business will be minimal since the suppliers would still receive 105 percent of the purchase fee for items that are rented for the full 13-month capped rental period. In addition, the supplier would retain ownership of equipment that is not used for 13 months and can furnish the equipment to another beneficiary, beginning a new, separate 13-month capped rental period for the same item.
   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 162 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 162 rural hospital-based dialysis facilities will experience an estimated 0.2 percent increase in payments. As a result, this final rule is not estimated to have a significant impact on small rural hospitals. Therefore, the Secretary has determined that this final rule will not have a significant impact on the operations of a substantial number of small rural hospitals.
XII. 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
XIII. Federalism Analysis
   Executive Order 13132 on Federalism (
XIV. Congressional Review Act
   This final rule is subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C.
   accordance with the provisions of Executive Order 12866, this proposed rule was reviewed by the
XV. 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
   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 414
   Administrative practice and procedure, Health facilities, Health professions, Kidney diseases, Medicare, Reporting and recordkeeping requirements.
   For the reasons set forth in the preamble, the
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED PAYMENT RATES FOR SKILLED NURSING FACILITIES
   1. The authority citation for part 413 is revised to read as follows:
   Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and (n), 1861(v), 1871, 1881, 1883 and 1886 of the Social Security Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of Pub.L. 106-113 (113 Stat. 1501A-332), sec. 3201 of Pub.L. 112-96 (126 Stat. 156), and sec. 632 of Pub. L. 112-240 (126 Stat. 2354)
SEC 413.174 [Amended]
   2. Section 413.174 (f)(6) (as added on
SEC 413.237 [Amended]
   3. Section 413.237 (a)(1)(iv) is amended by removing "excluding" and by adding in its place "including"; and by removing "
PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES
   4. The authority citation for part 414 continues to read as follows:
   Authority: Secs. 1102, 1871, and 1881(b)(1) of the Social Security Act (42 U.S.C.1302, 1395hh, and 1395rr(b)(1)).
   5. The heading for subpart C is revised to read as follows:
Subpart C--Fee Schedules for Parenteral and Enteral Nutrition (PEN) Nutrients, Equipment and Supplies, Splints, Casts, and Certain Intraocular Lenses (IOLs)
* * * * *
   6. Section 414.100 is revised to read as follows:
SEC 414.100 Purpose.
   This subpart implements fee schedules for PEN items and services, splints and casts, and IOLs inserted in a physician's office as authorized by section 1842(s) of the Act.
   7. Section 414.102 is amended by revising paragraphs (a) introductory text, (a)(2), (b)(1), and (c) to read as follows:
SEC 414.102 General payment rules.
   (a) General rule. For PEN items and services furnished on or after
* * * * *
   (2) The fee schedule amount for the item or service, as determined in accordance with SUBSEC 414.104 thru 414.108.
   (b) * * *
   (1) CMS or the carrier determines fee schedules for parenteral and enteral nutrition (PEN) nutrients, equipment, and supplies, splints and casts, and IOLs inserted in a physician's office, as specified in SUBSEC 414.104 thru 414.108.
* * * * *
   (c) Updating the fee schedule amounts. For the years 2003 through 2010 for PEN items and services, the fee schedule amounts of the preceding year are updated by the percentage increase in the CPI-U for the 12-month period ending with June of the preceding year. For each year subsequent to 2010 for PEN items and services and for each year subsequent to 2014 for splints and casts, and IOLs inserted in a physician's office, the fee schedule amounts of the preceding year are updated by the percentage increase in the CPI-U for the 12-month period ending with June of the preceding year, reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act.
   8. Section 414.106 is added to read as follows:
SEC 414.106 Splints and casts.
   (a) Payment rules. Payment is made in a lump sum for splints and casts.
   (b) Fee schedule amount. The fee schedule amount for payment for an item or service furnished in 2014 is the reasonable charge amount for 2013, updated by the percentage increase in the CPI-U for the 12-month period ending with June of 2013.
   9. Section 414.108 is added to read as follows:
SEC 414.108 IOLs inserted in a physician's office.
   (a) Payment rules. Payment is made in a lump sum for IOLs inserted in a physician's office.
   (b) Fee schedule amount. The fee schedule amount for payment for an IOL furnished in 2014 is the national average allowed charge for the IOL furnished from in calendar year 2012, updated by the percentage increase in the CPI-U for the 24-month period ending with June of 2013.
   10. Revise the heading to Subpart D to read as follows:
Subpart D--Payment for Durable Medical Equipment, Prosthetic and Orthotic Devices, and Surgical Dressings
* * * * *
   11. Section SEC 414.200 is revised to read as follows:
SEC 414.200 Purpose
   This subpart implements sections 1834(a), (h) and (i) of the Act by specifying how payments are made for the purchase or rental of new and used durable medical equipment, prosthetic and orthotic devices, and surgical dressings for Medicare beneficiaries.
   12. Section 414.226 is amended by revising paragraph (c)(6) to read as follows:
SEC 414.226 Oxygen and oxygen equipment
* * * * *
   (c) * * *
   (6) Beginning in 2008, CMS makes an annual adjustment to the national limited monthly payment rate for items described in paragraph (c)(1)(i) of this section to ensure that such payment rates do not result in expenditures for any year that are more or less than the expenditures that would have been made if such classes had not been established.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773, Medicare--
   Dated:
Marilyn Tavenner,
Administrator,
   Approved:
Kathleen Sebelius,
Secretary,
[FR Doc. 2013-28451 Filed 11-22-13;
BILLING CODE 4120-01-P
Copyright: | (c) 2013 Federal Information & News Dispatch, Inc. |
Wordcount: | 101339 |
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