Definitions Relating to ESRD End-Stage Renal Disease Prospective Payment System

10 - Definitions Relating to ESRD End-Stage Renal Disease Prospective Payment System and Acute Kidney Injury Dialysis Payment (Rev. 13599, Issued: 01-30-26, Effective: 05-01-26, Implementation: 05-01-26) End-Stage Renal Disease (ESRD) occurs from the destruction of normal kidney tissues over a long period of time. Often there are no symptoms until the kidney has lost more than half its function. At this advanced stage of kidney disease, the kidneys do not perform effectively and dialysis or a kidney transplant is needed to live. The loss of kidney function in ESRD is usually irreversible and permanent. The term “individual with acute kidney injury” means an individual who has acute loss of renal function and does not receive renal dialysis services for which payment is made under section 1881(b)(14) of the Social Security Act (the Act). Renal dialysis services furnished to hospital in-patients are covered under Medicare Part A and paid in accordance with applicable payment rules. Renal dialysis services furnished by ESRD facilities to individuals with ESRD who need outpatient dialysis are covered under Medicare Part B and paid under the ESRD Prospective Payment System (PPS). Medicare Part B also covers and pays for AKI dialysis, as discussed in §10.E.3 of this chapter. ESRD facilities must be certified by Medicare and are required to comply with the Conditions for Coverage set forth in 42 CFR Part 494. Survey and certification information for ESRD facilities can be found at the following Centers for Medicare & Medicaid Services (CMS) website: <http://www.cms.gov/Medicare/Provider-Enrollment-and- Certification/GuidanceforLawsAndRegulations/Dialysis.html>. A. Dialysis Dialysis is the process of removing waste products from the body by diffusion from one fluid compartment to another across a semi-permeable membrane (dialyzer). This process involves using a bath solution known as dialysate to remove waste products from the blood. Dialysis procedures can include: 1) hemodialysis; 2) peritoneal dialysis; 3) hemofiltration; and 4) ultrafiltration. Of these types of dialysis procedures, the two most commonly used for the treatment of ESRD are hemodialysis and peritoneal dialysis. 1. Hemodialysis – In Hemodialysis, blood passes from the access site through an artificial kidney machine and the waste products diffuse across a man-made membrane (dialyzer) into a bath solution (dialysate), after which the cleansed blood is returned to the patient’s body. Hemodialysis is usually accomplished in 3 to 5- hour sessions with an average of 4 hours per session, 3 times a week. Hemodialysis paid for under the ESRD PPS can be performed in an ESRD facility or at home. See §50.A.1 of this chapter for payment information related to hemodialysis. 2. Peritoneal – In Peritoneal dialysis, waste products are passed from the patient’s body through the peritoneal membrane into the peritoneal (abdominal) cavity. A bath solution (dialysate) is introduced into the body and removed periodically to extract the waste products. See §50.A.4 of this chapter for payment information related to peritoneal dialysis. The three types of peritoneal dialysis are listed below: a. Continuous Ambulatory Peritoneal Dialysis (CAPD) - In CAPD, the dialyzer is the patient’s peritoneal membrane. The patient connects a 2-liter plastic bag of dialysate to a surgically implanted indwelling catheter (a synthetic tube is placed into the abdominal cavity) that allows the dialysate to pour into the patient’s peritoneal cavity. Every 4 to 6 hours the patient drains the fluid out into the same bag and replaces the empty bag with a new bag of fresh dialysate. This is done several times a day. b. Continuous Cycling Peritoneal Dialysis (CCPD) - CCPD combines the advantages of the long dwell, continuous steady-state dialysis of CAPD, with the advantages of automation inherent in intermittent peritoneal dialysis. The major difference between CCPD and CAPD is that the solution exchanges are performed manually during the day by the patient on CAPD, but for the patient on CCPD the solution exchanges occur instead at night and are performed automatically with a peritoneal dialysis cycler. Generally, there are three nocturnal exchanges occurring at intervals of 2 1/2 to 3 hours. Upon awakening, the patient disconnects from the cycler and leaves the last 2-liter fill inside the peritoneum to continue the daytime long dwell dialysis. c. Intermittent Peritoneal Dialysis (IPD) - Waste products pass from the patient’s body through the peritoneal membrane into the peritoneal cavity where the dialysate is introduced and removed periodically by machine. IPD is generally required for approximately 30 hours a week, either as three 10-hour sessions or less frequent, but longer, sessions. See §50.A.5 of this chapter for payment information. 3. Hemofiltration - Hemofiltration is an alternative to peritoneal dialysis and hemodialysis. Hemofiltration removes fluid, electrolytes, and other low molecular weight toxic substances from the blood by filtration through hollow artificial membranes and may be routinely performed in three weekly sessions. In contrast to both hemodialysis and peritoneal dialysis treatments, which eliminate dissolved substances via diffusion across semi-permeable membranes, hemofiltration mimics the filtration process of the normal kidney. The technique requires an arteriovenous (AV) access. Hemofiltration may be performed either in an ESRD facility or at home. For payment information see §50.A.2 of this chapter. 4. Ultrafiltration – Ultrafiltration is the process of removing excess fluid from the blood by exerting pressure through a dialysis membrane. This is not a substitute for dialysis. Ultrafiltration is used in cases where excess fluid cannot be removed easily during the regular course of hemodialysis. It is commonly done during the first hour or two of hemodialysis on patients who have refractory edema (collection of fluid that is unresponsive to maintenance dialysis). Occasionally, medical complications may occur which require that ultrafiltration be performed separately from the dialysis treatment. See §50.A.3 of this chapter for payment information. B. ESRD Facility An ESRD facility is an entity that provides outpatient maintenance dialysis services, or home dialysis training and support services, or both. Per section 1881 of the Act, ESRD facilities are designated in 42 CFR § 413.174 as being either hospital-based or independent facilities. There is no distinction between the two facility types for payment purposes under the ESRD PPS. 1. Hospital-Based ESRD Facilities In accordance with 42 CFR §§ 413.65(a) and 413.174(c), hospital-based ESRD facilities may be located on a hospital campus and may share certain overhead costs and administrative functions with the hospital but do not qualify as provider-based departments of a hospital. However, hospital-based ESRD facilities have separate provider numbers under which they bill Medicare and are subject to unique Conditions for Coverage that differ from hospital Conditions of Participation. Information regarding the survey and certification of ESRD facilities may be found at the following link: <http://www.cms.gov/Medicare/Provider-Enrollment-and- Certification/GuidanceforLawsAndRegulations/Dialysis.html>. CMS determines that an ESRD facility is hospital-based if all of the following criteria are met: • The ESRD facility and hospital are subject to the bylaws and operating decisions of a common governing board. This governing board, which has final administrative responsibility, approves all personnel actions, appoints medical staff, and carries out similar management functions; • The ESRD facility’s director or administrator is under the supervision of the hospital’s chief executive officer and reports through that officer to the governing board; • The ESRD facility’s personnel policies and practices conform to those of the hospital; • The administrative functions of the ESRD facility (e.g., records, billing, laundry, housekeeping, and purchasing) are integrated with those of the hospital; and • The ESRD facility and hospital are financially integrated, as evidenced by the cost report, which must reflect allocation of hospital overhead to the facility through the required “step-down” methodology. CMS does not consider the following to mean that an ESRD facility is hospital based: the existence of an agreement between an ESRD facility and a hospital for the referral of patients, a shared service arrangement between a facility and a hospital, or the physical location of a dialysis unit on the premises of a hospital. 2. Independent ESRD Facility – Any ESRD facility that does not meet the criteria of a hospital-based ESRD facility. The following are some terms used to describe independent ESRD facilities: a. Renal Dialysis Facility - An independent, Medicare-certified unit that is approved to furnish outpatient maintenance dialysis services directly to ESRD patients and individuals with AKI. Under the ESRD PPS, CMS refers to renal dialysis facilities as ESRD facilities. b. Self-Dialysis Unit - A dialysis unit that furnishes self-dialysis services and is part of a Medicare- certified ESRD facility. c. Home Dialysis Training and Support ESRD Facility – A Medicare-certified ESRD facility that furnishes home dialysis training and support services. See 42 CFR § 494.100 for more information regarding Medicare certification requirements. d. Special Purpose Renal Dialysis Facility – A Medicare-certified ESRD facility that is approved to furnish dialysis at special locations, on a short-term basis, to a group of dialysis patients otherwise unable to obtain treatment in their geographical area. The special locations must be either special rehabilitative (including vacation) locations serving ESRD patients temporarily residing there, or locations in need of ESRD facilities under emergency circumstances. C. Renal Dialysis Services Renal dialysis services are all items and services used to furnish outpatient maintenance dialysis to individuals for the treatment of ESRD in the ESRD facility or in a beneficiary’s home. Renal dialysis services include but are not limited to: • All items and services included under the composite rate for renal dialysis services as of December 31, 2010 (see §20.2.E, §20.3.F, and §70.B of this chapter for more information); • Erythropoiesis stimulating agents (ESAs) and their oral or other forms of administration (see §20.3.A of this chapter for more information); • Injectable drugs and biological products and their oral or other forms of administration furnished for the treatment of ESRD (see §20.3.B, §20.3.C and §20.3.D of this chapter for more information); • Non-injectable drugs and biological products and other forms of administration with no injectable functional equivalent furnished for the treatment of ESRD (effective January 1, 2025, see §20.3 of this chapter for more information); • Diagnostic laboratory tests (see §20.2 of this chapter for more information); • Home and self-dialysis training (see §30.2 of this chapter for more information); and • All supplies, equipment, and support services necessary for the effective performance of a beneficiary’s dialysis furnished in the ESRD facility or in a beneficiary’s home (see §20.4 of this chapter for more information). See §20 of this chapter for more information regarding renal dialysis items and services. D. Services Provided Under an Arrangement A Medicare-certified ESRD facility may enter into written arrangements with a second ESRD facility to provide certain covered outpatient dialysis items or services to patients. When services are provided under this type of arrangement, the first ESRD facility retains professional and financial responsibility for those services and also for billing Medicare for them. The first ESRD facility may bill the patient for the applicable coinsurance and deductible amounts. The second ESRD facility is permitted to seek payment only from the first ESRD facility and may not bill the patient or Medicare. E. Types of Dialysis 1. Outpatient Maintenance Dialysis - Outpatient maintenance dialysis is furnished to ESRD patients on an outpatient basis by a Medicare certified ESRD facility and is paid under the ESRD PPS. Types of outpatient maintenance dialysis include: a. In-Facility Dialysis - Dialysis furnished on an outpatient basis in a Medicare-certified ESRD facility. This could include staff-assisted dialysis, self-dialysis, or nocturnal dialysis provided at an ESRD facility. b. Home Dialysis - Dialysis performed at an ESRD patient’s home, including in skilled nursing facilities and nursing facilities, by the ESRD patient or a caregiver who has completed an appropriate course of training as specified in 42 CFR § 494.100(a). c. Staff-Assisted Dialysis - Dialysis performed by the staff of the ESRD facility in the ESRD facility. d. Self-Dialysis - Dialysis performed by an ESRD patient in-facility or at an ESRD patient’s home with the expectation that the patient, or a caregiver, performs their dialysis treatment with little or no professional assistance. The patient or caregiver must have completed an appropriate course of training as specified in 42 CFR §494.100(a). e. Nocturnal Dialysis – Dialysis performed overnight at home or in-facility for >5 hours per treatment, 3-7 days a week. 2. Back-Up Dialysis - Dialysis given to patients under special circumstances. Examples include: dialysis of a home dialysis patient in an ESRD facility when the patient’s equipment fails or when a patient loses their caregiver, inpatient dialysis when a patient’s illness requires more comprehensive care, and preoperative and postoperative dialysis provided to transplant patients. 3. Acute Kidney Injury (AKI Dialysis) – AKI dialysis is furnished to individuals with AKI on an outpatient basis by a Medicare certified ESRD facility or a hospital outpatient dialysis unit. When AKI dialysis is furnished in a Medicare certified ESRD facility, it is paid under the ESRD PPS. When AKI dialysis is furnished in a hospital outpatient dialysis unit, it is paid under the hospital outpatient prospective payment system. For billing and payment instructions for AKI dialysis furnished in a hospital outpatient dialysis unit see Pub. 100-04, chapter 4, §200.2 and Pub. 100-02, chapter 1, section 10. Payment policy for AKI dialysis in an ESRD facility is available in section §100.2 of this chapter. F. Home Dialysis - Supplies, Equipment, and Support Services ESRD facilities are responsible for furnishing supplies, equipment, and support services for home dialysis. ESRD facilities are financially responsible and may not bill Medicare or the patient for separate payment. If an ESRD facility arranges for a supplier to furnish renal dialysis supplies and equipment, the supplier may seek payment only from the ESRD facility and may not bill Medicare or the patient for separate payment. The ESRD facility may not bill the beneficiary directly for any renal dialysis supplies, services, or equipment. For further discussion on ESRD PPS payment refer to §20.1 of this chapter. 1. Home Dialysis Equipment - Home dialysis equipment includes all of the medically necessary equipment ordered by the attending physician, for example: artificial kidneys, automated peritoneal dialysis machines, and support equipment. Home dialysis supplies and equipment may be covered if used by an ESRD beneficiary in a nursing facility or a skilled nursing facility. See §40.C and §40.D of this chapter for more information. 2. Installation - Installation includes (but is not limited to): the identification of any minor plumbing and electrical changes required to accommodate the equipment, the ordering and performing of these changes, delivery of the equipment and its actual installation (i.e., hookup), as well as any necessary testing to assure proper installation and function. Disposal of equipment is also included. Minor plumbing and electrical changes include those parts and labor required to connect the dialysis equipment to plumbing and electrical lines that already exist in the room where the patient will dialyze. Medicare does not cover wiring or rewiring of the patient’s home or installing any plumbing to the patient’s home or to the room of the home where the patient will dialyze. 3. Maintenance - Maintenance includes (but is not limited to): travel to the patient’s home, transportation of the equipment to a repair site, the actual performance of the maintenance or repair, and necessary parts. Water purification equipment maintenance includes (but is not limited to): replacing the filter on a reverse osmosis device, regenerating the resin tanks on a deionization device, using chemicals in a water softener, and periodic water testing to assure proper performance. Routine maintenance customarily performed by a patient is not a covered service, except for the cost of parts involved in the maintenance furnished by the ESRD facility to the patient. 4. Supplies - Supplies include all durable and disposable items and medical supplies necessary for the effective performance of a patient’s dialysis. Supplies include (but are not limited to): dialyzers, forceps, sphygmomanometer with cuff and stethoscope, scales, scissors, syringes, alcohol wipes, sterile drapes, needles, topical anesthetics, and gloves. 5. Support Services – Home dialysis support services identified at 42 CFR §§ 410.52 and 494.100 may be furnished in the home or in the ESRD facility. These services include (but are not limited to): Monitoring home dialysis progress, emergency visits to the home by ESRD facility personnel, unscheduled visits to an ESRD facility as needed and renal dialysis laboratory tests covered under the ESRD PPS. See §30.1.A of this chapter for more information. 6. Support Equipment - Support equipment is equipment used in conjunction with the basic dialysate delivery system. Such equipment includes (but is not limited to): pumps (such as blood and heparin pumps), alarms (such as bubble detectors), water purification equipment used to improve the quality of the water used for dialysis, and adjustable dialysis chairs. G. Overview of Medicare’s ESRD Payment Policy 1. ESRD PPS – Section 153(b) of Pub. L. 110-275, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), amended section 1881(b) of the Social Security Act to require the implementation of an ESRD bundled payment system, effective January 1, 2011. Under MIPPA, the ESRD PPS replaced the basic case-mix adjusted composite rate payment system and the methodologies for the reimbursement of separately billable outpatient renal dialysis items and services. The ESRD PPS provides a case-mix and facility-level adjusted single payment to ESRD facilities for renal dialysis services provided in an ESRD facility or in a beneficiary’s home. (See §10.C of this chapter for the items and services considered to be “renal dialysis services.”) To account for higher resource utilization, the ESRD PPS applies case-mix adjusters to the base rate and, when applicable, also includes an add-on for home and self-dialysis training and an outlier payment. The ESRD PPS provided for a 4-year transition period under which facilities may have received a blend of the payment methodology prior to January 1, 2011 (that is, the basic case-mix adjusted composite rate payment system) and the ESRD PPS. Since 2014, all ESRD facilities that receive Medicare payment have been paid 100 percent under the ESRD PPS. The ESRD PPS combines payment, for what had previously been composite rate and separately billable outpatient renal dialysis items and services, into a single base rate for both adult and pediatric patients. The per dialysis treatment base rate is subsequently adjusted to reflect: • Patient-level adjustments for: o case-mix, (see §60.A.1 of this chapter for adult patient adjustments and §60.A.6 of this chapter for pediatric patient adjustments) o An onset of dialysis adjustment for adult patients that have Medicare ESRD entitlement during their initial 4 months of dialysis, (see §60.A.4 of this chapter) • Facility-level adjustments for: o A low-volume facility adjustment for ESRD facilities that meet certain criteria, (see §60.B.1 of this chapter) o A wage index adjustment to reflect differences in wage levels among the urban and rural areas in which ESRD facilities are located, (see §60.B.2 of this chapter) o A rural adjustment, effective January 1, 2016 • Other adjustments: o A home or self-dialysis training add-on, (see §60.C.1 of this chapter) o An outlier payment, (see §60.D of this chapter) o A transitional drug add-on payment adjustment (TDAPA), (see §20.3.1.C of this chapter) o A transitional add-on payment adjustment for new and innovative equipment and supplies (TPNIES), (see §20.4.1 of this chapter) o A post-TDAPA add-on payment adjustment, (see §60.C.5 of this chapter) o A transitional pediatric ESRD add-on payment adjustment (TPEAPA), (see §60.C.6 of this chapter) The ESRD PPS implemented consolidated billing edits for certain renal dialysis laboratory services, drugs and biological products, equipment, and supplies to ensure that payment for renal dialysis services is not made to providers or suppliers other than the ESRD facility. A service furnished by an ESRD facility that is not for the treatment of ESRD must be submitted with an AY modifier to allow for separate payment outside of the ESRD PPS. The list of renal dialysis services identified for the ESRD PPS consolidated billing may be viewed at <http://www.cms.gov/Medicare/Medicare-Fee-for-Service- Payment/ESRDpayment/Consolidated_Billing.html>. Note that this list is not exhaustive, and ESRD facilities are responsible and are paid for furnishing all renal dialysis services under the ESRD PPS. 2. Basic Case-Mix Adjusted Composite Rate Payment System – The basic case-mix adjusted composite rate payment system was implemented in CY 2005 and maintained until 2014 for purposes of the blended payment during the ESRD PPS transition period. It applied patient-level case-mix adjusters, additional payment for home and self-dialysis training, and a drug add-on to the composite rate. The drug add-on accounted for the difference between the methodologies of payment for separately billed drugs and biological products prior to the enactment of the revised drug pricing specified in the Medicare Modernization Act of 2003 (MMA). For more information on the history of the composite rate see Appendix C. 3. Composite Rate –The composite rate was the first step Medicare made toward creating a bundled payment for renal dialysis items and services. It covered routine laboratory testing, certain drugs, equipment and supplies, and support services furnished for outpatient maintenance dialysis in Medicare-certified ESRD facilities. Under the composite rate methodology, separate payment was made to ESRD facilities for most drugs and biological products furnished to ESRD patients. For more information regarding composite rate items and services, see §20.1, for composite rate laboratory services, see §20.2.E, and for composite rate drugs, see §20.3.F of this chapter. 4. Formerly Separately Billable Services (FSBs) – Services which were not included in the composite rate and were therefore separately billable while the composite rate system was in effect before the ESRD PPS was implemented on January 1, 2011. FSBs are included in the ESRD PPS bundled payment. FSBs consist mainly of certain drugs and biological products and certain laboratory tests furnished for the treatment of ESRD, including ESAs. 5. “Time on Machine” Data – Beginning January 1, 2025, ESRD facilities must report “time on machine” data (the number of minutes between the start and end of hemodialysis treatment, without accounting for interruptions, a beneficiary receives during the billing period in center in an ESRD facility) using the D6 value code on ESRD PPS claims for all in-center hemodialysis treatments. The CY 2024 ESRD PPS final rule finalized the addition of § 413.198(b)(5), which states that ESRD facilities must submit data and information in the formats established by CMS for the purpose of estimating patient-level and facility level variation in resource use, including “time on machine” data.