ESRD PPS Case-Mix Adjustments ESRD PPS Payment Adjustments

60 - ESRD PPS Case-Mix Adjustments ESRD PPS Payment Adjustments (Rev. 13599, Issued: 01-30-26, Effective: 05-01-26, Implementation: 05-01-26) The ESRD PPS includes patient-level adjustments (also known as the case-mix adjustments), facility-level adjustments, and training adjustments, as well as an outlier payment. In addition, the ESRD PPS includes certain add-on payment adjustments as discussed in § 60.C of this chapter. Under the ESRD PPS, the beneficiary co-insurance amount is 20 percent of the total ESRD PPS payment, after the deductible (see §60.E of this chapter). Note: In general, the ESRD PPS case-mix adjustments, facility level adjustments and add-on payment adjustments do not apply to AKI beneficiaries. The only payment adjustments that apply to AKI dialysis claims are the ESRD PPS wage index and, beginning January 1, 2025, the add-on payment adjustment for home and self-dialysis training. A. Patient-level case-mix adjustments The ESRD PPS base rate is adjusted for characteristics of both adult and pediatric patients to account for case-mix variability. Pediatric patient-level adjusters (see §60.A.6 of this chapter), consist of combinations of two age categories and two dialysis modalities. The adult case-mix adjusters include age, body surface area (BSA), low body mass index (BMI), and six comorbidity categories (three acute and three chronic), and the onset of renal dialysis. Based on the refinement of the ESRD PPS, effective January 1, 2016, adult case-mix payment adjustments are made for four comorbidity categories (two acute and two chronic) as indicated in the chart below. The comorbidity categories of bacterial pneumonia monoclonal gammopathy were removed. 1. Adult case-mix adjusters This section presents a list of the ESRD PPS case-mix adjusters for adults and provides several examples using the adult case-mix adjusters implemented in CY 2011 and refined in CY 2016. Any revisions to the case-mix adjusters will be addressed in subsequent rulemaking. Adult Patient-Level Characteristics Adjustment Value CY 2011- 2015 Beginning CY 2016 Age: 18-44 1.171 1.257 Age: 45-59 1.013 1.068 Age: 60-69 1.000 1.070 Age: 70-79 1.011 1.000 Age: 80+ 1.016 1.109 Body Surface Area (per 0.1 m2) 1.020 1.032 Low Body Mass Index (BMI <18.5) 1.025 1.017 Onset of Renal Dialysis <4 Months 1.510 1.327 Pericarditis (acute) 1.114 1.040 Bacterial pneumonia (acute)* 1.135 --- Gastro-intestinal tract bleeding (acute) 1.183 1.082 Hereditary hemolytic or sickle cell anemia (chronic) 1.072 1.192 Myelodysplastic syndrome (chronic) 1.099 1.095 Monoclonal gammopathy (chronic)* 1.024 --- *Were removed effective January 1, 2016. Calculating the ESRD PPS Bundled Payment Amount The following example demonstrates the calculation of the ESRD PPS bundled payment in an urban area with a wage index of 1.10. Before giving the particulars of the dialysis patient for the example, shown first is how to calculate the labor-adjusted base rate, which is the starting point for the computation of the case- mix adjusted base rate (the examples below use rates effective January 1, 2026). • Base rate: $281.71 • Labor-related share of base rate: $281.71 * 0.552 = $155.50 • Wage index adjusted labor-related share: $155.50 * 1.1000 = $171.05 • Non labor-related share of base rate: $281.71 * (1 - 0.552) = $126.21 • Wage index adjusted base rate: $171.05 + $126.21 = $297.26 Provided next is the continuation of the example with the inclusion of the patient characteristics portion of the payment. A 45 year old male Medicare beneficiary is 187.96 cm. (1.8796 m.) in height and weighs 95 kg. He receives dialysis in an ESRD facility on January 1, 2026. Using the formula for BMI, note that the patient is not underweight, having a BMI of 26.89 kg/m2, which is greater than the threshold value of 18.5 kg/m2. BMIPatient = weightkg /height (m2) = 95/1.87962 = 95/3.5329 = 26.89 The formula for calculation of a patient’s BSA is: • 0.007184 multiplied by height in meters 0.725 multiplied by weight in kg. 0.425 • or BSA = 0.007184 * heightcm0.725* weightkg0.425 The BSA for the patient in this example is calculated as: BSAPatient = 0.007184 * 187.96.725 * 95.425 = 0.007184 * 44.5346 * 6.9268 = 2.2161 Using the adult case-mix adjusters table shown above, the BSA multiplier is 1.032. The patient’s case- mix adjustment or payment multiplier (PM) based on his BSA of 2.2161 is computed as follows: PM BSA = 1.032(2.2161-1.90)/0.1 = 1.0323.161 = 1.1047 The example patient’s PM would reflect the applicable case-mix adjustments from the adult case-mix adjusters table above for both age and BSA and may be expressed as: PMPatient = PMage * PMBSA = 1.068 * 1.1047 = 1.1798 The example patient’s ESRD payment rate for treatments furnished in his ESRD facility (assuming a wage index of 1.000) would be: $281.71* 1.1798 = $332.36 NOTE: This example is computed without regard to other adjustments (e.g., outlier payments, training add- on, low-volume adjustment, etc.). Additionally, this case-mix adjustment multiplier would be applied to any post-TDAPA add-on payment adjustment amounts applicable for the claim. For example, if the post-TDAPA add-on payment adjustment amount for the quarter of the claim in question was $0.50, the post-TDAPA add-on to the per-treatment payment rate would be: $0.50*1.1798 = $0.59 2. Patient Age There are 5 age categories for adults (18-44; 45-59; 60-69; 70-79; and 80 and above) in the ESRD PPS and each category has a separate case-mix adjuster. Note that when a beneficiary reaches a birthday that results in a different age category, the age change is effective from the first day of the birthday month, regardless of the date the birthday occurs in that month. The case-mix adjustment factor corresponding to the age of the dialysis patient is multiplied by the wage index adjusted base rate as a step in the calculation of the ESRD PPS per treatment payment amount. The examples shown below draw on values from the table of the CY 2016 adult case-mix adjusters as well as the discussion of the wage adjusted ESRD PPS base rate found in the section above (examples below are using rates effective January 1, 2026). • Example 1: Mr. Taylor is 38 years of age and is classified in the 18-44 age group with an associated case- mix adjuster of 1.257. Applying the case-mix adjuster of 1.257 to the wage index adjusted base rate of $281.71 (assuming a wage index of 1.000) yields the age adjusted base rate amount of $354.11 ($281.71 x 1.257 = $354.11). • Example 2: Mrs. Williams was born on July 4, 1936. On June 15, 2016, she is 79 years old and is classified in the 70-79 age category with a case-mix adjustment of 1.000 (the reference group). However, beginning with dialysis treatments occurring on and after July 1, 2016, she will move into the 80+ age group with an associated case-mix multiplier of 1.109. • Example 3: Mr. Davis was born on September 29, 1971. For dialysis treatments occurring in August 2016, he is 44 years old and would be classified in the 18-44 age group with an associated case-mix adjuster of 1.257. Beginning with dialysis treatments occurring on and after September 1, 2016, he is classified in the 45-59 age category with a case-mix adjuster of 1.068 because he is considered to have attained age 45 on September 1. 3. Body Size: Low Body Mass Index (BMI) and/or Body Surface Area (BSA) Low BMI and BSA are two measures used to estimate body size. Both measures are strong predictors of variation in costs and are closely associated with the duration and intensity of dialysis necessary to achieve a therapeutic dialysis target for ESRD patients. Both are objective measures that are computed using height and weight data located on the patient claim. The BMI and BSA are calculated for all beneficiaries. Low BMI is associated with higher costs due to additional resources that may be necessary to address malnutrition or frailty. BSA is associated with higher costs due to more time on the dialysis machine. Although height and weight are taken at intervals throughout any given month of dialysis treatment, the measurements for the purpose of payment must be taken as follows: • The dry weight of the patient is measured and recorded in kilograms immediately following the last dialysis session of the month. • The patient height is measured and recorded in centimeters during the last dialysis session of the month. The measurement is required no less frequently than once per year. The formula for the calculation of the BMI is weight in kilograms divided by height in meters squared, or kg/m2. As an example, the designated low BMI adjustment factor of 1.017 (see §60.A.1 of this chapter) is only applied for those beneficiaries with a BMI value that is less than 18.5kg/m2 which is a clinical measure of being underweight and an indicator of malnutrition. The formula for the calculation of the BSA is BSA = w0.425 * h0.725 * 0.007184 where w and h represent weight in kilograms and height in centimeters. The BSA factor is defined as an exponent equal to the value of the patient’s BSA minus the reference BSA of 1.90 divided by 0.1. Using the example of adult adjusters above, the BSA adjustment factor of 1.032 is then exponentiated based on the calculated BSA factor as 1.032(BSA-1.90)/0.1. The reference BSA used to calculate the BSA is the national average among Medicare dialysis patients. 4. Onset of Dialysis Effective January 1, 2016, the ESRD PPS onset of renal dialysis adjustment is 1.327. An ESRD facility may only receive the onset of dialysis adjustment for adult Medicare ESRD beneficiaries. The onset period is defined as the initial 120 days of outpatient maintenance dialysis, which is designated by the first date of when regular chronic dialysis began as reported on the CMS Form 2728. The onset of dialysis adjustment factor is a multiplier used in the calculation of the ESRD PPS per treatment payment amount for dialysis furnished in either an ESRD facility or home setting. For example, when a dialysis patient is not eligible for the Medicare ESRD benefit at the initiation of their maintenance dialysis but is Medicare eligible at the end of 85 days, the onset of dialysis adjustment will be applied to the ESRD facility’s ESRD PPS base rate for each treatment furnished in the following 35 days. However, if the patient is not Medicare eligible at any time during the initial 120 days of receiving maintenance dialysis, the onset of dialysis adjustment will not apply. The onset of dialysis adjustment is a one-time adjustment. It is not applied when a patient changes ESRD facilities or after a failed transplant. If a patient changes or transfers to another ESRD facility during the initial 120 days, the new ESRD facility will only receive the onset of dialysis adjustment for the remaining time. In other words, the 120 day “clock” does not start over. If the onset of dialysis adjustment is being applied to the ESRD PPS base rate, then those treatments would not be eligible for the comorbidity adjustment nor any applicable training adjustment(s). However, those treatments are eligible for an outlier payment when appropriate. 5. Comorbidity Categories The two acute comorbidity categories are pericarditis and gastro-intestinal tract bleeding with hemorrhage. The two chronic comorbidity categories are myelodysplastic syndrome and hereditary hemolytic anemia (including sickle cell anemia). For each patient only the single comorbidity with the largest adjustment factor will be applied to the payment calculation, as explained in the CY 2011 ESRD PPS final rule (75 FR 49106). The related comorbidity diagnosis codes can be found at the CMS ESRD Payment Web site located at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Patient-Level- Adjustments.html NOTE: Prior to January 1, 2016, the ESRD PPS included payment adjustments for the comorbidity categories of bacterial pneumonia and monoclonal gammopathy, which were removed effective January 1, 2016. The ESRD facility is responsible for obtaining documentation of the presence of an acute or chronic comorbidity. If an ESRD facility is unaware of the existence of a comorbidity because it does not impact the facility’s costs, then the ESRD facility should not expect to receive a comorbidity adjustment. The comorbidity payment adjustment is only applied if the appropriate diagnosis code, specified under one of the categories above, is identified on the ESRD claim. Comorbidities other than the two acute and the two chronic conditions identified above do not qualify for a comorbidity adjustment. Even if an ESRD patient has or has had one of the four conditions that would qualify for a comorbidity payment adjustment, the condition must be currently active and have an effect on the cost of care for the ESRD facility to be eligible to receive the adjustment. To qualify for the comorbidity adjustment there must be adherence to diagnosis coding requirements. Diagnosis codes are updated annually as stated in Pub. 100-04, Chapter 23, section 10, are posted at http://www.cms.gov/Medicare/Coding/ICD10/index.html, and are effective each October 1st. For transfer patients, it is expected that ESRD facilities will work together on the appropriate transfer of information to facilitate appropriate billing for dialysis services. The counting of treatments for an acute comorbidity adjustment is based on the patient and not on the ESRD facility. Therefore, counting does not restart when a beneficiary moves to a new ESRD facility, but rather continues for the remaining 4 months. a. Duration of Acute Comorbidity Adjustment Payment for an acute comorbidity adjustment begins in the month in which the diagnosis is established and lasts for the next 3 consecutive patient months. A patient month is any month in which a dialysis treatment is furnished, and an acute comorbidity applies. The acute diagnosis comorbidity adjustment is applied to each dialysis treatment for 4 patient months. If a second comorbidity is diagnosed during that period (either acute or chronic), then the adjustment is made using the higher adjustment factor. At no time is an adjustment applied for more than one comorbidity. When there is a recurrence of an acute comorbidity within the 4 patient-month period, there will not be an extension of the 4 patient-month adjustment. A recurrence is defined as a new episode of a comorbidity that was previously experienced by an individual beneficiary. However, if the recurrence happens after the completion of the 4-month period, then a new comorbidity adjustment for 4 months would start. • Example – A male patient has been receiving hemodialysis since January 2010. He had a 2-week hospitalization due to a fracture in mid-January 2016. During his stay in the hospital, he was diagnosed with gastro-intestinal tract bleeding with hemorrhage on January 20, 2016. He resumed his outpatient maintenance dialysis on January 29, 2016. The 4 patient-months in which the patient’s ESRD facility would be eligible to have the comorbidity adjustment applied to each dialysis treatment are January through April 2016. b. Duration of Chronic Comorbidity Adjustment The chronic diagnosis comorbidity adjustment is applicable only when the comorbidity has an effect on the cost of dialysis care and when that chronic diagnosis comorbidity appears on the claim. The adjustment does not automatically continue each month. When an acute diagnosis comorbidity with a higher adjustment value is applicable at the same time a chronic comorbidity applies, then the higher adjustment will be applied for 4 patient-months, and then revert to the lower chronic comorbidity payment adjustment factor. 6. Pediatric case-mix adjusters: Age and dialysis modality Pediatric patients are beneficiaries with ESRD who are under the age of 18. The same base rate is used for adult and pediatric patients, which is also adjusted by the area wage index. However, the base rate for pediatric patients is not adjusted for case-mix as adjustments used for adult patients. The pediatric payment adjustments use only two age categories (<13, age 13-17) and dialysis modality (PD or HD). The pediatric case-mix adjusters, applicable for CY 2011, are shown below. These values are presented for the purpose of demonstrating the computations shown in the examples in the following sections. Any revisions to the case-mix adjusters will be published in subsequent rulemaking. Based on the two classification categories for age and modality, there are four pediatric classification groups. Pediatric Patient-Level Characteristics Adjustment Value CY 2011- 2015 Beginning CY 2016 Age: <13, Modality: PD 1.033 1.063 Age:<13, Modality: Hemo 1.219 1.306 Age:13-17, Modality: PD 1.067 1.102 Age:13-17, Modality: Hemo 1.277 1.327 ESRD facilities receive an additional transitional pediatric ESRD add-on payment adjustment (TPEAPA) for renal dialysis services furnished to pediatric ESRD patients (as defined at §413.171). This TPEAPA represents an increase in payment of 30% of the per-treatment payment amount. The TPEAPA is not an increase to the case-mix adjustment factors displayed above, but it functions similarly to an increase to the above case-mix adjustment factors of 30% (1.3 multiplier). The TPEAPA applies for calendar years 2024, 2025 and 2026 as CMS collects additional data on the costs associated with treating pediatric ESRD patients. The TPEAPA does not impact the outlier services multipliers or the outlier payment in any way. ESRD facilities do not receive the low-volume adjustment, described in §60.B.1, or the rural adjustment, described in §60.B.3, for pediatric beneficiaries. However, they are eligible for training add-on and outlier payments (described in §60.C.1 and §60.D, of this chapter respectively). The following example demonstrates the calculation of the payment rate for a pediatric patient who receives dialysis at an ESRD facility and is located in an urban area with a wage index of 1.10. The example also shows the application of the training add-on for eligible training treatments. Before giving the particulars of the pediatric dialysis patient, shown first is the calculation of the labor-adjusted base rate of $297.26, which is the starting point for the computation of the case-mix adjusted base rate (the examples below use rates effective January 1, 2026). • Base rate: $281.71 • Labor-related share of base rate: $281.71 * 0.552 = $155.50 • Wage index adjusted labor-related share: $155.50 * 1.1000 = $171.05 • Non labor-related share of base rate: $281.71 * (1 - 0.552) = $126.21 • Wage index adjusted base rate: $171.05 + $126.21 = $297.26 Provided next is the continuation of the example with the characteristics of the pediatric patient. • Andrew, a 12-year-old male, has been on CCPD since June 2020. His mother, who assists him with his dialysis at home, is no longer able to assist with dialysis beginning May 10, 2026. His aunt, who lives nearby, has agreed to be the caregiver and assist him with his dialysis. The aunt required 17 training sessions at an ESRD facility in order to become knowledgeable and skilled sufficiently to perform this role. These training sessions began May 16 and ended June 10. The above pediatric classification table reveals that Andrew’s pediatric dialysis classification group is cell 1, with an associated patient multiplier of 1.063. During the months of May and June 2026, the ESRD payment rate per HD- equivalent treatment at a facility with a wage index of 1.1 would be: $297.26 * 1.063 = $315.99 • However, the ESRD facility is entitled to receive payment for a maximum of 15 training treatments furnished in connection with a new caregiver. Because the amount of the training add-on is adjusted by the ESRD facility’s wage index (1.10), the amount of the training add-on is calculated as follows: Training rate: $95.60 Wage index: 1.10 Training payment: $95.60 * 1.10 = $105.16 NOTE: This example is computed without regard to other adjustments (e.g., outlier payments.) • For treatments furnished to pediatric ESRD patients in calendar years 2024, 2025 and 2026, a TPEAPA of 30% of the per treatment payment amount would be added to the payment amount. Case-mix adjusted payment rate: $315.99 TPEAPA multiplier: 0.3 TPEAPA amount: : $315.99* 0.3 = $94.80 • Additionally, the above case-mix adjustment multiplier and the TPEAPA would be applied to any post- TDAPA add-on payment adjustment amounts applicable for the claim. For example, if the post-TDAPA add-on payment adjustment amount for the quarter of the claim in question was $0.50, the post-TDAPA add-on to the per-treatment payment rate would be: $0.50 * 1.063 * 1.3 = $0.69 NOTE: the post-TDAPA add-on payment adjustment amount is only adjusted by the patient-level case-mix adjusters and the TPEAPA. Facility level adjustment factors (e.g. LVPA, rural adjustment) and other add- on payment adjustments (home and self-dialysis training add-on, outlier payment) are not applied to the post-TDAPA add-on payment adjustment. • For the maximum number of 15 training treatments for which the training adjustment may be provided in connection with a PD patient, the payment rate, including the add-on payment adjustments, would be: ($297.26 * 1.063) + $105.16 + $94.80 + 0.69 = $516.64 B. Facility-level adjustments There are three facility-level adjustments in the ESRD PPS. The first adjustment accounts for ESRD facilities furnishing a low-volume of dialysis treatments. The second adjustment reflects urban and rural differences in area wage levels using an area wage index developed from Core Based Statistical Areas (CBSAs). The third is a rural adjustment beginning in CY 2016. 1. Low-Volume Adjustment ESRD facilities that qualify as being low-volume can receive the low-volume payment adjustment (LVPA) applied to each dialysis treatment they furnish beginning on or after January 1, 2011. For CY 2011 the payment adjustment was 18.9 percent, and beginning January 1, 2016, the payment adjustment was 23.9 percent. Beginning January 1, 2025, the payment adjustment will be 28.4 percent for facilities furnishing less than 3,000 treatments and 18.1 percent for facilities furnishing between 3,000 and 3,999 treatments. a. Low-Volume Criteria To be eligible for the low-volume adjustment, an ESRD facility must meet specific criteria: • The ESRD facility must have furnished less than 4,000 dialysis treatments in each of the 3 cost reporting years preceding its payment year. This 3 year eligibility period is based on the ESRD facility’s as-filed or final settled 12- consecutive month cost reports. o The term “payment year” is the period of time that is used for determining payment to ESRD facilities, which is a calendar year. The ESRD PPS is based on a calendar year which begins January 1 of each year. o The eligibility years are defined as the 3 years preceding the payment year and are based on cost reporting periods—specifically, the cost reporting periods that end in the 3 years immediately preceding the payment year. The cost reporting periods must report costs for 12 consecutive months. • For purposes of determining eligibility for the low-volume adjustment, the number of “treatments” is the total number of treatments furnished to Medicare and non-Medicare patients. For peritoneal dialysis (PD) patients, 1 week of PD is considered equivalent to 3 hemodialysis (HD) treatments. For example, a patient on PD for 21 days would have (21/7) x 3 or 9 HD-equivalent treatments. See §50.A.4 of this chapter for more information on hemodialysis equivalent treatments. The ESRD facility must not have opened, closed, or received a new provider number due to a change in ownership, (see Pub. 100-07, chapter 3, §3210), in the 3 years preceding the payment year. o This 3-year period is based on the ESRD facility’s as-filed or final settled 12-consecutive month cost reports that end in the 3 years immediately preceding the ESRD PPS payment year. o An ESRD facility is determined to be “opened” when the ESRD facility is a new establishment newly surveyed by the state and Medicare, is certified for Medicare participation, receives a provider number, and begins furnishing Medicare certified outpatient maintenance dialysis treatments. o If there is a change in ownership that does not result in a change in provider number but does cause a change in the fiscal year reporting to that of the new provider, the A/B MAC (A) should combine the reporting periods for determining eligibility to the LVPA. For example, prior to a change of ownership (CHOW), Facility A had a cost reporting period that spanned January 1 through December 31. Facility A had a CHOW mid-year that did not result in a new provider transaction access number (PTAN) but caused a break in the cost reporting period. The A/B MAC (A) would add Facility A’s cost report that spanned January 1 through May 31 to its cost report that spanned June 1 through December 31 to verify the total treatment count. The other situation that could occur is when a CHOW results in a change of the original fiscal period. For example, prior to a CHOW, Facility B had a cost reporting period that spanned January 1 through December 31 and, based on its cost reports for 2012 and 2013, it met the LVPA eligibility criteria. Then, Facility B had a CHOW in the beginning of 2014 that did not result in a new PTAN but changed its cost reporting period to that of its new owner, October 1, 2014, through September 30, 2015. This scenario would create a short and a long cost report that would not total 12 months that the A/B MAC (A) would need to review for verification. That is, Facility B would have a cost report that spanned January 1, 2014, through July 31, 2014 (7 months) and a cost report that spanned August 1, 2014 through September 30, 2015 (14 months). In this situation, the A/B MAC (A) should combine the two non-standard cost reporting periods that in combination may exceed 12-consecutive months and prorate the data to equal a full 12-consecutive month period. o Beginning January 1, 2019, if there is a CHOW that results in a change in provider number due to a facility-type change (for example, hospital based dialysis facility to independent dialysis facility) and the new owner accepts the Medicare agreement, the ESRD facility can qualify for the LVPA if they otherwise meet the LVPA eligibility criteria. This policy does not extend to CHOWs where a new PTAN is issued for any other reason. o Effective January 1, 2019, ESRD facilities that change their fiscal year end for cost reporting purposes, outside of a CHOW, qualify for the LVPA if they otherwise meet the LVPA eligibility criteria. When this occurs, the MACs will combine the two nonstandard cost reporting periods of less than 12 months to equal a full 12- consecutive month period or combine the two non-standard cost reporting periods, that in combination may exceed 12-consecutive months, and prorate the data to equal a full 12-consecutive month period. This does not impact or change requirements for reporting, as established by the MACs, or those set forth in § 413.24(f)(3). • Effective January 1, 2016, the ESRD facility must not be located within 5 road miles of another ESRD facility under common ownership. The geographic proximity criterion is applicable to all ESRD facilities that are Medicare certified to furnish outpatient maintenance dialysis treatments. For the purpose of determining the number of treatments furnished by the ESRD facility, the number of treatments considered furnished by the ESRD facility would be equal to the aggregate number of treatments furnished by the other ESRD facilities that are both under common ownership, and 5 road miles or less from the ESRD facility in question. For example, ESRD facility A received its Medicare certification on February 1, 2011, allowing them to bill and receive payment for outpatient maintenance dialysis that they furnish to Medicare beneficiaries. ESRD facility A will need to meet the low-volume criteria for 3 years. When the ESRD facility A submits its attestation to the A/B MAC (A), the A/B MAC (A) will need to consider ESRD facility A’s ownership and the ownership of all of the ESRD facilities located within a 5 road mile radius or less when determining total treatments. A/B MACs (A) shall use the Provider Enrollment, Chain, and Ownership System (PECOS) (or the most recent available Medicare enrollment system) to locate the ESRD facility’s ownership information. A/B MACs (A) shall refer to 42 CFR §421.404(a) when determining common ownership. Prior to January 1, 2016, ESRD facilities that were Medicare certified prior to January 1, 2011, were grandfathered into the geographic proximity criterion. Beginning January 1, 2025, the structure of the LVPA will change to include two tiers. ESRD facilities that furnish fewer than 3,000 treatments will fall into the first tier, and facilities that furnish 3,000 or more treatments but fewer than 4,000 treatments will fall into the second. An ESRD facility's LVPA tier will be determined based on the median treatment count of the last three cost-reporting years, rather than using a single year treatment count. Facilities that fall into the first tier will receive a 28.4 percent adjustment, and facilities that fall into the second tier will receive an 18.1 percent adjustment. Should a facility receive an exception under § 413.232(g)(5) in one or more of the past three cost- reporting years, the median treatment count of the unaffected cost-reporting years will be used to make the facility's tier determination. In the case that a facility does not have cost-reporting data from the last 3 years that are unaffected by a disaster or other emergency, the facility will be assigned to a tier based on their last full year of unaffected treatment volume, assuming all LVPA eligibility criteria are met. Two-Tier LVPA Structure Effective January 1, 2025 Tier LVPA Adjuster Tier 1 (less than 3,000) 28.4% Tier 2 (3,000 – 3,999) 18.1% For example, if cost-reporting data indicated that an ESRD facility furnished 2,500, 2,999, and 4,500 treatments in the 3 years preceding the payment year, but the facility received an exception under § 413.232(g)(5) during the year it furnished 4,500 treatments, the median treatment count from the two prior years (2,500 and 2,999) would be used determine the facility’s LVPA tier, which would place the facility in tier 1. The facility would then receive a 28.4 percent payment adjustment for all of the treatments furnished during the payment year. NOTE: The low-volume adjustment does not apply to dialysis treatments provided to pediatric patients. b. ESRD Facility Attestation Instruction for Low-Volume Adjustment In order to receive the low-volume adjustment under the ESRD PPS, each individual ESRD facility must submit an attestation statement each year to its A/B MAC (A). The attestation must state that the ESRD facility qualifies as a low-volume facility in accordance with 42 CFR §413.232 as described above. Specifically, the attestation states that the ESRD facility was low- volume for the first 2 eligibility years and that they will be for the third eligibility year, that is, the cost reporting period ending in the year that immediately precedes the payment year. In most cases, the A/B MACs (A) will not have received the third eligibility year’s cost report and will rely on the attestation in order to allow the application of the adjustment. November 1st of each year is the mandatory deadline for the submission of attestations for ESRD facilities that believe they are eligible to receive the low-volume payment adjustment. If the ESRD facility qualifies for LVPA based on the three prior years (i.e., the treatment counts in each of the three cost reports) then it will receive the LVPA adjustment in that 4th year, which is the payment year. Should the facility exceed the 4,000 treatment count in that payment year, it will qualify for the full LVPA adjustment during the entire payment year; however, the facility will not qualify for three subsequent payment years. Beginning January 1, 2019, ESRD facilities may request an extraordinary circumstance exception to the November 1 deadline. In order to request an extraordinary circumstance exception, the facility is required to submit a narrative explaining the rationale for the exception to their MAC. The MAC will evaluate the narrative to determine if an exception is justified. The determination will be final, with no appeal. However, for new or resubmitted attestations applicable to payment years 2011 to 2015, to allow A/B MACs (A) and facilities adequate time to review policy clarifications related to the low volume adjustment, the attestation deadline was extended to December 31, 2014. For attestations applicable to payment year 2016, the attestation deadline was extended to December 31, 2015, to allow A/B MACs (A) and facilities adequate time to review policy changes finalized in the CY 2016 ESRD PPS final rule. The attestation deadline for payment year 2021 was extended until December 31, 2020, due to the extraordinary circumstance of COVID-19 for all ESRD facilities requesting the LVPA. A/B MACs (A) have a maximum of 60 days to verify attestations for implementation of the low-volume adjustment beginning January 1 of the following payment year. A/B MACs (A) shall notify the ESRD facilities no later than September 1 of each year that they need to submit the low-volume attestation no later than November 1 of each year in order to receive the adjustment the following payment year. A/B MACs (A) may not accept attestations submitted after the mandatory deadline. If an ESRD facility is receiving the low-volume payment adjustment and will qualify for the adjustment in the subsequent payment year they must submit another attestation. If the ESRD facility does not submit an attestation, the A/B MAC (A) should no longer apply the low-volume payment adjustment beginning January 1 of the next payment year and the ESRD facility cannot receive the low-volume payment adjustment until the following payment year. An ESRD facility should notify its A/B MAC if it determines that it did not maintain low-volume status for its cost reporting period ending immediately preceding the payment year or if it finds that it will not remain low-volume for any subsequent cost reporting year. The A/B MAC (A) is responsible to reconcile incorrect payments made to ESRD facilities retroactively, if needed, to ensure overpayments have not been made. If an A/B MAC (A) determines that an ESRD facility has received the low-volume adjustment in error, the A/B MAC (A) is required to adjust all of the ESRD facility’s affected claims to remove the adjustment within 6 months of finding the error. The A/B MAC (A) shall: • Recoup low-volume adjustment payments made to an ESRD facility that failed to meet the low-volume adjustment criteria defined in 42 CFR §413.232(b)(1). Recoupment shall occur when the A/B MAC (A) receives the as-filed cost report for the third eligibility year and finds that the ESRD facility did not meet the eligibility criteria. Recoupment shall also occur if any cost reports used for eligibility are subsequently found to have not met the low-volume criteria, for example, reopening or appeals. A/B MACs (A) shall reprocess claims paid during the payment year in which the ESRD facility incorrectly received the low- volume payment adjustment. Recoup low-volume adjustment payments made to an ESRD facility that failed to meet the low-volume adjustment criteria defined in 42 CFR §413.232(b)(2). A/B MACs (A) shall use PECOS (or most recent Medicare enrollment system) to locate the ESRD facility’s ownership information at the time of verification to determine if the ESRD facility is in the process of a CHOW. A/B MACs (A) shall use the current owner provided in PECOS. If the ESRD facility was in the process of a CHOW, recoupment shall occur when the CHOW is effective and the new owner is assigned a new provider number. A/B MACs(A) shall reprocess claims paid during the payment year in which the ESRD facility incorrectly received the low-volume payment adjustment. If an ESRD facility does not remain low-volume for each of the 3 years (described above in §60.B.1.a) immediately preceding the payment year, the ESRD facility cannot be eligible for the adjustment until it can demonstrate again that for 3 years it has met the low-volume criteria. Example - Provider 21-25XX is an independent ESRD facility that has a June 30th cost report year end. The ESRD facility concluded in October 2010 that it met the criteria of a low- volume facility. For its cost reporting periods, 7/1/2007 – 6/30/2008, 7/1/2008 – 6/30/2009, and 7/1/2009 – 6/30/2010, it did not open, close, or have a change of ownership and furnished less than 4,000 dialysis treatments in each of those cost reporting periods. In October 2010, the ESRD facility sent its A/B MAC (A) an attestation stating that it believes that it meets the low-volume criteria and would like to begin to receive the low-volume adjustment. The A/B MAC (A) receives the attestation on November 1st and then has 60 days (that is, until December 30th) to verify if the ESRD facility qualifies as a low-volume facility. On December 28th the A/B MAC (A) was able to verify that provider 21-25XX met the criteria and allowed for the adjustment to be applied to each dialysis treatment the ESRD facility furnished beginning January 1, 2011. Determining Low-Volume Eligibility in Hospitals with Multiple Subunits and Satellites A hospital may be affiliated with multiple hospital-based ESRD facilities. In addition, an individual hospital-based ESRD facility may have several locations that are subsumed under it, billing under the same ESRD facility provider number. Verification of an ESRD facility’s low-volume status is based on the A/B MAC’s (A) review of the total treatment count on an ESRD facility’s (or a hospital’s) cost report. In the situation where a hospital has multiple locations of a hospital-based ESRD facility under its governing body, the aggregate cost and treatment data of all of the locations (not just the treatment count of one of the subunits or satellite entities) are reported on the hospital’s cost report I series. In the case where a hospital has multiple locations and treatment counts are aggregated in the hospital’s cost report, the A/B MAC (A) may consider other supporting documentation which may include individual facility treatment counts, rather than the hospital’s cost report alone. The hospital must provide the documentation to support the total treatment count for all the facilities that make up the total treatment count on the cost report for the A/B MAC (A) to review, even if not all the facilities are applying for the low volume adjustment. LVPA Eligibility for Cost Reporting Periods Ending in 2020 For ESRD facilities that have an increase in their treatment counts for cost reporting periods ending in 2020 that are COVID-related such that the increase prevents them from qualifying for the LVPA, CMS will hold these facilities harmless from losing the LVPA. For purposes of determining LVPA eligibility for payment years 2021, 2022, and 2023, CMS will only consider total dialysis treatments furnished for any 6 months of a facility’s cost-reporting period ending in 2020; ESRD facilities will select those 6 months (consecutive or nonconsecutive) during which treatments will be counted for purposes of the LVPA determination. ESRD facilities will attest that their total dialysis treatments for those 6 months of their cost-reporting period ending in 2020 are less than 2,000 and that, although the total number of treatments furnished in the entire year otherwise exceeded the LVPA threshold, the excess treatments furnished were due to temporary patient shifting resulting from the COVID–19 PHE. MACs will annualize the total dialysis treatments for the total treatments reported in those 6 months by multiplying by 2. ESRD facilities will be expected to provide supporting documentation to the MACs upon request. c. LVPA Emergency Provisions Beginning January 1, 2024, ESRD facilities that are affected by disasters and other emergencies may qualify for exceptions to certain eligibility requirements for the LVPA. These exceptions affect both an ESRD facility that closes as a result of a disaster or other emergency, along with a facility that surpasses the LVPA treatment threshold eligibility requirement due to treating patients with ESRD who are displaced from their usual ESRD facility because of the disaster or other emergency. First, an ESRD facility may request an exception to the eligibility requirement at 42 CFR § 413.232(b)(2). This exception would allow the ESRD facility to close and reopen in response to a disaster or other emergency and still receive the LVPA. If an ESRD facility is affected by a disaster or other emergency and the ESRD facility closes and re-opens later, the ESRD facility must request an exception from CMS in writing in order to continue to be eligible for the LVPA. Written requests must be sent to the ESRD Payment Mailbox (ESRDPAYMENT@cms.hhs.gov) within 60 days of the facility’s closure. Additionally, the ESRD facility must inform the MAC of the request. CMS will review the request within 30 days of receipt and either approve the request based on a determination that the ESRD facility closed due to a disaster or other emergency, or deny the request, and would inform both the ESRD facility and the MAC of its decision. Second, an ESRD facility may request an exception to the eligibility requirement at 42 CFR § 413.232(b)(1). This exception would allow the ESRD facility to receive the LVPA even if it exceeds the LVPA treatment volume threshold (i.e., 4,000 treatments) if its treatment count increases due to temporary patient shifting due to a disaster or other emergency. For the purposes of this exception, temporary patient shifting is defined as providing renal dialysis services to one or more patient(s) at any time through the end of the calendar year following the 12-month period. This 12-month period begins on the date the accepting ESRD facility first begins providing renal dialysis services to the displaced patient(s). The accepting ESRD facility must submit to CMS a written request for this exception. These written requests must be sent to the ESRD Payment Mailbox (ESRDPAYMENT@cms.hhs.gov) no later than the annual attestation deadline of November 1st or 30 days after the end of the cost reporting year for which the ESRD facility is attesting, whichever is later. In addition, the accepting ESRD facility must attest to its MAC that it furnished treatments equal to or in excess of 4,000 in the cost reporting year due to temporary patient-shifting as a result of the closure or operational disruption of an ESRD facility due to a disaster or other emergency. CMS will review the exception request and notify the ESRD facility and the MAC within 30 days if the ESRD facility qualifies for the exception. If CMS approves the request, the ESRD facility is paid the low-volume adjustment on claims for Medicare beneficiaries, on the basis of the exception during the payment year in which the temporary patient-shifting occurred, so long as all other requirements for the low-volume adjustment are met. For any future payment year, the ESRD facility would not be prevented from receiving the low-volume adjustment if the ESRD facility meets or exceeds the 4,000 treatment threshold in a cost reporting year due to temporary patient-shifting as a result of the disaster or other emergency that resulted in another ESRD facility’s closure or operational disruption, so long as all other requirements for the low- volume adjustment are met. These exceptions are set forth at 42 CFR §§ 413.232(g)(5) and (g)(6). 2. Wage index The wage index adjustment is applied when calculating the ESRD PPS payment in order to account for geographic differences in area wage levels. Each ESRD facility‘s payment is adjusted using the wage index for the CBSA in which the ESRD facility is located. Rural ESRD facilities use the statewide average. The wage index values and the budget neutrality adjustment factor are updated during rulemaking, are issued via annual Recurring Update Notifications, and are posted on the ESRD Payment Webpage. Prior to 2025, the ESRD PPS used the wage index calculated based on data collected from CMS-certified hospitals nationwide for purposes of the acute care hospital inpatient prospective payment system (IPPS). CMS used the IPPS wage index values for each CBSA prior to the application of certain adjustments and modifications applicable to hospitals under the IPPS (i.e., the pre-floor, pre-reclassification wage index). When this IPPS-based wage index was in use, CMS also adopted methodologies for calculating wage index values for ESRD facilities that are located in urban and rural areas where there is no hospital data. For urban areas with no hospital data, CMS computed the average wage index value of all urban areas within the state to serve as a reasonable proxy for the wage index of that urban CBSA, that is, CMS used that value as the wage index. For rural areas with no hospital data, CMS computed the wage index using the average wage index values from all contiguous CBSAs to represent a reasonable proxy for that rural area. For a full discussion, see CY 2011 and CY 2012 ESRD PPS final rules at 75 FR 49116 through 49117 and 76 FR 70239 through 70241, respectively. For CY 2021, CMS adopted the CBSA delineations as described in the September 14, 2018 Office of Management and Budget (OMB) Bulletin No. 18-04. As a result, several counties now have new CBSA numbers. In addition, CMS applied a 5 percent cap on any decrease in an ESRD facility’s wage index from the ESRD facility’s final wage index in CY 2020. This transition was phased in over 2 years, where the reduction in an ESRD facility’s wage index was capped at 5 percent in CY 2021 (that is, no cap would be applied to the reduction in the wage index for the second year (CY 2022)). These policies were applied budget neutrally and incorporated into the overall ESRD PPS wage index budget neutrality adjustment. In the CY 2023 ESRD PPS final rule CMS finalized making the 5 percent cap on decreases in wage index permanent. This rule also finalized a wage index floor of 0.600. These policies are applied budget neutrally and incorporated into the overall ESRD PPS wage index budget neutrality adjustment. Beginning for CY 2025 the ESRD PPS uses a new wage index methodology, which uses data from the Bureau of Labor Statistics (BLS) Occupational Employment Wages & Statistics (OEWS). The new methodology uses mean hourly wage data from BLS OEWS data, which is then weighted by a national ESRD facility occupational mix derived from freestanding ESRD facility cost report data. The BLS OEWS wage data includes data from freestanding ESRD facilities and similar care locations, whereas the prior ESRD PPS wage index methodology was based on the IPPS wage index, which is derived from inpatient acute care hospital data. CMS still applies the wage index floor of 0.600 and the 5 percent cap on wage index decreases finalized in CY 2023. For CY 2025, CMS adopted the most recent CBSA delineations as described in the July 21, 2023, OMB Bulletin No. 23-01. As a result, several counties now have new CBSA numbers. ESRD facilities may confirm their CBSA delineation status and wage index value on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal- Disease-ESRD-Payment-Regulations-and-Notices. 3. Rural adjustment Beginning January 1, 2016, the ESRD PPS provides a 1.008 percent payment adjustment for ESRD facilities located in a rural CBSA. When CMS adopted the newest CBSA definitions according to OMB Bulletin 23-01, CMS also adopted a phase-out policy for ESRD facilities which were located in a rural CBSA in CY 2024 but were re- designated to an urban CBSA in CY 2025. These facilities, which would otherwise lose the rural adjustment for CY 2025 instead receive 2/3rd of the rural adjustment for 2025, a 1.0053 percent payment adjustment, and 1/3rd of the rural adjustment for 2026, a 1.0027 percent payment adjustment. 4. Non-Contiguous Areas Payment Adjustment Beginning January 1, 2026, ESRD facilities located in certain non-contiguous areas of the United States for which CMS has identified as having higher non-labor costs receive an increase to the non-labor portion of the ESRD PPS bundled payment. This increase is 1.21 for ESRD facilities in Hawaii and 1.25 for ESRD facilities in Alaska, Guam, American Samoa, and the Northern Marianas Islands. The non- labor related share of the ESRD PPS base rate is 44.8%. Below is an example calculation using the CY 2026 ESRD PPS final base rate of 281.71 for an ESRD facility in Alaska with a wage index of 1.0775: CY 2026 Base Rate: $281.71 Labor related share: 0.552 Non-labor related share: 0.448 Wage index: 1.0775 Alaska NAPA Factor: 1.25 Labor related portion: $281.71 * 0.552 * 1.0775 = $167.56 Non-labor related portion: $281.71 * 0.448 * 1.025 = $157.76 Wage-adjusted base rate: $167.56 + $157.76 = $325.32 The wage-adjusted base rate of $325.32 is the figure to which other case-mix and facility level adjustment factors would be applied. C. Add-On Payment Adjustments Payment amounts under the ESRD PPS are adjusted by several add-on payment adjustments as described below. 1. Training and Retraining Add-On Payment Adjustment A training add-on payment adjustment is available under the ESRD PPS. The training add-on payment is computed by using the national average hourly wage for nurses from the Bureau of Labor Statistics. The payment accounts for 1.5 hours of nursing time for each training treatment that is furnished and is adjusted by the geographic area wage index. The training add-on payment applies to both peritoneal dialysis and hemodialysis training treatments, and added to the ESRD PPS payment, when a training treatment is provided by a Medicare certified training ESRD facility. An ESRD facility may bill a maximum of 25 training sessions per patient for hemodialysis training, and 15 sessions for CCPD and CAPD training. ESRD facilities should not expect additional reimbursement beyond the maximum sessions. CMS expects that ESRD patients who opt for home dialysis are good candidates for home dialysis training and will successfully complete their method of training before reaching the maximum number of allotted training treatments. For more information regarding dialysis training, see §30.2 of this chapter. For more information regarding retraining, see §30.2.E of this chapter. Beginning for CY 2025, the training and retraining add-on payment adjustment is allowed for claims for renal dialysis services provided to AKI beneficiaries. This is the only add-on payment adjustment extended to AKI dialysis claims. 2. Outlier Payment The ESRD PPS provides additional payment for high cost outliers due to unusual variations in the type or amount of medically necessary care when applicable. Outlier payments are based on a comparison of the predicted Medicare allowable payment (MAP) per treatment to actual incurred expenditure per treatment for services that were or would have been considered separately billable prior to the implementation of the ESRD PPS. The ESRD PPS outlier policy is set forth at 42 CFR § 413.237. For more information regarding the ESRD outlier services included in the outlier calculation and an example of the outlier calculation, see §60.D of this chapter. 3. TDAPA The Transitional Drug Add-on Payment Adjustment (TDAPA) is an add-on payment adjustment for claims for services provided to patients who utilize certain new renal dialysis drugs and biological products. The TDAPA is set forth at 42 CFR § 413.234(c). The TDAPA is explained in further detail in §20.3.1 of this chapter. 4. TPNIES The Transitional Add-On Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES) is an add-on payment adjustment for claims for services provided to patients who utilize certain new and innovative renal dialysis equipment and supplies. The TPNIES is set forth at 42 CFR § 413.236. The TPNIES is explained in further detail in §20.4.1 of this chapter. 5. Post-TDAPA Add-on Payment Adjustment The post-TDAPA add-on payment adjustment is an add-on payment adjustment for all ESRD PPS patients for 3 years following the end of the TDAPA period for certain renal dialysis drugs and biological products. The amount of the post-TDAPA add-on payment adjustment for a drug or biological product is calculated based on 65% of the total payment for that drug or biological product across the most recent available 12 months of claims data and is published in the annual ESRD PPS rule. The post-TDAPA add- on payment amount for a claim is adjusted by the patient-level case-mix adjusters described in §60.A of this chapter (for pediatric patients this includes the TPEAPA described below and in §60.C.6 of this chapter). The post-TDAPA add-on payment adjustment is only calculated for new renal dialysis drugs and biological products in existing ESRD PPS functional categories. The application of the post-TDAPA add-on payment adjustment is set forth at 42 CFR § 413.234(c)(3), and the methodology for calculating the post-TDAPA add-on payment adjustment is set forth at § 413.234(g). For drugs and biological products for which there is not 12 months of claims data available at the time of rulemaking, CMS publishes the post-TDAPA add-on payment adjustment amount in a change request 2 calendar quarters before the end of the TDAPA payment period for that drug or biological product. 6. TPEAPA The Transitional Pediatric ESRD Add-on Payment Adjustment (TPEAPA) is an add-on payment adjustment of 30 percent of the per-treatment payment amount applied to all claims for renal dialysis services provided to ESRD patients aged 18 or younger. The TPEAPA is 30 percent of the per-treatment payment amount for a patient, which reflects both the patient-level case mix adjusters, described in §60.A of this chapter, and the facility level adjusters, described in §60.B of this chapter, but does not include any of the other add-on payment adjustments described in this §60.C. The TPEAPA is a temporary adjustment, which is applied only for CYs 2024, 2025 and 2026. The TPEAPA is set forth at 413.235(b)(2). D. Outlier Policy The ESRD PPS provides additional payment for high cost outliers due to unusual variations in the type or amount of medically necessary care when applicable. Outlier payments are based on a comparison of the predicted Medicare allowable payment (MAP) per treatment to actual incurred expenditure per treatment for services which were or would have been considered separately billable prior to the implementation of the ESRD PPS. ESRD outlier services include: • Drugs and biological products used for the treatment of ESRD that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B; • Laboratory tests used for the treatment of ESRD that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B; • Medical or surgical supplies used to administer drugs and biological products used for the treatment of ESRD that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B; and • Drugs and biological products used for the treatment of ESRD that were or would have been, prior to January 1, 2011, separately billable under Part D, including renal dialysis oral-only drugs effective January 1, 2025. • New and innovative renal dialysis equipment or supplies previously paid for using the TPNIES, regardless of whether the equipment or supply would have been separately billable prior to 2011 (excluding capital-related assets that are home dialysis machines). • Drugs and biological products that were historically included in the composite rate, as well as newer drugs and biological products that are currently included in the calculation of the post-TDAPA add-on payment adjustment. The list of renal dialysis services that are included as outlier services may be found at https://www.cms.gov/medicare/payment/prospective-payment-systems/end-stage-renal-disease- esrd/esrd-pps-outlier-services. NOTE: All renal dialysis service Part B drugs and biological products reported with a HCPCS code that is on the ASP List are included for outlier payments. The laboratory tests that comprise the AMCC panel do not qualify for an outlier payment, see §20.2.A for information regarding the 50/50 rule. ESRD facilities may receive outlier payments for the treatment of both adult and pediatric ESRD patients. An ESRD facility is eligible for an outlier payment if its actual or imputed MAP amount per treatment for ESRD outlier services exceeds a threshold. The MAP amount represents the average incurred amount per treatment for services that were or would have been considered separately billable services prior to January 1, 2011. The threshold is equal to the ESRD facility’s predicted ESRD outlier services MAP amount per treatment (which is case-mix adjusted) plus the fixed dollar loss (FDL) amount. In accordance with 42 CFR §413.237(c), facilities are paid 80 percent of the per treatment amount by which the imputed MAP amount for outlier services (that is, the actual incurred amount) exceeds this threshold. In the CY 2025 ESRD PPS final rule, CMS finalized a change that adds the case-mix adjusted post-TDAPA add-on payment adjustment amount to the predicted MAP for a patient. The MAP and FDL amounts are prospectively calculated each year with a target that outlier payments equal 1% of total ESRD PPS payments. For example, the average outlier services MAP amounts per treatment for pediatric and adult dialysis patients for CY 2026 were $50.19 and $23.68, respectively. After multiplication by applicable patient and facility specific adjusters to yield a predicted outlier services MAP amount, a fixed amount is added (the “fixed dollar loss” amount) to determine the outlier threshold. The fixed dollar loss amounts for CY 2026 were $162.43 for pediatric patients and $14.80 for adult patients. The CY 2026 values of the average outlier services MAP amount and the fixed dollar loss amount are used below for the purpose of following the outlier payment computation. These values may be revised as a result of subsequent rulemaking. In computing the MAP amount, the adjusters used are: Adult Characteristics Adjustment Value CY 2011- 2015 Beginning CY 2016 Age: 18-44 0.996 1.044 Age: 45-59 0.992 1.000 Age: 60-69 1.000 1.005 Age: 70-79 0.963 1.000 Age: 80+ 0.915 0.961 Body Surface Area 1.014 1.000 Low Body Mass Index (BMI <18.5) 1.078 1.090 Onset of Dialysis 1.450 1.409 Pericarditis 1.354 1.209 Bacterial pneumonia 1.422 --- Gastro-intestinal tract bleeding 1.571 1.426 Hereditary hemolytic or sickle cell anemia 1.225 1.999 Myelodysplastic syndrome 1.309 1.494 Monoclonal gammopathy 1.074 --- Low-volume facility adjustment (either tier) 0.975 0.955 Rural facility adjustment* --- 0.978 *For CY 2025 and 2026 ESRD facilities that were redesignated from rural to urban will receive 2/3rds and 1/3rd of the rural adjustment respectively. For the outlier services adjustment these values are 0.9853 for CY 2025 and 0.9927 for CY 2026. Pediatric Characteristics Adjustment Value CY 2011- 2015 Beginning CY 2016 Age: <13, Modality: PD 0.319 0.410 Age: <13, Modality: Hemo 1.185 1.406 Age: 13-17, Modality: PD 0.476 0.569 Age: 13-17, Modality: Hemo 1.459 1.494 Both the adult and pediatric CY 2016 separately billable case-mix adjusters are presented for the purpose of following the outlier payment computations shown below and may be revised as a result of subsequent rulemaking. 1. Outlier Payment Calculation The outlier payment computations use the case-mix adjusters for separately billable services. These adjusters are applied to the relevant outlier services MAP amount for either adult or pediatric patients discussed above to obtain the predicted MAP amount for outlier services, reflecting all patient-specific and any facility-specific adjustments. The following example shows how outlier payments are calculated under the ESRD PPS. For further information on the calculation of a patient’s BSA, see §60.A.1. The pricing amounts for laboratory services qualifying as outlier services are based on the Medicare Clinical Laboratory Fee Schedule. For injectable drugs and biological products, pricing is based on the latest available quarterly average sales price plus 6 percent (ASP + 6) methodology. For formerly Part D drugs with an injectable version, pricing is generally based on national average drug prices based on the Medicare Prescription Drug Plan Finder. For medical/surgical supplies, pricing is based on prices established by the local A/B MAC (A). For further information regarding A/B MAC (A) pricing of medical/surgical supplies, see Pub. 100- 04, chapter 8, §20.1. 2. Example of Outlier Payment The following is an example of the calculation of the outlier payment using rates effective January 1, 2026. John, a 68 year old male Medicare beneficiary, is 187.96 cm. in height and weighs 95 kg. John receives hemodialysis 3 times weekly. In January 2026, he was hospitalized for 4 days for a compound ankle fracture. During the hospitalization John did not undergo any dialysis treatments. After discharge John resumed his dialysis treatments but required additional laboratory testing and above-average doses of several injectable drugs, particularly EPO, to return his hemoglobin levels to the normal range. During January 2026, John received 9 hemodialysis treatments at his usual ESRD facility. The facility submitted a claim for eligible ESRD outlier services including drugs and biological products, laboratory tests, and supplies totaling $3,000.00. Begin by computing the predicted MAP amount per treatment based on the ESRD outlier services case-mix adjustment factors applicable to John. These factors are age and BSA. John’s BSA is 2.2161. Applying the ESRD outlier services multiplier from the table in §60.D for BSA, John’s ESRD outlier services payment multiplier for BSA is computed as follows: {1.000}{(2.2161-1.9)/0.1} = {1.000}{3.16135} = 1.000 Step 1: Determine the predicted, ESRD outlier services MAP amount using the product of all applicable case-mix adjusters. Using this calculated multiplier for BSA and the multiplier for age from the table in §60.D, John’s outlier services PM is calculated as: 1.005 * 1.000 = 1.005 As described in §60.C of this chapter, the (case-mix adjusted) post-TDAPA add-on payment adjustment amount is added to the predicted MAP for a patient. Supposing the post-TDAPA add-on payment adjustment amount for Q1 2025 is $0.50 and John’s applicable patient-level case-mix adjustment factors are age (1.070) and BSA ({1.032}{(2.2161-1.9)/0.1} = {1.032}{3.16135} = 1.105) the post-TDAPA add-on payment adjustment amount for John is $0.59 ($0.50*1.070*1.105). For CY 2026, the national average MAP amount per treatment for adult patients is $23.68. Therefore, the predicted MAP amount per treatment for John is: $23.68 * 1.005 + $0.59 = $24.39. Step 2: Determine the imputed average, per treatment, ESRD outlier services MAP amount based on utilization of all separately billable services on the monthly ESRD facility bill John’s imputed MAP amount per treatment is equal to the total amount of drugs and biological products, laboratory tests, and supplies submitted on the claim, divided by the number of treatments. This is calculated as: $3000.00 / 9 = $333.33. Step 3: Add the fixed dollar loss amount to the predicted, ESRD outlier services MAP amount Calculate the threshold per treatment by adding the CY 2026 FDL amount to the predicted MAP amount for John. The threshold amount for John is calculated to reflect the case-mix adjustments for age and BSA. Threshold = Predicted MAP amount ($24.39) + FDL ($14.80) = $39.19 Because John’s imputed MAP amount per treatment was $333.33, which exceeds the sum of the predicted MAP amount and FDL amount ($39.19), John’s ESRD facility is eligible for outlier payments. Step 4: Calculate outlier payment per treatment The outlier payments for John’s 9 treatments are calculated as the amount by which the imputed MAP amount exceeds the threshold, then multiplied by the 80 percent loss-sharing ratio. Imputed MAP amount minus Threshold: $333.33 - $39.19 = $294.14 Outlier payments per treatment: $294.14 * .80 = $235.31 Total outlier payments: $235.31 * 9 = $2117.79 E. Co-Insurance Eighty percent of the total ESRD PPS payment amount for renal dialysis services furnished by ESRD facilities to ESRD beneficiaries is paid by Medicare. ESRD beneficiaries are responsible for the remaining 20 percent after the deductible. Therefore, the beneficiary co-insurance amount under the ESRD PPS is 20 percent of the total ESRD PPS payment, which includes the ESRD PPS base rate and all applicable payment adjustments, including any applicable add-on payment adjustments such as the TPNIES and the TDAPA, any applicable training add-on amounts, and any applicable outlier payments. For example, under the ESRD PPS the patient’s co-insurance liability is based on the payment made to the ESRD facility and NOT on specific renal dialysis items and services. Therefore, any renal dialysis service drug or biological product or laboratory service furnished to a beneficiary would NOT require a separate co-insurance amount, because the renal dialysis service drug or biological product or laboratory service is included in the single payment made to the ESRD facility. In the event a claim is reprocessed and the amount that was paid to the ESRD facility changes, the ESRD facility is responsible for reconciling with the ESRD patient any overpayment or underpayment of co-insurance or deductible amounts paid to the ESRD facility.