January 2007
Provider Types Affected
Medicare certified ESRD facilities billing Medicare Fiscal Intermediaries (FIs) or Part A/B Medicare Administrative Contractors (A/B MACs) for End Stage Renal Disease (ESRD) dialysis services.
What You Need to Know
CR 5407, from which this article is taken, notes that for Calendar Year (CY) 2007, there are no significant changes to the End Stage Renal Disease (ESRD) composite rate payment methodology; but announces that the Centers for Medicare & Medicaid Services (CMS) made two updates: 1) To the drug add-on adjustment to the composite rate; and 2) To the wage index and transition.
Background
Section 1881(b) of the Social Security Act (as amended by section 623 of the Medicare Modernization Act (MMA)) directed CMS to make a number of revisions to the ESRD composite rate payment system, as well as to the payment for separately billable drugs furnished by ESRD facilities.
For Calendar Year (CY) 2007 CMS did not propose any significant changes to the composite rate payment methodology, but did make the following updates:
Drug add-on adjustment
MMA Section 623 established the ESRD composite payment rate’s drug add-on adjustment to account for the difference between 1) Payment amounts for separately billable drugs under pre-MMA payments, and 2) The new payment methodology established under Section 623.
The current add-on adjustment is 14.5% and includes a 1.4% update for 2006. CR 5407 announces that for CY 2007, the drug add-on adjustment to the composite payment rate is 0.5%. As a result, the drug add-on adjustment for 2007 will increase from 14.5% to 15.1% (1.145 x 1.005).
Also, note that there are no changes to the current CMS policy for payment of separately billed ESRD drugs. Therefore, for CY 2007, payment for separately billable drugs furnished by ESRD facilities will continue at Average Sales Price (ASP) +6%.
Wage index and transition
CR 5407 also announces an update to the wage index adjustment to reflect the latest hospital wage data, including a budget neutrality adjustment to the wage index for CY 2007 (the second year of the 4-year transition period). Consistent with the transition blends, CMS is implementing a 50/50 blend between an ESRD facility’s Metropolitan Statistical Area (MSA) based composite rate, and its CY 2007 Core Based Statistical Area (CBSA) based rate reflecting its revised wage index values.
Also, for CY 2007, CMS is reducing the wage index floor from 0.85 to 0.80, so after applying a budget neutrality adjustment of 1.052818, the wage index floor is 0.8423.
Additional Information
You can find more information about the End Stage Renal Disease (ESRD) payment for CY 2007 by going to CR 5407, located at http://www.cms.hhs.gov/Transmittals/downloads/R61BP.pdf on the CMS website. You will find the updated Medicare Benefit Policy Manual, Chapter 11 (End Stage Renal Disease (ESRD)), Section 30.5.1 (New ESRD Composite Payment Rates) as an attachment to that CR.
If you have any questions, please contact your state's Provider Contact Center.
MLN Matters MM5407