From the Field: 2021 Changes to the ESRD PPS

A little more than 12 years ago, I began my career in the renal billing field. At that time, dialysis was reimbursed under the composite rate and medications such as ESAs, IV iron, and vitamin D were separately reimbursed. During those days, the reimbursement for a billable unit of epoetin was around a dollar and Medicare controlled overuse by leveraging a patient’s hemoglobin and hematocrit readings.  As administration of epoetin has a direct impact on a patient’s hemoglobin and hematocrit readings, Medicare used these lab values, among other things, to determine the medical necessity of ESA administration.

As a biller, I learned to be proficient in identifying a hemoglobin over 13 or a hematocrit over 39 and subsequently assessing the ESA utilization and past months’ hemoglobin and hematocrit readings to determine if a claim may be subject to a reduction in ESA reimbursement. During the years I billed for dialysis under the composite rate reimbursement system, it was not unheard of to see billing sheets for patients that were administered more than 400,000 units of epoetin in a calendar month. This also happens to be the Medicare medically unlikely edit (MUE) for epoetin on a dialysis claim.

In 2010, I learned of the end-stage renal disease (ESRD) prospective payment system (PPS), or the ESRD bundle for the first time. I remember my predecessor, Rick Collins, conducting analyses on our client’s utilization of medications that were separately reimbursable under the composite rate system to help them prepare financially for life under the ESRD PPS. We prepared extensive training materials for our staff, as the reimbursement change also came with changes in billing requirements, and we provided clients with modified billing forms to assist in capturing all the information necessary to meet the new billing requirements.

Each year since the inception of the ESRD PPS, the Centers for Medicare & Medicaid Services (CMS) have made changes to the components of the ESRD PPS to align the cost of a dialysis treatment to reimbursement. Most years, these changes were small; increases or decreases in the fixed dollar loss amount or a change to the low volume payment adjustment (LVPA) amount or qualification thresholds, etc. That is, until the implementation of the Transitional Drug Add-On Payment Adjustment (TDAPA) in January of 2018: this change to the ESRD PPS allowed dialysis facilities, for the first time in 8 years, to bill separately for and obtain additional reimbursement for a medication on a claim for dialysis services.

One stipulation of TDAPA was that CMS will separately reimburse for medications qualified for reimbursement under TDAPA for a minimum of 2 years to allow CMS to obtain sufficient utilization data for reimbursement under the bundle. In 2018, when calcimimetics became available for purchase, many but not all, the facilities my company billed for began utilizing them in their facilities. Over the last three years, we have seen stabilization in the utilization of calcimimetics, in those facilities that utilize them.

The 2021 ESRD PPS final rule contains changes to reimbursement and billing requirements that remind me, in some ways, of big, sweeping changes to dialysis reimbursement and billing requirements. Rather than reimbursing calcimimetics on a fee for service basis, CMS increased the bundle to account for the average expenditure per treatment for calcimimetics, based on the most recent claims data available. As for the new billing requirement, CMS now requires dialysis facilities to report the total number of hours that a patient spends dialyzing each month.

The 2021 ESRD PPS base rate is just about $14.00 more than the 2020 ESRD PPS base rate. For those facilities that do not use or have a very low utilization of calcimimetics, this increase in the ESRD PPS base rate will likely be a welcome increase in reimbursement. However, based on the history of the ESRD PPS base rate, I would suspect that the base rate in 2022 decreases significantly based on the likely decrease in utilization of calcimimetics just as the 2012 base rate decreased due to the significant reduction in ESA utilization.

Over the years, I have kept a table of the base rate and many of the adjustment factors that impact the final payment amount to help me keep track of how claims were reimbursed in any given year. In light of the similarities of the 2011 and 2021 reimbursement changes, I find this chart more beneficial than I have in years past; I hope you find it beneficial as well.

Comparison of ESRD PPS 2011-2021

Sarah Tolson is the director of operations for Sceptre Management Solutions, Inc., a company specializing in billing for outpatient ESRD dialysis programs, nephrology practices, and vascular access. Your questions are welcome and she can be reached at [email protected], 801.775.8010, or via Sceptre’s website,