Implications of the 2023 ESRD PPS Proposed Rule

From the Field

When I started my journey in the renal billing field in 2008, I was excited about the opportunity to make a difference in the lives of dialysis patients and to help dialysis facilities. I learned about the long history of Medicare reimbursement of dialysis treatments and how the fundamental principle behind Medicare’s coverage and reimbursement of dialysis is for Medicare to provide access to dialysis for people with ESRD. Access to coverage is critical in ensuring there is never a need to bring back committees that decide who gets dialysis.

In addition to learning about dialysis death committees from the 1960s, I also learned how small the gap is between the cost to provide treatment and the amount Medicare reimburses. This gap narrowed further in 2011 with the implementation of the ESRD Prospective Payment System (ESRD PPS). In the years following the rollout of the ESRD PPS, CMS has adjusted the rate at which they reimburse dialysis based on many different factors, one of which is the wage index.

CMS recently released the CY 2023 ESRD PPS Proposed Rule, which includes a proposed increase of 3.1% to the base rate. However, the facility impact file indicates there are facilities that will receive a decrease in reimbursement under the proposed rule. The response I have observed in renal industry forums is a cry to CMS to consider the significant increase in labor costs since the beginning of the Public Health Emergency (PHE) in 2020 in the calculation for the 2023 ESRD PPS base rate. As labor costs are commonly cited as a main contributor to the need for a larger increase in the ESRD PPS, I thought it would be helpful to look at some data related to labor costs.

Using Bureau of Labor Statistics (BLS) data, I compared the national average annual wage per employee for a privately owned kidney dialysis center from 2017 through 2021. Based on this information from the BLS, before the PHE (2017 through 2019) the average annual wage for an employee of a privately held kidney dialysis center was $57,943.33. During the PHE (2020-2021) the average wage increased to $65,052.50, which is an increase of 12.27%. These data are somewhat limited as only privately owned dialysis centers are included; however, it does give us some insight into the changes in labor costs during the PHE.

I was also curious about how the ESRD PPS base rate changed during this same period. During this period, CMS began reimbursing separately for calcimimetics under TDAPA, and in 2021 CMS increased the ESRD PPS base rate by $9.93 to account for the increase in cost of dialysis treatments due to the utilization of calcimimetics. The average base rate from 2017 through 2019 was $233.06. The average base rate for 2020 and 2021, excluding the calcimimetics add-on of $9.93 for the 2021 base rate, was $241.27, an increase of 3.52%.

Considering the disparity in costs and reimbursement, I have been reaching out to the dialysis facilities my company works with to make sure they are aware of the proposed changes and the opportunity to voice their concerns to CMS before the end of the comment period for the 2023 ESRD PPS. In my conversations with the leaders of these dialysis programs, they have highlighted additional financial challenges they have been navigating since the beginning of 2020, such as exacerbated training costs due to increased turnover, costs associated with coverage for staff that are out sick due to COVID-19, and supply costs that increased during the PHE and have not reverted to pre-PHE rates. Supply issues hit smaller facilities the hardest as they don’t have the same purchasing power as large dialysis organizations.

To recap, because the PHE and annual wages of privately owned kidney dialysis centers have increased more than 12%, CMS has increased the ESRD PPS base rate by 3.52%. In addition to increases in wages, dialysis facilities are struggling with other cost increases. When costs exceed reimbursement, dialysis facilities are at risk of closing—which would decrease access to care for those with ESRD that are on dialysis. Access to care for this medically fragile and vulnerable population must be preserved.

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 interventional nephrology. Your questions are welcome, and she can be reached at stolson@sceptremanagement.com, 801.775.8010, or via Sceptre’s website, www.sceptremanagement.com.