Critical Financial Shifts Ahead: How CY 2025 ESRD PPS Changes Could Impact Small Dialysis Facilities

As they do every year, the Centers for Medicare & Medicaid Services (CMS) released the proposed rule for the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for calendar year (CY) 2025, which outlines several significant changes that will directly affect the financial health of dialysis facilities. For administrators of small and medium dialysis organizations, understanding these proposed updates is crucial to navigating the financial landscape ahead. This article highlights the key financial implications of the proposed rule and how they may affect your facility’s bottom line. 

While we have yet to see the CMS ESRD PPS Final Rule, one thing is clear: There will be significant reimbursement changes for CY 2025. Several of the notable changes being proposed for next year are the base rate of $273.20, a potential ESRD PPS-specific wage index, changes to items that would contribute to an outlier adjustment, a revamp of the Low-Volume Payment Adjustment (LVPA) structure, and inclusion of oral-only drugs in the ESRD PPS, just to name a few. Let’s dive into the details! 

CY 2025 ESRD PPS Base Rate 

The proposed base rate for CY 2025 is $273.20—an increase of $2.18 (0.8%) from the CY 2024 base rate of $271.02. One thing to keep in mind is that, due to adjustments for wage index, your program’s base rate could be more or less than the amount above. CMS does intend to keep a wage index floor of 0.6000 and a 5% cap on wage index decreases year after year. 

Wage Index  

CMS proposed using an ESRD PPS-specific wage index to adjust ESRD PPS payments for geographic differences in area wages. This proposed wage index would combine data from the Bureau of Labor Statistics Occupation Employment Wage and Statistics program and freestanding ESRD facility cost reports to calculate an ESRD PPS-specific wage index instead of the hospital data currently being used to determine wage index values for each geographic area. 

Outlier Policy  

CMS has proposed expanding the list of ESRD outlier services to comprise drugs and biologicals that were included in the composite rate prior to the ESRD PPS. CMS has indicated that the intent behind this change is to increase the outlier payment per qualifying claim. The target for outlier payments would continue to be 1% of all payments, so while the outlier payment per claim may increase, the number of qualifying claims would decrease. 

Low-Volume Payment Adjustment Tiered Approach 

Small dialysis programs that provide fewer than 4000 treatments per year for the three most recent cost-reporting periods have been eligible for a 23.9% payment adjustment under the LVPA. CMS is proposing that facilities with less than 3000 treatments receive a 28.4% payment adjustment, and facilities rendering between 3000 and 3999 treatments receive an 18.1% payment adjustment. While this may ease the burden of being a dialysis program with approximately 19 patients, it may present challenges for programs in the 20 to 24 patient range.  

ESRD PPS Inclusion of Oral-Only Drugs 

At the time of this writing, it appears as though dialysis programs should be preparing for the inclusion of oral-only drugs in the ESRD PPS. CMS has estimated that including oral-only drugs in the ESRD PPS will increase Medicare spending by $180 million in CY 2025. Additionally, CMS intends for this change to expand access to these medications for patients who do not have Medicare Part D coverage.  

Each year when CMS publishes the ESRD PPS proposed and final rules, they also publish facility-level impact files that allow dialysis programs to estimate the monetary impact of the changes on their program. If you have not yet estimated your program’s potential monetary impact for 2025, taking the time to do so may take the element of surprise out of next year’s Medicare reimbursement. Just remember, we have yet to see the CY 2025 ESRD PPS Final Rule.