From the Field
Those involved in the dialysis industry since 2020 have faced a substantial increase in costs for supplies and labor due to the public health emergency (PHE). As a participant in this industry, you are likely aware that these costs have not subsided.
The company I work for specializes in revenue cycle management for small, independent dialysis programs. Our clients range from hospital-based and freestanding facilities to those providing care in nursing homes, traditional in-center dialysis facilities, and home programs. They cater to a diverse demographic spectrum, from elderly, indigent patients to affluent, middle-aged individuals, including residents of Indian reservations and pediatric patients. Despite their differences, a common thread unites these programs: deep care for their patients and grappling with labor and supply costs that have significantly outpaced reimbursement increases in the End Stage Renal Disease (ESRD) Prospective Payment System (PPS).
ESRD PPS Base Rate Increase
The new base rate for CY 2024 is set at $271.02, which is a 2% increase from CY 2023. The Centers for Medicare & Medicaid Services (CMS) projects the updates to the ESRD PPS for CY 2024 will result in an overall reimbursement increase of 2.1% over CY 2023 reimbursement. CMS anticipates hospital-based dialysis facilities will see a 3.1% increase, whereas the reimbursement increase for freestanding dialysis programs will be approximately 2%. The information I have reviewed from renal associations as well as commentary from my clients indicates the underlying driver for requesting a higher increase to the market basket adjustment is to adequately cover costs for dialysis treatments and ensure continued access to care for patients with ESRD who need dialysis treatments. Despite 90 comments urging a higher market basket adjustment to account for labor cost spikes during and post-PHE, CMS believes the current adjustment adequately reflects the average change in service costs, including labor.
Transitional Pediatric ESRD Add-on Payment Adjustment
The introduction of a 30% add-on payment adjustment for pediatric ESRD patients is a welcome development. The labor requirements for pediatric hemodialysis are significantly higher than adult hemodialysis. As such, pediatric dialysis programs are really feeling the financial squeeze. However, this adjustment is temporary, and concerns remain about the adequacy of future payment adjustments, given the history with post-transitional drug add-on (TDAPA).
Time on Machine and Wastage Reporting Requirements
Beginning in January 2025, CMS will require dialysis programs to report JW and/or JZ modifiers when billing for medications on a dialysis claim to allow CMS to gather data more easily regarding medication waste. Additionally, CMS will require dialysis facilities to include the amount of time a patient spent on dialysis during a billing period on the claim form to assess patient-level resource usage. These reporting requirements will increase the administrative burden related to documenting reporting medication amounts and time on dialysis in medical records as well as on billing claim forms. Dialysis facility administrators should begin to review their processes, electronic health records, and billing software to identify any changes that need to be made to meet these new requirements. Additionally, it is important to work with individuals whose workflows will be impacted to ensure they have a complete understanding of how to comply with these reporting changes.
TDAPA Payment Adjustment, Outlier and LVPA Updates
CMS has set the post-TDAPA payment adjustment amount at 65% of TDAPA expenditure levels. This new adjustment provides a bit of clarity on what to expect after the TDAPA period ends. The outlier policy was updated by adjusting the adult and pediatric Medicare allowable payment amounts and fixed dollar loss amounts in an attempt to increase outlier payments to the goal of 1% of ESRD PPS claims. Lastly, CMS has made modifications to the low-volume payment adjustment (LVPA) to provide flexibilities in qualification of dialysis programs as they relate to temporary closure and reopening or exceeding treatment thresholds during a disaster or other emergency.
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.
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