On August 12, 2010, the Centers for Medicare & Medicaid Services (CMS) is publishing a final rule implementing a prospective payment system (PPS) for Medicare end-stage renal disease (ESRD) services, as mandated by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). The final ESRD PPS rule provides a single bundled payment to dialysis facilities covering services such as dialysis treatments and supplies, certain ESRD-related drugs, and ESRD-related clinical laboratory tests. Notably, while CMS has finalized its policy to include in the definition of renal dialysis services ESRD-related oral drugs without injectable equivalents (so-called “oral-only” drugs), CMS is now postponing payment for such drugs under the ESRD PPS until 2014 (although all other ESRD-related former Part D drugs and biologicals are included in the bundled payment effective January 1, 2011). Under the final rule, dialysis providers will receive a per-treatment base rate of $229.63 (compared to the proposed $198.64 rate) for all services related to a dialysis session. This amount is subject to patient-specific and facility-specific adjustments, including adjustments for case mix and comorbidities, geographic cost differences, low-volume facilities, and certain outlier cases. In response to comments, CMS has added payment adjustment of $33.38 for home dialysis training when clinically appropriate. As required by MIPPA, total ESRD PPS payments are estimated to equal 98% of payments that would have been made absent the statutory changes. The ESRD PPS is effective January 1, 2011, with a four-year phase in-period (facilities may elect to be paid entirely under the new system beginning January 1, 2011). CMS will apply a “transition budget neutrality adjustment factor” of -3.1% to all payments during the phase-in. The rule also adopts three quality measures pertaining to hemodialysis adequacy and anemia management to be uses for the ESRD Quality Incentive Program (QIP), under which ESRD payments will be reduced by up to 2.0% for dialysis providers that do not meet performance standards. Also on August 12, CMS is publishing a related proposed rule that would establish performance standards and a scoring methodology for the ESRD Quality Incentive Program; CMS will accept comments on the proposed rule until September 24, 2010.