Principles of Reasonable Cost Reimbursement; Payment for End-stage Renal Disease Services; Prospectively Determined Payment Rates for Skilled Nursing Facilities; Payment for Acute Kidney Injury Dialysis

Introduction.

This provision outlines the statutory basis, scope, and applicability of Medicare payment principles for various healthcare providers, including hospitals, skilled nursing facilities, and home health agencies.

Special treatment of certain accrued costs.

This provision establishes the requirements for the recognition and liquidation of accrued costs for Medicare payment purposes, including specific timelines for various types of liabilities such as vacation pay, sick pay, deferred compensation, and self-insurance.

Compensation of owners.

This provision establishes the criteria for determining reasonable compensation for services performed by owners of provider organizations as an allowable cost for reimbursement purposes.

Reasonable cost of physical and other therapy services furnished under arrangements.

This provision establishes the methodology for determining the reasonable cost of therapy services, including physical, occupational, and speech therapy, when furnished under arrangements for Medicare reimbursement purposes.

Payment for posthospital SNF care furnished by a swing-bed hospital.

This provision establishes the payment methodologies and requirements for posthospital skilled nursing facility care provided by rural hospitals and critical access hospitals with swing-bed approval.

Payment for facility services related to covered ASC surgical procedures performed in hospitals on an outpatient basis.

This provision establishes the method for determining Medicare payments for facility services furnished by a hospital on an outpatient basis in connection with covered ambulatory surgical center procedures.

Payment for hospital outpatient radiology services and other diagnostic procedures.

This provision establishes the method for determining Medicare payments for radiology services and other diagnostic procedures performed by a hospital on an outpatient basis.

Payment for screening mammography performed by hospitals on an outpatient basis.

This provision establishes the methodology for determining Medicare payment for outpatient screening mammography services provided by hospitals.

Reduction to hospital outpatient operating costs.

This provision mandates a 5.8 percent reduction in the reasonable costs of certain hospital outpatient services for specific cost reporting periods.

Payment for home health agency services.

This provision outlines cost allowability and payment limits for outpatient rehabilitation services provided by home health agencies to non-homebound patients.

Amount of payment if customary charges for services furnished are less than reasonable costs.

This provision defines the 'lesser of costs or charges' (LCC) principle for Medicare payments and specifies exceptions for various provider types and services.

Introduction to capital-related costs.

This provision defines the specific expenses that qualify as capital-related costs for Medicare reimbursement purposes, including depreciation, leases, interest, and insurance.

Depreciation: Allowance for depreciation based on asset costs.

This provision establishes the Medicare reimbursement principles for calculating depreciation on buildings and equipment, including rules for historical cost, useful life, asset disposal, and lease agreements.

Depreciation: Optional allowance for depreciation based on a percentage of operating costs.

This provision outlines the optional method for calculating depreciation on pre-1966 assets based on a percentage of a provider's operating costs for Medicare reimbursement purposes.

Depreciation: Allowance for depreciation on fully depreciated or partially depreciated assets.

This provision specifies the criteria for claiming depreciation on assets that are fully or partially depreciated on a provider's books when entering the Medicare program.

Depreciation: Allowance for depreciation on assets financed with Federal or public funds.

This provision confirms that depreciation is an allowable cost for Medicare reimbursement even when assets are financed through Federal or public funds such as Hill-Burton grants.

Interest expense.

This provision establishes the principles for determining allowable interest expense on current and capital indebtedness for Medicare cost reimbursement purposes.

Return on equity capital of proprietary providers.

This provision establishes the rules for calculating and paying a reasonable return on equity capital for proprietary hospitals and skilled nursing facilities under Medicare cost reporting.

Cost to related organizations.

This provision limits the allowable costs for services, facilities, and supplies obtained from organizations related to the provider by common ownership or control.

Scope.

This subpart implements sections 1881(b)(2), (b)(4), (b)(7), and (b)(12) through (b)(14) of the Act by—

Definitions.

For purposes of this subpart, the following definitions apply:

Principles of prospective payment.

This provision mandates that approved ESRD facilities accept CMS-established prospective payment rates as payment in full for covered renal dialysis services.

Prospective rates for hospital-based and independent ESRD facilities.

This provision defines the criteria for determining whether an ESRD facility is hospital-based or independent for the purpose of rate-setting and payment.

Amount of payments.

This provision specifies the calculation of Medicare payments to ESRD facilities based on the beneficiary's Part B deductible status.

Quality incentive program payment.

This provision defines the methodology for reducing Medicare payments to ESRD facilities that fail to meet established quality performance standards.

ESRD quality incentive program.

This provision establishes the End-Stage Renal Disease Quality Incentive Program, defining performance measures, data submission requirements, scoring methodologies, and payment reduction policies for dialysis facilities.

Procedures for requesting exceptions to payment rates.

This provision outlines the requirements and documentation necessary for pediatric ESRD facilities to request exceptions to their prospective payment rates.

Criteria for approval of exception requests.

This provision defines the specific criteria under which CMS may approve payment rate exceptions for pediatric ESRD facilities.

Payment exception: Pediatric patient mix.

This provision specifies the qualifications and documentation requirements for pediatric ESRD facilities seeking payment exceptions based on pediatric patient mix.

Payment exception: Self-dialysis training costs in pediatric facilities.

This provision outlines the requirements and documentation for pediatric ESRD facilities to request payment exceptions for self-dialysis and home dialysis training costs.

Appeals.

This provision establishes the procedures for facilities to appeal CMS decisions regarding Medicare bad debts and denied payment rate exception requests.

Limitation on Review.

This provision prohibits administrative or judicial review of specific ESRD payment determinations, including bundled payment amounts and market basket adjustments.

Notification of changes in rate-setting methodologies and payment rates.

CMS notifies ESRD facilities of changes in payment rates, including adjustments for labor costs, market basket updates, and wage index revisions.

Recordkeeping and cost reporting requirements for outpatient maintenance dialysis.

ESRD facilities must maintain financial records and submit cost reports to CMS to determine allowable costs for outpatient maintenance dialysis services.

Financial data and reports.

Providers must maintain sufficient financial and statistical records to support Medicare cost reporting and permit contractor examination of fiscal records.

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This section is reserved.

Organ procurement organization (OPO) cost for kidneys sent to foreign countries or transplanted in patients other than Medicare beneficiaries.

OPOs must separate costs for kidneys procured for foreign transplant centers or non-Medicare patients from Medicare allowable costs.

Transplant center costs for organs sent to foreign countries or transplanted in patients other than Medicare beneficiaries.

Transplant centers must exclude costs associated with organs sent to foreign countries or transplanted in non-Medicare patients from their Medicare allowable costs.

Conditions for payment under the end-stage renal disease (ESRD) prospective payment system.

ESRD facilities must meet specific conditions for coverage and furnish all covered items directly or under arrangements to qualify for Medicare payment.

Basis of payment.

ESRD facilities receive a predetermined per-treatment payment amount for renal dialysis services, with additional provisions for bad debt reimbursement.

Items and services included in the ESRD prospective payment system.

The ESRD prospective payment system includes renal dialysis services and home dialysis support, services, and equipment.

Methodology for calculating the per-treatment base rate under the ESRD prospective payment system effective January 1, 2011.

This provision outlines the methodology used by CMS to determine the per-treatment base rate for the End-Stage Renal Disease (ESRD) prospective payment system, including data sources and adjustment factors.

Determining the per treatment payment amount.

This provision defines the components that constitute the total per-treatment payment amount for ESRD services, including base rates, outlier payments, and various add-on adjustments.

Adjustment for wages.

This provision establishes the methodology for adjusting the labor-related portion of the ESRD base rate based on geographic wage indices and defines urban and rural area classifications.

Low-volume adjustment.

This provision defines the eligibility criteria, attestation requirements, and verification processes for End-Stage Renal Disease (ESRD) facilities to receive a low-volume payment adjustment.

Additional facility-level adjustments.

This provision outlines the adjustments CMS applies to base payment rates for facilities located in rural areas and specific geographic territories including Alaska, Hawaii, and US territories.

Drug designation process.

This provision establishes the drug designation process and payment methodology for new renal dialysis drugs and biological products under the End-Stage Renal Disease Prospective Payment System.

Patient-level adjustments.

Adjustments to the per-treatment base rate may be made to account for variation in case-mix.

Transitional add-on payment adjustment for new and innovative equipment and supplies.

(1) Effective January 1, 2020, this section establishes an add-on payment adjustment to support ESRD facilities in the uptake of new and innovative renal dialysis equipment and supplies under the ESRD prospective payment system under the authority of section 1881(b)(14)(D)(iv) of the Social Security Act.

Outliers.

This provision defines ESRD outlier services and establishes the eligibility criteria and payment calculation methodology for outlier payments to ESRD facilities.

Transition period.

This provision outlines the transition period for ESRD payment methodologies, including blended payment rates and the one-time election process for facilities.

Adequate cost data and cost finding.

This provision establishes the requirements for Medicare providers to maintain adequate, auditable financial and statistical cost data, utilize approved cost-finding methods, and submit accurate, certified cost reports in accordance with federal standards.

Pharmacy arrangements.

ESRD facilities must ensure that any pharmacy providing renal dialysis drugs and biologicals has the capability to supply all necessary classes of these items in a timely manner.

Limitations on payable costs.

CMS establishes prospective cost limits for skilled nursing facilities and home health agencies, including procedures for exemptions and exceptions based on atypical services or extraordinary circumstances.

Basis and scope.

This section outlines the eligibility and methodology for skilled nursing facilities to elect prospectively determined payment rates under Medicare.

Definitions.

This section defines key terms such as area wage level, routine capital-related costs, and routine operating costs for the purpose of SNF prospective payment rates.

Eligibility for prospectively determined payment rates.

Skilled nursing facilities must meet specific Medicare inpatient day thresholds to qualify for prospectively determined payment rates.

Rules governing election of prospectively determined payment rates.

Skilled nursing facilities must notify their contractor of their election for prospectively determined payment rates at least 30 days before the cost reporting period begins.

Basis of payment.

Qualified SNFs receive a per diem payment for routine inpatient services, which covers routine capital costs and is made in lieu of reasonable cost-based reimbursement.

Methodology for calculating rates.

This provision outlines the methodology for calculating prospectively determined payment rates for skilled nursing facilities, including adjustments for wage indices and market basket indices.

Determining payment amounts: Routine per diem rate.

This provision establishes the components of the routine per diem payment rate for skilled nursing facilities and specifies adjustments for cost reporting periods.

Determining payment amounts: Ancillary services.

This provision specifies that ancillary services in skilled nursing facilities are paid on the basis of reasonable cost.

Publication of prospectively determined payment rates or amounts.

This provision requires CMS to publish notice of revised prospectively determined payment rates at least 90 days before the Federal fiscal year.

Simplified cost report for SNFs.

SNFs electing to be paid under the prospectively determined payment rate system may file a simplified cost report.

Basis and scope.

This provision defines the basis and scope of the prospective payment system for skilled nursing facilities under section 1888(e) of the Act.

Definitions.

This provision provides definitions for terms used in the subpart regarding the prospective payment system for skilled nursing facilities.

Basis of payment.

This provision outlines the method of payment for skilled nursing facilities under the prospective payment system, including the scope of services covered by the per diem rate.

Methodology for calculating the prospective payment rates.

This provision establishes the methodology for calculating Medicare prospective payment rates for Skilled Nursing Facilities, including adjustments for wage indices, case-mix, market basket updates, quality reporting, and value-based purchasing.

Skilled nursing facility value-based purchasing program.

This provision establishes the regulatory framework for the Skilled Nursing Facility Value-Based Purchasing Program, including performance scoring, incentive payment calculations, quality measure reporting, and data validation requirements.

Transition period.

This provision establishes the transition period and methodology for blending facility-specific and federal rates for skilled nursing facility Medicare payments.

Resident assessment data.

This provision mandates that skilled nursing facilities submit resident assessment data according to a specific schedule to determine Medicare payment rates.

Publication of Federal prospective payment rates.

CMS publishes information regarding updates to federal prospective payment rates, including case-mix adjustment and wage index factors, in the Federal Register.

Limitation on review.

This provision prohibits judicial or administrative review regarding the establishment of federal prospective payment rates, including case-mix and wage index methodologies.

Limitations on coverage of costs: Charges to beneficiaries if cost limits are applied to services.

This provision outlines the conditions under which providers may charge Medicare beneficiaries for costs exceeding established limits, excluding emergency services.

Periodic interim payments for skilled nursing facilities receiving payment under the skilled nursing facility prospective payment system for Part A services.

This provision establishes the rules for periodic interim payments and accelerated payments for skilled nursing facilities under the Medicare Part A prospective payment system.

Additional payment: QIO reimbursement for cost of sending records electronically or by photocopy and mailing.

This provision outlines the additional payment available to skilled nursing facilities for the costs associated with sending requested patient records to a Quality Improvement Organization.

Requirements under the Skilled Nursing Facility (SNF) Quality Reporting Program (QRP).

This provision outlines the mandatory data submission, quality reporting, validation, and reconsideration processes for Skilled Nursing Facilities to avoid payment penalties under the SNF Quality Reporting Program.

Scope.

This provision establishes the regulatory scope and authority for CMS to set payment amounts for renal dialysis services provided to beneficiaries with acute kidney injury.

Definition.

This provision defines an individual with acute kidney injury for the purposes of determining eligibility for specific renal dialysis payment rates.

AKI dialysis payment rate.

This provision outlines the methodology for calculating the payment rate for acute kidney injury dialysis services, including base rates and adjustments.

Other adjustments to the AKI dialysis payment rate.

This provision specifies additional adjustments to the AKI dialysis payment rate, including training add-ons and other Secretary-authorized factors.

Renal dialysis services included in the AKI dialysis payment rate.

This provision clarifies which renal dialysis services are covered under the AKI payment rate and which items are separately payable.

Notification of changes in rate-setting methodologies and payment rates.

This provision outlines the process for updating AKI dialysis payment rates and methodologies, including notice and comment requirements.

Ceiling on the rate of increase in hospital inpatient costs.

This regulation establishes the methodology for calculating the ceiling on the rate of increase in operating costs per case for hospital inpatient services reimbursed by Medicare.

Definitions.

As used in this subpart:

Organ acquisition costs.

This provision defines allowable and non-allowable costs incurred by hospitals and organ procurement organizations for the acquisition of organs intended for transplant.

Standard acquisition charge.

This provision establishes the methodology for calculating and billing the standard acquisition charge for organs procured by transplant hospitals and organ procurement organizations.

Acquisition of pancreata for islet cell transplant.

This provision specifies that Medicare covers reasonable acquisition costs for pancreata used in islet cell transplants for specific clinical trials.

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This provision is a reserved placeholder in the regulation.

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This provision is a reserved placeholder in the regulation.

Intent to transplant, intent for research, counting en bloc, and unusable organs.

This provision establishes the principles for classifying and accounting for organs intended for transplant or research, including en bloc organs and unusable organs, for Medicare cost reporting purposes.

Medicare secondary payer and organ acquisition costs.

This provision outlines the conditions under which Medicare acts as a secondary payer for organ acquisition costs when a primary insurer is involved.

Organ acquisition charges for kidney-paired exchanges.

This provision specifies the billing and cost reporting requirements for hospitals participating in kidney-paired exchanges, including donor evaluation and procurement costs.

Amounts billed to organ procurement organizations for hospital services provided to deceased donors and included as organ acquisition costs.

This provision defines the requirements for hospitals to bill organ procurement organizations for services provided to deceased donors or donors with imminent death.

Payment to independent organ procurement organizations and histocompatibility laboratories for kidney acquisition costs.

This provision outlines the reimbursement principles, cost reporting, and audit requirements for independent organ procurement organizations and histocompatibility laboratories.

Cost reimbursement: General.

This provision establishes the general principles for Medicare cost reimbursement, including the identification of allowable costs, exclusions, and the treatment of depreciation and equity capital for providers.

Apportionment of allowable costs.

This provision outlines the methods for apportioning a provider's total allowable costs between Medicare beneficiaries and other patients, including the use of average-per-diem and charge-based methodologies.

Determination of cost of services to beneficiaries.

This regulation establishes the methodologies for apportioning allowable hospital costs between Medicare beneficiaries and other patients, including specific criteria for intensive care units and routine service definitions.

[Reserved]

This provision is reserved and contains no regulatory content.

Payments to providers: General.

This provision outlines the methodology for interim payments to providers and the process for final retroactive settlement based on actual costs incurred.