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CMS updates payment rule for new kidney drugs

The rule promotes competition and innovation in durable medical equipment by setting Medicare payment for items based on commercial pricing data.

Susan Morse, Managing Editor

The Centers for Medicare and Medicaid Services has made refinements to payment for new kidney-related drugs in a final rule for the end-stage renal disease prospective payment system, the ESRD quality incentive program and for durable medical equipment, prosthetics, orthotics and supplies, known as DMEPOS.

The changes will better target the payment to innovative new renal dialysis drugs that will encourage ESRD facility to use the latest therapies, CMS said.

The final rule also promotes competition and innovation in DMEPOS by setting Medicare payment for new items based on commercial pricing data.

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Certain new and innovative equipment and supplies used to care for end-stage renal disease patients will qualify for a transitional add-on payment adjustment.

CMS is streamlining the requirements for ordering DMEPOS items and developing a single list of DMEPOS items potentially subject to payment requirements.


In 2016, Medicare spent $35.4 billion to cover people with ESRD, representing more than 7.2% in Medicare spending. On average, Medicare spends seven times more on beneficiaries with ESRD than the average beneficiary.

Currently, there are more than 430,000 Medicare fee-for-service beneficiaries with end-stage renal disease and they typically spend 12 hours a week attached to a dialysis machine. Many beneficiaries with ESRD suffer from poor health outcomes, such as higher hospitalization and mortality rates, often the result of underlying disease complications and multiple comorbidities.

The policies in the final rule will help to better recognize costs for new therapies under the end-stage renal disease prospective payment system that will spur more innovation in kidney care, CMS said.

The change in the DMEPOS rule will create incentives for ESRD facilities to provide innovative therapies to improve health outcomes. The rule establishes methodologies to modernize the pricing of new DMEPOS items and services to  provide greater transparency for innovators regarding how CMS determines if new items and services are comparable to older items and services for Medicare pricing purposes.


These changes align with the goals of President Trump's two recent executive orders on advancing American kidney health and protecting and improving Medicare for our nation's seniors.

They are also aligned with the patients over paperwork initiative to reduce burden while eliminating potential fraud and abuse.


"For too long, Medicare beneficiaries suffering from kidney disease have also suffered under outdated government regulations that stand in the way of the care they need. This final rule – as well as President Trump's executive orders issued earlier this year - signals that those days are waning," said CMS Administrator Seema Verma.
"Payment reforms are just part of a holistic effort HHS is undertaking, including through public-private partnerships like KidneyX, to support the next generation of kidney health technologies," said Health and Human Services Secretary Alex Azar.

Twitter: @SusanJMorse
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