CMS Finalizes CY 2027 Updates for ESRD Payment System, AKI Dialysis, and Quality Incentive Program

The Centers for Medicare & Medicaid Services (CMS), an agency within the Department of Health and Human Services (HHS), has issued a final rule outlining Calendar Year (CY) 2027 updates for the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS), payments for renal dialysis services provided to individuals with Acute Kidney Injury (AKI), and the ESRD Quality Incentive Program (QIP). Published on October 30, 2026, these regulations will take effect on January 1, 2027. The rule aims to update payment methodologies and quality incentives to ensure appropriate reimbursement and continued quality improvement for beneficiaries receiving renal care, as mandated by federal legislation such as the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) and the Patient Protection and Affordable Care Act.

ESRD Prospective Payment System Updates for CY 2027

CMS is implementing several key modifications to the ESRD PPS for CY 2027. A significant change involves the rebasing and revising of the ESRD Bundled (ESRDB) market basket to a 2024 base year. This adjustment incorporates the most current cost report data and public information to more accurately reflect the costs associated with furnishing renal dialysis services. Consequently, the labor-related share of the ESRD PPS base rate has also been updated.

The CY 2027 ESRD PPS base rate is finalized at $297.52, representing an increase from the CY 2026 rate of $281.71. This calculation includes a wage index budget neutrality adjustment factor of 1.00260, an addition of $12.85 to incorporate phosphate binders into the base rate, a budget neutrality factor of 0.98864 for various payment adjustments, and an ESRDB market basket update of 1.9 percent. The budget neutral changes affect the low-volume payment adjustment (LVPA), case mix adjusters for pediatric ESRD patients, and the home and self-dialysis add-on payment adjustment.

Incorporation of Phosphate Binders

A notable policy change is the incorporation of phosphate binders into the ESRD PPS base rate. This inclusion, which adds $12.85 to the base rate, will occur at the end of the Transitional Drug Add-on Payment Adjustment (TDAPA) period for these drugs. This move signifies a shift towards bundling these essential medications directly into the per-treatment payment, aiming to streamline payment and encourage efficient management of phosphate levels in ESRD patients.

Wage Index and Outlier Policy Adjustments

CMS will update the ESRD PPS wage index annually, utilizing the latest mean hourly wage data from the Bureau of Labor Statistics (BLS) and occupational mix data from freestanding ESRD facility Medicare cost reports. This ensures that payment rates reflect regional labor cost differences. The outlier policy is also being updated for CY 2027, with adjustments to Medicare allowable payment (MAP) and fixed dollar loss (FDL) amounts for both adult and pediatric patients. These adjustments are based on recent claims data, with the aim of ensuring outlier payments remain around the target of 1.0 percent of total Medicare payments. In CY 2025, outlier payments were approximately 0.9 percent.

Transitional Add-On Payments and Post-TDAPA

The average per-treatment offset amount for the Transitional Add-On Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES) for capital-related home dialysis machines will be $10.63 for CY 2027. Additionally, the rule finalizes post-TDAPA add-on payment adjustment amounts for specific drugs. For the first quarter of CY 2027, Korsuva will have an adjustment of $0.0793 per treatment, DefenCath $8.3220 per treatment, and Vafseo $0.9970 per treatment. These amounts will be updated quarterly, contingent on the continued receipt of Average Sales Price (ASP) data.

Acute Kidney Injury Dialysis Payment Updates

The payment rate for renal dialysis services furnished to individuals with AKI will also be updated for CY 2027. This rate is directly tied to the ESRD PPS base rate and its annual adjustments, including the ESRDB market basket percentage increase factor minus a productivity adjustment, and further adjusted by the wage index. It is important to note that specific changes to the ESRD PPS case mix adjusters for pediatric patients, the expansion of the LVPA, and technical changes to the TDAPA will not directly influence the AKI dialysis payment rate for CY 2027.

ESRD Quality Incentive Program Modifications

The ESRD Quality Incentive Program (QIP) is undergoing several measure set changes, effective beginning with Payment Year (PY) 2029. CMS will replace the Hypercalcemia reporting measure with the Facility-Level Percentage of Chronic Hyperphosphatemia in Dialysis Patients (Hyperphosphatemia) clinical measure. The National Healthcare Safety Network Bloodstream Infection (NHSN BSI) clinical measure will be updated. Furthermore, two reporting measures, Medication Reconciliation (MedRec) and COVID-19 Vaccination Coverage Among Healthcare Personnel (HCP), will be removed from the program. The final rule also discusses feedback received regarding the potential inclusion of the Dialysis Facility Discussion of Patient Life Goals (D-PaLS) Patient-Reported Outcome Performance Measure (PRO-PM) in the ESRD QIP, indicating ongoing evaluation of patient-centered outcomes.