CFR > Title 42 - Public Health > CHAPTER IV—CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES > SUBCHAPTER B—MEDICARE PROGRAM (parts 405 to 426) > PART 413—PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED PAYMENT RATES FOR SKILLED NURSING FACILITIES > SUBPART H—Payment for End-Stage Renal Disease (ESRD) Services and Organ Procurement Costs (§413.170 to §413.241) > 413.174—Prospective rates for hospital-based and independent ESRD facilities.

413.174—Prospective rates for hospital-based and independent ESRD facilities.

(a) Establishment of rates. CMS establishes prospective payment rates for ESRD facilities using the following methodology:
(1) For dialysis services furnished prior to January 1, 2009, the methodology differentiates between hospital-based and independent ESRD facilities;
(2) For dialysis services furnished on or after January 1, 2009—
(i) The composite rate paid to hospital-based facilities for dialysis services shall be the same as the composite rate paid for such services furnished by independent renal dialysis facilities.
(ii) When applying the geographic index to hospital-based facilities, the labor share shall be based on the labor share otherwise applied for renal dialysis facilities.
(3) Effectively encourages efficient delivery of dialysis services; and
(4) Provides incentives for increasing the use of home dialysis.
(b) Determination of independent facility. For purposes of rate-setting and payment under this section, CMS considers any facility that does not meet all of the criteria of a hospital-based facility to be an independent facility. A determination under this paragraph (b) is an initial determination under § 498.3 of this chapter.
(c) Determination of hospital-based facility. A determination under this paragraph (c) is an initial determination under § 498.3 of this chapter. CMS determines that a facility is hospital-based if the—
(1) Facility and hospital are subject to the bylaws and operating decisions of a common governing board. This governing board, which has final administrative responsibility, approves all personnel actions, appoints medical staff, and carries out similar management functions;
(2) Facility's director or administrator is under the supervision of the hospital's chief executive officer and reports through him or her to the governing board;
(3) Facility personnel policies and practices conform to those of the hospital;
(4) Administrative functions of the facility (for example, records, billing, laundry, housekeeping, and purchasing) are integrated with those of the hospital; and
(5) Facility and hospital are financially integrated, as evidenced by the cost report, which reflects allocation of overhead to the facility through the required step-down methodology.
(d) Nondetermination of hospital-based facility. In determining whether a facility is hospital-based, CMS does not consider—
(1) An agreement between a facility and a hospital concerning patient referral;
(2) A shared service arrangement between a facility and a hospital; or
(3) The physical location of a facility on the premises of a hospital.
(e) Add-on amounts. If all the physicians furnishing services to patients in an ESRD facility elect the initial method of payment (as described in § 414.313(c) of this chapter ), the prospective rate (as described in paragraph (a) of this section) paid to that facility is increased by an add-on amount as described in § 414.313.
(f) Additional payment for separately billable drugs. CMS makes an additional payment for certain drugs furnished to ESRD patients by a Medicare-approved ESRD facility. CMS makes this payment directly to the ESRD facility. Payment for these drugs is made—
(1) Only on an assignment basis, directly to the facility which must accept, as payment in full, the amount that CMS determines;
(2) Subject to the Part B deductible and coinsurance;
(3) Effective January 1, 2006, to hospital-based ESRD facilities in accordance with the methodology specified in § 414.904 of this subchapter.
(4) To independent ESRD facilities in accordance with the methodology specified in § 405.517 of this subchapter.
[62 FR 43668, Aug. 15, 1997, as amended at 70 FR 70330, Nov. 21, 2005; 73 FR 69935, Nov. 19, 2008]

Code of Federal Regulations

Effective Date Note: At 75 FR 49198, Aug. 12, 2010, § 413.174 was amended by revising paragraphs (a), (f) introductory text and (f)(3) and (4) and adding paragraph (f)(5), effective January 1, 2011, and by adding paragraph (f)(6), effective January 1, 2014. For the convenience of the user, the added and revised text is set forth as follows: § 413.174 Prospective rates for hospital-based and independent ESRD facilities. (a) Establishment of rates. CMS establishes prospective payment rates for ESRD facilities using a methodology that— (1) Differentiates between hospital-based providers of services and independent ESRD facilities for items and services furnished prior to January 1, 2009; (2) Does not differentiate between hospital-based providers of services and independent ESRD facilities for items and services furnished on or after January 1, 2009; and (3) Requires the labor share be based on the labor share otherwise applied to independent ESRD facilities when applying the geographic index to hospital-based ESRD providers of services, on or after January 1, 2009. (f) Additional payment for separately billable drugs and biologicals. Prior to January 1, 2011, CMS makes additional payment directly to an ESRD facility for certain ESRD-related drugs and biologicals furnished to ESRD patients. (3) For drugs furnished prior to January 1, 2006, payment is made to hospital-based ESRD providers of services on a reasonable cost basis. Effective January 1, 2006, and prior to January 1, 2011, payment for drugs furnished by a hospital-based ESRD provider of service is based on the methodology specified in § 414.904 of this chapter. (4) For drugs furnished prior to January 1, 2006, payment is made to independent ESRD facilities based on the methodology specified in § 405.517 of this chapter. Effective January 1, 2006, and prior to January 1, 2011, payment for drugs and biological furnished by independent ESRD facilities is based on the methodology specified in § 414.904 of this chapter. (5) Effective January 1, 2011, except as provided below, payment to an ESRD facility for renal dialysis service drugs and biologicals as defined in § 413.171 , furnished to ESRD patients on or after January 1, 2011 is incorporated within the prospective payment system rates established by CMS in § 413.230 and separate payment will no longer be provided. (6) Effective January 1, 2014, payment to an ESRD facility for renal dialysis service drugs and biologicals with only an oral form furnished to ESRD patients is incorporated within the prospective payment system rates established by CMS in § 413.230 and separate payment will no longer be provided.
Code of Federal Regulations 812