Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies

The Centers for Medicare and Medicare Services (CMS) created the End Stage Renal (Kidney) Disease (ESRD/ESKD) Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES)¹in the 2020 rule-making cycle with the intention of promoting ESKD facility use and Medicare beneficiary access to certain qualifying, new, and innovative home dialysis-related equipment and supplies. Dialysis providers can receive additional reimbursement under the ESRD Prospective Payment System (PPS) for authorized equipment and supplies meeting CMS TPNIES eligibility criteria and deemed truly innovative. The following summarizes the responsibilities of the equipment/supplies manufacturer as well as the potential benefit to dialysis providers. 

Eligibility Criteria to Receive the Add-on Payment

Manufacturer applicants for TPNIES are required to demonstrate that the equipment or supply meets the following criteria:

1. Has been designated as a renal dialysis service by CMS under §413.171
2. Is within three years of Food & Drug Administration (FDA) marketing authorization
3. Is commercially available by January 1 of the year in which the payment adjustment would take effect
4. Has submitted a complete Healthcare Common Procedure Coding System (HCPCS) Level II code by the application deadline for the second biannual coding cycle for durable medical equipment, orthotics, prosthetics, and supplies (DMEPOS) prior to the calendar year
5. Has demonstrated evidence of innovation that aligns with substantial clinical improvement criteria (SCI)
6. Is not a capital-related asset, except for capital-related assets that are home dialysis machines

Evidence Required for Substantial Clinical Improvement Criteria

The applicant must show that the new equipment or supply represents an advance that substantially improves the diagnosis or treatment of Medicare beneficiaries compared to existing technologies. Evidence from published or unpublished information sources from within the United States or elsewhere may be sufficient to establish SCI criteria, including: clinical trials; peer-reviewed journal articles; study results; meta-analyses; consensus statements; white papers; patient surveys; case studies; reports; systematic literature reviews; letters from major health care associations; editorials and letters to the editor; public comments; and other appropriate information sources.

Add-on Payment Inclusion, Calculation, and Duration

The TPNIES is paid for two calendar years, beginning on January 1 and ending on December 31. Through TPNIES, CMS will reimburse dialysis providers by utilizing a rate that consists of three factors: a five-year depreciation schedule, an annual allowance equal to 65% of machine cost, and an offset for the equipment component of current treatment payment. Dialysis providers can receive maximum reimbursement up to 26% of the total cost of approved home dialysis machines. 

The calculation of the add-on payment, using these three factors for a TPNIES-approved home dialysis system starting 2022, is illustrated in the figure below:

Monthly TPNIES payments are only made if the home dialysis equipment is used during the 2-year TPNIES period. Using the same example, facilities could receive a total add-on reimbursement of 13% if first used for home dialysis for the full year 2023, then no add-on reimbursement if the machine continues to be used for home dialysis treatments after December 2023.

February 1 is the final date to submit a completed application to CMS to be considered for the following year’s rulemaking cycle. FDA marketing authorization and HCPCS application for the device must be submitted by the time of TPNIES application.

Basis of Payment

TPNIES is based on 65 percent of the Medicare Administrative Contractor (MAC) determined price. On behalf of CMS, the MACS will use the following verifiable information, if available, to determine prices for the new and innovative dialysis equipment and supplies that meet the TPNIES eligibility criteria: 

1. The invoice amount, facility charges for the item, discounts, allowances, and rebates
2. The price established for the item by other MACs and the sources of information used to establish that price
3. Payment amounts determined by other payers and the information used to establish those payment amounts
4. Charges and payment amounts required for other equipment and supplies that may be comparable or otherwise relevant

After the two-year TPNIES period ends, no modification will be made in the ESRD PPS base rate. Excluding home dialysis machines, the new and innovative renal dialysis equipment or supply will then become an eligible outlier service (i.e., one of the services evaluated for high-cost patients to determine a facility’s eligibility for outlier payments). The home dialysis machine will not be an eligible outlier service upon expiration of the add-on payment.

Conclusion

TPNIES is a new CMS program that could help improve the progression of home dialysis innovation. Although innovation is a key part of TPNIES, it could be hindered due to SCI criteria not being specific to home dialysis machines, or for determining TPNIES eligibility. Dialysis care delivery is complex, and most SCI guidelines are vague, making it difficult to determine if equipment or supplies can achieve TPNIES status. Key stakeholders in the kidney community should be involved in the decision-making process for TPNIES approval.