Including Oral-Only Drugs in the ESRD PPS Bundled Payment
Issued: 04-29-24, Effective: 01-01-25, Implementation: 01-01-25
Under 42 C.F.R. § 413.174(f)(6), effective January 1, 2025, 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. Although we included oral-only renal dialysis
service drugs and biologicals in the definition of renal dialysis services in the CY 2011 ESRD
PPS final rule (75 FR 49044), we also finalized a policy to delay payment for these drugs under
the ESRD PPS until January 1, 2014, and later updated it based on legislation to the current date
of 2025. In the CY 2016 ESRD PPS final rule, CMS updated regulations at 42 C.F.R. §
413.174(f)(6) to incorporate ESRD drugs and biological products with only an oral form into the
ESRD PPS bundled payment beginning January 1, 2025.
CMS will use the same process that it used for calcimimetics to incorporate phosphate binders
into the ESRD PPS beginning January 1, 2025, which was further discussed in MLN Matters
Number: MM10065. We are not following this process for any other oral drugs or biological
products. Manufacturers would need to apply for HCPCS and TDAPA. Under our current policy
(80 FR 69027; 87 FR 67180), if no injectable equivalent (or other form of administration) of
phosphate binders is approved by the Food and Drug Administration prior to January 1, 2025,
then we will pay for these drugs using the Transitional Drug Add-on Payment Adjustment
(TDAPA) under the ESRD PPS for at least 2 years beginning January 1, 2025. CMS will then
undertake rulemaking to modify the ESRD PPS base rate to account for the cost and utilization
of phosphate binders in the ESRD PPS bundled payment. Any new oral renal dialysis drug or
biological product which is not a phosphate binder would have to follow the existing TDAPA
application process described at 42 CFR 413.234.
Payment:
• ESRD facilities will receive payment of the TDAPA for phosphate binders for at least
two years, followed by a modification to the ESRD PPS base rate, if appropriate.
• Pricing for phosphate binders under the TDAPA will be based on pricing methodologies
available under section 1847A of the Social Security Act. A new renal dialysis drug or
biological product is paid for using a transitional drug add-on payment adjustment,
which is based on 100 percent of average sales price (ASP). If ASP is not available then
the transitional drug add-on payment adjustment is based on 100 percent of wholesale
acquisition cost (WAC) and, when WAC is not available, the payment is based on the
drug manufacturer's invoice.
• ESRD facilities will not receive separate payment for the unused portion of a
prescription for ESRD drugs and biological products with only an oral form after the
base rate has been modified as appropriate for phosphate binders. CMS encourages
ESRD facilities to develop education and strategies for managing the prescription of the
appropriate number of doses during the titration period to reduce discarded drugs.
• The JW and JZ modifiers apply only to renal dialysis drugs and biological products from
a single-dose container or single-use package. CMS policy for payment under the ESRD
PPS, including the calculation of the TDAPA and outlier payment adjustments, includes
payment for units of renal dialysis drugs and biological products billed with the JW
modifier, but does not allow payment for overfill units. That is, the current ESRD PPS
payment policy is consistent with the broader Medicare Part B policy to pay for the
unused and discarded amount, as well as the dose administered, up to the amount of the
drug indicated on the vial or package labeling (88 FR 76382).
Coding:
CMS has a long-standing convention to assign dose descriptors in the smallest amount that could
be billed in multiple units to accommodate a variety of doses and support streamlined billing.
This long-standing policy makes coding more robust and facilitates accurate payment and
reporting of the exact dose administered. Following this long-standing convention, in
preparation for timely TDAPA payment beginning January 1, 2025,CMS has established the
following HCPCS codes for use in billing generic phosphate binders under the ESRD PPS. We
note that the effective date for these codes will be January 1, 2025 and they will be listed on the
HCPCS Level II code file beginning with the October 2024 quarterly update. The HCPCS codes
we are establishing are as follows:
o J0601, “Sevelamer carbonate (Renvela or therapeutically equivalent), oral, 20 mg
(for ESRD on dialysis)”
o J0602, “Sevelamer carbonate (Renvela or therapeutically equivalent), oral,
powder, 20 mg (for ESRD on dialysis)”
o J0603, “Sevelamer hydrochloride (Renagel or therapeutically equivalent), oral, 20
mg (for ESRD on dialysis)”
o J0605, “Sucroferric oxyhydroxide, oral, 5 mg (for ESRD on dialysis)”
o J0607, “Lanthanum carbonate, oral, 5 mg (for ESRD on dialysis)”
o J0608, “Lanthanum carbonate, oral, powder, 5 mg, not therapeutically equivalent
to J0607 (for ESRD on dialysis)”
o J0609, “Ferric citrate, oral, 3 mg ferric iron, (for ESRD on dialysis)”
o J0615, “Calcium acetate, oral, 23 mg (for ESRD on dialysis)”
Important Timeframes:
• Pharmaceutical manufacturers should supply Average Sales Price (ASP) information as
quickly as possible, but no later than October 30, 2024, for pricing information to be
available for TDAPA payment beginning January 1, 2025. All the required information
and required links are available at the Average Sales Price (ASP) Reporting webpage.
Additional information can be found at ASP Education & Outreach | CMS along with
educational videos. ASP regulations are available at: ASP Regulations & Policy | CMS.
• The regulations regarding ASP reporting and how to calculate the ASP can be found in
sections 1847A and 1927(b) of the Social Security Act and codified in regulation text at
42 C.F.R. part 414, subpart J. Section 401 in the Consolidated Appropriations Act, 2021
requires all drug manufacturers to report average sales price (ASP) for drugs and
biological products covered under Medicare Part B. It also adds a new requirement that
drug manufacturers without a rebate agreement must report ASP.
• Pharmaceutical manufacturers may apply to CMS for HCPCS codes for their proprietary
phosphate binders by October 1, 2024, for inclusion in the TDAPA calculation
beginning January 1, 2025.
