Dialysis on a “Policy Keto”: How CMS’ Nov. 24, 2025 ESRD PPS Final Rule Rebalances Medicare’s Kidney‑Care Diet
Metabolic context: CMS' final rule for the End‑Stage Renal Disease (ESRD) Prospective Payment System (PPS), published in the Federal Register on November 24, 2025, recalibrates Medicare dialysis payments, quality reporting, and a controversial Innovation Center model — a concentrated policy “diet” that trims some reporting burdens while redirecting resources to non‑contiguous geographies and changing incentives for home dialysis and transplant. This post unpacks the numbers, the politics, and what providers, patients, and lawmakers should watch next. 🏛️📊
- CMS finalized a CY 2026 ESRD PPS base rate of $281.71 per treatment (effective Jan. 1, 2026). [1]
- Aggregate Medicare FFS payments to dialysis providers are projected to rise ~2.2% in CY 2026; CMS estimates about $180 million of the increase is from payment updates. [2]
- New targeted non‑contiguous area payment adjustment (NAPA) gives up to +25% for Alaska and U.S. Pacific Territories and +21% for Hawaii (capped) to reflect higher non‑labor costs. [3]
- CMS is ending the ESRD Treatment Choices (ETC) Model early (termination aligned with Dec. 31, 2025), citing limited quality and savings results — a major policy reversal for an Innovation Center mandatory model. [4]
- Quality reporting will be simplified (shorter ICH‑CAHPS survey, removal of several equity/social‑drivers reporting measures) — tradeoffs between administrative relief and data for disparities oversight. [5]
What CMS did (quick, concrete summary)
- Set the CY 2026 ESRD PPS base rate to $281.71 per treatment (up $7.89 from $273.82 in CY 2025). Effective date: Jan. 1, 2026. [6]
- Projects total Medicare payments to ESRD facilities of roughly $6 billion and estimates overall Medicare FFS payments to ESRD facilities will increase ~2.2% in CY 2026. [7]
- Finalizes a Non‑Contiguous Area Payment Adjustment (NAPA) to increase the non‑labor portion of the base for Alaska, Hawaii, and U.S. Pacific Territories (capped at 25%; Hawaii ~21% in CMS’ analysis). [8]
- Shortens the in‑center ICH CAHPS patient survey and removes three health‑equity reporting measures from the ESRD Quality Incentive Program (QIP); requests public comment on new measure concepts. [9]
- Finalizes early termination of the ESRD Treatment Choices (ETC) Model after evaluation showed the model did not deliver the intended home‑dialysis/transplant quality gains or projected savings. [10]
Numbers that matter — policy “macros” and “micros”
| Metric | CY 2025 (baseline) | CY 2026 (final rule) |
|---|---|---|
| ESRD PPS base rate (per treatment) | $273.82 | $281.71 (+$7.89; ≈+2.9% nominal) |
| Projected change in aggregate Medicare FFS payments to ESRD facilities | — | ≈ +2.2% (CMS estimate) |
| Medicare spending on ESRD dialysis (approx.) | — | CMS projects ~$6 billion paid to ~7,600 facilities for renal dialysis services (CY 2026 estimates basis). [11] |
| NAPA adjustment (max non‑labor increase) | None previously targeted | Alaska & U.S. Pacific Territories: up to +25%; Hawaii: ≈+21% (capped). [12] |
Sources: CMS fact sheet (Nov. 20, 2025) and Federal Register final rule (published Nov. 24, 2025). [13]
Why this matters (policy and political implications)
1) Provider finances and access — a modest boost, but uneven
CMS projects a ~2.2% increase in Medicare FFS payments to ESRD facilities in CY 2026, and estimates ~ $180 million of net increase associated with the ESRD PPS updates. That modest uptick will help some facilities cover rising costs (wage and supply pressure), but the distribution is uneven: rural, small independent clinics and certain chains have different exposure to add‑ons and low‑volume adjustments. MedPAC and patient groups have previously flagged negative or razor‑thin Medicare margins for some outpatient dialysis providers (e.g., MedPAC reported negative or near‑zero FFS margins in recent years), which makes even modest updates politically salient. [14]
2) Geographic equity — NAPA recognizes higher non‑labor costs
By adding the NAPA for Alaska, Hawaii, and U.S. Pacific Territories, CMS aims to align reimbursement with observed higher non‑labor costs in non‑contiguous geographies. The policy is budget‑neutral at the national level (CMS applied a small budget‑neutrality offset), but for facilities in those regions it can be materially meaningful — up to a 25% bump to the non‑labor portion of the bundle. Expect local providers and territorial policymakers to welcome this, and Congress could see follow‑up pressure to extend or re‑target such geographic adjustments. [15]
3) Innovation/insight tradeoff — ETC’s early end and QIP simplification
CMS concluded the ETC Model did not demonstrate the projected increases in home dialysis or transplant waitlisting nor the expected savings; the agency finalizes early termination. That is a notable policy signal: mandatory Innovation Center payment models face higher evidentiary bars. Simultaneously, CMS shortens the ICH‑CAHPS survey and removes three health‑equity reporting measures from the ESRD QIP — easing provider burden but narrowing some equity‑data collection. Expect patient advocates and equity‑focused stakeholders to press for replacement measures and for CMS to face scrutiny over whether simplification diminishes oversight. [16]
Practical examples: how different stakeholders are affected
Small rural clinic (fewer than 3,000 treatments/year)
- LVPA (low‑volume payment adjustment) already raises rates for very small clinics; CMS notes additional protections and projects small clinics may see ~1.7–1.9% increases depending on ownership and region. [17]
- Risk: staffing shortages and local fixed costs can still outpace the payment bump; Dialysis Patient Citizens and other groups have flagged clinic closures in rural areas. [18]
Provider chain with high utilization of newly bundled drugs
Polling and public stakes
Healthcare and protection of Medicare remain major voter concerns. A KFF Health Tracking Poll from Jan. 2025 showed large public favorability for Medicare (≈82% view it favorably) and a plurality saying the federal government spends “not enough” on Medicare (51%). That public sentiment constrains policymakers: large, visible cuts to Medicare programs are politically risky even as fiscal pressure persists. Expect advocacy coalitions to use the CMS rule rollout to make the case for either additional support for dialysis access or stronger oversight of dialysis operator margins. [21]
Policy breakdown (legal and administrative mechanics)
- Regulatory authority: CMS finalized the rule under CMS‑1830‑F, RIN 0938‑AV52; the Federal Register publication (90 FR 53068) lists detailed regulatory text and analyses. Effective date: Jan. 1, 2026. [22]
- Budget neutrality: CMS applied a wage‑index budget‑neutrality adjustment (1.00905) and a small offset for NAPA (0.99860) when computing the per‑treatment rate. [23]
- Quality metrics: CMS will shorten ICH‑CAHPS and remove three health equity reporting measures beginning with PY 2027/QIP updates; it also solicits RFIs on future measure concepts (interoperability, nutrition, well‑being, physical activity). [24]
Historical context — why Medicare ESRD is different
Medicare coverage for people with permanent kidney failure is unique: Congress created the ESRD entitlement in the Social Security Amendments of 1972 (P.L. 92‑603), making dialysis and kidney transplant services a disease‑specific entitlement long before other targeted program expansions. That history explains why ESRD payment and access discussions draw intense advocacy and policy attention — the program transformed care access, but cost forecasts and provider market changes have been a recurring policy issue ever since. [25]
What to watch next (timeline & likely battles)
- Immediate: implementation guidance and updated claims/pricing tables on CMS websites (CMS typically posts addenda and technical files in late November/December for Jan. 1 effective rules). Providers should review wage‑index tables, LVPA calculations, and NAPA eligibility. [26]
- Short term (next 30–90 days): stakeholder reactions — trade groups, patient advocates, and Members of Congress may seek clarifications, technical corrections, or appropriations requests to support territory clinics. Expect letters, CMS FAQs, and possible targeted outreach from lawmakers representing Alaska/Hawaii/Pacific territories. [27]
- Legislative/RFI window: CMS asked for comment on future QIP measures and measure concepts; stakeholders should submit data/comments during the formal comment and RFI windows to shape PY 2027–2028 measure sets. [28]
- Longer term: expect renewed attention from MedPAC and Congressional committees on dialysis margins, consolidation effects, and whether Innovation Center mandatory models remain politically tenable after the ETC termination. [29]
Verdict: Who wins, who loses, and the red flags
- If margins for critical rural providers remain negative despite the rule, access gaps (travel distance, capacity) can widen quickly — watch closure reports and ESRD Network alerts. [34]
- Early termination of ETC may chill future mandatory Innovation Center experiments unless evaluative standards and stakeholder buy‑in improve. [35]
Recommendation box — what different actors should do now
- For providers: Run your CY 2026 payment forecast with updated wage‑index, LVPA, NAPA (if applicable), and outlier thresholds — evaluate cash‑flow, staffing and supply contracts before Jan. 1. [36]
- For patient advocates: Track the removal of equity reporting measures and engage CMS during RFIs to propose replacement metrics that are actionable and low‑burden. [37]
- For lawmakers: Consider targeted oversight on access in rural and non‑contiguous areas, and weigh whether additional appropriations or targeted grants are needed to prevent closures. [38]
Note: CMS' official rule text and tables (Federal Register: Document 2025‑20681, 90 FR 53068) contain the full regulatory language, addenda tables, and the agency's cost/impact modeling. Read the Federal Register PDF for legal and technical specifics. [39]
Historical comparison: 1972 vs. 2025 policy dynamics
When Congress created the ESRD Medicare entitlement in the Social Security Amendments of 1972, it was responding to a life‑or‑death access problem and set up a disease‑specific entitlement that persists today. The 2025–2026 rule shows how policy has shifted: rather than broad new entitlement expansions, the fight is over payment design, geographic equity, measurement burden, and whether payment reforms can or should be driven by mandatory Innovation Center models. The ESRD program’s unique origins explain the sustained political heat around even relatively modest payment changes. [40]
Closing summary — adherence tips, red flags, next steps
- CMS' ESRD PPS final rule (published Nov. 24, 2025; effective Jan. 1, 2026) raises the base rate to $281.71 and applies targeted geographic and program changes intended to rebalance costs and administrative burden. [41]
- Adherence tips: providers should (1) recalculate budgets with updated wage‑index and LVPA tables, (2) check NAPA eligibility if located in Alaska/Hawaii/Pacific Territories, and (3) prepare for QIP survey changes. [42]
- Red flags: monitor rural clinic margins and patient access indicators; watch whether the loss of some equity measures reduces transparency on disparities. [43]
- Next steps for readers: download the Federal Register PDF (Document 2025‑20681), review CMS' CY 2026 ESRD fact sheet and addenda, and submit comments to CMS on any outstanding RFIs if you represent a stakeholder organization. [44]
- Federal Register — Medicare Program; ESRD PPS final rule (Document 2025‑20681), published Nov. 24, 2025 (90 FR 53068). [45]
- CMS newsroom & fact sheet: "Calendar Year (CY) 2026 ESRD PPS Final Rule" (CMS fact sheet, Nov. 20, 2025). [46]
- Analysis and practice notes (health‑law blog summaries) summarizing key provisions (Nov. 2025). [47]
- Polling & public‑opinion context: KFF Health Tracking Poll (Jan. 17, 2025) on public views of Medicare and health‑care priorities. [48]
- Historical context: NCBI / National Academies reviews of the Social Security Amendments of 1972 and the ESRD entitlement. [49]
- Provider margin context and advocacy: MedPAC summaries and Dialysis Patient Citizens commentary on clinic margins and closures. [50]
Questions or want a tailored briefing for your state, hospital, or dialysis network (payment‑impact spreadsheet, model run, or sample comment letter to CMS)? Tell me which stakeholder you're representing and I’ll prepare a short, actionable packet. 🗳️
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