On June 30, 2025, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to update payment rates and policies under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished to Medicare beneficiaries on or after January 1, 2026. This proposed rule would also update the acute kidney injury (AKI) dialysis payment rate for renal dialysis services furnished by ESRD facilities for calendar year (CY) 2026 and proposes to update requirements for the ESRD Quality Incentive Program (QIP).

For CY 2026, CMS is proposing to increase the ESRD PPS base rate to $281.06, which CMS expects would increase total payments to all ESRD facilities, both freestanding and hospital-based, by approximately 1.9%. The CY 2026 ESRD PPS proposed rule also includes a proposed payment adjustment for certain non-labor costs for ESRD facilities located in Alaska, Hawaii, and the United States (U.S.) Pacific Territories.

CMS is proposing shortening the In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) survey to 39 questions, removing 23 questions, and eliminating three health equity reporting measures from the ESRD QIP. Additionally, CMS is seeking input on health IT use in dialysis facilities; and input on future measure concepts. CMS also is proposing the early termination of the ESRD Treatment Choices Model.

The ESRD PPS provides a bundled, per-treatment payment to ESRD facilities that includes all renal dialysis services furnished for outpatient maintenance dialysis, including drugs and biological products. Additionally, the bundled payment includes all other renal dialysis items and services that were formerly separately payable under previous payment methodologies. The bundled payment rate is case mix adjusted for a number of factors relating to patient characteristics. There are also facility-level adjustments for ESRD facilities that have a low patient volume, for facilities in rural areas, and for the wage index. When applicable, the bundled payment rate also includes a training add-on payment adjustment for home and self-dialysis modalities, an outlier payment for high-cost patients, and add-on payment adjustments for certain drugs, equipment, and supplies.

Annual Update to the ESRD PPS Base Rate 

Under the ESRD PPS for CY 2026, Medicare expects to pay $6.9 billion to approximately 7,600 ESRD facilities for furnishing renal dialysis services. The proposed CY 2026 ESRD PPS base rate is $281.06, which would be an increase of $7.24 from the current CY 2025 base rate of $273.82. This proposed amount reflects the application of the proposed wage index budget-neutrality adjustment factor (1.00872), a proposed CY 2026 ESRD Bundled market basket update of 1.9%, and a budget neutrality factor of 0.99859 for the proposed non-contiguous areas payment adjustment (NAPA), equaling $281.06 (($273.82 X 1.00872 x 0.99859) x 1.019 = $281.06). CMS projects that the updates for CY 2026 would increase the total payments to all ESRD facilities by 1.9% compared with CY 2025. For hospital-based ESRD facilities, CMS projects an increase in total payments of 1.5%, and for freestanding facilities, CMS projects an increase in total payments of 1.9%.

Wage Index Update 

CMS is proposing to make routine annual updates to the ESRD PPS-specific wage index that is used to adjust ESRD PPS payments for geographic differences in area wages. The ESRD PPS wage index methodology, which was finalized in the CY 2025 ESRD PPS final rule, combines data from the Bureau of Labor Statistics (BLS) Occupational Employment & Wage Statistics (OEWS) program and freestanding ESRD facility cost reports to produce this ESRD PPS-specific wage index. We are proposing to update the ESRD PPS wage index for CY 2026 to use the latest available BLS OEWS data. CMS is also proposing to continue to apply the wage-index floor of 0.6000 and a 5% cap on wage-index decreases from the prior year, as finalized in the CY 2023 ESRD PPS final rule. 

Updates to the Outlier Policy 

CMS is proposing routine updates to the fixed dollar loss (FDL) and Medicare allowable payment (MAP) amounts for CY 2026.  For pediatric beneficiaries, the FDL amount would decrease from $234.26 to $148.34, and the MAP amount would decrease from $59.60 to $44.10 as compared to CY 2025 values. For adult beneficiaries, the FDL amount would decrease from $45.41 to $12.77, and the MAP amount would decrease from $31.02 to $22.09. 

Proposed Payment Adjustment for ESRD Facilities in Certain Non-Contiguous States and Territories 

CMS is proposing a new facility-level payment adjustment for ESRD facilities in Alaska, Hawaii, and the U.S. Pacific Territories.  Our analysis of costs for renal dialysis services has found that ESRD facilities in certain remote non-contiguous geographic areas have higher non-labor costs when compared to the contiguous U.S.  Accordingly, we are proposing that ESRD facilities in these selected geographies would receive an increase to the non-labor portion of the ESRD PPS base rate as determined by the latest available analysis. This payment adjustment would be capped at 25%. We are proposing that ESRD facilities in Alaska and the U.S. Pacific Territories would receive the maximum increase of 25% and ESRD facilities in Hawaii would receive an increase of 21%.

Under this proposal, CMS would reduce the CY 2026 ESRD PPS base rate by approximately 0.1%, or $0.40, to maintain budget neutrality. We believe that this proposed new payment adjustment would better align payment with resource use in those remote geographic areas.

As required by section 1834(r) of the Social Security Act, CMS is proposing to update the AKI dialysis payment rate for CY 2026 to $281.06, which is equal to the proposed CY 2026 ESRD PPS base rate. CMS is also proposing to apply the CY 2026 ESRD PPS wage index to calculate AKI dialysis payments.

The ESRD QIP is authorized by law and under the program, CMS assesses the total performance of each facility on quality measures specified for a payment year, applies an appropriate payment reduction to each facility that does not meet a minimum total performance score (mTPS), and publicly reports the results.

Beginning with Payment Year (PY) 2027, CMS is proposing to remove the Facility Commitment to Health Equity reporting measure, Screening for Social Drivers of Health reporting measure, and Screen Positive Rate for Social Drivers of Health reporting measure. Although these three measures were finalized in the CY 2024 final rule, we have concluded that the costs of the continued use of these measures in the ESRD QIP may outweigh the benefits to providers and patients. If finalized, facilities that do not report their PY 2027 measure data for these three measures would not be penalized for PY 2027 scoring or payment purposes. In addition, any measure data received by CMS would not be used for public reporting or payment purposes. With the entire set of measures, the ESRD QIP continues to incentivize the improvement of dialysis care quality and health outcomes for all patients through measurement and transparency. 

CMS is also proposing updates to the ICH CAHPS clinical measure beginning with the PY 2028 ESRD QIP measure set. This proposed update would address ongoing concerns about patient survey burden and declining survey response rates. Based on analyses and stakeholder engagement efforts, CMS is proposing to update the ICH CAHPS clinical measure to 39 questions, reducing the length of the current survey by 23 questions.

CMS is requesting public comment on the current state of health IT use, including electronic health records, in dialysis facilities to further ongoing CMS efforts to facilitate successful adoption and integration of Fast Healthcare Interoperability Resources (FHIR®), FHIR-based technologies and standardized data for patient assessment instruments. CMS is also requesting public comment on Future Measure Concepts for the ESRD QIP in order to receive feedback on potential measurement concepts that could be developed into ESRD QIP measures. Specifically, CMS is seeking feedback on the measure concepts of interoperability, nutrition, well-being, and physical activity, which are policy areas that are consistent with the Administration’s goals.

On March 12, 2025, CMS announced its intention to conduct future rulemaking to end the ESRD Treatment Choices Model as of December 31, 2025. After reviewing multiple years of evaluation reports, the ESRD Treatment Choices Model was not showing the quality results around home dialysis and transplant waitlisting or the expenditure savings that were initially projected, leading CMS to propose model termination. This proposed early ending is to better align with the CMS Innovation Center’s statutory mandate and to protect taxpayers.

CMS is including a Request for Information (RFI) to seek public input on measures that assess overall health, happiness, and life satisfaction that could include aspects of emotional well-being, social connections, purpose, and fulfillment.  The RFI also seeks public input on tools and measures that promote healthy eating habits, exercise, nutrition, or physical activity.

The proposed rule can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/2025-12368/medicare-program-end-stage-renal-disease-prospective-payment-system-payment-for-renal-dialysis.  

Additionally, CMS is seeking public input on approaches and opportunities to streamline regulations and reduce burdens on those participating in the Medicare program through a standalone RFI available at https://www.cms.gov/medicare-regulatory-relief-rfi. The public should submit all comments in response to this RFI through the provided weblink.

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