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FY 2023 IPPS Proposed Rule: Payment Rates, Relative Weights, New ICD-10 Codes and New Technologies

Published on 

Wednesday, May 11, 2022

 | Billing 
 | Coding 
 | Quality 

CMS issued a display copy of the FY 2023 IPPS Proposed Rule (CMS-1762-IFC) on Monday, April 18, 2022. This article contains a high-level look at the proposed operating payment rate, quality program proposals, COVID-19 claims impact on setting MS-DRG relative weights, new ICD-10 diagnosis and procedure codes, CMS’ request for comments related to Social Determinants of Health (SDOH) and New Technology Add-On Payments.

Proposed Payment Rate Changes

The proposed increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) use is projected to be 3.2%.

Overall, CMS estimates hospitals payments will increase in FY 2023 by $1.6 billion.

Quality Program Proposals

Like FY 2022, CMS is proposing to suppress or refine several measures in the Hospital Readmissions Reduction Program (HRRP), Hospital-Acquired Condition (HAC) Reduction Program, and Hospital Value-Based Purchasing (VBP) Program.

Due to proposed measure suppression for Hospital VBP Program, CMS has proposed to award all hospitals a value-based payment amount for each discharge that is equal to the 2% withheld. They have also proposed to not impose the payment penalty on any hospitals in FY 2023 due to low performance in the HAC Reduction Program.

One or several proposals related to the HRRP is a proposal to modify all six conditions/procedures specific to the readmissions measures to include a covariate adjustment for history of COVID-19 within one year preceding the index admission, beginning with the FY 2024 program year.

Calculating MS-DRG Relative Weights

CMS notes, in a related Fact Sheet, it is reasonable to assume Medicare beneficiaries will continue to be hospitalized with COVID-19 and current information available the volume of hospitalizations will be fewer than are reflected in the FY 2021 data.

Based on these assumptions, CMS is proposing to calculate relative weights for FY 2023 by:

  • Calculating two sets of relative weights, one including and one excluding COVID-19 claims, and
  • Average the two sets of relative weights to determine the final FY 2023 relative weights.

CMS has also proposed a 10% cap on relative weight decrease from the prior fiscal year.

ICD-10 Diagnosis Codes by the Numbers

There are 1,176 new diagnosis codes (Table 6A). Of these codes, thirty-five codes have been designated as an MCC and one hundred thirty-six codes have been designated as an CC. Following are examples of the types of new codes:

  • Three new acidosis codes (E87.20 acidosis, unspecified, E87.21 chronic metabolic acidosis, and E87.29 other acidosis)
  • Sixty-nine new dementia with manifestations codes,
  • Nine new codes for refractory angina pectoris (i.e., I20.2 refractory angina pectoris),
  • Eighteen new methamphetamines codes including poisoning by, adverse effect of and underdosing of codes,
  • Four hundred seventy-four codes describing electric (assisted) bicycle or motorcycle accidents,
  • Three codes related to COVID-19 vaccination and other immunization status that were effective April 1, 2022, and
  • Three new Social Determinants of Health (SDOH) codes (Z59.82 transportation insecurity, Z59.86 financial insecurity, and Z59.87 material hardship).

Request for Information on Social Determinants of Health

The subset of Z codes describing SDOHs are found in categories Z55-Z65 (Persons with potential health hazards related to socioeconomic and psychosocial circumstances).

CMS believes reporting of SDOH Z codes may better determine the resource utilization for treating patients experiencing these circumstances to help inform whether a change to the severity designation of these codes would be clinically warranted.

CMS also notes that, if SDOH Z codes are not consistently reported in inpatient claims data, our methodology utilized to mathematically measure the impact on resource use, as described previously, may not adequately reflect what additional resources were expended by the hospital to address these SDOH circumstances in terms of requiring clinical evaluation, extended length of hospital stay, increased nursing care or monitoring or both, and comprehensive discharge planning.

They are seeking public comment on issues related to SDOHs, including the following questions:

  • How the reporting of certain Z codes – and if so, which Z codes - may improve our ability to recognize severity of illness, complexity of illness, and utilization of resources under the MS-DRGs?
  • Whether CMS should require the reporting of certain Z codes – and if so, which ones – to be reported on hospital inpatient claims to strengthen data analysis?
  • What would be the additional provider burden and potential benefits of documenting and reporting of certain Z codes, including potential benefits to beneficiaries?
  • Whether codes in category Z59 (Homelessness) have been underreported and if so, why? We are interested in hearing the perspectives of large urban hospitals, rural hospitals, and other hospital types regarding their experience. We also seek comments on how factors such as hospital size and type might impact a hospital’s ability to develop standardized consistent protocols to better screen, document, and report homelessness.

ICD-10 Procedure Codes by the Numbers

There are fifty-four new procedures codes (Table 6B). Of these codes:

  • thirty-eight have been designated as O.R. procedure codes,
  • twelve have been designated as non-O.R. procedure codes,
  • nine of the twelve non-O.R. procedure codes were implemented April 1, 2022, and includes new technology codes for COVID-19 vaccines and drugs to treat COVID-19, and
  • four have been designated as non-O.R. procedure codes affecting the DRG assignment.

You can find new ICD-10 diagnosis and procedure codes as well as proposed changes to the MCC and CC lists for FY 2023 in tables available on the CMS IPPS Proposed Rule Home Page.

New Technology Add-On Payment (NTAP) Policy

The NTAP policy provides additional payment beyond the MS-DRG for cases where a CMS designated new technology was used and coded on the claim. Note, this “is not budget neutral and is generally limited to the 2-to 3-year period following the date of the FDA approval or clearance for marketing.”

CMS is proposing a one-year extension of new technology add-on payments for fifteen technologies for which the new technology add-on payment would otherwise be discontinued beginning FY 2022. Collectively in FY 2023, the estimated number of cases for the fifteen technologies is 192,455 and the estimated payment impact is $612,910,746.15.

There are twenty-six applications discussed in the proposed rule for new technologies seeking approval for an add-on payment.

I encourage you to submit comments to CMS. The deadline to submit comments is 5 p.m. EDT on June 28, 2021.


Article Author: Beth Cobb, RN, BSN, ACM, CCDS
Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Analytics at Medical Management Plus, Inc. Beth has over twenty-five years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. In her current position, Beth is a principle writer for MMP’s Wednesday@One weekly e-newsletter, an active member of our HIPAA Compliance Committee, MMP’s Education Department Program Director and co-developer of MMP’s proprietary Compliance Protection Assessment Tool.

This material was compiled to share information.  MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.