NOTE: All in-article links open in a new tab.

FY 2025 IPPS Proposed Rule Diagnosis Codes Severity Designation

Published on 

Wednesday, May 8, 2024

 | Coding 

As part of the Annual Proposed and Final Rule process, CMS evaluates diagnosis codes and their impact on hospital resource utilization. The following timeline of events highlights CMS efforts from FY 2008 to what is being proposed in the FY 2025 IPPS Proposed Rule.

FY 2008 IPPS Final Rule

CMS described their process for establishing three different levels of CC severity into which diagnosis codes would be subdivided. The categorization of diagnoses as a MCC, a CC, or a NonCC was accomplished by evaluating each diagnosis code to determine the extent to which its presence as a secondary diagnosis would result in increased hospital resource use.

FY 2020 IPPS Proposed Rule

CMS noted with the transition to ICD-10-CM and the significant changes to diagnosis codes since FY 2008, a new comprehensive analysis was warranted. At that time, CMS proposed changes to the severity level designation for 1,492 ICD-10-CM diagnosis codes. After consideration of comments received, the proposal was not finalized.


October 8, 2019

CMS held a listening session that included a review of the methodology CMS utilized to mathematically measure the impact on resource use.


FY 2021 IPPS Final Rule

CMS discussed their plan to continue a comprehensive CC/MCC analysis, using a combination of mathematical analysis of claims data and the application of the following nine guiding principles:

  1. Represents end of life/near death or has reached an advanced stage associated with systemic physiologic decompensation and disability,
  2. Denotes organ system instability or failure.
  3. Involves a chronic illness with susceptibility to exacerbations or abrupt decline.
  4. Serves as a marker for advanced disease states across multiple different comorbid conditions.
  5. Reflects systemic impact.
  6. Post-operative/post-procedure condition/complication impacting recovery.
  7. Typically requires higher level of care (that is, intensive monitoring, greater number of caregivers, additional testing, intensive care unit care, extended length of stay).
  8. Impedes patient cooperation or management of care or both.
  9. Recent (in the last 10 years) changes in best practice, or in practice guidelines and review of the extent to which these changes have led to concomitant changes in expected resource use.

FY 2025 IPPS Proposed Rule: CMS indicates they have continued to solicit feedback since the nine guiding principles were first introduced in the FY 2021 IPPS Final Rule but have received no additional feedback or comments since then. They are now proposing to finalize the nine guiding principles to be used in combination with mathematical analysis of claims to determine the extent to which the presence of a diagnosis code as a secondary diagnosis resulting in increased hospital resource use.

FY 2025 Proposed ICD-10-CM Diagnosis Severity Changes

For FY 2025, CMS is proposing the addition of four ICD-10-CM codes to the MCC list, the addition of twenty-nine ICD-10-CM codes to the CC list, and eighteen ICD-10-CM codes be deleted from the CC list.


Social Determinants of Health Z-Codes

Included in the list of twenty-nine proposed additions to the CC list are the following seven SDOH Z-codes:

  • Z59.10 (Inadequate housing, unspecified)
  • Z59.11 (Inadequate housing environmental temperature)
  • Z59.12 (Inadequate housing utilities)
  • Z59.811 (Housing instability, housed, with risk of homelessness)
  • Z59.812 (Housing instability, housed, homelessness in past 12 months)
  • Z59.819 (Housing instability, housed unspecified).


CMS reminds providers that if SDOH Z codes are not consistently reported in inpatient claims data, our methodology utilized to mathematically measure the impact on resource use 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 stay, increased nursing care or monitoring, or both, and comprehensive discharge planning.


They plan to continue to monitor SDOH Z code reporting including reporting based on the SDOH screening performed as a result of new quality measures in the Hospital Inpatient Quality Reporting (IQR) Program and may consider proposing severity changes for SDOH codes in the future.


CMS is accepting comments about the proposed rule through June 5, 2024.



FY 2025 IPPS Proposed Rule Home Page at
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.