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Highlights from Proposed Changes to ICD-10-PCS O.R. Status Designation in FY 2022 IPPS Proposed Rule

Published on 

Wednesday, May 19, 2021

 | Billing 
 | Coding 
 | Quality 

CMS issued the FY 2022 IPPS Proposed Rule (CMS-1762-IFC) on Tuesday April 27, 2021. You can find a high level review of what is being proposed in a related MMP article (link). Another article in this week’s newsletter focuses on a couple of topics in section D, Proposed Changes to Specific MS-DRG Classifications, of the Proposed Rule. Each topic synopsis includes the potential financial impact if the proposal is finalized.

This article highlights proposed O.R. designation changes for ICD-10-PCS procedure codes as well as a change finalized for FY 2021. Calculating the potential financial impact of proposals was accomplished through a collaboration with RealTime Medicare Data (RTMD). RTMD’s database currently includes Medicare Fee-for-Service paid claims data for all U.S. states and territories except Kentucky and Ohio. RTMD claims dates of service in this article includes:

  • FY 2019 Medicare Fee-for-Service claims for all 48 states in RTMD’s footprint collectively, and
  • Venal Cava Filter: FY 2020 Medicare Fee-for-Service paid claims as the change from an O.R. to Non-O.R. procedure was finalized in FY 2021.

O.R. and Non-O.R. Procedures Status Re-Designation

In the Acute Care Hospital Inpatient setting, discharges are assigned to one Medicare Severity Diagnosis-Related Group (MS-DRGs) for the entire hospitalization. The MS-DRG System groups together similar clinical conditions and the procedures furnished during a hospitalization.

Principal Diagnoses, MCCs (Major Complications/Comorbidities), CCs (Complications/Comorbidities) and Procedures may all impact MS-DRG assignment. Notice, I did not say will impact MS-DRG assignment. This is because there are specific MCCs, CCs and O.R. Procedures designated by CMS that will impact MS-DRG assignment and other secondary diagnoses and Non-O.R. designated procedures that won’t.

When ICD-10-CM/PCS was implemented on October 1, 2015, there were several new O.R. Procedure Codes impacting MS-DRG assignment that had Coding Professionals and CDI Specialists questioning if the resources to perform the procedures truly supported the O.R. Procedure designation. CMS soon realized this too and included proposals in the FY 2017 IPPS Proposed Rule for consideration to re-designate certain ICD-10-PCS procedures codes from O.R. Procedures to Non-O.R. Procedures as well as Non-O.R. Procedures to O.R. Procedures. CMS received requests and recommendations for over 800 procedure codes and were unable to fully evaluate and finalize comments in time for the release of the FY 2017 IPPS Final Rule. The next year, in FY 2018, they began the process of proposing and finalizing changes to ICD-10-PCS procedures codes O.R. status designation.

Since FY 2018, CMS has continued to propose and re-designate ICD-10-PCS procedure codes O.R. status designation and the FY 2022 Proposed Rule is no exception.

FY 2022 O.R. to Non-O.R. Procedures Proposal and Potential Financial Impact
  • 31 specific ICD-10-PCS procedures codes have been proposed for re-designated as Non-O.R. procedures.
  • In FY 2019 there were 13,714 claims paid where one of these 31 codes was the principal procedure code driving the MS-DRG assignment.
  • CMS paid $220,018,645.02 to hospitals for these 13,714 claims.

When CMS first began this process in FY 2018, MMP provided our clients with a detailed accounting of their hospital specific surgical MS-DRGs claims impacted by the proposed rule and what the equivalent medical MS-DRG would be based on the medical principal diagnosis and minus the surgical procedure. What we found was that the decrease in payment from a surgical MS-DRG to a medical MS-DRG ranged from a 35% to 58% with an average decrease of 40%. Multiplying the payment for the 13,714 claims by 40% equates to a potential decrease in payment to hospitals of $88,007,458.

FY 2022 Non-O.R. Procedures to O.R. Procedures Proposal and Potential Financial Impact
  • 46 specific ICD-10-PCS procedure codes have been proposed for re-designation from Non-O.R. Procedure to O.R. Procedures.
  • In FY 2019 there were 3,604 medical MS-DRG claims paid that included one of the 46 codes proposed for re-designation.
  • CMS paid $47,122,242.22 to hospitals for these 3,604 claims.
  • Following the same logic as with O.R. to Non-O.R. procedures, adding 40% to the payment would result in an additional potential payment to hospitals of $47,122,242.22.

Vena Cava Filter ICD-10-PCS Procedure Code 06H03DZ

In FY 2018, based on feedback from one commenter, CMS did not finalize the re-designation of ICD-10-PCS code 06H03DZ (Insertion of intraluminal device, into inferior vena cava, percutaneous approach) from O.R. to a Non-O.R. procedure. However, CMS did finalize the re-designation of ICD-10-PCS procedure code 06H03DZ to a Non-O.R. procedure in the FY 2021 Final Rule.

In the FY 2022 Proposed Rule, one requestor “respectfully disagreed” with this decision. CMS notes that their clinical advisors continue to state that this change “better reflects the associated technical complexity and hospital resource use of this procedure.”

Potential Financial Impact

COVID-19 PHE had a tremendous impact on inpatient hospital utilization in 2020 and as mentioned at the start of this article, CMS has proposed to use FY 2019 data to approximate the expected FY 2022 inpatient hospital utilization. However, since this proposed change was finalized in the FY 2021 Final Rule, the potential impact below is based on FY 2020 claims provided by RTMD.

  • 12,469 claims in FY 2020 included ICD-10-PCS procedure code 06H03DZ as the principal procedure code.
  • Total Charges by hospitals for this group of claims was $1,773,710,236.89.
  • CMS paid $343,009,156.37 to hospitals for this group of claims.
  • Potential impact of this change for FY 2021 will be a decrease in payment of $343,009,156.37.
  • CMS FY 2022 IPPS Proposed Rule CMS Fact Sheet:(link)
  • CMS FY 2022 Proposed Rule web page: (link)
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.