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FY 2021 IPPS Proposed Rule

Take a closer look at important MS-DRG updates

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by Adrienne Commeree, CPC, CPMA, CCS, CEMC, CPIP

Even though a lot of us are working from home these days, CMS is still busy with the release of their annual IPPS proposed rule.

The fiscal year (FY) 2021 IPPS proposed rule was released later than usual: May 11, 2020, and comments are due by July 10. CMS has published a waiver of the 60-day delayed effective date for the FY 2021 IPPS final rule in response to the outbreak of COVID-19.

According to the proposed rule, “due to the significant devotion of resources to the COVID-19 response, we are hereby waiving the 60-day delay in the effective date of the final rule and replacing it with a 30-day delay in the effective date of the final rule.”

Development guiding principles

What I found interesting is that CMS had a listening session last October regarding guiding principles for making changes to severity levels (CC/MCC), with a review of the methodology to measure the impact on resource use. The aim is to develop guiding principles that, when applied, could assist in determining whether the presence of the specified secondary diagnosis would lead to increased hospital resource use in most instances.

The listening session provided an opportunity for CMS to receive public input on this analysis and address any clarifying questions in order to assist the public in formulating written comments on the current severity level designations for consideration for FY 2021 rulemaking.

CMS says it is still working on it, though, and it plans to continue a comprehensive CC/MCC analysis and present the findings and proposals in future rulemaking.

Update to antimicrobials and antifungals

CMS proposed changes to the new technology payment for antimicrobials and antifungals. Per CMS, “It will be considered new and not substantially similar to an existing technology for purposes of the new technology add-on payment under the IPPS, and will not need to meet the requirement that it represent an advance that substantially improves, relative to technologies previously available."

The eligible antimicrobial products would begin receiving the new technology add-on payment sooner. CMS is also discussing creating a new subgroup within a base MS-DRG.

The subgroup must meet all five of the subgroup criteria in the DRG classification system for resource stratification and also promote stability in the relative weights by avoiding low-volume counts for the non-CC-level MS-DRGs, therefore the proposal is to expand the criteria to also include the non-CC subgroup.

Proposed MS-DRG updates

Here's a rundown of the rest of the proposed MS-DRG changes.

CMS proposed to redesignate bone marrow transplant procedures from surgical to medical MS-DRGs and split MS-DRG 014 (Allogeneic Bone Marrow Transplant) into two severity levels. CMS also proposed the creation of a new MS-DRG for procedures involving chimeric antigen receptor T-cell (CAR-T) therapies.

The rule proposed that the procedure codes listed in MS-DRGs 037, 038, and 039 (Extracranial Procedures), which describe procedures that involve dilation of the carotid artery with an intraluminal device, be reassigned to MS-DRGs 034, 035, and 036 (Carotid Artery Stent Procedures).

CMS proposed that cases describing the Insertion of a neurostimulator generator into the skull in combination with the Insertion of a neurostimulator lead into the brain be reassigned from MS-DRG 023 (Craniotomy With Major Device Implant or Acute Complex CNS PDX with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator) to MS-DRG 021 (Intracranial Vascular Procedures with PDX Hemorrhage with CC) or to reassign these cases to another MS-DRG for more appropriate payment

CMS proposed the reassignment of ICD-10-PCS codes 0RRC0JZ (Replacement of right temporomandibular joint with synthetic substitute, open approach) and 0RRD0JZ (Replacement of left temporomandibular joint with synthetic substitute, open approach) for temporomandibular joint Replacements from MS-DRGs 133 and 134 (Other Ear, Nose, Mouth and Throat OR Procedures) to MS-DRGs 131 and 132 (Cranial/Facial Procedures) in MDC 03. This would mean MS-DRGs 129-134 would be restructured accordingly.

The proposed rule reassigned ICD-10-PCS codes that describe a left atrial appendage closure from MS-DRGs 250 and 251 (Percutaneous Cardiovascular Procedures without Coronary Artery Stent) to MS-DRGs 273 and 274 (Percutaneous Intracardiac Procedures).

CMS proposed that the 12 clinically invalid code combinations be deleted from the GROUPER logic of MS-DRGs 222, 223, 224, 225, 226, and 227 (Cardiac Defibrillator Implants) that describe the Insertion of contractility modulation device and the Insertion of a cardiac lead into the left ventricle.

CMS is also proposing the following regarding ICD-10-CM code category K35.- (acute appendicitis):

  • Maintain the current assignment of diagnosis code K35.20 (acute appendicitis with generalized peritonitis, without abscess) in MS-DRGs 341, 342, and 343 (Appendectomy without Complicated Principal Diagnosis)
  • Reassign diagnosis code K35.32 (acute appendicitis with perforation and localized peritonitis, without abscess) from MS-DRGs 338, 339, and 340 (Appendectomy with Complicated Principal Diagnosis) to MS-DRGs 341, 342, and 343
  • Remove diagnosis code K35.32 from the complicated principal diagnosis list in MS-DRGs 338, 339, and 340 as listed in the ICD-10 MS-DRG Version 37 Definitions Manual

CMS is proposing to create new MS-DRG 521 (Hip Replacement with Principal Diagnosis of Hip Fracture with MCC) and new MS-DRG 522 (Hip Replacement with Principal Diagnosis of Hip Fracture without MCC). CMS also wishes to create a new Pre-MDC MS-DRG for cases describing the performance of hemodialysis during an admission where the patient received a simultaneous pancreas/kidney transplant

According to the proposal, two new MS-DRGs will be created with a two-way severity level split for cases describing the performance of hemodialysis in an admission where the patient received a kidney transplant.

CMS is proposing to add the following ICD-10-CM codes to the list of principal diagnosis codes in the subset of GROUPER logic in MS-DRGs 673, 674, and 675 (Other Kidney and Urinary Tract Procedures) when reported with a secondary diagnosis of N18.5 (chronic kidney disease, stage 5) or N18.6 (end-stage renal disease):

  • E09.22, drug or chemical induced diabetes mellitus with diabetic chronic kidney disease
  • E10.22, Type 1 diabetes mellitus with diabetic chronic kidney disease
  • E11.22, Type 2 diabetes mellitus with diabetic chronic kidney disease
  • E13.22, other specified diabetes mellitus with diabetic chronic kidney disease

These MS-DRGs recognize the Insertion of totally implantable vascular access devices or tunneled vascular access devices as an inpatient procedure for the purposes of hemodialysis.

CMS is also proposing to add ICD-10-CM codes T86.11 (kidney transplant rejection), T86.12 (kidney transplant failure), T86.13 (kidney transplant infection), and T86.19 (other complication of kidney transplant) to the list of principal diagnosis codes in this subset of GROUPER logic in MS-DRGs 673, 674, and 675 as well.

CMS also wishes to designate the Insertion of an intraluminal device into the inferior vena cava as non-OR procedures.

CMS invites the public to comment on all proposals. For more information on the rule, see the Federal Register. Comments are due to CMS no later than 5 p.m. eastern on July 10, as stated above, CMS is waiving the 60-day delay in the effective date of the final rule and replacing it with a 30-day delay.

Editor’s note: Commeree is a coding regulatory specialist for HCPro, a brand of Simplify Compliance LLC, in Middleton, Massachusetts. She has many years of experience in the healthcare industry involving coding, auditing, training, and compliance expertise. Commeree was previously a coding auditor/medical assistance program specialist at the Washington State Healthcare Authority's clinical review unit within the state's Medicaid program. She is also a Briefings on Coding Compliance Strategies editorial advisory board member. Opinions expressed are that of the author and do not represent HCPro or ACDIS. For questions, contact Editor Amanda Norris at

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