Medicare spending on acute-care inpatient hospital services will increase by about $3.5 billion in FY 2021
As the healthcare industry continues to be buffeted by the unrelenting coronavirus pandemic, the Centers for Medicare & Medicaid Services (CMS) has released the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) final rule.
The final rule, published on Wednesday, Sept. 2, gives healthcare professionals less than four weeks to prepare for the updates that provide payment policies effective for stays beginning on Oct. 1, 2020.
Weighing in at slightly more than 2,100 pages, the final rule contains payment and policy updates associated with a number of issues, including new technology add-on payments and a new DRG for Chimeric Antigen Receptor (CAR) T-cell therapies. The rule also makes Medicare hospital payments more market-based, rather than charge-based, finalizing a requirement for hospitals to report to CMS the median rates negotiated with Medicare Advantage Organizations (MAOs) for inpatient services.
The changes will affect approximately 3,200 acute-care hospitals and approximately 360 LTCHs, according to CMS, which also estimates that total Medicare spending on acute-care inpatient hospital services will increase by about $3.5 billion in the 2021 fiscal year (FY), or 2.7 percent.
“CMS will begin to collect this data in 2021 and will use it in the methodology for calculating inpatient hospital payments beginning in 2024,” said Stanley Nachimson, former CMS career professional, referring to the new market-based rate for Medicare hospital payments.
Long-awaited and highly anticipated, the final rule made its way through the regulatory process even amid the pandemic, and even as CMS was issuing a slew of regulatory waivers.
“Despite the public health emergency (PHE), CMS was still required to go through the necessary steps to develop and publish these policies through the normal regulatory process,” Nachimson said. “This is a massive undertaking in a normal year, and is especially difficult during these times.”
A critical part of the IPPS Final Rule is the Medicare Severity Diagnostic-Related Group (MS-DRG) changes, including a provision to provide hospitals with what CMS says will be a “predictable payment to help adequately compensate hospitals for administering Chimeric Antigen Receptor (CAR) T-cell therapies.” This new MS-DRG 18 (Chimeric Antigen Receptor T-cell Immunotherapy) is for patients undergoing CAR T-cell therapy such as YESCARTA and KYMRIAH. The MS-DRG will be based on the presence of ICD-10-PCS codes XW033C3 or XW043C3.
Other MS-DRG changes include the following:
Pre-Major Diagnostic Category (MDC)
MS-DRGs 14, 16, and 17 will be designated as medical MS-DRGs. There are eight bone marrow procedures that were erroneously designated as DRG operating procedures and will now be designated as non-OR procedures.
MDC 1 (Diseases of the Nervous System)
Procedure codes 037H04Z, 037J04Z, 037K04Z, 037L04Z, 037M04Z, and 037N04Z (open carotid artery dilation with an intraluminal device) will be reassigned from MS-DRGs 37, 38, and 39 to MS-DRGs 34, 35, and 36. Thirty-six additional ICD-10-PCS codes that involve open carotid artery dilation with multiple intraluminal devices will be shifted from MS-DRGs 252, 253, and 254.
MDC 3 (Diseases of Ear, Nose, and Throat)
MS-DRGs 129, 130, 131, 132, 133, and 134 have been deleted. New MS-DRGs 140, 141 and 142 are created for Major Head and Neck Procedures. MS-DRGs 143, 144, and 145 are created for other Ear, Nose, and Throat procedures. After completing an in-depth analysis of the procedures in these six MS-DRGs, it was found that they could be better classified.
MDC 5 (Diseases of the Circulatory System)
Procedure codes 02L70CK, 02L70DK, and 02L70ZK (left atrial appendage insertion) will be reassigned from MS-DRG 250/251 (percutaneous cardiovascular procedures without coronary artery stent) to 273/274 (percutaneous intracardiac procedures).
Twenty-four code combinations will be added for insertion of contractility modulation device and insertion of lead into the right ventricle or atrium, to MS-DRGs 222, 223, 224, 225, 226, and 227 (cardiac defibrillator implant with and without cardiac catheterization).
Twelve code pairs for the insertion of contractility modulation device and insertion of lead into the left ventricle or atrium will be deleted from those MS-DRGs, as they are clinically invalid.
MS-DRG 8 (Diseases of Musculoskeletal System and Connective Tissue)
Two new MS-DRGs will be created for hip replacement with principal diagnosis of hip fracture, with and without MCC. These MS-DRGs are 521 and 522.These new MS-DRGs will be integrated into the Comprehensive Care for Joint Replacement program, effective Oct. 1, 2020.
MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract)
A new MS-DRG, 19, has been created for patients who have a simultaneous pancreas/kidney transplant and has hemodialysis during an admission. This MS-DRG will be found in the pre-MDC section. New MS-DRGs 650 and 651 have been created for kidney transplant with hemodialysis, with and without MCC. The kidney transplant procedure codes will be added to 650 and 651 with the hemodialysis codes, which will be designated as non-OR procedures.
Diagnosis codes T82.41XA, T82.42XA, T82.43XA,and T82.49XA are reassigned from MDC 05 in MS-DRGs 314, 315,and 316 (Other Circulatory System Diagnoses) to MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract), assigned to MS-DRGs 673, 674, and 675 (Other Kidney and Urinary Tract Procedures) and 698, 699,and 700 (Other Kidney and Urinary Tract Diagnoses).
Diagnosis codes E09.22, E10.22, E11.22, and E13.22 (when reported with a secondary diagnosis of N18.5 or N18.6) and T86.11, T86.12, T86.13,and T86.19 have been added to the list of principal diagnosis codes in the subset of GROUPER logic in MS-DRGs 673, 674,and 675. These diagnosis codes will be removed from a subset routine of MS-DRGs 673-675: I12.9, I13.10, N18.1, N18.2, N18.3, N18.4, and N18.9.
MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms)
These three procedures (06H00DZ, 06H03DZ, and 06H04DZ) will be removed from the Operating Room Procedures List, which will no longer impact MS-DRGs 829 and 830 (myeloproliferative disorders and poorly differentiated neoplasms with procedures).
This final rule also establishes new requirements and revises existing requirements for eligible hospitals and critical access hospitals (CAHs) participating in Medicare and Medicaid Promoting Interoperability Programs.
There are performance standards for hospital-value-based purchasing, as well as updated policies for the Hospital Readmission Reduction Program and Hospital-Acquired Conditions (HAC) Reduction Program.
There are also changes to the new technology add-on payment. In fact, CMS approved 24 new technology add-on payments (NTAPs), which, according to the agency, represent an additional payment to hospitals for cases involving “eligible new and relatively high-cost technologies.”
More information will be provided during the ICD10monitor “IPPSpalooza” three-part webcast series, beginning Sept. 15 and continuing through Sept. 17.
Check back here for continuing updates and in-depth reporting.
The Centers for Medicare & Medicaid Services’ (CMS’s) $50 billion Rural Health Transformation Program was designed by the Trump Administration to reshape healthcare delivery in
At times, it can seem as though the chips are stacked against hospitals. There are a multitude of organizations collecting hospital claim data and monetizing
Please log in to your account to comment on this article.
Sepsis sequencing continues to challenge even experienced coding and CDI professionals, with evolving guidelines, documentation gaps, and payer scrutiny driving denials and data inconsistencies. In this webcast, Payal Sinha, MBA, RHIA, CCDS, CDIP, CCS, CCS-P, CCDS-O, CRC, CRCR, provides clear guideline-based strategies to accurately code sepsis, severe sepsis, and septic shock, assign POA indicators, clarify the relationship between infection and organ dysfunction, and align documentation across teams. Attendees will gain practical tools to strengthen audit defensibility, improve first-pass accuracy, support appeal success, reduce denials, and ensure accurate quality reporting, empowering organizations to achieve consistent, compliant sepsis coding outcomes.
Expert presenters Kathy Pride, RHIT, CPC, CCS-P, CPMA, and Brandi Russell, RHIA, CCS, COC, CPMA, break down complex fracture care coding rules, walk through correct modifier application (-25, -57, 54, 55), and clarify sequencing for initial and subsequent encounters. Attendees will gain the practical knowledge needed to submit clean claims, ensure compliance, and stay one step ahead of payer audits in 2026.
Accurately determining the principal diagnosis is critical for compliant billing, appropriate reimbursement, and valid quality reporting — yet it remains one of the most subjective and error-prone areas in inpatient coding. In this expert-led session, Cheryl Ericson, RN, MS, CCDS, CDIP, demystifies the complexities of principal diagnosis assignment, bridging the gap between coding rules and clinical reality. Learn how to strengthen your organization’s coding accuracy, reduce denials, and ensure your documentation supports true medical necessity.
Denials continue to delay reimbursement, increase administrative burden, and threaten financial stability across healthcare organizations. This essential webcast tackles the root causes—rising payer scrutiny, fragmented workflows, inconsistent documentation, and underused analytics—and offers proven, data-driven strategies to prevent and overturn denials. Attendees will gain practical tools to strengthen documentation and coding accuracy, engage clinicians effectively, and leverage predictive analytics and AI to identify risks before they impact revenue. Through real-world case examples and actionable guidance, this session empowers coding, CDI, and revenue cycle professionals to shift from reactive appeals to proactive denial prevention and revenue protection.
In this timely session, Stacey Shillito, CDIP, CPMA, CCS, CCS-P, CPEDC, COPC, breaks down the complexities of Medical Decision Making (MDM) documentation so providers can confidently capture the true complexity of their care. Attendees will learn practical, efficient strategies to ensure documentation aligns with current E/M guidelines, supports accurate coding, and reduces audit risk, all without adding to charting time.
Join Ronald Hirsch, MD, FACP, CHCQM for The PEPPER Returns – Risk and Opportunity at Your Fingertips, a practical webcast that demystifies the PEPPER and shows you how to turn complex claims data into actionable insights. Dr. Hirsch will explain how to interpret key measures, identify compliance risks, uncover missed revenue opportunities, and understand new updates in the PEPPER, all to help your organization stay ahead of audits and use this powerful data proactively.
Stay ahead of the 2026-2027 audit surge with “Top 10 Audit Targets for 2026-2027 for Hospitals & Physicians: Protect Your Revenue,” a high-impact webcast led by Michael Calahan, PA, MBA. This concise session gives hospitals and physicians clear insight into the most likely federal audit targets, such as E/M services, split/shared and critical care, observation and admissions, device credits, and Two-Midnight Rule changes, and shows how to tighten documentation, coding, and internal processes to reduce denials, recoupments, and penalties. Attendees walk away with practical best practices to protect revenue, strengthen compliance, and better prepare their teams for inevitable audits.
As AI reshapes healthcare compliance, the risk of biased outputs and opaque decision-making grows. This webcast, led by Frank Cohen, delivers a practical Four-Pillar Governance Framework—Transparency, Accountability, Fairness, and Explainability—to help you govern AI-driven claim auditing with confidence. Learn how to identify and mitigate bias, implement robust human oversight, and document defensible AI review processes that regulators and auditors will accept. Discover concrete remedies, from rotation protocols to uncertainty scoring, and actionable steps to evaluate vendors before contracts are signed. In a regulatory landscape that moves faster than ever, gain the tools to stay compliant, defend your processes, and reduce liability while maintaining operational effectiveness.
Get 15% OFF on all educational webcasts at ICD10monitor with code JULYFOURTH24 until July 4, 2024—start learning today!
Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →
CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 1 with code CYBER25
CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 2 with code CYBER24
