FY2022 IPPS Rule (MS-DRGs) is Released and Noteworthy

The Centers for Medicare and Medicaid Services (CMS) released on August 2nd, the Fiscal Year 2022 final rule for both Inpatient Prospective Payment System (IPPS) and the Long Term Care Hospital (LTCH) Prospective Payment System. After receiving more than 6500 comments to the proposed rule for IPPS and LTCH PPS, the results include a policy regarding healthcare equality for patients. The final rule is effective October 1, 2021, and authorizes additional payments for diagnostics and therapies to treat COVID-19 during the current public health emergency (PHE), and beyond. The CMS FY2022 IPPS final rule fact sheet is available at: https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2022-medicare-hospital-inpatient-prospective-payment-system-ipps-and-long-term-care-0

Although CMS is still very much dedicated to price transparency, they are repealing the collection of market-based rate information on the Medicare cost report. They will also repeal the market-based Medicare Severity Diagnosis Related Group (MS-DRGs) relative weight methodology, which would have been effective FY2024. The policy on data collection and payment is also repealed in this final rule.

Due to the COVID-19 pandemic, rather than using the 2020 hospital data for establishing the temporary additional payments for hospital cases with high costs under the New Technology Add-on Payment policy or “NTAP”, the final rule used 2019 data. There will be a one-year extension of payment for 13 technologies which were otherwise due to expire in FY2022. There will be a total of 42 technologies in FY2022 in which NTAP will be allowed. From a Health Information Management coding perspective, knowing about the technologies and the documentation expected to be reviewed can assist with the capture of ICD-10-PCS codes.

There are several realignment of MS-DRGs for FY2022, the following are just three of them to note:

  • MS-DRG reassignment will occur with ICD-10-CM diagnosis code B33.24 (Viral cardiomyopathy) from MDC 18 in MS DRGs 865 and 866 (Viral Illness with and without MCC, respectively) to MDC 05 in MS DRGs 314, 315, and 316 (Other Circulatory System Diagnoses with MCC, with CC, and without CC/MCC, respectively)
  • Procedure codes describing CAR T-cell, non-CAR T-cell and other immunotherapies will be assigned to Pre-MDC MS-DRG 018 and the title is being modified to “Chimeric Antigen Receptor (CAR) T-cell and Other Immunotherapies” to better reflect the cases reporting the administration of non-CAR T-cell therapies and other immunotherapies.
  • Reassignment of procedure codes 0JB60ZZ, 0JB70ZZ, and 0JB80ZZ describing excision of subcutaneous tissue of chest, back, or abdomen from MS-DRGs 140, 141, and 142 to MS–DRGs 143, 144, and 145 will occur for FY 2022.

In addition, a modification to the GROUPER logic will occur for FY2022 to allow cases reporting diagnosis code I21.A1 (Myocardial infarction type 2) as a secondary diagnosis to group to MS-DRGs 222 and 223 when reported with qualifying procedures.

For the Hospital Acquired Condition (HAC) program, CMS stated the following:

Establishing a measure suppression policy which will suppress the third and fourth quarters of CY 2020 CDC National Healthcare Safety Network Healthcare-Associated Infection (HAI) and CMS PSI 90 data from performance calculations for the FY 2022 and FY 2023 program years.

CMS has released the associated tables and files relating to IPPS FY2022. I always find these helpful and interesting to review. They include:

  • Table 5- List of Medicare Severity Diagnosis Groups (MS-DRG) Relative Weight (RW) and Length of Stay (LOS)
  • Table 6A-New Diagnosis Codes
  • Table 6B-New Procedure Codes
  • Table 6C-Invalid Diagnosis Codes
  • Table 6D-Invalid Procedure Codes
  • Table 6E-Revised Diagnosis Code Titles
  • Table 6F-Revised Procedure Code Titles
  • Table 6G.1- Secondary Diagnosis Order Additions to the CC Exclusions List
  • Table 6G.2- Principal Diagnosis Order Additions to the CC Exclusions List
  • Table 6H.1- Secondary Diagnosis Order Deletions to the CC Exclusions List
  • Table 6H.2- Principal Diagnosis Order Deletions to the CC Exclusions List
  • Table 6I – Complete MCC List; Table 6I.1- Additions to the MCC List 
  • Table 6I.2- Deletions to the MCC List; Table 6J – Complete CC List
  • Table 6J.1- Additions to the CC List; Table 6J.2- Deletions to the CC List
  • Table 6K-Complete List of CC Exclusions

Also, released is Tables 6P.1a-6P.2c (ICD-10-CM and ICD-10-PCS Codes for MS-DRG Changes): See summary tab in excel spreadsheet called “CMS-1752-F TABLE 6P ICD-10-CM and ICD-10-PCS Codes for MS-DRG Changes.xlsx” for a complete description of all tables. 

In addition, Table 6P.3a (Medicare Code Editor Unspecified Codes List) was released: See summary tab in excel spreadsheet called “CMS-1752-F TABLE 6P.3a ICD-10-CM Codes finalized for Unspecified Code Edit in the Medicare Code Editor.xlsx” for complete description of the table.

I particularly like to take a look at “Table 5” as this contains helpful information on those MS-DRGs that increased in relative weight and those that decreased; and also, LOS that changes. I would suggest running a MS-DRG frequency report and identify your top 20 MS-DRGs by volume, then look at those same MS-DRGs on the FY2022 Table 5 to see if the RW changed. This information can be very useful for your finance, reimbursement, and revenue cycle leadership. Also take a look at the LOS changes, as this can be helpful to Utilization Review and Case Management, so contact the department leadership and share what you learn from this exercise.

There is a CMS ICD-10-CM/PCS MS-DRG version 39.0 Definitions Manual that is available at:

ICD-10-CM/PCS MS-DRG v39.0 Definitions Manual (cms.gov) Take a look at some of the files here as they contain some valuable MS-DRG and ICD-10-CM/PCS code information. For example, the Appendix C Part 2 relates to ICD-10-CM codes that are a CC or Major CC ONLY if the patient is discharged alive:


Cardiac arrest due to underlying cardiac condition


Cardiac arrest due to other underlying condition


Cardiac arrest, cause unspecified


Ventricular fibrillation


Respiratory arrest


Cardiogenic shock


Hypovolemic shock


Other shock

As you can tell there is lots of changes and lots of information from CMS for IPPS FY2022. Now is the time to speak to your internal and external (i.e., RMC) coding education team about some in-servicing. Be sure to include HIM Coding and CDI staff – together in your educational programs. Also, plan for an audit about 60-75 days after 10/1/2021 to validate coding accuracy with the new ICD-10-CM/PCS codes and the accuracy of the MS-DRGs.

For a link to the FY2022 IPPS/LTCH PPS Final Rule on the Federal Register, please visit: https://www.federalregister.gov/public-inspection/current.

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This program has been approved for continuing education unit(s) (CEUs) for use in fulfilling the continuing education requirements of the American Health Information Management Association (AHIMA). Granting of Approved CEUs from AHIMA does not constitute endorsement of the program content or its program provider.