Part 3: New 2022 IPPS Changes

In the previous two parts of this four part series, we discussed the new ICD-10-CM diagnosis code changes and ICD-10-PC procedure code changes.  In this session we will review the major IPPS changes for FY2022.

IPPS Changes Financial

On August 2, 2021, CMS published the Final Rule for IPPS (CMS-1752F)  FY2022 IPPS Final Rule

Acute care hospitals that report quality data and that are meaningful users of EHRs will receive approximately a 2.5% increase in Medicare operating rates. Hospitals that do not submit quality data would lose 1/4 (-25%)  of the market basket update (-25% of  the 2.5% as above) and hospitals that are not meaningful users of EHRs will be subject to a ¾ or 0.75%) reduction of the market basket for FY 2022.

CMS is projecting that with the 2.5% increase and other changes to IPPS policies it will boost total IPPS payments in FY2022 by roughly $3.7 billion.

As a result of the ongoing COVID-19 public health emergency, CMS will extend its “New COVID-19 Treatments Add-on Payments” (NCTAP) through the end of the fiscal year (9/30/22)  in which the PHE ends for all eligible products and new tech add-on payments for FY2022 with any new technology add-on payment reducing the amount of the NCTAP.  (This is done by increasing the normal DRG relative weight by 20% for cases that have U07.1 coded)

There were no new changes to the Post-Acute Care Transfer Policy for FY2022.

Quality Measures

Also, in light of the COVID-19 PHE, CMS finalized adjustments to its hospital quality measurement and value programs. Specifically, for FY 2022, CMS will suppress (i.e., not use) most hospital value-based purchasing program measures. As a result, hospitals would receive neutral payment adjustments under the VBP for FY 2022. In addition, CMS will exclude performance data from 2020 in calculating Hospital Acquired Condition Reduction Program performance for FYs 2022 and 2023. Lastly, for the FY 2023 Hospital Readmissions Reduction Program, CMS will suppress the pneumonia readmissions measure, and to exclude COVID-19 diagnosed patients from the remaining five measures.

Hospitals are required to report measures and meet the administrative requirements of the IQR program to avoid having their annual market basket update reduced by one quarter.  The IQR also includes requirements to report electronic clinical quality measures (eCQMs) that align with the eCQM reporting requirements in the Promoting Interoperability Program. (Generated by provider’s E.H.R.) See

CMS is finalizing to adopt five new measures, remove three existing measures, and make changes to the existing EHR certification requirements along with other administrative updates. CMS is also requested comment on the potential future adoption of a COVID-19 mortality measure and patient reported outcome measure following elective primary total hip and/or knee arthroplasty.  See this link for details of these changes:

Regarding Hospital Value Based Purchasing  Program In Final Rule FY2022 CMS is:

  • Establishing the measure suppression policy for the duration of the COVID-19 PHE;
  • Suppress the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS), Medicare Spending Per Beneficiary (MSPB), and five HAI measures, for the FY 2022 program year, and
  • Suppress the Pneumonia (PN) 30-Day Mortality Rate (MORT-30-PN) measures measure for the FY 2023 program year;
  • Remove the Patient Safety and Adverse Events Composite (CMS PSI 90) measure beginning with the FY 2023 program year. CMS continues to consider patient safety a high priority, but because the CMS PSI 90 measure is also used in the HAC Reduction Program, CMS believes removing this measure from the Hospital VBP Program will reduce the provider and clinician costs associated with tracking duplicative measures across programs.


CMS is also finalizing their proposal to revise the scoring and payment methodology for the FY 2022 program year such that hospitals will not receive Total Performance Scores. Instead, we are finalizing proposal to award each hospital a payment incentive multiplier that results in a value-based incentive payment that is equal to the amount withheld for the fiscal year (2 percent).

For the Hospital-Acquired Condition (HAC) Reduction Program, no changes to the scoring methodology will be made in FY2022.

For the FY2022 Hospital Readmissions Reduction Program (HRRP) 30 day readmissions, CMS is

  • Finalizing to adopt a cross-program measure suppression policy until after the COVID-19 public health emergency (PHE); and finalizing to suppress the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) following Pneumonia Hospitalization measure (NQF #0506) beginning with the FY 2023 program year;
  • Modifying the remaining five condition-specific readmission measures to exclude COVID-19 diagnosed patients from the measure denominators, beginning with the FY 2023 program year; along with using MedPAR data that aligns with the applicable period for FY2022.
  • In response to the COVID-19 public health emergency, CMS is excluding Quarter 1 and Quarter 2 2020 data from all program calculations for HRRP.


MS-DRG Changes

There were several changes involving MS-DRGs.

Pre-MDC:  Chimeric Antigen Receptor(CAR) T-cell and Other Immunotherapies

The above in green was added to the MS-DRG name. Also, 16 new XW0—- codes were added to reflect the addition of new technology substances/drugs added for FY2022.

MDC 3: Ear, Nose and Throat Procedures:  CMS is changing the designation of 0JB60ZZ, 0JB70ZZ and 0JB80ZZ describing excision of subcutaneous tissue of chest, back and abdomen to “Non extensive procedure” codes.  So, if there is not a PDX in MDC 3, they will now group to MS-DRGS 987, 988, 989 for Non-Extensive O.R. Procedures Unrelated to PDX with MCC, with CC, and without CC/MCC.

CMS is reassigning the three procedure codes describing excision of subcutaneous tissue of chest, back, or abdomen (0JB60ZZ, 0JB70ZZ, and 0JB80ZZ) from MS-DRGs 140, 141, and 142 (Major Head and Neck Procedures with MCC, with CC, and without CC/MCC, respectively) to MS–DRGs 143, 144, and 145 (Other Ear, Nose, Mouth And Throat O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 03 for FY 2022.

Of the 82 codes reviewed, three codes, 0W310ZZ, 0W313ZZ and 0W214ZZ,  Control of bleeding of cranial cavity, open, percutaneous or percutaneous endoscopic should map to and warrant grouping to MS-DRGs 23, 24, 25, 26, and 27 (“craniotomy” MS-DRGs) in MDC 01. They were removed from MS-DRGs 143, 144 and 145 (Other Ear, Nose, Mouth And Throat O.R. Procedures with MCC, with CC, and without CC/MCC, respectively)

MDC 4: Respiratory System:  Of the procedures currently assigned to MS–DRGs 163, 164, 165, 166, 167, and 168, we found 17 procedure codes in MS-DRGs 163, 164, and 165 describing laser interstitial thermal therapy (LITT) of body parts that do not describe areas within the respiratory system, which would not be clinically appropriate to maintain in the logic. CMS is finalizing to reassign these 17 procedure codes from their current MS-DRG assignments in MDC 04, and from the additional MDCs and MS-DRGs identified during their review that were found to be clinically inappropriate, to their clinically appropriate MDC and MS-DRGs as shown in Table 6P.2b which is on the CMS website.  See the link below in References.

CMS also identified five procedure codes describing repair of the esophagus procedures currently assigned to MS-DRGs 163, 164, and 165  for Major Chest Procedures that would not be clinically appropriate to maintain in the logic. The procedure codes are:

  • 0DQ50ZZ (Repair esophagus, open approach),
  • 0DQ53ZZ (Repair esophagus, percutaneous approach),
  • 0DQ54ZZ (Repair esophagus, percutaneous endoscopic approach),
  • 0DQ57ZZ (Repair esophagus, via natural or artificial opening), and
  • 0DQ58ZZ (Repair esophagus, via natural or artificial opening endoscopic),

Therefore, we are removing procedure codes 0DQ50ZZ, 0DQ53ZZ, 0DQ54ZZ, 0DQ57ZZ, and 0DQ58ZZ from the logic in MDC 04 and DRGS 163-165. They will be assigned to other appropriate MS-DRGs depending on the PDX.

Also, As a result of our preliminary review of ALL codes in MS-DRGs 163, 164, 165, 166, 167, and 168, for FY 2022 CMS is finalizing the reassignment of the listed 26 procedure codes (9 procedure codes describing repair of pulmonary or thoracic structures, and 17 procedure codes describing procedures performed on the sternum or ribs) from MS-DRGs 166, 167, and 168, Other Respiratory System OR Procedures  to MS-DRGs 163, 164, and 165, Major Chest Procedures in MDC 04.  See Table 6P.2c from the link below.  Example is 02QP4ZZ, Repair Pulmonary Trunk, Percutaneous Endoscopic Approach.

CMS plans to do data analyses of all codes in Tables 6P1e and 6P1f to see if these MS-DRGS are warranted and analysis of the creation of the new procedure codes assigned to these MS-DRGs.

MDC 5: Cardiovascular System:   CMS is reassigning Impella™ heart assist devices fromMS-DRG 215 (Other Heart Assist System Implant) to MS-DRGs 216, 217, and 218 (Cardiac Valve and Other Major Cardiothoracic Procedures WITH Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively) and MS-DRGs 219, 220, 221 (Cardia Valve and Other Major Cardiothoracic Procedures WITHOUT Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively as the short term Impella™ devices placed intraoperatively require less resources. Hence the two pathways above depending on use.

For Type 2 MI, requester said if I21.A1 is coded with PDX in MDC 05, DRGs 280-282 (Acute Myocardial Infarction, Discharged Alive with MCC, with CC, and without CC/MCC, respectively) is assigned.  A type 2 myocardial infarction is not a true acute myocardial infarction.

CMS did not agree with changing DRGs 280-282 but did finalize modifications to the GROUPER logic to allow cases reporting diagnosis code I21.A1 (Myocardial infarction type 2) as a secondary diagnosis to group to MS-DRGs 222 and 223 (Cardiac Defibrillator Implant with Cardiac Catheterization with AMI, HF or Shock with and without MCC, respectively) when reported with a listed procedure code for clinical consistency with the other MS-DRGs describing acute myocardial infarction.

MDC 8: Musculoskeletal system:  Finalizing to add the three procedure code combinations listed below describing removal and replacement of the right knee joint that were inadvertently omitted from the logic to MS-DRGs 461, 462, 466, 467, and 468 in MDC 08 and MS-DRGs 628, 629, and 630 in MDC 10.  They had erroneously mapped to MS-DRG 465 previously.  Adding:

0SPC4JC (remove patellar surface) with 0SRV0JZ (Replace tibial surface with synthetic)

0SPT4HZ (remove femoral surface) with 0SRV0JZ (Replace tibial surface with synthetic)

0SPV4JZ (remove tibial surface) with 0SRV0JZ (Replace tibial surface with synthetic)

MDC 16: Blood and Blood Forming Organs:  With the finalization of new diagnosis codes T80.82XA (D) (S) Complication of immune effector cellular therapy, initial (subsequent) (sequela) encounter to DRGs 814-816, diagnosis code T80.89XA would no longer be reported and these cases would instead report new diagnosis code T80.82XA, as of October 1, 2021. Therefore, CMS is revising the structure of MS-DRGs 814, 815, and 816 by removing the logic that includes a principal diagnosis of T80.89XA with a secondary diagnosis of any CRS code D89.8- from MS-DRGs 814, 815, and 816 effective FY 2022.

OR to Non-OR and Vice Versa DRG Changes

I will just go over the major changes below.

Procedures performed within the cranial cavity always involve drilling or cutting through the skull regardless of the approach. Therefore the three procedure codes identified cranial cavity procedures are identified by ICD-10-PCS procedure codes 0W310ZZ (Control bleeding in cranial cavity, open approach), 0W313ZZ (Control bleeding in cranial cavity, percutaneous approach) and 0W314ZZ (Control bleeding in cranial cavity, percutaneous endoscopic approach. There CMS is adding  the above procedure codes to MDC 01 in MS-DRGs 23, 24, 25, 26, and 27 (“craniotomy” MS-DRGs) for FY 2022 and remove them from assigning to DRGS 981-983 and 987-989.

Many codes were changed from MS-DRGS 981-983 “extensive OR procedures” to MS-DRGS 987-989 “non-extensive” procedures.  They include:

  • 0JB60ZZ, Excision of chest subcutaneous tissue and fascia, open approach
  • 0JB70ZZ, Excision of back subcutaneous tissue and fascia, open approach
  • 0JB80ZZ, Excision of abdomen subcutaneous tissue and fascia, open approach
  • 31 LITT procedures (D0Y-KZZ, DBY-KZZ, DDY-KZZ, DFY-KZZ, DGY-KZZ, DMY-KZZ, DVY0KZZ) depending on body part were listed as extensive OR procedures.
  • Five procedure codes describing repair of esophagus, 0DQ50ZZ, 0DQ53ZZ, 0DQ54ZZ, 0DQ57ZZ, 0DQ58ZZ with PDX from unrelated MDC
  • 0T9D0ZZ, Drainage of urethra, open approach

CMS REMOVED 22 procedure codes for drainage of various sies of skin and subcutaneous tissue

as “OR Procedures.”  The codes begin with “0J9—-“

Added XW0Q316, Introduction of Eladocagene exuparvovec into cranial cavity and brain,

percutaneous, new technology group 6 as OR procedure and assign them to MS-DRGs 628, 629,

and 630  AND to MS-DRGs 987-989.


0BBN/P0ZX Excision of right or left pleura added as OR procedure for BIOPSY and assigned to

MS-DRGs 166, 167, and 168 (Other Respiratory System O.R. procedures with MCC, CC, without

CC/MCC, respectively)


Adding 02WY3DZ, 03WY3DZ, 04WY3DZ, 05WY3DZ, and 06WY3DZ for percutaneous revision of

various vessel intraluminal device as O.R. procedures to MS-DRGS 270-272 (Other Major

Cardiovascular Procedures, with MCC, with CC, and without CC/MCC, respectively) or 252-254

(Other Vascular Procedures with MCC, with CC, and without CC/MCC, respectively).


Both 0SS7/834Z and 0SS9/B34Z for percutaneous reposition of R/L sacroiliac joint or R/L hip

joint were added as “OR Procedures” and assigned to appropriate MS-DRGS depending on the

principal diagnosis.


Eight procedure codes in 0RP/H—- for Insertion/Removal of spacer in R/L shoulder joint were

added to MS-DRGs  510-512 for Shoulder procedures or MS-DRGs 987-989 for non-extensive OR



Four procedure codes 0WC4/5-ZZ for extirpation of matter from upper/lower jaw, open or

percutaneous were added to MS-DRGS 143-145 for  ENT OR procedures.

CMS is added 22 procedures, 0JC-0ZZ that describe OPEN extirpation of matter from

subcutaneous   tissue and fascia to MS-DRGS 579-581 or 907-909.




Other Changes

Surgical hierarchy  for MS-DRGS in MDC 05 to sequence MS-DRGs 231-236 (Coronary Bypass) above MS-DRGs 228 and 229.

Several changes were made to the Medicare Code Editor (MCE) to accommodate new code additions.


Unspecified Codes:  Currently there are 3,490 unspecified codes.  CMS requested public comments on a potential change to the severity level designations for “unspecified” ICD- 10-CM diagnosis codes that CMS had been considering adopting for FY 2022. Instead, the severity level designations were NOT changed, but a new  MCE code edit would trigger when an “unspecified” laterality diagnosis code currently designated as either a CC or MCC, that includes other codes available in that code subcategory that further specify the anatomic site, is entered. We refer the reader to table 6P.3a of the Final Rule which lists unspecified diagnosis codes for laterality that would be subject to this edit.   This MCE edit will signal to the provider that a more specific code is available to report. CMS believes this edit aligns with documentation improvement efforts and leverages the specificity within ICD-10.  The edit will be 10. Unspecified Code Edit.  Payment will not be affected but the claim will e returned for review by the provider. The provider will then need to enter “UNABLE TO DET LAT 1” to identify that they are unable to obtain additional information to specify laterality or they may enter “UNABLE TO DET LAT 2” to identify that the physician is clinically unable to determine laterality.”


MCC/CC Severity Levels

CMS decided NOT to change any diagnoses on the MCC list or CC list.  Only the expanded (new) codes for FY2022 were added.  Coders can review tables 6I.1, 6I.2, 6J.1 and 6J.2 for these additions and deletions.

CMS decided to change some of the CC exclusions for some of the heart failure codes when with I11.0 or I13.2.  The full list and changes are contained in the Final Rule AND in HIA’s  IPPS Changes for FY2022 education module.


So there you have it for a summary of the IPPS FY2022 changes.  Stay tuned….. In the final Part 4 of this series, the New Technology Add-On Payments (NTAP) will be reviewed in detail.


The information contained in this post is valid at the time of posting. Viewers are encouraged to research subsequent official guidance in the areas associated with the topic as they can change rapidly.

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