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The Centers for Medicare & Medicaid Services (CMS) released the Inpatient Prospective Payment System (IPPS) final rule for the 2017 fiscal year on Aug. 2, one day after its federally mandated deadline. This final rule will be effective for inpatient discharges taking place on and after Oct. 1, 2016.

There were some surprising inclusions in this year’s update to the inpatient payment methodology.   

There are now 757 Medicare severity diagnosis-related groups (MS-DRGs). MS-DRG 230 (Other cardiothoracic procedures without CC/MCC) from the 2016 fiscal year was deleted for 2017. The cases now will be split between MS-DRGs 228 (Other cardiothoracic procedures with MCC) and 229 (Other cardiothoracic procedures without MCC). The relative weights for 2017 were recalibrated using MedPAR files, which included claims made through Sept. 30, 2015 and reporting data. The net change in the relative weights from 2016 to 2017 was +6.2587. Be aware that the relative weights changed between the 2016 and 2017 proposed rules and then again between the final rules. 

Two of the most shocking items in the new final rule are the coding and documentation adjustment and the change to the two-midnight rule. The coding and documentation adjustment was created in 2014 to recoup funds that CMS overpaid; this was uncovered due to improved coding and documentation practices. The adjustment has been 0.08-percent since 2014. The adjustment for 2017 is 1.5 percent, which is almost double last year’s adjustment of 0.8 percent. The overall $11 billion payback to the Medicare Trust Fund should be completed with this year’s recoupment. This final rule also includes a one-time payment adjustment of 0.6 percent to nullify the adjustments due to the two-midnight rule in 2014, 2015, and 2016. 

CMS also addressed a number of reported MS-DRG issues that resulted from the transition from ICD-9-CM to ICD-10-CM/PCS. There were a significant number of replication issues that resulted when mapping from ICD-9-CM to ICD-10-PCS, and these issues are addressed in this update as well.     

MS-DRG 001 and 002 now have ICD-10-PCS codes 02RK0JZ and 02RL0JZ, which cover the biventricular heart replacements. MS-DRGs 919-921 had ICD-10-CM codes representing complications with nervous system prostheses, grafts, and neurostimulators; these were moved to 91 through 93. This movement resulted in an overall decrease in the relative weights.

Two procedure codes were moved from MS-DRGs 268 and 269 (Aortic and heart assist procedures excluding pulsatile balloon) to MS-DRGs 270-272 (Other major cardiothoracic procedures). The procedure codes that were moved are 06CV3ZZ and 06CY3ZZ (Extirpation of foot vein and lower vein). These changes also resulted in an overall decrease in relative weights. 

There is some good news for MS-DRGs 242-244 (Cardiac pacemaker insertion); 258-259 (Cardiac pacemaker replacement); and 260-262 (Cardiac pacemaker revision). The logic for these MS-DRGs became more simplified with the removal of the clustering. The methodology now will focus on insertion of generator and leads for the insertion MS-DRGs. The revision MS-DRGs will focus on removal, revision, and replacements of leads and generators, while the replacement MS-DRG will focus on insertion of generator without the insertion of cardiac pacemaker leads.

The deletion of MS-DRG 230 (Other cardiothoracic procedures without CC/MCC) had a positive effect on the relative weights for MS-DRGs 228 and 229 (Other cardiothoracic procedures with or without MCC). The MitraClip, which was designated as new technology with an ICD-10-PCS code of 02UG3JZ, has moved from MS-DRGs 273 and 274 (Percutaneous intracardiac procedures) to MS-DRGs 228 and 229. This additional switch also created a positive change for the relative weights now assigned to the MitraClip usage.

Another positive change in relative weights resulted from the switch of the excision of ileum and duodenum from MS-DRG 347-349 (Anal and stomal procedures) to 329-331 (Major small and large bowel procedures). The increases ranged from 0.6658 to 2.5155.

There were corrections due to replication errors as well, such as ensuring that all of the appropriate procedure codes are assigned to MS-DRGs 466-468 (Revision of hip/knee replacements); MS-DRGs 332-334 (Rectal resections); and MS-DRGs 734-735 (Pelvic evisceration). The replication errors occurred with the mapping of ICD-9-CM Volume 3 procedure codes to ICD-10-PCS procedure codes. If the general equivalency mapping was not accurate, it impacted the MS-DRG conversion.

There are no new changes with the hospital-acquired conditions (HACs), but CMS did expand on the value-based purchasing program by adding payment models for acute myocardial infarctions and heart failure for the 2021 fiscal year. The pneumonia mortality measure cohort was also expanded to include patients with aspiration pneumonia and patients with sepsis as a principal diagnosis and pneumonia as a secondary diagnosis. For the 2022 fiscal year, a mortality measure for coronary artery bypass grafts (CABGs) has been added. The 2017 final rule also includes a schedule for baseline reporting and performance reporting activities, which is detailed by measure and fiscal year.

New technology has been an active area as well. The following devices/substances have been approved for 2017: CardioMEMS HF Monitoring System, Blinatumomab (BLINCYTO), Lutonix Drug Coated Balloon PTA Catheter/Admiral InPACT Pacliaxel, Coated Percutaneous Transluminal Angioplasty (PTA) Balloon, MAGEC Spinal Bracing and Distraction System, Idarucizumab, Defitelio (Defibrotide), GORE Excluder Iliac Branch Endoprosthesis, and VISTOGARD (Uridine Triacetate). These items were discontinued for 2017: Kcentra, Argus II Retinal Prosthesis, MitraClip, and Responsive Neurostimulator System. Two new applications were not approved for 2017, but these organizations can reapply.

There were many changes in the 2017final rule, providing a glimpse of many changes to come!

Stay tuned!

Program Note:

Laurie Johnson will lead a webcast on Thursday, Aug. 18, 2016, 1:30 p.m. Eastern, on the 2017 IPPS Final Rule. Register to attend, “DRGs Under ICD-10: How Are They Changing?”


Laurie M. Johnson, MS, RHIA, FAHIMA, AHIMA Approved ICD-10-CM/PCS Trainer

Laurie Johnson is currently a senior healthcare consultant for Revenue Cycle Solutions, based in Pittsburgh, Pa. Laurie is an AHIMA-approved ICD-10-CM/PCS trainer. She has more than 35 years of experience in health information management and specializes in coding and related functions. She has been a featured speaker in over 40 conferences. Laurie is a member of the ICD10monitor editorial board and is a permanent panelist on Talk Ten Tuesdays

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