Get Ready for IPPS 2024 Coding Impacts

When the Hospital Inpatient Prospective Payment System (IPPS) Final Rule for the 2024 fiscal year (FY) takes effect on Oct. 1, 2023, it will usher in a number of important updates and changes to reimbursement factors and programs, such as the Hospital Value-Based Purchasing (VBP) Program, Hospital Readmissions Reduction Program (HRRP), and Hospital-Acquired Condition (HAC) Reduction Program. The rule, issued in August by the Centers for Medicare & Medicaid Services (CMS), also includes updates for long-term care hospitals (LTCHs) and their payment system, as well as modifications to the LTCH Quality Reporting Program.

Notable changes for FY 2024 include the creation of 15 new Medicare Severity Diagnosis Related Groups (MS-DRGs) and deletion of 16 existing ones, as well as updates to the complications and comorbidities (CCs) and major complications and comorbidities (MCCs) lists. There are also changes to the code edits and the inclusion of new ICD-10 codes, as well as the New Technology Add-on Payment (NTAP) program.

When restructuring the MS-DRGs, CMS considered factors such as cost, severity, and length of stay, with the goal of improving the accuracy and appropriateness of reimbursement by aligning them with specific diagnoses and procedures. Most focus on the circulatory system chapter (MDC05) involving procedures such as cardiac defibrillator implantation and percutaneous cardiovascular interventions. Changes are also being made to MS-DRGs related to eye disorders, ultrasound thrombolysis procedures, and appendectomies.

The rule also includes adjustments related to the social determinants of health (SDoH), recognizing the influence of social and economic circumstances on healthcare outcomes. Notably, the addition of homelessness as a coded CC is a step to support efforts to advance health equity.

Additionally, CMS added 18 codes to the CC/MCC list and deleted others to align with the changes made to the code set. For example, sickle cell diagnosis codes are more specific, and the code set for gram-negative pneumonia has been expanded as an MCC. The CC list has 78 additions, as well as some deletions related to supraventricular tachycardia, appendicitis, short bowel syndrome, osteoporosis with a pathological fracture, and various congenital conditions.

Edits were also made to the Medicare Code Editor (MCE) within the grouping process to provide warnings or restrictions on the use of certain codes. For instance, external cause codes, which provide injury details, can no longer be used as principal diagnoses (PDX) and should only be utilized as secondary diagnoses. Similarly, specific ICD-10 codes, such as E20.811 for secondary hyperparathyroidism and H36.89 for other retinal disorder, should not be used as PDX and should be sequenced as secondary diagnoses.

To encourage specificity and accuracy in coding, CMS expanded the list of unacceptable PDX codes to include 39 new ICD-10-CM codes, including family history-related codes and noncompliance codes, and added 12 new codes to the unspecified code edit list to avoid. These codes trigger warnings, urging coders to seek more detailed information in the medical record to select a more specific code.

Furthermore, within the IPPS, Medicare provides bundled payments for inpatient hospital stays, covering various services and supplies. This includes add-on payments for certain devices or new technologies that meet specific criteria designed to compensate for their use.

Updates and changes were also made to the NTAP program. For example, some NTAP payments related to COVID-19 treatments will be discontinued. Others were classified as new technology and will continue to receive payments, in addition to the MS-DRG payment, as long as they are utilized and coded appropriately. CMS also added 29 new technology add-on payments for FY 2024 for qualifying innovative treatments and procedures.

Healthcare organizations should review and understand the changes to effectively prepare for the upcoming fiscal year and ensure compliance with the new coding guidelines. Preparing ahead of time is critical to effectively adapt to the coding impacts for FY 2024 and avoid potential challenges that can negatively impact the bottom line.