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FY 2022 IPPS MS-DRG Final Rule Updates

The annual final rule from the Centers for Medicare and Medicaid Services (CMS) regarding the Inpatient Prospective Payment System (IPPS) MS-DRGs was issued on August 2, 2021. [1] This final rule is effective October 1, 2021. [2]

It was proposed in April that 3,490 unspecified diagnosis codes currently designated as either CC or MCC would change to a Non-CC designation for FY 2022. However, this was not implemented, and it will be delayed until FY 2023 or later, giving provider organizations more time to address specificity documentation gaps.

Notable changes in the IPPS final rule for FY 2022 include:

  1. A net increase in IPPS payment rates of 2.5% over FY 2021.
  2. The requirement that hospitals report median payer-specific negotiated rates for inpatient services for Medicare Advantage organizations is repealed.
  3. The new COVID-19 treatment add-on payment is extended through the end of the year in which the public health emergency (PHE) ends
  4. Changes to the quality reporting program in response to the COVID-19 pandemic, including a new quality reporting program measure assessing COVID-19 vaccination rates of health care personnel.
  5. Adoption of a measure suppression policy to “suppress” (i.e. not use) data affected by COVID-19 in calculating hospital performance.
    1. For FY 2022, CMS will suppress most hospital value-based purchasing program measures, resulting in neutral payment adjustments.
    1. CMS will exclude performance data from 2020 in calculating Hospital Acquired Condition (HAC) Reduction Program performance for FY 2022 and FY 2023.
    1. CMS will suppress the pneumonia readmissions measure and exclude COVID-19 diagnosed patients from the other measures in the FY 2023 Hospital Readmissions Reduction program.

End Notes:

  1. Fiscal Year (FY) 2022 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Care Hospital (LTCH) Rates Final Rule (CMS-1752-F) | CMS
  2. 2021-16519.pdf (