IPPS Final Rule Changes for Fiscal Year 2021

IPPS Final Rule Changes for Fiscal Year 2021

By Margaret M. Foley, PhD, RHIA, CCS

The Inpatient Prospective Payment System (IPPS) Final Rule for Fiscal Year 2021 (FY 2021) went into effect for acute care hospital discharges on October 1, 2020. The final rule was published on the Centers for Medicare and Medicaid Services (CMS) website on September 2, 2020 and was published in the Federal Register on September 18, 2020.

The 2021 final rule publication was released about a month later than is typical due to CMS’ significant devotion of resources to the COVID-19 response. Therefore, the requirement for a 60-day timeframe between a final rule publication and an effective date was waived. This article provides a synopsis of the final rule content most relevant to coding professionals.

MS-DRG Changes

CMS implemented version 38.0 of the MS-DRG Grouper for fiscal year 2021. Twelve new MS-DRGs were created while six MS-DRGs were deleted for a new total of 767 MS-DRGs.

Two new Pre-MDCs were created. The first is:

  • MS-DRG 018 Chimeric Antigen Receptor (CAR) T-cell Immunotherapy

This MS-DRG will capture cases reporting procedure codes for Chimeric Antigen Receptor (CAR) T-cell Immunotherapy. MS-DRG 018 is now the highest paying MS-DRG with a relative weight of 37.3290.

The other Pre-MDC MS-DRG created to capture cases describing the performance of hemodialysis during an admission where the patient received a simultaneous pancreas/kidney transplant is:

  • MS-DRG 019 Simultaneous Pancreas/Kidney Transplant with Hemodialysis

Similarly, two other MS-DRGs were added to MDC 11 Diseases and Disorders of the Kidney and Urinary Tract. Kidney transplant cases reporting a hemodialysis procedure during the same admission are now assigned to either:

  • MS-DRG 650 Kidney Transplant with Hemodialysis with major complication or comorbidity (MCC)
  • MS-DRG 651 Kidney Transplant with Hemodialysis without MCC

MDC 03 Diseases & Disorders of the Ear, Nose, Mouth & Throat was significantly restructured. Six MS-DRGs were deleted (MS-DRGs 129 thru MS-DRG 134). Procedure codes were reassigned to MS-DRGs so that cases with similar clinical characteristics and resource consumption are grouped together. The new MDC 03 MS-DRGS are:

  • MS-DRG 140 Major Head & Neck Procedure with major complication and comorbidity (MCC)
  • MS-DRG 141 Major Head & Neck Procedure with complication or comorbidity (CC)
  • MS-DRG 142 Major Head & Neck Procedure without CC/MCC
  • MS-DRG 143 Other Ear, Nose, Mouth & Throat operating room (OR) Procedure with MCC
  • MS-DRG 144 Other Ear, Nose, Mouth & Throat OR Procedure with CC
  • MS-DRG 145 Other Ear, Nose, Mouth & Throat OR Procedure without CC/MCC

Two new MS-DRGs were added to MDC 08 Diseases & Disorders of the Musculoskeletal System & Connective Tissue. Cases reporting a hip replacement with a principal diagnosis of a hip fracture are now assigned to either:

  • MS-DRG 521 Hip Replacement with Principal Diagnosis of Hip Fracture with MCC
  • MS-DRG 522 Hip Replacement with Principal Diagnosis of Hip Fracture without MCC

Other significant changes made to the MS-DRG grouper logic include:

  • Reassignment of carotid artery stent procedures to more clinically appropriate MS-DRGs
  • Left atrial appendage closure (LAAC) procedures with an open approach group to the more clinically suitable MS-DRGs 273 and 274 Percutaneous and Other Intracardiac Procedures with and without MCC, respectively
  • Combination codes for the insertion of the implantable program generator and lead insertions for cardiac contractility modulation procedures group to MS-DRGs 222 through 227
  • MS-DRG revisions prevent some chemotherapy cases on which an inferior vena cava filter (IVC) insertion is reported from grouping to the lower paying MS-DRG associated with IVC procedure
  • Grouper logic revisions prevent cases from grouping to an MS-DRG for an OR procedure unrelated to the principal diagnosis (MS-DRGs 981, 982, 983 and 987, 988, and 989)
  • Procedure code designation changes from OR to non-OR and vice versa
  • Procedure codes redesignated from surgical to non-OR procedures affecting DRG assignment
New Technology Add-On Payments

CMS’s new technology add-on payment policy provides additional payments for cases with high costs involving eligible new technologies. CMS has expanded the approaches through which new technologies can qualify for add-on payments. These new approaches include medical devices that are part of the FDA Breakthrough Devices Program and are an alternative pathway for products that received FDA Qualified Infectious Disease Product (QIDP) designation. Fourteen new technologies were newly approved for add-on payments for FY2021. They are:

  • ContaCT
  • Hemospray Endoscopic Hemostat
  • IMFINZI® (durvalumab) and TECENTRIQ® (atezolizumab)
  • Eluvia drug-eluting vascular stent system
  • Soliris (eculizumab)
  • SpineJack system
  • BAROSTIM NEO system
  • Optimizer System
  • Cefiderocol (Fetroja)
  • CONTEPO (fosfomycin for injection)
  • NUZYRA (omadacycline for injection)
  • ZERBAXA (ceftolozane and tazobactam)

The following items continue to be eligible for new technology add-on payments in FY 2021:

  • AZEDRA (Ultratrace iobenguane Iodine-131)
  • CABLIVI (caplacizumab-yhdp)
  • ELZONRIS (tagraxofusp-erzs, SL-401)
  • Balversa (erdafitinib)
  • Andexxa (Andexanet alfa)
  • SPRAVATO (Esketamine)
  • ZEMDRI (Plazomicin)
  • XOSPATA (gilteritinib)
  • JAKAFI (Ruxolitinib)
  • T2Bacteria Panel (T2 bacteria test panel)
CMS Planned Analyses

In the final rule CMS announced that it plans to conduct a comprehensive, systematic review of the ICD-10-PCS procedure codes. This will be a multi-year project during which CMS will review the process for determining whether a procedure is considered an operating room (OR) procedure or non-OR procedure in future versions of the Grouper. CMS will be providing more detail on this analysis and the methodology for conducting this review in future rulemaking.

CMS also reported that it is continuing its comprehensive analysis of CC and MCC severity level designations. CMS is using a combination of mathematical analysis of claims data and the application of recently developed nine guiding principles to determine whether changes to the severity level designations of diagnoses are needed. CMS is continuing to solicit comments regarding these guiding principles, as well as other possible ways to incorporate meaningful indicators of clinical severity.

Additional Information

The IPPS FY 2021 rule also contains information on updates to the following CMS initiatives:

  • Hospital-Acquired Condition (HAC) Reduction Program
  • Hospital Value-Based Purchasing (VBP) initiative
  • Hospital Readmission Reduction Program (HRRP)
  • Hospital Inpatient Quality Reporting (IQR) Program

The full text of the IPPS regulation and related tables, published in the Federal Register on September 18, 2020, is available at:



Maggie Foley (margaret.foley@temple.edu) is an associate professor in the Temple University Division of Health Information Management Department of Health Services Administration and Policy.