2022 IPPS Final Rule Released with Allowances Due to COVID-19 PHE, Including Extended NCTAP

2022 IPPS Final Rule Released with Allowances Due to COVID-19 PHE, Including Extended NCTAP

CMS released the Final Rule for IPPS on August 2, 2021, and published it in the Federal Register on August 13, 2021 (Federal Register, 2021). Based on the rule, payments to hospitals will increase by approximately 2.5%. This will result in about $2.3 billion in additional reimbursement for inpatient services. CMS released a fact sheet detailing changes effective October 1, 2021. The changes include the extension of the New COVID-19 Treatments Add-on Payment (NCTAP).

NCTAP Adjustments due to the COVID-19 Public Health Emergency (PHE)

As proposed, CMS is using the FY 2019 Medicare Provider Analysis and Review (MedPAR) data for rate-setting. The agency will use this instead of the FY 2020 data. This is to compensate for the significant impact the COVID-19 Public Health Emergency (PHE) posed for hospital utilization. The FY 2020 was not representative of a typical year.


In a related adjustment, the New COVID-19 Treatments Add-on Payment (NCTAP), due to expire when the PHE concluded, was extended through the end of the fiscal year in which the PHE ends. CMS also did not finalize the proposal to discontinue the NCTAP on October 1, 2021, for a product that is approved for new technology add-on payments beginning in FY 2022 (CMS, 2021).

Instead, hospitals will be eligible to receive both NCTAP and traditional new technology add-on payments for patient stays that qualify (CMS, 2021). As with the NCTAP, this provision will apply “through the end of the fiscal year in which the PHE ends, with the new technology add-on payment reducing the total amount of the NCTAP” (CMS, 2021).

Additionally, CMS extended 13 new technology add-on payments for one year in response to the PHE. The agency originally set these items to expire in FY 2022.

CMS approved the repeal of the planned comprehensive overhaul of the MS-DRG rate-setting. The agency announced this change in the 2021 Final Rule. This provision was intended to move from a cost-to-charge ratio to a market-based MS-DRG rate-setting policy by FY 2024. CMS has now set that provision aside.

Repeal of this change eliminates the requirement that hospitals provide the median payer-specific negotiated payment rate by MS-DRG for all Medicare Advantage (MA) organization payers. Analysts estimate that this will reduce hospital work time by 63,780 annual hours.

Updates to MS-DRGs and Related Changes

CMS included updates to MS-DRGs as described by MDC in the 2,295-page rule. The agency also included the results of the annual review of procedures classified to MS-DRGs 981-983, Extensive OR Procedures Unrelated to Principal Diagnosis and 987-989, Non-Extensive OR Procedures Unrelated to Principal Diagnosis.

This review looked at the volume of cases in these MS-DRGs and determined if reassignment into a surgical MS-DRG into which the principal diagnosis falls was more appropriate. Alternatively, CMS could shift the procedures from Extensive OR Procedures to Non-Extensive OR Procedures.

Also listed are redesignations of OR Procedures to Non-OR Procedures, as well as Non-OR Procedures to OR Procedures. For example, four codes for insertion or removal of a spacer from a shoulder joint using an open approach. IPPS will designate these as OR procedures instead of Non-OR.

Coders can find official lists of ICD-10-CM and ICD-10-PCS codes on the CMS website (2021). The website also lists changes to files such as the 2022 new final coding guidelines MCC and CC lists separately from the final rule.

New MCE Edit for Unspecified Codes

Changes to the Medicare Code Editor (MCE) include a new edit for unspecified codes. Encoders will trigger this edit upon report of one of the unspecified diagnosis codes. These codes will designated as either a CC or MCC. There also needs to be other codes available in the code subcategory that further specify the anatomic site to trigger. Table 6P.3a includes a comprehensive list of codes impacted by this edit.

The list includes more than 3,000 unspecified codes, such as H40.219 acute angle-closure glaucoma, unspecified eye. The edit would request additional information on laterality. An update in the Coding Guidelines for FY 2022 will assist with compliance. The update states, “When laterality is not documented by the patient’s provider, code assignment for the affected side may be based on medical record documentation from other clinicians” (CDC, 2021).

CMS also notes in the guideline update: “If there is conflicting medical record documentation regarding the affected side, the patient’s attending provider should be queried for clarification. Codes for ‘unspecified’ side should rarely be used, such as when the documentation in the record is insufficient to determine the affected side, and it is not possible to obtain clarification” (CDC, 2021)

Code Implementation on April 1 and October 1

CMS finalized a proposal to implement new ICD-10-CM/PCS codes on both April 1 and October 1, effective April 1, 2022. This additional date will allow for more timely recognition of diseases and procedures and flexibility in the update process. Update files for April 1st code implementation would be ready for public access by February 1st of the applicable year.

A comprehensive review of provisions in the 2022 IPPS Final Rule will be included in the 2022 IPPS & MS-DRG 10-1-21 Updates course by YES HIM Education. This course will review and discuss the 2022 IPPS and MS-DRG updates and changes effective 10/1/21. It will review applicable guidelines and identify new and/or revised information. The course will also analyze additions and deletions to the MCC and CC lists, as well as changes to add-on payments.

For additional information regarding the 2022 ICD-10 and IPPS annual updates, review these articles:

Ann Zeisset, RHIT, CCS, CCS-P, co-authored this article with Teri Jorwic, MPH, RHIA, CCS, CCS-P, FAHIMA.

Teri Jorwic

Contract Educator, MPH, RHIA, CCS, CCS-P, FAHIMA
NCTAP IPPS final rule

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