CMS Releases the FY 2025 Hospital Inpatient Prospective Payment System (IPPS) Final Rule
CMS Releases the FY 2025 Hospital Inpatient Prospective Payment System (IPPS) Final Rule
On August 1, 2024, the Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2025 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) final rule.
The operating payment rates for general acute care hospitals paid under the IPPS that actively participate in the Hospital Inpatient Quality Reporting (IQR) program and effectively utilize electronic health records (EHR) will see a 2.9% increase.
Below is a summary of the new concepts of interest to medical coding and reimbursement professionals.
Separate IPPS Payment for Establishing and Maintaining Access to Essential Medicines
CMS is providing separate payment under the IPPS for small, independent hospitals to establish and maintain a buffer stock of essential medicines as a preventive measure to guard against future shortages. These drug shortages can have profound impacts on the care hospitals are able to provide to their patients, including medication errors, delays in critical treatments, and increased risk of hospital-acquired infections and in-hospital mortality.
Resources for Treating Patients with Inadequate Housing
CMS is changing the severity designation of the seven ICD-10-CM diagnosis codes that describe inadequate housing and housing instability from non-complication or comorbidity (NonCC) to complication or comorbidity (CC). This is based on the higher average resource costs of cases with these diagnosis codes compared to similar cases without these codes.
Added to the list of CCs for 2025 are:
| Code | Description |
| Z59.10 | Inadequate housing, unspecified |
| Z59.11 | Inadequate housing environmental temperature |
| Z59.12 | Inadequate housing utilities |
| Z59.19 | Other inadequate housing |
| Z59.811 | Housing instability, housed, with risk of homelessness |
| Z59.812 | Housing instability, housed, homelessness in past 12 months |
| Z59.819 | Housing instability, housed unspecified |
Changes to New Technology Add-on Payment (NTAP) for FY 2025
Some changes to this initiative are:
- Increase the NTAP percentage from 65% to 75% for certain gene therapies approved for new technology add-on payments when indicated and used specifically for the treatment of Sickle Cell Disease
- Use the start of the fiscal year, October 1, instead of April 1, to determine whether a technology is within its 2- to 3-year newness period (starting in FY 2026)
- No longer consider an FDA marketing authorization hold to be an inactive status for the purpose of NTAP application eligibility (beginning with FY 2026 applications)
For FY 2025, NTAP payment is:
- Deleted for seven technologies
- Continued for 24 technologies
- Added 16 2025 new technologies
MS-DRG Changes
One of the most substantial changes in MS-DRGs is to the Fusion DRGs. MS-DRGs 453, 454, 455, 459, and 460 were deleted. The new hierarchy includes MS-DRGs for multiple-level spinal fusions and those with an aprevo™ custom-made anatomically designed interbody fusion device.
The new fusion MS-DRGs are:
| MS-DRG | Description |
| 402 | Single Level Combined Anterior and Posterior Spinal Fusion Except Cervical |
| 426 | Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with MCC or Custom-Made Anatomically Designed Interbody Fusion Device |
| 427 | Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with CC |
| 428 | Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical Without CC/MCC |
| 429 | Combined Anterior and Posterior Cervical Spinal Fusion with MCC |
| 430 | Combined Anterior and Posterior Cervical Spinal Fusion Without MCC |
| 447 | Multiple Level Spinal Fusion Except Cervical with MCC or Custom-Made Anatomically Designed Interbody Fusion Device |
| 448 | Multiple Level Spinal Fusion Except Cervical Without MCC |
| 450 | Single Level Spinal Fusion Except Cervical with MCC or Custom-Made Anatomically Designed Interbody Fusion Device |
| 451 | Single Level Spinal Fusion Except Cervical Without MCC |
No changes made to the following MS-DRGs: 456 – Spinal Fusion Except Cervical With Spinal Curvature, Malignancy, Infection or Extensive Fusions with MCC; 457 – Spinal Fusion Except Cervical With Spinal Curvature, Malignancy, Infection or Extensive Fusions with CC; or 458 – Spinal Fusion Except Cervical With Spinal Curvature, Malignancy, Infection or Extensive Fusions without MCC/CC. Additionally, no changes were made to MS-DRGs 471, 472, and 473 for the cervical spinal fusions.
More Details in the 2025 IPPS Final Rule and YES Update Presentation
The Final Rule is almost 3,000 pages long and includes a synopsis of comments received on all provisions from the Proposed Rule and a description of the final decisions. The final rule is expected to be published in the Federal Register on August 28, 2024.
CMS released a Fact Sheet that summarizes key initiatives and outcomes that serve as a valuable resource. It includes significant changes, including the Hospital Inpatient Quality Reporting Program, Hospital-Acquired Condition (HAC) Reduction Program, and the Hospital Value-Based Purchasing (VBP) Program.
YES HIM Education has an educational course on key IPPS changes for FY 2025 impacting healthcare organizations, hospitals, and HIM practices. Visit the ICD-10 Resource Center for further updates and educational resources.
