Note from the ACDIS Interim Director: Down the rabbit hole into the FY 2023 IPPS final rule

CDI Strategies - Volume 16, Issue 36

by Laurie Prescott, RN, MSN, CCDS, CCDS-O, CDIP, CRC

Did you know 2023 is the Chinese Year of the Rabbit? Chinese astrology describes the rabbit as being gentle, quiet, elegant, and alert. Rabbits are also thought to be kind and very responsible. Really, rabbits sound like good friends to have. I have never referred to the inpatient prospective payment system (IPPS) as a good friend, but as I provide you with a summary of some of this year’s IPPS final rule, I will try to parallel this to rabbits and bunnies, just because it might add a little fun to what is otherwise a dry subject!

CMS demonstrated a few acts of kindness just like Thumper from Bambi:

  • Medicare payments for hospital inpatient services will increase by 4.3%. This is a higher reimbursement rate than the 3.2% increase that CMS proposed in April. "This is the highest market basket update in the last 25 years and is primarily due to higher expected growth in compensation prices for hospital workers," CMS said. 
  • The proposed rule listed 41 base MS-DRGs (123 MS-DRGs total) that were identified as being “three-tiered” (i.e., with MCC, with CC or without MCC/CC)​ and spoke on plans to change these to “two-tiered” MS-DRGs (i.e., with MCC and without MCC). See Table 6P.1B in the proposed rule for the complete list​. But the final rule stated that, considering the ongoing public health emergency, CMS is still concerned about the impact of implementing this volume of MS-DRG changes and will once again delay this change.
  • In response to the public health emergency, like fiscal year (FY) 2022, CMS continues to suppress or refine several measures in the Hospital Readmissions Reduction Program (HRRP), Hospital-Acquired Condition (HAC) Reduction Program, and Hospital Value-Based Purchasing (VBP) Program.
  • Due to measure suppression for Hospital VBP Program, CMS will award all hospitals a value-based payment amount for each discharge that is equal to the 2% withheld. They also will not impose the payment penalty on any hospitals in FY 2023 due to low performance in the HAC Reduction Program.

New ICD-10-CM Codes for FY 2023

Just as bunnies do, the number of codes has multiplied. ICD-10-CM now offers over 1,100 new codes and ICD-10-PCS added 331 new codes. I can’t speak to them all, but here are a few highlights:

Hemolytic-uremic Syndrome (HUS) – Four new codes differentiating infection associated, hereditary, other, and unspecified HUS are introduced. These new codes will all provide an MCC as a secondary diagnosis. The interesting piece for these new codes is the corresponding changes to the Official Guidelines for Coding and Reporting and sequencing for this diagnosis. Guidelines 1.C.1.d.9 instructs us that if the reason for admission is hemolytic-uremic syndrome that is associated with sepsis, we should assign code D59.31, Infection-associated hemolytic-uremic syndrome, as the principal diagnosis. Codes for the underlying systemic infection and any other conditions (such as severe sepsis) should be assigned as secondary diagnoses. Similar instruction is also given related to HIV disease and HUS.

Von Willebrand Syndrome – Von Willebrand is now differentiated by 10 new codes. These codes offer both unspecified, other, and acquired, and also allow one to differentiate by the type of Von Willebrand (types 1, 2A, 2B, 2M, 2N and 3). All provide a CC as a secondary diagnosis.

Acidosis – The codes for acidosis have been re-organized and now allow us to capture more specificity. Previously the codes for acidosis (NOS, lactic, metabolic and respiratory) all were classified to E87.2. Now the E87.2 grouping is expanded to include separate codes for acidosis, unspecified, acute metabolic acidosis, and chronic acidosis. Each of these codes include the specification of lactic acidosis as well. Lastly, E87.29 classifies Other acidosis with an inclusion term of respiratory acidosis, NOS.

The burning question that every curious bunny wants to know is, what about respiratory acidosis that is specified as acute or chronic? These codes are now housed in Chapter 10, Diseases of the Respiratory System.

  • Acute Respiratory Acidosis is now listed as an inclusion term for J96.02, Acute respiratory failure with hypercapnia.
  • Chronic Respiratory Acidosis is now listed as an inclusion term for J96.12, Chronic respiratory failure with hypercapnia.

Dementia – In an effort to gather more information on the severity of dementia and any associated behaviors, CMS has expanded the codes for dementia. These new codes work to further specify the severity of the disease process with levels of mild, moderate, and severe. Secondly, the codes that include behavioral disorder are much more specific to include the presence of agitation, psychotic disturbance, mood disturbance, and anxiety. As the inclusion terms are very specific, I suggest you review the code groupings for vascular dementia (F01.5-), dementia in diseases classified elsewhere (F02.8-) and unspecified dementia (F09.9-).

Refractory Angina Pectoris – This describes frequently occurring attacks of angina that are not controlled by optimal drug therapy. The patient’s daily activity is significantly limited. Due to the disease progression, PTCA or CABG is contraindicated. This new code, I20.2, offers a CC as a secondary diagnosis.

Ventricular tachycardia – The I47.2 code grouping for ventricular tachycardia is now expanded to include codes for ventricular tachycardia, unspecified, torsades de pointes, and other ventricular tachycardia. These provide a CC as a secondary diagnosis.

Transfusion associated dyspnea – This new code (J95.87) was developed to capture those cases in which respiratory distress was associated with a transfusion, but was not as severe of a reaction as one that might be associated with transfusion-related acute lung injury or transfusion associated circulatory overload. This diagnosis would provide a CC as a secondary diagnosis.

Hepatic encephalopathy – This new code (K76.82) allows one to report hepatic encephalopathy separately from acute hepatic failure (K72.00). There is an “Excludes1 note” that does not allow the reporting of hepatic encephalopathy with acute hepatic failure with coma (K72.01), alcoholic hepatic failure with coma (K70.41), chronic hepatic failure with coma (K72.11), and hepatic failure with coma (K72.91). This code does not provide a CC or MCC as a secondary diagnosis.

Fractures associated with chest compression – Five new codes were added to capture rib fractures and flail chest associated with chest compression and CPR. These codes are within the M96 code category, classifying Other Disorders of the Musculoskeletal System and Connective Tissue. They will not map to a trauma or complication code that could impact quality measure reporting. That said, the provider should specifically state the fractures were due to chest compressions. M96.A4, classifying flair chest associated with chest compressions, provides an MCC as a secondary diagnosis. The other codes related to rib fractures will provide a CC. 

FY 2023 Official Guidelines for Coding & Reporting

One of my favorite rabbits is Rabbit from Winnie-the-Pooh, perhaps because I see myself in him. He is a bit obsessive and bossy but means well. He and I agree that we must always follow the rules. So, with that, let’s look at the FY 2023 Official Guidelines. I will not speak to all the changes but will speak to those of greater significance. If you have not read them I suggest you do so, they can be accessed here.  (Please notice, I did not order you to read these, only suggested!)

Section 1.A.19 instructs us that, “The assignment of a diagnosis code is based on the provider’s diagnostic statement that the condition exists. The provider’s statement that the patient has a particular condition is sufficient. Code assignment is not based on clinical criteria used by the provider to establish the diagnosis. If there is conflicting medical record documentation, query the provider.”

The bolded text above was added this year. This statement reminds us that if there is evidence within the record that does not support the stated diagnosis, we have an obligation to clinically validate the record through query.

Section 1.B.14 lists under-immunization status as an additional example of documentation that can be reported when documented by a clinician other than the patient’s provider.

Section 1.B.16 gives additional guidance related to the documentation and reporting of complications of care. It is included below with the new wording bolded.

Code assignment is based on the provider’s documentation of the relationship between the condition and the care or procedure, unless otherwise instructed by the classification. The guideline extends to any complications of care, regardless of the chapter the code is located in. It is important to note that not all conditions that occur during or following medical care or surgery are classified as complications. There must be a cause-and-effect relationship between the care provided and the condition, and the documentation must support that the condition is clinically significant. It is not necessary for the provider to explicitly document the term “complication.” For example, if the condition alters the course of the surgery as documented in the operative report, then it would be appropriate to report a complication code. Query the provider for clarification if the documentation is not clear as to the relationship between the condition and the care or procedure.

I have specifically underlined the most significant statement: “[I]f the condition alters the course of the surgery as documented in the operative report, then it would be appropriate to report a complication code.” These words give us a measure of where the line is drawn in determining the reporting of a complication.

Section 1.C.1.d.9 introduces a new guideline related to the sequencing of hemolytic-uremic syndrome (HUS) associated with sepsis. As mentioned above, the direction states if the reason for admission is hemolytic-uremic syndrome that is associated with sepsis, assign code D59.31, Infection-associated hemolytic, as the principal diagnosis. This will result in a change in DRG mapping from a sepsis DRG to DRGs 811 and 812, Red blood cell disorders with or without MCC.

Section 1.C.1.a.2 offers sequencing instruction related to HUS and HIV disease. An exception (put in bolded text) was added to this pre-existing instruction. “If a patient is admitted for an HIV-related condition, the principal diagnosis should be B20, Human immunodeficiency virus [HIV] disease followed by additional diagnosis codes for all reported HIV-related conditions. An exception to this guideline is if the reason for admission is hemolytic-uremic syndrome associated with HIV disease. Assign code D59.31, Infection-associated hemolytic-uremic syndrome, followed by code B20, Human immunodeficiency virus [HIV] disease.”

Section 1.C.5.d introduces a new guideline related to dementia. It states:

The ICD-10-CM classifies dementia (categories F01, F02, and F03) on the basis of the etiology and severity (unspecified, mild, moderate or severe).  Selection of the appropriate severity level requires the provider’s clinical judgment and codes should be assigned only on the basis of provider documentation, unless otherwise instructed by the classification.  If the documentation does not provide information about the severity of the dementia, assign the appropriate code for unspecified severity. If a patient is admitted to an inpatient acute care hospital or other inpatient facility setting with dementia at one severity level and it progresses to a higher severity level, assign one code for the highest severity level reported during the stay.

I do anticipate that the severity of the dementia will eventually provide greater impact in risk adjustment. We should work to educate providers of the needed specification.

1.C.15.a.7 introduces a new guideline directing us that ICD-10-CM considers a full week of gestation to mean full weeks. It provides the example of the fact that 39 weeks and six days would be reported as 39 weeks of gestation.

Section 1.C.15.q.4 introduces a new guideline related to hemorrhage post-elective abortion. We are to assign code O04.6, Delayed or excessive hemorrhage following (induced) termination of pregnancy.  Do not assign code O72.1, Other immediate postpartum hemorrhage, as this code should not be assigned for post abortion. The guideline also instructs us to not assign code Z33.2, Encounter for elective termination of pregnancy, when the patient experiences a complication post elective abortion.

Section 1.C.17, speaking to social determinants of health (SDOH), now includes direction stating to “assign as many SDOH codes as are necessary to describe all of the problems or risk factors. These codes should be assigned only when the documentation specifies that the patient has an associated problem or risk factor. For example, not every individual living alone would be assigned code Z60.2, Problems related to living alone.”

ICD-10-PCS for 2023

Let’s first start with the guidelines for the updated ICD-10-PCS. You can read them in their entirety here.

Section B3.19 introduces new guidance stating “The root operation Detachment contains qualifiers that can be used to specify the level where the extremity was amputated. These qualifiers are dependent on the body part value in the ‘upper extremities’ and ‘lower extremities’ body systems.”

“For procedures involving the detachment of all or part of the upper or lower extremities, the procedure is coded to the body part value that describes the site of the detachment. Example: An amputation at the proximal portion of the shaft of the tibia and fibula is coded to the Lower leg body part value in the body system Anatomical Regions, Lower Extremities, and the qualifier High is used to specify the level where the extremity was detached.”

Section B4.1c was revised to state: “If a single vascular procedure is performed on a continuous section of an arterial or venous body part, code the body part value corresponding to the anatomically most proximal (closest to the heart) portion of the arterial or venous body part.”

Here’s an example: A procedure performed on a continuous section of artery from the femoral artery to the external iliac artery with the point of entry at the femoral artery is coded to the external iliac body part. A procedure performed on a continuous section of artery from the femoral artery to the external iliac artery, with the point of entry at the external iliac artery, is also coded to the external iliac artery body part.

Lastly, this year’s update contains new codes for Laser Interstitial Thermal Therapy (LITT), a technique that uses laser heat via a thin probe inserted through the skin (or a small hole drilled through the skull) to destroy tumors in many parts of the body. We already had LITT codes in ICD-10-PCS, added a few years ago to one of the radiation therapy sections. But the doctors who perform the procedure and the manufacturers who make the equipment felt strongly that the procedure should be in the med/surg section rather than an ancillary section.

New codes have been added for more types of therapies using genetically modified stem cells. There is also a new code for human donor thymus tissue that has been highly processed so that donor matching is not an issue. It is for implantation in pediatric patients born without a thymus and who therefore have life-threatening immunodeficiency.

Because I was writing as fast as a bunny, I pulled many highlights from the final rule, but considering there were over 2,000 pages I could not easily summarize the entire document. And, as with any new year’s direction, we will not know the impact for a while. What information is of significance for you will largely depend upon your population of patients and the procedures performed at your facility. I encourage you to review the different guidelines and wish you a great year, the Year of the Rabbit!

Editor’s note: Prescott is the interim director and director of CDI education for ACDIS, based in Middleton, Massachusetts. Contact her at

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ACDIS Guidance, Clinical & Coding