This page addresses follow-up questions and additional information pertinent to our webinar
2026 Hospital Payment Update: A Coder’s Guide to MS-DRG Changes.
** The coding information and guidance are valid at the time of publishing. Learners are encouraged to research
subsequent official guidance in the areas associated with the topic as they can change rapidly.
A: CMS based the FY 2026 rates on two primary data sources:
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- Claims data from FY 2024 – This includes discharges occurring between October 1, 2023, and September 30, 2024, based on bills received by CMS through March 31, 2025.
- Cost report data – Specifically, the March 2025 update of the FY 2023 Healthcare Cost Report Information System (HCRIS).
A: Under the Inpatient Prospective Payment System (IPPS), hospitals are reimbursed based in part on whether a patient has Complications or Comorbidities (CCs) or Major Complications or Comorbidities (MCCs), since these conditions often require additional resources.
The CC Exclusion Lists are tools CMS uses to ensure payment accuracy. They identify situations where a secondary diagnosis—normally counted as a CC or MCC—does not increase reimbursement when paired with certain principal diagnoses. This is because the secondary condition is either clinically related to or an expected part of the primary illness.
Why they matter:
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- Prevent double counting: Hospitals don’t receive extra payment for conditions that are inherent to the main reason for admission.
- Ensure clinical accuracy: Only complications that represent true additional care needs influence payment.
- Protect payment integrity: They safeguard against overpayments and maintain fairness in the system.
- Support coding compliance: Coders rely on these lists to assign diagnoses correctly and avoid billing errors.
The CC Exclusion Lists keep reimbursement aligned with real clinical complexity—ensuring hospitals are paid appropriately while preserving accuracy and integrity in the Medicare payment system.
A: Under the Inpatient Prospective Payment System (IPPS), hospitals may receive a New Technology Add-on Payment (NTAP) for new, costly treatments not yet reflected in DRG payments.
Traditional Pathway:
To qualify, a technology must meet three requirements:
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- Newness – Generally within 2–3 years of FDA approval or market entry.
- Cost – Demonstrates that existing DRG payments do not adequately cover its costs.
- Substantial Clinical Improvement (SCI) – Must show strong evidence that it improves outcomes compared to existing treatments.
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Alternative Pathway:
Certain FDA-designated products (such as Breakthrough Devices or Qualified Infectious Disease Products [QIDPs]) can qualify through a streamlined route. These technologies are automatically considered to meet the SCI requirement, so applicants only need to demonstrate newness and cost.
The traditional pathway requires proof of all three criteria, while the alternative pathway waives the clinical improvement requirement for specific FDA-designated products, making approval faster.
Looking for additional information on this topic?
Meet the Presenter: Kristi Pollard, RHIT, CCS, CPC, CIRCC
Kristi is the Director of Coding Quality & Education with more than 25 years of industry experience; she is responsible for the development of web-based, instructor-led, and webinar training materials; conducting training in ICD-10-CM/PCS and CPT; and performing DRG and APC audits. Kristi has an extensive background in coding education and consulting and is a national speaker and published writer on topics related to ICD-10 and CPT coding and code-based reimbursement. She has designed and developed training programs for inpatient and outpatient hospital-based coding, with a focus on vascular interventional radiology, interventional cardiology, orthopedics, and obstetrics.
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