Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals (IPPS) and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year (FY) 2026 Rates; Changes to the FY 2025 IPPS Rates Due to Court Decision; Requirements for Quality Programs; and Other Policy Changes; Health Data, Technology, and Interoperability: Electronic Prescribing, Real-Time Prescription Benefit and Electronic Prior Authorization

1. Discussion of Changes to Coding System and Basis for FY 2026 MS-DRG Updates a. International Classification of Diseases, 10th Revision (ICD-10)

Providers use the International Classification of Diseases, 10th Revision (ICD-10) coding system to report diagnoses and procedures for Medicare hospital inpatient services under the MS-DRG system. The ICD- 10 coding system includes the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) for diagnosis coding and the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as well as the ICD-10-CM and ICD-10-PCS Official Guidelines for Coding and Reporting. b. Basis for FY 2026 MS-DRG Updates

The deadline for interested parties to submit MS-DRG classification change requests for FY 2026 was October 20, 2024. All requests are submitted to CMS via Medicare Electronic Application Request Information SystemTM (MEARISTM), accessed at https://mearis.cms.gov. Specifically, as indicated on the MEARISTM site, the MS-DRG classification change request process may be used for requests to create, modify, or delete MS-DRGs, change ICD-10-CM diagnosis code(s) severity level designations, change ICD-10-PCS procedure code(s) Operating Room (O.R.) designations, or to review the CC Exclusions List or the surgical hierarchy.

Within MEARISTM, we have built in several resources to support users, including a “Resources” section available at https://mearis.cms.gov/public/resources with technical support available under “Useful Links” at the bottom of the MEARISTM site. Questions regarding the MEARISTM system can be submitted to CMS using the form available under “Contact”, also at the bottom of the MEARISTM site.

We note that the burden associated with this information collection requirement is the time and effort required to collect and submit the data in the request for MS-DRG classification changes to CMS. The aforementioned burden is subject to the Paperwork Reduction Act (PRA) of 1995 and approved under OMB control number 0938-1431 and has an expiration date of 09/30/2025.

Interested parties should submit any MS-DRG classification change requests, including any comments and suggestions for FY 2027 consideration by October 20, 2025 via MEARISTM at: https://mearis.cms.gov/public/home. As we have discussed in prior rulemaking, we may not be able to fully consider all of the requests that we receive for the upcoming fiscal year. We have found that, with the implementation of ICD 10, some types of requested changes to the MS-DRG classifications require more extensive research to identify and analyze all of the data that are relevant to evaluating the potential change.

Beginning with the MS-DRG classification change requests that are submitted for FY 2027 consideration, we plan to inform requestors via MEARISTM if the MS-DRG classification change request is not able to be considered with the upcoming fiscal year rulemaking cycle. As in prior years, requests that may require more extensive analysis may include those involving multiple MS-DRGs, overlapping logic across multiple Major Diagnostic Categories (MDCs), special logic such as diagnosis codes combined with procedure codes, and/or complex logic including code clusters or multiple logic lists. Beginning with FY 2027 rulemaking, we will no longer summarize in the proposed and final rules those requests that are not able to be considered for the upcoming FY.

As noted previously, interested parties had to submit MS-DRG classification change requests for FY 2026 by October 20, 2024. As we have discussed in prior rulemaking and as previously noted, we may not be able to fully consider all of the requests that we receive for the upcoming fiscal year. In the proposed rule, we noted those topics for which further research and analysis are required, and which we will continue to consider in connection with future rulemaking as summarized in the discussion that follows. We further noted that we also received recommendations and feedback that did not involve requests to create, modify, or delete MS-DRGs, change code designations, or to review the CC Exclusions List or the surgical hierarchy, which therefore were not summarized or addressed in the discussion of the MS-DRG classification change requests received for FY 2026.

As discussed in the proposed rule, we received requests to modify the GROUPER logic in several MS-DRGs under MDC 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) and a request to modify the GROUPER logic for MS-DRG 794 (Neonate with Other Significant Problems) under MDC 15 (Newborns and Other Neonates with Conditions Originating in Perinatal Period). Specifically, we received requests to do the following:

Modify the GROUPER logic of new MS-DRG 426 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with MCC or Custom-Made Anatomically Designed Interbody Fusion Device), new MS- DRG 427 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical with CC), and new MS-DRG 428 (Multiple Level Combined Anterior and Posterior Spinal Fusion Except Cervical without CC/MCC); new MS-DRG 447 (Multiple Level Spinal Fusion Except Cervical with MCC or Custom-Made Anatomically Designed Interbody Fusion Device) and new MS-DRG 448 (Multiple Level Spinal Fusion Except Cervical without MCC); and MS-DRGs 456, 457, and 458 (Spinal Fusion Except Cervical with Spinal Curvature, Malignancy, Infection or Extensive Fusions with MCC, with CC, and without CC/MCC, respectively) by reassigning cases with an ICD-10-PCS code that describes fusion of a sacroiliac joint using an internal fixation device with tulip connector or insertion of an internal fixation device with tulip connector into a pelvic bone with another spinal fusion procedure code that currently map to the lower severity level MS-DRG to the highest severity level (with MCC) MS-DRG.

Modify the GROUPER logic of MS-DRGs 463, 464, and 465 (Wound Debridement and Skin Graft Except Hand for Musculoskeletal and Connective Tissue Disorders with MCC, with CC, and without CC/MCC, respectively); MS-DRGs 466, 467, and 468 (Revision of Hip or Knee Replacement with MCC, with CC, and without CC/MCC, respectively); and MS-DRGs 492, 493, and 494 (Lower Extremity and Humerus Procedures Except Hip, Foot and Femur with MCC, with CC, and without CC/MCC, respectively) by reassigning cases with ICD-10-PCS code XW0V0P7 (Introduction of antibiotic-eluting bone void filler into bones, open approach, new technology group 7) that currently map to the lower severity level MS-DRG to the highest severity level (with MCC) MS-DRG.

Modify the GROUPER logic of MS-DRG 794. The requestor recommended that ICD-10-CM diagnosis codes P09.6 (Abnormal findings on neonatal screening for neonatal hearing loss), Z13.0 (Encounter for screening for diseases of the blood and blood-forming organs and certain disorders involving the immune mechanism), Z82.5 (Family history of asthma and other chronic lower respiratory diseases) and Z82.79 (Family history of other congenital malformations, deformations and chromosomal abnormalities), be added to the MS-DRG 795 (Normal Newborn) “only secondary diagnosis” list so that they would result in assignment to MS-DRG 795 when coded with a principal diagnosis code from ICD-10-CM category Z38 (Liveborn infants according to place of birth and type of delivery) instead of MS-DRG 794.

In the proposed rule, we stated that we appreciated the submissions and related analyses provided by the requestors for our consideration as we review MS-DRG classification change requests for FY 2026; however, we also noted the complexity of the GROUPER logic for these MS-DRGs in connection with these requests requires more extensive analyses to identify and evaluate all the data relevant to assessing these potential modifications. Specifically, we noted that MS-DRGs 426, 427, 428, 447, and 448 recently became effective October 1, 2024 (FY 2025) and as discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 35982 through 35983) and final rule (89 FR 69049 through 69053) in consideration of any future modifications to the current structure of the logic for case assignment to MS-DRGs 456, 457, and 458 we noted that additional analysis would be needed because the logic is also defined by diagnosis code logic as well as extensive fusions. We also noted that, as discussed further in section II.C.5.c. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule, we identified additional inconsistencies related to the diagnosis code logic for MS-DRGs 456, 457, and 458 for which we proposed modifications. In addition, we stated that analyzing the impact of restructuring the logic in these MS-DRGs with respect to procedure codes describing fusion of a sacroiliac joint using an internal fixation device with tulip connector necessitates evaluating the impact across numerous other MS-DRGs in MDC 08, as well as MS-DRG 028 (Spinal Procedures with MCC), MS-DRG 029 (Spinal Procedures with CC or Spinal Neurostimulators), and MS-DRG 030 (Spinal Procedures without CC/MCC) under MDC 01 (Diseases and Disorders of the Nervous System) since the procedure codes describing fusion of a sacroiliac joint using an internal fixation device with tulip connector also map to these MS-DRGs.

With respect to the request to reassign cases reporting procedure code XW0V0P7 from the lower severity level to the highest (with MCC) severity level in the previously listed MS-DRGs, we noted in the proposed rule that the procedure to insert a bone void filler is designated as a non-operating room (Non-O.R.) procedure and believe that the key factor that would contribute to resource utilization in these cases is the fact that the patients have an infection(s) which require additional resources. As discussed in section II.C.5.a. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule, we also noted that we received an MS-DRG request related to cases reporting a hip or knee procedure with a diagnosis of

periprosthetic joint infection (PJI) in MS-DRGs 463, 464, and 465. We stated that in our review of the claims data to address that request we noted that a subset of the cases also reported procedure code XW0V0P7. As discussed in the proposed rule, consistent with our established process, we must also consider if there are additional factors, such as the severity of illness with other secondary CC/MCC conditions reported and any other O.R. procedures or services provided, such as mechanical ventilation, that may be contributing to the consumption of resources for these cases. We stated that, for these reasons and those previously described, we believed additional time was needed to review and evaluate potential extensive modifications to the structure of these MS-DRGs.

In the proposed rule, we noted that with respect to the request to modify the GROUPER logic of MS-DRG 794, as discussed in the FY 2025 IPPS/LTCH PPS final rule (89 FR 69061 through 69065), we acknowledged that MS-DRG 794 utilizes “fall-through” logic, meaning if a diagnosis code is not assigned to any of the other MS-DRGs, then assignment “falls-through” to MS-DRG 794. As discussed in the FY 2025 IPPS/LTCH PPS rule, we stated we have started to examine the GROUPER logic that would determine the assignment of cases to the MS-DRGs in MDC 15, including MS-DRGs 794 and 795, to determine where further refinements could potentially be made to better account for differences in clinical complexity and resource utilization. However, as we have noted in prior rulemaking (72 FR 47152), we stated we cannot adopt the same approach to refine the newborn MS-DRGs because of the extremely low volume of Medicare patients there are in these MS-DRGs. We stated we believe it is appropriate to consider the request to add ICD-10-CM diagnosis codes P09.6 (Abnormal findings on neonatal screening for neonatal hearing loss), Z13.0 (Encounter for screening for diseases of the blood and blood-forming organs and certain disorders involving the immune mechanism), Z82.5 (Family history of asthma and other chronic lower respiratory diseases) and Z82.79 (Family history of other congenital malformations, deformations and chromosomal abnormalities) to the MS- DRG 795 (Normal Newborn) “only secondary diagnosis” list in connection with our continued examination of the GROUPER logic that would determine the assignment of cases to the MS-DRGs in MDC 15 in future rulemaking, rather than proposing to change the MS-DRG assignment of individual ICD-10-CM diagnosis codes at this time. We stated that additional time is needed to fully and accurately evaluate cases currently grouping to the MS-DRGs in MDC 15 to consider if restructuring the current MS-DRGs would better recognize the clinical distinctions of these patient populations.

Comment: A commenter (the manufacturer) thanked CMS for consideration of its request to reassign cases with an ICD-10-PCS code that describes fusion of a sacroiliac joint using an internal fixation device with tulip connector or insertion of an internal fixation device with tulip connector into a pelvic bone with another spinal fusion procedure code that currently map to the lower severity level MS-DRG to the highest severity level (with MCC) MS-DRG and expressed their understanding that resources are limited such that not every request may be considered each cycle. However, the commenter stated they were hopeful that CMS would move forward with their recommendations, so that hospitals supporting these case types in FY 2026 would be compensated appropriately. The commenter provided additional information and analyses for CMS' consideration, including analyses with the proposed diagnosis code logic changes for MS-DRGs 456, 457, and 458, and stated its findings reinforce that the reassignment request for FY 2026 involving MS-DRGs 426, 427, and 428; MS-DRGs 456, 457, and 458; and MS- DRGs 447 and 448 to maintain payment accuracy and protect access to care for Medicare beneficiaries requiring advanced sacropelvic fixation is warranted, given the significant cost differences reported for these cases compared to all other cases in related MS-DRGs.

Several commenters (members of an international society for spine surgery) suggested that CMS finalize the requested reassignment of cases reporting a sacroiliac joint fusion or pelvic fixation procedure with another spinal fusion procedure code from the lower severity level to the higher severity level spinal fusion MS-DRG in FY 2026 IPPS rulemaking. The commenters stated that in comparison to standard spinal fusion cases, procedures that include sacroiliac joint fusion and pelvic fixation represent a substantial increase in surgical complexity, operative time, and instrumentation cost. According to the commenters, the addition of both sacroiliac joint fusion and pelvic fixation adjunctive to spinal fusion introduces a level of surgical intensity that is not currently accounted for in the existing MS-DRG assignments. The commenters encouraged CMS to recognize the added clinical burden and cost associated with these cases and assign them to MS-DRGs that appropriately reflect their complexity.

A commenter stated that CMS should reconsider its rejection of the request to reassign cases reporting procedures describing sacroiliac joint and pelvic internal fixation devices using a tulip connector. Another commenter stated that while there is an increased cost in performing pelvic fixation, its use dramatically lowers the risk of failure and reoperation, both of which lead to extraordinary cost escalation for care of these patients. The commenter also stated that long-term sustainability of the health care landscape depends on CMS incentivizing and supporting better care for these spinal patients through reassigning these higher cost cases to the higher paying MCC MS-DRG in the relevant MS-DRG grouping.

In response to the discussion regarding the request to reassign cases reporting procedure code XW0V0P7 (Introduction of antibiotic- eluting bone void filler into bones, open approach, new technology group 7) from the lower severity level to the highest (with MCC) severity level MS-DRG among MS-DRGs 463, 464, and 465; MS-DRGs 466, 467, and 468; and MS-DRGs 492, 493, and 494, a commenter (the manufacturer) expressed concern that CMS did not act on its request and deferred the requested changes. The commenter stated its belief that without action on its request, the payment outlook for cases reporting procedure code XW0V0P7 for bone infection will result in underpayment and suppress hospital adoption and patient access to improved clinical outcomes. Additionally, the commenter stated that CMS' reasoning to defer decision making on claims reporting procedure code XW0V0P7 was based on the procedures non-O.R. designation and it was confusing to them as most treatments of bone infection with the antibiotic-eluting bone void filler (code XW0V0P7) are performed in the O.R. The commenter further stated that CMS should reconsider its FY 2026 decision to postpone action on the MS-DRG modification request to reassign cases reporting procedure code XW0V0P7 and clarify the criteria for how procedures are assigned O.R. versus non-O.R. status, as well as whether having O.R. status for a procedure code is essential for the code to potentially influence the MS-DRG assignment in the GROUPER. The commenter provided additional information and analyses for CMS' consideration and stated that cases

reporting procedure code XW0V0P7 show a compelling discrepancy in resource use that should not be ignored.

With respect to our discussion regarding the request to modify the GROUPER logic of MS-DRG 794, a commenter specifically stated they appreciate CMS' ongoing examination of the GROUPER logic for the MS- DRGs in MDC 15 (Newborns and Other Neonates with Conditions Originating in Perinatal Period) to determine if restructuring the current MS-DRGs would better recognize the clinical distinctions of these patient populations.

Response: We thank the commenters for sharing their feedback on these requests. As discussed in the proposed rule, we have found that with the implementation of ICD-10, some types of requested changes to the MS-DRG classifications require more extensive research to identify and analyze the relevant data for evaluating a potential change.

With respect to the comments received in response to our proposed rule discussion of the request to modify the GROUPER logic of MS-DRGs 426, 427, and 428, MS-DRGs 456, 457, and 458, and MS-DRGs 447 and 448, while many commenters stated their belief that a modification to the logic of these MS-DRGs is warranted for FY 2026, we note that we did not propose a change to the logic for FY 2026, nor did we state the request was specifically rejected. Rather, we noted in the proposed rule that we will continue to consider this request in connection with future rulemaking. We appreciate the analysis that the commenter (the manufacturer) performed and the findings it shared, including with the proposed changes to the diagnosis code logic for MS-DRGs 456, 457, and 458; however, as discussed in the proposed rule, the proposed changes for MS-DRGs 456, 457, and 458 involving diagnosis code logic were only one of several considerations as to why additional time is needed to evaluate the reassignment request (90 FR 18012). We note that the logic for case assignment to MS-DRGs 456, 457, and 458 is also defined by extensive fusions. In addition, MS-DRGs 426, 427, 428, 447, and 448 (that is, multiple level spinal fusions) recently became effective October 1, 2024 which we are continuing to monitor. The data analysis necessary to examine the intricate logic within the spinal fusion MS- DRGs outlined in the request is complex and requires additional time for careful consideration of case redistribution and potential relative weight impacts, in connection with other related spinal fusion procedure requests that may be discussed in future rulemaking.

With respect to the comment we received in response to our proposed rule discussion of the request to reassign cases with ICD-10-PCS code XW0V0P7 (Introduction of antibiotic-eluting bone void filler into bones, open approach, new technology group 7) among MS-DRGs 463, 464, and 465; MS-DRGs 466, 467, and 468; and MS-DRGs 492, 493, and 494, while the commenter stated that CMS should reconsider the decision to postpone action on the request to modify the MS-DRG logic for the aforementioned MS-DRGs for FY 2026, we note that we did not propose a change to the logic for FY 2026. Rather, we noted in the proposed rule that we will continue to consider this request in connection with future rulemaking. We appreciate the analysis that the commenter (the manufacturer) performed and the findings it shared; however, we note that in addition to assessing impacts in association with other MS-DRG requests being considered, there are various types of bone void fillers and additional data analysis would also need to be performed to assess cases reporting the procedure codes describing those alternative products for comparison. While we did not propose a change to the assignment of these cases for FY 2026, we noted in our proposed rule discussion that we will continue to consider this request in connection with future rulemaking.

As previously discussed, we will continue to consider these issues in connection with future rulemaking. As we develop and refine our analysis of the claims data with respect to MS-DRGs in MDC 01, MDC 08, and MDC 15, we welcome feedback on other factors that should be considered in the potential restructuring of these MS-DRGs. Feedback and other suggestions may be directed to MEARISTM at: https://mearis.cms.gov/public/home. As noted, interested parties should submit any MS-DRG classification change requests, including any comments and suggestions for FY 2027 consideration by October 20, 2025 via MEARISTM at: https://mearis.cms.gov/public/home.

As we did for the FY 2025 IPPS/LTCH PPS proposed rule, for the FY 2026 IPPS/LTCH PPS proposed rule we provided a test version of the ICD- 10 MS-DRG GROUPER Software, Version 43, so that the public can better analyze and understand the impact of the proposals included in the proposed rule. We noted that this test software reflected the proposed GROUPER logic for FY 2026. Therefore, it included the new diagnosis and procedure codes that are effective for FY 2026 as reflected in Table 6A.--New Diagnosis Codes--FY 2026 and Table 6B.--New Procedure Codes-- FY 2026 associated with the proposed rule and does not include the diagnosis codes that are invalid beginning in FY 2026 as reflected in Table 6C.--Invalid Diagnosis Codes--FY 2026 and Table 6D.--Invalid Procedure Codes--FY 2026 associated with the proposed rule. Those tables were not published in the Addendum to the FY 2026 IPPS/LTCH PPS proposed rule, but are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as described in section VI. of the Addendum to the FY 2026 IPPS/LTCH PPS proposed rule. Because the diagnosis and procedure codes no longer valid for FY 2026 are not reflected in the test software, we made available a supplemental file in Table 6P.1a that includes the mapped Version 43 FY 2026 ICD-10-CM codes and the deleted Version 42 FY 2025 ICD-10-CM codes and Table 6P.1b that includes the mapped Version 43 FY 2026 ICD-10-PCS codes and the deleted Version 42.1 FY 2025 ICD-10-PCS codes that should be used for testing purposes with users' available claims data. Therefore, users had access to the test software allowing them to build case examples that reflect the proposals that were included in the proposed rule. In addition, users were able to view the draft version of the ICD-10 MS-DRG Definitions Manual, Version 43 that contains the documentation for proposed FY 2026 ICD-10 MS-DRG GROUPER Version 43 logic changes and were also able to view a draft version of the Definitions of Medicare Code Edits (MCE) Manual to review any changes that will become effective October 1 for FY 2026. In the proposed rule we also noted that, as a result of new and modified code updates approved after the annual spring ICD-10 Coordination and Maintenance Committee meeting, any further changes to the MCE will be reflected in the finalized Definitions of Medicare Code Edits (MCE) Manual, made available in association with the annual IPPS/LTCH PPS final rule. As such, we made available the draft FY 2026 ICD-10 MCE Version 43 Manual file on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software.

We noted in the proposed rule that the MCE manual is comprised of two chapters: Chapter 1: Edit code lists provides a listing of each edit, an

explanation of each edit, and as applicable, the diagnosis and/or procedure codes for each edit, and Chapter 2: Code list changes summarizes the changes in the edit code lists (for example, additions and deletions) from the prior release of the MCE software. We also stated that the public may submit any questions, comments, concerns, or recommendations regarding the MCE to the CMS mailbox at [email protected] for our review and consideration.

In association with the proposed rule, we made available the test version of the ICD-10 MS-DRG GROUPER Software, Version 43, the draft version of the ICD-10 MS-DRG Definitions Manual, Version 43, the draft version of the Definitions of Medicare Code Edits Manual, Version 43, and the supplemental mapping files in Tables 6P.1a and 6P.1b of the FY 2025 and FY 2026 ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes which are available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.

Comment: Commenters expressed appreciation that we provided a test version of the ICD-10 MS-DRG GROUPER Software, Version 43, along with mapping files to assist with analysis, however, the commenters stated that this version essentially only allows for a case-by-case analysis and a minimal batch analysis. The commenters stated that it would be more beneficial to have a Batch z/OS version of the test GROUPER so that it could be better utilized for broader and more meaningful analysis purposes. The commenters requested that availability of a Batch z/OS version of the test GROUPER be made publicly available for all future rulemaking.

Response: We appreciate the commenters' feedback and will take the suggestion into consideration.

Following are the changes that we proposed to the MS-DRGs for FY 2026. We invited public comments on each of the MS-DRG classification proposed changes, as well as our proposals to maintain certain existing MS-DRG classifications discussed in the FY 2026 IPPS/LTCH PPS proposed rule. In some cases, we proposed changes to the MS-DRG classifications based on our analysis of claims data and clinical appropriateness. In other cases, we proposed to maintain the existing MS-DRG classifications based on our analysis of claims data and clinical appropriateness. As discussed in the FY 2026 IPPS/LTCH PPS proposed rule, our MS-DRG analysis was based on ICD-10 claims data from the September 2024 update of the FY 2024 MedPAR file, which contains hospital bills received from October 1, 2023 through September 30, 2024. In our discussion of the proposed MS-DRG reclassification changes, we referred to these claims data as the “September 2024 update of the FY 2024 MedPAR file.”

As explained in previous rulemaking (76 FR 51487), in deciding whether to propose to make further modifications to the MS-DRGs for particular circumstances brought to our attention, we consider whether the resource consumption and clinical characteristics of the patients with a given set of conditions are significantly different than the remaining patients represented in the MS-DRG. We evaluate patient care costs using average costs and lengths of stay and rely on clinical factors to determine whether patients are clinically distinct or similar to other patients represented in the MS-DRG. In evaluating resource costs, we consider both the absolute and percentage differences in average costs between the cases we select for review and the remainder of cases in the MS-DRG. We also consider variation in costs within these groups; that is, whether observed average differences are consistent across patients or attributable to cases that are extreme in terms of costs or length of stay, or both. Further, we consider the number of patients who will have a given set of characteristics and generally prefer not to create a new MS-DRG unless it would include a substantial number of cases.

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58448), we finalized our proposal to expand our existing criteria to create a new complication or comorbidity (CC) or major complication or comorbidity (MCC) subgroup within a base MS-DRG. Specifically, we finalized the expansion of the criteria to include the NonCC subgroup for a three-way severity level split. We stated we believed that applying these criteria to the NonCC subgroup would better reflect resource stratification as well as promote stability in the relative weights by avoiding low volume counts for the NonCC level MS-DRGs. We noted that in our analysis of MS-DRG classification requests for FY 2021 that were received by November 1, 2019, as well as any additional analyses that were conducted in connection with those requests, we applied these criteria to each of the MCC, CC, and NonCC subgroups.

As discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58661), we continue to apply the criteria to create subgroups, including application of the NonCC subgroup criteria, in our annual analysis of MS-DRG classification requests, consistent with our approach since FY 2021 when we finalized the expansion of the criteria to include the NonCC subgroup for a three-way severity level split. Accordingly, in our analysis of the MS-DRG classification requests for FY 2026 that we received by October 20, 2024, as well as any additional analyses that were conducted in connection with those requests, we applied these criteria to each of the MCC, CC, and NonCC subgroups, as described in the following table.

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In general, once the decision has been made to propose to make further modifications to the MS-DRGs as described previously, such as creating a new base MS-DRG, or in our evaluation of a specific MS-DRG classification request to split (or subdivide) an existing base MS-DRG into severity levels, all five criteria must be met for the base MS-DRG to be split (or subdivided) by a CC subgroup. We note that in our analysis of requests to create a new MS-DRG, we typically evaluate the most recent year of MedPAR claims data available. For example, we stated earlier that for the FY 2026 IPPS/LTCH PPS proposed rule, our MS-DRG analysis was based on ICD-10 claims data from the September 2024 update of the FY 2024 MedPAR file. However, in our evaluation of requests to split an existing base MS-DRG into severity levels, as noted in prior rulemaking (80 FR 49368), we typically analyze the most recent 2 years of data. This analysis includes 2 years of MedPAR claims data to compare the data results from one year to the next to avoid making determinations about whether additional severity levels are warranted based on an isolated year's data fluctuation and also, to validate that the established severity levels within a base MS-DRG are supported. The first step in our process of evaluating if the creation of a new CC subgroup within a base MS-DRG is warranted is to determine if all the criteria is satisfied for a three-way split. In applying the criteria for a three-way split, a base MS-DRG is initially subdivided into the three subgroups: MCC, CC, and NonCC. Each subgroup is then analyzed in relation to the other two subgroups using the volume (Criteria 1 and 2), average cost (Criteria 3 and 4), and reduction in variance (Criteria 5). If the criteria fail, the next step is to determine if the criteria are satisfied for a two-way split. In applying the criteria for a two-way split, a base MS-DRG is initially subdivided into two subgroups: “with MCC” and “without MCC” (1_23) or “with CC/MCC” and “without CC/MCC” (12_3). Each subgroup is then analyzed in relation to the other using the volume (Criteria 1 and 2), average cost (Criteria 3 and 4), and reduction in variance (Criteria 5). If the criteria for both of the two-way splits fail, then a split (or CC subgroup) would generally not be warranted for that base MS-DRG. If the three-way split fails on any one of the five criteria and all five criteria for both two-way splits (1_23 and 12_3) are met, we would apply the two-way split with the highest R2 value. We note that if the request to split (or subdivide) an existing base MS-DRG into severity levels specifies the request is for either one of the two-way splits (1_23 or 12_3), in response to the specific request, we will evaluate the criteria for both of the two-way splits; however, we do not also evaluate the criteria for a three-way split.

We are making the FY 2026 ICD-10 MS-DRG GROUPER and Medicare Code Editor (MCE) Software Version 43, the ICD-10 MS-DRG Definitions Manual files Version 43 and the Definitions of Medicare Code Edits Manual Version 43 available to the public on our CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software. 2. Pre-MDC MS-DRG 018 Chimeric Antigen Receptor (CAR) T-Cell and Other Immunotherapies

In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18015 through 18017), we discussed a request we received to review the recent MS-DRG assignments to Pre-MDC MS-DRG 018 (Chimeric Antigen Receptor (CAR) T- cell and Other Immunotherapies) and to clarify how decisions for the assignment of cell and gene therapies will be made moving forward. According to the requestor, for FY 2025, CMS did not assign prademagene zamikeracel (PZ), an autologous genetically engineered cell-based gene therapy, to MS-DRGs that would create clinical homogeneity and therefore, the mapping of these cases to MS-DRG 018 instead implied that estimated post-approval product pricing takes precedent for cell and gene therapies over clinical homogeneity principles. The requestor acknowledged that CMS has previously clarified that therapies mapped to Pre-MDC MS-DRG 018 do not need to be CAR T-cell products or utilized in the treatment of cancer and stated it concurs with that approach. However, the requestor indicated that the mapping of PZ to Pre-MDC MS- DRG 018 for FY 2025 also raised the following questions:

Why was PZ mapped to Pre-MDC MS-DRG 018 when a different product (eladocagene exuparvovec) that is also delivered via operating room administration methods was mapped to other non-pre-MDC MS-DRGs?

Why did CMS indicate that Lantidra, a recently approved cellular therapy, would map to the same MS-DRGs as existing insulin delivery therapies and technologies used to treat the subset of patients with hard-to-control Type 1 diabetes complicated by severe hypoglycemia who cannot receive a whole pancreas transplant instead of to Pre-MDC MS-DRG 018?

Does CMS intend a future split of Pre-MDC MS-DRG 018 between medical and surgical cell and gene therapies to recognize the clinical resource

differential between the two modalities, even if the 500 case volume threshold is not reached?

Why was a product delivered via allogeneic stem cell transplant procedure (Orca-T) mapped to Pre-MDC MS-DRG 018 instead of Pre-MDC MS-DRG 014 (Allogeneic Bone Marrow Transplant)?

If products delivered via stem cell transplant should be mapped to Pre-MDC MS-DRG 018 based on resource use, per the Orca-T example, why are multiple gene therapy products delivered via stem cell transplant instead mapped to Pre-MDC MS-DRGs 016 and 017 (Autologous Bone Marrow Transplant with CC/MCC and without CC/MCC, respectively)?

The requestor stated the previously listed questions illustrate examples of inconsistencies with the MS-DRG mappings of cell and gene therapy products in recent years. The requestor recommended that CMS review recent MS-DRG assignments for these products and consider refinements to the approach. The requestor also urged CMS to clarify how decisions for cell and gene therapies will be made in the future. The requestor stated that if the intent of CMS is for Pre-MDC MS-DRG 018 to be a broad cell and gene therapy MS-DRG then a modification to the title of Pre-MDC MS-DRG 018 should be proposed and therapies currently assigned to other MS-DRGs should be re-mapped.

The requestor also suggested that CMS clarify the process by which interested parties can submit comments on potential or proposed procedure code mappings to the MS-DRGs for code proposals discussed at the Spring ICD-10 Coordination and Maintenance (C&M) Committee meeting since, given the timing, proposed code assignments are not published in association with the annual IPPS/LTCH PPS proposed rule. Specifically, the requestor stated there is no opportunity for interested parties to provide feedback to CMS about the assignment of new codes to Pre-MDC MS-DRG 018. The requestor stated that because MS-DRG 018 is a Pre-MDC MS-DRG with a limited number of procedure codes mapping to it, it is important for interested parties to have the ability to preview potential assignments to this MS-DRG and provide feedback to CMS prior to any final mapping decisions being made. The requestor acknowledged that CMS previously responded to prior comments regarding the process of commenting on the assignment of newly created codes; however, the requestor suggested that CMS provide additional clarification. Specifically, the requestor stated that the primary comment period with respect to the Spring procedure code requests is the timeframe following the ICD-10 C&M Committee meeting and that the materials provided in association with the meeting do not contain mapping requests submitted by the code requestor. The requestor indicated that if it is to assume any new procedure code request could potentially be mapped to Pre-MDC MS-DRG 018 and submits comments accordingly, that would create an undue burden. The requestor submitted the following questions regarding the process by which interested parties may submit comments on potential procedure code mappings to MS-DRGs:

Can mapping requests be submitted as part of the request for a new ICD-10-PCS procedure code or do mapping requests need to go through the MS-DRG modification process with an annual October deadline?

Can CMS provide information on mapping requests as part of the ICD-10 C&M Committee meeting materials?

Will comments submitted to the ICD-10 C&M Committee about potential mappings be shared with the CMS teams associated with MS-DRG mapping decisions?

Should interested parties include the same comments that are submitted to the ICD-10 C&M Committee in their proposed rule comments?

Will comments submitted as part of the proposed rule be considered within scope for proposed codes presented during the spring meeting that are subsequently finalized but not listed in Table 6A.-- New Diagnosis codes and Table 6B.--New Procedure Codes with proposed mappings?

Do CMS' prior responses indicate that interested parties who submit comments on procedure code mappings should request code proposals presented at the spring meeting be delayed until the fall meeting?

The requestor recommended that CMS address the previously listed questions and seek input on the process by which interested parties may submit comments on potential procedure code mappings.

We stated in the proposed rule that we appreciated the requestor's feedback and suggestions regarding the classification of therapies to Pre-MDC MS-DRG 018 and the broader topic of MS-DRG mappings of cell and gene therapy products for the future. As discussed in the FY 2025 IPPS/ LTCH PPS final rule (89 FR 69008 through 69010), we summarized and responded to comments regarding the mapping of procedure codes describing the application of PZ and other newly established procedure codes to Pre-MDC MS-DRG 018. We noted that we previously addressed similar comments in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48806 through 48807), and we also noted that we provided detailed summaries and responses to these same or similar comments in the FY 2022 IPPS/ LTCH PPS final rule (86 FR 44798 through 44806). We also referred the reader to the discussion in section II.D. of the FY 2026 IPPS/LTCH PPS proposed rule, regarding the proposed relative weight methodology for cases mapping to Pre-MDC MS-DRG 018 effective October 1, 2025, for FY 2026.

As discussed in the proposed rule, with respect to the requestor's suggestion that a modification to the title of Pre-MDC MS-DRG 018 be proposed, we noted that the requestor did not provide a specific recommendation for FY 2026 consideration; however, we acknowledged that there has been discussion related to requests to revise the title to Pre-MDC MS-DRG 018 in prior rulemaking, most recently in the FY 2025 IPPS/LTCH PPS final rule (89 FR 69008 through 69010), and we stated that we continue to be interested in obtaining input from members of the public on options to consider, recognizing there are additional types of cell and gene therapies now mapping to Pre-MDC MS-DRG 018. We stated we will continue to review additional feedback and suggestions in connection with future rulemaking.

In response to the requestor's assertion that there is no opportunity for interested parties to submit feedback about MS-DRG assignments, as we have discussed in prior rulemaking (87 FR 48807 through 48808) and as noted in the proposed rule discussion, interested parties may use current coding information as shown in the ICD-10 C&M Committee meeting materials to consider the potential MS-DRG assignments for any procedure codes that may be finalized after the Spring meeting and submit public comments for consideration. As we have noted in prior rulemaking, because the diagnosis and procedure code proposals that are presented at the Spring ICD-10-CM C&M Committee meeting for an October 1 implementation (upcoming FY) are not finalized in time to include in Table 6A.--New Diagnosis Codes and Table 6B.--New Procedure Codes in association with the proposed rule, we use our established process to examine the MS-DRG assignment for the predecessor codes to determine the most appropriate MS-DRG assignment. Specifically, we review the predecessor code and MS-DRG assignment most

closely associated with the new procedure code, and in the absence of claims data, we consider other factors that may be relevant to the MS- DRG assignment, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the condition. We have noted in prior rulemaking that this process does not automatically result in the new procedure code being assigned to the same MS-DRG or to have the same designation (O.R. versus Non-O.R.) as the predecessor code. In response to the question regarding the inclusion of information on mapping requests as part of the ICD-10 C&M Committee meeting materials, we noted in the proposed rule that, as announced at each ICD-10 C&M Committee meeting, there is no discussion of MS-DRGs, payment, coverage, or billing at the ICD-10 C&M Committee meetings; therefore, we do not include such information in the meeting materials made publicly available in association with the meeting. Rather, we state that any issues related to MS-DRGs or payment are addressed through IPPS rulemaking. We noted that the purpose of the ICD-10 C&M Committee meeting is to present code proposals based on requests received regarding coding updates (that is, additions, deletions, or revisions). Therefore, while mapping requests may be included in the submission of an ICD-10-PCS procedure code request, that information is not included in the meeting materials, nor is there any discussion about any mapping request(s) during the meeting.

In response to the requestor's question regarding whether comments submitted to the ICD-10 C&M Committee about potential mappings are shared with the CMS staff associated with MS-DRG mapping decisions, we noted in the proposed rule that the comments are shared. With respect to whether interested parties should include the same comments submitted to the ICD-10 C&M Committee in the comments submitted in response to the proposed rule, we noted in the proposed rule that what comments to include and submit for each process is up to the commenter. In response to the question of whether comments submitted in response to the proposed rule would be considered within scope for proposed codes presented during the Spring meeting that are subsequently finalized but not listed in Table 6A.--New Diagnosis codes and Table 6B.--New Procedure Codes with proposed mappings, we noted in the proposed rule that the procedure code update files reflecting the newly finalized codes are made publicly available following the receipt and review of public comments received by the established deadline for the Spring coding topics, and that interested parties may choose to submit public comments on MS-DRG assignment for the agency's consideration. Lastly, in response to the question of whether interested parties considering submitting comments on procedure code mappings should request code proposals associated with the Spring meeting be delayed until the Fall meeting, we similarly noted in the proposed rule that the decision on what comments a commenter decides to include and submit in response to a code proposal is up to the commenter. We referred the reader to section II.C.11. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule for additional information regarding the ICD-10 C&M Committee meeting process.

As discussed in the proposed rule, in connection with the comments and questions about how products are grouped under the IPPS MS-DRGs, specifically with respect to cell and gene therapies under Pre-MDC MS- DRG 018, for FY 2026, we also received a request to create a new neurosurgical gene therapy MS-DRG to more accurately reflect the clinical characteristics and resource intensity required for the administration of neurosurgical gene therapies, including eladocagene exuparvovec, for patients diagnosed with Aromatic L-amino acid decarboxylase (AADC) deficiency. We referred the reader to the FY 2022 IPPS/LTCH PPS final rule (86 FR 44895) and the FY 2023 IPPS/LTCH PPS final rule (87 FR 48853 through 48854) for discussion regarding eladocagene exuparvovec.

We stated that the requestor (the manufacturer), expressed its appreciation for CMS' efforts to reassign cases reporting procedure code XW0Q316 (Introduction of eladocagene exuparvovec into cranial cavity and brain, percutaneous approach, new technology group 6) to a surgical MS-DRG as discussed in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44895). According to the requestor, the decision appropriately reclassified cases involving eladocagene exuparvovec from a Non-O.R. procedure to an operating room (O.R.) procedure due to the requirement for intraputaminal administration via a burr hole in the skull. However, the requestor did not agree with the current assignment to MS- DRGs 628, 629, and 630 (Other Endocrine, Nutritional and Metabolic O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 10, or MS-DRGs 987, 988, and 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without MCC/CC, respectively). According to the requestor, the clinical characteristics and average costs of the cases currently assigned to MS-DRGs 628, 629, and 630 are significantly different from those associated with eladocagene exuparvovec neurosurgical gene therapy for rare disease.

The requestor stated that CMS denied the request to create a new MS-DRG for FY 2023, stating that it would continue to explore appropriate mechanisms to address low volume MS-DRGs indicated for rare diseases; however, after receiving responses to the Request for Information (RFI), the requestor stated that there have not been any changes proposed to the IPPS. The requestor stated its belief that assigning cases for this gene therapy and the rare disease indicated to a new MS-DRG is both appropriate and warranted. According to the requestor, the current MS-DRGs that eladocagene exuparvovec cases group to do not adequately reflect the clinical characteristics or resource needs associated with treatment which may deter hospitals from providing this therapy.

The requestor also stated there are approximately 68 gene therapy trials in the U.S. for central nervous system disorders for which over 30 of the 68 trials involve the gene therapy being administered directly into the brain parenchyma. According to the requestor, gene therapies administered surgically, including with neurosurgery, are extremely complicated, resource-intensive procedures for hospitals to undertake. These procedures require highly specialized surgeons, surgical equipment, and staff. Patients undergoing these procedures may also require continuous monitoring and longer hospital stays. The requestor stated the more intensive needs of these patients are not adequately captured in existing MS-DRGs and the creation of a new MS- DRG for neurosurgical gene therapy would help CMS proactively shape payment policy for this evolving class of therapies, thus allowing appropriate payment to support patient access to these treatments.

We stated that our analysis of the September 2024 update of the FY 2024 MedPAR file yielded zero cases reporting the administration of eladocagene exuparvovec; therefore, we believed it would be premature to consider the creation of a new neurosurgical gene therapy MS-DRG at this time. We also stated we appreciated

the detailed clinical information that the requestor provided and acknowledged that cases involving neurosurgery are technically complex and that patients undergoing these procedures tend to be critically ill, many with rare diseases.

We noted that we did receive a new procedure code request to identify and describe the Smartflow[supreg] Neuro Cannula as the delivery mechanism to administer eladocagene exuparvovec that was included as a topic in the Spring 2025 ICD-10 Coordination and Maintenance Committee Update materials. We refer the reader to the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials for additional detailed information regarding the request, and the related materials. We note that procedure code 00H033J (Insertion of infusion device into brain, temporary, percutaneous approach) that describes the procedure that uses the Smartflow[supreg] Neuro Cannula was approved and finalized as reflected in the FY 2026 ICD-10-PCS code update files that were made publicly available on the CMS website on June 6, 2025 at: https://www.cms.gov/medicare/coding-billing/icd-10-codes.

We also noted, as discussed in prior rulemaking, that this category of therapies continues to evolve, and we are in the process of carefully considering the feedback we have previously received about ways in which we can continue to appropriately reflect resource utilization while maintaining clinical coherence and stability in the relative weights under the IPPS MS-DRGs. We appreciate the recommendations and suggestions for consideration we have received and will continue to examine these complex issues in connection with future rulemaking. We acknowledge that there may be distinctions to account for as we continue to gain more experience in the use of these therapies and have additional claims data to analyze.

Comment: A commenter (the requestor) expressed appreciation for the clarification CMS provided regarding the submission of comments related to coding requests presented during the Spring ICD-10 Coordination and Maintenance Committee Meeting and that comments submitted after the Spring meeting will be shared with the groups responsible for considering MS-DRG mappings. The commenter stated that while some stakeholders may have the resources and expertise to review meeting materials, infer potential requested mappings for all therapies requesting new codes and submit mapping comments accordingly, many stakeholders will not. The commenter stated that if an applicant is requesting an MS-DRG mapping as part of the ICD-10-PCS process, this should be made explicitly public in the meeting materials, even if it is not discussed in the meeting itself. The commenter also stated that CMS should not ask or expect all stakeholders to know enough about clinical care and CMS' mapping processes to be able to suggest an alternative mapping for a code, if required. The commenter reiterated its request for CMS to introduce a process by which stakeholders can review requested MS-DRG mappings as part of, or in parallel to, the ICD-10-PCS code request process. The commenter also requested that CMS utilize its established process to review and reconsider MS-DRG assignment when stakeholders raise concerns about CMS' assignment instead of expecting stakeholders to propose alternative mappings.

Response: We thank the commenter for the feedback. In response to the commenter's assertion that not all stakeholders may have the resources and expertise to review meeting materials, infer potential requested mappings for all therapies requesting new codes and submit mapping comments accordingly, we note that we have made all of the information and materials necessary to conduct those actions publicly available via the CMS website. Specifically, the ICD-10 Coordination and Maintenance Committee Meeting materials are available at: https://www.cms.gov/medicare/coding-billing/icd-10-codes/icd-10-coordination-maintenance-committee-materials, and the meeting process is summarized in the annual rulemakings available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps. In addition, the ICD-10 MS-DRG Definitions Manual is made publicly available via the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software.

In response to the commenter's statement that if an applicant is requesting an MS-DRG mapping as part of the ICD-10-PCS process it should be made public in the meeting materials even if it is not discussed in the meeting itself, we note that, as discussed in the preamble of the proposed rule (90 FR 18016) and this final rule, the purpose of the ICD-10 Coordination and Maintenance Committee meeting is to present code proposals based on requests received regarding coding updates (that is, additions, deletions, or revisions). Therefore, while mapping requests may be included in the submission of an ICD-10-PCS procedure code request, we disagree that the information should be included in the meeting materials. We underscore that the focus of the ICD-10 Coordination and Maintenance Committee meetings is on updates and maintenance to the ICD-10 code sets and not about how a potential new code may be designated or assigned under the IPPS, which is addressed through rulemaking. These are two separate and distinct processes, each with their own objectives and timelines.

In response to the commenter's statement that CMS should not ask or expect all stakeholders to know enough about clinical care and CMS' mapping processes to be able to suggest an alternative mapping for a code, if required, we note that under our established process, we consider requests for MS-DRG classification changes on an annual basis that are submitted via MEARISTM at: https://mearis.cms.gov/public/home by the designated October 20 deadline for the upcoming fiscal year. If a proposal is subsequently put forth in rulemaking and members of the public submit comments expressing disagreement with that proposal (for example, proposed new MS-DRG(s), proposed reassignment of diagnosis and/or procedure codes, or their designation), the public comments routinely provide the rationale behind the disagreement as well as alternative suggestions) for our consideration, which we may be able to further evaluate. With respect to the mapping process, as discussed in the preamble of the proposed rule (90 FR 18016) and this final rule, under our established process, when a new procedure code is finalized, we review the predecessor code and MS-DRG assignment most closely associated with the new procedure code, and in the absence of claims data, we consider other factors that may be relevant to the MS- DRG assignment, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the condition. We have noted in prior rulemaking that this process does not automatically result in the new procedure code being assigned to the same MS-DRG or to have the same designation (O.R. versus Non-O.R.) as the predecessor code.

Comment: A commenter (the requestor) expressed appreciation that CMS shared the types of concerns and questions raised by stakeholders about the rationale for mapping new ICD-10-PCS codes for novel therapies into Pre-MDC MS-DRG 018; however, the commenter requested that CMS discuss

the rationale for mapping Orca-T allogeneic T-cell immunotherapy to Pre-MDC MS-DRG 018.

Response: We thank the commenter for the feedback. The procedure code proposal for Orca-T allogeneic T-cell immunotherapy was discussed at the March 19-20, 2024 ICD-10 Coordination and Maintenance Committee meeting. We refer the reader to the meeting materials on the CMS website at: https://www.cms.gov/medicare/coding-billing/icd-10-codes/icd-10-coordination-maintenance-committee-materials for additional information regarding the request. ICD-10-PCS codes XW033BA (Introduction of Orca-T allogeneic T-cell immunotherapy into peripheral vein, percutaneous approach, new technology group 10) and XW043BA (Introduction of Orca-T allogeneic T-cell immunotherapy into central vein, percutaneous approach, new technology group 10) became effective October 1, 2024, for FY 2025. Under our established process, we reviewed the predecessor code assignments. The predecessor codes for Orca-T allogeneic T-cell immunotherapy (hereafter referred to as Orca- T) are procedure codes 3E033GC (Introduction of other therapeutic substance into peripheral vein, percutaneous approach) and 3E043GC (Introduction of other therapeutic substance into central vein, percutaneous approach) that are designated as non-O.R. and do not affect MS-DRG assignment. We then reviewed other factors associated with Orca-T. Notably, Orca-T is a precision-engineered allogeneic stem cell and T-cell immunotherapy biologic (that is, a combination therapy comprised of immune cells, including regulatory T-cells (Tregs) and conventional T-cells (Tcons), and stem cells) that is in clinical trials and regulated under FDA section 351 of the Public Health Service Act (PHSA) as a biologic.

Allogeneic hematopoietic stem cell transplant (alloHSCT) can provide a curative therapy for many patients with advanced hematologic malignancies. Unfortunately, despite advancements in identifying matching donors and medical care, patients can experience a variety of post-transplant complications including Graft Versus Host Disease (GvHD), infection and organ failure. GvHD is a condition in which the donated cells attack the recipient's tissues which can lead to end organ damage.

Orca-T is derived from an HLA matched donor and combines progenitor stem cells along with highly purified T-cells in the form of regulatory T-cells (Tregs, a specialized CD4+ T cell subset) and conventional T- cells (Tcons). Because of its purified nature, the Tregs can proliferate and exist in a patient's tissues in a fashion not normally possible. While the stem cells serve to build a long term immune system in the recipient, the Tregs act to protect the patient's tissues and organs from GvHD and other toxicities. The Tcons component is designed to accelerate the reconstitution of a patient's immune system, mediating the graft-versus-leukemic effect, graft-versus-infection and the inflammatory responses, providing protection against infection.

Establishment of a successful allograft requires an approach that balances an enhancement of the graft-vs-tumor and graft-vs-infection effects while avoiding or limiting GvHD. While some immunotherapeutic agents treat an active disease process, the specialized cells in Orca-T are intended to immunologically mitigate significant post allograft complications such as GvHD and infection.

We note that both CAR T-cell therapy and Orca T-cell therapy are forms of immunotherapies that are indicated for patients diagnosed with acute lymphoblastic leukemia (ALL), among other types of cancer. One of the challenges experienced to date with the treatment of ALL is GvHD, which is what Orca-T is formulated to address. We also note that there are other procedure codes describing both allogeneic CAR T-cell and non-CAR T-cell immunotherapy currently assigned to MS-DRG 018. Therefore, we believe the assignment of Orca T-cell immunotherapy to Pre-MDC MS-DRG 018 is appropriate.

Comment: A commenter stated that the procedure code describing valoctocogene roxaparvovec is listed in Table 6B in association with the proposed rule and a proposed mapping to Pre-MDC MS-DRG 018, but CMS did not discuss any rationale for this proposal in the rule text. The commenter stated that the title of Pre-MDC MS-DRG 018 is Chimeric Antigen Receptor (CAR) T-Cell and Other Immunotherapies, and valoctocogene roxaparvovec is an off-the-shelf in vivo gene therapy that is neither a CAR-T nor an immunotherapy. Additionally, according to the commenter, it does not require the same types of complex and specialized clinical resources to administer as the other therapies assigned to Pre-MDC MS-DRG 018. The commenter further stated that, as a result, and without any discussion or explanation from CMS about why its medical advisors have proposed this, they assume that this proposed assignment is simply based on the manufacturer's request to assign its product to Pre-MDC MS-DRG 018 as part of the ICD-10-PCS code request application. The commenter stated that CMS' acceptance of this requested mapping is concerning as it seems that resource homogeneity is the only factor being relied upon. The commenter stated its understanding is that CMS has always discussed the importance of balancing both clinical and resource homogeneity when considering MS- DRG assignments for new therapies. The commenter provided an example stating that CMS assigned several hematopoietic stem cell gene therapies to autologous transplant MS-DRGs 016 and 017 (Autologous Bone Marrow Transplant with CC/MCC and without CC/MCC, respectively) based on the clinical similarity of the services being provided to the patient, rather than basing assignment on price point. According to the commenter, if the latter had been deemed more critical at the time of those assignments, then CMS would have assigned the therapies to Pre- MDC MS-DRG 018 as well. The commenter also stated that CMS did not propose to map eladocagene exuparvovec to MS-DRG 018 after denying its request for a new MS-DRG (as discussed later in this section), though eladocagene exuparvovec has a similar price point. The commenter stated it cannot determine any consistent logic guiding the variation in recent mapping proposals and decisions.

The commenter requested that CMS not finalize the proposed mapping of valoctocogene roxaparvovec to Pre-MDC MS-DRG 018 due to differences in clinical complexity and resource use. The commenter stated that CMS should use its established mapping process and input from its clinical advisors to assign valoctocogene roxaparvovec to a more clinically appropriate MS-DRG.

Response: In response to the commenter's request that CMS not finalize the proposed mapping of valoctocogene roxaparvovec to Pre-MDC MS-DRG 018 because it is neither a CAR-T nor an immunotherapy and does not require the same types of complex and specialized clinical resources to administer as the other therapies assigned to Pre-MDC MS- DRG 018, we note that, as discussed in prior rulemaking, consideration is given to the similarities and differences in resource utilization among patients in each MS-DRG and we strive to ensure that resource utilization is relatively consistent across patients in each MS-DRG. However, some variation in resource intensity will remain among the patients in each MS-DRG because

the definition of the MS-DRG is not so specific that every patient is identical, rather the average pattern of resource intensity of a group of patients in an MS-DRG can be predicted. We note that historically, in the development of the DRGs, the initial step in the determination of the DRG had been the assignment of the appropriate MDC based on the principal diagnosis, however, beginning with the eighth version of the GROUPER (CMS 8.0), the initial step in DRG assignment was based on the procedure being performed, thus the creation of the Pre-MDC DRGs, where the patient is assigned to these DRGs independent of the MDC of the principal diagnosis. Therefore, the logic for case assignment to Pre- MDC MS-DRG 018 does not preclude the assignment of other therapies indicated in the treatment of patients with different diagnoses. In our review of the MS-DRG assignment of valoctocogene roxaparvovec, we recognized that this technology is defined as a gene therapy. We also note that similar to the discussions in prior rulemaking with respect to the difficulty in predicting what the associated costs will be in the future for CAR T-cell and other immunotherapies that remain under development (87 FR 48806), it is also difficult to predict what the associated costs will be in the future for cell and gene therapies that remain under development or in clinical trials.

In response to the commenter's assertion that CMS did not use its established mapping process and input from its clinical advisors to assign valoctocogene roxaparvovec to a more clinically appropriate MS- DRG, as discussed in the preamble of the proposed rule (90 FR 18016) and this final rule, and as noted in prior rulemaking, we use our established process to examine the MS-DRG assignment for the predecessor codes to determine the most appropriate MS-DRG assignment. Specifically, we review the predecessor code and MS-DRG assignment most closely associated with the new procedure code, and in the absence of claims data, we consider other factors that may be relevant to the MS- DRG assignment, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the condition. As noted previously and in prior rulemaking, this process does not automatically result in the new procedure code being assigned to the same MS-DRG or to have the same designation (O.R. versus Non-O.R.). We note that the proposal to create new procedure codes that describe the administration of valoctocogene roxaparvovec was discussed at the September 10, 2024 ICD-10 Coordination and Maintenance Committee meeting. The predecessor codes to describe the administration of valoctocogene roxaparvovec are ICD- 10-PCS codes 3E033GC (Introduction of other therapeutic substance into peripheral vein, percutaneous approach) and 3E043GC (Introduction of other therapeutic substance into central vein, percutaneous approach) which are designated as non-O.R. and do not impact MS-DRG assignment. We refer the reader to the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials for additional detailed information regarding the code request, including a recording of the discussion and the related meeting materials. We also note that the procedure codes to describe the administration of valoctocogene roxaparvovec were approved and finalized as reflected in Table 6B.--New Procedure Codes associated with the proposed rule and this final rule (and available via the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps) as well as reflected in the FY 2026 ICD-10-PCS code update files that were made publicly available on the CMS website on June 6, 2025 at: https://www.cms.gov/medicare/coding-billing/icd-10-codes. As discussed in section II.C.11. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule and this final rule, the code titles are adopted as part of the ICD-10 Coordination and Maintenance Committee meeting process that have been finalized after the review of public comments. As also discussed in the preamble of the proposed rule (90 FR 18067) and this final rule, we proposed the MDC and MS-DRG assignments for the new diagnosis codes and procedure codes as set forth in Table 6A.--New Diagnosis Codes and Table 6B.--New Procedure Codes associated with the proposed rule. Therefore, the public has the opportunity to comment and provide feedback on the proposed assignments for CMS' consideration, which is subsequently included in the final rule with a summary of the comments and feedback and CMS' response, as is reflected in the discussion in this section of this final rule.

In response to the commenter's statement that valoctocogene roxaparvovec does not require the same types of complex and specialized clinical resources to administer as other therapies assigned to Pre-MDC MS-DRG 018, we note that valoctocogene roxaparvovec is indicated in the treatment of Hemophilia A, an X-linked genetic disorder that results in a dysfunction in the gene encoding for Factor VIII which is essential for proper coagulation. Patients may have varying degrees of functional activity of Factor VIII with severe activity (TM) and CAR T-cell therapy in that these treatments involve introduction of genetic material into a patient's cells to treat a disease process. CAR T-cell therapy uses a patient's genetically modified T-cells to treat cancer while prademagene zamikeracel and valoctocogene roxaparvovec introduce functional deoxyribonucleic acid (DNA) copies into a patient's skin and liver, respectively, to correct an inherited genetic dysfunction. While they are similar in character to the hematopoietic stem cell gene therapies assigned to autologous transplant MS-DRGs 016 and 017 (Autologous Bone Marrow Transplant with CC/MCC and without CC/MCC, respectively), resource utilization differs. Prademagene zamikeracel and valoctocogene roxaparvovec involve introduction of genetic material into mature cells while hematopoietic gene therapy involves introduction of genetic material into stem cells which require a level of resource utilization more akin to other therapies in MS-DRGs 016 and 017.

In response to the commenter's assumption that the manufacturer requested assignment to Pre-MDC MS-DRG 018 in association with its procedure code request, we note that it did not. We also take this opportunity to emphasize that, as has been discussed in prior rulemaking with respect to gene therapies, this category of therapies continues to evolve, and we are in the process of carefully considering the feedback we have previously received about ways in which we can continue

to appropriately reflect resource utilization while maintaining clinical coherence and stability in the relative weights under the IPPS MS-DRGs. We also note that valoctogene roxaparvovec is primarily administered in the outpatient setting (for example, hemophilia treatment centers). However, in rare instances when the therapy is administered in the inpatient setting or the patient must be transferred to the inpatient setting, providers are equipped with a specific procedure code to report its use in connection with a predictable payment mechanism under the IPPS.

Comment: A commenter stated they support appropriate and ongoing refinement of the MS-DRG system and greater clarity with respect to how CMS renders decisions regarding ICD-10-PCS codes mapped to Pre-MDC MS- DRG 018. Another commenter recommended that CMS dedicate space in each IPPS proposed rule to identify relevant ICD-10-PCS codes that might be assigned to Pre-MS-DRG 018, along with preliminary rationales for these potential assignments.

Response: We appreciate the commenters' feedback. We note that while the establishment of Pre-MDC MS-DRG 018 has presented unique operational considerations under the IPPS, there are also over 700 other MS-DRGs that warrant continued review for ongoing refinements. In response to how CMS renders decisions regarding the mapping of procedure codes to a Pre-MDC MS-DRG, as discussed in the preamble of the proposed rule (90 FR 18068) and in this final rule, we review the predecessor code and MS-DRG assignment most closely associated with the new diagnosis or procedure code, and in the absence of claims data, we consider other factors that may be relevant to the MS-DRG assignment, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis or treatment of the condition. As previously noted, this process does not automatically result in the new diagnosis or procedure code being proposed for assignment to the same MS-DRG or to have the same designation as the predecessor code.

Comment: A commenter stated it is unclear why discussion of the request to create a new MS-DRG to describe neurosurgical gene therapies was included under the Pre-MDC MS-DRG 018 section of the proposed rule instead of under MDC 10 (Endocrine, Nutritional and Metabolic Diseases and Disorders) where prior discussions of eladocagene exuparvovec have been included. The commenter indicated that if CMS placed this discussion in the Pre-MDC MS-DRG 018 section in an effort to seek comments about whether Pre-MDC MS-DRG 018 should be broadened to include eladocagene exuparvovec and other gene therapies that it be made explicit what information the agency is seeking from stakeholders in advance of the FY 2027 IPPS/LTCH PPS rulemaking cycle. The commenter also stated that if CMS intends for Pre-MDC MS-DRG 018 to be the primary Pre-MDC MS-DRG for all cell and gene therapies until further modifications can be made, the agency should propose to rename the MS- DRG and be consistent with mapping practices and rationale. The commenter further remarked that CMS' proposed rule analysis stated no cases reporting eladocagene exuparvovec were found, however, according to the commenter, because the product was not approved until November 2024, cases would not be expected to appear in the data.

Response: As stated in the preamble of the proposed rule (90 FR 18016), in connection with the comments and questions about how products are grouped under the IPPS MS-DRGs, specifically with respect to cell and gene therapies under Pre-MDC MS-DRG 018, for FY 2026, we also received a request to create a new neurosurgical gene therapy MS- DRG, which we believe was appropriately placed and discussed in that section of the preamble of the proposed rule. As also explicitly stated in the preamble of the proposed rule (90 FR 18017), we continue to welcome additional feedback and comments on other options to consider on how to appropriately address low volume, high-cost treatments for rare diseases, therefore, we believe that our intentions were clearly stated. In response to the commenter's suggestion that a proposal to revise the title for Pre-MDC MS-DRG 018 should be put forth if CMS aims to temporarily designate Pre-MDC MS-DRG 018 as the primary Pre-MDC MS- DRG for all cell and gene therapies, we note that, as also stated in the preamble of the proposed rule, (90 FR 18016), there has been discussion related to requests to revise the title to Pre-MDC MS-DRG 018 in prior rulemaking, most recently in the FY 2025 IPPS/LTCH PPS final rule (89 FR 69008 through 69010), and we continue to be interested in obtaining input from members of the public on options to consider, recognizing there are additional types of cell and gene therapies now mapping to Pre-MDC MS-DRG 018. We stated we will continue to review additional feedback and suggestions in connection with future rulemaking. In response to the commenter's remarks that CMS' proposed rule analysis stated no cases were found to report the administration of eladocagene exuparvovec and because the product was not approved until November 2024, cases would not be expected to appear in the data, we note that procedure code XW0Q316 (Introduction of eladocagene exuparvovec into cranial cavity and brain, percutaneous approach, new technology group 6) that describes the administration of eladocagene exuparvovec became effective October 1, 2020 (FY 2021) and a single case was previously identified in the data in MS-DRG 829 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Other Procedures with CC/MCC) with an average length of stay of 2 days and average costs of $1,544, as discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48854). We further note that, as also discussed in prior rulemaking, the creation of a code to describe a technology that is utilized in the performance of a procedure or service does not require FDA approval of the technology nor is the proposed and final assignment of a procedure code to an MS-DRG dependent upon a product's FDA approval (86 FR 44806).

Several commenters provided general feedback on the subject of cell and gene therapies for CMS' consideration in association with the Pre- MDC MS-DRG 018 proposed rule discussion. Notably, commenters suggested that CMS: (1) issue a Request for Information (RFI) to obtain additional insight on provider experiences, including information on the therapies under development and expected to become available in the near future, as well as features of their administration and the affected patient populations, (2) develop a payment model or long-term solution for appropriate payment that also accounts for products whose new technology add-on payment is expiring, and (3) ensure transparency in the refinement process by collaborating with stakeholders.

We appreciate the commenters' recommendations and feedback as we continue to examine the complexities involved with these therapies under the IPPS. We intend to address any potential modifications to the MS-DRGs through future notice and comment rulemaking. 3. MDC 01 (Diseases and Disorders of the Nervous System) a. Logic for MS-DRGs 023 Through 027

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18017

through 18025), we received three separate but related requests to review the MS-DRG assignments for a subset of procedures assigned to MS-DRGs 023 through 027. In this section of the preamble of this FY 2026 IPPS/LTCH PPS final rule, we discuss each of these separate, but related requests.

The first request was to create a new MS-DRG for cases involving “chemotherapy implants” and cases involving “epilepsy with neurostimulator.” The requestor noted chemotherapy implants are used to treat patients with brain tumors. They are implanted into the brain during the craniotomy procedure at the time of tumor resection. Upon implantation, these devices immediately release radiation or chemotherapeutic agents. This approach enables treatment to be initiated at the time of tumor resection without undue delay. “Epilepsy with neurostimulator” cases involve devices used in the treatment of medically intractable epilepsy. The neurostimulator is implanted in the skull via a craniotomy and is connected to electrodes that are implanted on the surface of the brain or in the brain through either a craniotomy or a burr hole(s). According to the requestor, like the procedure to insert a chemotherapy implant, the craniotomy procedure to insert the neurostimulator lead is performed under general anesthesia and the procedure typically takes four hours.

We noted in the proposed rule that the requestor performed their own analysis of Medicare claims data and stated they found that the average costs of cases involving chemotherapy implants and cases involving epilepsy with neurostimulators are significantly higher than the average costs of other procedures currently grouped within MS-DRG 023 (Craniotomy with Acute Complex CNS Principal Diagnosis with MCC or Antineoplastic Implant). The requestor asserted that as a result, these cases are not being adequately paid under the current MS-DRG. Therefore, given the limited options within the existing MS-DRG structure, the requestor recommended that CMS extract cases reporting the insertion of a chemotherapy implant and cases reporting a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain, and a principal diagnosis of epilepsy from MS-DRG 023 and create a new MS-DRG for these cases with a payment rate that better aligns with the resource utilization associated with these procedures. The requestor stated that this recommendation appeared to be reasonable, given that CMS has already determined that these two subsets of cases are clinically coherent by virtue of them being currently assigned to the same MS-DRG.

To begin our analysis, as discussed in the proposed rule, we reviewed the GROUPER logic for MS-DRGs 023 and 024 (Craniotomy with Acute Complex CNS Principal Diagnosis without MCC). We noted in the proposed rule that the requestor is correct that currently, cases involving “chemotherapy implants” and cases involving “epilepsy with neurostimulator” are assigned to the higher severity level MS-DRG 023. MS-DRGs 023 and 024 contain a logic list referred to as “Chemotherapy Implant.” This logic list includes the following four ICD-10-PCS codes: [GRAPHIC] [TIFF OMITTED] TR04AU25.040

We stated that the “Chemotherapy Implant” logic list was created for cases reporting the implantation of a chemotherapeutic agent and devices implanted in the brain, such as implantable chemotherapeutic wafers. Additionally, we noted MS-DRGs 023 and 024 contain a logic list referred to as “Epilepsy Principal Diagnosis” that includes 58 ICD- 10-CM diagnosis codes that describe epilepsy, and a logic list referred to as “Neurostimulator” that includes the following three ICD-10-PCS procedure code combinations:

0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H00MZ (Insertion of neurostimulator lead into brain, open approach);

0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H03MZ (Insertion of neurostimulator lead into brain, percutaneous approach); and

0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H04MZ (Insertion of neurostimulator lead into brain, percutaneous endoscopic approach).

These two logic lists were created to capture cases involving the use of the Responsive Neurostimulation (RNS)[supreg] neurostimulator, a treatment option for persons diagnosed with medically intractable epilepsy. The RNS[supreg] neurostimulator includes a cranially implanted programmable neurostimulator connected to one or two depth and/or subdural cortical strip leads that are surgically placed in or on the brain at the seizure focus. The implanted neurostimulator continuously monitors brain electrical activity and is programmed by a physician to detect abnormal patterns of electrical activity that the physician believes may lead to seizures (epileptiform activity).

We refer the reader to the ICD-10 MS-DRG Definitions Manual, Version 42.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete documentation of the GROUPER logic for MS-DRGs 023 and 024.

As discussed in the preamble of the proposed rule, we then examined claims data from the September 2024 update of the FY 2024 MedPAR file for all cases in MS-DRG 023 and compared the results to cases reporting one of the four procedure codes that appear under the logic list referred to as “Chemotherapy Implant” in MS-DRG 023 and for all cases reporting a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator), and a principal diagnosis of epilepsy. The following table shows our findings:

[GRAPHIC] [TIFF OMITTED] TR04AU25.041

As shown in the table, for MS-DRG 023, we identified a total of 12,136 cases, with an average length of stay of 10 days and average costs of $51,132. Of the 12,136 cases in MS-DRG 023, there were 176 cases reporting the insertion of a chemotherapy implant with an average length of stay of 6.4 days and average costs of $49,743. Additionally, there were 68 cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) that had a principal diagnosis of epilepsy with an average length of stay of 2.4 days and average costs of $66,303.

As the data show, the 68 cases in MS-DRG 023 describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy have average costs that are higher than the average costs of all cases in MS-DRG 023 ($66,303 compared to $51,132), and they have an average length of stay that is shorter (2.4 days compared to 10 days). The 176 cases in MS-DRG 023 reporting the insertion of a chemotherapy implant have average costs that are lower than the average costs of all cases in MS-DRG 023 ($49,743 compared to $51,132), and they have an average length of stay that is shorter (6.4 days compared to 10 days).

We stated we reviewed the claims data, and did not believe the data support creating a new MS-DRG for cases reporting the insertion of a chemotherapy implant and cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy. We stated that the results of the claims analysis as previously summarized indicate the cases reporting the insertion of a chemotherapy implant demonstrate comparable resource utilization with other cases in their currently assigned MS-DRG. Further, the claims data analysis indicates that these two subsets of cases, that is cases reporting the insertion of a chemotherapy implant and cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy, do not demonstrate comparable resource utilization. The cases in MS-DRG 023 reporting the insertion of a chemotherapy implant have average costs that are lower than the average costs of cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain and a principal diagnosis of epilepsy ($49,743 compared to $66,303), and they have an average length of stay that is longer (6.4 days compared to 2.4 days).

Therefore, based on review of the claims data, we did not propose to create a new MS-DRG for cases reporting the insertion of a chemotherapy implant and cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy for FY 2026. However, while our analysis of the claims data did not support creating a new MS-DRG for cases reporting the insertion of a chemotherapy implant and cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy, as discussed in the proposed rule, cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy have average costs that are higher than the average costs of all cases in MS-DRG 023, with a shorter average length of stay. Accordingly, in the proposed rule we stated we determined that further analysis of cases reporting a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator), and a principal diagnosis of epilepsy was needed in conjunction with the separate but related requests we received to review the MS-DRG assignments for a subset of procedures also assigned to MS-DRGs 023 through 027 for the FY 2026 IPPS/LTCH PPS proposed rule to ensure clinical coherence between these cases and the other cases with which they would potentially be grouped, as discussed later in this section.

As noted previously, MS-DRGs 023 and 024 contain a logic list referred to as “Chemotherapy Implant” that includes the following four ICD-10-PCS codes: [GRAPHIC] [TIFF OMITTED] TR04AU25.042

In the proposed rule we stated that during our review of the GROUPER logic for MS-DRGs 023 and 024, we identified that the following four ICD-10-PCS procedure codes describing the insertion of a radioactive element were inadvertently excluded from the “Chemotherapy Implant” logic list: [GRAPHIC] [TIFF OMITTED] TR04AU25.043

In review of this finding, we stated we analyzed claims data from the September 2024 update of the FY 2024 MedPAR file for MS-DRGs 023, 024, 025, 026, and 027 for all cases and for cases reporting procedure codes 00H001Z, 00H005Z, 00H031Z, or 00H041Z. The findings from our analysis are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.044

As the data show, we found four cases reporting procedure code 00H001Z, 00H005Z, 00H031Z, or 00H041Z in MS-DRG 025, with average costs of $40,199 and an average length of stay of 3.8 days. We reviewed this issue and noted in the proposed rule radioactive elements are inserted into the brain to deliver a targeted concentrated dose of radiation directly to a brain tumor or tumor bed. They are primarily used to treat recurrent brain metastases or other aggressive brain cancers, as it allows for high-dose radiation delivery specifically to the tumor site while minimizing damage to surrounding healthy brain tissue. Although we did not identify many cases, we stated we believe the four procedure codes describing the insertion of a radioactive element into the brain are clinically aligned with the procedure codes currently included in the “Chemotherapy Implant” logic list in MS-DRGs 023 and 024.

Therefore, for clinical consistency we proposed to add procedure codes 00H001Z, 00H005Z, 00H031Z, and 00H041Z to the “Chemotherapy Implant” logic list in MS-DRGs 023 and 024, effective October 1, 2025, for FY 2026. We also proposed to change the description of the logic list in MS-DRGs 023 and 024 from “Chemotherapy Implant” to “Antineoplastic Implant” to better reflect the GROUPER logic that includes ICD-10-PCS procedure codes describing antineoplastic agents implanted in the brain.

Comment: Commenters supported the proposals to add procedure codes 00H001Z, 00H005Z, 00H031Z, and 00H041Z to the “Chemotherapy Implant” logic list in MS-DRGs 023 and 024 and to change the description of the logic list in MS-DRGs 023 and 024 from “Chemotherapy Implant” to “Antineoplastic Implant”, effective October 1, 2025, for FY 2026.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to add procedure codes 00H001Z, 00H005Z, 00H031Z, and 00H041Z to the “Chemotherapy Implant” logic list in MS- DRGs 023 and 024, without modification, effective October 1, 2025, for FY 2026. We are also finalizing the change of the description of the logic list in MS-DRGs 023 and 024 from “Chemotherapy Implant” to “Antineoplastic Implant”.

As mentioned previously, and as discussed in the FY 2026 IPPS/LTCH PPS proposed rule, we received three separate but related requests to review and reconsider the MS-DRG assignments for a subset of procedures assigned to MS-DRGs 023 through 027. The second and third request involve the MS-DRG assignment of cases reporting procedure codes describing the insertion of deep brain stimulators (DBS). Deep brain stimulation is a surgical treatment that involves the implantation of a neurostimulator, used in the treatment of essential tremor, Parkinson's disease, dystonia, epilepsy, obsessive-compulsive disorder and chronic pain. A DBS system consists of one or two leads that are placed stereotactically at defined targets deep within the brain via one or two burr holes created in the skull. The lead is then connected to an extension that is tunneled under the skin, down the neck, and connected to a programmable neurostimulator generator that is placed under the skin.

The second request we received was to reassign cases reporting the implantation of a DBS system from the lower (without MCC) severity level MS-DRG 024 to the higher (MCC) severity level MS-DRG 023, even if there is no MCC reported. The requestor suggested that if finalized, the title for MS-DRG 023 should be revised to reflect “Craniotomy with Acute Complex Central Nervous System Principal Diagnosis with MCC or Chemotherapy Implant or Major Device Implant or Epilepsy with Neurostimulator.”

We stated in the proposed rule that the requestor performed their own analysis and stated they found that the majority of cases reporting the implantation of a DBS system are assigned to the lower severity level MS-DRG 024. The requestor also stated that in their analysis, the cases reporting the implantation of a DBS system assigned to MS-DRG 024 have average costs that are 20 percent greater than all cases in MS-DRG 024. The requestor asserted that reassigning cases reporting the implantation of a DBS system from the lower (without MCC) severity level MS-DRG 024 to the higher (with MCC) severity level MS-DRG 023, even if there is no MCC reported, would better recognize hospital resource utilization when the DBS systems are inserted.

We stated in the proposed rule that the requestor identified cases reporting the implantation of a DBS system by the presence of the following procedure code combinations:

0JH60DZ (Insertion of multiple array stimulator generator into chest subcutaneous tissue and fascia, open approach), in combination with 00H00MZ (Insertion of neurostimulator lead into brain, open approach);

0JH60DZ (Insertion of multiple array stimulator generator into chest subcutaneous tissue and fascia, open approach), in combination with 00H03MZ (Insertion of neurostimulator lead into brain, percutaneous approach);

0JH60EZ (Insertion of multiple array rechargeable stimulator generator into chest subcutaneous tissue and fascia, open approach), in combination with 00H00MZ (Insertion of neurostimulator lead into brain, open approach); and

0JH60EZ (Insertion of multiple array rechargeable stimulator generator into chest subcutaneous tissue and fascia, open approach), in combination with 00H03MZ (Insertion of neurostimulator lead into brain, percutaneous approach).

To begin our analysis, as discussed in the proposed rule, we again reviewed the GROUPER logic for MS-DRGs 023 and 024. The GROUPER logic for MS-DRGs 023 and 024 also contains 78 procedure code combinations representing the insertion of neurostimulator generator and a neurostimulator lead that are captured under a list referred to as “Major Device Implant.” The procedure codes describing the insertion of a neurostimulator generator on this list describe insertion of the neurostimulator generator into the subcutaneous areas of the chest, back, or abdomen, as well as into the skull. The procedure codes describing the insertion of a neurostimulator lead describe the insertion of the lead into the brain or the cerebral ventricle. We refer the reader to the ICD-10 MS-DRG Definitions Manual, Version 42.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete documentation of the GROUPER logic for MS- DRGs 023 and 024.

In our analysis of this issue, we stated that we agree that the four procedure code combinations discussed previously that were identified by this requestor are included in the “Major Device Implant” logic list of MS-DRGs 023 and 024, but we noted in the proposed rule that 32 additional procedure code combinations exist on the “Major Device Implant” logic list that also describe the implantation of a DBS system by describing the insertion of a neurostimulator generator into the subcutaneous areas of the chest, back, or abdomen in combination with a code describing the insertion of a neurostimulator lead into the brain. We refer the reader to Table 6P.2a associated with the FY 2026 IPPS/LTCH PPS proposed rule (and available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps) for the list of the 36 ICD-10-PCS procedure code combinations in the logic of MS-DRGs 023 and 024 in the “Major Device Implant” logic list that we identified that describe the implantation of a DBS system and therefore were included in our analysis.

We stated we then examined claims data from the September 2024 update of the FY 2024 MedPAR file for all cases in MS-DRGs 023 and 024 and compared the results to cases reporting the implantation of a DBS system by reporting a procedure code combination that describes the insertion of a neurostimulator generator into the subcutaneous areas of the chest, back, or abdomen in combination with a code describing the insertion of a neurostimulator lead into the brain. The following table shows our findings: [GRAPHIC] [TIFF OMITTED] TR04AU25.045

As shown in the table, for MS-DRG 023, we identified a total of 12,136 cases, with an average length of stay of 10 days and average costs of $51,132. Of the 12,136 cases in MS-DRG 023, there were 26 cases reporting the implantation of a DBS system with an average length of stay of 8.3 days and average costs of $81,947. For MS-DRG 024, we identified a total of 4,624 cases, with an average length of stay of 5 days and average costs of $35,516. Of the 4,624 cases in MS-DRG 024, there were 432 cases reporting the implantation of a DBS system with an average length of stay of 1.7 days and average costs of $43,032.

In the proposed rule, we stated we reviewed the claims data, and the data did not support reassignment of the cases reporting the implantation of a DBS system from MS-DRG 024 to MS-DRG 023 even if there is no MCC

reported. We stated the results of the claims analysis as previously summarized indicate the cases reporting the implantation of a DBS system, without reporting a secondary diagnosis designated as an MCC, that are currently assigned to MS-DRG 024, have average costs that are lower than the average costs of all cases in MS-DRG 023 ($43,032 compared to $51,132), and they have an average length of stay that is shorter (1.7 days compared to 10 days). While the average costs of these cases are higher than the average costs of all cases in MS-DRG 024 ($43,032 compared to $35,516), we stated we believe it would not be appropriate to reassign these cases into the higher severity level MS- DRG 023, even if there is no MCC reported, because the cases would not be coherent with regard to resource utilization. The cases reporting the implantation of a DBS system, without reporting a secondary diagnosis designated as an MCC, that are currently assigned to MS-DRG 024 have average costs that are $8,100 lower than the average costs of all cases in MS-DRG 023. Therefore, we did not propose to reassign cases reporting the implantation of a DBS system from the lower (without MCC) severity level MS-DRG 024 to the higher (with MCC) severity level MS-DRG 023, even if there is no MCC reported. However, while the analysis of the claims data did not support reassigning the cases reporting the implantation of a DBS system from the lower (without MCC) severity level MS-DRG 024 to the higher (MCC) severity level MS-DRG 023 even if there is no MCC reported, as discussed, we stated our analysis of the claims data found the average costs of the cases reporting the implantation of a DBS system are higher than all cases in their respective MS-DRGs, while the average lengths of stay are shorter. Accordingly, and as discussed later in this section, we stated we determined that further analysis of cases reporting the implantation of a DBS system is needed in conjunction with the separate but related requests we received to review the MS-DRG assignments for a subset of procedures also assigned to MS-DRGs 023 through 027 for the FY 2026 IPPS/LTCH PPS proposed rule to ensure clinical coherence between these cases and the other cases with which they may potentially be grouped.

The third request we received, as discussed in the proposed rule, was to have all cases reporting the concomitant insertion of a DBS generator and lead assigned to MS-DRGs 023 and 024. This requestor performed their own analysis and stated they found 76 claims reporting procedure codes describing the insertion of a DBS generator and a lead assigned to MS-DRGs 026 and 027 (Craniotomy and Endovascular Intracranial Procedures with CC, and without CC/MCC, respectively) and found that the average costs of these cases were 54% and 63% higher than the average of all cases in MS-DRGs 026 and 027, respectively. The requestor stated that placement of a complete DBS system, which requires placement of both the generator and the lead, during a single procedure, appears to be an efficacious and well-tolerated procedure. The requestor asserted that the relatively low reimbursement in MS-DRGs 026 and 027 can limit patient access to a single stage procedure.

This requestor identified cases reporting the implantation of a DBS system by the presence of the following procedure code combinations:

0JH60DZ (Insertion of multiple array stimulator generator into chest subcutaneous tissue and fascia, open approach), in combination with 00H00MZ (Insertion of neurostimulator lead into brain, open approach);

0JH60DZ (Insertion of multiple array stimulator generator into chest subcutaneous tissue and fascia, open approach), in combination with 00H03MZ (Insertion of neurostimulator lead into brain, percutaneous approach);

0JH60EZ (Insertion of multiple array rechargeable stimulator generator into chest subcutaneous tissue and fascia, open approach), in combination with 00H00MZ (Insertion of neurostimulator lead into brain, open approach); and

0JH60EZ (Insertion of multiple array rechargeable stimulator generator into chest subcutaneous tissue and fascia, open approach), in combination with 00H03MZ (Insertion of neurostimulator lead into brain, percutaneous approach);

0JH60BZ (Insertion of single array stimulator generator into chest subcutaneous tissue and fascia, open approach), in combination with 00H00MZ (Insertion of neurostimulator lead into brain, open approach); and

0JH60BZ (Insertion of single array stimulator generator into chest subcutaneous tissue and fascia, open approach), in combination with 00H03MZ (Insertion of neurostimulator lead into brain, percutaneous approach).

In the proposed rule, we stated to begin our analysis, we again reviewed the GROUPER logic for MS-DRG 023 and 024. As mentioned previously, the GROUPER logic for MS-DRGs 023 and 024 contains 78 procedure code combinations representing the insertion of neurostimulator generator and a neurostimulator lead that are captured under a list referred to as “Major Device Implant.” The procedure codes describing the insertion of a neurostimulator generator on this list describe insertion of the neurostimulator generator into the subcutaneous areas of the chest, back, or abdomen, as well as into the skull.

In reviewing this request, we noted in the proposed rule that the procedure code combinations in MS-DRG 023 and 024 captured under the “Major Device Implant” logic list that describe the insertion of a neurostimulator generator into the subcutaneous areas of the chest, back, or abdomen, all describe the insertion of a multiple array stimulator generator or a rechargeable multiple array stimulator generator. We further noted that procedure code combinations describing the insertion of a single array stimulator generator or a rechargeable single array stimulator generator into the subcutaneous areas of the chest, back, or abdomen and a neurostimulator lead are not captured under the “Major Device Implant” logic list, therefore MS-DRGs 025, 026, and 027 (Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, and without CC/MCC, respectively) are assigned based on the reporting of the ICD-10-PCS procedure code describing the insertion of the neurostimulator into the brain. We refer the reader to the ICD- 10 MS-DRG Definitions Manual, Version 42.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete documentation of the GROUPER logic for MS-DRGs 023, 024, 025, 026, and 027.

In the proposed rule, we stated we identified 36 ICD-10-PCS procedure code combinations that would describe the implantation of a DBS system with a single array stimulator generator or a rechargeable single array stimulator generator and the insertion of a neurostimulator lead into the brain. We refer the reader to Table 6P.2b associated with the FY 2026 IPPS/LTCH PPS proposed rule and this final rule (available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps) for the list of the 36 ICD-10-PCS procedure code combinations we identified that describe the implantation of a DBS system with a single array stimulator generator or a rechargeable single array stimulator generator and the insertion of a neurostimulator lead into the brain.

As discussed in the proposed rule, we then examined claims data from the September 2024 update of the FY 2024 MedPAR file for all cases in MS-DRGs 025, 026, and 027 and compared the results to cases reporting a procedure code combination that describes the insertion of a single array stimulator generator or a rechargeable single array stimulator generator into the subcutaneous areas of the chest, back, or abdomen in combination with a code describing the insertion of a neurostimulator lead into the brain. The following table shows our findings: [GRAPHIC] [TIFF OMITTED] TR04AU25.046

As shown in the table, for MS-DRG 025, we identified a total of 21,059 cases, with an average length of stay of 8.6 days and average costs of $40,215. Of those 21,059 cases, there were 5 cases reporting the insertion of a single array generator and insertion of neurostimulator lead into brain with average costs higher than the average costs in the FY 2024 MedPAR file for MS-DRG 025 ($73,168 compared to $40,215) and a shorter average length of stay (5 days compared to 8.6 days). In MS-DRG 026, we identified a total of 5,833 cases, with an average length of stay of 4.1 days and average costs of $28,404. Of the 5,833 cases in MS-DRG 026, there were 25 cases reporting the insertion of a single array generator and insertion of neurostimulator lead into brain with average costs higher than the average costs in the FY 2024 MedPAR file for MS-DRG 026 ($42,002 compared to $28,404) and a shorter average length of stay (2.3 days compared to 4.1 days). In MS-DRG 027, we identified a total of 7,049 cases, with an average length of stay of 1.9 days and average costs of $23,059. Of the 7,049 cases in MS-DRG 027, there were 78 cases reporting the insertion of a single array generator and insertion of neurostimulator lead into brain with average costs higher than the average costs in the FY 2024 MedPAR file for MS-DRG 027 ($39,381 compared to $23,059) and a shorter average length of stay (1.4 days compared to 1.9 days). As the data show, the cases in MS-DRGs 025, 026, and 027 reporting the insertion of a single array generator and insertion of neurostimulator lead into brain have average costs that are higher than the average costs of all cases in their respective MS- DRGs.

We reviewed the clinical issues and noted in the proposed rule a deep brain stimulator typically has one or two leads implanted in the brain, depending on whether one or both sides of the brain need treatment. A single array stimulator generator has one port where one lead can be connected. A multiple array stimulator generator has two or more ports where two or more leads can be connected. We stated we believe the procedure code combinations that describe the insertion of a single array stimulator generator or a rechargeable single array stimulator generator into the subcutaneous areas of the chest, back, or abdomen in combination with a code describing the insertion of a neurostimulator lead into the brain are clinically coherent with the procedure code combinations in MS-DRG 023 and 024 captured under the “Major Device Implant” logic list that describe the insertion of a multiple array stimulator generator or a rechargeable multiple array stimulator generator into the subcutaneous areas of the chest, back, or abdomen in combination with a code describing the insertion of a neurostimulator lead into the brain.

As discussed in the proposed rule, to determine how the resources for this subset of cases compared to cases in MS-DRGs 023 and 024 as a whole, we examined the average costs and length of stay for cases in MS-DRGs 023 and 024. Our findings are shown in this table. [GRAPHIC] [TIFF OMITTED] TR04AU25.047

We reviewed the data and noted in the proposed rule the cases in MS-DRGs 025, 026, and 027 reporting the insertion of a single array generator and insertion of neurostimulator lead into brain have average costs that are higher and the average length of stay is shorter than all cases in MS-DRGs 023 and 024. We stated we agree with the requestor that cases reporting the insertion of a single array generator and insertion of neurostimulator lead into brain are more resource intensive and are clinically distinct from other cases currently assigned to MS-DRGs 025, 026, and 027. However, we stated we did not believe proposing to reassign all cases reporting the procedure code combination describing a single array generator and insertion of neurostimulator lead into brain to MS-DRGs 023 and 024 would fully address the difference in resource utilization in these cases.

To explore other mechanisms to address this request, we stated we then reexamined the separate but related requests discussed previously to review the MS-DRG assignments for a subset of procedures assigned to MS-DRGs 023

through 027. In examining these requests, we noted in the proposed rule that the first request was to reassign cases involving “chemotherapy implants” and cases involving “epilepsy with neurostimulator” from MS-DRG 023 and to create a new MS-DRG for these cases. While analysis of the claims data did not support creating a new MS-DRG for cases reporting the insertion of a chemotherapy implant and cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy, we stated in the proposed rule that our analysis of that request found cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy have average costs that are higher than the average costs of all cases in MS-DRG 023, with a shorter average length of stay.

The second request we received was to reassign cases reporting the implantation of a DBS system from the lower (without MCC) severity level MS-DRG 024 to the higher (MCC) severity level MS-DRG 023 even if there is no MCC reported. While analysis of the claims data did not support reassigning the cases reporting the implantation of a DBS system from the lower (without MCC) severity level MS-DRG 024 to the higher (MCC) severity level MS-DRG 023 even if there is no MCC reported, we stated our analysis of that request found the average costs of the cases reporting the implantation of a DBS system are higher than all cases in their respective MS-DRGs, while the average lengths of stay are shorter. Lastly, our analysis of the third request demonstrates the cases reporting the insertion of a single array generator and insertion of neurostimulator lead into brain have average costs that are higher than the average costs of all cases in their respective MS-DRGs, while the average lengths of stay are shorter.

As discussed in the proposed rule, we reviewed these issues and noted intracranial neurostimulator implants, such as deep brain stimulators and RNS[supreg] neurostimulators, are similar in that these intracranial neurostimulators are implanted surgically and include placement of a neurostimulator generator and insertion of leads into specific brain regions to deliver electrical stimulation. Additionally, we stated that based on our data analysis, cases reporting the insertion of intracranial neurostimulator implants are clinically coherent in that they are similar in terms of technical complexity and hospital resource use as reflected by the similarity in average costs and average lengths of stay.

We stated we explored creating a new base MS-DRG for cases reporting the insertion of an intracranial neurostimulator implant and compared the analysis discussed previously using the claims data from the September 2024 update of the FY 2024 MedPAR file. The following table illustrates our findings for all 654 cases reporting procedure codes describing the insertion of an intracranial neurostimulator implant. [GRAPHIC] [TIFF OMITTED] TR04AU25.048

In the proposed rule we stated we reviewed these data and did not believe proposing a new base MS-DRG for these cases would better reflect hospital resource use. Because there were only 654 cases identified, the analysis demonstrates both a three-way and a two-way split of a new base MS-DRG would fail the criterion that there be at least 500 cases for each subgroup. The analysis also demonstrates the cases reporting a principal diagnosis of epilepsy with neurostimulator generator inserted into the skull and insertion of a neurostimulator lead into brain, and cases reporting the insertion of a single or multiple array generator with a secondary diagnosis designated as an

MCC, would continue to have average costs that are higher when compared to all other cases reporting the insertion of an intracranial neurostimulator implant in a new MS-DRG. We therefore explored an alternative mechanism to address these requests.

We noted in the proposed rule that in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38015 through 38019), the FY 2021 IPPS/LTCH PPS final rule (85 FR 58459 through 58462) and the FY 2024 IPPS/LTCH PPS final rule (88 FR 58661 through 58667), we discussed requests we received to reassign cases describing the insertion of a neurostimulator generator into the skull in combination with the insertion of a neurostimulator lead into the brain from MS-DRG 023 to MS-DRG 021 (Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage with CC). While acknowledging the cases in MS-DRG 023 describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulators) and a principal diagnosis of epilepsy have average costs that are similar to the average costs of cases in MS-DRG 021, we have stated we did not support reassigning the cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulators) and a principal diagnosis of epilepsy from MS-DRG 023 to MS-DRGs 020, 021, and 022 (Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage, with MCC, with CC, without CC/MCC, respectively), as the cases in MS-DRGs 020, 021, and 022 are defined by a principal diagnosis of a hemorrhage. We stated that RNS[supreg] neurostimulators are not used to treat patients with diagnosis of hemorrhage and that we believe that it is inappropriate to reassign cases representing a principal diagnosis of epilepsy to a MS-DRG that contains cases that represent the treatment of intracranial hemorrhage.

However, after further consideration, to explore other mechanisms to address this request, we stated in the proposed rule we examined MS- DRGs 020, 021, and 022 to reconsider the possibility of reassigning the cases reporting the insertion of an intracranial neurostimulator implant as we have been unable to identify another MS-DRG in MDC 01 that would be a more appropriate MS-DRG assignment for these cases based on the indication for and complexity of the procedures.

As discussed in the proposed rule, the GROUPER logic for MS-DRGs 020, 021, and 022 contains a list of procedure codes describing intracranial vascular procedures that are captured under a logic list referred to as “Intracranial Vascular Procedures” and a list of diagnosis codes describing a diagnosis of a hemorrhage that are captured under a logic list referred to as “Hemorrhage Principal Diagnosis.” We noted in the proposed rule that during our review of MS-DRGs 020, 021, and 022, we identified 57 ICD-10-PCS procedure codes describing the intracranial vascular procedures and 66 diagnosis codes describing a diagnosis of intracranial hemorrhage that were inadvertently excluded from these logic lists. We refer the reader to Table 6P.2c and Table 6P.2d associated with the FY 2026 IPPS/LTCH PPS proposed rule (and available at: https://www.cms.gov/medicare/medicare-fee-for-service-payment/acuteinpatientpps) for the lists of the 57 ICD- 10-PCS procedure codes and 66 ICD-10-CM diagnosis codes that we identified.

As these 57 procedure codes describe intracranial vascular procedures and the 66 diagnosis codes describe a diagnosis of intracranial hemorrhage, in the proposed rule we stated we believe these codes are clinically aligned with the codes currently included in the “Intracranial Vascular Procedures” and the “Hemorrhage Principal Diagnosis” logic lists, respectively in MS-DRGs 020, 021, and 022. Therefore, for clinical consistency we proposed to add the 57 procedure codes to the “Intracranial Vascular Procedures” logic list, and the 66 diagnosis codes to the “Hemorrhage Principal Diagnosis” logic list of MS-DRGs 020, 021, and 022, effective October 1, 2025, for FY 2026.

As discussed in the proposed rule, in reviewing the claims data from the September 2024 update of the FY 2024 MedPAR file and examining the clinical considerations, we stated we believe that the cases reporting the insertion of an intracranial neurostimulator implant could more suitably group to MS-DRGs 020, 021, and 022 and would lead to a grouping that is more coherent and better reflects the clinical severity and resource use involved in these cases. While we previously have stated that we believe it would be inappropriate to reassign cases representing a principal diagnosis of epilepsy to a MS-DRG that contains cases that represent the treatment of intracranial hemorrhage, after further consideration, we stated we no longer believe maintaining a difference in assignment based on the indication is warranted in this subset of cases based on the fact that both treatments involve intracranial procedures and demonstrate comparable resource utilization.

In the proposed rule, we stated we also believe that cases reporting the insertion of an intracranial neurostimulator implant, regardless of principal diagnosis, share similar resource utilization such that it is no longer necessary to subdivide these cases based on the diagnosis codes reported. Accordingly, we stated that we believe it is appropriate to remove the special logic defined as “Epilepsy Principal Diagnosis” from the definition for assignment to the proposed modified MS-DRGs, as the cases can be appropriately grouped along with cases reporting any MDC 01 diagnosis when reported with qualifying procedures, as part of the proposed restructured MS-DRGs.

Therefore, we proposed to add 114 procedure code combinations to a new “Intracranial Neurostimulator Implant” logic list in MS-DRGs 020, 021, and 022 that describe (1) the insertion of multiple or single array neurostimulator generators with the insertion of a neurostimulator lead into the brain or the cerebral ventricle and (2) the insertion of neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain. We also proposed to delete the “Major Device Implant,” “Epilepsy Principal Diagnosis,” “Neurostimulator” logic lists from MS-DRGs 023 and 024. We refer the reader to Table 6P.2e associated with the FY 2026 IPPS/ LTCH PPS proposed rule (and available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps) for the list of the 114 ICD-10-PCS procedure code combinations we proposed to add to a new “Intracranial Neurostimulator Implant” logic list in MS-DRGs 020, 021, and 022.

To compare and analyze the impact of these potential modifications, as discussed in the proposed rule, we ran a simulation using the claims data from the September 2024 update of the FY 2024 MedPAR file. The following table reflects the simulation of our proposed changes in MS- DRGs 020, 021, and 022.

[GRAPHIC] [TIFF OMITTED] TR04AU25.049

In the proposed rule, we stated we believe that this simulation supports that the resulting MS-DRG assignments would be more clinically homogeneous, coherent, and better reflect hospital resource use. As the table shows, for MS-DRG 020, there were a total of 2,322 cases with an average length of stay of 12.5 days and average costs of $71,916. For MS-DRG 021, there were a total of 642 cases with an average length of stay of 7.8 days and average costs of $48,421. For MS-DRG 022, there were a total of 385 cases with an average length of stay of 2.4 days and average costs of $28,243. We stated that a review of this simulation shows that adding a new “Intracranial Neurostimulator Implant” logic list, while also adding 57 procedure codes to the “Intracranial Vascular Procedures” logic list, and 66 diagnosis codes to the “Hemorrhage Principal Diagnosis” logic list in MS-DRGs 020, 021 and 022 has a limited effect on the average costs of these MS-DRGs, while leading to a grouping that is more coherent and better reflects the clinical severity and resource use involved in these cases.

In summary, for FY 2026, to more appropriately reflect utilization of resources for these procedures, we proposed to add 114 procedure code combinations to a new “Intracranial Neurostimulator Implant” logic list in MS-DRGs 020, 021, and 022 that describe (1) the insertion of multiple or single array neurostimulator generators with the insertion of a neurostimulator lead into the brain or the cerebral ventricle and (2) the insertion of neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain. We also proposed to add 57 procedure codes to the “Intracranial Vascular Procedures” logic list, and 66 diagnosis codes to the “Hemorrhage Principal Diagnosis” logic list of MS-DRGs 020, 021, and 022.

Additionally, we also proposed to delete the “Major Device Implant,” “Epilepsy Principal Diagnosis,” “Neurostimulator” logic lists from MS-DRGs 023 and 024. Lastly, for consistency, we proposed to change the titles of MS-DRGs 020, 021, and 022 from “Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage with MCC, with CC, and without CC/MCC, respectively” to “Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage or Intracranial Neurostimulator Implant with MCC, with CC, and without CC/MCC, respectively,” proposed to change the title of MS-DRG 023 from “Craniotomy with Major Device Implant or Acute Complex Central Nervous System Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator” to “Craniotomy with Acute Complex Central Nervous System Principal Diagnosis with MCC or Antineoplastic Implant,” and proposed to change the title of MS-DRG 024 from “Craniotomy with Major Device Implant or Acute Complex Central Nervous System Principal Diagnosis without MCC” to “Craniotomy with Acute Complex Central Nervous System Principal Diagnosis without MCC” to better reflect the assigned procedures effective October 1, 2025, for FY 2026.

Comment: Commenters supported the proposal to add the 57 procedure codes to the “Intracranial Vascular Procedures” logic list, and the 66 diagnosis codes to the “Hemorrhage Principal Diagnosis” logic list of MS-DRGs 020, 021, and 022, effective October 1, 2025, for FY 2026.

Response: We appreciate the commenters' support.

Comment: Several commenters supported our proposal to add 114 procedure code combinations to a new “Intracranial Neurostimulator Implant” logic list in MS-DRGs 020, 021, and 022 that describe (1) the insertion of multiple or single array neurostimulator generators with the insertion of a neurostimulator lead into the brain or the cerebral ventricle and (2) the insertion of neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain. A few commenters expressed gratitude to CMS for its thorough analysis and fully supported the proposal, urging CMS to finalize it in its current form. A

commenter specifically stated that this proposal supports their longstanding goal of providing more appropriate payment levels for hospitals furnishing intracranial vascular procedures that are assigned to MS-DRGs 020, 021, and 022 after multiple years of payment declines. Another commenter stated that the proposal recognizes the similarities in clinical characteristics associated with deep brain stimulators for Parkinson's disease, essential tremor, epilepsy, and dystonia and stated that the proposed reassignments better represent the resource utilization associated with inserting a full deep brain stimulator system.

Many other commenters expressed their concerns with the proposals. Some commenters noted that procedure code 00H004Z (Insertion of radioactive element, cesium-131 collagen implant into brain, open approach) is included in the Chemotherapy Implant logic list of MS-DRG 023 and suggested that this assignment does not accurately reflect the increased resources required to perform procedures involving the insertion of radioactive implants. Several commenters stated that with CMS' proposed reassignment of neurostimulator cases out of MS-DRG 023, these procedures involving the insertion of radioactive implants will be grouped with acute complex central nervous system (CNS) procedures, and this grouping is clinically inconsistent, as the majority of acute CNS cases describe conditions treated without implanted devices. Other commenters stated that while procedures involving the insertion of radioactive implants and procedures involving the introduction of chemotherapy both involve the delivery of either radiation or chemotherapy directly after tumor resection, the overall care pathway and resources associated with the episodes of care are dramatically different. These commenters stated that procedures involving the insertion of radioactive implants are more aligned with major device implant procedures than with the acute complex CNS cases that will remain in MS-DRG 023. Another commenter stated they performed their own analysis and stated that they found that procedures involving the insertion of radioactive implants have consistently demonstrated higher resource use than antineoplastic chemotherapy implant cases across two consecutive years of MedPAR data and are more closely aligned with cases assigned to MS-DRGs 020, 021 and 022. These commenters recommended that cases reporting procedure code 00H004Z, such as cases involving GammaTile[supreg], which is a surgically implanted brachytherapy device used to treat patients with malignant brain tumors, be assigned to MS-DRGs 020, 021, and 022.

Other commenters expressed concerns with the proposal to reassign cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) with a principal diagnosis of epilepsy from MS-DRG 023 to MS-DRGs 020, 021, and 022. These commenters stated that this proposal would have devastating impacts on hospital payment, which in turn would impact the ability of hospitals to continue to offer the RNS[supreg] neurostimulator to Medicare beneficiaries. While thanking CMS for continuing to explore solutions to better align the resource utilization of epilepsy with neurostimulator cases, some commenters stated the proposed reassignment would result in a greater misalignment of hospital costs, resulting in a significant reduction in hospital payment for the vast majority of epilepsy with neurostimulator cases. A commenter specifically stated that they performed their own analysis and found that most epilepsy with neurostimulator cases do not report a secondary diagnosis designated as an MCC, therefore reassigning these cases to MS-DRGs 020, 021, and 022 without maintaining the “Epilepsy Principal Diagnosis,” “Neurostimulator” logic lists in these MS-DRGs will have the opposite effect and will decrease hospital payments even further. Many commenters requested that CMS modify its current proposal and assign all cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) with a principal diagnosis of epilepsy to MS-DRG 020 even if there is no MCC reported.

Response: We appreciate the commenters' feedback and thank the commenters for sharing their concerns.

In response to the commenters' concerns that finalizing our proposal could adversely affect cases reporting procedure code 00H004Z and cases reporting a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy, we performed additional analysis of these cases. As discussed in the preamble of the proposed rule, MS-DRGs 023 and 024 contain a logic list referred to as “Chemotherapy Implant.” This logic list includes four ICD-10-PCS codes: 00H004Z (Insertion of radioactive element, cesium-131 collagen implant into brain, open approach), 3E0Q005 (Introduction of other antineoplastic into cranial cavity and brain, open approach), 3E0Q305 (Introduction of other antineoplastic into cranial cavity and brain, percutaneous approach), and 3E0Q705 (Introduction of other antineoplastic into cranial cavity and brain, via natural or artificial opening). In our analysis discussed in the proposed rule, we examined claims data from the September 2024 update of the FY 2024 MedPAR file for all cases in MS-DRG 023 and compared the results to cases reporting one of the four procedure codes that appear under the “Chemotherapy Implant” logic list in MS-DRG 023.

To evaluate the commenters' concerns regarding cases involving the insertion of radioactive implants, we further examined claims data from the September 2024 update of the FY 2024 MedPAR file for all cases in MS-DRG 023 and compared the results to cases reporting procedure code 00H004Z specifically. The following table shows our findings: [GRAPHIC] [TIFF OMITTED] TR04AU25.050

As shown in the table, for MS-DRG 023, we identified a total of 12,136 cases, with an average length of stay of 10 days and average costs of $51,132. Of the 12,136 cases in MS DRG 023, there were 111 cases reporting procedure

code 00H004Z with an average length of stay of 5.5 days and average costs of $53,666.

Because all cases reporting a procedure code included in the logic list referred to as “Chemotherapy Implant” are assigned to the higher severity level (with MCC) MS-DRG 023 and there is a three-way split within MS-DRGs 020, 021, and 022, we next analyzed the 111 cases reporting a procedure code 00H004Z in MS-DRG 023 for the presence or absence of a secondary diagnosis designated as a complication or comorbidity (CC) or a major complication or comorbidity (MCC). [GRAPHIC] [TIFF OMITTED] TR04AU25.051

We then examined claims data from the September 2024 update of the FY 2024 MedPAR file for MS-DRGs 020, 021, and 022. Our findings are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.052

As shown in the table, the data analysis performed indicates that the 77 cases in MS-DRG 023 reporting procedure code 00H004Z with a secondary diagnosis code designated as an MCC have a shorter average length of stay (6.5 days versus 12.5 days) and lower average costs ($57,820 versus $71,916) when compared to all the cases in MS-DRG 020. The 23 cases in MS-DRG 023 reporting procedure code 00H004Z with a secondary diagnosis code designated as an CC have a shorter average length of stay (3.5 days versus 7.8 days) and lower average costs ($46,741 versus $48,421) when compared to all the cases in MS-DRG 021. The 11 cases in MS-DRG 023 reporting procedure code 00H004Z without a secondary diagnosis code designated as an CC or an MCC have a shorter average length of stay (2.1 days versus 2.4 days) and higher average costs ($39,075 versus $28,243) when compared to all the cases in MS-DRG 022. These data reflect when distributed based on the presence or absence of a secondary diagnosis designated as a CC or an MCC, the 111 cases in MS-DRG 023 reporting procedure code 00H004Z have lower average costs and shorter lengths of stay than the cases in the FY 2024 MedPAR file for MS-DRGs 020 and 021 while having higher average costs and shorter lengths of stay than the cases in MS-DRG 022.

While the 111 cases reporting procedure code 00H004Z have average costs that are higher than the average costs of all cases in their currently assigned MS-DRG 023 ($53,666 versus $51,132), we do not believe it would be appropriate to reassign the cases reporting procedure code 00H004Z to MS-DRG 020, 021, and 022 as the cases are not clinically coherent with regard to resource utilization as reflected in the difference in average costs when distributed based on the presence or absence of a secondary diagnosis designated as a CC or an MCC.

We then performed a similar analysis for the cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy. As discussed in the proposed rule, for MS-DRG 023, there were 68 cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy with an average length of stay of 2.4 days and average costs of $66,303. Because all cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy are assigned to the higher severity level (with MCC) MS-DRG 023 and there is a three-way split within MS-DRGs 020, 021, and 022, next we analyzed the 68 cases describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy in MS-DRG 023 for the presence or absence of a secondary diagnosis designated as a complication or comorbidity (CC) or a major complication or comorbidity (MCC).

[GRAPHIC] [TIFF OMITTED] TR04AU25.053

The data analysis performed indicates that the 9 cases in MS-DRG 023 reporting a principal diagnosis of epilepsy and a secondary diagnosis code designated as an MCC with a neurostimulator generator inserted into the skull and insertion of a neurostimulator lead into brain have a shorter average length of stay (4.6 days versus 12.5 days) and lower average costs ($66,945 versus $71,916) when compared to all the cases in MS-DRG 020. The 23 cases in MS-DRG 023 reporting a principal diagnosis of epilepsy and a secondary diagnosis code designated as a CC with a neurostimulator generator inserted into the skull and insertion of a neurostimulator lead into brain have a shorter average length of stay (2.6 days versus 7.8 days) and higher average costs ($76,648 versus $48,421) when compared to all the cases in MS-DRG 021. The 36 cases in MS-DRG 023 reporting a principal diagnosis of epilepsy without a secondary diagnosis code designated as a CC or an MCC with a neurostimulator generator inserted into the skull and insertion of a neurostimulator lead into brain have a shorter average length of stay (1.8 days versus 2.4 days) and higher average costs ($59,534 versus $28,243) when compared to all the cases in MS-DRG 022.

As shown in the table, when distributed based on the presence or absence of a secondary diagnosis designated as a CC or an MCC, the 68 cases in MS-DRG 023 reporting a principal diagnosis of epilepsy with a neurostimulator generator inserted into the skull and insertion of a neurostimulator lead into brain have higher average costs and shorter lengths of stay than the cases in the FY 2024 MedPAR file for MS-DRGs 021 and 022 while having lower average costs and shorter lengths of stay than the cases in MS-DRG 020. We note, similar to the commenters' analysis, our analysis using the September 2024 update of the FY 2024 MedPAR file reflects that the majority of the cases (36) describing a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy do not also report secondary diagnoses designated as CCs or MCCs.

While the 68 cases reporting a principal diagnosis of epilepsy with a neurostimulator generator inserted into the skull and insertion of a neurostimulator lead into brain have average costs that are higher than the average costs of all cases in their currently assigned MS-DRG 023 ($66,303 versus $51,132), the data indicate that the difference in average costs is $12,382 ($71,916-$59,534 = $12,382) for the majority of the cases which describe a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy without reporting a secondary diagnosis code designated as a CC or an MCC in MS-DRG 023 when compared to all the cases in MS-DRG 020. We do not believe it would be appropriate to reassign all cases reporting a principal diagnosis of epilepsy with a neurostimulator generator inserted into the skull and insertion of a neurostimulator lead into the brain to the highest severity level (with MCC) MS DRG 020 as the majority of the cases are not clinically coherent with regard to resource utilization as reflected in the difference in average costs.

After consideration of the public comments we received, and for the reasons discussed, we believe that further analysis of cases reporting the insertion of a radioactive element into the brain and cases reporting a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy is needed prior to generally finalizing further reassignment of these cases to ensure clinical and resource coherence between these cases and the other cases with which they may potentially be grouped. Accordingly, we believe it would be appropriate to take additional time to examine the relevant clinical factors and similarities in resource consumption in order to best represent these subsets of patients within the MS-DRG classification and improve the overall accuracy of the IPPS payments.

CMS appreciates the comments submitted in response to our proposal as discussed in the FY 2026 IPPS/LTCH PPS proposed rule. We continue to be attuned to the requestors' and the commenters' concerns about payment for cases reporting procedure codes describing the insertion of the RNS[supreg] neurostimulator, the implantation of a DBS system, or the insertion of antineoplastic implants and note that our work in this area is ongoing. As stated in prior rulemaking, we recognize the logic for MS-DRGs 020 through 027 has grown more complex over the years and continue to believe there is an opportunity for further refinement. As discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58661 through 58667), we have begun to analyze the ICD-10 coded claims data to determine if the patients' diagnoses, the objective of the procedure performed, the specific anatomical site where the procedure is performed or the surgical approach used (for example, open, percutaneous, percutaneous endoscopic, among others) demonstrates a greater severity of illness and/or increased treatment difficulty as we consider where further refinements could potentially be made to better account for differences in the technical complexity and resource utilization among the procedures that are currently assigned to MS-DRGs 020 through 027, including how to better

align the clinical indications with the performance of specific intracranial procedures. CMS will continue to monitor and analyze the claims data with respect to MS-DRGs 020 through 027 as we further examine the logic for case assignment to the craniotomy MS-DRGs and we will continue to consider these issues as we develop potential future rulemaking proposals. Feedback and other suggestions on what other factors should be considered in a potential restructuring of these MS- DRGs may continue to be directed to MEARISTM, discussed in section II.C.1.b. of the preamble of this final rule at: https://mearis.cms.gov/public/home.

In summary, for FY 2026, after consideration of the public comments we received and for the reasons discussed, we are generally not finalizing our proposed changes to the assignment of the cases reporting the insertion of an intracranial neurostimulator implant, other than the changes described in more detail in the discussion that follows.

For FY 2026, cases reporting a neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain (including cases involving the use of the RNS[supreg] neurostimulator) and a principal diagnosis of epilepsy will be maintained in MS-DRG 023. We are not finalizing our proposal to add 114 procedure code combinations to a “Intracranial Neurostimulator Implant” logic list in MS-DRGs 020, 021, and 022 that describe (1) the insertion of multiple or single array neurostimulator generators with the insertion of a neurostimulator lead into the brain or the cerebral ventricle and (2) the insertion of neurostimulator generator inserted into the skull with the insertion of a neurostimulator lead into the brain. Accordingly, the “Major Device Implant,” “Epilepsy Principal Diagnosis,” “Neurostimulator” logic lists will be maintained in MS- DRGs 023 and 024 for FY 2026.

We are also not finalizing our proposals to change the titles of MS-DRGs 020, 021, and 022 from “Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage with MCC, with CC, and without CC/MCC, respectively” to “Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage or Intracranial Neurostimulator Implant with MCC, with CC, and without CC/MCC, respectively,” to change the title of MS- DRG 023 from “Craniotomy with Major Device Implant or Acute Complex Central Nervous System Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator” to “Craniotomy with Acute Complex Central Nervous System Principal Diagnosis with MCC or Antineoplastic Implant,” or to change the title of MS-DRG 024 from “Craniotomy with Major Device Implant or Acute Complex Central Nervous System Principal Diagnosis without MCC” to “Craniotomy with Acute Complex Central Nervous System Principal Diagnosis without MCC.”

As discussed earlier in this section, we noted that 36 procedure code combinations describing the insertion of a single array stimulator generator or a rechargeable single array stimulator generator into the subcutaneous areas of the chest, back, or abdomen and a neurostimulator lead are not captured under the “Major Device Implant” logic list, in MS-DRG 023 and 024, therefore MS-DRGs 025, 026, and 027 (Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, and without CC/ MCC, respectively) are assigned based on the reporting of the ICD-10- PCS procedure code describing the insertion of the neurostimulator into the brain. As discussed in the proposed rule, our analysis indicated the cases in MS-DRGs 025, 026, and 027 reporting the insertion of a single array generator and insertion of neurostimulator lead into brain have average costs that are higher than the average costs of all cases in their respective MS-DRGs. We then examined the data to determine how the resources for the subset of cases reporting the insertion of a single array generator and insertion of neurostimulator lead into brain compared to cases in MS-DRGs 023 and 024, and similarly found that the cases reporting the insertion of a single array generator and insertion of neurostimulator lead into brain have average costs that are higher and an average length of stay that is shorter than all cases in MS-DRGs 023 and 024. In the FY 2026 proposed rule we stated we believe the procedure code combinations that describe the insertion of a single array stimulator generator or a rechargeable single array stimulator generator into the subcutaneous areas of the chest, back, or abdomen in combination with a code describing the insertion of a neurostimulator lead into the brain are clinically coherent with the procedure code combinations in MS-DRG 023 and 024 captured under the “Major Device Implant” logic list that describe the insertion of a multiple array stimulator generator or a rechargeable multiple array stimulator generator into the subcutaneous areas of the chest, back, or abdomen in combination with a code describing the insertion of a neurostimulator lead into the brain. While we continue to believe that reassigning all cases reporting the procedure code combination describing a single array generator and insertion of neurostimulator lead into brain to MS- DRGs 023 and 024 would not fully address the difference in resource utilization in these cases, we believe that adding the 36 procedure code combinations describing the insertion of a single array stimulator generator or a rechargeable single array stimulator generator into the subcutaneous areas of the chest, back, or abdomen and a neurostimulator lead to the “Major Device Implant” logic list under MS-DRGs 023 and 024 for FY 2026 would better reflect hospital resource utilization and appropriately group these cases describing single array stimulator generator combinations with those cases describing multiple array generator combinations consistent with our proposal. Therefore, for the reasons discussed, we are finalizing the addition of the 36 ICD-10-PCS procedure code combinations that describe the implantation of a DBS system with a single array stimulator generator or a rechargeable single array stimulator generator and the insertion of a neurostimulator lead into the brain to the “Major Device Implant” logic list in MS-DRGs 023 and 024. We refer the reader to Table 6P.2b associated with this FY 2026 IPPS/LTCH PPS final rule (available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps) for the list of the 36 ICD-10-PCS procedure code combinations that describe the implantation of a DBS system with a single array stimulator generator or a rechargeable single array stimulator generator and the insertion of a neurostimulator lead into the brain that are being added to the “Major Device Implant” logic list in MS-DRGs 023 and 024.

We also note that as discussed earlier in this section, after consideration of the public comments we received, we are finalizing our proposal to add procedure codes 00H001Z, 00H005Z, 00H031Z, and 00H041Z to the “Chemotherapy Implant” logic list in MS-DRGs 023 and 024, without modification, effective October 1, 2025, for FY 2026. We are also finalizing the change of the description of the logic list in MS- DRGs 023 and 024 from “Chemotherapy Implant” to “Antineoplastic Implant”. Therefore, for consistency with our finalized changes to the logic list, we are finalizing a change to the title of MS-DRG 023 from “Craniotomy with Major

Device Implant or Acute Complex Central Nervous System Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator” to “Craniotomy with Major Device Implant or Acute Complex Central Nervous System Principal Diagnosis with MCC or Antineoplastic Implant or Epilepsy with Neurostimulator.”

Comment: Several commenters noted that in Table 6P.2c associated with the FY 2026 IPPS/LTCH PPS proposed rule, which contains the list of the 57 ICD-10-PCS procedure codes that were inadvertently excluded from the “Intracranial Vascular Procedures” logic list of MS-DRGs 020, 021, and 022, ICD-10-PCS codes 057L3DZ (Dilation of intracranial vein with intraluminal device, percutaneous approach) and 057L4DZ (Dilation of intracranial vein with intraluminal device, percutaneous endoscopic approach) were included. These commenters noted that ICD-10- PCS code 057L0DZ (Dilation of intracranial vein with intraluminal device, open approach) was not also included in the list and recommended CMS consider also adding procedure code 057L0DZ to the “Intracranial Vascular Procedures” logic list of MS-DRGs 020, 021, and 022, as this code also describes dilation of an intracranial vein with an intraluminal device, differing only in approach. Several commenters specifically stated that they were unclear on the rationale for not including ICD-10-PCS code 057L0DZ (Dilation of Intracranial Vein with Intraluminal Device, Open Approach) to the logic list of MS- DRGs 020, 021, and 022.

Response: We appreciate the commenters' feedback. In the ICD-10 MS- DRGs Version 42.1, ICD-10-PCS procedure codes 057L3DZ and 057L4DZ are currently assigned to MS-DRGs 023, 024, 025, 026, and 027. As we noted in the proposed rule, during our review of MS-DRGs 020, 021, and 022, we identified 57 ICD-10-PCS procedure codes describing intracranial vascular procedures that were inadvertently excluded from the “Intracranial Vascular Procedures” logic list of MS-DRGs 020, 021, and 022. We note that we identified the 57 procedure codes by comparing the logic lists in MS-DRGs 023, 024, 025, 026, and 027 to the logic list of MS-DRGs 020, 021, and 022.

ICD-10-PCS procedure code 057L0DZ (Dilation of intracranial vein with intraluminal device, open approach) is currently assigned to MDC 05 (Diseases and Disorders of the Circulatory System) MS-DRGs 252, 253 and 254 (Other Vascular Procedures with MCC, with CC, without MCC respectively) and therefore was not identified in our initial review. We agree with the commenters that ICD-10-PCS code 057L0DZ describes an intracranial vascular procedure and should be added to the “Intracranial Vascular Procedures” logic list of MS-DRGs 020, 021, and 022, consistent with our proposal to add the ICD-10-PCS procedure codes describing intracranial vascular procedures that were inadvertently excluded from the “Intracranial Vascular Procedures” logic list.

During our review of this issue identified by the commenters, we further examined the GROUPER logic that would determine the assignment of a case to MS-DRGs 020, 021, and 022. Specifically, we reviewed the ICD-10-PCS classification to determine if there were other ICD-10-PCS codes describing dilation of an intracranial vein that were not listed in the logic for MS-DRGs 020, 021, and 022. We identified the following three procedure codes. [GRAPHIC] [TIFF OMITTED] TR04AU25.054

ICD-10-PCS codes 057L0ZZ, 057L3ZZ, and 057L4ZZ are also currently assigned to MS-DRGs 252, 253 and 254 in the ICD-10 MS-DRGs Version 42.1. In response to the commenters that stated they were unclear on the rationale for not including ICD-10-PCS code 057L0DZ in the list of procedure codes proposed to be added to the “Intracranial Vascular Procedures” logic list of MS-DRGs 020, 021, and 022, we have identified that the disparate MS-DRG assignments of the six ICD-10-PCS procedure codes that describe the dilation of an intracranial vein are a result of a replication error in transitioning to ICD-10. We determined it may be helpful to provide the comparable translations under ICD-9-CM for commenters to better understand how these six procedures were initially grouped to the ICD-10 MS-DRGs as a result of replication during the conversion from ICD-9 to ICD-10 based MS-DRGs. We refer the reader to Table 6P.2f associated with this FY 2026 IPPS/ LTCH PPS final rule (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) for the findings from our analysis of the six procedure codes, which indicates how these procedures were classified under ICD-10-PCS based on the comparable translations under ICD-9-CM resulting in the current MS-DRG assignments.

We reviewed ICD-10-PCS codes 057L0DZ, 057L0ZZ, 057L3ZZ, and 057L4ZZ and note these codes describe intracranial vascular procedures that are consistent with the existing procedure codes included in the logic for case assignment to MS-DRGs 020, 021, 022, 023, 024, 025, 026, and 027. Accordingly, because procedure codes 057L0DZ, 057L0ZZ, 057L3ZZ, and 057L4ZZ that describe dilation of an intracranial vein were not assigned to MS-DRGs 020, 021, 022, 023, 024, 025, 026, and 027 as a result of replication in the transition from ICD-9 to ICD-10 based MS- DRGs, and are consistent with the existing procedure codes that also describe dilation of an intracranial vein currently included in the logic for these MS-DRGs, we believe that consistent with our proposal to add the other ICD-10-PCS procedure codes describing intracranial vascular procedures that were inadvertently excluded from the “Intracranial Vascular Procedures” logic list, procedure codes 057L0DZ, 057L0ZZ, 057L3ZZ, and 057L4ZZ should be assigned to MS-DRGs 020, 021, 022, 023, 024, 025, 026, and 027 in MDC 01, effective FY 2026.

Therefore, after consideration of the public comments we received, and for the reasons discussed, we are finalizing our proposal to add the 57 procedure codes to the “Intracranial Vascular Procedures” logic list, and the 66 diagnosis codes to the “Hemorrhage

Principal Diagnosis” logic list of MS-DRGs 020, 021, and 022, with modification, effective October 1, 2025, for FY 2026. Specifically, we are also adding ICD-10-PCS codes 057L0DZ, 057L0ZZ, 057L3ZZ, and 057L4ZZ that also describe dilation of an intracranial vein to the list of procedure codes in the “Intracranial Vascular Procedures” logic list of MS-DRGs 020, 021, and 022. The list of ICD-10-PCS procedure codes describing intracranial vascular procedures that we are finalizing to add to the “Intracranial Vascular Procedures” logic list of MS-DRGs 020, 021, and 022 are shown in Table 6P.2c associated with this final rule and available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps. In addition, we are also finalizing the assignment of ICD-10-PCS codes 057L0DZ, 057L0ZZ, 057L3ZZ, and 057L4ZZ to MS-DRGs 023, 024, 025, 026, and 027 in MDC 01 effective FY 2026.

These finalizations as discussed are reflected in the final version of ICD-10 MS-DRG Definitions Manual, Version 43 that contains the complete documentation of the GROUPER logic for MS-DRGs 020 through 027 for FY 2026 and is available via the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software. b. Hypertensive Encephalopathy

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18026 through 18028, we received a request to delete MS-DRGs 077, 078, and 079 (Hypertensive Encephalopathy with MCC, with CC, and without CC/ MCC, respectively). Hypertensive encephalopathy refers to brain dysfunction that occurs when the brain's blood vessels can no longer regulate blood flow due to severe or sudden rises in blood pressure, causing brain swelling and damage. It is characterized by the insidious onset of headache, nausea, and vomiting, followed by non-localizing neurologic symptoms such as restlessness, confusion, and, if the hypertension is not treated, seizures and coma. The diagnosis is based on clinical presentation, elevated blood pressure, and neurological examination, often supported by brain imaging like CT or MRI. The treatment involves immediate and rapid lowering of blood pressure with appropriate medications administered in a controlled setting. ICD-10-CM diagnosis code I67.4 (Hypertensive encephalopathy) is used to report this diagnosis.

The requestor noted that effective FY 2025, a “use additional code” instructional note was added under diagnosis code I16.1 (Hypertensive emergency) in the ICD-10-CM Tabular List of Diseases and Injuries. Specifically, the instructional note states, “use additional code, if applicable, to identify specific organ dysfunction, such as:” and lists I67.4 as well as eight other ICD-10-CM diagnosis codes. The requestor stated that the addition of this “use additional code” instructional note has sequencing implications and requires I67.4 to be sequenced as a secondary diagnosis when hypertensive emergency and hypertensive encephalopathy are documented. As the GROUPER logic for MS-DRGs 077, 078, and 079 is defined by only diagnosis code I67.4, the requestor stated there will no longer be cases grouping to medical MS- DRGs 077, 078, and 079 because I67.4 will only be sequenced as a secondary diagnosis and I16.1 will have to be sequenced as the principal diagnosis. Instead, these cases will group to MDC 05 (Diseases and Disorders of the Circulatory System) medical MS-DRGs 304 and 305 (Hypertension with MCC and without MCC, respectively) since I16.1 is assigned to those MS-DRGs.

To begin our analysis, as discussed in the proposed rule, we reviewed the ICD-10-CM Tabular List of Diseases and Injuries. We stated that the requestor is correct a “use additional code” instructional note was added under diagnosis code I16.1 (Hypertensive emergency) in the ICD-10-CM Tabular List of Diseases and Injuries, effective FY 2025. According to the ICD-10-CM Official Guidelines for Coding and Reporting, “certain conditions have both an underlying etiology and multiple body system manifestations due to the underlying etiology. For such conditions the ICD-10-CM has a coding convention that requires the underlying condition to be sequenced first followed by the manifestation. Wherever such a combination exists there is an `use additional code' note at the etiology code, and a `code first' note at the manifestation code. These instructional notes indicate the proper sequencing order of the codes, etiology followed by manifestation.” We noted in the proposed rule that no such “code first” note appears at ICD-10-CM diagnosis code I67.4 (Hypertensive encephalopathy) in the ICD-10-CM Tabular List of Diseases and Injuries meaning the sequencing depends on the circumstances of the encounter when hypertensive emergency and hypertensive encephalopathy are documented. If providers have cases involving hypertensive emergency and hypertensive encephalopathy for which they need ICD-10 coding assistance, we encourage them to submit their questions to the American Hospital Association's Central Office on ICD-10 at https://www.codingclinicadvisor.com/.

We then reviewed the GROUPER logic. We stated the requestor is correct that diagnosis code I67.4 is the only diagnosis code listed under the heading of “Principal Diagnosis” in the ICD-10 MS-DRG Definitions Manual for MS-DRGs 077, 078, and 079. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 42.1, which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software, for complete documentation of the GROUPER logic for MS- DRGs 077, 078, and 079. We noted in the proposed rule that a DRG for a principal diagnosis of hypertensive encephalopathy (48 FR 39876) has existed since 1983 when Congress amended the Social Security Act to include a national DRG-based hospital prospective payment system for all Medicare patients.

We then examined claims data from the September 2024 update of the FY 2024 MedPAR file for all cases in MS-DRGs 077, 078, and 079 to consider the resources involved in the cases reporting a principal diagnosis of hypertensive encephalopathy. Our findings are shown in this table. [GRAPHIC] [TIFF OMITTED] TR04AU25.055

We stated in the proposed rule the data reflect a moderately low volume of cases in MS-DRGs 077, 078, and 079, relatively. We then evaluated the reporting of hypertensive encephalopathy in the inpatient setting over the past few years in medical MS-DRGs 077, 078, and 079. We analyzed claims data for MS-DRGs 077, 078, and 079 from the FY 2020 through the FY 2024 MedPAR files, which were used in our analysis of claims data for MS-DRG reclassification requests effective for FY 2022 through FY 2026 to trend the number of cases assigned to these MS-DRGs over time. Our findings are shown in the following graph: [GRAPHIC] [TIFF OMITTED] TR04AU25.056

The data show a general decline in the number of cases reporting hypertensive encephalopathy as a principal diagnosis in medical MS-DRGs 077, 078, and 079 for the past 5 years. We noted in the proposed rule that as discussed in prior rulemaking, the MS-DRGs are a classification system intended to group together diagnoses and procedures with similar clinical characteristics and utilization of resources. We generally seek to identify sufficient sets of claims data with demonstrated clinical similarity in developing diagnosis related groups rather than subsets based on single diagnoses. After review of the findings indicating a general decline in the number of cases reporting hypertensive encephalopathy as a principal diagnosis, and consideration of the intent of the MS-DRGs, we stated we believe that there is no longer a clinical reason to maintain the MS-DRGs for hypertensive encephalopathy (MS-DRGs 077, 078, and 079) as they are defined by the reporting of one principal diagnosis code.

As discussed in the proposed rule, to explore mechanisms to ensure clinical coherence between cases reporting hypertensive encephalopathy as a principal diagnosis and the other cases with which they may potentially be grouped, we then conducted an examination of all the MS- DRGs where I67.4 was also reported as principal diagnosis to determine if the diagnosis was included in any other MS-DRGs outside of MDC 01, to assess the current MS-DRG assignment of this diagnosis code. Our findings are shown in the following table.

[GRAPHIC] [TIFF OMITTED] TR04AU25.057

As shown in the table, we found 35 cases reporting hypertensive encephalopathy as the principal diagnosis in MS-DRGs other than MS-DRGs 077, 078, and 079. We noted in the proposed rule that the majority of the listed MS-DRGs are assigned to MDC 01 with one exception: Pre-MDC MS-DRG 004 (Tracheostomy with MV >96 Hours or Principal Diagnosis Except Face, Mouth and Neck without Major O.R. Procedures). Additionally, there were 11 cases that grouped to MS-DRGs 981, and 982 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, and with CC, respectively) and two cases that grouped to MS-DRG 987 (Non-Extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC). After review of these data, we stated we believe it would not be appropriate to reassign diagnosis code I67.4 to another MDC because it could inadvertently cause cases reporting a principal diagnosis of hypertensive encephalopathy with a nervous system procedure to be assigned to an unrelated MS-DRG. Further, we stated we believe it is clinically appropriate to maintain the assignment of I67.4 in MDC 01 as the condition is consistent with other conditions reported by diagnosis codes assigned to MDC 01.

We then examined the MS-DRGs within MDC 01 to consider the possibility of reassigning the cases with a principal diagnosis of hypertensive encephalopathy to other MS-DRGs within MDC 01. In reviewing the claims data from the September 2024 update of the FY 2024 MedPAR file, and examining the clinical considerations, we stated we believe that the cases reporting a principal diagnosis of hypertensive encephalopathy could suitably group to MS-DRGs 070, 071, and 072 (Nonspecific Cerebrovascular Disorders with MCC, with CC and, without CC/MCC, respectively), which contain other cerebrovascular diagnoses under the heading of “Principal Diagnosis” in the GROUPER logic list, noting in the proposed rule that hypertensive encephalopathy is considered a cerebrovascular disorder, as it is a neurological condition directly caused by a sudden, severe elevation in blood pressure. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 42.1, which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software, for complete documentation of the GROUPER logic for MS-DRGs 070, 071, and 072.

To determine how the resources for the cases in MS-DRGs 077, 078, and 079 compared to cases in MS-DRGs 070, 071, and 072, we examined the average costs and length of stay for cases in MS-DRGs 070, 071, and 072. Our findings are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.058

As reflected and discussed in the proposed rule, the average costs of the 1,488 cases reporting a principal diagnosis of I67.4 with a secondary diagnosis designated as a MCC in MS-DRG 077 are slightly lower ($13,176 compared to $14,771) and the average length of stay is shorter (5 days compared to 6.4 days) than for all cases in MS-DRGs 070. The average costs of the 1,846 cases reporting a principal diagnosis of I67.4 with a secondary diagnosis designated as a CC in MS- DRG 078 are slightly lower ($8,591 compared to $9,381) and the average length of stay is shorter (3.3 days compared to 4.5 days) than for all cases in MS-DRGs 071. The average costs of the 243 cases reporting a principal diagnosis of I67.4 without reporting a secondary diagnosis designated as a CC or a MCC in MS-DRG 079 are slightly lower ($6,729 compared to $7,047) and the average length of stay is shorter (2.4

days compared to 2.9 days) than for all cases in MS-DRGs 072.

We stated in the proposed rule our analysis demonstrates that the cases reporting a principal diagnosis of I67.4 currently grouping to medical MS-DRGs 077, 078, and 079 are generally aligned with the average costs for the cases currently grouping to MS-DRGs 070, 071, and 072. While the cases reporting a principal diagnosis code describing hypertensive encephalopathy have slightly lower costs and a shorter average length of stay than for cases in MS-DRGs 070, 071, and 072, we stated we believe reassigning diagnosis code I67.4 to MS-DRGs 070, 071, and 072 will account for the subset of patients reporting this principal diagnosis and will appropriately reflect the resources involved in evaluating and treating these patients.

As discussed in the proposed rule, during our review of this issue and the examination of the MS-DRGs within MDC 01, we noted that the title of MS-DRGs 067, 068, and 069 is “Nonspecific CVA and Precerebral Occlusion without Infarction with MCC, with CC, and without CC/MCC, respectively” and the title of MS-DRGs 070, 071, and 072 is “Nonspecific Cerebrovascular Disorders, with MCC, with CC, and without CC/MCC, respectively.” In examining the GROUPER logic for these MS- DRGs and reviewing the diagnoses listed under the heading of “Principal Diagnosis” in the ICD-10 MS-DRG Definitions Manual, we stated we believe the titles for these MS-DRGs no longer accurately reflects the assigned diagnoses. Like MS-DRGs 077, 078, and 079, the titles of MS-DRGs 067, 068, 069, 070, 071, and 072 were established prior to the transition to ICD-10-CM. The terminology “nonspecific” in the titles for these MS-DRGs was appropriate to describe the ICD-9- CM diagnosis codes that were previously assigned to these DRGs, but as discussed in the HIPAA Administrative Simplification: Modification to Medical Data Code Set Standards To Adopt ICD-10-CM and ICD-10-PCS proposed rule (73 FR 49796 through 49803), in comparison to ICD-9-CM, ICD-10-CM diagnosis codes are very specific and that this specificity improves the richness of data for analysis and improves the accuracy of data used for medical research. Therefore, we stated we believe it is appropriate to propose to revise the titles of these MS-DRGs for consistency.

In this final rule, we are amending our previous statement as the titles of MS-DRGs 067 and 068 are “Nonspecific CVA and Precerebral Occlusion without Infarction with MCC and without MCC”, respectively, in the ICD-10 MS-DRG Definitions Manual Version 42.1. The title of MS- DRG 069 is “Transient Ischemia without Thrombolytic” and was inadvertently referenced in our proposed rule discussion in connection with MS-DRGs 067 and 068.

In summary, for FY 2026, we proposed to delete MS-DRGs 077, 078, and 079. Additionally, we proposed to reassign ICD-10-CM diagnosis code I67.4 (Hypertensive encephalopathy) from MDC 01 MS-DRGs 077, 078, and 079 to MS-DRGs 070, 071, and 072. Lastly, for consistency, we also proposed to change the titles of MS-DRGs 067, 068, and 069 from “Nonspecific CVA and Precerebral Occlusion without Infarction with MCC, with CC, and without CC/MCC, respectively” to “Precerebral Occlusion without Infarction with MCC, with CC, and without CC/MCC, respectively” and to change the titles of MS-DRGs 070, 071, and 072 from “Nonspecific Cerebrovascular Disorders, with MCC, with CC, and without CC/MCC, respectively” to “Other Cerebrovascular Disorders with MCC, with CC, and without CC/MCC, respectively” to better reflect the assigned diagnoses.

Comment: Commenters supported the proposals to delete MS-DRGs 077, 078, and 079, to reassign ICD-10-CM diagnosis code I67.4 (Hypertensive encephalopathy) from MDC 01 MS-DRGs 077, 078, and 079 to MS-DRGs 070, 071, and 072, to change the titles of MS-DRGs 067, 068, and 069 to “Precerebral Occlusion without Infarction with MCC, with CC, and without CC/MCC, respectively” and to change the titles of MS-DRGs 070, 071, and 072 to “Other Cerebrovascular Disorders with MCC, with CC, and without CC/MCC, respectively”. Some commenters stated that they supported the proposal based on CMS' data analysis, which indicates a general decline in the number of cases reporting hypertensive encephalopathy as a principal diagnosis in these MS-DRGs over the past 5 years.

Several commenters, while supporting the proposals, stated that they disagree with CMS' statement that since no “code first” note appears at ICD-10-CM diagnosis code I67.4 (Hypertensive encephalopathy) in the ICD-10-CM Tabular List of Diseases and Injuries, the sequencing of the diagnosis codes depends on the circumstances of the encounter when hypertensive emergency and hypertensive encephalopathy are documented. These commenters stated that they do not believe this is a correct interpretation of the ICD-10-CM instructional notes. In their interpretation, when both an etiology and manifestation are documented, and a “use additional code” note appears at the ICD-10-CM code for the etiology, the manifestations listed in that note must be sequenced as secondary diagnosis codes, regardless of whether a corresponding “code first” note appears at the codes listed in the “use additional code” note. A commenter stated that since they question the interpretation of the instructional notes as discussed in the proposed rule, additional data analysis should be performed based on the ICD-10- CM Tabular List instructions.

Response: We appreciate the commenters' support and thank them for sharing their interpretation of the ICD-10-CM instructional notes. As noted in section II.C.11. of the preamble of this final rule, the Centers for Disease Control and Prevention's (CDC's) National Center for Health Statistics (NCHS) has lead responsibility for the diagnosis codes and CMS has lead responsibility for the ICD-10-PCS procedure codes. We note that after review of the commenters' interpretation of the ICD-10-CM Tabular List instructions, we consulted with the staff at the CDC/NCHS and NCHS confirmed that they would consider further review of the classification, including review of the Tabular List instructions for hypertensive emergency and hypertensive encephalopathy and other instances in the classification where a “code first” note does not appear at the manifestation code. Additionally, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), coding advice is issued independently from payment policy. While we collaborate with the American Hospital Association (AHA) through the Coding Clinic for ICD- 10-CM and ICD-10-PCS to promote proper coding as one of the Cooperating Parties for ICD-10, the AHA is the official U.S. clearinghouse on medical coding. We recommend that an entity seeking coding guidance on reporting hypertensive emergency and hypertensive encephalopathy submit any questions to the AHA's Central Office on ICD-10 at https://www.codingclinicadvisor.com/.

In response to the suggestion that CMS perform additional analysis based on the commenters' interpretation of the ICD-10-CM Tabular List instructions, we note that as discussed in the proposed rule, the GROUPER logic for MS-DRGs 077, 078, and 079 is defined by only diagnosis code I67.4 listed under the heading of “Principal Diagnosis” in the ICD-10 MS-DRG Definitions Manual. As the GROUPER logic for MS-DRGs 077, 078, and 079 is

defined by only one diagnosis code, it is unclear how the interpretation of the ICD-10-CM Tabular List instructions would factor into our data analysis, as cases reporting a different principal diagnosis code would not be assigned to MS-DRGs 077, 078, and 079. We further note our proposal to delete MS-DRGs 077, 078, and 079 was based on our review of the findings indicating a general decline in the number of cases reporting hypertensive encephalopathy as a principal diagnosis in the inpatient setting over the past few years and in consideration of the intent of the MS-DRGs.

Therefore, after consideration of the public comments we received, we are finalizing our proposal to delete MS-DRGs 077, 078, and 079. Additionally, we are finalizing our proposal to reassign ICD-10-CM diagnosis code I67.4 (Hypertensive encephalopathy) from MDC 01 MS-DRGs 077, 078, and 079 to MS-DRGs 070, 071, and 072. We are also finalizing our proposal to change the titles of MS-DRGs 070, 071, and 072 from “Nonspecific Cerebrovascular Disorders, with MCC, with CC, and without CC/MCC, respectively” to “Other Cerebrovascular Disorders with MCC, with CC, and without CC/MCC, respectively”, without modification, effective October 1, 2025, for FY 2026.

Lastly, as discussed previously, in the ICD-10 MS-DRG Definitions Manual Version 42.1, the titles of MS-DRGs 067 and 068 are “Nonspecific CVA and Precerebral Occlusion without Infarction with MCC and without MCC”, respectively, and MS-DRG 069 was inadvertently referenced in our discussion in the proposed rule. Therefore, after consideration of the public comments we received, for the reasons discussed, we are finalizing our proposal with modification. Specifically, we are finalizing our proposal to change the titles of MS-DRGs 067 and 068 from “Nonspecific CVA and Precerebral Occlusion without Infarction with MCC and without MCC”, respectively, to “Precerebral Occlusion without Infarction with MCC and without MCC”, respectively, effective October 1, 2025. Under this finalization, the title of MS-DRG 069 will be maintained as “Transient Ischemia without Thrombolytic” for FY 2026. c. Encounter for Adjustment and Management of Implanted Devices of the Special Senses

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18028 through 18029), we identified a replication issue from the ICD-9 based MS-DRGs to the ICD-10 based MS-DRGs regarding the assignment of four ICD-10-CM diagnosis codes that describe encounters for adjustment and management of implanted devices of the special senses. Under the Version 32 ICD-9-CM based MS-DRGs, ICD-9-CM diagnosis code V53.09 (Fitting and adjustment of other devices related to nervous system and special senses), as shown in the following table, was assigned medical MS-DRGs 091, 092, and 093 (Other Disorders of Nervous System with MCC, with CC, and without CC/MCC, respectively) in MDC 01 (Diseases and Disorders of the Nervous System). The four ICD-10-CM code translations also shown in the following table, that provide more detailed and specific information, also currently group to MS-DRGs 091, 092, and 093 in the ICD-10 MS-DRGs Version 42.1. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 42.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete documentation of the GROUPER logic for MS-DRGs 091, 092, and 093. [GRAPHIC] [TIFF OMITTED] TR04AU25.059

As discussed in the proposed rule, during our review of this issue, we noted that under ICD-9-CM, diagnosis code V53.09 (Fitting and adjustment of other devices related to nervous system and special senses) did not further describe the type of device related to nervous system and special senses. This is in contrast to its four comparable ICD-10-CM code translations listed in the previous table that provide more detailed and specific information than the ICD-9-CM diagnosis code and do specify the type of device.

In reviewing the four ICD-10-CM diagnosis codes listed in the previous table and the devices they describe, we stated we believe that code Z45.31 is more appropriately assigned to MDC 02 (Diseases and Disorders of the Eye) and codes Z45.320, Z45.321, and Z45.328 are more appropriately assigned to MDC 03 (Diseases and Disorders of the Ear, Nose, Mouth and Throat). We noted in the proposed rule that an “implanted visual substitution device,” also known as a “visual prosthesis,” is a medical implant designed to partially restore vision to a patient who is blind by directly stimulating the visual pathway in the retina or brain, essentially bypassing damaged photoreceptor cells in the eye and providing a basic visual perception through electrical stimulation. Bone conduction devices, also known as bone conduction hearing aids, amplify sound via bone conduction, or vibrations through the bones of the skull which directly stimulate a functioning cochlea. Cochlear devices and other implanted hearing devices are small electronic devices designed for patients with moderate to severe hearing loss caused by damage to the inner ear to help perceive sounds.

We analyzed claims data from the September 2024 update of the FY 2024 MedPAR file to determine if there were any cases reported with diagnosis codes Z45.31, Z45.320, Z45.321, or Z45.328. One case was found in MS-DRG 983 (Extensive O.R. Procedures Unrelated to Principal Diagnosis without CC/MCC) reporting principal diagnosis Z45.321 and procedure code 09PE0SZ (Removal of hearing device from left inner ear, open approach) with costs of $5,530 and a length of stay of one day.

In the proposed rule we stated we recognize that the volume of inpatient cases for patients with a principal diagnosis of Z45.31, Z45.320, Z45.321,

or Z45.328 is low, however we believe that for clinical consistency, it is more appropriate for these cases to be assigned to MDCs that better describe the indication of the implanted devices of the special senses the codes describe. Accordingly, because the cases reporting principal diagnoses describing encounters for adjustment and management of implanted devices of the special senses are more clinically consistent in MDC 02 or MDC 03 depending on the type of device, and the diagnosis codes were initially assigned to MDC 01 MS-DRGs 091, 092, and 093 as a result of replication in the transition from ICD-9 to ICD-10 based MS- DRGs, we proposed to reassign ICD-10-CM diagnosis code Z45.31 from MS- DRGs 091, 092, and 093 to MDC 02 MS-DRG 123 (Neurological Eye Disorders). We also proposed to reassign ICD-10-CM diagnosis codes Z45.320, Z45.321, and Z45.328 from MS-DRGs 091, 092, and 093 to MDC 03 MS-DRGs 154, 155, and 156 (Other Ear, Nose, Mouth and Throat Diagnoses with MCC, with CC, and without CC/MCC, respectively).

Comment: Commenters supported the proposal to assign ICD-10-CM codes Z45.31, Z45.320, Z45.321, and Z45.328 to MDCs that better describe the indication of the implanted devices of the special senses the diagnosis codes describe.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing, without modification, our proposal to reassign ICD-10-CM diagnosis code Z45.31 from MDC 01 MS-DRGs 091, 092, and 093 to MDC 02 MS-DRG 123 (Neurological Eye Disorders). We are also finalizing our proposal to reassign ICD-10-CM diagnosis codes Z45.320, Z45.321, and Z45.328 from MS-DRGs 091, 092, and 093 to MDC 03 MS-DRGs 154, 155, and 156 (Other Ear, Nose, Mouth and Throat Diagnoses with MCC, with CC, and without CC/MCC, respectively). 4. MDC 05 (Diseases and Disorders of the Circulatory System) a. Endovascular Aneurysm Repair (EVAR) With Iliac Branch Procedures

In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18029 through 18032), we discussed a request we received to create a new MS-DRG for cases reporting endovascular repair of abdominal aortic aneurysms that extend into at least one iliac artery to preserve blood flow to the external or internal iliac arteries. According to the requestor, aortic aneurysms extend into at least one of the iliac arteries in approximately 25% of patients with abdominal aortic aneurysms. The requestor (the manufacturer), stated that the GORE[supreg] EXCLUDER[supreg] Iliac Branch Endoprosthesis was approved by the Food and Drug Administration (FDA) in March of 2016 to be used exclusively with the GORE[supreg] EXCLUDER[supreg] Abdominal Aortic Aneurysm Endoprosthesis to isolate the common iliac artery from systemic blood flow and preserve blood flow in the external iliac and internal iliac arteries in patients with a common iliac or aortoiliac aneurysm, who have appropriate anatomy.\3\ According to the requestor, maintaining flow to the internal iliac artery and pelvic circulation using iliac branch devices or alternative techniques aims to decrease complications associated with artery occlusion.4 5 6 The requestor also stated that occluding the internal iliac artery can result in significant hip and/or buttock claudication, erectile dysfunction, and colonic and spinal cord ischemia.

\3\ van der Veen D, Holewijn S, Bellosta R, van Sterkenburg SMM, Heyligers JMM, Ficarelli I, G[oacute]mez Palon[eacute]s FJ, Mangialardi N, Mosquera NJ, Holden A, Reijnen MMPJ; IceBERG Study Collaboration. One Year Outcomes of an International Multicentre Prospective Cohort Study on the Gore Excluder Iliac Branch Endoprosthesis for Aorto-Iliac Aneurysms. Eur J Vasc Endovasc Surg. 2021 Aug;62(2):177-185. doi: 10.1016/j.ejvs.2021.04.006. Epub 2021 Jun 16. PMID: 34144884.

\4\ Sousa LHDG, Baptista-Silva JCC, Vasconcelos V, Flumignan RLG, Nakano LCU. Internal iliac artery revascularisation versus internal iliac artery occlusion for endovascular treatment of aorto- iliac aneurysms. Cochrane Database of Systematic Reviews 2020, Issue 7. Art. No.: CD013168. DOI: 10.1002/14651858.CD013168.pub2.

\5\ Parlani G, Verzini F, De Rango P, Brambilla D, Coscarella C, Ferrer C, Cao P. Long-term results of iliac aneurysm repair with iliac branched endograft: a 5-year experience on 100 consecutive cases. Eur J Vasc Endovasc Surg. 2012 Mar;43(3):287-92. doi: 10.1016/j.ejvs.2011.12.011. Epub 2012 Jan 10. PMID: 22240335.

\6\ Taudorf M, Gr[oslash]nvall J, Schroeder TV, L[ouml]nn L. Endovascular Aneurysm Repair Treatment of Aortoiliac Aneurysms: Can Iliac Branched Devices Prevent Gluteal Claudication? J Vasc Interv Radiol. 2016 Feb;27(2):174-80. doi: 10.1016/j.jvir.2015.11.031. Epub 2015 Dec 22. PMID: 26706185.

According to the requestor, endovascular aneurysm repair (EVAR) procedures that preserve blood flow to the iliac arteries are technically more challenging than conventional EVAR of the abdominal aorta, and they require increased procedure time, fluoroscopy time, and anesthesia time. The requestor stated that tortuosity and/or stenosis in the iliac territory may increase the complexity or even prevent the deployment of devices, leading to treatment failure or causing early occlusion of the branches. In such cases, some patients may develop symptoms of pelvic ischaemia.7 8 The requestor stated that current guidelines advocate the preservation of at least one internal iliac artery in patients with common iliac artery aneurysms, and iliac branched devices were developed to preserve the perfusion in the internal iliac artery.\9\

\7\ Donas KP, Criado FJ, Torsello G, Veith FJ, Minion DJ; PERICLES Registry Collaborators. Classification of Chimney EVAR- Related Endoleaks: Insights From the PERICLES Registry. J Endovasc Ther. 2017 Feb 1;24(1):72-74. doi: 10.1177/1526602816678994. Epub 2016 Nov 21. PMID: 27872319.

\8\ Ghosh J, Murray D, Paravastu S, Farquharson F, Walker MG, Serracino-Inglott F. Contemporary management of aorto-iliac aneurysms in the endovascular era. Eur J Vasc Endovasc Surg. 2009 Feb;37(2):182-8. doi: 10.1016/j.ejvs.2008.11.001. Epub 2008 Nov 29. PMID: 19046903.

\9\ van der Veen D, Holewijn S, Bellosta R, van Sterkenburg SMM, Heyligers JMM, Ficarelli I, G[oacute]mez Palon[eacute]s FJ, Mangialardi N, Mosquera NJ, Holden A, Reijnen MMPJ; IceBERG Study Collaboration. One Year Outcomes of an International Multicentre Prospective Cohort Study on the Gore Excluder Iliac Branch Endoprosthesis for Aorto-Iliac Aneurysms. Eur J Vasc Endovasc Surg. 2021 Aug;62(2):177-185. doi: 10.1016/j.ejvs.2021.04.006. Epub 2021 Jun 16. PMID: 34144884.

The requestor also expressed concern that hospitals who treat Medicare patients with aortoiliac and common iliac aneurysms using endovascular procedures with endoprostheses are not classified appropriately based on the current MS-DRG assignment and the resources required. The requestor performed its own data analysis and indicated it found differences in resource utilization when comparing cases reporting standard EVAR of the abdominal aorta to cases reporting EVAR of the abdominal aorta combined with procedures to preserve flow to an iliac branch. According to the requestor, the disparity in resource coherency under the current MS-DRG assignment may reduce access to Medicare beneficiaries who could benefit from these procedures. The requestor stated a new MS-DRG would enable more precise payments and better resource coherency under the MS-DRGs.

The procedure codes that describe EVAR using an abdominal aortic aneurysm (AAA) endoprosthesis and the procedure codes that describe EVAR using an iliac branch endoprosthesis (IBE) that are used to treat aortoiliac and iliac artery aneurysms, respectively, are listed in the following tables.

[GRAPHIC] [TIFF OMITTED] TR04AU25.060

[GRAPHIC] [TIFF OMITTED] TR04AU25.061

Cases reporting a combination of these procedure codes (that is, any one procedure code from each list) for the endovascular treatment of aortoiliac and iliac artery aneurysms are currently assigned to MS- DRGs 268 and 269 (Aortic and Heart Assist Procedures Except Pulsation Balloon with MCC and without MCC, respectively). Based on its analysis of Medicare claims data using the previously listed codes in MS-DRGs 268 and 269, and to facilitate more precise payments for these procedures, the requestor recommended that CMS assign cases reporting a procedure code describing EVAR using an AAA endoprosthesis with a procedure code describing EVAR using an IBE to a proposed new MS-DRG titled, “Concomitant Endovascular Abdominal Aorta and Iliac Branch Procedures”.

In review of this request, as discussed in the proposed rule, we analyzed claims data from the September 2024 update of the FY 2024 MedPAR file for MS-DRGs 268 and 269 and for cases reporting standard EVAR using an AAA endoprosthesis compared to cases reporting EVAR using an AAA endoprosthesis with an IBE that are used to treat aortoiliac and iliac artery aneurysms with the previously listed procedure codes. The findings from our analysis are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.062

As shown in the table, we identified a total of 2,519 cases within MS-DRG 268 with an average length of stay of 9.1 days and average costs of $62,984. Of the 2,519 cases, we found 1,500 cases reporting standard EVAR using an AAA endoprosthesis with an average length of stay of 7.4 days and average costs of $63,877 and 193 cases reporting EVAR using an AAA endoprosthesis with an IBE with an average length of stay of 8.2 days and average costs of $68,145. The data show that the cases reporting standard EVAR using an AAA endoprosthesis have a shorter average length of stay (7.4 days versus 8.2 days) and lower average costs ($63,877 versus $68,145) compared to the average costs of the cases reporting EVAR using an AAA endoprosthesis with an IBE. The data further show that the 193 cases reporting EVAR using an AAA endoprosthesis with an IBE have a shorter average length of stay (8.2 days versus 9.1 days) and higher average costs ($68,145 versus $62,984) compared to the average length of stay and average costs of all the cases in MS-DRG 268.

For MS-DRG 269, we identified a total of 10,108 cases with an average length of stay of 2.0 days and average costs of $39,165. Of the 10,108 cases, we found 8,655 cases reporting standard EVAR using an AAA endoprosthesis with an average length of stay of 1.8 days and average costs of $38,562 and 871 cases reporting EVAR using an AAA endoprosthesis with an IBE with an average length of stay of 1.8 days and average costs of $48,159. The data show that the cases reporting standard EVAR using an AAA endoprosthesis have a comparable average length of stay (1.8 days versus 1.8 days) and lower average costs ($38,562 versus $48,159) compared to the cases reporting EVAR using an AAA endoprosthesis with an IBE. The data further show that the 871 cases reporting EVAR using an AAA endoprosthesis with an IBE have a

shorter average length of stay (1.8 days versus 2.0 days) and higher average costs ($48,159 versus $39,165) compared to the average length of stay and average costs of all the cases in MS-DRG 269.

We stated in the proposed rule that the findings suggest that the cases reporting EVAR using an AAA endoprosthesis with an IBE utilize greater resources compared to the cases reporting standard EVAR using an AAA endoprosthesis. We agreed that patients who have aortoiliac and iliac aneurysms are a more complex population to treat, contributing to increased resource utilization.

Additionally, in the proposed rule we stated that, based on our review and analysis of the cases reporting standard EVAR using an AAA endoprosthesis compared to the cases reporting EVAR using an AAA endoprosthesis with an IBE to treat aortoiliac and iliac artery aneurysms in MS-DRGs 268 and 269, we believe new MS-DRGs are warranted to differentiate the utilization of resources between standard EVAR to treat AAA and EVAR to treat AAA extending into the iliac artery.

We stated we applied the criteria to create subgroups in a base MS- DRG as discussed in section II.C.1.b. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule and this final rule. We noted that, as shown in the table that follows, a three-way split of the proposed new base MS-DRG failed to meet the criterion that at least 500 or more cases are in each subgroup. It also failed to meet the criterion that there be at least a 20 percent difference in average costs between the CC and NonCC (without CC/MCC) subgroup and at least a $2,000 difference in average costs between the CC and NonCC (without CC/MCC) subgroup. The following table illustrates our findings. [GRAPHIC] [TIFF OMITTED] TR04AU25.063

As discussed in section II.C.1.b. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule and this final rule, if the criteria for a three-way split fail, the next step is to determine if the criteria are satisfied for a two-way split. In the proposed rule we stated we applied the criteria for a two-way split for the “with MCC” and “without MCC” subgroups. We noted that, as shown in the table that follows, a two-way split of this base MS-DRG failed to meet the criterion that there be at least 500 cases in the “with MCC” subgroup. [GRAPHIC] [TIFF OMITTED] TR04AU25.064

We then applied the criteria for a two-way split for the “with CC/ MCC” and “without CC/MCC” subgroups. As shown in the table that follows, a two-way split of this base MS-DRG failed to meet the criterion that there be at least 500 or more cases in the “without CC/ MCC” subgroup and at least a 20 percent difference in average costs between the “with CC/MCC” and “without CC/MCC” subgroup. [GRAPHIC] [TIFF OMITTED] TR04AU25.065

We noted that because the criteria for both of the two-way splits failed, a split (or CC subgroup) is not warranted for the proposed new base MS-DRG. As a result, for FY 2026, we proposed to create new base MS-DRG 213 (Endovascular Abdominal Aorta and Iliac Branch Procedures). The following table reflects a simulation of the proposed new base MS- DRG. [GRAPHIC] [TIFF OMITTED] TR04AU25.066

Comment: Commenters supported the proposal to create proposed new MS-DRG 213 to differentiate resource use between standard EVAR to treat AAA and EVAR to treat AAA extending into the iliac artery. The commenters stated that they appreciated CMS' thorough analysis of the request in exploring mechanisms to address resource use of these procedures. The commenters agreed with CMS' findings that the cases reporting EVAR using an abdominal aortic aneurysm (AAA) endoprosthesis with an IBE utilize greater resources compared to the cases reporting standard EVAR using an AAA endoprosthesis and that patients who have aortoiliac and iliac aneurysms are a more complex population to treat, contributing to increased resource utilization. The commenters also acknowledged that the criteria were not met to subdivide the proposed new MS-DRG 213 further. However, the commenters stated that given that CMS' data support that patients who have EVAR procedures using an AAA endoprosthesis with an IBE are a more complex population to treat and contribute to increased resource utilization, they requested CMS reconsider the proposed relative weight of proposed new MS-DRG 213. The

commenters stated that, as reflected in Table 5.--List of Medicare Severity Diagnosis-Related Groups (MS-DRGs), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay--FY 2026 Proposed Rule, the proposed new MS-DRG 213 relative weight of 5.7834 is lower than the FY 2026 proposed relative weight of MS-DRG 268 (6.9027) and that MS-DRG 268 is the “with MCC” MS-DRG. A commenter who supported the proposal also encouraged CMS to continue to track the costs of these cases in future years to assess if CC subgroups would be supported.

Response: We thank the commenters for their support and feedback. The commenters are correct that in Table 5., made publicly available in association with the proposed rule at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps, the proposed relative weight for MS-DRG 213 is shown as 5.7834 and the proposed relative weight for MS-DRG 268 is shown as 6.9027. As summarized in the analysis provided in the preamble of the proposed rule (90 FR 18031) and this final rule, a total of 2,519 cases were identified in MS-DRG 268 and a total of 10,108 cases were identified in MS-DRG 269. Among the 2,519 cases in MS-DRG 268, we found 193 cases that reported EVAR using an AAA endoprosthesis with an IBE, with an average length of stay of 8.2 days and average costs of $68,145. Of the 10,108 cases in MS-DRG 269, we found 871 cases that reported EVAR using an AAA endoprosthesis with an IBE, with an average length of stay of 1.8 days and average costs of $48,159. Because most of the cases reporting EVAR using an AAA endoprosthesis with an IBE are derived from MS-DRG 269 compared to MS- DRG 268 (871 versus 193), and the cases from MS-DRG 269 have lower average costs compared to MS-DRG 268 ($48,159 versus $68,145), the data from MS-DRG 269 have a greater influence on the structure and composition of the proposed new MS-DRG 213. Alternatively, among the 2,519 cases found in MS-DRG 268, 1,500 cases reported standard EVAR using an AAA endoprosthesis with average costs of $63,877, and among the 10,108 cases in MS-DRG 269, we found 8,655 cases that reported standard EVAR using an AAA endoprosthesis with average costs of $38,562. Since the higher volume of cases in MS-DRG 268 is reflected by the cases reporting standard EVAR using an AAA endoprosthesis compared to the cases reporting EVAR using an AAA endoprosthesis with an IBE (1,500 compared to 193), the cases reporting standard EVAR using an AAA endoprosthesis have a greater influence on the revised structure and composition of MS-DRG 268, thus, the higher proposed relative weight for MS-DRG 268 compared to the proposed relative weight for the proposed new MS-DRG 213.

After consideration of the public comments we received, we are finalizing our proposal, without modification, to create new base MS- DRG 213 (Endovascular Abdominal Aorta and Iliac Branch Procedures) for FY 2026. We will continue to monitor the data for this new MS-DRG to determine if future revisions are warranted. b. Concomitant Single Valve Procedure With Open Surgical Ablation

In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44836 through 44848), we discussed a two-part request we received to review the MS- DRG assignments for cases involving the surgical ablation procedure for atrial fibrillation. The first part of the request was to create a new classification of surgical ablation MS-DRGs to better accommodate the costs of open concomitant surgical ablations. The second part of the request was to reassign cases describing standalone percutaneous endoscopic surgical ablation. In the part of the request relating to the costs of open concomitant surgical ablations, the requestor identified the following potential procedure combinations that would comprise an “open concomitant surgical ablation” procedure.

Open coronary artery bypass graft (CABG) + open surgical ablation.

Open mitral valve repair or mitral valve replacement (MVR) + open surgical ablation.

Open aortic valve repair or mitral valve replacement (AVR) + open surgical ablation.

Open MVR + open AVR + open surgical ablation.

Open MVR + open CABG + open surgical ablation.

Open MVR + open AVR + open CABG + open surgical ablation.

Open AVR + open CABG + open surgical ablation.

As discussed in the FY 2022 IPPS/LTCH PPS final rule, we examined claims data from the March 2020 update of the FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR file for cases reporting procedure code combinations describing open concomitant surgical ablations and stated our analysis showed while the average lengths of stay and average costs of cases reporting procedure code combinations describing open concomitant surgical ablations are higher than all cases in their respective MS-DRG, we found variation in the volume, length of stay, and average costs of the cases.

In the FY 2022 IPPS/LTCH PPS final rule, for the reasons discussed, we finalized our proposal to revise the surgical hierarchy for the MS- DRGs in MDC 05 (Diseases and Disorders of the Circulatory System) to sequence MS-DRGs 231-236 (Coronary Bypass, with or without PTCA, with or without Cardiac Catheterization or Open Ablation, with and without MCC, respectively) above MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with and without MCC, respectively), effective October 1, 2021. In addition, we also finalized the assignment of cases with a procedure code describing coronary bypass and a procedure code describing open ablation to MS-DRGs 233 and 234 and changed the titles of these MS-DRGs to “Coronary Bypass with Cardiac Catheterization or Open Ablation with and without MCC, respectively” to reflect this reassignment for FY 2022.

In the FY 2023 IPPS/LTCH PPS final rule (87 FR 48845 through 48849), we discussed a request we received to again review the MS-DRG assignment of cases involving open concomitant surgical ablation procedures. The requestor stated they continue to believe that the average hospital costs for surgical ablation for atrial fibrillation demonstrates a cost disparity compared to all procedures within their respective MS-DRGs. The requestor suggested that when open surgical ablation is performed with MVR, or AVR or MVR/AVR + CABG that these procedures are either (1) assigned to a different family of MS-DRGs or (2) assigned to MS-DRGs 216 and 217 (Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac Catheterization with MCC and with CC, respectively) similar to what CMS did with CABG and open ablation procedures in the FY 2022 rulemaking to better accommodate the added cost of open concomitant surgical ablation.

We stated our analysis using the September 2021 update of the FY 2021 MedPAR file reflected that the cases reporting an open concomitant surgical ablation code combination are predominately found in the higher (CC or MCC) severity level MS-DRGs of their current base MS-DRG assignment, suggesting that the patient's co-morbid conditions may also be contributing to the higher costs of these cases. Secondly, for the numerous procedure combinations that would comprise an

“open concomitant surgical ablation” procedure, the increase in average costs appeared to directly correlate with the number of procedures performed. For example, cases that describe “Open MVR + Open surgical ablation” generally demonstrated costs that were lower than cases that describe “Open MVR + Open AVR + Open CABG + Open surgical ablation.”

Therefore, we stated we believe that additional time was needed to allow for further analysis of the claims data to determine to what extent the patient's co-morbid conditions are also contributing to higher costs and to identify other contributing factors that might exist with respect to the increased length of stay and costs of these cases in these MS-DRGs. For the reasons summarized, and after consideration of the public comments we received, we did not make any MS-DRG changes for cases involving the open concomitant surgical ablation procedures for FY 2023.

As discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58681 through 58690), we again received a request to review the MS-DRG assignment of cases involving open concomitant surgical ablation procedures. The requestor recommended that CMS reassign open concomitant surgical ablation procedures for atrial fibrillation (AF) from MS-DRGs 219, 220, and 221 (Cardiac Valve and Other Major Cardiothoracic Procedures without Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 216, 217, and 218. The requestor further recommended that if CMS does not reassign cases involving open concomitant surgical ablation procedures to MS- DRGs 216, 217, and 218, in the alternative, CMS should create new MS- DRGs for all open mitral or aortic valve repair or replacement procedures with concomitant surgical ablation for AF to improve clinical coherence when three to four open heart procedures are performed in one setting.

The requestor stated that cases reporting open surgical ablation procedures for AF performed during open valve repair/replacement procedures are typically assigned to MS-DRGs 216, 217, 218, 219, 220, and 221, with the majority of the cases being assigned to MS-DRGs 219, 220, and 221 because of the surgical hierarchy in MDC 05 and because there is less of a need for cardiac catheterization in these cases. We stated in the final rule that the requestor performed its own data analysis, and stated their analysis showed that the data continue to demonstrate that claims with open surgical ablation procedures for AF are not clinically similar to the remaining cases in MS-DRGs 219, 220, and 221, and there are significant differences in resource utilization that reflect those clinical differences.

We noted in FY 2024 IPPS/LTCH PPS final rule that our analysis of the claims data suggested that it is the performance of an aortic valve repair or replacement procedure, a mitral valve repair or replacement procedure plus another concomitant procedure that is associated with increased hospital resource utilization, not solely the performance of open surgical ablation as suggested by the requestor, when compared to other cases in their respective MS-DRGs. Therefore, for the reasons discussed, we finalized our proposal to create MS-DRG 212 (Concomitant Aortic and Mitral Valve Procedures) in MDC 05 for cases reporting an aortic valve repair or replacement procedure, a mitral valve repair or replacement procedure, and another concomitant procedure.

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18032 through 18035), we again received a request to review the MS-DRG assignment of cases involving a single open surgical valve procedure with an open surgical ablation. The requestor recommended that CMS reassign cases involving a single open surgical valve procedure with an open surgical ablation from MS-DRGs 219, 220, and 221 (Cardiac Valve and Other Major Cardiothoracic Procedures without Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 216, 217, and 218 (Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively). The requestor also suggested that if finalized, the title for MS-DRGs 216, 217, and 218 should be revised to “Cardiac valve and Other Major Cardiothoracic Procedures with Cardiac Catheterization or Open Ablation, with MCC, with CC or without CC/MCC, respectively.”

As discussed in the proposed rule, the requestor stated MS-DRGs primarily focus on the most resource intensive procedure, without fully accounting for the overall resource intensity and complexity of all procedures performed and stated treating AF as a secondary condition is one such example. The requestor stated that AF, if not treated early after diagnosis, continues to worsen and is associated with stroke and mortality risk, and significantly higher healthcare spending. According to the requestor, a majority of AF patients undergoing surgical ablation procedures are older and frailer than non-surgical ablation valvular patients, and these patients frequently require two or even three procedures during one hospital visit to treat multiple conditions (AF, valve disease, heart failure, blocked coronaries). The requestor further stated patients undergoing multiple cardiac procedures, including surgical ablation, typically require between two and four hours of additional time in the operating room, a longer length of stay, and are at an increased risk for adverse event in recovery and noted that much like cardiac catheterization procedures, in many instances adding surgical ablation to open valvular procedures also requires an atriotomy to better visualize the mitral valve and complete the surgical ablation, making these concomitant procedures significantly more complex than single valve procedures performed on their own. The requestor stated that the current MS-DRG assignments do not adequately pay hospitals for the resources associated with furnishing surgical ablation procedures and that therefore, it is increasingly becoming financially unviable for hospitals to perform these procedures to Medicare beneficiaries in a single admission.

The requestor asserted that reassigning cases involving a single open surgical valve procedure with an open surgical ablation, which are currently assigned in MS-DRGs 219, 220, and 221, to MS-DRGs 216, 217, and 218 would accommodate the clinical complexity of performing two or more open heart procedures, would enhance clinical coherence for patients undergoing multiple procedures within MDC 05, would more accurately reflect associated costs and resource utilization, and would help minimize the need for multiple patient admissions. The requestor performed its own data analysis of the Standard Analytical File (SAF) FY 2022 Q1-Q3 report and stated they identified 1,938 cases involving a single open surgical valve procedure with an open surgical ablation that were assigned to MS-DRGs 219, 220, and 221. The requestor stated their analysis showed that the impact of reassigning the 1,938 cases would result in better resource alignment with minimal relative weight changes. Specifically, the requestor stated that their analysis showed that if the cases involving a single open surgical valve procedure with an open surgical ablation that are currently assigned to MS-DRGs 219, 220, and 221 were reassigned to MS-DRGs 216, 217, and 218, the relative weights of MS-DRGs

216, 217, 218, 219, 220, and 221 would change by -5.35%, -4.48%, - 2.59%, +0.47%, -0.93% and -0.12% respectively.

As previously noted, the requestor recommended that we consider cases involving a single open surgical valve procedure with an open surgical ablation; however, the requestor did not provide a specific list of procedure codes for our consideration. Therefore, as discussed in the proposed rule, we reviewed the ICD-10-PCS classification and identified 81 procedure codes describing open surgical valve procedures and eight procedure codes describing open surgical ablation procedures. We refer readers to Table 6P.3a associated with the FY 2026 IPPS/LTCH PPS proposed rule (which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps) which sets forth the list of ICD-10-PCS procedure codes describing open surgical valve procedures and open surgical ablation procedures that we examined.

To address this request and to understand the resource use for the subset of cases reporting procedure codes describing a single open surgical valve procedure with an open surgical ablation, without reporting a procedure code describing the performance of a cardiac catheterization, that are currently grouping to MS-DRGs 219, 220, and 221, we examined claims data from the September 2024 update of the FY 2024 MedPAR file for the average length of stay and average costs for these cases. Our findings are shown in the following table: [GRAPHIC] [TIFF OMITTED] TR04AU25.067

As shown in the table, the data analysis performed indicates that the 1,657 cases in MS-DRG 219 reporting an open valve procedure and an open surgical ablation procedure, without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an MCC have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 219 (10.1 days versus 10 days) and lower average costs when compared to all the cases in MS-DRG 219 ($67,532 versus $69,728). The difference in average costs is $2,196 ($69,728-$67,532 = $2,196) for the cases reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as a MCC in MS-DRG 219 when compared to all the cases in MS-DRG 219.

In MS-DRG 220, the 999 cases reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as a CC have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 220 (6.9 days versus 6.2 days) and higher average costs when compared to all the cases in MS-DRG 220 ($53,603 versus $49,514). The difference in average costs is $4,089 ($53,603-$49,514=$4,089) for the cases reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as a CC in MS-DRG 220 when compared to all the cases in MS-DRG 220.

In MS-DRG 221, the 41 cases reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization, and without a secondary diagnosis code designated as a CC or MCC have an average length of stay that is longer than the average length of stay for all the cases in MS- DRG 221 (5.6 days versus 3.6 days) and higher average costs when compared to all the cases in MS-DRG 221 ($48,353 versus $46,900). The difference in average costs is $1,453 ($48,353-$46,900=$1,453) for the cases reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization, and without a secondary diagnosis code designated as a CC or MCC in MS-DRG 221 when compared to all the cases in MS-DRG 221.

As discussed in the proposed rule, we then examined the data for cases in MS-DRGs 216, 217, and 218, and our findings are shown in the following table:

[GRAPHIC] [TIFF OMITTED] TR04AU25.068

The data analysis performed indicates that the cases in MS-DRGs 219, 220, and 221 reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization have a generally longer average length of stay and lower average costs when compared to all cases in MS-DRGs 216, 217, and 218. As shown in the table, the data analysis performed indicates that the 1,657 cases in MS-DRG 219 reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as an MCC have a shorter average length of stay (10.1 days versus 13.6 days) and lower average costs ($67,532 versus $88,193) when compared to all the cases in MS-DRG 216. The difference in average costs is $20,661 ($88,193-$67,532=$20,661) for the cases reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as a MCC in MS-DRG 219 when compared to all the cases in MS-DRG 216.

The 999 cases in MS-DRG 220 reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as a CC have a longer average length of stay (6.9 days versus 6.8 days) and lower average costs ($53,603 versus $59,943) when compared to all the cases in MS-DRG 217. The difference in average costs is $6,340 ($59,943-$53,603=$6,340) for the cases reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization, and with a secondary diagnosis code designated as a CC in MS-DRG 220 when compared to all the cases in MS-DRG 217.

The 41 cases in MS-DRG 221 reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization, and without a secondary diagnosis code designated as a CC or MCC have a longer average length of stay (5.6 days versus 2.9 days) and lower average costs ($48,353 versus $61,733) when compared to all the cases in MS-DRG 218. The difference in average costs is $13,380 ($61,733-$48,353=$13,380) for the cases reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization, and without a secondary diagnosis code designated as a CC or MCC in MS-DRG 221 when compared to all the cases in MS-DRG 218.

While the data analysis reflects that cases that report an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization generally demonstrate slightly higher average costs in their respective MS-DRGs, we stated we believe these cases are more suitably grouped to MS-DRGs 219, 220, and 221 where they are currently assigned, based on the closer similarities in resource utilization compared to all the cases in their respective MS-DRG. As discussed in prior rulemaking (86 FR 44878), the MS-DRG system is a system of averages and it is expected that within the diagnostic related groups, some cases may demonstrate higher than average costs, while other cases may demonstrate lower than average costs. We also provide outlier payments to mitigate extreme loss on individual cases. Moreover, we stated that the data do not indicate cases reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization utilize similar resources when compared to the cases assigned to MS-DRGs 216, 217, and 218. We stated that the cases are not clinically coherent with regard to resource utilization as reflected in the greater differences in average costs.

Further, in examining this request, we noted in the proposed rule that the requestor suggested that CMS reassign cases reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization from MS-DRGs 219, 220, and 221 (Cardiac Valve and Other Major Cardiothoracic Procedures without Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 216, 217, and 218 for FY 2026, however, as discussed in prior rulemaking (86 FR 44830, 87 FR 48847, and 88 FR 58683), MS-DRGs 216, 217, and 218 are defined by the performance of cardiac catheterization. We stated we continue to be concerned about the effect on clinical coherence of assigning cases reporting an open valve procedure and an open surgical ablation procedure that do not also have a cardiac catheterization procedure reported to MS-DRGs that are defined by the performance of that procedure. We stated our claims analysis for the FY 2026 IPPS/LTCH PPS proposed rule continues to reflect the difference in average costs demonstrated by the two cohorts, as cases reporting the performance of a cardiac catheterization in MS-DRGs 216, 217, and 218 continue to demonstrate higher average costs.

We stated that our analysis of the claims data continues to reflect that cases reporting an open valve procedure and an open surgical ablation procedure without a procedure code describing the performance of a cardiac catheterization are clinically coherent in their currently assigned MS-DRGs. Therefore, we proposed to maintain the structure of MS-DRGs 216, 217, and 218 for FY 2026. We also proposed to maintain the title of MS-DRGs 216, 217, and 218 as “Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively” for FY 2026.

Comment: Commenters expressed support for the proposal to maintain the structure of MS-DRGs 216, 217, and 218 in MDC 05 for FY 2026. A commenter specifically stated that they support CMS' decision and rationale for maintaining the current structure of MS-DRGs 216, 217, and 218. Another commenter stated they acknowledge CMS' assessment that current data do not support moving these cases for the upcoming fiscal year and stated they believe that updated data will continue to reflect the greater resource utilization

of cases reporting cardiac valve procedures with surgical ablation compared to other cases in the respective MS-DRGs, and respectfully requested that CMS continue to monitor the relevant data and reassess the impact of concomitant surgical ablation in future rulemaking cycles.

Some commenters stated while they appreciate CMS' continued review of this issue and understand CMS' reasoning for proposing to maintain the current structure of MS-DRGs 216, 217, and 218 for FY 2026, the measures taken by CMS, such as revisions to the surgical hierarchy in FY 2022 and the creation of MS-DRG 212 (Concomitant Aortic and Mitral Valve Procedures) in FY 2024, have not effectively addressed the increased resource demands of cases involving a single open surgical valve procedure combined with open surgical ablation despite repeated analyses over the years recognizing the higher costs associated with these procedures. A few commenters suggested that CMS should consider alternative methods of addressing the increased costs associated with cases where a single open surgical valve procedure is performed with any of the other concomitant procedures, such as the creation of new MS-DRGs, to ensure clinical coherence and more accurately reflect resource utilization. A commenter suggested that CMS amend the definition of MS-DRG 212 to address cases where a single open surgical valve procedure is performed with any of the other concomitant procedures from MDC 05 that are included in the GROUPER logic of MS-DRG 212, while another commenter suggested that CMS carefully review all concomitant procedures with higher hospital resource utilization, given the important patient care benefits and efficiencies associated with performing certain procedures concomitantly in a single encounter rather than staging separate procedures.

Response: We thank the commenters for their support, and we appreciate the commenters sharing their concerns and feedback on this proposal. While the data do not support creating a new MS-DRG for cases reporting an open valve procedure and an open surgical ablation procedure and instead suggest that cases are suitably grouped to MS- DRGs 216, 217, 218, 219, 220, and 221 where they are currently assigned based on the similarities in resource utilization compared to all the cases in their respective MS-DRG, we will continue to monitor the claims data for cases reporting an open valve procedure and an open surgical ablation procedure to determine if additional refinements may be warranted in the future. We note that we would address any proposed modifications to the existing logic in future rulemaking.

Comment: Another commenter suggested that if CMS finalizes its proposal to maintain the structure of MS-DRGs 216, 217, and 218 for FY 2026, CMS should consider partially mitigating the impact of this finalization on advanced AF patients by designating ICD-10-CM diagnosis codes I48.11 (Longstanding persistent atrial fibrillation) and I48.21 (Permanent atrial fibrillation) as MCCs on its own initiative for FY 2026 to better align appropriate resources to treat the most complex subset of patients with atrial fibrillation. This commenter stated they performed their own analysis and found that data indicate that the presence of longstanding persistent atrial fibrillation and permanent atrial fibrillation results in significant costs differences compared to other admissions.

Response: We appreciate the commenters' feedback. While we consider this comment to be outside the scope of the proposal included in the FY 2026 IPPS/LTCH PPS proposed rule as we did not examine a potential change to the severity level designations for the diagnosis codes that describe longstanding persistent atrial fibrillation and permanent atrial fibrillation, we encourage individuals with comments about the severity level designations of ICD-10-CM diagnosis codes to submit these comments no later than October 20th of each year, via MEARISTM at: https://mearis.cms.gov/public/home, so that they can be considered for possible inclusion in the annual proposed rule. We refer the commenter to section II.C.8. of the preamble of this FY 2026 IPPS/LTCH PPS final rule for discussion related to our plan to continue a comprehensive CC/MCC analysis, using a combination of mathematical analysis of claims data and the application of nine guiding principles and plan to present the findings and proposals in future rulemaking.

Therefore, after consideration of the public comments we received, we are finalizing our proposal to maintain the structure of MS-DRGs 216, 217, and 218 for FY 2026, without modification. We are also finalizing our proposal to maintain the title of MS-DRGs 216, 217, and 218 as “Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively” for FY 2026. c. Transcatheter Aortic Valve Replacement Procedures for Aortic Regurgitation

Transcatheter aortic valve replacement (TAVR) is a minimally invasive procedure that involves a catheter being inserted into an artery, without an incision for most cases, and then guided to the heart. The catheter delivers the new valve without the need for the chest or heart to be surgically opened. As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18035 through 18038), we received a request to reassign cases reporting TAVR procedures for aortic regurgitation (AR) from MS-DRGs 266 and 267 (Endovascular Cardiac Valve Replacement with or without MCC, respectively) to what the requester described as a more clinically and cost cohesive MS-DRG such as MS-DRG 215 (Other Heart Assist System Implant) and to revise the title of MS- DRG 215 to “Other Heart Assist System Implant or Endovascular Cardiac Regurgitant Valve Replacement Procedures.”

According to the requestor, Medicare patients with severe, symptomatic AR often present with chronic, congestive heart failure, which equates to significantly greater diastolic heart failure, atrial fibrillation, and concomitant kidney, liver, and biventricular failure. As a result, managing this systemic damage requires a multidisciplinary care team, comprised of implanting physicians, cardiac surgeons, imaging cardiologists, and heart failure specialists, similar to the management required for cases currently assigned to MS-DRG 215. Further, the requestor stated TAVR procedures for AR prevent patients from devolving into heart failure and are clinically more comparable to short term heart assist device support. The requestor stated regurgitant valve disease, such as AR, is a whole-heart cardiac disease that has systemic manifestations that leads to biventricular heart failure and non-cardiac morbidity, while stenotic valve disease, such as aortic stenosis (AS), is less often associated with non-cardiac dysfunction. According to the requestor, managing a diagnosis of AR leads to inpatient lengths of stay that are double the duration of the length of stay of patients with AS, as management of AS only requires the involvement of the implanting physician and the cardiac surgeon.

As discussed in the proposed rule, the requestor identified TAVR for AR with ICD-10-CM diagnosis code I35.1 (Nonrheumatic aortic (valve) insufficiency) and ICD-10-PCS

procedure code 02RF38Z (Replacement of aortic valve with zooplastic tissue, percutaneous approach) and performed their own analysis of the FY 2023 Final MedPAR data. The requestor stated they found the cases reporting a diagnosis of aortic regurgitation in MS-DRG 266 and 267 have 20 percent higher average costs (AR = $54,425 versus AS = $45,323), two times the length of stay (AR = 5 days versus AS = 2.5 days) and trigger outlier payments two times more often (AR = 11.43 percent versus AS = 5.82 percent) compared to the cases reporting a diagnosis of aortic stenosis in MS-DRGs 266 and 267. The requestor noted in order to perform their analysis, they excluded cases reporting procedure codes describing the insertion of a percutaneous short-term external heart assist device by removing cases that reported ICD-10-PCS procedure codes 02HA3RZ (Insertion of short-term external heart assist system into heart, percutaneous approach) and 5A0221D (Assistance with cardiac output using impeller pump, continuous) from their analyses, as the requestor asserted those procedure codes were reassigned to MS-DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System with MCC and without MCC, respectively) in FY 2024.

As stated previously, the requestor identified TAVR procedures for AR with ICD-10-CM diagnosis code I35.1 (Nonrheumatic aortic (valve) insufficiency) and ICD-10-PCS procedure code 02RF38Z (Replacement of aortic valve with zooplastic tissue, percutaneous approach). As we discussed in the proposed rule, in reviewing this request, we identified five additional ICD-10-CM diagnosis codes that also describe aortic regurgitation and included these codes in our analysis. The five ICD-10-CM diagnosis codes we identified are listed in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.069

Also, we noted in the proposed rule we identified eight additional ICD-10-PCS procedure codes that describe TAVR procedures as well, and similarly included these codes in our analysis. The eight ICD-10-PCS procedure codes we identified are listed in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.070

To begin our analysis, we reviewed the GROUPER logic. We stated the requestor is correct that nine ICD-10-PCS codes that describe TAVR procedures mentioned previously are currently assigned to MS-DRGs 266 and 267. The requestor is also correct that in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58690 through 58696), we discussed a request we received to reassign certain cases reporting procedure codes describing the insertion of a short-term external heart assist device from MS-DRG 215 to MS-DRGs 001 and 002. We stated temporary heart assist devices are intended to support blood pressure and provide increased blood flow to critical organs in patients with cardiogenic shock, by drawing blood out of the heart and pumping it into the aorta, partially or fully bypassing the left ventricle to provide adequate circulation of blood (replace or supplement left ventricle pumping) while also allowing damaged heart muscle the opportunity to rest and recover in patients who need short-term support.

In the FY 2024 IPPS/LTCH PPS final rule, we stated that we examined the claims data and the data suggested that overall, cases reporting a procedure code describing the open insertion of a short-term external heart assist device may be more appropriately aligned with the average costs of the cases in MS-DRGs 001 and 002 in comparison to MS-DRG 215, even though the average length of stay is shorter. We also stated that we reviewed the clinical considerations along with this data analysis and agreed that cases reporting a procedure code that describes the open insertion of a short-term external heart assist device are generally more resource intensive and are clinically distinct from other cases reporting procedure codes describing the insertion of short-term external heart devices by other approaches currently assigned to MS-DRG 215. Therefore, for the reasons discussed and after consideration of the public comments we received, we finalized our proposal to reassign ICD-10-PCS code 02HA0RZ (Insertion of short-term external heart assist system into heart, open approach) from MS-DRG 215 in MDC 05 to Pre-MDC MS-DRGs 001 and 002 when reported as a standalone procedure for FY 2024. Under this finalization, procedure code 02HA0RZ no longer needs to be reported as part of a procedure code combination or procedure code “cluster” to satisfy the logic for assignment to MS-DRGs 001 and 002. We refer the reader to the ICD-10 MS-DRG Definitions Manual, Version 42.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete documentation of the

GROUPER logic for MS-DRGs 001, 002, 215, 266 and 267.

While the requestor stated that procedure code 02HA3RZ (Insertion of short-term external heart assist system into heart, percutaneous approach) and procedure code 5A0221D (Assistance with cardiac output using impeller pump, continuous) were reassigned to MS-DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System with MCC and without MCC, respectively) in FY 2024, we noted in the proposed rule that our finalization in the FY 2024 IPPS/LTCH PPS final rule did not involve modifying the MS-DRG assignment of procedure code 02HA3RZ or procedure code 5A0221D. In Version 42.1, cases reporting procedure codes 02HA3RZ and 5A0221D, continue to be assigned to MS-DRG 215. We refer the reader to Appendix E of the ICD-10 MS-DRG Definitions Manual, Version 42.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for the MS-DRG assignments of procedure codes 02HA0RZ, 02HA3RZ, and 5A0221D.

Next, we examined claims data from the September 2024 update of the FY 2024 MedPAR file for MS-DRG 266 and 267 to identify cases reporting one of the six ICD-10-CM codes listed previously that describe aortic regurgitation as a principal or a secondary diagnosis with one of the nine procedure codes that describe a TAVR procedure. Our findings are shown in the following table: [GRAPHIC] [TIFF OMITTED] TR04AU25.071

As shown in the table, in MS-DRG 266, we identified a total of 22,083 cases with an average length of stay of 4.5 days and average costs of $55,402. Of those 22,083 cases, there were 3,616 cases reporting a procedure code describing TAVR with a principal or secondary diagnosis of aortic regurgitation, with average costs higher than the average costs in the FY 2024 MedPAR file for MS-DRG 266 ($56,010 compared to $55,402) and a longer average length of stay (5.7 days compared to 4.5 days). In MS-DRG 267, we identified a total of 36,405 cases with an average length of stay of 1.5 days and average costs of $43,282. Of those 36,405 cases, there were 3,616 cases reporting a procedure code describing TAVR with a principal or secondary diagnosis of aortic regurgitation, with average costs lower than the average costs in the FY 2024 MedPAR file for MS-DRG 267 ($41,189 compared to $43,282) and a longer average length of stay (1.6 days compared to 1.5 days).

As discussed in the proposed rule, we then examined claims data from the September 2024 update of the FY 2024 MedPAR for MS-DRG 215. Our findings are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.072

Our analysis indicates that the cases assigned to MS-DRG 215 have much higher average costs ($87,701 versus $56,010 or $41,189) and a much longer length of stay (8.2 days versus 5.7 days or 1.6 days) than the cases reporting a procedure code describing TAVR with a principal or secondary diagnosis of aortic regurgitation currently assigned to MS-DRGs 266 or 267, respectively. Instead, we stated the average costs and average length of stay for cases reporting a procedure code describing TAVR with a principal or secondary diagnosis of aortic regurgitation appear to be generally more aligned with the average costs and average length of stay for all cases in MS-DRGs 266 and 267, where they are currently assigned.

In addition, based on our review of the clinical considerations, in the proposed rule we stated we do not believe the procedure codes describing a TAVR are clinically coherent with the procedure codes currently assigned to MS-DRG 215. Heart assist devices, such as ventricular assist devices and artificial heart systems, provide circulatory support by taking over most of the workload of the left ventricle. Blood enters the pump through an inflow conduit connected to the left ventricle and is ejected through an outflow conduit into the body's arterial system. Heart assist devices can provide temporary left, right, or biventricular support for patients whose hearts have failed and can also be used as a bridge for patients who are awaiting a heart transplant. We stated while we agree that TAVR can be a treatment option for patients with severe AR who are at high risk for mortality or complications due to advanced age and multiple comorbidities, we do not believe the procedure codes describing TAVR should be assigned to MS-DRG 215. AR is a condition where the aortic valve doesn't close properly causing blood to leak back into the heart. While we acknowledged that if not treated AR can gradually worsen and lead to left ventricular enlargement and eventually heart failure, we stated we believe that patients with indications for heart assist devices tend to be more severely ill and these inpatient admissions are associated with greater resource utilization as evidenced by the higher average costs and longer lengths of stay. Therefore, for the reasons stated previously, we proposed to maintain the GROUPER logic for MS-DRGs 266 and 267 for FY 2026. We also proposed to maintain the title of MS-DRGs 215 as “Other Heart Assist System Implant” for FY 2026.

Comment: Commenters supported the proposal to maintain the GROUPER

logic for MS-DRGs 266 and 267 for FY 2026. A commenter stated they believe the request to reassign cases reporting TAVR procedures for aortic regurgitation from MS-DRGs 266 and 267 was premature, as valve treatments and the data associated with these procedures are limited. This commenter further stated that as more data are available, CMS will be better able to evaluate appropriate assignment of endovascular cardiac valve therapies in the future. Another commenter stated that patients requiring heart assist devices tend to present with more severe illnesses and require greater resource utilization and longer lengths of stay than those patients undergoing TAVR for aortic regurgitation, therefore reassigning cases reporting TAVR procedures for aortic regurgitation to MS-DRG 215 would not be clinically coherent. Other commenters stated that upon review of the data analysis that CMS described in the proposed rule, it appears the reassignment may not be appropriate at this time and encouraged CMS to continue to monitor the data for these cases and consider if any MS-DRG modifications may be warranted in the future.

Response: We appreciate the commenters' support.

Comment: Other commenters stated CMS should reconsider its proposal to maintain the GROUPER logic for MS-DRGs 266 and 267 for FY 2026 and should reassign cases reporting TAVR procedures for aortic regurgitation from MS-DRGs 266 and 267 to a more clinically and cost cohesive MS-DRG. Several commenters noted that CMS' analysis of cases reporting a procedure code describing TAVR with a principal or secondary diagnosis of aortic regurgitation included ICD-10-CM diagnosis code I35.2 (Nonrheumatic aortic (valve) stenosis with insufficiency). These commenters stated that code I35.2 inadvertently identifies patients with mixed valvular heart disease and predominant aortic stenosis and including this code in the analysis does not allow an understanding of the resource utilization required to treat patients with predominant aortic regurgitation. These commenters encouraged CMS to refine our analysis to exclude cases with aortic stenosis by analyzing the cases reporting a principal or secondary diagnosis of aortic regurgitation, without including ICD-10-CM code I35.2 and, if the data supports, assign these cases to a more clinically and cost cohesive MS-DRG. Another commenter (the requestor) stated the inclusion of ICD-10-CM code I35.2 inadvertently analyzed a very different patient population from the population they identified in their initial request, which they asserted truly identified patients who were treated with TAVR for aortic regurgitation. This commenter stated that it was impossible for more than 8,000 TAVR procedures to have been performed for patients with aortic regurgitation since there is no FDA-approved valve for this indication and noted that the ALIGN-AR trial (a single- arm, prospective, multicenter study designed to evaluate the efficacy and safety of the JenaValve Trilogy transcatheter heart valve in patients with symptomatic, greater-than-moderate native aortic regurgitation who were deemed high risk for surgery) only treated 180 patients in 2023. The commenter requested that CMS analyze the MedPAR data again using ICD-10-CM diagnosis codes I06.1 (Rheumatic aortic insufficiency) or I35.1 (Nonrheumatic aortic (valve) insufficiency) as principal or secondary diagnosis only, to accurately identify the costs and lengths of stay for patients treated for aortic regurgitation.

Response: We appreciate the commenters sharing their concerns and feedback. We agree with commenters that diagnosis code I35.2 describes nonrheumatic mixed aortic valve disease (MAVD), a condition where the aortic valve is affected by both aortic stenosis and aortic regurgitation. As discussed in the proposed rule and earlier in this section, the requestor identified TAVR for aortic regurgitation with ICD-10-CM diagnosis code I35.1 (Nonrheumatic aortic (valve) insufficiency) only. In reviewing this request, we identified five additional diagnosis codes in the ICD-10-CM classification that also describe aortic regurgitation, including code I35.2, and therefore included these codes in our analysis to avoid unintended consequences or missed opportunities in most appropriately capturing the resource utilization and clinical coherence for cases reporting a procedure code describing TAVR with a principal or secondary diagnosis of aortic regurgitation.

To examine the recommendations that CMS (1) analyze cases reporting a procedure code describing TAVR with a principal or secondary diagnosis of aortic regurgitation, while excluding cases reporting a principal or secondary diagnosis of ICD-10-CM code I35.2 (Nonrheumatic aortic (valve) stenosis with insufficiency), and (2) analyze cases reporting a procedure code describing TAVR with a principal or secondary diagnosis of ICD-10-CM codes I06.1 (Rheumatic aortic insufficiency) or I35.1 (Nonrheumatic aortic (valve) insufficiency) only, we further examined claims data from the September 2024 update of the FY 2024 MedPAR file for MS-DRG 266 and 267. Our findings are shown in the following table:

[GRAPHIC] [TIFF OMITTED] TR04AU25.073

As shown in the table, in MS-DRG 266, we identified a total of 22,083 cases with an average length of stay of 4.5 days and average costs of $55,402. Of those 22,083 cases, there were 2,019 cases reporting a procedure code describing TAVR with a principal or secondary diagnosis of aortic regurgitation, excluding cases reporting ICD-10-CM diagnosis code I35.2, with average costs higher than the average costs in the FY 2024 MedPAR file for MS-DRG 266 ($57,724 compared to $55,402) and a longer average length of stay (6.5 days compared to 4.5 days). Additionally, there were 264 cases reporting a procedure code describing TAVR with a principal or secondary diagnosis of aortic regurgitation by reporting ICD-10-CM diagnosis codes I06.1 or I31.1 only, with average costs higher than the average costs in the FY 2024 MedPAR file for MS-DRG 266 ($61,433 compared to $55,402) and a longer average length of stay (7.0 days compared to 4.5 days).

In MS-DRG 267, we identified a total of 36,405 cases with an average length of stay of 1.5 days and average costs of $43,282. Of those 36,405 cases, there were 2,038 cases reporting a procedure code describing TAVR with a principal or secondary diagnosis of aortic regurgitation, excluding cases reporting ICD-10-CM diagnosis code I35.2, with average costs lower than the average costs in the FY 2024 MedPAR file for MS-DRG 267 ($40,153 compared to $43,282) and a longer average length of stay (1.7 days compared to 1.5 days). Additionally, there were 262 cases reporting a procedure code describing TAVR with a principal or secondary diagnosis of aortic regurgitation by reporting ICD-10-CM diagnosis codes I06.1 or I31.1 only, with average costs lower than the average costs in the FY 2024 MedPAR file for MS-DRG 267 ($40,937 compared to $43,282) and a longer average length of stay (1.6 days compared to 1.5 days).

We reviewed these data and note that the original request was to reassign cases reporting TAVR procedures for aortic regurgitation from MS-DRGs 266 and 267 to what the requester described as a more clinically and cost cohesive MS-DRG such as MS-DRG 215 (Other Heart Assist System Implant). We continue to believe that patients with indications for heart assist devices tend to be more severely ill and these inpatient admissions are associated with greater resource utilization as evidenced by the higher average costs and longer lengths of stay compared to cases reporting codes describing TAVR for aortic regurgitation, even when excluding cases with a principal or secondary diagnosis of ICD-10-CM code I35.2 or when considering cases reporting a principal or secondary diagnosis of ICD-10-CM codes I06.1 or I35.1 only. We also note that the claims data reflect variance with regard to average length of stay and average costs for these cases when considering which principal or secondary ICD-10-CM diagnosis codes are reported to describe aortic regurgitation. The claims data also clearly show that the cases reporting secondary diagnoses designated as MCCs are more resource intensive compared to other cases reporting codes describing TAVR for aortic regurgitation. As such, we believe it is premature to propose changes to the MS-DRG assignment of cases reporting TAVR procedures for aortic regurgitation. Further analysis is needed, particularly focusing on the diagnosis codes reported, and also giving consideration as to whether other factors, such as the reporting of secondary MCC and CC diagnoses, may be contributing to the average costs prior to proposing any reassignment of these cases to ensure clinical coherence between these cases and the other cases with which they may potentially be grouped. Furthermore, it is also difficult to predict what the associated costs and resource utilization will be in the future for TAVR devices that remain under development or in clinical trials as research continues to refine TAVR techniques, evaluate long-term outcomes, develop new devices, and expand clinical indications. We expect in future years we will have additional data that can be used to evaluate the potential reassignment of cases reporting TAVR procedures. We will continue to monitor the claims data in consideration of any future modifications to the MS-DRGs for which TAVR procedures may be reported.

Therefore, after consideration of the public comments we received, we are finalizing our proposal to maintain the GROUPER logic for MS- DRGs 266 and 267 for FY 2026, without modification. We are also finalizing our proposal to maintain the title of MS-DRGs 215 as “Other Heart Assist System Implant” for FY 2026. d. Percutaneous Coronary Atherectomy

In the FY 2024 IPPS/LTCH PPS final rule (88 FR 58704 through 58712), we discussed a request we received to

review the MS-DRG assignment of cases describing percutaneous coronary intravascular lithotripsy (IVL). Coronary IVL is utilized in a subset of percutaneous coronary intervention (PCI) procedures when the artery is severely calcified. According to the requestor, PCIs involving coronary IVL are clinically more complex because coronary IVL is a therapy deployed exclusively in severely calcified coronary lesions, and these lesion types are associated with longer procedure times and increased utilization of hospital resources. In analyzing this request, we stated in the FY 2024 IPPS/LTCH PPS final rule that the data analysis showed that the average costs of cases reporting percutaneous coronary IVL, with or without involving the insertion of an intraluminal device, were higher than for all cases in their respective MS-DRG. Therefore, for FY 2024, taking into consideration that it clinically requires greater resources to perform coronary IVL, and after consideration of the public comments we received, we finalized our proposal to create MS-DRG 323 (Coronary Intravascular Lithotripsy with Intraluminal Device with MCC), MS-DRG 324 (Coronary Intravascular Lithotripsy with Intraluminal Device without MCC) and MS-DRG 325 (Coronary Intravascular Lithotripsy without Intraluminal Device) in MDC 05.

In the FY 2025 IPPS/LTCH PPS final rule (89 FR 69000 through 69002), we discussed requests to modify the GROUPER logic in a number of cardiac MS-DRGs under MDC 05 (Diseases and Disorders of the Circulatory System) for which we stated further research and analysis were required, and which we would continue to consider in connection with future rulemaking. Specifically, we discussed requests we received to modify the GROUPER logic of MS-DRGs 323, 324, and 325. In two separate but related requests, the requestors suggested that we add procedure codes that describe additional PCI procedures, such as percutaneous coronary rotational, laser, and orbital atherectomy, to the GROUPER logic of new MS-DRGs 323, 324, and 325.

In the FY 2025 IPPS/LTCH PPS final rule, we noted that as stated in prior rulemaking (88 FR 58708), atherectomy is distinct from coronary lithotripsy in that each of these procedures are defined by clinically distinct definitions and objectives. We stated additional analysis to assess for unintended consequences across the classification was needed as we have made a distinction between the root operations used to describe atherectomy (Extirpation) and the root operation used to describe lithotripsy (Fragmentation) in evaluating other requests in rulemaking. We stated we would need to consider the application of these two root operations in other scenarios where we have also specifically stated that Extirpation is not the same as Fragmentation and do not warrant similar MS-DRG assignment (85 FR 58572 through 58573). Furthermore, as MS-DRGs 323, 324, and 325 had recently become effective on October 1, 2023 (FY 2024), we stated additional time was needed to review and evaluate extensive modifications to the structure of these MS-DRGs.

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18038 through 18042), we received a request to reassign percutaneous coronary atherectomy procedures from MS-DRGs 250 and 251 (Percutaneous Cardiovascular Procedures without Intraluminal Device with MCC and without MCC, respectively) and MS-DRGs 321 and 322 (Percutaneous Cardiovascular Procedures with Intraluminal Device with MCC or 4+ Arteries/Intraluminal Devices and without MCC, respectively) to MS-DRGs 323, 324, and 325 where cases reporting percutaneous coronary IVL are assigned. Atherectomy is a procedure used to remove plaque buildup from the inside of arteries. The requestor stated that coronary atherectomy and coronary IVL target the same step of the PCI treatment process (that is, reducing the burden of calcium by preparing the vessel prior to stent delivery). The requestor further stated that coronary atherectomy is more clinically similar to coronary IVL than other routine vessel preparation techniques (such as angioplasty) in that both coronary atherectomy and coronary IVL are used to modify severe coronary calcium, treat the same patient population, and have the same intended clinical use for complex vessel preparation. Complex vessel preparation is required to increase the diameter of an artery's lumen in severely calcified lesions and improves revascularization by debulking calcification which enables better intraluminal device deployment and improved drug uptake into the vessel wall. Similar to lithotripsy, after percutaneous atherectomy is performed, the provider can implant an intraluminal device, also called a stent, to keep the vessel open.

According to the requestor, removing percutaneous coronary atherectomy procedures from their current MS-DRG assignments and assigning them to MS-DRGs 323, 324, and 325 would reduce cost variance and improve clinical coherence across all PCI MS-DRGs. The requestor also stated that as atherectomy procedures involve more complex calcified lesions and require greater resources, it is not clinically or cost coherent to maintain their current MS-DRG assignments, therefore creating a new MS-DRG for all cases involving percutaneous coronary atherectomy procedures was a reasonable alternative option if CMS did not agree with the reassignment of these cases to MS-DRGs 323, 324, and 325.

As discussed in the proposed rule, the requestor identified eight ICD-10-PCS codes that they state describe percutaneous coronary atherectomy. The eight codes the requestor identified are listed in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.074

While we agree with the requestor that the eight procedure codes listed in the previous table describe percutaneous coronary atherectomy, we noted in the proposed rule there are additional ICD-10- PCS codes that

describe percutaneous coronary atherectomy in the GROUPER logic for MS- DRGs 250, 251, 321, and 322. Therefore, in reviewing this request, we stated we identified 12 additional ICD-10-PCS procedure codes that also describe percutaneous or percutaneous endoscopic coronary atherectomy procedures and included these codes in our analysis. The 12 codes we identified are listed in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.075

We refer the reader to the ICD-10 MS-DRG Definitions Manual, Version 42.1 (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete documentation of the GROUPER logic for MS-DRGs 250, 251, 321, and 322.

To begin our analysis, we examined claims data from the September 2024 update of the FY 2024 MedPAR file for MS-DRGs 250, 251, 321, and 322 to identify cases reporting a procedure code describing percutaneous or percutaneous endoscopic coronary atherectomy and compared the results to all cases in their respective MS-DRG. Our findings are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.076

As shown by the table, in MS-DRG 250, we identified a total of 3,047 cases, with an average length of stay of 4.4 days and average costs of $21,383. Of those 3,047 cases, there were 493 cases reporting percutaneous or percutaneous endoscopic coronary atherectomy without reporting the insertion of an intraluminal device, with higher average costs as compared to all cases in MS-DRG 250 ($25,139 compared to $21,383), and a longer average length of stay (4.6 days compared to 4.4 days). In MS-DRG 251, we identified a total of 2,515 cases with an average length of stay of 2.4 days and average costs of $14,521. Of those 2,515 cases, there were 340 cases reporting percutaneous or percutaneous endoscopic coronary atherectomy without reporting the insertion of an intraluminal device, with higher average costs as compared to all cases in MS-DRG 251 ($18,121 compared to $14,521), and a longer average length of stay (2.5 days compared to 2.4 days).

In MS-DRG 321, we identified a total of 32,517 cases with an average length of stay of 5.0 days and average costs of $26,309. Of those 32,517 cases, there were 3,307 cases reporting percutaneous or percutaneous endoscopic coronary atherectomy with the insertion of an intraluminal device, with higher average costs as compared to all cases in MS-DRG 321 ($31,886 compared to $26,309), and a longer average length of stay (5.1 days compared to 5.0 days). In MS-DRG 322, we identified a total of 46,600 cases with an average length of stay of 2.4 days and average costs of $16,792. Of those 46,600 cases, there were 3,134 cases reporting percutaneous or percutaneous endoscopic coronary atherectomy with the insertion of an intraluminal device, with higher average costs as compared to all cases in MS-DRG 322 ($20,889 compared to $16,792), and a longer average length of stay (2.5 days compared to 2.4 days). The data analysis shows that the average costs of cases reporting percutaneous or percutaneous endoscopic coronary atherectomy, with or without involving the insertion of an intraluminal device, are higher than for all cases in their respective MS-DRG.

As discussed in the proposed rule, we then examined claims data from the September 2024 update of the FY 2024 MedPAR file for MS-DRGs 323, 324, and 325. Our findings are shown in the following table.

[GRAPHIC] [TIFF OMITTED] TR04AU25.077

In MS-DRG 323, we found a total of 4,429 cases with an average length of stay of 6.0 days and average costs of $39,047. In MS-DRG 324, we found a total of 4,877 cases with an average length of stay of 2.9 days and average costs of $28,809. In MS-DRG 325, we found a total of 646 cases with an average length of stay of 3.9 days and average costs of $29,362.

The average costs of the 3,307 cases reporting percutaneous or percutaneous endoscopic coronary atherectomy with the insertion of an intraluminal device in MS-DRG 321 are $7,161 less than the average costs of all cases in MS-DRG 323 ($39,047-$31,886 = $7,161) and have an average length of stay that is less than the average length of stay of all cases in MS-DRG 323 (5.1 days versus 6.0 days). The average costs of the 3,134 cases reporting percutaneous or percutaneous endoscopic coronary atherectomy with the insertion of an intraluminal device in MS-DRG 322 are $7,920 less than the average costs of all cases in MS- DRG 324 ($28,809-$20,899 = $7,920) and have an average length of stay that is less than the average length of stay of all cases in MS-DRG 324 (2.5 days versus 2.9 days). The average costs of the 493 cases in MS- DRG 250 and the 340 cases in MS-DRG 251 reporting percutaneous or percutaneous endoscopic coronary atherectomy without reporting a procedure code describing the insertion of an intraluminal device are $4,223 and $11,241 less than the average costs of all cases in MS-DRG 325 ($29,362-$25,139 = $7,920; $29,362-$18,121 = $11,241), respectively. These 493 cases in MS-DRG 250 have an average length of stay that is more than the average length of stay of all cases in MS- DRG 325 (4.6 days versus 3.9 days) while the 340 cases in MS-DRG 251 have an average length of stay that is less than the average length of stay of all cases in MS-DRG 325 (2.5 days versus 3.9 days).

Upon analysis of the claims data and our review of the request, we stated in the proposed rule we do not agree with reassigning cases reporting percutaneous or percutaneous endoscopic coronary atherectomy from MS-DRGs 250, 251, 321, and 322 to MS-DRGs 323, 324, and 325. We stated that while we agree that the performance of percutaneous or percutaneous endoscopic coronary atherectomy contributes to increased resource consumption for these PCI procedures, as previously noted, the data do not support that cases reporting percutaneous or percutaneous endoscopic coronary atherectomy, with or without involving the insertion of an intraluminal device, utilize similar resources when compared to coronary IVL procedures currently assigned to MS-DRGs 323, 324, and 325. Additionally, as stated previously and in prior rulemaking (88 FR 58708), coronary atherectomy is distinct from coronary lithotripsy in that each of these procedures are defined by clinically distinct definitions and objectives. We stated we continue to believe that the root operation Extirpation is not the same as the root operation Fragmentation and do not warrant similar MS-DRG assignment (85 FR 58572 through 58573).

As discussed in the proposed rule, we then explored alternative options, as was requested. As discussed in prior rulemaking (88 FR 58706), we continue to agree that clinically, the presence of severe calcification can increase the treatment difficulty and complexity of service. We stated the data analysis clearly shows that cases reporting percutaneous or percutaneous endoscopic coronary atherectomy, with or without involving the insertion of an intraluminal device, have higher average costs and longer lengths of stay compared to all the cases in their assigned MS-DRG. For these reasons, we proposed to create new MS- DRGs for cases reporting procedure codes describing percutaneous or percutaneous endoscopic coronary atherectomy involving the insertion of an intraluminal device, as well as a new MS-DRG for cases reporting procedure codes describing percutaneous or percutaneous endoscopic coronary atherectomy without the insertion of an intraluminal device to address the differential in resource consumption.

To compare and analyze the impact of our suggested modifications, as discussed in the proposed rule, we ran a simulation using the most recent claims data from the September 2024 update of the FY 2024 MedPAR file. The following table illustrates our findings for all 6,441 cases reporting procedure codes describing percutaneous or percutaneous endoscopic atherectomy involving the insertion of an intraluminal device. [GRAPHIC] [TIFF OMITTED] TR04AU25.078

We applied the criteria to create subgroups in a base MS-DRG as discussed in section II.C.1.b. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule and this final rule. As shown, a three-way split of the proposed new MS-DRG failed to meet the criterion that there be at least a 20 percent difference in average costs between the CC and NonCC subgroup. [GRAPHIC] [TIFF OMITTED] TR04AU25.079

As discussed in section II.C.1.b. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule and this final rule, if the criteria for a three-way split fail, the next step is to determine if the criteria are satisfied for a two-way split. We therefore applied the criteria for a two-way split for the “with MCC” and “without MCC” subgroups and found that all five criteria were met. The following table illustrates our findings. [GRAPHIC] [TIFF OMITTED] TR04AU25.080

As discussed in the proposed rule, for the proposed new MS-DRGs for cases reporting procedure codes describing percutaneous or percutaneous endoscopic atherectomy involving the insertion of an intraluminal device, there is at least (1) 500 cases in the MCC subgroup and 500 cases in the without MCC subgroup; (2) 5 percent of the cases in the MCC group and 5 percent in the without MCC subgroup; (3) a 20 percent difference in average costs between the MCC group and the without MCC group; (4) a $2,000 difference in average costs between the MCC group and the without MCC group; and (5) a 3-percent reduction in cost variance, indicating that the proposed severity level splits increase the explanatory power of the base MS-DRG in capturing differences in expected cost between the proposed MS-DRG severity level splits by at least 3 percent and thus improve the overall accuracy of the IPPS payment system.

We then ran a simulation using the most recent claims data from the September 2024 update of the FY 2024 MedPAR file for all 833 cases reporting procedure codes describing percutaneous or percutaneous endoscopic atherectomy without the insertion of an intraluminal device. The following table illustrates our findings. [GRAPHIC] [TIFF OMITTED] TR04AU25.081

We applied the criteria to create subgroups in a base MS-DRG as discussed in section II.C.1.b. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule and this final rule. As shown, a three-way split of the proposed new MS-DRG failed to meet the criterion that there be at least 500 cases in the MCC subgroup, CC subgroup, and NonCC subgroup. [GRAPHIC] [TIFF OMITTED] TR04AU25.082

As discussed in section II.C.1.b. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule and this final rule, if the criteria for a three-way split fail, the next step is to determine if the criteria are satisfied for a two-way split. We therefore applied the criteria for a two-way split for the “with MCC” and “without MCC” subgroups. We note that, as shown in the table that follows, a two-way split of this base MS-DRG failed to meet the criterion that there be at least 500 cases in the with MCC and the without MCC subgroups. [GRAPHIC] [TIFF OMITTED] TR04AU25.083

We then applied the criteria for a two-way split for the “with CC/ MCC” and “without CC/MCC” subgroups. As shown in the table that follows, a two-way split of this base MS-DRG also failed to meet the criterion that there be at least 500 cases in the without CC/MCC subgroup. [GRAPHIC] [TIFF OMITTED] TR04AU25.084

We noted in the proposed rule that because the criteria for both of the two-way splits failed, a split (or CC subgroup) is not warranted for the proposed new base MS-DRG. As a result, for FY 2026, we proposed to

create a base MS-DRG for cases reporting procedure codes describing percutaneous or percutaneous endoscopic atherectomy without the insertion of an intraluminal device.

In summary, for FY 2026, taking into consideration that it clinically requires greater resources to perform percutaneous or percutaneous endoscopic coronary atherectomy, we proposed to create two new MS-DRGs with a two-way severity level split for cases describing percutaneous or percutaneous endoscopic coronary atherectomy involving the insertion of an intraluminal device in MDC 05. We also proposed to create a new base MS-DRG for cases describing percutaneous or percutaneous endoscopic coronary atherectomy without an intraluminal device. The proposed new MS-DRGs are proposed new MS-DRG 359 (Percutaneous Coronary Atherectomy with Intraluminal Device with MCC), proposed new MS-DRG 360 (Percutaneous Coronary Atherectomy with Intraluminal Device without MCC) and proposed new MS-DRG 318 (Percutaneous Coronary Atherectomy without Intraluminal Device). We refer the reader to Table 6P.4a and Table 6P.4b associated with the FY 2026 IPPS/LTCH PPS proposed rule (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) for the list of procedure codes we proposed to define in the logic for each of the proposed new MS-DRGs. We noted that discussion of the surgical hierarchy for the proposed modification is discussed in section II.C.10. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule.

Comment: Many commenters expressed support for CMS' proposal to create new MS-DRGs for cases describing percutaneous or percutaneous endoscopic coronary atherectomy. Commenters stated they appreciate CMS' recognition of the greater resources required to perform percutaneous or percutaneous endoscopic coronary atherectomy. These commenters stated that they agree that the new MS-DRGs will appropriately reflect the higher resource use and longer hospital stays associated with these complex procedures and applauded CMS for recognizing the increased resources required and for undertaking the detailed analysis.

Response: We thank the commenters for their support.

After consideration of the public comments we received, we are finalizing our proposal to create new MS-DRG 359 (Percutaneous Coronary Atherectomy with Intraluminal Device with MCC), new MS-DRG 360 (Percutaneous Coronary Atherectomy with Intraluminal Device without MCC) and new MS-DRG 318 (Percutaneous Coronary Atherectomy without Intraluminal Device) for cases reporting percutaneous or percutaneous endoscopic coronary atherectomy, without modification, for FY 2026.

We refer the reader to Table 6P.4a and Table 6P.4b associated with this FY 2026 IPPS/LTCH PPS final rule (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) for the list of procedure codes we are finalizing to define in the logic for each of the new MS-DRGs. We note that discussion of the surgical hierarchy for the finalized modification is discussed in section II.C.10. of the preamble of this FY 2026 IPPS/LTCH PPS final rule. e. Complex Aortic Arch Procedures

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18042 through 18047), we received two separate but related requests to review and reconsider the MS-DRG assignments for a subset of codes describing aortic arch procedures assigned to MS DRGs 216, 217, 218, 219, 220, and 221 (Cardiac Valve & Other Major Cardiothoracic Procedure with and without Cardiac Catheterization, with MCC, with CC, without CC/MCC, respectively). In this section of the preamble of this FY 2026 IPPS/LTCH PPS final rule, we discuss each of these separate, but related requests.

The first request was to reassign cases reporting a procedure code describing endovascular restriction of the thoracic aorta with a branched or fenestrated intraluminal device from MS-DRGs 219, 220, and 221 (Cardiac Valve and Other Major Cardiothoracic Procedures without Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively) to MS-DRG 216 (Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac Catheterization with MCC). Alternatively, the requestor stated CMS could consider reassigning other similar complex aortic arch branch procedures to MS-DRG 216. The requestor suggested that if finalized, the title for MS-DRG 216 should be revised to reflect “Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac Catheterization with MCC or with Aortic Arch Branch Intraluminal Device.”

According to the requestor, the manufacturer of the GORE[supreg] TAG[supreg] Thoracic Branch Endoprosthesis (TBE), reassignment of the procedure code describing endovascular restriction of the thoracic aorta with a branched or fenestrated intraluminal device to MS-DRG 216 would result in higher payment and better account for the differences in resource use of the cases reporting this procedure than other cases in their respective MS-DRGs where they are currently assigned. The GORE[supreg] TAG[supreg] TBE provides endovascular repair of pathologies of the descending thoracic aorta requiring a proximal landing zone including the left subclavian artery. It is a modular device that consists of three implantable fabric tubes supported by a nitinol framework. The GORE[supreg] TAG[supreg] TBE is indicated for endovascular repair of lesions such as aortic aneurysms, traumatic transections, and dissections of the descending thoracic aorta with treatment extending to the aortic arch, while maintaining flow into the left subclavian artery (Zone 2 of the aortic arch), in patients who are at high risk for debranching subclavian procedures and who have appropriate anatomy. According to the requestor, patients with lesions in the aortic arch are often more clinically complex and more difficult to treat than patients with lesions in lower parts of the aorta due to vascular tortuosity, proximity to the heart, involvement of arch vessels that feed into the head and brain, and risk of stroke and paraplegia or paraparesis from emboli released into arteries that provide blood flow to the left arm and head. The requestor stated that for lesions involving the left subclavian artery, the only other treatment options available today include open surgical repair with a synthetic graft or a hybrid procedure which includes a non-branched endovascular device and an open surgical bypass procedure of the head vessels. Per the requestor, for arch lesions involving the brachiocephalic and left common carotid arteries, a TBE device enables hybrid treatment with one fewer bypass procedure.

The requestor identified cases reporting endovascular restriction of the thoracic aorta with a branched or fenestrated intraluminal device by the presence of ICD-10-PCS codes 02VX3EZ (Restriction of thoracic aorta, ascending/arch with branched or fenestrated intraluminal device, one or two arteries, percutaneous approach) and 02VW3DZ (Restriction of thoracic aorta, descending with intraluminal device, percutaneous approach) on the same claim and performed its own analysis of the claims data. The requestor stated they found 90 cases reporting endovascular restriction of the thoracic aorta with a branched or fenestrated intraluminal device, and

these cases are 49% (+$32,326), 60% (+$27,727), and 38% (+$15,432) more costly compared to all cases in MS-DRGs 219, 220, and 221, respectively. While acknowledging that cases reporting endovascular restriction of the thoracic aorta with a branched or fenestrated intraluminal device typically do not require a cardiac catheterization procedure, the requestor asserted that this claims analysis demonstrates cases reporting endovascular restriction of the thoracic aorta with a branched or fenestrated intraluminal device require resources similar to cases in MS-DRG 216.

As mentioned previously, the requestor stated we could also consider reassigning cases reporting procedure codes describing other complex aortic arch branch procedures to MS-DRG 216. The requestor stated to be considered a similar “complex aortic arch procedure” the case should report an ICD-10-PCS code describing the endovascular restriction of the thoracic aorta with a branched or fenestrated intraluminal device with an ICD-10-PCS code describing a Zone 0 or a Zone 1 Bypass procedure. Zone 0 is in the ascending aorta, proximal to the brachiocephalic artery and Zone 1 covers the portion of the aortic arch between the brachiocephalic artery and the left common carotid artery. The requestor identified cases reporting these “other complex aortic arch procedures” as cases reporting ICD-10-PCS codes as reflected in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.085

In analyzing this request, we noted in the proposed rule the requestor is correct that the following ICD-10-PCS codes specifically describe procedures involving the GORE[supreg] TAG[supreg] TBE: 02VX3EZ (Restriction of thoracic aorta, ascending/arch with branched or fenestrated intraluminal device, one or two arteries, percutaneous approach), in combination with 02VW3DZ (Restriction of thoracic aorta, descending with intraluminal device, percutaneous approach). The requestor is also correct that procedure codes 02VX3EZ and 02VW3DZ are assigned to MS-DRGs 216, 217, 218, 219, 220, and 221. Additionally, we stated we agree that the ICD-10-PCS codes as reflected in the previous table can describe other complex aortic arch procedures, and when reported, MS-DRGs 216, 217, 218, 219, 220, and 221 would be assigned. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 42.1, which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software, for complete documentation of the GROUPER logic for MS-DRGs 216, 217, 218, 219, 220, and 221. We noted in the proposed rule that the GORE[supreg] TAG[supreg] TBE was approved for new technology add-on payments for FY 2023 (87 FR 48966 through 48969), FY 2024 (88 FR 58800), and FY 2025 (89 FR 69124). We refer readers to section II.E.5 of the preamble of this FY 2026 IPPS/LTCH PPS final rule for a discussion regarding the FY 2026 status of technologies approved for FY 2025 new technology add-on payments, including the GORE[supreg] TAG[supreg] TBE.

To explore mechanisms to address this request and to understand the resource use for the subset of cases reporting procedure codes 02VX3EZ and 02VW3DZ, and cases reporting “other complex aortic arch procedures”, in the proposed rule we stated we began our analysis by examining claims data from the September 2024 update of the FY 2024 MedPAR file for cases assigned to MS-DRGs 216, 217, 218, 219, 220, and 221. Our findings are shown in the following table:

[GRAPHIC] [TIFF OMITTED] TR04AU25.086

As shown in the table, the data analysis performed indicates that the 4 cases in MS-DRG 216 reporting procedure codes 02VX3EZ and 02VW3DZ have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 216 (25.3 days versus 13.6 days) and higher average costs when compared to all the cases in MS-DRG 216 ($156,361 versus $88,193). The difference in average costs is $68,168 ($156,361-$88,193 = $68,168) for the cases reporting procedure codes 02VX3EZ and 02VW3DZ in MS-DRG 216 when compared to all the cases in MS- DRG 216. There were zero cases reporting other complex aortic arch procedures in MS-DRG 216. In MS-DRG 217, the one case reporting procedure codes 02VX3EZ and 02VW3DZ has a length of stay that is shorter than the average length of stay for all the cases in MS-DRG 217 (2 days versus 6.8 days) and lower costs when compared to all the cases in MS-DRG 217 ($46,235 versus $59,943). The difference in average costs is $13,708 ($59,943-$46,235 = $13,708) for the cases reporting procedure codes 02VX3EZ and 02VW3DZ in MS-DRG 217 when compared to all the cases in MS-DRG 217. There were zero cases reporting other complex aortic arch procedures in MS-DRG 217. In MS-DRG 218, there were zero cases reporting procedure codes 02VX3EZ and 02VW3DZ or other complex aortic arch procedures.

The 81 cases in MS-DRG 219 reporting procedure codes 02VX3EZ and 02VW3DZ have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 219 (11.4 days versus 10 days) and higher average costs when compared to all the cases in MS-DRG 219 ($97,336 versus $69,728). The difference in average costs is $27,608 ($97,336-$69,728 = $27,608) for the cases reporting procedure codes 02VX3EZ and 02VW3DZ in MS-DRG 219 when compared to all the cases in MS-DRG 219. The 10 cases in MS-DRG 219 reporting procedure codes describing other complex arch procedures have an average length of stay that is longer than the average length of stay for all the cases in MS- DRG 219 (20.7 days versus 10 days) and higher average costs when compared to all the cases in MS-DRG 219 ($112,213 versus $69,728). The difference in average costs is $42,485 ($112,213-$69,728 = $42,485) for the cases reporting procedure codes describing other complex arch procedures in MS-DRG 219 when compared to all the cases in MS-DRG 219.

In MS-DRG 220, the 64 cases reporting procedure codes 02VX3EZ and 02VW3DZ have an average length of stay that is shorter than the average length of stay for all the cases in MS-DRG 220 (5.2 days versus 6.2 days) and higher average costs when compared to all the cases in MS-DRG 220 ($76,700 versus $49,514). The difference in average costs is $27,186 ($76,700-$49,514 = $27,186) for the cases reporting procedure codes 02VX3EZ and 02VW3DZ in MS-DRG 220 when compared to all the cases in MS-DRG 220. The 10 cases reporting procedure codes describing other complex arch procedures have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 220 (6.9 days versus 6.2 days) and higher average costs when compared to all the cases in MS-DRG 220 ($87,003 versus $49,514). The difference in average costs is $37,489 ($87,003-$49,514 = $37,489) for the cases reporting procedure codes describing other complex arch procedures in MS-DRG 220 when compared to all the cases in MS-DRG 220.

In MS-DRG 221, the 32 cases reporting procedure codes 02VX3EZ and 02VW3DZ have an average length of stay that is shorter than the average length of stay for all the cases in MS-DRG 221 (1.9 days versus 3.6 days) and higher average costs when compared to all the cases in MS-DRG 221 ($56,765 versus $46,900). The difference in average costs is $9,865 ($56,765-$46,900 = $9,865) for the cases reporting procedure codes 02VX3EZ and 02VW3DZ in MS-DRG 221 when compared to all the cases in MS- DRG 221. There were zero cases reporting other complex aortic arch procedures in MS-DRG 221.

As discussed in the proposed rule, our analysis of the claims data for cases reporting procedure codes 02VX3EZ and 02VW3DZ and cases reporting procedure codes describing other complex arch procedures demonstrated a relatively low volume of cases in comparison to all the cases in their respective MS-DRGs (that is, in 216, 217, 218, 219, 220, and 221). Analysis of the claims data also demonstrates that the cases had an average length of stay

generally longer than all the cases in their respective MS-DRGs. The data analysis indicates that the average costs of the 182 cases reporting procedure codes 02VX3EZ and 02VW3DZ and the 20 cases reporting procedure codes describing other complex arch procedures are generally higher when compared to the average costs of all cases in MS- DRGs 216, 217, 218, 219, 220, and 221. Specifically, most of these cases have average costs that are considerably higher than the average costs of all cases in MS-DRG 216. We stated we reviewed these data and do not believe that proposing to reassign the cases reporting procedure codes 02VX3EZ and 02VW3DZ and the cases reporting procedure codes describing other complex arch procedures to MS-DRG 216, even if there is no cardiac catheterization procedure reported and no secondary diagnosis designated as an MCC reported, would fully address the difference in resource utilization in these cases. Accordingly, we stated we do not believe the data adequately support a potential reassignment of these cases to MS-DRG 216. Therefore, we decided to further explore alternative options to ensure clinical coherence between these cases and the other cases with which they may potentially be grouped in conjunction with the separate but related request we received to review and reconsider the MS-DRG assignments for another subset of codes describing aortic arch procedures, as discussed later in this section.

The second request we received, and discussed in the proposed rule, was to reassign cases reporting thoracic aortic arch replacement combined with restriction of the descending thoracic aorta from MS-DRGs 219, 220, and 221 (Cardiac Valve and Other Major Cardiothoracic Procedures without Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 216, 217, and 218 (Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively).

The requestor, the manufacturer of the ThoraflexTM Hybrid device (also known as the Terumo Aortic Hybrid device), stated that hospital resource utilization for cases involving the ThoraflexTM Hybrid device is significantly higher compared to all cases in MS-DRGs 216, 217, 218, 219, 220, and 221, creating substantial financial loss for the hospitals that offer this technology. The ThoraflexTM Hybrid device is a dual-purpose medical device that replaces the ascending aorta and aortic arch while also stabilizing and repairing the descending thoracic aorta in a single procedure. It is indicated for the open surgical repair or replacement of damaged or diseased vessels of the aortic arch and descending aorta with or without involvement of the ascending aorta in cases of aneurysm and/or dissection. According to the requestor, when the ThoraflexTM Hybrid device is implanted within the aorta, it creates a channel for the blood to bypass the damaged or diseased part of the vessel and keep flowing as the graft and stented sections of the implant replace the parts of the aorta that are not working properly.

The requestor stated that aortic pathologies such as aneurysms and dissections that involve the aortic arch and descending thoracic aorta continue to present surgical challenges and carry risks such as stroke, cerebral malperfusion, paralysis, and renal malperfusion. These risks must be mitigated by intense and patient specific goal-oriented care. According to the requestor, hospitals treating aortic arch pathologies must be able to deploy rapid neurology, neurosurgery, and nephrology all within hours to ensure a good patient outcome. According to the requestor, all these attributes attest to the difficulty and complexity of thoracic aortic arch replacement combined with restriction of the descending thoracic aorta and care of the patient.

The requestor identified cases reporting thoracic aortic arch replacement combined with restriction of the descending thoracic aorta by the presence of ICD-10-PCS code X2RX0N7 (Replacement of thoracic aorta, arch using branched synthetic substitute with intraluminal device, open approach, new technology group 7) in combination with X2VW0N7 (Restriction of thoracic aorta, descending using branched synthetic substitute with intraluminal device, open approach, new technology group 7) on the same claim and performed its own analysis of the claims data. The requestor stated they found that while the volume of cases reporting thoracic aortic arch replacement combined with restriction of the descending thoracic aorta is TM Hybrid device: X2RX0N7 (Replacement of thoracic aorta arch with branched synthetic substitute with intraluminal device, new technology group 7) in combination with X2VW0N7 (Restriction of thoracic descending aorta with branched synthetic substitute with intraluminal device, new technology group 7). We stated the requestor is also correct that procedure codes X2RX0N7 and X2VW0N7 are assigned to MS- DRGs 216, 217, 218, 219, 220, and 221. We refer the reader to the ICD- 10 MS-DRG Definitions Manual Version 42.1, which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software, for complete documentation of the GROUPER logic for MS-DRGs 216, 217, 218, 219, 220, and 221. The ThoraflexTM Hybrid device was approved for new technology add-on payments for FY 2023 (87 FR 48974 through 48976), FY 2024 (88 FR 58800), and FY 2025 (89 FR 69124). We refer readers to section II.E.5 of the preamble of this FY 2026 IPPS/LTCH PPS final rule for a discussion regarding the FY 2026 status of technologies approved for FY 2025 new technology add-on payments, including the ThoraflexTM Hybrid device.

To explore mechanisms to address this request and to understand the resource use for the subset of cases reporting procedure codes X2RX0N7 and X2VW0N7, we stated in the proposed rule that we began our analysis by examining claims data from the September 2024 update of the FY 2024 MedPAR file for cases reporting the procedure code combination describing thoracic aortic arch replacement combined with restriction of the descending thoracic aorta assigned to MS-DRGs 216, 217, 218, 219, 220, and 221. Our findings are shown in the following table:

[GRAPHIC] [TIFF OMITTED] TR04AU25.087

As shown in the table, the data analysis performed indicates that the 20 cases in MS-DRG 216 reporting procedure codes X2RX0N7 and X2VW0N7 have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 216 (23 days versus 13.6 days) and higher average costs when compared to all the cases in MS-DRG 216 ($158,920 versus $88,193). The difference in average costs is $70,727 ($158,920-$88,193 = $70,727) for the cases reporting procedure codes X2RX0N7 and X2VW0N7 in MS-DRG 216 when compared to all the cases in MS-DRG 216. In MS-DRG 217, the 2 cases reporting procedure codes X2RX0N7 and X2VW0N7 have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 217 (21.5 days versus 6.8 days) and higher average costs when compared to all the cases in MS-DRG 217 ($160,014 versus $59,943). The difference in average costs is $100,071 ($160,014-$59,943 = $100,071) for the cases reporting procedure codes X2RX0N7 and X2VW0N7 in MS-DRG 217 when compared to all the cases in MS-DRG 217. In MS-DRG 218, there were zero cases reporting procedure codes X2RX0N7 and X2VW0N7.

The 61 cases in MS-DRG 219 reporting procedure codes X2RX0N7 and X2VW0N7 have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 219 (16.9 days versus 10 days) and higher average costs when compared to all the cases in MS-DRG 219 ($154,134 versus $69,728). The difference in average costs is $84,406 ($154,134-$69,728 = $84,406) for the cases reporting procedure codes X2RX0N7 and X2VW0N7 in MS-DRG 219 when compared to all the cases in MS-DRG 219. In MS-DRG 220, the 14 cases reporting procedure codes X2RX0N7 and X2VW0N7 have an average length of stay that is longer than the average length of stay for all the cases in MS-DRG 220 (8.9 days versus 6.2 days) and higher average costs when compared to all the cases in MS-DRG 220 ($84,004 versus $49,514). The difference in average costs is $34,490 ($84,004-$49,514 = $34,490) for the cases reporting procedure codes X2RX0N7 and X2VW0N7 in MS-DRG 220 when compared to all the cases in MS-DRG 220. In MS-DRG 221, the one case reporting procedure codes X2RX0N7 and X2VW0N7 has a length of stay that is shorter than the average length of stay for all the cases in MS-DRG 221 (3 days versus 3.6 days) and higher average costs when compared to all the cases in MS-DRG 221 ($97,825 versus $46,900). The difference in average costs is $50,925 ($97,825-$46,900 = $50,925) for the cases reporting procedure codes X2RX0N7 and X2VW0N7 in MS-DRG 221 when compared to all the cases in MS-DRG 221.

In the proposed rule, we stated we reviewed these data and noted the average costs of the 98 cases reporting the procedure code combination describing thoracic aortic arch replacement combined with restriction of the descending thoracic aorta are higher when compared to the average costs of all cases in MS-DRGs 216, 217, 218, 219, 220, and 221. The difference in average costs of the 98 cases reporting the procedure code combination describing thoracic aortic arch replacement combined with restriction of the descending thoracic aorta is $56,445 ($144,638-$88,193 = $56,445) for the cases reporting procedure codes X2RX0N7 and X2VW0N7 when compared to all the cases in MS-DRG 216, which is the highest severity level “with MCC” MS-DRG. We reviewed these data and stated we do not believe that proposing to reassign all cases reporting the procedure code combination describing thoracic aortic arch replacement combined with restriction of the descending thoracic aorta to MS-DRGs 216, 217, and 218, even if there is no cardiac catheterization procedure reported and no secondary diagnosis designated as an MCC reported, would fully address the difference in resource utilization in these cases as the average costs of the cases reporting procedure codes X2RX0N7 and X2VW0N7 are much higher when compared to all the cases in MS-DRG 216. Accordingly, we stated we do not believe the data adequately supports a potential reassignment of these cases to MS-DRGs 216, 217, and 218, respectively.

We also stated we do not believe that the small subset cases that report the procedure code combination describing thoracic aortic arch replacement combined with restriction of the descending thoracic aorta warrants the creation of a new MS-DRG at this time. As stated in prior rulemaking, the MS-DRGs are a classification system intended to group together diagnoses and procedures with similar clinical characteristics and utilization of resources. We generally seek to identify sufficiently large sets of claims data with a resource/cost similarity and clinical similarity in developing diagnosis related groups rather than smaller subsets. Moreover, as stated in prior rulemaking (85 FR 58472), we have concerns regarding making proposed MS-DRG changes based on a specific, single technology (the ThoraflexTM Hybrid device) identified by only one unique procedure code combination versus considering proposed changes based on a group of related procedure codes that can be reported to describe the same type or class of technology, which is more consistent with the intent of the MS-DRGs.

To explore other mechanisms to address this request, we then reexamined the separate but related request discussed previously to reassign cases reporting procedure codes describing endovascular restriction of the thoracic aorta with a branched or fenestrated intraluminal device and cases reporting other complex aortic arch procedures. In examining these requests, we noted in the proposed rule that the first requestor suggested that CMS reassign cases reporting procedure codes describing endovascular restriction of the thoracic aorta with a branched or fenestrated intraluminal device from MS-DRGs 219, 220, and 221 to MS-DRG 216 and the second requestor suggested that CMS reassign cases reporting the procedure code combination describing thoracic aortic arch replacement combined with restriction of the descending thoracic aorta without a procedure code describing the performance of a cardiac catheterization from MS-DRGs 219, 220, and 221 to MS-DRGs 216, 217, and 218 for FY 2026. As discussed in prior rulemaking (86 FR 44830, 87 FR 48847, and 88 FR 58683), MS-DRGs 216, 217, and 218 are defined by the performance of cardiac catheterization. We stated we are concerned about the effect on clinical coherence of assigning cases that do not also have a cardiac catheterization procedure reported to MS-DRGs that are defined by the performance of that procedure.

However, we stated that in our examination of both requests, the data analysis indicates that the average costs of these complex aortic arch procedures, such as the cases reporting procedure codes describing endovascular restriction of the thoracic aorta with a branched or fenestrated intraluminal device, the cases reporting the procedure code combination describing thoracic aortic arch replacement combined with restriction of the descending thoracic aorta, and the cases reporting other complex aortic arch procedures, are higher when compared to the average costs of all cases in MS-DRGs 216, 217, 218, 219, 220, and 221. Analysis of the claims data also suggests that these cases reporting complex aortic arch procedures are associated with increased hospital resource utilization.

We reviewed these data and noted in the proposed rule that, clinically, aortic arch pathologies are serious clinical conditions associated with an increased likelihood of death but also the potential for significant functional limitations. The aortic arch is the segment of the aorta that helps distribute blood to the head and upper extremities via the brachiocephalic trunk, the left common carotid, and the left subclavian artery. The aortic arch also plays a role in blood pressure homeostasis via baroreceptors found within the walls of the aortic arch that help prevent quick, drastic changes in blood pressure. Aortic aneurysms and aortic dissection that involve the aortic arch are associated with extremely high mortality and morbidity and the data analysis clearly shows that cases reporting complex aortic arch procedures have higher average costs and generally longer lengths of stay compared to all the cases in their assigned MS-DRG.

Therefore, based on our review of the clinical issues and the claims data, we proposed to create a new MS-DRG to better differentiate these complex aortic arch procedures from other cases in their respective MS-DRGs, based on treatment difficulty, clinical similarity, and resource use. To compare and analyze the impact of our suggested modifications, we ran a simulation using the claims data from the September 2024 update of the FY 2024 MedPAR file. [GRAPHIC] [TIFF OMITTED] TR04AU25.088

For the cases reporting complex aortic arch procedures, we identified a total of 300 cases using the claims data from the September 2024 update of the FY 2024 MedPAR file, so the criterion that there are at least 500 or more cases in each subgroup could not be met. Therefore, we did not propose to subdivide the proposed new MS-DRG for complex aortic arch procedures into severity levels.

In summary, for FY 2026, taking into consideration that it clinically requires greater resources to perform complex aortic arch procedures, we proposed to create a new base MS-DRG for cases reporting complex aortic arch procedures in MDC 05. The proposed new MS-DRG is proposed new MS-DRG 209 (Complex Aortic Arch Procedures). We refer the reader to Table 6P.5a associated with the FY 2026 IPPS/LTCH PPS proposed rule (which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for the list of procedure codes we proposed to define in the logic for the proposed new MS-DRG. We note that the surgical hierarchy for the proposed modification is discussed in section II.C.10. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule.

Comment: Many commenters expressed support for the proposal to create new base MS-DRG 209 for cases reporting complex aortic arch procedures in MDC 05. Commenters stated that the creation of MS-DRG 209 would ensure better alignment with resource use and clinical needs, allowing appropriate payment and improved access to care for patients undergoing these complex surgeries. Several commenters agreed patients undergoing complex aortic arch procedures reflect a complex patient population that require increased resource utilization associated with their care. A commenter stated that the new MS-DRG would account for new technologies, resulting in a more tailored and appropriate payment to providers, which will inevitably result in better patient care and wider access to these complex aortic arch procedures. Another commenter specifically stated they appreciate the creation of the new MS-DRG and stated the proposed placement of MS-DRG 209 in the surgical hierarchy of MDC 05 will ensure that this group of complex patients will be clinically coherent and will appropriately account for the increased resource use and complexity required to care for them.

Response: We appreciate the commenters' support.

Comment: Another commenter disagreed with the proposal to create new MS-DRG 209 for cases reporting complex aortic arch procedures in MDC 05 and suggested that CMS delay the creation of the new MS-DRG to allow more time to analyze cost and length of stay data. This commenter stated that the current volume of cases is too small to justify a new MS-DRG and stated that more data is needed to assess the impact of concomitant comorbidities on resource use. While acknowledging that aortic arch repair procedures can be resource-intensive, the commenter

asserted that the impact of other concomitant comorbidities in exacerbating resource use has not adequately been assessed, and these cases should be more thoroughly evaluated before establishing a new MS- DRG. This commenter performed their own analysis and stated that they found that cases reporting a diagnosis of atrial fibrillation with procedure codes describing complex aortic arch procedures have higher average costs and longer average lengths of stay. The commenter stated that the disparity of resource use for complex aortic procedures may partially be due to the presence of comorbid diagnoses, such as atrial fibrillation, and should be evaluated in further detail. Lastly, the commenter expressed concern that the new MS-DRG could negatively affect the surgical hierarchy in MDC 05, particularly with regard to MS-DRG 212 (Concomitant Aortic and Mitral Valve Procedures). Specifically, the commenter noted that for FY 2026, CMS proposed to place new MS-DRG 209 in the highest position in the proposed Version 43 surgical hierarchy for MDC 05, ahead of MS-DRG 212. The commenter stated that MS-DRG 212 is defined by the performance of three cardiac procedures and asserted the complexity of performing three cardiac procedures is significant and should be reflected in the surgical hierarchy.

Response: We thank the commenter for their feedback and for sharing their concerns. In response to the suggestion that CMS delay implementation of proposed new MS-DRG 209 for complex aortic arch procedures, we reviewed the commenters' concern and do not agree that a delay is necessary or appropriate. As stated earlier, the data analysis clearly shows that when performed, complex aortic arch procedures are clinically different when compared to all cases in MS-DRGs 216, 217, 218, 219, 220, and 221 in terms of technical complexity and hospital resource use. For these reasons, we proposed to create a new MS-DRG for cases reporting complex aortic arch procedures. We continue to believe that a new base MS-DRG in MDC 05 will better differentiate these cases reporting complex aortic arch procedures from other cases in their currently assigned MS-DRGs.

In response to the commenters' concern that the disparity of resource use for complex aortic procedures may partially be due to the presence of comorbid diagnoses and therefore should be evaluated in further detail, as discussed in the proposed rule and earlier in this section, our data analysis indicated that the average costs of the cases reporting procedure codes describing endovascular restriction of the thoracic aorta with a branched or fenestrated intraluminal device, the cases reporting the procedure code combination describing thoracic aortic arch replacement combined with restriction of the descending thoracic aorta, and the cases reporting other complex aortic arch procedures are generally higher when compared to the average costs of all cases in MS-DRGs 216, 217, 218, 219, 220, and 221. Specifically, most of these cases have average costs that are higher than the average costs of all cases in MS-DRG 216, which is the highest severity level “with MCC” MS-DRG. For the cases reporting these complex aortic arch procedures, we identified a total of 300 cases using the claims data from the September 2024 update of the FY 2024 MedPAR file, so the criterion that there are at least 500 or more cases in each subgroup could not be met. Therefore, we did not propose to subdivide the proposed new MS DRG for complex aortic arch procedures into severity levels for FY 2026. We believe that over time the volume of cases reporting complex aortic arch procedures in MS-DRG 209 may increase and we could consider subdividing the proposed new MS DRG for complex aortic arch procedures into severity levels in the future.

In response to the concern regarding the surgical hierarchy for MDC 05, we continue to believe our proposed revisions to the surgical hierarchy account for the resources expended to address these complex procedures and do not believe any modifications are warranted at this time. We believe the sequencing as discussed in the proposed rule appropriately reflects resource utilization when the assigned cardiac procedures are performed and will result in the most suitable MS-DRG assignments. We will continue to review the surgical hierarchy, consistent with our annual rulemaking, to determine if other modifications are warranted in the future.

Comment: A commenter (the manufacturer of the GORE[supreg] TAG[supreg] TBE) stated they reviewed the ICD-10-PCS classification for other procedure code combinations that would describe a “complex aortic arch procedure” by reporting a procedure code reporting the endovascular restriction of the thoracic aorta with a branched or fenestrated intraluminal device with an ICD-10-PCS code describing a Zone 0 (innominate artery), Zone 1 (left common carotid), or Zone 2 (left subclavian artery) aortic arch procedure to ensure continued access to care for Medicare beneficiaries undergoing this treatment and better alignment of resource use, costs, and clinical complexity of these aortic arch procedures. This commenter identified the following nine ICD-10-PCS codes and requested that these codes be added to definition (logic) of new MS-DRG 209 when reported with code 02VX3EZ (Restriction of thoracic aorta, ascending/arch with branched or fenestrated intraluminal device, one or two arteries, percutaneous approach). [GRAPHIC] [TIFF OMITTED] TR04AU25.089

Response: We appreciate the commenters' feedback. As discussed previously and in the proposed rule, Zone 0 of the aortic arch is in the ascending aorta, proximal to the brachiocephalic artery and Zone 1 covers the portion of the aortic arch between the brachiocephalic artery and the left common carotid artery. We note

that Zone 2 of the aortic arch refers to the segment of the aortic arch located between the left common carotid artery and the left subclavian artery. This zone is a common location for aortic tears, aneurysms, and dissections and is a critical area for surgical and endovascular interventions. We agree with the commenter that the nine ICD-10-PCS codes as reflected in the previous table describe Zone 0, Zone 1, or Zone 2 aortic arch procedures, and when reported with code 02VX3EZ (Restriction of thoracic aorta, ascending/arch with branched or fenestrated intraluminal device, one or two arteries, percutaneous approach), would describe complex aortic arch procedures and should be added to the list of ICD-10-PCS procedure codes in the logic for assignment of cases for the proposed new MS-DRG that describe complex aortic arch procedures when reported with code 02VX3EZ.

During our review of this issue, we further examined the GROUPER logic that would determine assignment of a case to proposed new MS-DRG 209. Specifically, we reviewed the ICD-10-PCS classification to determine if there were other ICD-10-PCS codes describing Zone 0, Zone 1 or Zone 2 aortic arch procedures that could describe complex aortic arch procedures when reported with code 02VX3EZ that were inadvertently not listed in the proposed GROUPER logic for MS-DRG 209. We identified the following 11 procedure codes. [GRAPHIC] [TIFF OMITTED] TR04AU25.090

We reviewed the 11 ICD-10-PCS codes as reflected in the previous table and note that when reported with code 02VX3EZ (Restriction of thoracic aorta, ascending/arch with branched or fenestrated intraluminal device, one or two arteries, percutaneous approach), these procedure code combinations also describe complex aortic arch procedures. As these procedure code combinations also describe complex aortic arch procedures, we believe these 11 ICD-10-PCS procedure codes should also be added to the list of ICD-10-PCS procedure codes that describe complex aortic arch procedures when reported with code 02VX3EZ in the logic for assignment of cases for proposed new MS-DRG 209.

Therefore, after consideration of the public comments received, and for the reasons discussed, we are finalizing our proposal to create new MS-DRG 209 (Complex Aortic Arch Procedures), with modification, effective October 1, 2025, for FY 2026. Specifically, we are adding the 20 ICD-10-PCS codes listed previously to the list of procedure codes that describe other complex aortic arch procedures when reported with ICD-10-PCS code 02VX3EZ in the logic for the new MS-DRG 209. Conforming changes to the GROUPER logic are also are shown in Table 6P.5a associated with this final rule and available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps and also as reflected in the final version of ICD-10 MS- DRG Definitions Manual, version 43, available in association with this final rule and available via the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software. We note that discussion of the surgical hierarchy for the finalized modification is discussed in section II.C.10. of the preamble of this FY 2026 IPPS/LTCH PPS final rule.

Comment: A commenter noted that a code proposal requesting new procedure codes to identify bypass procedures from the innominate artery to a subclavian artery or an axillary artery was displayed in association with the Spring 2025 ICD-10 Coordination and Maintenance Committee Update. The commenter suggested that any new procedure codes finalized in association with the Spring 2025 ICD-10 Coordination and Maintenance Committee Update that identify bypass procedures from the innominate artery to a subclavian artery or an axillary artery should be assigned to the GROUPER logic of MS-DRG 209 when coded with procedure code 02VX3EZ, as these procedure code combinations would describe “complex aortic arch procedures” as well.

Response: We thank the commenter for their feedback. We note that the proposal requesting new procedure codes to identify bypass procedures from the innominate artery to a subclavian artery or an axillary artery that was displayed in association with the Spring 2025 ICD-10 Coordination and Maintenance Committee Update was approved and five new procedure codes to identify bypass procedures from the innominate artery to a subclavian artery or an axillary artery were finalized as reflected in the FY 2026 ICD-10-PCS Code Update files that were made publicly available on the CMS website at https://www.cms.gov/Medicare/Coding/ICD10 on June 6, 2025. We note that the new procedure codes are also reflected in Table 6B.--New Procedure Codes, in association with this final rule and available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ AcuteInpatientPPS, including the MS-DRG assignments for these new codes for FY 2026.

We agree that when coded with procedure code 02VX3EZ, these procedure code combinations would also describe complex aortic arch procedures and therefore should be assigned to new MS-DRG 209 along with other procedure codes describing complex aortic arch procedures. As reflected in Table 6B.--New Procedure Codes in association with this final rule, we note that the five procedure codes describing bypass procedures from the innominate artery to a subclavian artery or an axillary artery are assigned to new MDC 05 MS-DRG 209 and MS-DRGs

252, 253, and 254 (Other Vascular Procedures with MCC, with CC, and without CC/MCC, respectively) for FY 2026. This assignment is reflected in the final V43 GROUPER logic. We refer the reader to section II.C.13. of the preamble of this final rule for further information regarding the table. f. Deep Vein Thrombophlebitis

In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18047), we stated that consistent with our annual review of the MS-DRGs, we consider changes in resource consumption, treatment patterns, technology, and any other factors that may change the relative use of hospital resources. We noted that in our review of the claims data from the September 2024 update of the FY 2024 MedPAR file, we identified a low volume of cases for MS-DRGs 294 and 295 (Deep Vein Thrombophlebitis with CC/MCC and without CC/MCC, respectively). Our findings are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.091

A deep vein thrombophlebitis (DVT) is a blood clot that forms in one of the deep veins of the body, most commonly occurring in the veins of the pelvis, calf, or thigh. The 35 ICD-10-CM diagnosis codes describing deep vein thrombophlebitis currently assigned to MS-DRGs 294 and 295 are shown in the following table. BILLING CODE 4120-01-P [GRAPHIC] [TIFF OMITTED] TR04AU25.147

BILLING CODE 4120-01-C

In light of the initial findings of only 146 cases for MS-DRG 294 and zero cases in MS-DRG 295, we further reviewed the MedPAR claims data for cases assigned to MS-DRGs 294 and 295 for the past 5 fiscal years. As reflected in the following tables, the data indicate that the number of cases grouping to MS-DRGs 294 and 295 has declined.

[GRAPHIC] [TIFF OMITTED] TR04AU25.092

[GRAPHIC] [TIFF OMITTED] TR04AU25.093

We noted in the proposed rule that, if, during our annual MS-DRG analysis we identify that there are only a few patients in a respective MS-DRG, consistent with our established process in deciding whether to propose to make further modifications, we consider if there have been potential changes in the clinical characteristics of the patients, treatment patterns, or resource utilization. A principle of the MS-DRGs and the characteristics of a meaningful DRG classification scheme is the ability to detect such changes and accordingly, propose clinically appropriate modifications that are also consistent with resource utilization. We have noted in prior rulemaking that we prefer to have a substantial number of cases in an MS-DRG because having larger clinical cohesive groups within an MS-DRG provides greater stability for annual updates to the relative payment weights. In light of these considerations, and the low volume of cases in MS-DRGs 294 and 295, we believed it was appropriate to further analyze how to potentially reclassify these cases.

Accordingly, using the September 2024 update of the FY 2024 MedPAR file, we examined whether there were other MS-DRGs to which these cases could appropriately be reassigned. As part of this analysis, we also reviewed the base DRG by severity claims data for MS-DRG 294 because the MS-DRG includes cases reporting an MCC as well as cases reporting a CC. As previously noted, there were zero cases identified in MS-DRG 295, which would only consist of NonCC cases. Therefore, we analyzed the claims data to determine the number of cases, the average length of stay, and average costs for the 146 cases in MS-DRG 294 by severity level (1=MCC and 2=CC). Our findings are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.094

We note that medical MS-DRGs 299, 300, and 301 (Peripheral Vascular Disorders with MCC, with CC, and without CC/MCC, respectively) also include diagnoses describing other types of phlebitis and thrombophlebitis in the logic for case assignment, consistent with the diagnosis codes in the logic for case assignment to MS-DRGs 294 and 295. As such, we reviewed the claims data from the September 2024 update of the FY 2024 MedPAR file for MS-DRGs 299, 300, and 301 to examine the resource utilization associated with cases assigned to these MS-DRGs. Our findings are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.095

As shown in the data, the 45 cases reporting an MCC in MS-DRG 294 have an average length of stay of 5.4 days with average costs of $14,085, which is comparable to the cases in MS-DRG 299 reporting an MCC that have an average length of stay of 5.5 days with average costs of $14,742. The 101 cases reporting a CC in MS-DRG 294 have an average length of stay of 3.5 days with average costs of $9,348, which is comparable to the cases in MS-DRG 300 reporting an CC that have an average length of stay of 3.9 days with average costs of $9,757.

We stated in the proposed rule that based on our analysis and review of the cases grouping to MS-DRGs 294 and 295, we believed it is appropriate to delete these MS-DRGs and reassign the cases currently assigned to MS-DRGs 294 and 295 to MS-DRGs 299, 300, and 301, which are clinically consistent and also align with the resource utilization for these cases. Accordingly, for FY 2026, we proposed to delete MS-DRGs 294 and 295 and reassign the previously listed 35 diagnosis codes describing deep vein thrombophlebitis to MS-DRGs 299, 300, and 301. We refer the reader to the ICD-10 MS-DRG Version 42.1 Definitions Manual (which is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software for complete documentation of the

GROUPER logic for MS-DRGs 299, 300, and 301.

Comment: Several commenters supported the proposal to delete MS- DRGs 294 and 295 and reassign the previously listed 35 diagnosis codes describing deep vein thrombophlebitis to MS-DRGs 299, 300, and 301.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing, without modification, our proposal to delete MS-DRGs 294 and 295 and reassign the 35 diagnosis codes describing deep vein thrombophlebitis listed previously that are currently assigned to MS- DRGs 294 and 295 to MS-DRGs 299, 300, and 301 for FY 2026. 5. MDC 08 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) a. Hip or Knee Procedures With Periprosthetic Joint Infection

In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18049 through 18052), we discussed a request we received to reassign cases reporting a hip or knee procedure with a principal diagnosis of periprosthetic joint infection (PJI) from the lower severity level “without CC/MCC” MS-DRG to the higher severity level “with CC” MS-DRG when there is no major complication or comorbidity (MCC) or complication or comorbidity (CC) reported. According to the requestor, PJI is a devastating healthcare condition that occurs in one percent to two percent (1% to 2%) of primary joint replacements.\10\ PJI is also the primary cause for revision arthroplasty in most developed markets. The requestor stated that patients undergoing revision for PJI experience higher mortality rates ranging from 0.8 to 4 percent at 1 year and 12.9 to 25.9 percent at 5 years following revision surgery.

\10\ Corvec S, Portillo ME, Pasticci BM, Borens O, Trampuz A. Epidemiology and new developments in the diagnosis of prosthetic joint infection. Int J Artif Organs 2012;35:923-934.

According to the requestor, management of PJI requires complex treatment strategies including multiple surgical revisions and long- term antimicrobial treatment, leading to substantially higher costs versus aseptic revision arthroplasty. The requestor asserted that when missed or undertreated, PJI leads to persistence of infection and multiple surgical revisions causing poor function or disability, considerably impairing quality of life.

The requestor stated that current treatment options for PJI include chronic suppressive antibiotics; debridement, antibiotics, and implant retention (DAIR); one-stage revision; two-stage revision; and amputation. According to the requestor, regardless of the treatment option selected for the knee or hip, the presence of PJI as the principal diagnosis appears to significantly increase the length of stay and the resource utilization of these cases in comparison to all other cases assigned to the respective MS-DRGs.

Using the FY 2023 MedPAR file that informed FY 2025 rulemaking, the requestor stated it performed its own analysis of cases reporting PJI as the principal diagnosis. The requestor provided the following list of ICD-10-CM diagnosis codes it used to identify the presence of a PJI in the hip or knee joint. [GRAPHIC] [TIFF OMITTED] TR04AU25.096

The requestor stated that cases involving the DAIR procedure are commonly assigned to MS-DRGs 463, 464, and 465 (Wound Debridement and Skin Graft Except Hand for Musculoskeletal and Connective Tissue Disorders with MCC, with CC, and without CC/MCC, respectively), MS-DRGs 480, 481, and 482 (Hip and Femur Procedures Except Major Joint with MCC, with CC, and without CC/MCC, respectively) or MS-DRG 485, 486, and 487 (Knee Procedures with Principal Diagnosis of Infection with MCC, with CC, and without CC/MCC, respectively). According to the requestor, in each of the scenarios reviewed, the average cost and average length of stay for cases with a principal diagnosis of PJI that grouped to the “with CC” or “without CC/MCC” MS-DRG are similar or higher and longer than the other cases assigned to the same MS-DRGs.

The requestor also stated that one-stage hip or knee revision procedures are typically assigned to MS-DRGs 466, 467, and 468 and the findings from their analysis showed the presence of a PJI as the principal diagnosis with a hip or knee revision procedure show a longer length of stay and a similar or higher average cost than for the other aseptic revision arthroplasties.

In addition, the requestor stated that its analysis of cases reporting PJI with the last treatment option, amputation, assigned to MS-DRGs 474, 475, and 476 (Amputation for Musculoskeletal System and Connective Tissue Disorders with MCC, with CC, and without CC/MCC, respectively) also showed a longer average length of stay and higher average costs compared to all other non-PJI cases in MS-DRGs 474, 475, and 476, further supporting the request to reassign cases to the “with CC” severity level MS-DRG.

In summary, the requestor specifically recommended the following modifications to the listed MS-DRGs for cases reporting a hip or knee procedure with a principal diagnosis of PJI:

[GRAPHIC] [TIFF OMITTED] TR04AU25.097

We reviewed claims data from the September 2024 update of the FY 2024 MedPAR file for MS-DRGs 463, 464, 465, 466, 467, 468, 474, 475, 476, 480, 481, 482, 485, 486, and 487 and for cases reporting a principal diagnosis of PJI with a hip or knee procedure. We refer the reader to Table 6P. 6a that was made publicly available in association with the proposed rule and is available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps for the list of diagnosis codes we analyzed to identify a PJI and for the list of procedure codes we analyzed from the previously listed MS-DRGs to identify a hip or knee procedure. Findings from our analysis are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.098

The findings show that the cases reporting a PJI with a hip or knee procedure in MS-DRGs 466, 467, and 468 have a slightly longer average length of stay and lower average costs compared to the average length of stay and average costs of all the cases in their respective MS-DRGs. Therefore, because the resource utilization of these cases is generally comparable to all the cases in their respective MS-DRGs, we believe the cases reporting a PJI in MS-DRGs 466, 467, and 468 appear to be grouping appropriately in their current MS-DRG assignment.

The findings show that for the cases reporting a PJI with a hip or knee procedure in MS-DRGs 463, 464, 465, 474, 475, 476, 485, 486, and 487, the average length of stay is comparable to the average length of stay of all the cases in their respective MS-DRGs, however, the average length of stay for the cases reporting a PJI with a hip or knee procedure in MS-DRGs 480, 481, and 482 are notably longer compared to the average length of stay of all the cases in their respective MS- DRGs. Findings from our analysis also show that the average costs of the cases reporting a PJI with a hip or knee procedure in MS-DRGs 463, 464, 465, 474, 475, 476, 480, 481, and 482 are higher compared to the average costs of all the cases in their respective MS-DRGs with a difference in average costs of approximately $5,459 for cases reporting a PJI with a hip or knee procedure across MS-DRGs 463, 464, and 465, a difference in average costs of approximately $5,190 for cases reporting a PJI with a hip or knee procedure across MS-DRGs 474, 475, and 476, and a difference in average costs of approximately $7,306 for cases reporting a PJI with a hip or knee procedure across MS-DRGs 480, 481 and 482. However, because MS-DRGs

485, 486, and 487 currently include a principal diagnosis of infection in the logic for case assignment to these MS-DRGs, the difference in average costs for the cases reporting a PJI with a hip or knee procedure compared to the average costs of all the cases in their respective MS-DRG is minimal ($2,018, $1,697, and $2,001, respectively).

We stated in the proposed rule that, based on our review and analysis of the data, we disagreed with the request to reassign PJI cases from the lower severity “without CC/MCC” level MS-DRG to the higher severity “with CC” level MS-DRG suggested by the requestor as the average costs of the PJI cases in the “without CC/MCC” level are not comparable and do not align with the average costs of all the cases at the “with CC” level. In addition, our findings show that other than for MS-DRGs 466, 467, and 468, the cases reporting a PJI with a hip or knee procedure at the higher “with CC” level and the highest “with MCC” level have higher average costs compared to all the cases in their respective MS-DRG. For example, as reflected in the findings of our analysis for MS-DRGs 463, 464, and 465, if we were to reassign the 237 cases reporting a PJI with a hip or knee procedure with an average length of stay of 4.3 days and average costs of $22,689 from MS-DRG 465 to MS-DRG 464 where we found a total of 5,775 cases with an average length of stay of 7.3 days and average costs of $26,757, the 1,358 cases reporting a PJI with a hip or knee procedure with an average length of stay of 7.7 days and average costs of $32,474 in MS- DRG 464 and the 804 cases reporting a PJI with a hip or knee procedure with an average length of stay of 13.9 days and average costs of $50,127 in MS-DRG 463 would continue to not be comparable from a resource perspective as compared to all the cases in their assigned MS- DRGs. We stated we believe the data support proposing a new base MS-DRG for the cases reporting a PJI with a hip or knee procedure in MS-DRGs 463, 464, 465, 474, 475, 476, 480, 481, and 482 to better reflect the complexity of services, resource utilization, and severity of illness of these patients.

We stated we applied the criteria to create subgroups in a base MS- DRG as discussed in section II.C.1.b. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule and this final rule. We noted that, as shown in the table that follows, a three-way split of this proposed new base MS-DRG failed to meet the criterion that at least 500 or more cases are in the “without CC/MCC” subgroup. The following table illustrates our findings. [GRAPHIC] [TIFF OMITTED] TR04AU25.099

As discussed in section II.C.1.b. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule and this final rule, if the criteria for a three-way split fail, the next step is to determine if the criteria are satisfied for a two-way split. Therefore, we applied the criteria for a two-way split for the “with MCC and without MCC” subgroups and found that all five criteria were met. The following table illustrates our findings. [GRAPHIC] [TIFF OMITTED] TR04AU25.100

For the proposed new MS-DRGs for cases reporting a PJI with a hip or knee procedure, there is at least: (1) 500 cases in the MCC subgroup and 500 cases in the without MCC subgroup; (2) 5 percent of the cases in the MCC group and 5 percent in the without MCC subgroup; (3) a 20 percent difference in average costs between the MCC group and the without MCC group; (4) a $2,000 difference in average costs between the MCC group and the without MCC group; and (5) a 3-percent reduction in cost variance, indicating that the proposed severity level splits increase the explanatory power of the base MS-DRG in capturing differences in expected cost between the proposed MS-DRG severity level splits by at least 3 percent and thus improve the overall accuracy of the IPPS payment system.

As a result, for FY 2026, we proposed to create new MS-DRGs 403 and 404 (Hip or Knee Procedures with Principal Diagnosis of Periprosthetic Joint Infection with MCC and without MCC, respectively). The following table reflects a simulation of the proposed new MS-DRGs. [GRAPHIC] [TIFF OMITTED] TR04AU25.101

Comment: Several commenters supported the proposal to create proposed new MS-DRGs 403 and 404. A commenter stated it was pleased that CMS is taking note of the resource intensiveness required to thoroughly treat periprosthetic joint infections (PJI). According to the commenter, PJIs have become more prevalent in recent years and are now the leading cause of revision surgery in both Total Knee Arthroplasty (TKA) and Total Hip Arthroplasty (THA) procedures. The commenter stated that according to the American Joint Replacement Registry, PJIs account for over 20 percent of hip revisions and 28 percent of knee revisions annually. The commenter expressed agreement with CMS' statement in the proposed rule that there are multiple MS- DRGs to which these cases are assigned dependent on treatment type. The commenter stated that given the wide variability of cost among the cases in the MS-DRGs analyzed, they appreciate that CMS proposed to assign these cases to

proposed new MS-DRGs based on a principal diagnosis of PJI. The commenter stated its belief that these proposed new MS-DRGs will provide more accurate and appropriate payment for the treatment of PJI commensurate with the complexity of these cases. The commenter also stated that as this epidemic of PJI is growing, they want to ensure that individuals facing challenges with treatment of PJI have access to a quality health care system which is primarily based on a set of organizational structures to ensure rapid diagnosis and appropriate treatment, and this proposed change is a significant positive step in that direction. Another commenter who expressed support for the proposal recommended that CMS and other stakeholders take caution and closely monitor these proposed new MS-DRGs if finalized, to observe how the proposed new structure may alter referral patterns, utilization, or site of service for unanticipated effects. This commenter also suggested that CMS identify the party requesting reassignment and stated that in the interest of transparency in public programs, when CMS addresses a reclassification request in the annual proposed rulemakings, it should be clear to the public which parties are requesting the changes so that stakeholders can take that into account when commenting to CMS.

Response: We appreciate the commenters' support. In response to the commenter's recommendation that any finalized policy should continue to be closely monitored, we thank the commenter for the feedback and note that we review the MS-DRGs for changes in treatment patterns and resource utilization on an annual basis. With respect to the request that CMS identify the party requesting reassignment for transparency, we will consider this suggestion for future rulemaking.

Comment: A commenter who expressed support for the creation of proposed new MS-DRGs 403 and 404 stated it encountered inconsistencies with case volumes when grouping cases using the Version 43 test GROUPER that was made publicly available in association with the FY 2026 IPPS/ LTCH PPS proposed rule on the CMS website: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software. The commenter stated it reviewed CMS' analysis findings summarized in the proposed rule and the accompanying After Outliers Removed and Before Outliers Removed (AOR/BOR) file that shows the case volume and MS-DRG shifts between the Version 42.1 GROUPER and Version 43 test GROUPER and identified differences in case volume shifts among the MS-DRGs that were analyzed for proposed new MS- DRGs 403 and 404. The commenter indicated that it was challenging to understand the rationale for some of the shifts in case volume among the MS-DRGs when comparing the AOR/BOR file to the proposed rule findings. The commenter stated it validated that the data appropriately reflected declining volume in MS-DRGs 463, 464, 465, 474, 475, 476, 480, 481, and 482 as CMS outlined in the analysis as the cases shifted to proposed new MS-DRGs 403 and 404. The commenter also validated that CMS' analysis excluded MS-DRGs 485, 486, and 487 and these MS-DRGs reflected zero cases shifting as CMS outlined in the preamble of the proposed rule (90 FR 18051) and in the AOR/BOR file that was made publicly available in association with the proposed rule at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps. However, the commenter stated that the AOR/BOR file shows a decline (that is, shift) in case volume for MS-DRG 466 (243 cases), MS-DRG 467 (406 cases), and MS-DRG 468 (48 cases), resulting in a total decline of 699 cases while the proposed rule analysis identified a total of 1,567 cases reporting a principal diagnosis of PJI with a hip or knee procedure among those MS-DRGs (MS-DRG 466 (460 cases); MS-DRG 467 (947 cases); and MS-DRG 468 (160 cases)). The commenter also stated that in the proposed rule analysis, CMS noted that it excluded MS-DRGs 466, 467, and 468 from further consideration because it believed those cases were grouping appropriately in their current MS-DRG assignment.

The commenter stated that they reviewed the list of procedure codes analyzed by CMS, which was made publicly available in Table 6P.6a in connection with the proposed rule, as well as the list of procedure codes in the logic for MS-DRGs 466, 467, and 468 included in the Draft Version 43 ICD-10 MS-DRG Definitions Manual and noted an overlap of approximately 52 procedure codes. The commenter provided the example of procedure code 0SRB0EZ (Replacement of left hip joint with articulating spacer, open approach) and stated this procedure code is included in both lists. The commenter stated it recognized that logically the surgical hierarchy would result in the assignment of MS-DRG 403 or 404 versus MS-DRGs 466, 467, or 468, however, the commenter expressed concern regarding the case shift for 699 of the 1,567 cases from MS- DRGs 466, 467, and 468 into the proposed new MS-DRGs 403 and 404 and that the shift was not acknowledged nor explained in the proposed rule. The commenter stated their belief that the shifts should have been included within the proposed rule and explained for data transparency. According to the commenter, the lack of detail in the proposed rule made it unclear if the cases shifted because of the procedure code overlap or because of programming within the Version 43 test GROUPER. The commenter requested CMS provide an explanation for the decline in case volume among MS-DRGs 466, 467, and 468.

The commenter stated that during its review of the shift in case volume among MS-DRGs 466, 467, and 468, it identified inconsistencies in the assignment of cases to proposed new MS-DRGs 403 and 404 utilizing the Version 43 test GROUPER. The commenter provided examples of eight different test cases that included procedure codes from the list in Table 6P.6a that was made available in association with the proposed rule. According to the commenter's review, all eight cases should have resulted in assignment to the proposed new MS-DRGs 403 and 404; however, using the Version 43 test GROUPER, only four of the test cases grouped to proposed new MS-DRGs 403 and 404 while the remaining four test cases grouped to current MS-DRGs 463 or 464. The commenter stated that proposed new MS-DRGs 403 and 404 are proposed to be sequenced higher in the surgical hierarchy than existing MS-DRGs 463 and 464, therefore, the commenter requested an explanation regarding the accuracy of the Version 43 test GROUPER and the impact on the AOR/ BOR file. The commenter requested additional transparency with regard to the MS-DRG groupings, the Version 43 test GROUPER, and the AOR/BOR file. Additionally, the commenter stated that if the findings demonstrate inaccuracies, corrected versions should be made available. The commenter suggested that for future rulemaking CMS consider including further insight, rationale and transparency regarding any shifts in volume that may result from proposed changes to MS-DRG logic.

Response: We appreciate the commenter's support and feedback. The commenter is correct that there is a redistribution (or shift) in cases among the MS-DRGs that were analyzed and discussed in the proposed rule (466, 467, and 468). We note that under the

GROUPER software program some collections of ICD-10-PCS procedure codes have a different set of attributes, independent of those of the codes that make them up (that is, their “components”). These collections of ICD-10-PCS procedure codes are called clusters. A routine program in the GROUPER, upstream of the MS-DRG assignment logic, searches the claim for clusters. When a cluster is found, it is added to the list of procedures found on the claim. Clusters may be “restricted” by Major Diagnostic Category (MDC) and a restricted cluster inhibits the use of its procedure code component attributes for the MDC's MS-DRG assignment logic. For example, procedure code cluster 0SPC0JZ (Removal of synthetic substitute from right knee joint, open approach) and 0SRT0JZ (Replacement of right knee joint, femoral surface with synthetic substitute, open approach) may be recognized on a claim if both codes appear (in any order). The reporting of these codes creates a new procedure code cluster “@0045”. The cluster @0045 has a different set of attributes than either code 0SPC0JZ or 0SRT0JZ by itself and is further “restricted” for MDC 08. When the GROUPER logic determines that the MDC is 08, it ignores the attributes of procedure codes 0SPC0JZ and 0SRT0JZ individually, only using those of @0045. This logic results in assignment of the claim to MS-DRGs 466, 467, and 468 (Revision of Hip or Knee Replacement with MCC, with CC, and without CC/ MCC, respectively) rather than MS-DRGs 463, 464, and 465 (Wound Debridement and Skin Graft Except Hand for Musculoskeletal and Connective Tissue Disorders with MCC, with CC, and without CC/MCC, respectively). If the principal diagnosis reported is not assigned under MDC 08, the cluster would not restrict the interpretation of the component codes and their individual attributes could be relevant as well as those of @0045.

Following publication of the proposed rule, we identified that the intended grouping of cases to the proposed new MS-DRGs was impacted because of these cluster restrictions under MDC 08, therefore we removed the restrictions and performed additional analysis. As a result of removing the restrictions, and due to the existing overlapping procedure code logic among a subset of the MDC 08 MS-DRGs, our analysis showed that further redistribution of the cases under MDC 08 occurs, impacting the remaining number of cases in MS-DRGs 466, 467, and 468 and MS-DRGs 485, 486, and 487, such that, those MS-DRGs no longer satisfy the criteria for a 3-way split. Under our established process for applying the criteria to create subgroups within a base MS-DRG, existing MS-DRGs 466, 467, and 468 would be deleted and a new base MS- DRG for Revision of Hip or Knee Replacement would be established. Additionally, under this established process, existing MS-DRGs 485, 486, and 487 would be deleted and new MS-DRGs (2-way split) for Knee Procedures with Principal Diagnosis of Infection with and without MCC, respectively, would be established. Because these findings were not identified until after publication of the proposed rule, we believe it is appropriate to further consider the creation of proposed new MS-DRGs 403 and 404, along with the removal of the MDC 08 restrictions on the procedure code clusters and the potential implications for existing MS- DRGs 466, 467, and 468 and MS-DRGs 485, 486, and 487, as well as the creation of new MS-DRGs, in addition to having an updated test Grouper that reflects these potential changes. We also note that any future proposed MS-DRG changes may also impact the surgical hierarchy.

After consideration of the public comments we received, and for the reasons described, we are not finalizing our proposal to create new MS- DRGs 403 and 404 (Hip or Knee Procedures with Principal Diagnosis of Periprosthetic Joint Infection with MCC and without MCC, respectively) for FY 2026. As noted, we may further consider these potential MS-DRG changes for future rulemaking. b. Arthroscopy

In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18052 through 18054), we stated that consistent with our annual review of the MS- DRGs, we consider changes in resource consumption, treatment patterns, technology, and any other factors that may change the relative use of hospital resources. We noted that in our review of the claims data from the September 2024 update of the FY 2024 MedPAR file, we identified an extremely low volume of cases for MS-DRG 509 (Arthroscopy). Specifically, we found 16 cases with an average length of stay of 5.2 days and average costs of $18,239.

An arthroscopy is a surgical procedure that allows orthopedic surgeons to see the inside of a joint through a small incision and with specialized instruments (for example, arthroscope). The ICD-10-PCS codes describing arthroscopy and currently assigned to MS-DRG 509 are shown in the following table. BILLING CODE 4120-01-P

[GRAPHIC] [TIFF OMITTED] TR04AU25.102

BILLING CODE 4120-01-C

In light of our initial findings of 16 cases for MS-DRG 509, we further reviewed the MedPAR claims data for cases assigned to MS-DRG 509 for the past 5 fiscal years. As reflected in the following table, the data indicate that the number of cases grouping to MS-DRG 509 has steadily declined. [GRAPHIC] [TIFF OMITTED] TR04AU25.103

We noted that, if, during our annual MS-DRG analysis we identify that there are only a few patients in a respective MS-DRG, consistent with our established process, we consider if there have been potential changes in the clinical characteristics of the patients, treatment patterns, or resource utilization. A principle of the MS-DRGs and the characteristics of a meaningful DRG classification scheme is the ability to detect such changes and accordingly, propose clinically appropriate modifications that are also consistent with resource utilization.

We stated we believe that the volume of cases reporting the arthroscopy procedures in the inpatient setting has shifted to the outpatient setting over the years; it is usually performed as an outpatient procedure. Of the 16 cases found to report an arthroscopy procedure in the FY 2024 MedPAR data, 13 cases also reported another procedure. For example, one case that reported procedure code 0RJK4ZZ (Inspection of left shoulder joint, percutaneous endoscopic approach) also reported procedure code 0RBK4ZZ (Excision of left shoulder joint, percutaneous endoscopic approach). Procedure code 0RBK4ZZ is assigned to MS-DRGs 510, 511, and 512 (Shoulder, Elbow or Forearm Procedures, Except Major Joint Procedures with MCC, with CC, and without CC/MCC, respectively). However, because of the surgical hierarchy, the resulting assignment is MS-DRG 509.

Using the September 2024 update of the FY 2024 MedPAR file, we also reviewed the base DRG by severity claims data for MS-DRG 509 to determine the number of cases, average length of stay and average costs for the 16 cases by severity level (1=MCC, 2=CC and 3=NonCC). Our findings are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.104

Next, we reviewed the claims data from the September 2024 update of the FY 2024 MedPAR file for MS-DRGs 510, 511, and 512 (Shoulder, Elbow or Forearm Procedures, Except Major Joint Procedures with MCC, with CC, and without CC/MCC, respectively); MS-DRGs 513 and 514 (Hand or Wrist Procedures, Except Major Thumb or Joint Procedures with CC/MCC and without CC/MCC, respectively); and MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) because these MS-DRGs are considered to be clinically appropriate and consistent with the arthroscopy procedure code descriptions in MS-DRG 509 previously listed that specify the anatomic site. Our findings are shown in the following tables. [GRAPHIC] [TIFF OMITTED] TR04AU25.105

Based on our analysis and review of the cases grouping to MS-DRG 509, we stated that we believe it is appropriate to delete MS-DRG 509 and reassign the 47 procedure codes describing arthroscopy of various anatomic sites to clinically appropriate MS-DRGs that also align with the resource utilization for these cases. For example, of the 16 cases found to group to MS-DRG 509, in addition to identifying 13 cases reporting additional procedures as previously discussed, we also identified 11 cases reporting diagnosis codes designated as a CC or MCC where the average length of stay and average costs of those cases are comparable with the average length of stay and average costs of the cases in the MS-DRGs considered clinically appropriate for their reassignment. Therefore, for FY 2026, of the 47 procedure codes previously listed describing arthroscopy of various anatomic sites, we proposed to do the following:

Reassign the 8 procedure codes describing arthroscopy of the shoulder or elbow joint to MS-DRGs 510, 511, and 512 (Shoulder, Elbow or Forearm Procedures, Except Major Joint Procedures with MCC, with CC, and without CC/MCC, respectively).

Reassign the 10 procedure codes describing arthroscopy of the hand or wrist joint to MS-DRGs 513 and 514 (Hand or Wrist Procedures, Except Major Thumb or Joint Procedures with CC/MCC and without CC/MCC, respectively).

Reassign the 29 procedure codes describing arthroscopy of various vertebral joints and other

musculoskeletal joints to MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, with CC, and without CC/MCC, respectively).

We refer the reader to Table 6P.7a made publicly available in association with the proposed rule and available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps for the detailed list of procedure codes with the proposed MS-DRG reassignments.

Comment: Commenters supported our proposal to delete MS-DRG 509 and to reassign the 47 procedure codes describing arthroscopy of various anatomic sites to the proposed clinically appropriate MS-DRGs.

Response: We thank the commenters for their support.

After consideration of the public comments we received, we are finalizing, without modification, our proposal to delete MS-DRG 509 and to reassign the 47 procedure codes describing arthroscopy of various anatomic sites to clinically appropriate MS-DRGs, as reflected in Table 6P.7a in association with this final rule and available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps. c. MS-DRG Logic for MS-DRGs 456, 457, and 458

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18054 through 18056), we identified an inconsistency in the GROUPER logic for MS-DRGs 456, 457, and 458 (Spinal Fusion Except Cervical with Spinal Curvature, Malignancy, Infection or Extensive Fusions with MCC, with CC, and without CC/MCC, respectively) related to the ICD-10-CM diagnosis codes describing a principal diagnosis of infection. The logic for case assignment to MS-DRGs 456, 457, and 458 as displayed in the ICD-10 MS-DRG Definitions Manual Version 42.1 (which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software) is comprised of four logic lists. The first logic list is titled “Spinal Fusion Except Cervical” and is defined by a list of procedure codes designated as O.R. procedures that describe spinal fusion procedures of the thoracic, thoracolumbar, lumbar, lumbosacral, sacrococcygeal, and sacroiliac joint. (We note that 12 procedure codes describing Fusion of coccygeal joint were deleted effective with discharges beginning April 1, 2025 in version 42.1). The second logic list is titled “Spinal Curvature/Malignancy/Infection” and is defined by a list of diagnosis codes describing spinal curvature, spinal malignancy, and spinal infection that are used to define the logic for case assignment when any one of the listed diagnosis codes is reported as the principal diagnosis. The third logic list is titled “OR Secondary Diagnosis” and is defined by a list of diagnosis codes describing curvature of the spine that are used to define the logic for case assignment when any one of the listed codes is reported as a secondary diagnosis. The fourth logic list is titled “Extensive Fusions” and is defined by a list of procedure codes designated as O.R. procedures that describe extensive spinal fusion procedures. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 42.1, (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) for complete documentation of the GROUPER logic for MS- DRGs 456, 457, and 458.

In the second logic list titled “Spinal Curvature/Malignancy/ Infection” there are a subset of diagnosis codes describing spinal infections. We stated in the proposed rule that in our review and analysis of MS-DRGs 456, 457, and 458, we identified additional diagnosis codes within the ICD-10-CM classification describing spinal infections that are not currently listed in the logic for case assignment to MS-DRGs 456, 457, and 458. Specifically, we identified the following 47 diagnoses that we believe are clinically appropriate to add to the existing diagnosis codes describing spinal infections in MS-DRGs 456, 457, and 458. BILLING CODE 4120-01-P

[GRAPHIC] [TIFF OMITTED] TR04AU25.106

BILLING CODE 4120-01-C

Therefore, for clinical consistency and because these codes describe spinal infections that could reasonably require a spinal fusion procedure, we proposed to add the previously listed diagnosis codes to the logic list titled “Spinal Curvature/Malignancy/ Infection” in MS-DRGs 456, 457, and 458, effective October 1, 2025 for FY 2026.

We also identified eight diagnosis codes currently listed in the second logic list titled “Spinal Curvature/Malignancy/Infection” for case assignment to MS-DRGs 456, 457, and 458 that we believe are not clinically appropriate to maintain in the list. Specifically, we identified the following diagnoses.

[GRAPHIC] [TIFF OMITTED] TR04AU25.107

The previously listed diagnosis codes do not describe a spinal curvature, malignancy or infection, rather they describe compression fractures of various anatomic sites (for example, collapsed vertebra) and osteoporosis is a condition where the bones become weakened leading to an increased risk of bone fracture. Therefore, for clinical consistency and to ensure accuracy in the logic for case assignment, we proposed to remove the eight previously listed diagnosis codes from the logic list titled “Spinal Curvature/Malignancy/Infection” in MS-DRGs 456, 457, and 458, effective October 1, 2025 for FY 2026.

Comment: Commenters supported our proposal to add the previously listed 47 diagnosis codes to the logic list titled “Spinal Curvature/ Malignancy/Infection” in MS-DRGs 456, 457, and 458, and our proposal to delete the eight previously listed diagnosis codes from the logic list titled “Spinal Curvature/Malignancy/Infection” in MS-DRGs 456, 457, and 458.

Response: We thank the commenters for their support.

After consideration of the public comments we received, we are finalizing, without modification, our proposal to add the previously listed 47 diagnosis codes to the logic list titled “Spinal Curvature/ Malignancy/Infection” in MS-DRGs 456, 457, and 458, effective October 1, 2025 for FY 2026. We are also finalizing, without modification, our proposal to remove the eight previously listed diagnosis codes from the logic list titled “Spinal Curvature/Malignancy/Infection” in MS-DRGs 456, 457, and 458, effective October 1, 2025 for FY 2026. 6. Review of Procedure Codes in MS-DRGs 981 Through 983 and 987 Through 989

We annually conduct a review of procedures producing assignment to MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 987 through 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) on the basis of volume, by procedure, to see if it would be appropriate to move cases reporting these procedure codes out of these MS-DRGs into one of the surgical MS-DRGs for the MDC into which the principal diagnosis falls. The data are arrayed in two ways for comparison purposes. We look at a frequency count of each major operative procedure code. We also compare procedures across MDCs by volume of procedure codes within each MDC. We use this information to determine which procedure codes and diagnosis codes to examine.

We identify those procedures occurring in conjunction with certain principal diagnoses with sufficient frequency to justify adding them to one of the surgical MS-DRGs for the MDC in which the diagnosis falls. We also consider whether it would be more appropriate to move the principal diagnosis codes into the MDC to which the procedure is currently assigned.

Based on the results of our review of the claims data from the September 2024 update of the FY 2024 MedPAR file of cases found to group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, we proposed to move the cases reporting the procedures and/or principal diagnosis codes described in this section of this rule from MS-DRGs 981 through 983 or MS-DRGs 987 through 989 into one of the surgical MS-DRGs for the MDC into which the principal diagnosis or procedure is assigned. a. Control of Bleeding in the Genitourinary Tract

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18056 through 18057), during the review of the cases that group to MS- DRGs 981 through 983, we noted that when ICD-10-PCS procedure codes describing the control of bleeding in the genitourinary tract are reported in conjunction with ICD-10-CM diagnosis codes in MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs, and Immunologic Disorders), the cases group to MS-DRGs 981 through 983. The five ICD- 10-CM procedure codes reviewed, as well as their current MDC assignments, are found in the table: [GRAPHIC] [TIFF OMITTED] TR04AU25.108

We refer the reader to Appendix E of the ICD-10 MS-DRG Version 42.1 Definitions Manual, which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps.html, for the MS-DRG assignment for each procedure code listed and further discussion of how each procedure code may be assigned to multiple MDCs and MS-DRGs under the IPPS.

The principal diagnosis most frequently reported with the five ICD- 10-PCS procedure codes describing the control of bleeding in the genitourinary tract in MDC 16 is ICD-10-CM code D68.32 (Hemorrhagic disorder due to extrinsic circulating anticoagulants). Hemorrhagic disorder due to extrinsic circulating anticoagulants is a condition

that occurs when bleeding is caused by anticoagulants or antithrombotics, which are medicines commonly used to treat or prevent blood clots by decreasing the amount of clotting proteins in the blood.

As noted in the proposed rule, we examined claims data from the September 2024 update of the FY 2024 MedPAR file to identify the average length of stay and average costs for cases reporting a procedure code describing the control of bleeding in the genitourinary tract with a principal diagnosis in MDC 16, which are currently grouping to MS-DRGs 981 through 983, as well as all cases in MS-DRGs 981 through 983. Our findings are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.109

We then examined the MS-DRGs within MDC 16 and determined that the cases reporting procedure codes describing the control of bleeding in the genitourinary tract with a principal diagnosis in MDC 16 would most suitably group to MS-DRGs 802, 803, and 804 (Other O.R. Procedures of the Blood and Blood Forming Organs with MCC, with CC, and without CC/ MCC, respectively), which contains a group of procedures that are only infrequently related to the diagnoses in the MDC, but are still occasionally performed on patients with cases assigned to the MDC with these diagnoses.

To determine how the resources for this subset of cases compared to cases in MS-DRGs 802, 803, and 804 as a whole, we stated in the proposed rule we examined the average costs and length of stay for cases in MS-DRGs 802, 803, and 804. Our findings are shown in this table. [GRAPHIC] [TIFF OMITTED] TR04AU25.110

We reviewed the data and noted in the proposed rule that for this subset of cases, the average costs are lower and the average length of stays are generally shorter than for cases in MS-DRGs 802, 803, and 804. However, we stated we believe that when an ICD-10-PCS procedure code describing the control of bleeding in the genitourinary tract is reported with a principal diagnosis in MDC 16 (typically hemorrhagic disorder due to extrinsic circulating anticoagulants), the procedure is related to the principal diagnosis. Because a procedure code describing the control of bleeding in the genitourinary tract would be expected to be related to a principal diagnosis describing a hemorrhagic disorder due to extrinsic circulating anticoagulants, it is clinically appropriate for the procedures to group to the same MS-DRGs as the principal diagnoses. Therefore, we proposed to add the five procedure codes listed previously to MDC 16. Under this proposal, cases reporting a procedure code describing the control of bleeding in the genitourinary tract with a principal diagnosis of a hemorrhagic disorder due to extrinsic circulating anticoagulants (diagnosis code D68.32) in MDC 16 would group to MS-DRGs 802, 803, and 804.

Comment: Commenters supported the proposal to add ICD-10-PCS procedure codes 0W3R0ZZ, 0W3R3ZZ, 0W3R4ZZ, 0W3R7ZZ, and 0W3R8ZZ to MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs and Immunologic Disorders).

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-PCS procedure codes 0W3R0ZZ, 0W3R3ZZ, 0W3R4ZZ, 0W3R7ZZ, and 0W3R8ZZ to MDC 16, without modification, for FY 2026. Under this finalization, cases reporting a procedure code describing the control of bleeding in the genitourinary tract with a principal diagnosis of a hemorrhagic disorder due to extrinsic circulating anticoagulants (diagnosis code D68.32) in MDC 16 would group to MS-DRGs 802, 803, and 804. b. Removal of Infusion Device From Peritoneal Cavity

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18057 through 18058), during the review of the

cases that group to MS-DRGs 981 through 983, we noted that when ICD-10- PCS procedure codes describing the removal of an infusion device from the peritoneal cavity are reported in conjunction with ICD-10-CM diagnosis codes in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs), the cases group to MS-DRGs 981 through 983. In the proposed rule, we included the following table, listing the three ICD-10-PCS procedure codes reviewed, and indicating current assignment to MDCs 06 and 21: [GRAPHIC] [TIFF OMITTED] TR04AU25.111

In this final rule, we are correcting this display to reflect that ICD-10-PCS code 0WPG33Z is not currently assigned to MDC 21. We note that, in ICD-10 MS-DRGs Definitions Manual Version 42.1, ICD-10-PCS codes 0WPG03Z and 0WPG43Z are assigned to MDC 21 MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively). ICD-10-PCS code 0WPG33Z is assigned to MDC 06 MS-DRGs 356, 357 and 358 (Other Digestive System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). We list in the following table the ICD-10-PCS procedure codes describing the removal of an infusion device from the peritoneal cavity and their corresponding MS-DRG assignments in the ICD-10 MS-DRGs Definitions Manual Version 42.1. [GRAPHIC] [TIFF OMITTED] TR04AU25.112

We refer the reader to Appendix E of the ICD-10 MS-DRG Version 42.1 Definitions Manual (which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps.html) for the MS-DRG assignment for each procedure code listed and further discussion of how each procedure code may be assigned to multiple MDCs and MS-DRGs under the IPPS.

As discussed in the proposed rule, the principal diagnosis most frequently reported with the three ICD-10-PCS procedure codes describing the removal of an infusion device from the peritoneal cavity in MDC 21 is ICD-10-CM code T85.71XA (Infection and inflammatory reaction due to peritoneal dialysis catheter, initial encounter).

We stated we examined claims data from the September 2024 update of the FY 2024 MedPAR file to identify the average length of stay and average costs for cases reporting a procedure code describing the removal of an infusion device from the peritoneal cavity with a principal diagnosis in MDC 21, which are currently grouping to MS-DRGs 981 through 983, as well as all cases in MS-DRGs 981 through 983. Our findings are shown in the following table.

[GRAPHIC] [TIFF OMITTED] TR04AU25.113

We then examined the MS-DRGs within MDC 21 and determined that the cases reporting procedure codes describing the removal of an infusion device from the peritoneal cavity with a principal diagnosis in MDC 21 would most suitably group to MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively), which contains other operating room procedures performed for injuries as further detailed later in this section.

To determine how the resources for this subset of cases compared to cases in MS-DRGs 907, 908, and 909 as a whole, we examined the average costs and length of stay for cases in MS-DRGs 907, 908, and 909. Our findings are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.114

As discussed in the proposed rule, we reviewed the data and noted for the subset of cases reporting procedure codes describing the removal of an infusion device from the peritoneal cavity with a principal diagnosis in MDC 21, the average costs are lower and the average lengths of stay are shorter than for cases in MS-DRGs 907, 908, and 909. However, we stated we believe that when an ICD-10-PCS procedure code describing the removal of an infusion device from the peritoneal cavity is reported with a principal diagnosis in MDC 21 (typically infection and inflammatory reaction due to peritoneal dialysis catheter), the procedure is related to the principal diagnosis. Because a procedure code describing the removal of an infusion device from the peritoneal cavity would be expected to be related to a principal diagnosis describing an infected catheter used for peritoneal dialysis causing inflammation in the surrounding tissue, we stated it is clinically appropriate for the procedures to group to the same MS-DRGs as the principal diagnoses. Therefore, we proposed to add the three procedure codes listed previously to MDC 21. We stated that under this proposal, cases reporting a procedure code describing the removal of an infusion device from the peritoneal cavity with a principal diagnosis of an infection and inflammatory reaction due to peritoneal dialysis catheter, initial encounter (diagnosis code T85.71XA) in MDC 21 would group to MS-DRGs 907, 908, and 909.

Comment: Commenters supported the proposal to add procedure codes describing the removal of an infusion device from the peritoneal cavity to MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs).

Response: We appreciate the commenters' support.

As discussed previously, in ICD-10 MS-DRGs Definitions Manual Version 42.1, ICD-10-PCS codes 0WPG03Z and 0WPG43Z are already assigned to MDC 21 MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively). Therefore, after consideration of the public comments we received, for the reasons discussed, we are finalizing our proposal with modification. Specifically, we are finalizing our proposal to add ICD-10-PCS code 0WPG33Z to MDC 21 for FY 2026. Under this finalization, cases reporting procedure code 0WPG33Z (Removal of infusion device from peritoneal cavity, percutaneous approach) with a principal diagnosis of an infection and inflammatory reaction due to peritoneal dialysis catheter, initial encounter (diagnosis code T85.71XA) in MDC 21 would group to MS-DRGs 907, 908, and 909.

In addition to the internal review of procedures producing assignment to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, as discussed in the proposed rule, we also consider requests that we receive to examine cases found to group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989 to determine if it would be appropriate to add procedure codes to one of the surgical MS-DRGs for the MDC into which the principal diagnosis falls or to move the principal diagnosis to the surgical MS-DRGs to which the procedure codes are assigned. We stated we did not receive any requests suggesting reassignment.

We also review the list of ICD-10-PCS procedures that, when in combination with their principal diagnosis code, result in assignment to MS DRGs 981 through 983, or 987 through 989, to ascertain whether any of those procedures should be reassigned from one of those two groups of MS-DRGs to the other group of MS-DRGs

based on average costs and the average length of stay. We look at the data for trends such as shifts in treatment practice or reporting practice that would make the resulting MS-DRG assignment illogical. If we find these shifts, we will propose to move cases to keep the MS-DRGs clinically similar or to propose MS-DRG assignments for the cases in a similar manner. Generally, we propose to move only those procedures for which we have an adequate number of discharges to analyze the data.

Additionally, we also consider requests that we receive to examine cases found to group to MS-DRGs 981 through 983 or MS-DRGs 987 through 989 to determine if it would be appropriate for the cases to be reassigned from one of the MS-DRG groups to the other. We stated we did not receive any requests suggesting reassignment. Further, based on the results of our review of the claims data from the September 2024 update of the FY 2024 MedPAR file we stated we did not identify any cases for reassignment. Therefore, for FY 2026 we did not propose to move any cases reporting procedure codes from MS-DRGs 981 through 983 to MS-DRGs 987 through 989 or vice versa.

Comment: Commenters expressed support for CMS' proposal to not move any cases reporting procedure codes from MS-DRGs 981 through 983 to MS- DRGs 987 through 989 or vice versa.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing, without modification, our proposal to not move any cases reporting procedure codes from MS-DRGs 981 through 983 to MS-DRGs 987 through 989 or vice versa. 7. Operating Room (O.R.) and Non-O.R. Procedures a. Background

Under the IPPS MS-DRGs (and former CMS MS-DRGs), we have a list of procedure codes that are considered operating room (O.R.) procedures. Historically, we developed this list using physician panels that classified each procedure code based on the procedure and its effect on consumption of hospital resources. For example, generally the presence of a surgical procedure which required the use of the operating room would be expected to have a significant effect on the type of hospital resources (for example, operating room, recovery room, and anesthesia) used by a patient, and therefore, these patients were considered surgical. Because the claims data generally available do not precisely indicate whether a patient was taken to the operating room, surgical patients were identified based on the procedures that were performed.

Generally, if the procedure was not expected to require the use of the operating room, the patient would be considered medical (non-O.R.). Currently, each ICD-10-PCS procedure code has designations that determine whether and in what way the presence of that procedure on a claim impacts the MS-DRG assignment. First, each ICD-10-PCS procedure code is either designated as an O.R. procedure for purposes of MS-DRG assignment (“O.R. procedures”) or is not designated as an O.R. procedure for purposes of MS-DRG assignment (“non-O.R. procedures”). Second, for each procedure that is designated as an O.R. procedure, that O.R. procedure is further classified as either extensive or non- extensive. Third, for each procedure that is designated as a non-O.R. procedure, that non-O.R. procedure is further classified as either affecting the MS-DRG assignment or not affecting the MS-DRG assignment. We refer to these designations that do affect MS-DRG assignment as “non O.R. affecting the MS-DRG.” For new procedure codes that have been finalized through the ICD-10 Coordination and Maintenance Committee meeting process and are proposed to be classified as O.R. procedures or non-O.R. procedures affecting the MS-DRG, we recommend the MS-DRG assignment which is then made available in association with the proposed rule (Table 6B.--New Procedure Codes) and subject to public comment. These proposed assignments are generally based on the assignment of predecessor codes or the assignment of similar codes. For example, we generally examine the MS-DRG assignment for similar procedures, such as the other approaches for that procedure, to determine the most appropriate MS-DRG assignment for procedures proposed to be newly designated as O.R. procedures. As discussed in section II.C.13 of the preamble of this FY 2026 IPPS/LTCH PPS final rule, we are making Table 6B.--New Procedure Codes--FY 2026 available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps.html. We also refer readers to the ICD-10 MS-DRG Version 42.1 Definitions Manual at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software.html for detailed information regarding the designation of procedures as O.R. or non-O.R. (affecting the M-DRG) in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index.

In the FY 2020 IPPS/LTCH PPS proposed rule, we stated that, given the long period of time that has elapsed since the original O.R. (extensive and non-extensive) and non-O.R. designations were established, the incremental changes that have occurred to these O.R. and non-O.R. procedure code lists, and changes in the way inpatient care is delivered, we plan to conduct a comprehensive, systematic review of the ICD-10-PCS procedure codes. This will be a multiyear project during which we will also review the process for determining when a procedure is considered an operating room procedure. For example, we may restructure the current O.R. and non-O.R. designations for procedures by leveraging the detail that is now available in the ICD-10 claims data. We refer readers to the discussion regarding the designation of procedure codes in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38066) where we stated that the determination of when a procedure code should be designated as an O.R. procedure has become a much more complex task. This is, in part, due to the number of various approaches available in the ICD-10-PCS classification, as well as changes in medical practice. While we have typically evaluated procedures on the basis of whether or not they would be performed in an operating room, we believe that there may be other factors to consider with regard to resource utilization, particularly with the implementation of ICD-10.

We discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19230) that, as a result of this planned review and potential restructuring, procedures that are currently designated as O.R. procedures may no longer warrant that designation, and conversely, procedures that are currently designated as non-O.R. procedures may warrant an O.R. designation. We intend to consider the resources used and how a procedure should affect the MS-DRG assignment. We may also consider the effect of certain surgical approaches to evaluate whether to subdivide a subset of MS-DRGs based on a specific surgical approach. We stated we plan to utilize our available MedPAR claims data as a basis for this review and the input of our clinical advisors. As part of this comprehensive review of the procedure codes, we also intend to evaluate the MS-DRG assignment of the procedures and the current surgical hierarchy

because both of these factor into the process of refining the ICD-10 MS-DRGs to better recognize complexity of service and resource utilization.

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58540 through 58541), we provided a summary of the comments we had received in response to our request for feedback on what factors or criteria to consider in determining whether a procedure is designated as an O.R. procedure in the ICD-10-PCS classification system for future consideration. We also stated that in consideration of the PHE, we believed it may be appropriate to allow additional time for the claims data to stabilize prior to selecting the timeframe to analyze for this review.

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18059 through 18060), we stated we continue to believe additional time is necessary as we continue to develop our process and methodology. As discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58749), we have signaled in prior rulemaking that the designation of an O.R. procedure encompasses more than the physical location of the hospital room in which the procedure may be performed; in other words, the performance of a procedure in an operating room is not the sole determining factor we will consider as we examine the designation of a procedure in the ICD-10-PCS classification system. We stated we are exploring alternatives on how we may restructure the current O.R. and non-O.R. designations for procedures by leveraging the detail that is available in the ICD-10 claims data. We are considering the feedback received on what factors and/or criteria to consider in determining whether a procedure is designated as an O.R. procedure in the ICD-10- PCS classification system as we continue to develop our process and methodology and will provide more detail on this analysis and the methodology for conducting this comprehensive review in future rulemaking. We encourage the public to continue to submit feedback and comments on any other factors in consideration of our refinement efforts to recognize and differentiate consumption of resources under the ICD-10 MS-DRGs.

Comment: Commenters supported CMS' plan to continue to conduct the comprehensive, systematic review of the ICD-10-PCS codes and to evaluate their current O.R. and non-O.R. designations. These commenters expressed that they were supportive of CMS' decision to continue to develop our process and methodology. A commenter stated they agreed that the revolution in medical procedures in recent years may render the performance of a procedure in an O.R. a less critical distinction in driving payment policy and stated that because of technological advances, sophisticated, resource-intensive procedures are no longer confined to the O.R. setting and noted that in their observation, bi- plane radiology interventional suites and cardiac catheterization labs used for procedures such as mechanical thrombectomy or endovascular coiling for aneurysms can utilize more advanced equipment and supplies than a basic operating room with minimal installed equipment. This commenter recommended that CMS provide detailed impact files prior to the adoption of changes to the designation of procedure codes in the ICD-10-PCS classification and stated that they look forward to commenting on CMS' data analysis and methodology in the future.

As part of the broader and continuing conversation about the designations of procedures in the ICD-10-PCS classification system, a commenter recommended that CMS work closely with physician specialty societies and industry stakeholders to identify the most important drivers of complexity and resource use in the hospital setting. Another commenter specifically recommended that CMS include nurse representatives when reviewing methodologies for determining the designation of procedure codes in the ICD-10-PCS classification system and noted that nurses are an integral part of the healthcare team, work closely with physicians in the operating room and have firsthand knowledge and experience to know what hospital resources are needed for procedures. This commenter further stated that omitting nurses only serves to discount their perspectives and could result in decision making that does not fully capture the hospital resources needed.

Response: We thank the commenters for their support. We also thank commenters for sharing their views and their willingness to provide feedback and recommendations as to what factors to consider in evaluating O.R. versus non-O.R. designations. We agree with commenters and believe that there may be other factors to consider with regard to resource utilization, particularly with the implementation of ICD-10. While CMS has already convened an internal team comprised of clinicians, consultants, coding specialists and other policy analysts, as well as provided the opportunity for interested parties to provide feedback as to what factors to consider in evaluating O.R. versus non- O.R. designations, we look forward to further input and feedback from interested parties, including nurses. As discussed in the proposed rule, we are considering the feedback received to date on what factors and/or criteria to consider in determining whether a procedure is designated as an O.R. procedure in the ICD-10-PCS classification system as we continue to develop our process and methodology and will provide more detail on this analysis and the methodology for conducting this comprehensive review in future rulemaking. As part of this comprehensive review of the procedure codes, we are also considering renaming the designations that determine whether and in what way the presence of that procedure on a claim impacts the MS-DRG assignment (that is, “O.R. procedures”, “non-O.R. procedures”, or “non O.R. affecting the MS-DRG”) for consistency. As discussed in prior rulemaking and earlier in this section of the preamble of this final rule, we have signaled that the performance of a procedure in an operating room is not the sole determining factor we will consider as we examine the designation of a procedure in the ICD-10-PCS classification system. We encourage the public to continue to submit comments and feedback on any other factors to consider in our refinement efforts to recognize and differentiate consumption of resources for procedures within the ICD-10 MS-DRGs under the IPPS.

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule, we received requests regarding changing the designation of specific ICD- 10-PCS procedure codes from non-O.R. to O.R. procedures. In this section of the preamble of this FY 2026 IPPS/LTCH PPS final rule, as we did in the proposed rule, we summarize and respond to those requests. In this section of the preamble of this final rule, we also discuss the proposal we made based on our internal review and analysis and the process that was utilized for evaluating each procedure code. For each procedure, we considered--

Whether the procedure would typically require the resources of an operating room;

Whether it is an extensive or a non-extensive procedure; and

To which MS-DRGs the procedure should be assigned.

We note that many MS-DRGs require the presence of any O.R. procedure. As a result, cases with a principal diagnosis associated with a particular MS-DRG would, by default, be grouped to that MS-DRG. Therefore, we do not list these MS-DRGs in our discussion in this section of the preamble of this FY

2026 IPPS/LTCH PPS final rule. Instead, we only discuss MS-DRGs that require explicitly adding the relevant procedure codes to the GROUPER logic in order for those procedure codes to affect the MS-DRG assignment as intended.

For procedures that would not typically require the resources of an operating room, we determined if the procedure should affect the MS-DRG assignment. In cases where we proposed to change the designation of procedure codes from non-O.R. procedures to O.R. procedures, we also proposed one or more MS-DRGs with which these procedures are clinically aligned and to which the procedure code would be assigned.

In addition, cases that contain O.R. procedures will map to MS-DRGs 981, 982, or 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS- DRGs 987, 988, or 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) when they do not contain a principal diagnosis that corresponds to one of the MDCs to which that procedure is assigned. These procedures need not be assigned to MS-DRGs 981 through 989 in order for this to occur. Therefore, we did not specifically address that aspect in summarizing the request and our response to that request or the proposal we made based on our internal review and analysis in the proposed rule and in this section of the preamble of this FY 2026 IPPS/LTCH PPS final rule. b. Non-O.R. Procedures to O.R. Procedures (1) Open Drainage of the Mandible

In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44895 through 44896), we discussed a request we received to change the designation of procedure codes 0N9R0ZZ (Drainage of maxilla, open approach), 0N9T0ZZ (Drainage of right mandible, open approach), and 0N9V0ZZ (Drainage of left mandible, open approach), from non-O.R. to O.R. procedures. In the FY 2022 final rule, we stated that we disagreed that the procedures describing the open drainage of the maxilla or mandible typically require the resources of an operating room. We stated that if admission is required for the treatment of a jaw infection, the admission is quite likely due to the need for IV antibiotics as opposed to the need for operating room resources in an inpatient setting. After consideration of the public comments we received, we finalized our proposal to maintain the non-O.R. designation of ICD-10-PCS procedure codes 0N9R0ZZ, 0N9T0ZZ, and 0N9V0ZZ, without modification, for FY 2022.

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18060 through 18061), we again received a request to change the designation of ICD-10-PCS codes 0N9T0ZZ (Drainage of right mandible, open approach), and 0N9V0ZZ (Drainage of left mandible, open approach), from non-O.R. to O.R. The requestor identified procedure code 0W950ZZ (Drainage of lower jaw, open approach) that is currently designated as an O.R. procedure and stated that the body part value of mandible is more specific than the body part value of lower jaw. The requestor also stated that in the ICD-10-PCS classification, other procedure codes that describe drainage procedures performed on body parts deeper than subcutaneous tissue, such as muscles, tendons, and bone, are designated as O.R. procedures. Therefore, the requestor stated that procedure codes 0N9T0ZZ and 0N9V0ZZ should also be recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor did not provide a specific list of the procedure codes that describe drainage procedures performed on body parts deeper than subcutaneous tissue, such as muscles, tendons, and bone, that are currently designated as O.R. procedures for CMS to review.

In the ICD-10 MS-DRGs Definitions Manual Version 42.1, procedure codes 0N9T0ZZ and 0N9V0ZZ are currently designated as non-O.R. procedures for purposes of MS-DRG assignment. We reviewed this issue and in the proposed rule, we stated we continue to disagree that the procedures describing the open drainage of the mandible are typically performed in the operating room under general anesthesia. As discussed in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44896), these procedures can be done in an oral surgeon's office, or an outpatient setting and are rarely performed in the inpatient setting. Therefore, we proposed to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0N9T0ZZ and 0N9V0ZZ.

Comment: A commenter opposed CMS' proposal to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0N9T0ZZ (Drainage of right mandible, open approach), and 0N9V0ZZ (Drainage of left mandible, open approach) and stated when performed in the inpatient setting, these procedures often involve complex infectious disease cases requiring significant resources. This commenter stated that their analysis and clinical experience suggest that these procedures, when performed on hospitalized patients, are substantially different and more complex when compared to routine outpatient drainage procedures and more closely align with other O.R.-designated procedures in terms of resource utilization. The commenter further stated that the infectious nature of these cases specifically requires additional resources beyond the procedure itself, including extended antimicrobial therapy, infectious diseases consultation and potential management of sepsis or other systemic complications.

Response: We thank the commenter for their feedback.

We reviewed the commenter's concerns and continue to support maintaining the current non-O.R. designation of the procedure codes describing open drainage of the mandible and disagree that the procedures describing the open drainage of the mandible typically require the resources of an operating room. We continue to believe if admission is required for the treatment of a jaw infection, the admission is quite likely due to the need for IV antibiotics as opposed to the need for operating room resources in an inpatient setting.

In response to the issues raised by this commenter, we examined claims data from the September 2024 update of the FY 2024 MedPAR file for cases reporting 0N9T0ZZ or 0N9V0ZZ. Our findings are shown in the following table. BILLING CODE 4120-01-P

[GRAPHIC] [TIFF OMITTED] TR04AU25.115

BILLING CODE 4120-01-C

As shown in the table, we found a total of 29 cases reporting procedure codes 0N9T0ZZ or 0N9V0ZZ across the MS-DRGs, demonstrating that procedures that describe open drainage of the mandible are infrequently performed in the inpatient setting. Our data findings also demonstrate, generally, the cases reporting procedures describing the open drainage of the mandible have average costs that are lower than the average costs of all cases in their respective MS-DRGs, while the average lengths of stay are shorter.

Therefore, after consideration of the public comments we received, for the reasons stated, we are finalizing our proposal to maintain the current non-O.R. designation of ICD-10-PCS procedure codes 0N9T0ZZ and 0N9V0ZZ, without modification, for FY 2026.

In our review of this issue, in the proposed rule, we stated we agree with the requestor that in the ICD-10 MS-DRGs Definitions Manual Version 42.1, procedure code 0W950ZZ (Drainage of lower jaw, open approach) is currently designated as an O.R. procedure for purposes of MS-DRG assignment. While we have stated in prior rulemaking that a correlation cannot be made between procedures performed in general anatomic regions and procedures performed in specific body parts because these procedures coded with the general anatomic regions body part represent a broader range of procedures that cannot be coded to a specific body part, we stated we continue to believe if admission is required for the treatment of a jaw infection, the admission is quite likely due to the need for IV antibiotics as opposed to the need for operating room resources in an inpatient setting. Like procedures that describe open drainage of the mandible, procedures to drain the lower jaw can also be done in an oral surgeon's office or an outpatient setting and are rarely performed in the inpatient setting. In the proposed rule we stated we agree that procedures that describe open drainage of the mandible consume resources comparable to the related ICD-10-PCS procedure code that describes the open drainage of the jaw. These procedures do not typically require the resources of an operating room and are not surgical in nature. Therefore, for clinical consistency, we proposed to remove procedure code 0W950ZZ (Drainage of lower jaw, open approach) from the FY 2026 ICD-10 MS-DRGs Version 43 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index as an O.R. procedure. Under this proposal, this procedure

would no longer impact MS-DRG assignment.

Comment: Commenters supported CMS' proposal to remove procedure code 0W950ZZ from the FY 2026 ICD-10 MS-DRGs Version 43 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS- DRG Index as an O.R. procedure.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure code 0W950ZZ (Drainage of lower jaw, open approach) from O.R. procedure to non-O.R. procedure, without modification, effective October 1, 2025. Under this finalization, this procedure code would no longer impact MS- DRG assignment. (2) Introduction of Paclitaxel-Coated Balloon Catheter Technology

In the FY 2025 IPPS/LTCH PPS final rule (89 FR 69094 through 69096), we summarized and responded to comments we received regarding the O.R. designation and MS-DRG assignment of 16 procedure codes that describe introduction of the AGENTTM Paclitaxel-Coated Balloon Catheter technology that is indicated to treat coronary in- stent restenosis (ISR) in patients with coronary artery disease. The following procedure codes describing use of the AGENTTM Paclitaxel-Coated Balloon Catheter technology were finalized following the March 19, 2024, ICD-10 Coordination and Maintenance Committee meeting and made available via the CMS website on June 5, 2024, at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps. We refer the reader to the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials for additional detailed information regarding the request, including a recording of the discussion and the related meeting materials. [GRAPHIC] [TIFF OMITTED] TR04AU25.116

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18061 through 18062), we again received a request to reconsider the designation and MS-DRG assignment of the previously listed 16 procedure codes. Specifically, the requestor (the manufacturer) requested that the procedure codes be designated as O.R. procedures and assigned to the following surgical MS-DRGs:

MS-DRG 250 Percutaneous Cardiovascular Procedures without Intraluminal Device with MCC

MS-DRG 251 Percutaneous Cardiovascular Procedures without Intraluminal Device without MCC

MS-DRG 321 Percutaneous Cardiovascular Procedures with Intraluminal Device with MCC or 4+ Arteries/Intraluminal Devices

MS-DRG 322 Percutaneous Cardiovascular Procedures with Intraluminal Device without MCC

MS-DRG 323 Coronary Intravascular Lithotripsy with Intraluminal Device with MCC

MS-DRG 324 Coronary Intravascular Lithotripsy with Intraluminal Device without MCC

MS-DRG 325 Coronary Intravascular Lithotripsy without Intraluminal Device

According to the requestor, the root operation CMS identified as the most appropriate (that is, Introduction in the Administration section), and the predecessor code selected, (procedure code 3E073GC (Introduction of other therapeutic substance into coronary artery, percutaneous approach)), only involves a therapeutic substance being delivered via infusion or injection. The requestor stated that the procedure to administer the paclitaxel via the drug coated balloon (DCB) catheter is a surgical procedure as described in the instructions for use, with the drug delivery occurring using controlled prolonged balloon inflation during which the patient is monitored for signs of ischemia or arrythmia. The requestor stated that the procedure to deliver the paclitaxel is more appropriate as an O.R. procedure than a non-O.R. procedure. The requestor acknowledged that while the MS-DRG assignment for existing percutaneous coronary intervention (PCI) procedures is driven by vessel preparation or the use of an intraluminal device, it should not preclude the designation of the procedure codes identifying use of an AGENTTM Paclitaxel- Coated Balloon Catheter technology that describes the delivery of the paclitaxel to the coronary vessel(s) as O.R. procedures.

In the FY 2025 IPPS/LTCH PPS final rule (89 FR 69095 through 69096), we stated that under our established process, we reviewed the predecessor code and MS-DRG assignment most closely associated with the new procedure codes. We noted that because the procedure codes describing the use of an AGENTTM Paclitaxel-Coated Balloon Catheter are describing delivery of the paclitaxel to the coronary vessel(s), the predecessor code is 3E073GC, which is designated as a non-O.R. procedure and does not affect MS-DRG assignment. We also stated that, as discussed at the March 19, 2024, ICD-10 Coordination and Maintenance Committee meeting and in the commenters' feedback, a preparatory step (that is, vessel preparation by either angioplasty, atherectomy, or lithotripsy) is required to be performed first, before the AGENTTM Paclitaxel-Coated Balloon Catheter is deployed. We noted that each type of vessel preparation procedure is designated as an O.R. procedure and maps to one of the previously listed surgical MS-DRGs. We also noted that based on the surgical hierarchy, the reporting of one of the vessel preparation steps (that is, angioplasty, atherectomy, or lithotripsy), or placement of a new stent in connection with the use of the AGENTTM Paclitaxel-Coated Balloon Catheter would result in assignment to one of the previously listed surgical MS-DRGs. We noted that use of the AGENTTM Paclitaxel-Coated Balloon Catheter to deliver the paclitaxel to the coronary vessel(s) cannot occur in the absence of a surgical vessel preparation and therefore, it is the vessel preparation procedure that will determine the surgical MS-DRG assignment to one of the previously listed surgical MS-DRGs.

In the proposed rule, we noted that we reviewed the instructions for use submitted by the requestor regarding the procedure to insert the drug-coated balloon catheter. The instructions for use state:

“Note: For optimal DCB results, adequate lesion preparation is essential. This should include predilatation with a non-coated coronary balloon. Intravascular imaging to guide lesion preparation and to assess the adequacy of the final result is strongly recommended.

Caution: Lesion preparation is necessary to prevent delamination of the balloon's drug coating while traversing patient anatomy. The TransPax coating is designed to facilitate drug transfer into the vessel wall upon contact. Do not use the AGENT Drug-Coated Balloon Catheter for lesion preparation.”

We also noted that the FDA-approved indication states, “The AGENTTM Paclitaxel-Coated Balloon Catheter is intended to be used after appropriate vessel preparation in adult patients undergoing percutaneous coronary intervention (PCI) in coronary arteries 2.0 mm to 4.0 mm in diameter and lesions up to 26 mm in length for the purpose of improving myocardial perfusion when treating in-stent restenosis (ISR).” We further noted that, as reflected in the March 19, 2024 ICD- 10 Coordination and Maintenance Committee meeting materials, “The AGENTTM Drug-Coated Balloon (DCB) has been designated by the FDA as an implant for PMA purposes. Per FDA guidance, the drug component is considered a permanent implant because it remains in the body for greater than 30 days.”

As such, we stated in the proposed rule that we continue to disagree with designating the procedure to deliver paclitaxel to a coronary vessel as identified by any one of the previously listed 16 procedure codes as O.R. procedures. As stated earlier in this section, the MS-DRG assignment is dependent on the surgical vessel preparation procedure that would be reported when the AGENTTM Paclitaxel-Coated Balloon Catheter technology is used to deliver the paclitaxel to the coronary vessel(s) and result in assignment to one of the previously listed surgical MS-DRGs. We referred the reader to the ICD-10 MS-DRG Definitions Manual, Version 42.1 available in association with the FY 2026 IPPS/LTCH PPS proposed rule on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps for complete documentation of the GROUPER logic for the previously listed surgical MS-DRGs under MDC 05. For the reasons discussed, we proposed to maintain the designation of the 16 procedure codes describing use of the AGENTTM Paclitaxel-Coated Balloon Catheter technology as non-O.R. for FY 2026.

Comment: Some commenters agreed with the proposal to maintain the designation of the 16 procedure codes describing use of the AGENTTM Paclitaxel-Coated Balloon Catheter technology as non-O.R. for FY 2026.

Response: We thank the commenters for their support.

Comment: A commenter (the manufacturer) urged CMS to change the designation of the procedure codes that describe the AGENTTM Paclitaxel-Coated Balloon Catheter technology from non-O.R. to O.R. for FY 2026. The commenter stated that patients scheduled for a procedure that uses the AGENTTM Paclitaxel-Coated Balloon Catheter technology have a principal diagnosis of ISR, and introduction of the AGENTTM implant is the principal procedure to address the ISR. The commenter stated that the AGENTTM implant represents the therapeutic intent of the intervention, drives associated resource requirements, and is not performed incident to vessel preparation. The commenter stated that other services provided during the same operative session as the AGENTTM implant are for the purpose of vessel dilation or plaque modification in preparation for effective therapeutic drug delivery. According to the commenter, the specific approach and rigor to vessel preparation technique(s) are dictated by the physician's decision to treat the lesion with the AGENTTM implant and are therefore secondary to the AGENTTM implant. The commenter stated the secondary procedures may include balloon angioplasty for vessel dilation, and atherectomy, lithotripsy, and/or cutting balloon for plaque modification. In addition, the commenter stated that intravascular ultrasound (IVUS) and/or optical coherence tomography (OCT) may be used for enhanced vessel visualization.

The commenter provided a table comparing clinical functions associated with percutaneous coronary interventions as follows: [GRAPHIC] [TIFF OMITTED] TR04AU25.117

The commenter also stated that the primary role of the AGENTTM implant is supported by ICD-10-PCS Guidelines which instruct to sequence the procedure performed for definitive treatment most related to the principal diagnosis as principal procedure. The commenter included the FDA labeling language that was referenced in the preamble of the proposed rule (90 FR 18062) and stated that because patients who are admitted for a procedure to deliver the AGENTTM implant have a principal diagnosis of ISR, the AGENTTM implant is the principal procedure from a coding perspective and is the primary procedure that represents the therapeutic intent of the intervention.

The commenter asserted that the AGENTTM DCB therapy is consistent with drug-eluting stent (DES) therapy in terms of diagnostic methods, intra-operative procedure steps, complexity and risk, therefore, consistent with DES and other procedure codes for percutaneous coronary interventions (PCI), the codes for the AGENTTM DCB should be designated as O.R. codes. The commenter stated that the procedure involving the AGENTTM implant is most clinically similar to a DES procedure because both are PCI procedures, performed only by physicians experienced in PCI, involve a surgical implant within the coronary artery, involve the transfer of therapeutic substances to a lesion and are targeted localized therapies as opposed to systemic treatments. The commenter added that the procedural steps to prepare a vessel for the AGENTTM implant is consistent with that required for a DES including obtaining percutaneous arterial access, positioning a guide catheter in the heart, advancing a guide wire across the coronary artery stenosis, preparing the vessel for the AGENTTM implant using specialized catheters and devices as needed (for example, angioplasty balloon, cutting balloon, lithotripsy, atherectomy), and using angiographic imaging to visualize the heart and IVUS or OCT to guide the procedure.

The commenter stated that in addition to the clinical similarities between the AGENTTM DCB and a DES, the procedure codes describing use of the AGENTTM Paclitaxel-Coated Balloon Catheter technology in ICD-10-PCS Table XW0 (Introduction, Anatomical Regions) closely mirror the procedure codes describing use of a DES, in ICD-10-PCS Table 027, Dilation of Heart and Great Vessels because both sets of codes account for treatment of multiple coronary arteries and the use of multiple devices. The commenter asserted that since the procedure codes describing a DES and all other PCI procedure codes are classified as surgical, the AGENTTM Paclitaxel-Coated Balloon Catheter technology should be similarly classified as surgical. The commenter stated that the 16 procedure codes describing use of the AGENTTM Paclitaxel-Coated Balloon Catheter technology should be designated as O.R. procedures regardless of whether there is immediate impact to the MS-DRG assignment.

Other commenters expressed appreciation that CMS reviewed the request to reconsider the MS-DRG assignment of the sixteen procedure codes describing use of the AGENTTM Paclitaxel-Coated Balloon Catheter technology from non-O.R. to O.R. however, the commenters disagreed with the proposal to maintain the DCB placement as a non-O.R. procedure. According to the commenters, because the vessel preparation techniques discussed to allow placement of the AGENTTM Paclitaxel-Coated Balloon Catheter are O.R. services, it would only be consistent for the AGENTTM Paclitaxel-Coated Balloon Catheter service itself to also be designated as an O.R. service. The commenters stated that, from a similar perspective, just as drug-eluting intraluminal device procedures (drug- eluting stents) are considered alongside non-drug-eluting intraluminal devices (stents); the AGENTTM Paclitaxel-Coated Balloon Catheter service should be categorized in the same manner as other dilation of coronary artery procedures (that is, angioplasty).

Response: We appreciate the commenters' feedback. We disagree with the commenter's (the manufacturer) statement that the vessel preparation technique(s) are secondary to delivery of the AGENTTM implant (that is, paclitaxel). While the delivery of paclitaxel via the AGENTTM Paclitaxel-Coated Balloon Catheter is the intended therapeutic intervention to treat ISR, it cannot occur in the absence of the initial vessel preparation procedure (for example, angioplasty for vessel dilation, and atherectomy, lithotripsy, and/or cutting balloon for plaque modification). In response to the commenter's statement that the primary role of the AGENTTM implant is supported by ICD-10-PCS sequencing guidelines for the principal procedure, we note that the ICD-10-PCS Guidelines regarding sequencing of the principal procedure have no direct correlation on MS-DRG assignment or whether a procedure code is designated as O.R. or non-O.R. We also note that the sequencing of the procedure on the claim does not have an effect on MS-DRG assignment. Rather, the MS-DRG assignment is based on the O.R. or non-O.R. designation of the procedure code.

While we agree that there are some procedural similarities between delivery of the AGENTTM implant and the insertion of a DES, we note that a major distinction is that the objective of the AGENTTM Paclitaxel-Coated Balloon Catheter is to deliver a targeted anti-proliferative drug dose, without introducing an extra layer of metal that is intended to remain permanently. We disagree with the commenter that the procedure involving the AGENTTM implant should be designated as an O.R. procedure. Although the FDA

designated the AGENTTM Paclitaxel-Coated Balloon as an implant for Pre-Market Approval (PMA) purposes, (that is, per FDA guidance, the drug component is considered a permanent implant because it remains in the body for greater than 30 days), delivery of a drug (or therapeutic agent) is not equivalent to the insertion of an intraluminal device (that is, stent) under the ICD-10-PCS classification. Notably, unlike a device, a drug cannot become dislodged from its location nor can it be removed.

Designating a procedure code that is identified as one component of a multi-component procedure, service, or therapy as O.R. when that component would not be performed independently and is not FDA approved to be performed independently in the absence of another component (that is, two components are necessary for reporting to accurately reflect the entire procedure) would not be appropriate and is also not necessary when the other component has an existing O.R. designation. Specifically, it would not be appropriate to only report a procedure code describing the introduction of the AGENTTM Paclitaxel- Coated Balloon Catheter technology and arrive at one of the requested MS-DRG assignments in the absence of a procedure code describing an angioplasty, lithotripsy, or atherectomy procedure being reported. To encourage proper coding and reporting, as well as to ensure appropriate MS-DRG assignment, both the AGENTTM Paclitaxel-Coated Balloon Catheter technology and one of the procedure codes describing an angioplasty, lithotripsy, or atherectomy must be reported. We also note that under ICD-10-PCS, PCI procedures such as angioplasty performed for the treatment of blocked arteries with one or more intraluminal devices (that is, stents) that remain in the patient are coded to “Dilation with intraluminal device”. The AGENTTM Paclitaxel-Coated Balloon Catheter technology does not involve a stent; rather, the drug (paclitaxel) is deployed and the balloon catheter is removed. The procedure codes describe the administration or transfer of the drug via the delivery mechanism of the balloon catheter. The intended outcomes or benefits of altering the designation of the procedure codes for the AGENTTM Paclitaxel-Coated Balloon Catheter technology from non-O.R. to O.R. remain unclear, as the MS-DRG assignment is determined by the vessel preparation procedure, which is classified as an O.R. procedure. As discussed in section II.C.7 of the preamble of the proposed rule (90 FR 18059) and this final rule, each ICD-10-PCS procedure code has a designation that determines whether and in what way the presence of that procedure on a claim impacts the MS- DRG assignment.

After consideration of the public comments received and for the reasons previously described, we are finalizing our proposal to maintain the designation of the 16 procedure codes describing use of the AGENTTM Paclitaxel-Coated Balloon Catheter technology as non-O.R. for FY 2026. (3) Endoscopic Drainage of the Ureter With Drainage Device

As discussed in the proposed rule (90 FR 18062 through 18063), during our internal review, we noted that procedure codes that describe drainage of the ureter with a drainage device, via a natural or artificial opening endoscopic approach, are not recognized as O.R. procedures for purposes of MS-DRG assignment. We identified the following three related codes: [GRAPHIC] [TIFF OMITTED] TR04AU25.118

Upon further review and consideration, we stated we believe that procedure codes 0T9680Z, 0T9780Z, and 0T9880Z that describe the drainage of the ureter with a drainage device via a natural or artificial opening endoscopic approach warrant designation as O.R. procedures. These procedures involve the use of a cystoscope and include the insertion of a small tube (called a ureteral stent or drainage tube) into one or both of the ureters (the tubes that carry urine from the kidneys to the bladder) to drain urine from a blocked or partially blocked ureter and must be performed by a urologist who specializes in diagnosing and treating conditions of the urinary tract, genitals, and adrenal glands through surgery. These procedures are typically performed in an operating room under anesthesia, can take about 30 minutes or more, including preparation time, and require that a patient's vital signs be monitored by the health care team for the duration of the procedure.

Therefore, we proposed to add procedure codes 0T9680Z, 0T9780Z, and 0T9880Z to the FY 2026 ICD-10 MS-DRG Version 43 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRG 264 (Other Circulatory System O.R. Procedures) in MDC 05 (Diseases and Disorders of the Circulatory System); MS-DRGs 656, 657, and 658 (Kidney and Ureter Procedures for Neoplasm, with MCC, with CC, and without CC/MCC, respectively) and MS- DRGs 659, 660, and 661 (Kidney and Ureter Procedures for Non-Neoplasm, with MCC, with CC, and without CC/MCC, respectively) in MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract); MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma).

Comment: Commenters supported the proposal to change the designation of procedure codes 0T9680Z, 0T9780Z, and 0T9880Z from non- O.R. procedures to O.R. procedures.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to change the designation of procedure codes 0T9680Z, 0T9780Z, and 0T9880Z from non-O.R. procedures to O.R. procedures, without modification, effective October 1, 2025. 8. Changes to the MS-DRG Diagnosis Codes for FY 2026 a. Background of the CC List and the CC Exclusions List

Under the IPPS MS-DRG classification system, we have developed a standard list of diagnoses that are considered CCs. Historically, we

developed this list using physician panels that classified each diagnosis code based on whether the diagnosis, when present as a secondary condition, would be considered a substantial complication or comorbidity. A substantial complication or comorbidity was defined as a condition that, because of its presence with a specific principal diagnosis, would cause an increase in the length-of-stay by at least 1 day in at least 75 percent of the patients. However, depending on the principal diagnosis of the patient, some diagnoses on the basic list of complications and comorbidities may be excluded if they are closely related to the principal diagnosis. In FY 2008, we evaluated each diagnosis code to determine its impact on resource use and to determine the most appropriate CC subclassification (NonCC, CC, or MCC) assignment. We refer readers to sections II.D.2. and 3. of the preamble of the FY 2008 IPPS final rule with comment period for a discussion of the refinement of CCs in relation to the MS DRGs we adopted for FY 2008 (72 FR 47152 through 47171). b. Overview of Comprehensive CC/MCC Analysis

In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described our process for establishing three different levels of CC severity into which we would subdivide the diagnosis codes. The categorization of diagnoses as an MCC, a CC, or a NonCC was accomplished using an iterative approach in which each diagnosis was evaluated to determine the extent to which its presence as a secondary diagnosis resulted in increased hospital resource use. We refer readers to the FY 2008 IPPS/ LTCH PPS final rule (72 FR 47159) for a complete discussion of our approach. Since the comprehensive analysis was completed for FY 2008, we have evaluated diagnosis codes individually when assigning severity levels to new codes and when receiving requests to change the severity level of specific diagnosis codes.

We noted in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235 through 19246) that with the transition to ICD-10-CM and the significant changes that have occurred to diagnosis codes since the FY 2008 review, we believed it was necessary to conduct a comprehensive analysis once again. Based on this analysis, we proposed changes to the severity level designations for 1,492 ICD-10-CM diagnosis codes and invited public comments on those proposals. As summarized in the FY 2020 IPPS/LTCH PPS final rule, many commenters expressed concern with the proposed severity level designation changes overall and recommended that CMS conduct further analysis prior to finalizing any proposals. After careful consideration of the public comments we received, as discussed further in the FY 2020 IPPS/LTCH PPS final rule, we generally did not finalize our proposed changes to the severity designations for the ICD-10-CM diagnosis codes, other than the changes to the severity level designations for the diagnosis codes in category Z16 (Resistance to antimicrobial drugs) from a NonCC to a CC. We stated that postponing adoption of the proposed comprehensive changes in the severity level designations would allow further opportunity to provide additional background to the public on the methodology utilized and clinical rationale applied across diagnostic categories to assist the public in its review. We refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42150 through 42152) for a complete discussion of our response to public comments regarding the proposed severity level designation changes for FY 2020.

As discussed in the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32550); to provide the public with more information on the CC/MCC comprehensive analysis discussed in the FY 2020 IPPS/LTCH PPS proposed and final rules, CMS hosted a listening session on October 8, 2019. The listening session included a review of this methodology utilized to mathematically measure the impact on resource use. We refer readers to https://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/Downloads/10082019ListingSessionTrasncriptandQandAsandAudioFile.zip for the transcript and audio file of the listening session. We also refer readers to https://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html for the supplementary file containing the mathematical data generated using claims from the FY 2018 MedPAR file describing the impact on resource use of specific ICD-10-CM diagnosis codes when reported as a secondary diagnosis that was made available for the listening session.

In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58550 through 58554), we discussed our plan to continue a comprehensive CC/MCC analysis, using a combination of mathematical analysis of claims data as discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235) and the application of nine guiding principles and plan to present the findings and proposals in future rulemaking. The nine guiding principles are as follows:

Represents end of life/near death or has reached an advanced stage associated with systemic physiologic decompensation and debility.

Denotes organ system instability or failure.

Involves a chronic illness with susceptibility to exacerbations or abrupt decline.

Serves as a marker for advanced disease states across multiple different comorbid conditions.

Reflects systemic impact.

Post-operative/post-procedure condition/complication impacting recovery.

Typically requires higher level of care (that is, intensive monitoring, greater number of caregivers, additional testing, intensive care unit care, extended length of stay).

Impedes patient cooperation or management of care or both.

Recent (last 10 years) change in best practice, or in practice guidelines and review of the extent to which these changes have led to concomitant changes in expected resource use.

We refer readers to the FY 2021 IPPS/LTCH PPS final rule for a complete summation of the comments we received for each of the nine guiding principles and our responses to those comments.

In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25175 through 25180), as another interval step in our comprehensive review of the severity designations of ICD-10-CM diagnosis codes, we requested public comments on a potential change to the severity level designations for “unspecified” ICD-10-CM diagnosis codes that we were considering adopting for FY 2022. Specifically, we noted we were considering changing the severity level designation of “unspecified” diagnosis codes to a NonCC where there are other codes available in that code subcategory that further specify the anatomic site. As summarized in the FY 2022 IPPS/LTCH PPS final rule, many commenters expressed concern with the potential severity level designation changes overall and recommended that CMS delay any possible change to the designation of these codes to give hospitals and their physicians time to prepare. After careful consideration of the public comments we received, we maintained the severity level designation of the “unspecified” diagnosis codes currently designated as a CC or MCC where there are other codes available in that code subcategory that further specify the anatomic site for

FY 2022. We refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR 44916 through 44926) for a complete discussion of our response to public comments regarding the potential severity level designation changes. Instead, for FY 2022, we finalized a new Medicare Code Editor (MCE) code edit for “unspecified” codes, effective with discharges on and after April 1, 2022. We stated we believed finalizing this new edit would provide additional time for providers to be educated while not affecting the payment the provider is eligible to receive. We refer the reader to section II.D.14.e. of the preamble of the FY 2022 IPPS/LTCH PPS final rule (86 FR 44940 through 44943) for the complete discussion.

As discussed in the FY 2023 IPPS/LTCH PPS final rule (87 FR 48866), we stated that as the new unspecified edit became effective beginning with discharges on and after April 1, 2022, we believed it was appropriate to not propose to change the designation of any ICD-10-CM diagnosis codes, including the unspecified codes that are subject to the “Unspecified Code” edit, as we continue our comprehensive CC/MCC analysis to allow interested parties the time needed to become acclimated to the new edit.

In the FY 2023 IPPS/LTCH proposed rule (87 FR 28177 through 28181), we also requested public comments on how the reporting of diagnosis codes in categories Z55-Z65 might improve our ability to recognize severity of illness, complexity of illness, and/or utilization of resources under the MS-DRGs. We stated we were also interested in receiving feedback on how we might otherwise foster the documentation and reporting of the diagnosis codes describing social and economic circumstances to more accurately reflect each health care encounter and improve the reliability and validity of the coded data.

In the FY 2024 IPPS/LTCH PPS final rule (88 FR 58755 through 58759), based on our analysis of the impact on resource use for the ICD-10-CM Z codes that describe homelessness and after consideration of public comments, we finalized changes to the severity levels for diagnosis codes Z59.00 (Homelessness, unspecified), Z59.01 (Sheltered homelessness), and Z59.02 (Unsheltered homelessness), from NonCC to CC.

In the FY 2025 proposed rule (89 FR 35995), we noted that since the FY 2021 IPPS/LTCH PPS final rule we have continued to solicit feedback regarding the nine guiding principles, as well as other possible ways we can incorporate meaningful indicators of clinical severity. We stated we had encouraged the public to provide a detailed explanation of how applying a suggested concept or principle would ensure that the severity designation appropriately reflects resource use for any diagnosis code when providing feedback or comments. We also noted in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26748 through 26750) we illustrated how the nine guiding principles might be applied in evaluating changes to the severity designations of diagnosis codes in our discussion of our proposed changes to the severity level designation for certain diagnosis codes that describe homelessness. After consideration of the ongoing feedback and comments we had received, we proposed to finalize the nine guiding principles. After consideration of the public comments received, and for the reasons discussed, we finalized the nine guiding principles as listed previously in the FY 2025 IPPS/LTCH PPS final rule (89 FR 69076 through 69078). Accordingly, we stated that our evaluations to determine the extent to which the presence of a diagnosis code as a secondary diagnosis results in increased hospital resource use will include a combination of mathematical analysis of claims data as discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235) and the application of the nine guiding principles.

Comment: A commenter stated that they applaud the inclusion of the guiding principles that recognize organ system instability or failure, chronic illness with susceptibility to exacerbations, conditions requiring higher levels of care, and systemic impact. This commenter stated that these principles appropriately capture the resource intensity associated with managing complex infectious diseases. This commenter also urged CMS to expedite the comprehensive CC/MCC analysis, paying particular attention to diagnoses that describe infectious conditions, and recommended that CMS consider additional factors specific to infectious disease management such as antimicrobial resistances, factors related to immunocompromised hosts and the role of antimicrobial stewardship when reviewing these conditions.

Response: We thank the commenter for their support and appreciate their feedback. We continue to welcome feedback regarding the guiding principles, as well as other possible ways we can incorporate meaningful indicators of clinical severity. We will examine these suggestions as we continue the comprehensive CC/MCC analysis and will provide more detail in future rulemaking.

Additionally, in the FY 2025 IPPS/LTCH PPS final rule (89 FR 69079 through 69084), based on our analysis of the impact on resource use for the ICD-10-CM diagnosis codes that describe inadequate housing and housing instability, and after consideration of public comments, we finalized changes to the severity levels for seven diagnosis codes for FY 2025.

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18064), we did not receive any requests to change the severity level designations of specific ICD-10-CM diagnosis codes. We stated at this time, we believe it is appropriate to continue to formulate future next steps in our comprehensive review of the severity designations of ICD- 10-CM diagnosis codes, rather than proposing to change the designation of individual ICD-10-CM diagnosis codes. Therefore, we did not propose any severity designation changes for FY 2026.

Comment: Commenters supported the decision to not propose any severity designation changes for FY 2026. A commenter stated that they appreciate CMS' commitment to refining the MS-DRG system to better reflect hospital resource use.

Response: We appreciate the commenters' support.

Comment: Several commenters stated that they appreciate that CMS finalized changes to the severity level designations for the diagnosis codes in category Z16 (Resistance to antimicrobial drugs) from a NonCC to a CC in the FY 2020 IPPS/LTCH PPS final rule. These commenters stated that they continue to support these designations and encouraged CMS to clarify that all current and future ICD-10-CM diagnosis codes describing antimicrobial resistance will be appropriately designated as CCs.

Other commenters encouraged CMS to examine the ICD-10-CM diagnosis codes that describe longstanding persistent and permanent atrial fibrillation to determine the hospital resource utilization related to addressing these diagnoses and to analyze whether these codes should be considered for severity designation changes. These commenters stated that from a resource perspective, patients with longstanding persistent atrial fibrillation or permanent atrial fibrillation require markedly more intensive management and typically face longer operative times, higher complication rates, prolonged hospital stays, and increased readmission risk.

Response: We appreciate the feedback.

In response to the request that CMS clarify that all future ICD-10- CM diagnosis codes describing antimicrobial resistance will be designated as CCs, as discussed in prior rulemaking and in section II.C.9 of this final rule, consistent with our established process for assigning new diagnosis or new procedure codes to MDCs, MS-DRGs, and the associated attributes (severity level and O.R. status), we examine the MDCs, MS-DRG assignment and severity level designation of the predecessor diagnosis codes to inform our assignments and designations. We review the predecessor code and MS-DRG assignment most closely associated with the new diagnosis or procedure code, and in the absence of claims data, we consider other factors that may be relevant to the MS-DRG assignment, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the condition. As we have previously noted, this process does not automatically result in the new diagnosis or procedure code being assigned to the same MS-DRG or to have the same designation as the predecessor code.

As we continue our comprehensive CC/MCC analysis, we may consider proposing changes for other diagnosis codes in the future based on our analysis of the impact on resource use, per our methodology, as previously described, and consideration of the guiding principles consistent with our annual process and will provide more detail in future rulemaking. We have updated the Impact on Resource Use Files on the CMS website so that the public can review the mathematical data for the impact on resource use generated using claims from the FY 2019 through the FY 2024 MedPAR files. These files are posted on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software.

We encourage individuals with comments about the severity level designations of ICD-10-CM diagnosis codes to submit these comments no later than October 20th of each year, via the Medicare Electronic Application Request Information SystemTM (MEARISTM) at: https://mearis.cms.gov/public/home, so that they can be considered for possible inclusion in the annual proposed rule. When submitting requests to change the severity level designation of an ICD-10-CM diagnosis code when reported as a secondary diagnosis, we encourage the public to review the mathematical data for the impact on resource use generated using claims from the FY 2019 through the FY 2024 MedPAR files as well as to provide a detailed explanation of how applying a suggested guiding principle would ensure that the severity designation appropriately reflects resource use for any diagnosis code.

For new diagnosis codes approved for FY 2026, consistent with our annual process for designating a severity level (MCC, CC, or NonCC) for new diagnosis codes, we first review the predecessor code designation, followed by review and consideration of other factors that may be relevant to the severity level designation, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis or treatment of the condition. We note that this process does not automatically result in the new diagnosis code having the same designation as the predecessor code. We refer the reader to section II.C.9 of the preamble of this FY 2026 IPPS/LTCH PPS final rule for the discussion of the finalized changes to the ICD-10-CM and ICD-10-PCS coding systems for FY 2026. c. Additions and Deletions to the Diagnosis Code Severity Levels for FY 2026

In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18065), we stated that the following tables identify the proposed additions and deletions to the diagnosis code MCC and CC severity levels list for FY 2026 and are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html

Table 6I.1--Proposed Additions to the MCC List--FY 2026;

Table 6I.2--Proposed Deletions to the MCC List--FY 2026;

Table 6J.1--Proposed Additions to the CC List--FY 2026; and

Table 6J.2--Proposed Deletions to the CC List--FY 2026.

We note that there was an inadvertent error in the listing of Table 6I.2 in the preamble of the proposed rule as there were no proposed deletions to the MCC list for FY 2026 and Table 6I.2 was not developed in association with the proposed rule.

Comment: Commenters agreed with the proposed additions and deletions to the MCC and CC lists as shown in tables 6I.1, 6J.1, and 6J.2 associated with the proposed rule.

Response: We appreciate the commenters' support.

The following tables associated with this final rule reflect the finalized severity levels under Version 43 of the ICD-10 MS-DRGs for FY 2026 and are available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps; Table 6I.--Complete MCC List--FY 2026; Table 6I.1--Additions to the MCC List--FY 2026; Table 6J.--Complete CC List--FY 2026; Table 6J.1-- Additions to the CC List--FY 2026; and Table 6J.2--Deletions to the CC List--FY 2026. d. CC Exclusions List for FY 2026

In the September 1, 1987 final notice (52 FR 33143) concerning changes to the DRG classification system, we modified the GROUPER logic so that certain diagnoses included on the standard list of CCs would not be considered valid CCs in combination with a particular principal diagnosis. We created the CC Exclusions List for the following reasons: (1) to preclude coding of CCs for closely related conditions; (2) to preclude duplicative or inconsistent coding from being treated as CCs; and (3) to ensure that cases are appropriately classified between the complicated and uncomplicated DRGs in a pair.

In the May 19, 1987 proposed notice (52 FR 18886) and the September 1, 1987 final notice (52 FR 33154), we explained that the excluded secondary diagnoses were established using the following five principles:

Chronic and acute manifestations of the same condition should not be considered CCs for one another;

Specific and nonspecific (that is, not otherwise specified (NOS)) diagnosis codes for the same condition should not be considered CCs for one another;

Codes for the same condition that cannot coexist, such as partial/total, unilateral/bilateral, obstructed/unobstructed, and benign/malignant, should not be considered CCs for one another;

Codes for the same condition in anatomically proximal sites should not be considered CCs for one another; and

Closely related conditions should not be considered CCs for one another.

The creation of the CC Exclusions List was a major project involving hundreds of codes. We have continued to review the remaining CCs to identify additional exclusions and to remove diagnoses from the master list that have been shown not to meet the definition of a CC. We refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541 through 50544) for detailed information regarding revisions that were made to

the CC and CC Exclusion Lists under the ICD-9-CM MS-DRGs.

The ICD-10 MS-DRGs Version 42.1 CC Exclusion List is included as Appendix C in the ICD-10 MS-DRG Definitions Manual (available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software) and includes three lists identified as Part 1, Part 2 and Part 3. Part 1 is the list of all diagnosis codes that are defined as a CC or MCC when reported as a secondary diagnosis. For all diagnosis codes on the list, a link is provided to a collection of diagnosis codes which, when reported as the principal diagnosis, would cause the CC or MCC diagnosis to be considered as a NonCC. Part 2 is the list of diagnosis codes designated as an MCC only for patients discharged alive; otherwise, they are assigned as a NonCC. Part 3 is the list of diagnosis codes that are designated as a CC or MCC and included in the definition of the logic for the listed MS-DRGs. When reported as a secondary diagnosis and grouped to one of the listed MS-DRGs, the diagnosis is excluded from acting as a CC/MCC for severity in DRG assignment (that is, suppression logic).

In the FY 2025 IPPS/LTCH PPS final rule (89 FR 69093), we stated that, because commenters had raised concerns regarding the principal diagnoses listed under Part 1 of Appendix C-CC Exclusions List in Principal Diagnosis Collection Lists 1379 and 1380 that exclude diagnosis codes N18.5 (Chronic kidney disease, stage 5) and N18.6 (End stage renal disease) from acting as a CC or MCC under the CC exclusion logic in accordance with the list of five principles established in 1987, we intended to perform a broad review of the conditions in these lists to determine if any modifications are warranted and to ensure they continue to be clinically appropriate. In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18065), we noted that the Principal Diagnosis Collection List numbers may change because of updates that are made to the list annually through rulemaking. Therefore, while under Version 41.1 the principal diagnoses listed in Principal Diagnosis Collection List numbers 1379 and 1380 exclude diagnosis codes N18.5 and N18.6 from acting as a CC or MCC, under Version 42.1, the principal diagnoses listed in Principal Diagnosis Collection List numbers 1330 and 1331 exclude diagnosis codes N18.5 and N18.6 from acting as a CC or MCC. Accordingly, we reviewed the list of principal diagnosis codes listed in Principal Diagnosis Collection List numbers 1330 and 1331 that exclude diagnosis codes N18.5 and N18.6 from acting as a CC or MCC to assess clinical appropriateness.

As discussed in the preamble of the FY 2026 IPPS/LTCH PPS proposed rule, the findings from our review indicated several of the listed conditions, when reported as a principal diagnosis, are not applicable to exclude the designated N18.5 or N18.6 secondary CC/MCC diagnosis code under application of our five established principles finalized in the September 1, 1987 final notice (52 FR 33154) previously discussed. For example, diagnosis codes describing diabetes with other specified complications such as arthropathy, periodontal disease, or a foot ulcer, and diagnosis codes describing endometriosis, are not chronic and acute manifestations of, or closely related conditions to, chronic kidney disease, stage 5 (code N18.5) or end stage renal disease (code N18.6), nor are they describing codes for the same condition that cannot coexist.

As previously described, the Principal Diagnosis Collection List numbers may change because of updates that are made to the list annually through rulemaking. We noted that, under proposed Version 43, the proposed Principal Diagnosis Collection List number to exclude diagnosis codes N18.5 and N18.6 from acting as a CC or MCC is 1335. We therefore proposed to remove the diagnosis codes listed in Table 6P.8a associated with the FY 2026 IPPS/LTCH PPS proposed rule and available via the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps from Principal Diagnosis Collection List number 1335 under proposed Version 43. In the proposed rule (90 FR 18065), we stated that findings from our internal review also indicated that diagnosis code I12.9 (Hypertensive chronic kidney disease with stage 1 through stage 4 chronic kidney disease, or unspecified chronic kidney disease) is currently listed in Principal Diagnosis Collection List number 1331 and excludes diagnosis code N18.6 from acting as an MCC; however, diagnosis code I12.9 is not currently listed in the Principal Diagnosis Collection List number 1330 to exclude diagnosis code N18.5. We stated we believe it is clinically appropriate to add diagnosis code I12.9 to Principal Diagnosis Collection List number 1335 under Version 43 because it would not be expected that a secondary diagnosis of N18.5 would be reported with a principal diagnosis of I12.9. As also discussed in the proposed rule, during our internal review we identified diagnosis code I13.0 (Hypertensive heart and chronic kidney disease with heart failure and stage 1 through stage 4 chronic kidney disease, or unspecified chronic kidney disease) and diagnosis code I13.10 (Hypertensive heart and chronic kidney disease without heart failure, with stage 1 through stage 4 chronic kidney disease, or unspecified chronic kidney disease) that we believe are appropriate to add to Principal Diagnosis Collection List number 1335 to exclude diagnosis codes N18.5 and N18.6 from acting as a CC/MCC when reported because the conditions describe chronic kidney disease, stage 5 and end stage renal disease (ESRD) and it would not be clinically appropriate to have a principal diagnosis describing stage 1 through stage 4 chronic kidney disease reported with chronic kidney disease, stage 5 or ESRD.

In summary, we proposed to add diagnosis code I12.9 to Principal Diagnosis Collection List number 1335 to exclude diagnosis code N18.5 from acting as a CC, proposed to remove the diagnosis codes listed in Table 6P.8a associated with the FY 2026 IPPS/LTCH PPS proposed rule and available via the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps from Principal Diagnosis Collection List number 1335, and proposed to add diagnosis codes I13.0 and I13.10 to Principal Diagnosis Collection List number 1335 to exclude diagnosis codes N18.5 and N18.6 from acting as a CC/ MCC.

Comment: Several commenters agreed with our proposals to add diagnosis code I12.9 to Principal Diagnosis Collection List number 1335 to exclude diagnosis code N18.5 from acting as a CC, remove the diagnosis codes listed in Table 6P.8a associated with the FY 2026 IPPS/ LTCH PPS proposed rule and available via the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps from Principal Diagnosis Collection List number 1335, and to add diagnosis codes I13.0 and I13.10 to Principal Diagnosis Collection List number 1335 to exclude diagnosis codes N18.5 and N18.6 from acting as a CC/MCC. However, a commenter disagreed with the proposed addition of diagnosis codes I13.0 and I13.10 to principal diagnosis collection list number 1335 to exclude diagnosis codes N18.5 and N18.6 from acting as a CC/MCC. According to the commenter, diagnosis codes I13.0 and I13.10 are combination codes and do not differentiate between a patient that is being admitted for congestive heart failure (CHF) or

chronic kidney disease (CKD). The commenter stated that the exclusion of codes N18.5 and N18.6 eliminates the complexity of these patients and the additional resources in management of their renal function when admitted for cardiogenic related conditions.

Response: We appreciate the commenters' support and feedback. In response to the commenter who disagreed with the proposal to exclude diagnosis codes N18.5 and N18.6 from acting as a CC/MCC when diagnosis code I13.0 or I13.10 is assigned as the principal diagnosis, we note that, as discussed in the FY 2026 IPPS/LTCH PPS proposed rule, the conditions described by diagnosis codes N18.5 and N18.6 describe chronic kidney disease, stage 5 and end stage renal disease (ESRD), respectively, and it would not be clinically appropriate to have a principal diagnosis describing stage 1 through stage 4 chronic kidney disease reported with chronic kidney disease, stage 5 or ESRD. We also note that in the ICD-10-CM Tabular List of Diseases, there are instructional notes at diagnosis codes I13.0 and I13.10 that specifically direct the user to “Use additional code to identify the stage of chronic kidney disease (N18.1-N18.4, N18.9)”. The instructional note does not list diagnosis codes N18.5 or N18.6 because they are not clinically applicable, as previously described. There is also another instructional note in the ICD-10-CM Tabular List of Diseases at diagnosis code I13.0 that specifically directs the user to “Use additional code to identify the type of heart failure (I50.-)” because diagnosis code I13.0 describes “with heart failure” (while diagnosis code I13.10 describes “without heart failure”). With respect to the commenter's statement that the combination codes (I13.0 and I13.10) do not differentiate between a patient that is being admitted for CHF or CKD, we note that because these codes are classified as combination codes, they include both a CHF and CKD component. Therefore, the appropriate combination code (I13.0 or I13.10) is assigned on a claim to accurately reflect the conditions documented, and any additional codes would be assigned based on the Tabular instructions.

After consideration of the public comments we received, we are finalizing our proposals to add diagnosis code I12.9 to Principal Diagnosis Collection List number 1335 to exclude diagnosis code N18.5 from acting as a CC, remove the diagnosis codes listed in Table 6P.8a associated with this FY 2026 IPPS/LTCH PPS final rule and available via the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps from Principal Diagnosis Collection List number 1335, and to add diagnosis codes I13.0 and I13.10 to Principal Diagnosis Collection List number 1335 to exclude diagnosis codes N18.5 and N18.6 from acting as a CC/MCC, effective October 1, 2025 for FY 2026.

We intend to continue this type of internal review to ensure all the other Principal Diagnosis Collection lists reflect the appropriate codes in connection with the CC/MCC secondary diagnosis code that is excluded from acting as a CC/MCC. Any proposed changes to the lists will be discussed in future rulemaking. To inform future rulemaking, feedback and other suggestions may be submitted by October 20, 2025, and directed to MEARISTM at: https://mearis.cms.gov/public/home.

As discussed in the proposed rule (90 FR 18066 through 18067), we also performed an internal review of the diagnoses listed in Appendix C--Part 2: Codes That are Major CC Only if Patient Discharged Alive. The diagnoses listed in Part 2 of Appendix C are assigned as an MCC only for patients discharged alive, otherwise the codes are assigned as a NonCC. The diagnoses listed in Part 2 in Version 42.1 are shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.119

In developing Appendix C--Part 2: Codes That are Major CC Only if Patient Discharged Alive (72 FR 47161 through 47168), the claims data were evaluated to determine if there was a difference in resource use between cases in which the patient was discharged alive or died during the hospital stay. For most secondary diagnoses, the charges were similar for the two groups. However, there were a few diagnoses where the difference in charges and clinical considerations supported a different CC designation for patients who died before discharge. For these diagnoses, the patients who were discharged alive required significantly more hospital resources than the patients who died. Therefore, when reported as a secondary diagnosis, each of the diagnoses is designated as an MCC in cases where the patient is discharged alive and as a NonCC in cases where the patient died.

As discussed in the preamble of the FY 2026 IPPS/LTCH PPS proposed rule, we analyzed claims data from the September 2024 update of the FY 2024 MedPAR file for the diagnoses currently listed in Appendix C--Part 2. Our findings are reflected in the following table:

[GRAPHIC] [TIFF OMITTED] TR04AU25.120

As shown in the table, the data reflect that most of the conditions currently listed in Appendix C--Part 2, utilize hospital resources as expected, with the patients who were discharged alive (without discharge status 20) requiring significantly more hospital resources than the patients who expired (with discharge status 20), as demonstrated by the longer lengths of stay and higher average costs of these cases. However, we noted in the proposed rule that the resource utilization for cases reporting R57.1 (Hypovolemic shock) as a secondary diagnosis appear to be comparable whether the patient was discharged alive or the patient expired. As reflected in the table, the claims data from the September 2024 update of the FY 2024 MedPAR file reflect that code R57.1 was reported as a secondary diagnosis in 32,614 cases where the patient was discharged alive. These cases had average costs of $39,051 and an average length of stay of 10.8 days. In the 6,476 cases where R57.1 was reported as a secondary diagnosis and the patient expired, the average costs were slightly lower ($38,697 versus $39,051) and the average length of stay was slightly shorter (8.3 days versus 10.8 days). We reviewed this issue and noted clinically, the recommended treatment for hypovolemic shock is immediate intervention with fluid resuscitation with intravenous (IV) fluids, blood transfusions, and vasoactive drugs. Hypovolemic shock generally has a lower mortality rate and responds to timely treatment. As the claims data no longer reflect that patients reporting hypovolemic shock as secondary diagnosis that are discharged alive require significantly more hospital resources than the patients who expire, we proposed to remove code R57.1 from the list found in Appendix C--Part 2: Codes That are Major CC Only if Patient Discharged Alive. We noted that under this proposal, when reported as a secondary diagnosis, R57.1 (Hypovolemic shock) will be assigned as an MCC when the patient is discharged alive or if the patient expires.

Comment: Commenters expressed support for our proposal to remove code R57.1 from the list found in Appendix C--Part 2: Codes That are Major CC Only if Patient Discharged Alive.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to remove code R57.1 (Hypovolemic shock) from the list found in Appendix C--Part 2: Codes That are Major CC Only if Patient Discharged Alive, without modification, effective October 1, 2025. Under this finalization, when reported as a secondary diagnosis, R57.1 will be assigned as an MCC when the patient is discharged alive or if the patient expires.

Based on our review, we considered if it was appropriate to add other diagnosis codes describing shock to Appendix C--Part 2. Specifically, we considered code T79.4XXA (Traumatic shock, initial encounter). ICD-10-CM diagnosis code T79.4XXA is currently designated as an MCC when reported as secondary diagnoses. Traumatic shock represents a unique pathological condition that begins with multiple, usually blunt, trauma and may conclude with acute respiratory distress syndrome, coagulopathy, sepsis, multiple organ dysfunction syndrome and death.

As discussed in the proposed rule, we analyzed claims data from the September 2024 update of the FY 2024 MedPAR file for cases reporting T79.4XXA as a secondary diagnosis and our findings are reflected in the following table: [GRAPHIC] [TIFF OMITTED] TR04AU25.121

As reflected in the table, the claims data from the September 2024 update of the FY 2024 MedPAR file indicate that T79.4XXA was reported as a secondary diagnosis in 1,187 cases where the patient was discharged alive. These cases had average costs of $79,218 and an average length of stay of 16.1 days. In the 553 cases where T79.4XXA was reported as a secondary diagnosis and the patient expired, the average costs were considerably lower ($48,880 versus $79,218) and the average length of stay was much shorter (6.5 days versus 16.1 days).

As the data reflect that cases reporting traumatic shock, initial encounter, as a secondary diagnosis for patients that are discharged alive require significantly more hospital resources than the patients who expire, we proposed to add code T79.4XXA to the list found in Appendix C--Part 2: Codes That are Major CC Only if Patient Discharged Alive. We noted that under this proposal, when reported as a secondary diagnosis, T79.4XXA (Traumatic shock, initial encounter) would be assigned as an MCC only when the patient is discharged alive.

Comment: Commenters expressed support for our proposal to add code T79.4XXA to the list found in Appendix C--Part 2: Codes That are Major CC Only if Patient Discharged Alive.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to add code T79.4XXA (Traumatic shock, initial encounter) to the list found in Appendix C--Part 2: Codes That are Major CC Only if Patient Discharged Alive, without modification, effective October 1, 2025. Under this finalization, when reported as a secondary diagnosis, T79.4XXA would be assigned as an MCC only when the patient is discharged alive.

In summary, the proposals and related findings discussed in connection with Appendix C and finalized in this section of the preamble of this final rule are reflected in the Version 43 ICD-10 MS- DRG Definitions Manual, which is available in association with this final rule at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software.

In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18067), we proposed additional changes to the ICD-10 MS-DRGs Version 43 CC Exclusion List based on the diagnosis code updates as discussed in section II.C.13. of the preamble of the proposed rule and set forth in Tables 6G.1, 6G.2, 6H.1, and 6H.2 associated with the proposed rule and available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps.

We did not receive any public comments opposing the proposed CC Exclusions List.

The finalized CC Exclusions List as displayed in Tables 6G.1, 6G.2, 6H.1, 6H.2, and 6K, associated with this final rule reflect the additions, deletions, and complete list of CC exclusions under Version 43 of the ICD-10 MS-DRGs. We have developed Table 6G.1.--Secondary Diagnosis Order Additions to the CC Exclusions List--FY 2026; Table 6G.2.--Principal Diagnosis Order Additions to the CC Exclusions List-- FY 2026; Table 6H.1.--Secondary Diagnosis Order Deletions to the CC Exclusions List--FY 2026; and Table 6H.2.--Principal Diagnosis Order Deletions to the CC Exclusions List--FY 2026; and Table 6K. Complete List of CC Exclusions--FY 2026. Tables 6G.1., 6G.2., 6H.1., 6H.2., and 6K associated with this FY 2026 IPPS/LTCH PPS final rule are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

For Table 6G.1, each secondary diagnosis code finalized for addition to the CC Exclusion List is shown with an asterisk and the principal diagnoses that exclude the secondary diagnosis code are provided in the indented column immediately following it. For Table 6G.2, each of the principal diagnosis codes for which there is a CC exclusion is shown with an asterisk and the conditions finalized for addition to the CC Exclusion List that will not count as a CC are provided in an indented column immediately following the affected principal diagnosis. For Table 6H.1, each secondary diagnosis code finalized for deletion from the CC Exclusion List is shown with an asterisk followed by the principal diagnosis codes that exclude it. For Table 6H.2, each of the principal diagnosis codes is shown with an asterisk and the finalized deletions to the CC Exclusions List are provided in an indented column immediately following the affected principal diagnosis. Table 6K contains a list of all of the codes that are defined as either a CC or MCC when assigned as a secondary diagnosis. Each CC or MCC secondary diagnosis code is assigned to a principal diagnosis number that reflects a collection of diagnosis codes which, when reported as the principal diagnosis, will cause the CC or MCC secondary diagnosis to be considered as only a non-CC secondary diagnosis. 9. Changes to the ICD-10-CM and ICD-10-PCS Coding Systems

To identify new, revised, and deleted diagnosis and procedure codes, for FY 2026, we have developed Table 6A.--New Diagnosis Codes, Table 6B.--New Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table 6D.--Invalid Procedure Codes, Table 6E.--Revised Diagnosis Code Titles, and Table 6F.--Revised Procedure Code Titles for this FY 2026 IPPS/LTCH PPS final rule.

These tables are not published in the Addendum to the proposed rule or final rule, but are available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as described in section VI. of the Addendum to this FY 2026 IPPS/LTCH PPS final rule. As discussed in section II.C.11. of the preamble of this FY 2026 IPPS/LTCH PPS final rule, the code titles are adopted as part of the ICD-10 Coordination and Maintenance Committee meeting process. Therefore, although we publish the code titles in the IPPS proposed and final rules, they are not subject to comment in the proposed or final rules.

In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18067 through 18068), we proposed the MDC and MS-DRG assignments for the new diagnosis codes and procedure codes as set forth in Table 6A.--New Diagnosis Codes and Table 6B.--New Procedure Codes. We also stated that the proposed severity level designations for the new diagnosis codes are set forth in Table 6A. and the proposed O.R. status for the new procedure codes are set forth in Table 6B. Consistent with our established process, we examined the MS-DRG assignment and the attributes (severity level and O.R. status) of the predecessor diagnosis or procedure code, as applicable, to inform our proposed assignments and designations.

Specifically, we reviewed the predecessor code and MS-DRG assignment most closely associated with the new diagnosis or procedure code, and in the absence of claims data, we considered other factors that may be relevant to the MS-DRG assignment, including the severity of illness, treatment difficulty, complexity of service and the resources utilized in the diagnosis and/or treatment of the condition. We noted that this process does not automatically result in the new diagnosis or procedure code being proposed for assignment to the same MS-DRG or to have the same designation as the predecessor code.

In this FY 2026 IPPS/LTCH PPS final rule, we present a summation of the comments we received in response to the proposed assignments, our responses to those comments, and our finalized policies.

Comment: Several commenters supported the proposed MDC and MS-DRG assignments for the new diagnosis codes and procedure codes as set forth in Table 6A.--New Diagnosis Codes and Table 6B.--New Procedure Codes. A commenter expressed appreciation for the new diagnosis codes finalized that describe “Fontan physiology” (I27.840, Fontan- associated liver disease [FALD]; I27.841, Fontan-associated lymphatic dysfunction; I27.848, Other Fontan-associated condition; and I27.849, Fontan related circulation, unspecified) and stated they are needed. The commenter also stated they were thankful for the work the Committee and the submitters do to keep the code set current and accurate. Another commenter expressed strong support for the new diagnosis codes finalized related to pyrophosphate metabolism (E83.82, ENPP1 deficiency causing generalized arterial calcification of infancy; E83.822, ENPP1 deficiency causing autosomal recessive hypophosphatemic rickets type 2; E83.823, ABCC6 deficiency causing generalized arterial calcification of infancy; and E83.824, ABCC6 deficiency causing pseudoxanthoma elasticum) and stated providers and medical coders

will now be better equipped to more specifically document and report, which will be very useful for tracking patients diagnosed with these rare conditions and help to improve patient outcomes.

Response: We appreciate the commenters' support and feedback.

Comment: A commenter (the manufacturer) requested that CMS assign procedure code X2H13XB (Insertion of temporary phrenic nerve/diaphragm stimulation electrodes into superior vena cava, percutaneous approach, new technology group 11) that can be reported to describe use of the AeroPace[supreg] System, to MS-DRG 003 (ECMO or Tracheostomy with MV >96 Hours or Principal Diagnosis Except Face, Mouth and Neck with Major O.R. Procedures), MS-DRG 004 (Tracheostomy with MV >96 Hours or Principal Diagnosis Except Face, Mouth and Neck without Major O.R. Procedures), MS-DRG 207 (Respiratory System Diagnosis with Ventilator Support >96 Hours), and MS-DRG 870 (Septicemia or Severe Sepsis with MV >96 Hours). The commenter stated that based on the predecessor code, CMS assigned this new procedure code to MS-DRG 264 (Other Circulatory System O.R. Procedures) under MDC 05 (Diseases and Disorders of the Circulatory System) and to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) as reflected in Table 6B.--New Procedure Codes. The commenter also stated that it understands these are preliminary MS-DRG assignments and do not limit the MS-DRGs to which a case may group.

According to the commenter, because the Food and Drug Administration (FDA) indication for use of the technology is in patients ages 18 years or older on mechanical ventilation 96 hours and who have not weaned, procedure code X2H13XB will be reported on claims that also report procedure code 5A1955Z (Respiratory ventilation, greater than 96 consecutive hours). The commenter stated that the data described in the new technology add-on payment application demonstrate that over 60 percent of beneficiaries who have received greater than 96 hours of mechanical ventilation are assigned to MS-DRGs 003, 004, 207, and 870.

Response: We thank the commenter for their feedback. We note that procedure code X2H13XB may be reported to describe the use of the AeroPace[supreg] System and was finalized following the September 10- 11, 2024 ICD-10 Coordination and Maintenance Committee meeting. The materials for the discussion related to this topic are located on the CMS website at: https://www.cms.gov/medicare/coding-billing/icd-10-codes/icd-10-coordination-maintenance-committee-materials.

Under our established process, we reviewed the predecessor code and MS-DRG assignment most closely associated with the new procedure code. We note that because the procedure code that identifies use of the AeroPace[supreg] System is describing temporary transvenous diaphragm activation via stimulation of the phrenic nerve(s), the predecessor code is 02HV3YZ (Insertion of other device into superior vena cava, percutaneous approach), which is designated as an O.R. procedure and assigned to MS-DRG 264 under MDC 05.

The logic for case assignment to Pre-MDC MS-DRG 003 (ECMO or Tracheostomy with MV >96 Hours or Principal Diagnosis Except Face, Mouth and Neck with Major O.R. Procedures) requires that either a procedure code describing extracorporeal membrane oxygenation (ECMO) or a procedure code describing a tracheostomy procedure with procedure code 5A1955Z is reported with any principal diagnosis that is not assigned to MS-DRGs 011, 012, or 013 (Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy with MCC, with CC, and without CC/MCC, respectively) and with a procedure code that is designated as a major operating room (O.R.) procedure. Accordingly, the appropriate MS-DRG assignment to Pre-MDC MS-DRG 003 or to Pre-MDC MS-DRG 004 would be determined when procedure code X2H13XB is reported on a claim with procedure codes that satisfy the logic for case assignment to the respective Pre-MDC MS-DRG.

We note that when procedure code X2H13XB is reported on a claim with procedure code 5A1955Z and a principal diagnosis from MDC 04 (Diseases and Disorders of the Respiratory System), the MS-DRG assignment will result in MS-DRG 207 (Respiratory System Diagnosis with Ventilator Support >96 Hours). Specifically, the logic for case assignment to MS-DRG 207 requires any principal diagnosis from MDC 04 with procedure code 5A1955Z. When procedure code X2H13XB is reported on a claim with procedure code 5A1955Z and a principal diagnosis describing septicemia, the MS-DRG assignment will result in MS-DRG 870 (Septicemia or Severe Sepsis with MV >96 Hours). In those scenarios, it is the respiratory ventilation procedure code and the principal diagnosis that will determine the MS-DRG assignment. We refer the reader to the ICD-10 MS-DRG Definitions Manual, Version 43 available in association with this final rule on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software for complete documentation of the GROUPER logic.

Comment: Commenters expressed support for the seven new diagnosis codes describing various types of hyperoxaluria and the proposed CC severity level designation for three of the new codes as reflected in Table 6A.--New Diagnosis Codes that was made publicly available in association with the proposed rule. However, the commenters stated that the remaining four new codes were not proposed to be designated as CCs and recommended that CMS reconsider the proposed designations. A commenter stated that each hyperoxaluria type involves the excessive excretion of oxalate in urine that can lead to kidney stones and therefore, all seven codes should be considered for a CC designation.

Response: We appreciate the commenters' feedback. The seven new diagnosis codes describing various types of hyperoxaluria and their proposed severity level designation are shown in the following table:

[GRAPHIC] [TIFF OMITTED] TR04AU25.122

Consistent with our established process, we identified diagnosis code E72.53 (Primary hyperoxaluria) which is designated as a CC, as the predecessor code for the three diagnosis codes describing a specified type of primary hyperoxaluria (E72.530, E72.538, and E72.539). We identified diagnosis code R82.992 (Hyperoxaluria) which is designated as a NonCC, as the predecessor code for the four diagnosis codes proposed to be designated as NonCC (E72.540, E72.541, E72.548, and E72.549). We also reviewed the FY 2024 Impact on Resource Use file available via the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software for the predecessor codes and the C1, C2, and C3 counts reflected in the following table. We refer readers to the FY 2008 IPPS/ LTCH PPS final rule (72 FR 47159) for a complete discussion of our historical approach to mathematically evaluate the extent to which the presence of an ICD-10-CM code as a secondary diagnosis resulted in increased hospital resource use, and a more detailed explanation of the columns in the table. [GRAPHIC] [TIFF OMITTED] TR04AU25.123

The table shows that for diagnosis code E72.53 the C1 finding is 1.19 and the C2 finding is 2.90, and for diagnosis code R82.992, the C1 finding is 1.06 and the C2 finding is 2.10. A higher value in the C1 (or C2 and C3) field suggests more resource usage is associated with the diagnosis and an increased likelihood that it is more like a CC or MCC than a NonCC. Thus, a value close to 2.0 suggests the condition is more like a CC than a NonCC but not as significant in resource usage as an MCC. A value close to 3.0 suggests the condition is expected to consume resources more similar to an MCC than a CC or NonCC. The data suggest that when diagnosis code E72.53 is reported as a secondary diagnosis the resources involved in caring for a patient diagnosed with primary hyperoxaluria are aligned with a CC and may also consume resources more similar to an MCC. The data suggest that when diagnosis code R82.992 is reported as a secondary diagnosis that the resources involved in caring for a patient diagnosed with hyperoxaluria are more aligned with a NonCC.

Comment: Several commenters indicated their support for the initiative to refine ICD-10 coding for immune complex membranoproliferative glomerulonephritis (IC-MPGN), though they also expressed concerns regarding the finalized new diagnosis codes. Specifically, a commenter stated that historically, IC-MPGN and C3 glomerulonephritis (C3G) (code N00.A, acute nephritic syndrome with C3 glomerulonephritis) were two distinct but related conditions, and based on that understanding, the proposed codes make sense. However, the commenter reported that new evidence has emerged suggesting that IC- MPGN and C3G may actually be a spectrum of the same condition and some patients can present with IC-MPGN initially and a repeat kidney biopsy might show C3G or the opposite (that is, some patients can present with C3G initially and a repeat kidney biopsy might show IC-MPGN). According to the commenter, the true distinction between these two diagnoses is currently uncertain. The commenter suggested that new codes be developed to address circumstances where the distinction between IC- MPGN and C3G cannot be determined. Other commenters stated similar concerns and suggested that reconsideration be given to the implementation of these new codes, including postponement, until treatment pathways for these conditions become more distinctly defined.

Response: We appreciate the commenters' feedback. We note that the Centers for Disease Control and Prevention's National Center for Health Statistics (CDC/NCHS) has lead responsibility for updates and maintenance to the ICD-10-CM diagnosis code set and the code proposal for Immune Complex-mediated Membranoproliferative Glomerulonephritis (IC-MPGN) was discussed at the September 10-11, 2024 ICD-10 Coordination and Maintenance Committee meeting. The materials for the discussion relating to this topic are located on the CDC website at: https://www.cdc.gov/nchs/icd/icd-10-maintenance/meetings.html.

The finalized diagnosis codes describing IC-MPGN are:

[GRAPHIC] [TIFF OMITTED] TR04AU25.124

We communicated with the CDC/NCHS staff regarding the feedback and concerns expressed by the commenters with respect to the new codes and they indicated that the public comments received in response to the code proposal were all in support.

Comment: A commenter stated that CMS proposed to assign ICD-10-PCS code D228DZZ (Stereotactic other photon radiosurgery of conduction mechanism) to MS-DRG 317 (Concomitant Left Atrial Appendage Closure and Cardiac Ablation). The commenter indicated that the ICD-10 meeting materials describe the code proposal as enabling the capture of procedures such as cardiac stereotactic body radiotherapy (SBRT). Additionally, the commenter stated the meeting materials reflect that cardiac SBRT, also called cardiac radioablation, is a non-invasive procedure to treat ventricular tachycardia (VT) that allows for the precise delivery of high-dose radiation to target tissue to any desired area within the body, including areas that may be inaccessible in traditional catheter ablation while also minimizing radiation exposure to adjacent anatomic structures. Alternatively, the commenter reported that intracardiac catheter ablation procedures are either percutaneous or surgical procedures, often involving femoral access and transeptal puncture to access the left atrium and ablate electrical irregularities causing atrial fibrillation. According to the commenter, because of the non-invasive nature of the cardiac SBRT procedure, its application to the treatment of VT, and the lack of identifiable current clinical concomitant performance with left atrial appendage closure (LAAC) during the same operative session, they stated their belief that the new procedure code (D228DZZ) is inappropriately proposed for assignment to MS-DRG 317. The commenter requested that CMS reconsider the appropriateness of this proposed assignment as well as the potential need for a different assignment when cardiac SBRT is performed without percutaneous LAAC.

Response: We appreciate the commenter's feedback. The proposal for a new procedure code to describe SBRT was discussed at the September 10, 2024 ICD-10 Coordination and Maintenance Committee meeting. We refer the reader to the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials for additional detailed information regarding the code request, including a recording of the discussion and the related meeting materials.

Procedure code D228DZZ was approved and finalized following the review and consideration of public comments effective with discharges on and after April 1, 2025, as reflected in Table 6B associated with the proposed rule (and available via the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps).

Under our established process, we reviewed the predecessor code. The predecessor code for SBRT is 02583ZZ (Destruction of conduction mechanism, percutaneous approach) which is designated as an O.R. procedure and is assigned to MS-DRGs 273 and 274 (Percutaneous and Other Intracardiac Procedures with MCC and without MCC, respectively) in addition to MS-DRG 317. Because SBRT is not considered an intracardiac catheter ablation procedure we did not propose assignment to MS-DRGs 273 and 274.

We acknowledge that SBRT and LAAC procedures may be performed for separate and distinct cardiac conditions (that is, ventricular tachycardia and atrial fibrillation, respectively) as reflected in the September 10, 2024 ICD-10 Coordination and Maintenance Committee meeting materials, however, recent studies also suggest that SBRT or stereotactic arrhythmia radioablation (STAR) may be indicated as a non- invasive treatment option for atrial fibrillation. Although studies are ongoing, we believe the assignment of SBRT to MS-DRG 317 is appropriate at this time. We note that if there is a lack of concomitant LAAC and SBRT procedures performed, there is no significant impact since, as previously stated, the designation of the procedure code that describes SBRT is designated as non-O.R. Specifically, in response to the commenter's request that CMS consider the potential need for a different assignment when cardiac SBRT is performed without percutaneous LAAC, we note that because the designation of procedure code D228DZZ is non-O.R., the reporting of procedure code D228DZZ only impacts the MS-DRG assignment when reported with a LAAC procedure as listed in the logic for case assignment to MS-DRG 317. Accordingly, when procedure code D228DZZ is reported in the absence of an LAAC procedure, the MS-DRG assignment is dependent on the reported principal diagnosis, any secondary diagnoses defined as a CC or MCC, other procedures or services performed, age, sex, and discharge status.

Comment: A commenter stated that the proposed MS-DRG assignment for new diagnosis code E11.A (Type 2 diabetes mellitus without complications in remission) to MDC 10 (Endocrine, Nutritional and Metabolic Diseases and Disorders) in MS-DRGs 637, 638, and 639 (Diabetes with MCC, with CC, and without CC/MCC, respectively) as listed in Table 6A in association with the FY 2026 IPPS/LTCH PPS proposed rule is not entirely consistent with the MS-DRG assignments of the predecessor code, E11.9 (Type 2 diabetes mellitus without complications). According to the commenter, in addition to MDC 10, diagnosis code E11.9 is also currently mapped to Pre-MDC MS-DRG 008 (Simultaneous Pancreas and Kidney Transplant), Pre-MDC MS-DRG 010 (Pancreas Transplant), and Pre-MDC MS-DRG 019 (Simultaneous Pancreas and Kidney Transplant with Hemodialysis), as are diagnosis codes E08.9 (Diabetes mellitus due to underlying condition without complications), E09.9 (Drug or chemical induced diabetes mellitus without complications), E10.9 (Type 1 diabetes mellitus without complications), and E13.9 (Other specified diabetes mellitus without complications. The commenter stated that each of these five diagnoses describes a specific type of diabetes “without complications”. However, the commenter also indicated that the five diagnosis codes do not appear to be clinically appropriate to be listed in the logic for Pre-MDC MS-DRGs 008, 010, and 019 because these MS-DRGs are defined by transplant procedures that are indicated for the treatment of diabetes “with complications”. According to the commenter, a transplant procedure that is assigned to any one of the previously listed Pre-

MDC MS-DRGs would not be indicated for a patient diagnosed with diabetes that does not have any associated complications of the diabetes. The commenter suggested that CMS review the clinical appropriateness for assignment of these five diagnosis codes and consider removing them from the logic for Pre-MDC MS-DRGs 008, 010, and 019 and only maintaining assignment to MS-DRGs 637, 638, and 639 under MDC 10 for FY 2026.

Response: We thank the commenter for the feedback. The commenter is correct that the predecessor code E11.9 (as reflected in the FY 2026 ICD-10-CM Conversion Table available via the CMS website at: https://www.cms.gov/medicare/coding-billing/icd-10-codes) for new diagnosis code E11.A currently maps to Pre-MDC MS-DRGs 008, 010, and 019, in addition to MDC 10 MS-DRGs 637, 638, and 639. The commenter is also correct that diagnosis codes E08.9, E09.9, E10.9, and E13.9 describe specific types of diabetes “without complications”. We agree with the commenter that these codes are not clinically appropriate to be listed in the logic for case assignment to Pre-MDC MS-DRGs 008, 010, and 019 because as the commenter noted, these MS-DRGs are defined by transplant procedures that are indicated for the treatment of diabetes “with complications”. In light of these findings, we examined claims data from the September 2024 update of the FY 2024 MedPAR file for Pre-MDC MS-DRGs 008, 010, and 019 and for cases reporting any one of the five listed diagnoses. Our analysis yielded zero cases reporting any one of the five diagnoses describing a type of diabetes “without complications”. For clinical appropriateness and because the diagnoses are not indicated for a pancreatic or kidney transplant procedure, we are removing diagnosis codes E08.9, E09.9, E10.9, E11.9, and E13.9 from the logic lists in Pre-MDC MS-DRGs 008, 010, and 019. We are maintaining the assignment of the diagnosis codes to MDC 10 in MS-DRGs 637, 638, and 639 effective October 1, 2025, for FY 2026.

After consideration of the public comments received, we are finalizing the MDC and MS-DRG assignments for the new diagnosis codes and procedure codes as set forth in Table 6A.--New Diagnosis Codes and Table 6B.--New Procedure Codes associated with this final rule. In addition, the finalized severity level designations for the new diagnosis codes are set forth in Table 6A. and the finalized O.R. status for the new procedure codes are set forth in Table 6B associated with this final rule.

In association with this FY 2026 IPPS/LTCH PPS final rule, we are making the following tables available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html:

Table 6A.--New Diagnosis Codes--FY 2026;

Table 6B.--New Procedure Codes--FY 2026;

Table 6C.--Invalid Diagnosis Codes--FY 2026;

Table 6D.--Invalid Procedure Codes--FY 2026;

Table 6E.--Revised Diagnosis Code Titles--FY 2026;

Table 6F.--Revised Procedure Code Titles--FY 2026;

Table 6G.1.--Secondary Diagnosis Order Additions to the CC Exclusions List--FY 2026;

Table 6G.2.--Principal Diagnosis Order Additions to the CC Exclusions List--FY 2026;

Table 6H.1.--Secondary Diagnosis Order Deletions to the CC Exclusions List--FY 2026;

Table 6H.2.--Principal Diagnosis Order Deletions to the CC Exclusions List--FY 2026;

Table 6I.--Complete MCC List--FY 2026;

Table 6I.1.--Additions to the MCC List--FY 2026;

Table 6J.--Complete CC List--FY 2026;

Table 6J.1.--Additions to the CC List--FY 2026;

Table 6J.2.--Deletions to the CC List--FY 2026; and

Table 6K.--Complete List of CC Exclusions--FY 2026. 10. Changes to the Surgical Hierarchies

Some inpatient stays entail multiple surgical procedures, each one of which, occurring by itself, could result in assignment of the case to a different MS-DRG within the MDC to which the principal diagnosis is assigned. Therefore, it is necessary to have a decision rule within the GROUPER by which these cases are assigned to a single MS-DRG. The surgical hierarchy, an ordering of surgical classes from most resource- intensive to least resource-intensive, performs that function. Application of this hierarchy ensures that cases involving multiple surgical procedures are assigned to the MS-DRG associated with the most resource-intensive surgical class.

A surgical class can be composed of one or more MS-DRGs. For example, in MDC 11, the surgical class “kidney transplant” consists of a single MS-DRG (MS-DRG 652) and the class “major bladder procedures” consists of three MS-DRGs (MS-DRGs 653, 654, and 655).

Consequently, in many cases, the surgical hierarchy has an impact on more than one MS-DRG. The methodology for determining the most resource-intensive surgical class involves weighting the average resources for each MS-DRG by frequency to determine the weighted average resources for each surgical class. For example, assume surgical class A includes MS-DRGs 001 and 002 and surgical class B includes MS- DRGs 003, 004, and 005. Assume also that the average costs of MS-DRG 001 are higher than that of MS-DRG 003, but the average costs of MS- DRGs 004 and 005 are higher than the average costs of MS-DRG 002. To determine whether surgical class A should be higher or lower than surgical class B in the surgical hierarchy, we would weigh the average costs of each MS-DRG in the class by frequency (that is, by the number of cases in the MS-DRG) to determine average resource consumption for the surgical class. The surgical classes would then be ordered from the class with the highest average resource utilization to that with the lowest, with the exception of “other O.R. procedures” as discussed in this FY 2026 IPPS/LTCH PPS final rule.

This methodology may occasionally result in assignment of a case involving multiple procedures to the lower-weighted MS-DRG (in the highest, most resource-intensive surgical class) of the available alternatives. However, given that the logic underlying the surgical hierarchy provides that the GROUPER search for the procedure in the most resource-intensive surgical class, in cases involving multiple procedures, this result is sometimes unavoidable.

We note that, notwithstanding the foregoing discussion, there are a few instances when a surgical class with a lower average cost is ordered above a surgical class with a higher average cost. For example, the “other O.R. procedures” surgical class is uniformly ordered last in the surgical hierarchy of each MDC in which it occurs, regardless of the fact that the average costs for the MS-DRG or MS-DRGs in that surgical class may be higher than those for other surgical classes in the MDC. The “other O.R. procedures” class is a group of procedures that are only infrequently related to the diagnoses in the MDC but are still occasionally performed on patients with cases assigned to the MDC with these diagnoses. Therefore, assignment to these surgical classes should only occur if no other surgical class more closely related to the diagnoses in the MDC is appropriate.

A second example occurs when the difference between the average costs for two surgical classes is very small. We have found that small differences generally do not warrant reordering of the hierarchy because, as a result of reassigning cases on the basis of the hierarchy change, the average costs are likely to shift such that the higher- ordered surgical class has lower average costs than the class ordered below it.

In the FY 2025 IPPS/LTCH PPS final rule (89 FR 69100), we stated our intent to consider if the development of evaluation criteria would be useful for future proposed modifications to the surgical hierarchy for MS-DRGs that have meaningful changes to the clinical logic. We are continuing to examine what factors should be taken into account as we consider any future proposals. We welcome feedback and other suggestions to be submitted via MEARISTM at https://mearis.cms.gov/public/home by October 20, 2025.

Based on the changes that we proposed to make for FY 2026, as discussed in section II.C. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule and this final rule, we proposed to modify the existing surgical hierarchy for FY 2026 as illustrated in the following tables. We noted in the proposed rule that because the current methodology involves weighing the average costs of each MS-DRG in the surgical class by frequency (that is, by the number of cases in the MS-DRG) to determine average resource consumption for the surgical class, that the surgical hierarchy of other MS-DRGs in the MDC may need to be adjusted based on the MS-DRG classification changes that are proposed to ensure that the average weighted cost for each base MS-DRG in each MDC are monotonically decreasing. We further noted that the proposed Version 43 surgical hierarchy as illustrated in the following tables may be subject to further modifications based on the finalized changes to the MS-DRG classifications for FY 2026. BILLING CODE 4120-01-P [GRAPHIC] [TIFF OMITTED] TR04AU25.125

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Comment: Several commenters expressed support for the proposed changes to the surgical hierarchy for MDC 05 and MDC 08.

Response: We thank the commenters for their support.

Therefore, after consideration of the public comments we received, and based on the changes that we are finalizing for FY 2026, as discussed in section II.C. of the preamble of this final rule, we are finalizing our proposals to modify the existing surgical hierarchy under MDC 05 and MDC 08, effective with the ICD-10 MS-DRGs Version 43, with modification. As discussed in section II.C.4., we are creating MS- DRG 209, MS-DRG 213, MS-DRG 218, and MS-DRGs 359 and 360. As discussed in section II.C.5., we are not finalizing the creation of proposed new MS-DRGs 403 and 404 for FY 2026.

The finalized surgical hierarchy for MDC 05 and MDC 08 is shown in the following tables. These changes are also reflected in Appendix D MS-DRG Surgical Hierarchy by MDC and MS-DRG of the ICD-10 MS-DRG Definitions Manual, Version 43 available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/ms-drg-classifications-and-software, effective October 1, 2025, for FY 2026.

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For issues pertaining to the surgical hierarchy, as with other MS- DRG related requests, we encourage interested parties to submit comments no later than October 20, 2025, via MEARISTM at https://mearis.cms.gov/public/home, so that they can be considered for possible inclusion in the annual proposed rule. We will consider these public comments for possible proposals in future rulemaking as part of our annual review process. 11. Maintenance of the ICD-10-CM and ICD-10-PCS Coding Systems

In September 1985, the ICD-9-CM Coordination and Maintenance Committee was formed. This is a Federal interdepartmental committee, co-chaired by the Centers for Disease Control and Prevention's (CDC) National Center for Health Statistics (NCHS) and CMS, charged with maintaining and updating the ICD-9-CM system. The final update to ICD- 9-CM codes was made on October 1, 2013. Thereafter, the name of the Committee was changed to the ICD-10 Coordination and Maintenance Committee, effective with the March 19-20, 2014 meeting. The ICD-10 Coordination and Maintenance Committee addresses updates to the ICD-10- CM and ICD-10-PCS coding systems. The Committee is jointly responsible for approving coding changes, and developing errata, addenda, and other modifications to the coding systems to reflect newly developed procedures and technologies and newly identified diseases. The Committee is also responsible for promoting the use of Federal and non- Federal educational programs and other communication techniques with a view toward standardizing coding applications and upgrading the quality of the classification system.

The official list of ICD-9-CM diagnosis and procedure codes by fiscal year can be found on the CMS website at: https://www.cms.gov/medicare/coding-billing/icd-10-codes/icd-9-cm-diagnosis-procedure-codes-abbreviated-and-full-code-titles.

The official list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS website at: http://www.cms.gov/Medicare/Coding/ICD10/index.html.

The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM diagnosis codes included in the Tabular List and Alphabetic Index for Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD- 9-CM procedure codes included in the Tabular List and Alphabetic Index for Procedures.

The Committee encourages participation in the previously mentioned process by health-related organizations. In this regard, the Committee holds public meetings for discussion of educational issues and proposed coding changes. These meetings provide an opportunity for representatives of recognized organizations in the coding field, such as the American Health Information Management Association (AHIMA), the American Hospital Association (AHA), and various physician specialty groups, as well as individual physicians, health information management professionals, and other members of the public, to contribute ideas on coding matters. Members of the public may submit comments on the proposed procedure code topics to CMS at: [email protected] and may submit comments on the proposed diagnosis code topics to the CDC/NCHS at: [email protected]. After considering the opinions expressed during the public meetings and in writing, the Committee formulates recommendations, which then must be approved by the agencies.

The Committee presented proposals for coding changes for implementation in FY 2026 at a public meeting held on September 10-11, 2024 and finalized

the coding changes after consideration of comments received at the meetings and in writing by November 15, 2024.

In lieu of holding its Spring 2025 meeting, the Committee solicited comments on the Spring 2025 ICD-10-PCS procedure code topics. The deadline for submitting comments on these code proposals was April 18, 2025. Any new diagnosis and procedure codes for which there was consensus of public support, and for which complete tabular and indexing changes would be made by June 2025 are included in the October 1, 2025 update to the ICD-10-CM diagnosis and ICD-10-PCS procedure code sets. As discussed in earlier sections of the preamble of this FY 2026 IPPS/LTCH PPS final rule, there are new, revised, and deleted ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes that are captured in Table 6A.--New Diagnosis Codes, Table 6B.--New Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table 6D.--Invalid Procedure Codes, Table 6E.--Revised Diagnosis Code Titles, and Table 6F.--Revised Procedure Code Titles for this FY 2026 IPPS/LTCH PPS final rule, which are available on the CMS website at: https://www.cms.gov/medicare/medicare-fee-for-service-payment/acuteinpatientpps.

The code titles are adopted as part of the ICD-10 Coordination and Maintenance Committee process. Therefore, although we make the code titles available for the IPPS proposed and final rules, they are not subject to comment in the proposed or final rule. Because of the length of these tables, they are not published in the Addendum to the proposed or final rule. Rather, they are available on the CMS website as discussed in section VI. of the Addendum to the proposed rule and this final rule.

Recordings for the virtual meeting discussions of the procedure codes at the Committee's September 10-11, 2024 meeting and the materials for the Spring 2025 ICD-10-PCS procedure code topics can be obtained from the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials. The materials for the topics relating to diagnosis codes discussed at the September 10-11, 2024 meeting can be found at: https://www.cdc.gov/nchs/icd/icd-10-maintenance/meetings.html. These websites also provide detailed information about the Committee, including information on requesting a new code, participating in a Committee meeting, timeline requirements, submitting comments, and meeting dates.

Comment: A commenter stated that in March 2025, CMS decided to not present the Spring 2025 ICD-10-PCS procedure code topics during a public meeting. Instead, CMS posted the meeting materials on the CMS website and solicited public comments with a 30-day comment period. The commenter requested clarification from CMS regarding its plans for future ICD-10-PCS procedure code topics. Specifically, whether CMS intends to resume its previous practice of hosting a public meeting twice annually, in March and September, or if CMS plans to permanently discontinue these meetings. The commenter stated they do not oppose the current approach; however, appreciate any insight into CMS' intention for future code proposals.

Response: CMS will share any updates to our approach for upcoming ICD-10 Coordination and Maintenance Committee meetings through the CMS website and our Subscriber List. To sign up for ICD-10 Coordination and Maintenance Committee meeting and related updates, members of the public may join the ICD-10 Coordination and Maintenance Committee Meetings Subscriber List. Instructions are located in the Downloads section on the following CMS website: https://www.cms.gov/medicare/coding-billing/icd-10-codes/icd-10-coordination-maintenance-committee-meetings.

We encourage commenters to submit questions and comments on coding issues involving diagnosis codes via email to: [email protected].

Questions and comments concerning the procedure codes should be submitted via email to: [email protected].

As discussed in the proposed rule (90 FR 18071), CMS implemented 50 new procedure codes including cardiac stereotactic body radiotherapy (SBRT), transplantation of the larynx, repositioning of long bones using a ring external fixation device with automated strut adjustment, supplementing the right atrium with heterotopic bioprosthetic valve(s), the administration of emapalumab-Izsg anti-IFNy monoclonal antibody, and the administration of tarlatamab-dlle antineoplastic into the ICD- 10-PCS classification effective with discharges on and after April 1, 2025. The procedure codes are as follows: BILLING CODE 4120-01-P

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The 50 procedure codes are also reflected in Table 6B.--New Procedure Codes, in association with the proposed rule and available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for- Service-Payment/AcuteInpatientPPS. As with the other new procedure codes and MS-DRG assignments included in Table 6B. in association with the FY 2026 IPPS/LTCH PPS proposed rule, we solicited public comments on the most appropriate MDC, MS-DRG, and operating room status assignments for these codes for FY 2026, as well as any other options for the GROUPER logic. We discuss the comments we received on these assignments in section II.C.9. of this final rule as well as our finalized assignments, as reflected in Table 6B.--New Procedure Codes in association with this final rule.

In the proposed rule, we also noted that Change Request (CR) 13917, Transmittal 12995, titled “April 2025 Update to the Medicare Severity- Diagnosis Related Group (MS-DRG) Grouper and Medicare Code Editor (MCE) Version 42.1” was issued on December 12, 2024 (available on the CMS website at: https://www.cms.gov/medicare/regulations-guidance/transmittals/2024-transmittals/r12995cp) regarding the release of an updated version of the ICD-10 MS-DRG GROUPER and Medicare Code Editor software, Version 42.1, effective with discharges on and after April 1, 2025, reflecting the new procedure codes. The updated software, along with the updated ICD-10 MS-DRG Version 42.1 Definitions Manual and the Definitions of Medicare Code Edits Version 42.1 manual is available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.

In the September 7, 2001 final rule implementing the IPPS new technology add-on payments (66 FR 46906), we indicated we would attempt to include proposals for procedure codes that

would describe new technology discussed and approved at the Spring meeting as part of the code revisions effective the following October.

Section 503(a) of the Medicare Modernization Act (Pub. L. 108-173) included a requirement for updating diagnosis and procedure codes twice a year instead of a single update on October 1 of each year. This requirement was included as part of the amendments to the Act relating to recognition of new technology under the IPPS. Section 503(a) of Public Law 108-173 amended section 1886(d)(5)(K) of the Act by adding a clause (vii) which states that the Secretary shall provide for the addition of new diagnosis and procedure codes on April 1 of each year, but the addition of such codes shall not require the Secretary to adjust the payment (or diagnosis-related group classification) until the fiscal year that begins after such date. This requirement improves the recognition of new technologies under the IPPS by providing information on these new technologies at an earlier date. Data will be available 6 months earlier than would be possible with updates occurring only once a year on October 1.

In the FY 2005 IPPS final rule, we implemented section 1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law 108-173, by developing a mechanism for approving, in time for the April update, diagnosis and procedure code revisions needed to describe new technologies and medical services for purposes of the new technology add-on payment process. We also established the following process for making these determinations. Topics considered during the Fall ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee meeting were considered for an April 1 update if a strong and convincing case was made by the requestor during the Committee's public meeting. The request needed to identify the reason why a new code was needed in April for purposes of the new technology process. Meeting participants and those reviewing the Committee meeting materials were provided the opportunity to comment on the expedited request. We refer the reader to the FY 2022 IPPS/LTCH PPS final rule (86 FR 44950) for further discussion of the implementation of this prior April 1 update for purposes of the new technology add-on payment process.

However, as discussed in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44950 through 44956), we adopted an April 1 implementation date, in addition to the annual October 1 update, beginning with April 1, 2022. We noted that the intent of this April 1 implementation date is to allow flexibility in the ICD-10 code update process. With this new April 1 update, CMS now uses the same process for consideration of all requests for an April 1 implementation date, including for purposes of the new technology add-on payment process (that is, the prior process for consideration of an April 1 implementation date only if a strong and convincing case was made by the requestor during the meeting no longer applies). We are continuing to use several aspects of our existing established process to implement new codes through the April 1 code update, which includes presenting proposals for April 1 consideration at the September ICD-10 Coordination and Maintenance Committee meeting, requesting public comments, reviewing the public comments, finalizing codes, and announcing the new codes with their assignments consistent with the new GROUPER release information. We note that under our established process, requestors indicate whether they are submitting their code request for consideration for an April 1 implementation date or an October 1 implementation date. The ICD-10 Coordination and Maintenance Committee makes efforts to accommodate the requested implementation date for each request submitted. However, the Committee determines which requests are to be presented for consideration for an April 1 implementation date or an October 1 implementation date. As discussed earlier in this section of the preamble of this FY 2026 IPPS/LTCH PPS final rule, there were code proposals presented for an April 1, 2025 implementation at the September 10-11, 2024 Committee meetings. Following the receipt of public comments, the code proposals were approved and finalized, therefore, there were new codes implemented April 1, 2025.

As discussed in the FY 2026 IPPS/LTCH PPS proposed rule, consistent with the process we outlined for the April 1 implementation date, we announced the new codes in November 2024 and provided the updated code files in December 2024. The NCHS provided the ICD-10-CM Official Guidelines for Coding and Reporting in January 2025. By February 27, 2025, we made available the updated Version 42.1 ICD-10 MS-DRG GROUPER software and related materials on the CMS web page at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.

ICD-9-CM addendum and code title information are published on the CMS website at https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/addendum. ICD-10-CM and ICD-10-PCS addendum and code title information are published on the CMS website at https://www.cms.gov/Medicare/Coding/ICD10. CMS also sends electronic files containing all ICD-10-CM and ICD-10-PCS coding changes to its Medicare contractors for use in updating their systems and providing education to providers. Information on ICD-10-CM diagnosis codes, along with the Official ICD-10-CM Coding Guidelines, can be found on the CDC website at https://www.cdc.gov/nchs/icd/icd-10-cm/files.html. Additionally, information on new, revised, and deleted ICD-10-CM diagnosis and ICD- 10-PCS procedure codes is provided to the AHA for publication in the Coding Clinic for ICD-10. The AHA also distributes coding update information to publishers and software vendors.

In the proposed rule (90 FR 18074), we noted that for FY 2025, there are currently 74,044 diagnosis codes and 78,986 procedure codes. We also noted as displayed in Table 6A.--New Diagnosis Codes and in Table 6B.--New Procedure Codes associated with the FY 2026 IPPS/LTCH PPS proposed rule (and available on the CMS website at https:// www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ AcuteInpatientPPS), there are 487 new diagnosis codes and 14 new procedure codes that had been finalized for FY 2026 at the time of the development of the FY 2026 IPPS/LTCH PPS proposed rule and 50 new procedure codes that were effective with discharges on and after April 1, 2025. The code titles are adopted as part of the ICD-10 Coordination and Maintenance Committee process. Thus, although we publish the code titles in the IPPS proposed and final rules, they are not subject to comment in the proposed or final rules.

As discussed in section II.C.13 of the preamble of this final rule, we are making Table 6A.--New Diagnosis Codes, Table 6B.--New Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table 6D.--Invalid Procedure Codes, Table 6E.--Revised Diagnosis Code Titles and Table 6F.--Revised Procedure Code Titles available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps in association with this final rule. As shown in Table 6B.--New Procedure

Codes, there were procedure codes proposed for the Spring 2025 ICD-10 Coordination and Maintenance Committee Update that were not finalized in time to include in the proposed rule and are identified with an asterisk. We refer the reader to Table 6B.--New Procedure Codes associated with this final rule and available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps for the detailed list of these 142 new procedure codes finalized for FY 2026.

We also note, as reflected in Table 6C.--Invalid Diagnosis Codes and in Table 6D.--Invalid Procedure Codes, there are a total of 28 diagnosis codes and 27 procedure codes that will become invalid effective October 1, 2025. Based on these code updates, effective October 1, 2025, there are a total of 74,719 ICD-10-CM diagnosis codes and 79,115 ICD-10-PCS procedure codes for FY 2026 as shown in the following table. [GRAPHIC] [TIFF OMITTED] TR04AU25.132

As stated previously, the public is provided the opportunity to comment on any requests for new diagnosis or procedure codes discussed during the ICD-10 Coordination and Maintenance Committee meeting. The code titles are adopted as part of the ICD-10 Coordination and Maintenance Committee process. Thus, although we publish the code titles in the IPPS proposed and final rules, they are not subject to comment in the proposed or final rules. 12. Replaced Devices Offered Without Cost or With a Credit a. Background

In the FY 2008 IPPS final rule with comment period (72 FR 47246 through 47251), we discussed the topic of Medicare payment for devices that are replaced without cost or where credit for a replaced device is furnished to the hospital. We implemented a policy to reduce a hospital's IPPS payment for certain MS-DRGs where the implantation of a device that subsequently failed or was recalled determined the base MS- DRG assignment. At that time, we specified that we will reduce a hospital's IPPS payment for those MS-DRGs where the hospital received a credit for a replaced device equal to 50 percent or more of the cost of the device.

In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through 51557), we clarified this policy to state that the policy applies if the hospital received a credit equal to 50 percent or more of the cost of the replacement device and issued instructions to hospitals accordingly. b. Changes for FY 2026

As discussed in section II.C.3a. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule and this final rule, for FY 2026, under MDC 01, we proposed to add procedure code combinations that describe the insertion of multiple or single array generators and the insertion of neurostimulator lead into the brain or cerebral ventricle and the procedure code combinations that describe the insertion of a neurostimulator generator into the skull and the insertion of a neurostimulator lead into the brain to a new “intracranial neurostimulator implant” logic list in MS-DRGs 020, 021, and 022. A subset of the procedures currently assigned to MS-DRGs 023 and 024 were proposed for reassignment to MS-DRGs 020, 021, and 022. We also proposed to revise the title of MS-DRG 020 from “Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage with MCC” to “Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage or Intracranial Neurostimulator Implant with MCC”; revise the title of MS-DRG 021 from “Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage with CC” to “Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage or Intracranial Neurostimulator Implant with CC”; revise the title of MS-DRG 022 from “Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage without CC/ MCC” to “Intracranial Vascular Procedures with Principal Diagnosis Hemorrhage or Intracranial Neurostimulator Implant without CC/MCC”; revise the title of MS-DRG 023 from “Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator” to “Craniotomy with Acute Complex CNS Principal Diagnosis with MCC or Antineoplastic Implant”; and revise the title of MS-DRG 024 from “Craniotomy with Major Device Implant or Acute Complex CNS Principal Diagnosis without MCC” to “Craniotomy with Acute Complex CNS Principal Diagnosis without MCC”.

Additionally, as discussed in section II.C.4. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule and this final rule, for FY 2026, under MDC 05, we proposed new MS-DRG 209 (Complex Aortic Arch Procedures) and new MS-DRG 213 (Endovascular Abdominal Aorta with Iliac Branch Procedures). A subset of the procedures currently assigned to MS-DRGs 216, 217, 218, 219, 220, and 221 were proposed for assignment to proposed new MS-DRG 209 and a subset of the procedures currently assigned to MS-DRGs 268, 269, 270, 271, and 272 were proposed for assignment to proposed new MS-DRG 213.

As stated in the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24409), we generally map new MS-DRGs onto the list when they are formed from procedures previously assigned to MS-DRGs that are already on the list. Currently, MS-DRGs 023, 024, 216, 217, 218, 219, 220, 221, 268, 269, 270, 271, and 272 are on the list of MS-DRGs subject to the policy for payment under the IPPS for replaced devices offered without cost or with a credit as shown in the following table. Therefore, we proposed that if the applicable proposed MS-DRG changes are finalized, we also would add MS-DRGs 020, 021, and 022 and proposed new MS-DRGs 209 and 213 to the list of MS-DRGs subject to the policy for payment under the IPPS for replaced devices offered without cost or with a credit and make conforming changes to the titles of MS-DRGs 023 and 024 in the list of MS-DRGs subject to the policy as reflected in the following table. We also proposed to continue to include the existing MS-DRGs currently subject to the policy.

As discussed in section II.C.3a of the preamble of this FY 2026 IPPS/LTCH PPS final rule, we are not finalizing our proposal to add procedure code combinations that describe the insertion of multiple or single array generators and the insertion of neurostimulator lead into the brain or cerebral ventricle and the procedure code combinations

that describe the insertion of a neurostimulator generator into the skull and the insertion of a neurostimulator lead into the brain to a new “intracranial neurostimulator implant” logic list in MS-DRGs 020, 021, and 022. Consequently, a subset of the procedures currently assigned to MS-DRGs 023 and 024 will not be reassigned to MS-DRGs 020, 021, and 022. Therefore, we are not finalizing our proposal to add MS- DRGs 020, 021, and 022 to the list of MS-DRGs subject to the policy for payment under the IPPS for replaced devices offered without cost or with a credit for FY 2026. We are finalizing our proposal to make conforming changes to the titles of MS-DRGs 023 and 024 in the list of MS-DRGs subject to the policy, with modification. As discussed in section II.C.3a, we are finalizing the change of the description of the logic list in MS-DRG 023 from “Chemotherapy Implant” to “Antineoplastic Implant”. Therefore, for consistency, we are finalizing a change to the title of MS-DRG 023 from “Craniotomy with Major Device Implant or Acute Complex Central Nervous System Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator” to “Craniotomy with Major Device Implant or Acute Complex Central Nervous System Principal Diagnosis with MCC or Antineoplastic Implant or Epilepsy with Neurostimulator” in the list of MS-DRGs subject to the policy. We are not finalizing a change to the title of MS-DRG 024 in the list of MS-DRGs subject to the policy for payment under the IPPS for replaced devices offered without cost or with a credit for FY 2026.

As discussed in section II.C.4 of the preamble of this FY 2026 IPPS/LTCH PPS final rule, we are finalizing our proposals to create new MS-DRGs 209 and 213. We did not receive any public comments opposing our proposal to add proposed new MS-DRGs 209 and 213 to the list of MS- DRGs that will be subject to the replaced devices offered without cost or with a credit policy effective October 1, 2025. Therefore, we are finalizing our proposal to add new MS-DRGs 209 and 213 to the list of MS-DRGs subject to the policy for payment under the IPPS for replaced devices offered without cost or with a credit for FY 2026.

We also note that under the current MS-DRGs version 42.1, MS-DRGs 466, 467, and 468 are on the list of MS-DRGs subject to the policy for payment under the IPPS for replaced devices offered without cost or with a credit as shown in the table that was made available in association with the proposed rule (90 FR 18075 through 18076). As previously discussed in this section of this final rule, we generally map new MS-DRGs onto the list when they are formed from procedures previously assigned to MS-DRGs that are already on the list. As discussed in section II.C.5. of the preamble of the FY 2026 IPPS/LTCH PPS proposed rule and this final rule, for FY 2026, under MDC 08, we proposed to create new MS-DRGs 403 and 404 (Hip or Knee Procedures with Principal Diagnosis of Periprosthetic Joint Infection with MCC and without MCC, respectively). A subset of the procedures currently assigned to MS-DRGs 466, 467, and 468 were proposed for assignment to proposed new MS-DRGs 403 and 404, however, we inadvertently omitted listing MS-DRGs 403 and 404 in the proposed list of MS-DRGs subject to the policy for payment under the IPPS for replaced devices offered without cost or with a credit in the proposed rule. As discussed in section II.C.5. of the preamble of this final rule, we are not finalizing our proposal to create new MS-DRGs 403 and 404 for FY 2026. Therefore, MS-DRGs 403 and 404 are not reflected in the table of MS- DRGs that will be subject to the policy for FY 2026.

We did not receive any public comments opposing our proposal to continue to include the existing MS-DRGs currently subject to the policy. Therefore, for the reasons summarized, we are finalizing the list of MS-DRGs in the following table that will be subject to the replaced devices offered without cost or with a credit policy effective October 1, 2025. BILLING CODE 4120-01-P

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The final list of MS-DRGs subject to the IPPS policy for replaced devices offered without cost or with a credit will be issued to providers in the form of a Change Request (CR). 13. Out of Scope Public Comments Received

We received public comments on MS-DRG related issues that were outside the scope of the proposals included in the FY 2026 IPPS/LTCH PPS proposed rule.

Because we consider these public comments to be outside the scope of the proposed rule, we are not addressing them in this final rule. As stated in section II.C.1.b. of the preamble of this final rule, we encourage individuals with comments about MS-DRG classifications to submit these comments no later than October 20, 2025, via MEARISTM at: https://mearis.cms.gov/public/home, so that they can be considered for possible inclusion in the annual proposed rule. We will consider these public comments for possible proposals in future rulemaking as part of our annual review process.