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Reclass Armageddon Averted…for Now

Publish Date
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Scot Nemchik, CCS, CRC, CLSS
August 6, 2019

For quite some time now CMS has reiterated their plan to perform a comprehensive assessment of current ICD-10-CM complication and comorbidity (CC) and major complication and comorbidity (MCC) designations. This year’s proposed rule, published on April 23, 2019 included the long-awaited outcomes of CMS’s reclass analysis, the results of which are astonishing in terms of their breadth and potential impact to MS-DRG classification, and by extension, facility reimbursement and multiple downstream dependencies, for example, CC/MCC capture baselines.

In an astonishing change of plans, made known in this year’s yet-to-be-published final rule, CMS has indicated that they will not be proceeding with these adjustments as proposed.  CMS stated “…after consideration of the public comments we received, we are generally not finalizing our proposed changes to the severity level designations for the ICD-10-CM diagnosis codes…”.  Given the length to which these changes were described in the proposed rule, their basis in statistical science, and the fact that proposed changes generally become finalized, this is a remarkable turn of events.

The respite though, may be short-lived.  In the final rule CMS also made known their intent to explore other implementation options including a phased-in approach.

Reading between the lines, it’s obvious CMS still believes that comprehensive reclassification is warranted but came to the realization that an October 1, 2019 implementation would have been too much, too soon.  In other words, this isn’t a matter of ‘will they?’, it’s really a matter of ‘when will they?’ and ‘how will they?’.

For preparedness’ sake, let’s take some time to reflect on the original proposed severity level changes along with their real-life consequences.  As previously stated, it’s highly likely that these will be finalized and implemented, just not for FY 2020.

Key Information

For starters, a severity level change has been recommended for 1,492 ICD-10-CM codes, this includes downgrades (instances where a code’s severity level is being reduced) and upgrades (instances where a code’s severity level is being increased). Downgrades outpace upgrades at a rate of 7:1.

  • The number of codes designated as an MCC will decrease from 3,244 to 3,099, – 4. 5% by volume.
  • The number of codes designated as a CC will decrease from 14,528 to 13, 691, – 5. 8% by volume.
  • The number of codes that are neither a CC nor an MCC will increase from 54,160 to 55,142, + 1. 8% by volume.

Percentage-wise, the large shift of many codes from CC class to non-CC/MCC class is somewhat masked by the size of the bucket into which they are being shifted. CMS modeled their proposed changes by regrouping nearly 9 million claims through DRG logic, incorporating the proposed severity level changes along the way.

  • The number of cases reporting at least one or more secondary diagnosis codes assigned to the MCC severity level decreased by 4. 7%.
  • The number of cases reporting at least one or more secondary diagnosis codes assigned to the CC severity level decreased by 0. 2%.
  • Lastly, the number of cases reporting no secondary diagnosis codes assigned to the MCC or CC severity level increased by 4. 9%.

The biggest shifts are at the ends (e. g., with MCC, without CC/MCC). Surprisingly ‘with CC’ DRGs were not significantly affected, suggesting that CC fallback options are present more often than not.

What to Expect

Let’s take it a step further and assess the impact of certain proposed changes in the context of real historical code volume. Doing so allows us to get a better read on true impact.

It’s less important to know the number of codes are being reclassified. It’s more important to understand how often we code the codes that are being reclassified.

For convenience, we’ll use 2017 Hospital Inpatient Diagnosis Code Frequency data made available by the California Office of Statewide Health Planning and Development (OSHPD) as the basis of this analysis. The OSHPD data contemplates over 36 million secondary diagnosis code assignments, which serves as a reasonable proxy for national comparative data. In other words, the proportions and percentages cited here should give us a pretty good idea of what we can expect.

  1. Use the code level reclass information available through CMS
  2. Bump the code level reclass information against recent California code volumes
  3. Extend the analysis to contemplate not only the count of the affected codes, but the relative frequency of the affected codes

MCCs Downgraded to CC Status

While MCC to CC downgrades affected approximately 4% of MCC codes, MCC to CC downgrades represented approximately 16% of MCC volume.

Notable MCC to CC downgrades include end-stage renal disease (ESRD), protein-calorie malnutrition, and Stage 3 and Stage 4 pressure ulcers. Collectively, these three concepts represented approximately 12% of MCC volume. ESRD alone accounted for over 6% of MCC volume.

MCCs Downgraded to Non-CC/MCC Status

MCC to Non-CC/MCC downgrades affected less than 1% of MCC codes and approximately 1% of MCC volume.

Notable MCC to Non-CC/MCC downgrades include certain sickle cell disorder codes and cardiac arrest.

CCs Downgraded to Non-CC/MCC Status

By far the largest downgrade category, CC to Non-CC/MCC downgrades affected approximately 8% of CC codes, but an incredible 20% of CC volume.

Notable CC to Non-CC/MCC downgrades include acute blood loss anemia, extreme BMIs, all variants of chronic congestive heart failure, chronic kidney disease stage 4 and 5, and all neoplasm codes that were currently assigned to CC status Collectively, these concepts represented nearly 15% of CC volume. Neoplasms alone accounted for over 1/3 of that 15%.

Non-CC/MCC Status Codes Upgraded to CCs

Non-CC/MCC to CC upgrades affected less than 1% of Non-CC/MCC codes and approximately 2% of Non-CC/MCC volume.

As mentioned previously, downgrades exceeded upgrades by about a 7-to-1 margin. Overall, the codes that were upgraded are not nearly as prevalent as many of the codes that were downgraded. Some of the upgrade wins in this category include stage 1 and stage 2 pressure ulcers, homelessness, and various forms of antibiotic resistance.

CC Status Codes Upgraded to MCCs

CC to MCC upgrades affected less than 1% of CC codes and approximately 1% of CC volume.

Notable upgrades in this category include moderate protein-calorie malnutrition and bacteremia. The upgrade of bacteremia to MCC status effectively eliminates the longstanding and profound code level severity divide between sepsis and bacteremia.

The results of CMS’s proposed reclassification were astonishing in terms of their breadth and potential impact to MS-DRG classification, and by extension, facility reimbursement and other downstream dependencies.


It’s hard to argue with CMS’s reclassification methodology. In fact, CMS’s statistical analysis “indicates that the proposed severity level changes increase the explanatory power of the GROUPER in capturing differences in expected cost between the MS-DRGS and thus would improve the overall accuracy of the IPPS payment system.”

CMS’ change of heart affords us the opportunity to provide CMS with additional feedback on the proposed changes.  Even if we can’t change the outcome, we have been afforded the chance to better prepare for the impact of CC/MCC reclassification. You can take steps now to prepare  and these strategies could reveal areas of opportunity that can be addressed outside of the reclass:

  1. Use historical data to complete a CC/MCC assessment of capture rates, including financial data.
  2. Conduct a coding audit with specific focus on areas of opportunity by diagnosis, MCC/CC, procedures, and physicians.
  3. Assess CDI programs and build the foundation of outpatient CDI to ensure accurate documentation and billing to reduce the potential for claims reject.
  4. Analyze current denials data to develop a proactive strategy for clinical validation audits and to identify documentation opportunities to prevent and manage denials.

The proposed reclass would have forced organizations to take a fresh look at processes, documentation capture, and coding of records. Why not do that anyway? Why wait until reclassification is finalized? Assessing current operations can benefit your organization now – by improving clinical and financial outcomes – and will help you minimize the impact of these severity level changes when they are implemented

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