Takeaways from FY 2025 IPPS Proposed Rule: Changes to SDOH diagnosis codes
In its recent proposed rule released in April 2024, CMS is proposing to change the severity designation of seven ICD-10-CM diagnosis codes. The affected codes currently describe inadequate housing and housing instability as non-complication or comorbidity (Non-CC). The rule would change these designations to complication or comorbidity (CC), based on the higher average resource cost of cases with these diagnosis codes compared to similar cases without these codes.
This change would be in addition to the three social determinants of health (SDOH) codes related to homelessness that were given CC designations in FY 2024.
What are the potential impacts of the FY2025 IPPS Proposed Rule?
IPPS payments are made based on the use of hospital resources in the treatment of a patient’s severity of illness, complexity of service, and/or consumption of resources. Generally, a higher severity level designation of a diagnosis code results in a higher payment to reflect the increased use of hospital resources. Social determinants of health (SDOH) codes describing social problems, conditions, or risk factors that influence a patient’s health should be assigned when this information is documented in the patient’s medical record. These codes include:
- 10 (Inadequate housing, unspecified);
- 11 (Inadequate housing, environmental temperature);
- 12 (Inadequate housing, utilities);
- 19 (Other inadequate housing);
- 811 (Housing instability, housed, with risk of homelessness);
- 812 (Housing instability, housed, homelessness in past 12 months); and
- Z59.819 (Housing instability, unspecified)
CMS reviewed an analysis of industry data about the impact on resource use generated using claims data. The findings led to this current proposal to change the severity designation of the seven ICD-10 codes. This builds on changes to CMS’s policy from 2023 for diagnosis codes describing homelessness (e.g., unspecified, sheltered, and unsheltered). This proposal also aligns with the Biden-Harris Administration’s broader work to recognize the influence of social factors on health and resource use. The Administration’s broader work includes the efforts of the U.S. Interagency Council on Homelessness, which recognizes housing stability as essential to the health and well-being of individuals and families.
The proposed policy, if finalized, would more accurately reflect each healthcare encounter for hospitals that include treatment or care of persons who have inadequate housing or housing instability. It also improves the reliability and validity of the coded data, which can help support efforts to advance health equity across the country.
For more information on these changes, please reach out to Maribeth Labbe or another member of the BNN revenue cycle team.
To read the full proposal, click here.
Accurate and timely medical coding
Revenue cycle optimization involves analyzing each step in the revenue cycle process to identify areas where improvements can be made. By optimizing the revenue cycle process, healthcare organizations can reduce costs, improve cash flow, and increase revenue. The BNN revenue cycle team can help your organization streamline processes, improve communication between departments, and implement new technologies to automate billing and coding tasks.
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