New COVID-19 Policies for Inpatient Prospective Payment System (IPPS) Hospitals Limits the 20 Percent Increase in Weighting Factor for COVID-19 DRGs

On August 17, 2020, CMS released a revised MLN Matters SE20015 to announce a change in the application of the 20% increase in the weighting factor for DRGs for individuals diagnosed with COVID-19 and discharged during the COVID-19 Public Health Emergency (PHE). The presence of ICD-10-CM diagnosis codes B97.29 (before April 1, 2020) and U07.1 (after April 1, 2020) identify discharged individuals diagnosed with COVID-19.

Beginning September 1, 2020, claims eligible for the 20% increase will now require a positive COVID-19 laboratory test documented in the patient’s medical record. The test must be the result of viral testing only (i.e., molecular or antigen) consistent with CDC guidelines. A viral test performed within 14 days prior to and up through the patient’s hospital stay will satisfy this requirement. Note that the language states performed, not resulted. Thus a test performed 15 days prior to admission but resulted within the 14 days may not qualify, per my interpretation of the instructions. However, CMS does state that they will consider whether there are complex medical factors in play for tests performed more than 14 days prior to the admission. 

During an audit, CMS will be looking for the positive viral COVID-19 test results in the inpatient medical record, even if it was performed outside of the hospital’s laboratory. Thus, it would serve hospitals and hospital providers well to ensure the test result is placed in the inpatient record when the patient is in the hospital.

Coding rules have not changed. COVID-19 can be coded based on a confirmed diagnosis documented by the provider. Confirmation of the diagnosis does not require documentation of the type of test performed. However, if a positive viral test result is not documented in the medical record, the 20% increase in the weighting factor will not be applied by CMS to the DRG. The hospital can decline the 20% increase at the time of claim submission by notifying its Medicare Administrative Contractor.

The DRGs impacted by the inclusion of the COVID-19 diagnoses codes are:

177, 178, 179 (Respiratory Infections and Inflammations)

791, 793 (Prematurity, Full Term Neonate with Major Problems)

974, 975, 976 (HIV with Major Related Condition)

MLN Matters SE20015:

Providers may refer to the following ICD-10-CM coding guidance for coding encounters related to COVID-19:

For discharges on or after April 1, 2020, the ICD-10-CM Official Coding and Reporting Guidelines are at

For discharges prior to April 1, 2020, the ICD-10-CM Official Coding Guideline – Supplement is at Gudance-Interim-Advice-coronavirus-feb-20-2020.pdf