FFY 2023 IPPS Final Rule: DRG Weights and Outlier Cost Threshold

To account for the anticipated decline in COVID-19 hospitalizations of Medicare beneficiaries as compared to FFY 2021 base-year data, CMS calculates DRG relative weights by averaging rates with one set including COVID-19 diagnoses, and the other set excluding COVID-19 diagnoses. CMS also finalizes a permanent threshold for DRG weight changes, whereby the relative weight for a MS-DRG is capped at no more than ten percent reduction in a given fiscal year.

The FFY 2023 cost outlier threshold is $38,859 using charge inflation factors prior to the COVID-19 PHE as a more reasonable approximation of the increase in costs that will occur from FFY 2021 to FFY 2023.  

For more information, please contact Scott Besler at (925) 685-9312 or scott.besler@toyonassociates.com.