Summary of the Changes
Each fiscal year, CMS (in coordination with NCHS, AHA, AHIMA, etc.) issues updates to both the ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes, along with revisions to the official guidelines. These updates take effect for discharges (and encounters) on or after October 1. CMS+4CDC+4HHS.gov+4
For FY 2026 (i.e. effective October 1, 2025 through September 30, 2026):
- The ICD-10-CM code set will be updated (new, revised, and deleted codes) with corresponding guidelines updates.
- The ICD-10-PCS code set will likewise be updated. The FY 2026 ICD-10-PCS release includes 156 new codes, 27 deleted codes, and 4 new tables in the procedure classification system.
- The total number of ICD-10-PCS codes in the 2026 set is 78,986.
- Although there are no major overhauls to the guidelines themselves, CMS did add new examples (especially in the “New Technology” section) to illustrate use of the new codes.
- Some of the new PCS codes cover procedures such as transfer of vascularized nasal tissue, cricothyroidotomy, subscapularis-sparing shoulder arthroplasty, replacement of the medial and lateral meniscus, extracorporeal circulatory filtration, among others.
- The Medicare Code Editor (MCE) will be updated to accommodate the FY 2026 code sets and edits.
- These updates also drive changes in DRG grouping logic and reimbursement outcomes, especially where new procedure codes or “new technology” add-on payments are involved.
In short: The changes are additive rather than transformational, but the volume of new codes and the impact on reimbursement makes them significant.
Why the Update Matters (Importance)
- Accurate Clinical Representation
- New and revised codes allow more precise capture of evolving procedures and technologies, ensuring clinical interventions are codified in a way aligned with current practice.
- Better granularity supports improved analytics, benchmarking, and clinical quality measurement.
- Reimbursement and DRG Impact
- The addition of new procedural codes may shift cases into different DRG or severity levels that affect payment.
- New Technology Add-On Payments (NTAP) often depend on procedures being coded with the designated new code.
- If coders continue to use unspecified or generic codes, the hospital may under-capture revenue potential.
- Regulatory & Compliance Risk
- Use of outdated or invalid codes may cause claim denials or rejections.
- Adherence to updated guidelines is mandatory under HIPAA rule sets.
- Audit risk increases if documentation is not aligned with the specificity demanded by new codes.
- Data Quality & Reporting
- Public reporting, quality measures, epidemiologic surveillance, and internal performance metrics hinge on the integrity of coded data.
- The updates ensure that emerging procedures and technologies are represented in national data sets.
- Operational Adaptation
- The changes force updates across system components: encoder logic, abstraction tools, clinical documentation improvement (CDI) initiatives, training programs, and internal audits.
Strategies for Success: How to Prepare and Adapt
To maximize the benefits and minimize disruption, here are recommended strategies:
- Early Gap Analysis & Impact Assessment
- Identify high-volume and high-risk areas (e.g., OR, cath lab, transplant, advanced imaging) and compare which new PCS codes may apply.
- Use pre-release code lists and mapping tools to crosswalk existing codes to new ones and flag areas needing documentation upgrades.
- Assess potential DRG shifts or reimbursement changes from the new codes.
- Update Tools & Systems
- Coordinate with your encoder/abstractor vendor to ensure the FY 2026 code tables and logic are fully integrated prior to go-live.
- Confirm that internal systems (EHR, order sets, procedure registries) can display and capture the new codes.
- Test to ensure that edits, validations, cross checks, and interfaces are configured to handle new, revised, and deleted codes.
- Documentation & CDI Training
- Educate physicians, surgeons, APPs, and ancillary staff about the new codes and documentation requirements (especially where specificity is needed).
- Embed reminders or prompts in templates or procedure notes to capture details needed (e.g. laterality, technique, approach, technology used).
- Conduct “what’s new” sessions in CDI rounds or coding huddles before and after October 1.
- Coding Staff Education & Practice
- Provide targeted training to coders and coding leadership on the new codes, updated tables, and new examples (especially in the “New Technology” section).
- Use mock cases (with retrospective chart review or simulation) to allow coders to practice applying new codes in context.
- Maintain a “hot list” or quick reference for new codes that are expected to be high frequency.
- Internal Audits, Monitoring & Feedback Loops
- Launch pre-go live audits on late FY 2025 or early FY 2026 discharges to catch miscoding or documentation gaps.
- Post-implementation, track KPI metrics such as code change rates, DRG shifts, denial rates, query volumes, and adjust training or processes accordingly.
- Engage CDI/coding leadership and quality oversight in periodic reviews of unexpected shifts.
- Provider Engagement & Query Processes
- Reinforce with clinicians the value of precise documentation and how it ties to quality, reimbursement, and institutional goals.
- Enable a streamlined query process for clarifying inadequate documentation (e.g. missing laterality, surgical technique, device used).
- Encourage cross-disciplinary communication so coders/CDI staff can raise issues promptly.
- Communication, Phased Rollout & Contingency
- Announce to stakeholders (clinical departments, revenue cycle, finance) the timeline, impact, and expected actions.
- Consider a soft launch period (e.g., shadow mode) where new codes are captured internally but claims are still submitted using established codes (if policy allows) to allow a learning curve.
- Ensure backup plans and support resources (coding helplines, vendor support, superusers) are in place for go-live’s first days/weeks.