CMS Final Rule: 2023 Medicare Inpatient Psychiatric Facility PPS

No new changes yet to the Inpatient Psychiatric Facility (IPF) Quality Reporting Program, but payments to facilities are expected to increase 2.5% ($90 million) over FY 2022. The Centers for Medicare & Medicaid Services (CMS) said the IPF prospective payment system (PPS) rates in FY 2023 will be updated by 3.8%. The agency also updated the outlier threshold from $16,040 to $24,630; outlier payments remain at 2% of total payments.

Another of the final rules’ major provisions is a 5% cap policy to smooth the impact of year-to-year changes in IPF payments related to decreases in the IPF wage index. CMS is finalizing that an IPF’s wage index for FY 2023 and subsequent years will not be less than 95% of its final wage index calculated in the prior FY.

According to MedPAC, services furnished by IPFs are intended to meet the urgent needs of those experiencing an acute mental health crisis. In 2019, Medicare beneficiaries accounted for over 15% of psychiatric facilities’ discharges. Under the IPF PPS Medicare’s payment rates are intended to cover all routine, ancillary, and capital costs that efficient providers are expected to incur in furnishing inpatient psychiatric care.

Rule Highlights

• The IPF PPS Federal per diem base rate from $832.94 to $865.63
• The IPF PPS Federal per diem base rate for providers who failed to report quality data to $848.95
• Electroconvulsive therapy (ECT) payment per treatment from $358.60 to $372.67
• The ECT payment per treatment for providers who failed to report quality data to $365.49.

CMS sought comments on the proposed rule, via a request for information (RFI), on considerations for the agency when advancing the use of measurement and stratification as tools to address healthcare disparities and advance healthcare equity. The agency invited comments from stakeholders on ways to better account for the effects that social determinants of health and low-income patient status have on the cost of providing IPF services. CMS received comments from MedPAC, state-level and national provider and patient advocacy organizations, and individual IPF hospitals and health systems in response to the comment solicitation, potentially informing future rules.

The base payment rate for IPFs is updated using an IPF-specific market basket index, which measures the price increases of goods and services IPFs buy to produce patient care. The Affordable Care Act (ACA) requires that the annual update to the IPF payment rates be reduced by an adjustment for productivity. The annual update to the base payment amount is further reduced by 2% for any IPF that fails to submit required quality data.

Read the CMS Fact Sheet on the IPF PPS Final Rule

Review the rule on the Federal Register