CMS Proposes 2.7% Payment Boost for Inpatient Psychiatric Facilities

CMS has issued a proposed Inpatient Psychiatric Facility (IPF) Prospective Payment System (PPS) rule for FY 2023, which introduced an update to IPF Medicare payments and included comment requests on the IPF PPS adjustment analysis.

The proposed rule stated that inpatient psychiatric facility payment rates will increase by 2.7 percent in FY 2023. This update reflects the proposed 3.1 percent increase in the IPF market basket with a 0.4 percent reduction for productivity adjustment.

Should more recent market basket update estimates or productivity adjustments become available, CMS said it would adjust the IPF payment rate update accordingly in the final rule.

The rule also included a proposed update to the outlier threshold to keep estimated outlier payments at 2.0 percent of total Medicare payments. This would lead to an overall 1.2 percent reduction in aggregate payments, the agency said.

After the outlier update, IPFs will receive an estimated 1.5 percent, or $50 million, increase in Medicare payments in FY 2023.

In FY 2022, CMS proposed a 2.1 percent rate increase for inpatient psychiatric facilities, with a 0.2 percent increase in aggregate payments stemming from the outlier threshold update.

CMS implemented the inpatient psychiatric facility PPS in 2005 and has used patient-level and facility-level adjustment factors derived from an original regression model to determine payment updates. The agency released a report in February 2022 that analyzes potential changes to the payment adjustments when using the most recently available data. The report also reevaluates parts of the regression model.

CMS said it performed these analyses to support the accuracy of the IPF payment system and account for variable patient costs. In the proposed rule, the agency has requested stakeholder feedback on the latest IPF PPS adjustment analysis results.

The proposed rule also included a 5 percent cap on IPF PPS wage index decreases to ease IPF payment instability. CMS stated that an IPF’s wage index for FY 2023 and following years would not be less than 95 percent of its final wage index calculated in the prior fiscal year.

Unlike last year’s proposed rule, CMS is not proposing any changes to the IPF Quality Reporting Program, the press release noted.

However, the agency is seeking stakeholder feedback on items to consider when collecting data to measure and analyze health disparities and how it can use this data to advance health equity.

CMS has requested comments on considerations for five areas, including:

• identification of goals and approaches for measuring healthcare disparities and using measure stratification across CMS quality programs
• guiding principles for selecting and prioritizing measures for disparity reporting access across CMS quality programs
• principles for social risk factor and demographic data selection and use
• identification of meaningful performance differences
• guiding principles for reporting disparity results

CMS said it will use the feedback to inform equity efforts in the IPF Quality Reporting Program.

In other recent proposed rules, CMS proposed an increase in payment rates for hospices and inpatient rehabilitation facilities (IRFs). The agency also proposed a permanent cap on wage index decreases for these services.