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FY 2021 Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS)

Inpatient Psychiatric Facilities Prospective Payment System

The CMS is finalizing a rule that further advances our efforts to support the Medicare program by better aligning payments for inpatient psychiatric facilities (IPFs) with the costs of providing care. The final rule will update Medicare payment policies and rates for the IPF Prospective Payment System (PPS) for FY 2021. These policies will help the CMS’s priority of “Strengthening Medicare” and help guarantee that seniors can access the care they need at the site of care they choose.

According to CMS, they are finalizing a 2.2 percent payment rate update and finalizing its proposal to adopt revised Office of Management and Budget (OMB) statistical area delineations resulting in wage index values being more representative of the actual costs of labor in a given area.

IPF Prospective Payment System

CMS have to pay for inpatient psychiatric services on a per diem basis under IPF PPS, according to the Balanced Budget Refinement Act of 1999.

IPFs include:

  • Medicare participating psychiatric hospitals
  • certified psychiatric units in acute care hospitals or critical access hospitals.  

CMS will use most recent available data to update payments for FY 2021 IPF PPS final rule. The IPF PPS applies to approximately 1500+ inpatient psychiatric facilities.   

IPF PPS Payment updates

IPF Payments Update

CMS has estimated total IPF payments to increase by 2.3 percent or $95 million in FY 2021. IPF market based increased by 2.2 percent, which is used to update IPF payment rates. Total estimated payments to IPFs are approximately to increase 0.1 percent point. This is happening due to updates in outlier threshold amount to maintain estimated outlier payments at 2 percent of total estimated payments. Adoption of revised Office of Management and Budget (OMB) Statistical Area.

CMS is adopting revised Office of Management and Budget (OMB) delineations from OMB Bulletin No. 18-04.  This bulletin established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and provided guidance on the use of the delineations of these statistical areas, thereby, resulting in wage index values being more representative of the actual costs of labor in a given area. 

CMS is finalizing its proposed policy that any decline in a provider’s wage index value from its FY 2020 wage index, regardless of the circumstance causing the decline, will be capped at a 5 percent decrease for FY 2021.  

Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program

For FY 2021 CMS adopts policies for the IPFQR Program that remain in effect for subsequent years after adopting those policies.

Changes to Scope-of-Practice Regulations under the IPF PPS

CMS is finalizing updates to the regulatory language to allow advanced practice providers, including physician assistants, nurse practitioners, psychologists, and clinical nurse specialists, to operate within the scope of practice allowed by state law by documenting progress notes in the medical record of patients, for whom they are responsible, receiving services in psychiatric hospitals. The current regulation is inconsistent with other recent changes finalized throughout the hospital conditions of participation and unnecessarily imposes regulatory burden on psychiatric hospitals.

The FY 2021 IPF PPS final rule can be downloaded from the Federal Register

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