Final rule to update Medicare payment policies and rates for the Inpatient Psychiatric Facility
On July 27, 2022, the Centers for Medicare
& Medicaid Services (CMS) issued a final rule to update Medicare
payment policies and rates for the Inpatient Psychiatric Facility
Prospective Payment System (IPF PPS) for fiscal year (FY) 2023. CMS is
publishing this final rule consistent with the legal requirements to
update Medicare payment policies for IPFs on an annual basis.
This fact sheet discusses the major
provisions of the final rule, including a permanent 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 not finalizing any changes for
the IPF Quality Reporting Program in this FY 2023 final rule.
The FY 2023 IPF PPS final rule can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/2022-16260/medicare-program-fy-2023-inpatient-psychiatric-facilities-prospective-payment-system-rate-update-and
Final Changes to Payments Under the IPF PPS
Final Updates to IPF Payment Rates
Total estimated payments to IPFs are
estimated to increase by 2.5% or $90 million in FY 2023 relative to IPF
payments in FY 2022. For FY 2023, CMS is updating the IPF PPS payment
rates by 3.8%, based on the final IPF market basket update of 4.1% less a
0.3 percentage point productivity adjustment. CMS is finalizing the FY
2023 market basket update and productivity adjustment based on the
latest available data for this final rule. Additionally, CMS is
updating the outlier threshold so that estimated outlier payments remain
at 2.0% of total payments. CMS estimates that this will result in a
1.2% decrease to aggregate payments due to updating the outlier
threshold. (Note: due to rounding, the 3.8% increase to payment rates
and the 1.2% decrease to outlier payments result in a 2.5% overall
increase in IPF payments).
Comment Solicitation on IPF PPS Refinement Analysis
The IPF PPS was implemented in 2005
and uses the adjustment factors derived from the original regression
model. Working in collaboration with a contractor, CMS has undertaken
further analysis of more recent IPF cost and claim information, which is
summarized in a report available on the CMS website at https://www.cms.gov/files/document/technical-report-medicare-program-inpatient-psychiatric-facilities-prospective-payment-system.pdf.
CMS sought comments in the proposed rule on the results summarized in
the report and on ways that CMS could 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, which we will take into consideration to
potentially inform future rulemaking.
Permanent Cap on Wage Index Decreases
In order to mitigate instability in
IPF PPS payments due to significant wage index decreases that may affect
providers in any given year, CMS will apply a 5% cap on decreases in
the IPF PPS wage index for FY 2023 and subsequent years, in a budget
neutral manner. Specifically, 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.
Principles for Measuring Healthcare Quality Disparities
Consistent with Executive Order 13985
on Advancing Racial Equity and Support for Underserved Communities
through the Federal Government, CMS’ Equity Plan for Improving Quality
in Medicare, and CMS’ strategic pillar to advance equity, CMS is also
committed to addressing persistent inequities in health outcomes in the
U.S. through improving data collection to better measure and analyze
disparities across programs and policies. As disparity initiatives
expand, it is important to model efforts off existing best practices.
CMS sought comments in 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. CMS
sought comments on key considerations in five specific areas that could
inform our approach: 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 across CMS quality programs;
principles for social risk factor and demographic data selection and
use; identification of meaningful performance differences; and guiding
principles for reporting disparity results. CMS received many comments
in response to this RFI, reflecting the importance of advancing health
equity within CMS quality programs. We will consider this input
carefully in developing future policies.
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