New CMS Rules for Inpatient Psychiatric Facilities

The Centers for Medicare & Medicaid Services (CMS) made significant updates to Medicare payment policies and rates for the Inpatient Psychiatric Facility Prospective Payment System (IPF PPS) for fiscal year (FY) 2024. These updates include several key provisions aimed at improving psychiatric services and payment policies. They expand the list of conditions that qualify a patient for inpatient psychiatric treatment and establish a new process for resolving payment disputes. CMS is increasing IPF PPS payment rates by 2.3% and estimates a combined $70 million increase in payments to inpatient psychiatric facilities during FY 2024. Changes to the quality reporting program are estimated to result in more than $8 million in savings.

The updates to Final Rule (CMS-1783-F) rebase and revise the IPF market basket and modify regulations to allow hospitals to open and begin billing Medicare for an excluded IPF unit anytime within the cost reporting year. CMS believes this will help increase access to essential inpatient psychiatric services and available beds. Here’s what hospitals and health systems need to know.

Key Provisions and Impacts of New CMS Rules for Inpatient Psychiatric Facilities

Modification to the Regulation of Excluded Units Paid Under the IPF PPS
To address the growing need for inpatient psychiatric beds, CMS has made it easier for hospitals to open and bill for new excluded inpatient psychiatric units. Hospitals can now open these units at any time during the cost-reporting year with adequate notice. This change makes it easier for hospitals to open new inpatient psychiatric units, allowing more patients to receive needed care.

Hospitals with an excluded IPF unit can be paid under the IPF PPS if the hospital provides at least 30 days’ notice to the CMS Regional Office and Medicare Administrative Contractor. CMS believes this change will alleviate unnecessary burden and administrative complexity placed upon hospitals when opening new excluded psychiatric units, helping to expand access to behavioral health care in line with the CMS Behavioral Health Care Strategy.

RFI to Inform the Revisions to the IPF PPS Required by the Consolidated Appropriations Act, 2023
New provisions in the CAA, 2023, require CMS to revise payments under the IPF PPS for rate year 2025. CMS included a request for information in the proposed rule that will be used to inform future payment revisions.

IPF Quality Reporting (IPFQR) Program Updates
CMS is adopting new measures to focus on health equity, social drivers of health, and patient experience that will require inpatient psychiatric units to provide more detailed information about their patients and cost reports. This includes measures of a facility’s commitment to health equity, screening for social drivers of health, and overall patient experience in an inpatient unit.

Social needs to be measured include food insecurity, housing instability, transportation needs, utility difficulties, and interpersonal safety. The IPFQR Program aims to assess and foster improvement in the quality of care provided to patients in IPFs. By requiring IPFs to submit quality data to CMS annually and by publicly reporting these data, CMS ensures that IPFs are aware of best practices and that patients can make more informed decisions about their healthcare options.

Modification of COVID-19 Vaccination Coverage Measure
The measure for COVID-19 vaccination coverage among healthcare personnel is being modified to align with the CDC's guidance.

Removal of Two Measures
Two measures, patients discharged on Multiple Antipsychotic Medications with Appropriate Justification (HBIPS-5) and Tobacco Use Brief Intervention Provided or Offered and Tobacco Use Brief Intervention Provided (TOB-2/2a), are being removed due to updates and redundancy.

Data Validation Pilot Program
A data validation pilot program is being introduced, starting in CY 2025, to enhance the accuracy of data reporting.

Codification of IPFQR Program Requirements and Policies
CMS is codifying the IPFQR Program's requirements and policies in alignment with other quality reporting programs, streamlining the process.

These changes are part of CMS's ongoing efforts to improve the quality and accessibility of inpatient psychiatric services, align with legal requirements, and ensure that IPF payment rates are up-to-date and reflective of current healthcare conditions.