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An Analysis and Commentary on Federal Health Care Issues by Larry Goldberg

CMS Posts Proposed Inpatient Psychiatric Facilities PPS Update for FY 2021

The Centers for Medicare and Medicaid Services (CMS) have issued a proposed rule to update the Medicare Inpatient Psychiatric Facilities (IPFs) Prospective Payment System (PPS) for Fiscal Year (FY) 2021.

This proposed rule would update the prospective payment rates, the outlier threshold, and the wage index for Medicare inpatient hospital services provided by IPFs, which include psychiatric hospitals and excluded psychiatric units of an Inpatient Prospective Payment System hospital or critical access hospital. In addition, this proposed rule would adopt the most recent Office of Management and Budget (OMB) statistical area delineations, and apply a 2-year transition for all providers negatively impacted by wage index changes.

The rule will be published in the April 14 Federal Register. A “display” copy of the 66-page document can be downloaded at: https://s3.amazonaws.com/public-inspection.federalregister.gov/2020-07870.pdf. This link will change upon publication. A 60-day comment period ending June 9 is provided.

CMS says the overall economic impact of the proposed rule is an estimated $100 million in increased payments to IPFs during FY 2020. This reflects a $110 million increase from the update to the payment rates (+$125 million from the 4th quarter 2019 IGI forecast of the 2016-based IPF market basket of 3.0 percent, and -$15 million for the productivity adjustment of 0.4 percentage point), as well as a -$10 million decrease as a result of the update to the outlier threshold amount. Outlier payments are estimated to change from 2.2 percent in FY 2020 to 2.0 percent of total estimated IPF payments in FY 2021.

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