Inpatient Psychiatric Facility PPS


Feedback on Scope of Practice

The Centers for Medicare & Medicaid Services (CMS) is seeking additional input and recommendations regarding elimination of specific Medicare regulations that require more stringent supervision than existing state scope of practice laws, or that limit health professionals from practicing at the top of their license.

We are seeking additional feedback in response to part of the President’s Executive Order (EO) #13890 on Protecting and Improving Medicare for Our Nation’s Seniors.  The EO specifically directs HHS to propose a number of reforms to the Medicare program, including ones that eliminate supervision and licensure requirements of the Medicare program that are more stringent than other applicable federal or state laws. These burdensome requirements ultimately limit healthcare professionals, including Physician Assistants (PAs) and Advanced Practice Registered Nurses (APRNs), from practicing at the top of their professional license.

In response to suggestions we have already received regarding supervision, scope of practice, and licensure requirements, CMS has made a number of regulatory changes in several payment rules, including the CY 2020 Physician Fee Schedule, Home Health, and Outpatient Prospective Payment System final rules. These changes include, but are not limited to: redefining physician supervision for services furnished by PAs, allowing therapist assistants to perform maintenance therapy under the Medicare home health benefit and reducing the minimum level of physician supervision required for all hospital outpatient therapeutic services.

We are proud of the work accomplished, and now we need your help in identifying additional Medicare regulations which contain more restrictive supervision requirements than existing state scope of practice laws, or which limit health professionals from practicing at the top of their license.  If you submitted comments on these topics to our 2019 Request for Information on Reducing Administrative Burden to Put Patients over Paperwork, thank you!  We are reviewing those submissions.

We welcome any additional recommendations.  Please send your recommendations to  with the phrase “Scope of Practice” in the subject line by January 17, 2020. 

We also continue to welcome your input on ways in which we can reduce unnecessary burden, increase efficiencies and improve the beneficiary experience, and request that input on such topics only be sent to this email address with the phrase “Scope of Practice” in the subject line if they relate to the specific areas in regulation which restrict non-physician providers from practicing to the full extent of their education and training.

What’s the IPF PPS?

In 1999, section 124 of the Balanced Budget Refinement Act or BBRA required that a per diem (daily) PPS be developed for payment to be made for inpatient psychiatric services furnished in psychiatric hospitals and psychiatric units of acute care hospitals and critical access hospitals. Section 124 of the BBRA required the IPF PPS be implemented for cost reporting periods beginning on or after October 1, 2002. The law also required:

  • An "adequate patient classification system that reflects the differences in patient resource use and costs among such hospitals"
  • The first year be budget neutral (have no effect on the budget)
  • The Secretary to report to Congress describing the system.

An adequate classification system resulted in paying larger prospective payments to providers who treat more costly, resource intensive patients. The IPF PPS Regulations and Notices are available through the "IPF PPS Regulations and Notices" link on the left side of this page.

Why did the IPF PPS start?

Since October 1, 1983, most hospitals have been paid under the hospital Inpatient Prospective Payment System (PPS). This program did not include some specialty hospitals and units because the PPS diagnosis related groups did not accurately account for the costs of the patients treated in those facilities.

The IPPS originally excluded these kinds of hospitals:

  • Rehabilitation
  • Psychiatric
  • Children's
  • Cancer
  • Long term care
  • Rehabilitation and psychiatric hospital distinct part units
  • Hospitals located outside the 50 states and Puerto Rico.

These providers are often known as Tax Equity and Fiscal Responsibility Act (TEFRA) facilities. TEFRA is a 1982 law that amended Section 1886(b) of the Social Security Act to explain how the TEFRA facilities should be paid. When IPFs were paid by Medicare under TEFRA, payments were based on reasonable costs. Payment included a target amount to limit payment, bonus payments where costs were less than the target amount, and exceptions for large increases in patients with severe illnesses. As a result of the implementation of the IPF PPS, IPFs are no longer paid under TEFRA.

How does the IPF PPS work?

The IPF PPS calculates a standardized federal per diem payment rate to be paid to all IPFs based on the sum of the national average routine operating, ancillary, and capital costs for each patient day of psychiatric care in an IPF, adjusted for budget neutrality. The federal per diem payment rate is adjusted to reflect certain patient and facility characteristics that were associated with statistically significant cost differences.

The IPF PPS provides patient-level adjustments for age, specified medical severity diagnosis-related groups (MS-DRGs), and selected comorbidity categories. It also provides facility adjustments that include a wage index adjustment, rural location adjustment, a teaching status adjustment, an adjustment for the presence of a qualifying emergency department, and a Cost-of-Living Adjustment for IPFs in Alaska or Hawaii.

The IPF PPS includes payment for extraordinarily high cost patients through an outlier policy. It also includes an interrupted stay policy and an additional payment for each electroconvulsive therapy (ECT) treatment.

How does the IPF PPS relate to the IPF Quality Reporting Program?

All IPFs that are eligible to bill CMS under the IPF PPS are eligible to participate in the IPF Quality Reporting (IPFQR) Program. IPFs must meet all of the requirements of the IPFQR Program in order to receive a full Annual Payment Update each year. IPFs that fail to report required quality data will have their annual payment update reduced by 2.0 percentage points. This may result in an annual update being less than zero for a given fiscal year. That may result in the federal per diem payment rate and the ECT payment per treatment for the upcoming fiscal year being less than the federal per diem payment rate and the ECT payment per treatment for the current fiscal year. Any reduction for failure to report required quality data only applies to the fiscal year involved; such a reduction is not accounted for when calculating the payment amount for a subsequent fiscal year.  The IPFQR Program collects quality measure data from participating facilities and publically reports the data to assist consumers.

Where can I find out more about the IPFQR Program?

To learn more about the IPFQR Program’s requirements click on the “IPFQR Program” button in the menu on the left side of this page

Page Last Modified:
12/26/2019 07:51 PM