Fiscal Year 2021 Proposed Medicare Payment and Policy Changes for Inpatient Psychiatric Facilities (CMS-1731-P)
On April 10, 2020, the Centers for Medicare & Medicaid Services (CMS) is proposing a rule that further advances our efforts to strengthen the Medicare program by better aligning payments for inpatient psychiatric facilities (IPFs) with the costs of providing care. The proposed rule would update Medicare payment policies and rates for the IPF Prospective Payment System (PPS) for Fiscal Year (FY) 2021. CMS is publishing this proposed rule consistent with the legal requirements to update Medicare payment policies for IPFs on an annual basis. CMS recognizes that the entire healthcare system is focused on responding to the COVID-19 public health emergency. As a result, the proposed rule includes proposals required by statute and that affect Medicare payment to IPFs, as well as proposals that reduce provider burden and may help providers in the COVID-19 response.
In this proposed rule CMS is proposing a 2.6 percent payment rate update and proposing to adopt the most recent 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.
2019 Coronavirus (COVID-19) Outbreak
The health and safety of America’s patients and provider workforce in the face of the Coronavirus Disease 2019 (COVID-19) outbreak is the top priority of the Trump Administration and CMS. We are working around the clock to equip the American healthcare system with maximum flexibility to respond to the 2019 Novel Coronavirus (COVID-19) pandemic. Recently, at President Trump’s direction, CMS issued an unprecedented array of temporary regulatory waivers and new rules to equip the American healthcare system with maximum flexibility to respond to the COVID-19 pandemic.
To keep up with the important work the Task Force is doing in response to COVID-19, go to . For information specific to CMS, please visit the .
While CMS is focused on helping the healthcare system respond to the COVID-19 pandemic, we are releasing the annual Medicare payment rules to ensure providers are informed on the 2021 payment updates. The policies in the IPF PPS proposed rule would update payments to inpatient psychiatric facilities. These policies support the agency’s priority of “Strengthening Medicare” and help guarantee that seniors can access the care they need at the site of care they choose.
This fact sheet discusses major provisions of the proposed rule. The deadline for submitting comments on the proposed rule is June 9, 2020. The proposed rule (CMS‑1731‑P) can be downloaded from the Federal Register at:
Background on the IPF Prospective Payment System
The Balanced Budget Refinement Act of 1999 required CMS to pay for inpatient psychiatric services on a per diem basis under IPF PPS. IPFs include Medicare participating psychiatric hospitals and certified psychiatric units in acute care hospitals or critical access hospitals.
This IPF PPS proposed rule would update the payments for FY 2021 using the most recent available data. The IPF PPS applies to approximately 1,565 inpatient psychiatric facilities.
Proposed Changes to Payments under the IPF PPS
Update to IPF Payments
CMS estimates total IPF payments to increase by 2.4 percent or $100 million in FY 2021. The IPF market basket increase, which is used to update IPF payment rates, is 3.0 percent. This is further adjusted by the productivity adjustment of -0.4 percentage point resulting in an IPF payment rate update of 2.6 percent. Additionally, total estimated payments to IPFs are estimated to decrease 0.2 percentage point due to updating the outlier threshold amount to maintain estimated outlier payments at 2 percent of total estimated payments.
Proposal to adopt the most recent Office of Management and Budget (OMB) Statistical Area Delineations
CMS is proposing to adopt 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.
Proposed Wage Index Transition for All Providers Negatively Impacted
CMS is proposing that all IPF providers negatively impacted in their wage index, regardless of the circumstance causing the decline, be capped at a 5 percent decrease for FY 2021.
Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program
For FY21 CMS is not proposing any changes to the IPFQR Program.
The FY 2021 IPF PPS proposed rule can be downloaded from the Federal Register at: