Fact Sheets

FY 2020 Medicare Payment and Quality Reporting Updates for Inpatient Psychiatric Facilities (CMS-1712-F)

On July 30, 2019, the Centers for Medicare & Medicaid Services (CMS) is finalizing a rule that further advances our continuing efforts to strengthen the Medicare program by better aligning payments for inpatient psychiatric facilities (IPFs) with the costs of providing care. The final rule will update Medicare payment policies and rates for the IPF Prospective Payment System (PPS) and the IPF Quality Reporting (IPFQR) Program for Fiscal Year (FY) 2020.

The policies in the IPF PPS and IPFQR final rule represent updates to the IPFs’ payments and quality measures. 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 final rule. 

Background on the IPF Prospective Payment System

The Balanced Budget Requirement Act of 1999 required CMS to pay for inpatient psychiatric services provided in a psychiatric facility on a per diem basis under the prospective payment system (PPS) for Inpatient Psychiatric Facilities (IPF).  The per diem PPS was implemented for inpatient psychiatric services that are furnished in a psychiatric hospital, or in psychiatric units in acute care hospitals or critical access hospitals.

The primary purpose of this IPF PPS final rule is to update the payments for FY 2020 using the most recently available data.  The IPF PPS applies to approximately 1,580 inpatient psychiatric facilities.

Background on the IPFQR Program

The IPFQR Program gives consumers quality-of-care information to help them make more informed decisions about their healthcare options. This includes providing consumers with data about quality measures that aim to assess and foster improvement in the quality of care provided to patients in psychiatric facilities.    The IPFQR Program encourages facilities and clinicians to improve the quality of inpatient care. The program helps providers know about and report on the best practices for their facilities and type of care they give by requiring submission of quality data to CMS annually.

Changes to Payments under IPF

Update to IPF Payments

CMS estimates total IPF payments to increase by 1.5 percent or $65 million in FY 2020. The IPF market basket increase, which is used to update IPF payment rates, is 2.9 percent.  This is further adjusted by two reductions required by law (the productivity adjustment of 0.4 percentage point and a 0.75 percentage point reduction), resulting in an IPF payment rate update of 1.75 percent. Additionally, total estimated payments to IPFs are estimated to decrease 0.23 percentage point due to updating the threshold amount used in calculating outlier payments.

Rebase and Revise the IPF Market Basket

For FY 2020, CMS is rebasing and revising the IPF market basket to reflect a 2016 base year from a 2012 base year.  Since the IPF PPS inception, the market basket used to update IPF PPS payments has been periodically rebased and revised to reflect more recent data.

Removal of the One-Year Lag of the IPF PPS Wage Index

Historically, the IPF wage index has been based on the prior year’s hospital inpatient wage data, which caused a data lag compared to several other payment systems.  For FY 2020 and subsequent years, CMS is removing the one-year lag of the wage index data to enhance the consistency of the wage indexes across settings. 

Inpatient Psychiatric Facility Quality Reporting Program

For FY 2020, CMS is adopting one new claims-based measure beginning with the FY 2021 payment determination and subsequent years.  This measure, Medication Continuation Following Inpatient Psychiatric Discharge (National Quality Forum #3205), assesses whether patients admitted to IPFs with diagnoses of Major Depressive Disorder (MDD), schizophrenia, or bipolar disorder filled at least one evidence-based medication within two days prior to discharge or during the 30-day post-discharge period.

The FY 2020 IPF PPS final rule can be downloaded from the Federal Register at:

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