On April 11, 2025, CMS issued its fiscal year (FY) 2026 prospective payment system (PPS) proposed payment rule for inpatient psychiatric hospitals (IPFs). In addition to updating Medicare payment rates, adjustment factors, and quality measures for IPFs, the proposed rule also includes a Request for Information for “approaches and opportunities” to align with a recent Executive Order prioritizing efforts to lower costs associated with federal compliance. Comments on the proposed rule are due by June 10, 2025.
Proposed Changes to IPF Payment Rates
CMS proposed a 2.4 percent increase to IPF PPS payment rates beginning in FY 2026. This is based on a 3.2 percent IPF market basket increase, adjusted by a 0.8 percent productivity adjustment, mandated by the Social Security Act. CMS stated that the increase is based on 2021 data but noted that it would use more recent data if it were to become available. CMS estimates that IPF PPS payments will increase by $70 million from FY 2025 to FY 2026.
Proposed Updates to IPF PPS Facility-Level Adjustment Factors
For FY 2026, CMS has updated the regression model for IPF PPS payment adjustments so that it reflects costs and claims data for FY 2020 – FY 2022. Based on its analysis, CMS proposed an increase to the facility-level adjustment factors for facility teaching statuses and rural location. Increases in IPF teaching caps for resident full-time equivalents were also proposed.
Proposed Updates to IPF Quality Reporting (IPFQR) Program
-
Change to Quality Measures
CMS also proposed changes to the quality measures used in the IPFQR Program. The IPFQR Program’s stated goal is to assess and foster improvement in the quality of care provided to patients. All IPFs paid under the IPS PPS must submit specified data on quality measures. If any IPF does not submit this information, it receives a 2.0-point reduction to its annual payment update.
CMS proposed to modify the 30-Day Risk-Standardized All-Cause Emergency Department Visit Following an Inpatient Psychiatric Facility Discharge measure. Under this modification, the length of the reporting period would change from a one-year period based on the calendar year to a two-year period based on fiscal years
- Removal of Quality Measures
CMS also proposed the removal of four measures: (i) Facility Commitment to Health Equity, (ii) COVID–19 Vaccination Coverage among Health Care Personnel, (iii) Screening for Social Drivers of Health, and (iv) Screen Positive Rate for Social Drivers of Health. These removals would be reflected beginning with the calendar year 2024 reporting period and the fiscal year 2026 payment determination.
Request for Information
On January 31, 2025, President Trump issued an Executive Order, EO 14192, declaring the Presidential administration’s policy to “significantly reduce the private expenditures required to comply with Federal regulations to secure America's economic prosperity and national security and the highest possible quality of life for each citizen.” In response, CMS included a Request for Information for “approaches and opportunities to streamline regulations and reduce administrative burdens on providers, suppliers, beneficiaries, and other interested parties participating in the Medicare program.”
For a copy of the proposed rule, please click here. For a copy of the CMS Fact Sheet released in connection with the proposed rule, please click here.
