CMS Publishes Proposed Rule for FY 2021 Inpatient Psychiatric Facilities Payments

On April 14, 2020, the Centers for Medicare and Medicaid Services (CMS) published the proposed rule for the fiscal year (FY) 2021 Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS), which impacts freestanding psychiatric hospitals and excluded psychiatric units.

When finalized, the rule will apply to discharges on or after October 1, 2020. An overview of the proposed rule follows.

Proposed Changes to IPF Payments

CMS has proposed the following updates to the prospective payment rates, outlier threshold, and wage index for the IPF PPS.

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Other Notable Updates

Core-Based Statistical Area (CBSA) Designation

CMS proposes the adoption of the most recent CBSA delineations and applies a two-year transition for all providers who would be negatively impacted by Office of Management and Budget (OMB) Bulletin 18-04.

Although the OMB issued a subsequent bulletin, Bulletin No. 20-01, it was issued too late for inclusion in this proposed rule. However, CMS reserves the right to include any updates from OMB Bulletin No. 20-01 in the final FY 2021 rule.

Proposed changes from Bulletin 18-04 include the following:

  • Thirty-four counties and five providers will be considered rural. A list of these counties is included in the proposed rule.
  • Forty-seven counties and four providers will be considered urban. A list of those counties is also included in the proposed rule.
  • Certain counties may shift between existing and new CBSAs. This change will impact 49 IPF providers, and it’s unknown if the impact will be positive or negative. A list of those counties is included in the proposed rule.

CMS has elected to propose a two-year transition period using a 5% cap in payment reductions. This policy was chosen in the interest of striking an appropriate balance between giving providers negatively impacted by the change time to adapt while maintaining the overall accuracy of the wage index system.

Alternatives to the two-year transition policy are also discussed in the proposed rule.

Inpatient Psychiatric Facilities Quality Reporting

There are no proposed changes to the Inpatient Psychiatric Facilities Quality Reporting (IPFQR) program.

Economic Impact

The overall economic impact of the proposed FY 2021 changes equates to a $100 million increase in payments from FY 2020.

Public Comments

Public comments can be submitted through 5:00pm EST on June 9, 2020. When commenting, reference CMS-1731-P. Refer to the proposed rule for different ways to submit your comments.

We’re Here to Help

For more information about the proposed rule, contact your Moss Adams professional.