On July 27, 2023, CMS issued a final rule (Final Rule) which revises Medicare policies and rates for the Inpatient Psychiatric Facility (IPF) Prospective Payment System (PPS) for the 2024 fiscal year (FY 2024). Among other things, the Final Rule provides for an increase in IPF PPS rates, adds new flexibility for hospitals to open excluded units, and modifies quality-reporting measures. Set forth below is a high-level summary of certain significant changes in the Final Rule.

• Rate Updates. IPF PPS rates are increasing by 3.3% for FY 2024, calculated based on a 3.5% market based update reduced by a 0.2% productivity adjustment. CMS estimates total payments under the IPF PPS will be $70 million, representing a 2.3% increase relative to FY 2023. The outlier threshold will increase from $24,630 to $34,750, which the Final Rule indicates will allow outlier estimated payments to remain at 2% of total IPF payments.
• Excluded Units. The regulations at 42 C.F.R. § 412.25(c) are amended for FY 2024 to allow hospitals to open a new excluded IPF unit (which will be reimbursed under the IPF PPS) at any time during their cost-reporting period, rather than only at the beginning of the period. This will require 30 days’ notice to the applicable CMS regional office and Medicare Administrative Contractor (MAC). The Fact Sheet states that this is intended to increase the availability of IPF beds in response to increasing behavioral health needs.
• Quality Reporting. The Final Rule also makes certain changes to the measures for the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program:
  • The new “Facility Commitment to Health Equity” measure will require IPFs to attest to certain efforts to address health equity, beginning with reporting of CY 2024 data for the FY 2026 payment determination.
  • The new “Screening for Social Drivers of Health (SDOH)” measure requires IPFs to report the percentage of adult patients who are screened for five health-related social needs (HRSNs): (i) food insecurity, (ii) housing instability, (iii) transportation needs, (iv) utility difficulties, and (v) interpersonal safety. This measure will be voluntary for CY 2024 and will become mandatory for CY 2025.
  • The new “Screen Positive Rate for SDOH” measure requires IPFs to report the percentage of patients screened under the SDOH screening measure described above who screen positive for each of the five HRSNs. This measure will be voluntary for CY 2024 and will become mandatory for CY 2025.
  • The new “Psychiatric Inpatient Experience (PIZ)” measure requires IPFs to report scores for certain domains (relationship with treatment team, nursing presence, treatment effectiveness, and healing environment) based on patient responses to a 23-item survey administered 24 hours prior to discharge. This measure will be voluntary for CY 2025 and will become mandatory for CY 2026.
  • The existing “COVID-19 Vaccination Coverage Among Healthcare Personnel” measure is modified beginning in the fourth quarter of CY 2023 to require IPFs to report the cumulative number of healthcare personnel who are up-to-date with recommended COVID-19 vaccinations. Currently, this measure only requires reporting for the primary vaccination series.
  • The “Patients Discharged on Multiple Antipsychotic Medications with Appropriate Justification (HBIPS-5)” and “Tobacco Use Brief Intervention Provided or Offered and Tobacco Use Brief Intervention Provided (TOB-2/2a)” measures are being removed beginning with the FY 2025 payment determination.
• Other. The Final Rule also codifies certain procedural aspects of the IPFQR Program and provides for adoption of a data validation pilot program beginning with CY 2025 data.

The Final Rule is available here. The Fact Sheet issued by CMS in connection with the Final Rule is available here.