On July 29, CMS released a notice updating the prospective payment rates for Medicare inpatient services provided by inpatient psychiatric facilities (IPFs) effective October 1, 2013, for the 2014 fiscal year.  CMS estimates that Medicare payment rates for 1,624 IPF facilities will rise approximately 2.3 percent in the 2014 fiscal year.

CMS’s Rehabilitation, Psychiatric, and Long Term Care market basket index, which reflects changes in the prices of goods and services in IPFs, inpatient rehabilitation facilities and long term care hospitals, projected a 2.6 percent price increase.  However, the market basket increase was reduced by a 0.5 percent multifactor productivity adjustment and an additional 0.1 percent adjustment, both required by the Affordable Care Act.  In addition, the high cost outlier threshold for Fiscal Year 2014 resulted in a 0.03 percent increase.  Accordingly, the actual payment increase will be approximately 2.3 percent.  CMS estimates that it will spend an additional $115 million for inpatient psychiatric care because of the payment rate increase.

CMS noted that it waived the notice and comment rulemaking process because this notice does not reflect any substantive changes in policy, only the application of previously established methodologies.  CMS expects to recalculate the IPF Federal per diem base rate and the patient-and facility-level adjustments in the Fiscal Year 2015 rulemaking process.

To view the payment update notice, click here.

Reporter, Lauren Slive, Atlanta, +1 404 572 3592, lslive@kslaw.com.