On March 31, 2022, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to update Medicare payment policies and rates for the Inpatient Psychiatric Facility Prospective Payment System (IPF PPS) for fiscal year (FY) 2023. CMS is publishing this proposed rule consistent with the legal requirements to update Medicare payment policies for IPFs on an annual basis.
This fact sheet discusses the major provisions of the proposed rule, including a proposal to establish a permanent 5% cap policy to smooth the impact of year-to-year changes in IPF payments related to changes in the IPF wage index. In addition, this proposed rule includes a request for comment on the results of the data analysis of the IPF PPS adjustments. CMS is not proposing any changes for the IPF Quality Reporting Program in this FY 2023 proposed rule.
Proposed Changes to Payments Under the IPF PPS
Proposed Updates to IPF Payment Rates:
Total estimated payments to IPFs are estimated to increase by 1.5 percent or $50 million in FY 2023 relative to IPF payments in FY 2022. For FY 2023, CMS is proposing to update the IPF PPS payment rates by 2.7 percent, based on the proposed IPF market basket update of 3.1 percent, less a 0.4 percentage point productivity adjustment. CMS is proposing that if more recent data become available (for example, a more recent estimate of the market basket update or productivity adjustment), CMS would use these data, as appropriate, to determine the FY 2023 market basket update and productivity adjustment in the final rule. Additionally, CMS is proposing to update the outlier threshold so that estimated outlier payments remain at 2.0 percent of total payments. CMS estimates that this would result in a 1.2 percent overall decrease to aggregate payments due to updating the outlier threshold.
Comment Solicitation on IPF PPS Refinement Analysis
The IPF PPS was implemented in 2005 and uses the adjustment factors derived from the original regression model. Working in collaboration with a contractor, CMS has undertaken further analysis of more recent IPF cost and claim information.
Proposed Permanent Cap on Wage Index Decreases
In order to mitigate instability in IPF PPS payments due to significant wage index decreases that may affect providers in any given year, CMS is proposing for FY 2023 and subsequent years to apply a 5 percent cap on decreases in the IPF PPS wage index. Specifically, CMS is proposing that an IPF’s wage index for FY 2023 and subsequent years would not be less than 95 percent of its final wage index calculated in the prior FY.
Principles for Measuring Healthcare Quality Disparities
Consistent with Executive Order 13985 on Advancing Racial Equity and Support for Underserved Communities through the Federal Government, CMS’ Equity Plan for Improving Quality in Medicare, and CMS’ strategic pillar to advance equity, CMS is also committed to addressing persistent inequities in health outcomes in the U.S. through improving data collection to better measure and analyze disparities across programs and policies. As disparity initiatives expand, it is important to model efforts off of existing best practices.
CMS is seeking comment, via a request for information (RFI), on considerations that CMS can consider when advancing the use of measurement and stratification as tools to address healthcare disparities and advance healthcare equity. CMS is seeking comment on key considerations in five specific areas that could inform our approach: identification of goals and approaches for measuring healthcare disparities and using measure stratification across CMS quality programs; guiding principles for selecting and prioritizing measures for disparity reporting across CMS quality programs; principles for social risk factor and demographic data selection and use; identification of meaningful performance differences; and guiding principles for reporting disparity results. Comments to the RFI will inform equity efforts both in behavioral health (mental health and substance use) by CMS as well as the Inpatient Psychiatric Facility Quality Reporting Program (IPFQRP).