FY 2023 inpatient psychiatric facility PPS final rule brings a 2.5% payment increase

Good news for inpatient psychiatric facilities (IPF). In FY 2023, these facilities will see an increase in total estimated payments by 2.5% or $90 million compared to FY 2022. It’s all thanks to the FY 2023 IPF prospective payment system (PPS) final rule that the Centers for Medicare & Medicaid Services (CMS) released on July 27, 2022. The rule was subsequently published in the Federal Register, and it takes effect on October 1, 2022. This 33-page rule is jam packed with information that will impact IPFs nationwide starting this fall. Here are a few highlights:

• CMS will impose a permanent 5% cap policy to smooth the impact of annual changes in IPF payments related to decreases in the IPF wage index.
• CMS will increase the IPF PPS federal per diem base rate from $832.94 to $865.63. The federal per diem base rate for providers who fail to report quality data will be $848.95.
• CMS will increase payment per treatment of electroconvulsive therapy from $358.60 to $372.67. The payment per treatment for providers who fail to report quality data will be $365.49.
• CMS will increase the labor-related share from 77.2% to 77.4%.
• CMS will change the wage index budget-neutrality to 1.0012.
• CMS will increase the fixed dollar loss threshold amount from $16,040 to $24,630.

How to prepare

As always, read the rule. This may sound simple, but it’s an obvious first step toward ensuring compliance. More specifically, providers should review whether they’ve uploaded appropriate IPF rates into their patient accounting system to ensure accurate Medicare billing on or after October 1, 2022. In addition, validate whether the system calculates rates correctly. To do this, run a paid claim through CMS’ IPF pricer tool. Still have questions? Contact us at Rivet Health Law, PLC. We’re happy to help you navigate the changes.