CMS estimates that the fiscal year (FY) 2017 inpatient psychiatric facility (IPF) prospective payment system (PPS) payment update will make an overall economic impact of $100 million in increased payments in IPFs during FY 2017. Under the update, IPFs that were designated as rural in FY 2015 but became urban in FY 2016 because of Office of Management and Budget (OMB) Core Based Statistical Area (CBSA) changes will receive one-third of the 17 percent IPF PPS rural adjustment, as CMS continues to phase out the rural adjustment for these providers. The notice will publish in the Federal Register on August 1, 2016.
CMS made the following updates to the IPF PPS for FY 2017:
- Market basket. Previously, for FY 2016, CMS adopted a 2012-based IPF market basket. For FY 2017, CMS adjusted the 2012-based IPF market basket update (2.8 percent) by a reduction for economy-wide productivity (0.3 percentage point) as required by Social Security Act (SSA) §1886(s)(2)(A)(i). CMS further reduced the 2012 IPF market basket update by 0.2 percentage point under SSA §1886(s)(2)(A)(ii), resulting in an estimated IPF payment rate of 2.3 percent for FY 2017.
- Labor-related share. CMS adjusted the 2012-based IPF market basket, resulting in a labor-related share of 75.1 percent for FY 2017.
- Per diem rate. CMS updated the IPF PPS per diem rate from $743.73 to $761.37 for FY 2017. Providers that failed to report quality data for FY 2017 payment will receive a per diem rate of $746.48 for FY 2017.
- ECT payment. CMs updated the electroconvulsive therapy (ECT) payment per treatment from $320.19 to $327.78. Providers that failed to report quality data for FY 2017 will receive a per-treatment payment of $321.38.
- Budget neutrality adjustment. CMS updated the labor-related share of 75.1 percent for the 2012 IPF market basket and CBSA rural and urban wage indices for FY 2017, resulting in a wage index budget-neutrality adjustment of 1.0007.
- Outlier payments. CMS updated the fixed-dollar loss threshold amount from $9,580 to $10,120 to maintain estimated outlier payments at 2 percent of the total estimated aggregate IPF PPS payments.
Continuing phase-out of providers that lost rural adjustment in 2016. The November 2004 IPF PPS final rule provided a 17 percent payment adjustment for IPFs in rural areas. For FY 2017, CMS will continue to apply a 17 percent payment adjustment for IPFs in rural areas. In the FY 2016 final rule, CMS implemented a budget-neutral three-year phase-out of the rural adjustments for IPFs that were rural in FY 2015 but became urban in FY 2016 as a result of OMB CBSA changes. For FY 2017, these IPFs will receive one-third of the 17 percent IPF PPS rural adjustment. For FY 2018 and subsequent years, the IPFs will not receive any rural adjustment.
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