CMS issues FY 2018 payment update for inpatient psychiatric facilities

The Centers for Medicare & Medicaid Services today issued a notice updating the payment rates for inpatient psychiatric facilities for fiscal year 2018. CMS makes a net payment increase of 0.99%, or $45 million, compared to FY 2017. This includes a 2.6% market-basket update, offset by cuts of 0.6% for productivity and a further Affordable Care Act-mandated cut of 0.75%, as well as a decrease of 0.26% for high-cost outlier cases. CMS also completes its transition to the most recent labor market areas issued by the Office of Management and Budget. Specifically, when implementing these new areas, several IPFs changed from rural to urban, thus losing eligibility for the rural payment add-on of 17%. In the FY 2016 IPF PPS final rule, CMS implemented a policy to gradually phase out the rural adjustment for these IPFs over three years. The affected IPFs received two-thirds of the rural adjustment in FY 2016, one-third of the rural adjustment for FY 2017, and will not receive an adjustment in FY 2018. The updates will take effect Oct. 1.