Medicare Fine-Tunes Psych Hospital Payments for Fiscal Year 2026
Published Date: 8/5/2025
Rule
Summary
Starting October 1, 2025, Medicare is updating how it pays inpatient psychiatric hospitals and units, including changes to rates, wage adjustments, and special payments for teaching and rural facilities. These updates affect hospitals that care for patients with mental health needs and aim to make payments fairer and more accurate. Plus, quality reporting rules are getting a refresh to keep care top-notch through September 30, 2026.
Analyzed Economic Effects
5 provisions identified: 1 benefits, 0 costs, 4 mixed.
IPF Prospective Payment Rate Update
If you receive inpatient psychiatric care paid by Medicare, the rule updates the prospective payment rates that Medicare uses to pay Inpatient Psychiatric Facilities (IPFs) for discharges from October 1, 2025 through September 30, 2026. This change alters how much Medicare pays those hospitals during that fiscal year.
Wage Index Adjustments for IPFs
Medicare is updating the wage index used to adjust payments to Inpatient Psychiatric Facilities for the period October 1, 2025 through September 30, 2026. If you get care in an IPF, the geographic wage adjustments that affect facility payments will be changed for that fiscal year.
Outlier Payment Threshold Change
Medicare is revising the outlier threshold used for IPF payments for discharges between October 1, 2025 and September 30, 2026. If an IPF has unusually costly cases, the threshold that triggers outlier payments will be different during that fiscal year.
Teaching & Rural Payment Adjustment Revisions
Medicare revises the payment adjustment factors that apply to IPFs with a teaching status and to IPFs located in rural areas for discharges from October 1, 2025 through September 30, 2026. If you receive care at a teaching hospital or a rural psychiatric facility, those facilities' Medicare adjustments are changed for that fiscal year.
IPF Quality Reporting and Exception Policy
Medicare is updating the measures used in the Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program and is updating and codifying the Extraordinary Circumstances Exception policy for the period through September 30, 2026. If you get care in an IPF, the quality measures that hospitals report and the rules for exceptions during extraordinary circumstances are changed for that reporting period.
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