Psych ward payments get a boring FY2027 tweak
Published Date: 7/31/2026
Rule
Summary
This final rule updates the prospective payment rates, the outlier threshold, and the wage index for Medicare inpatient hospital services provided by Inpatient Psychiatric Facilities (IPFs), which include psychiatric hospitals and excluded psychiatric units of an acute care hospital or critical access hospital. This final rule also refines the Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS) outlier policy. These changes will be effective for IPF discharges occurring during the fiscal year beginning October 1, 2026, through September 30, 2027. We are also finalizing the implementation of a standardized IPF patient assessment instrument, and removing two measures used in the Inpatient Psychiatric Facilities Quality Reporting Program.
Analyzed Economic Effects
3 provisions identified: 1 benefits, 1 costs, 1 mixed.
FY 2027 IPF Medicare Payment Updates
Medicare payment rates to Inpatient Psychiatric Facilities (IPFs) are updated for the FY beginning October 1, 2026. The Federal per diem base rate increases from $892.87 to $912.40 (and to $894.56 for IPFs that failed to report quality data); the electroconvulsive therapy (ECT) payment per treatment increases from $673.85 to $688.59 (and to $675.13 for non-reporting IPFs); the labor-related share is revised from 79.0 percent to 78.9 percent; the wage-index budget neutrality factor is set to 0.9989; and the fixed dollar loss (outlier) threshold increases from $39,360 to $40,750 to maintain estimated outlier payments at 2 percent of aggregate IPF PPS payments.
Cap on IPF Outlier Payments (20%)
CMS finalizes a policy to limit an IPF's outlier payments to no more than 20 percent of its total IPF PPS payments in a year, effective October 1, 2027. IPFs with fewer than 50 stays per year are exempt from this 20 percent limit.
Standardized IPF Assessment; Two Measures Removed
CMS finalizes implementation of a standardized Inpatient Psychiatric Facility patient assessment instrument (IPF-PAI) and finalizes removal of two IPF Quality Reporting Program measures: Alcohol Use Brief Intervention Provided or Offered and Alcohol Use Brief Intervention (SUB-2/2a) and Tobacco Use Treatment Provided or Offered at Discharge (TOB-3/3a). The statute requires IPFs to collect and submit standardized patient assessment data for RY 2028 (FY 2028) and each subsequent rate year, including at least admission and discharge data.
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Key Dates
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