Medicare Psychiatric Facility Payment Updates
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 revises the payment adjustment factors for teaching status and for IPFs located in rural areas. These changes will be effective for IPF discharges occurring during the fiscal year beginning October 1, 2025, through September 30, 2026. We are finalizing changes to measures used in the Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program, updating and codifying the Extraordinary Circumstances Exception policy, and summarizing comments received through requests for information regarding future changes to the IPFQR Program.
Compliance Requirements
- #1
Updates the prospective payment rates, the outlier threshold, and the wage index for Medicare inpatient hospital services provided by Inpatient Psychiatric Facilities (IPFs) for discharges occurring during fiscal year (FY) 2026, (beginning October 1, 2025, through September 30, 2026).; Revises the payment adjustment factors for teaching status and for IPFs located in rural areas.; Modifies a quality measure, removes four quality measures, and updates and codifies the Extraordinary Circumstances Exception (ECE) policy under the Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program.; IPFs that fail to report required quality data with respect to such a rate year will have their annual update to a standard Federal rate for discharges reduced by 2.0 percentage points.; Collect data and information, as the Secretary determines appropriate, to revise payments under the IPF PPS.; Implement revisions to the methodology for determining the payment rates under the IPF PPS for psychiatric hospitals and psychiatric units, effective for rate year (RY) 2025 (FY 2025).; IPFs participating in the IPFQR Program must collect and submit to the Secretary standardized patient assessment data, using a standardized patient assessment instrument, for RY 2028 (FY 2028) and each subsequent rate year.
Deadline: 2025-10-01(October 1, 2025)
Market Impacts
Updates the prospective payment rates, the outlier threshold, and the wage index for Medicare inpatient hospital services provided by Inpatient Psychiatric Facilities (IPFs) for FY 2026.; Estimates a cost reduction of $1,746,474 for facilities and patients due to the policies being finalized for the IPFQR Program.; Requires IPFs participating in the IPFQR Program to collect and submit standardized patient assessment data, using a standardized patient assessment instrument.
Validated Company Impacts
Acadia Healthcare Company, Inc.
Acadia Healthcare operates inpatient psychiatric facilities (IPFs) that provide Medicare-covered services, directly falling under this rule's jurisdiction for payment rate updates, quality reporting requirements, and payment adjustments. The company's core business of psychiatric hospital services aligns perfectly with all aspects of this Medicare IPF prospective payment system regulation. The rule directly impacts Medicare reimbursement rates and quality reporting requirements for inpatient psychiatric facilities, which aligns perfectly with the company's identified 'Medicare and Medicaid Reimbursement Risks' risk factor. This represents a material regulatory compliance risk that could significantly affect revenue, matching the company's specific concern about reimbursement policy changes.
HCA Healthcare, Inc.
HCA Healthcare operates hospitals that include psychiatric units, which fall directly under the IPF PPS regulations for Medicare inpatient psychiatric services. As a major hospital operator with facilities across multiple states, HCA would be subject to the payment rate updates, quality reporting requirements, and potential penalties for non-compliance with the IPFQR Program. The rule primarily addresses Medicare payment rates and quality reporting requirements for inpatient psychiatric facilities, which does not directly align with the company's disclosed risk factors focused on financial indebtedness, staffing shortages, physician recruitment, and refinancing risks. While the company has regulatory compliance risks identified, this specific psychiatric facility payment rule would not materially impact their core operational or financial risk profile.
Surgery Partners, Inc.
Surgery Partners operates surgical facilities focused on outpatient procedures and does not operate inpatient psychiatric facilities (IPFs) or psychiatric units, which are the exclusive targets of this Medicare rule. The company's business model centers on surgical and diagnostic services rather than inpatient psychiatric care, resulting in minimal relevance to this specific regulation. The rule directly impacts Medicare reimbursement rates for inpatient psychiatric services, which aligns strongly with the company's 'Revenue Concentration' risk factor due to dependence on patient service revenues. Additionally, the quality reporting requirements and regulatory changes match the 'Healthcare Regulations' risk factor, indicating significant regulatory compliance exposure.
TENET HEALTHCARE CORP
Tenet Healthcare operates psychiatric hospitals and inpatient psychiatric units within its acute care hospitals, which are directly regulated by this Medicare IPF payment system rule. The company's extensive Medicare participation and psychiatric service operations make it highly susceptible to the payment rate updates, quality reporting requirements, and financial penalties outlined in the rule. The Medicare IPF payment rule specifically targets inpatient psychiatric facilities and their Medicare reimbursement processes, which does not align with any of this company's disclosed risk factors focused exclusively on cybersecurity, legal proceedings, and regulatory investigations without mention of healthcare operations or Medicare compliance. The company's risk profile shows no indication of operating in healthcare services, psychiatric facilities, or Medicare-dependent revenue streams that would be affected by this rule.
UNIVERSAL HEALTH SERVICES INC
Universal Health Services operates behavioral health services that include inpatient psychiatric facilities, which are directly targeted by this Medicare rule updating payment rates and quality reporting requirements for IPFs. The company's extensive behavioral health segment aligns perfectly with the rule's focus on psychiatric hospitals and units. The rule specifically targets Medicare payment rates and quality reporting requirements for inpatient psychiatric facilities, which does not align with any of the company's disclosed risk factors. While the company has regulatory compliance risks (13 identified), none specifically mention Medicare reimbursement, psychiatric services, or quality reporting programs that would be directly impacted by this psychiatric facility payment rule.