(Medicare Claims Processing Manual)

define an IPF as a hospital that meets the requirements specified in  42 CFR 412.22, 42 CFR 412.23(a) , 42 CFR 482.60 , 42 CFR 482.61, and 42 CFR 482.62 , and units that meet the requirements specified in 42 CFR 412.22, 42 CFR 412.25, and 42 CFR 412.27 .  IPFs are certified under Medicare as inpatient psychiatric hospitals, which means an institution that is primarily engaged in providing, by or under the supervision of a physician, psychiatric services for the diagnosis and treatment of mentally ill patien ts, maintains clinical records necessary to determine the degree and intensity of the treatment provided to mentally ill patients, and meets staffing requirements sufficient to carry out active programs of treatment for individuals who are furnished care in the institution.  A distinct part psychiatric unit may also be certified if it meets the clinical record and staffing requirements in 42 CFR 412.27 which mirror the requirements for a psychiatric hospitals in 42 CFR 482.60, 42 CFR 482.61 and 42 CFR 482.62 .  The CMS Certification Number (CCN) ranges for IPFs are from xx -4000 through xx-4499, xx-Sxxx, and xx- Mxxx.  Note that this will change with the implementation of National Provider Identifiers (NPI).  The following hospitals are not paid under the IPF PPS:   Veterans Administration hospitals; See 42 CFR 412.22 (c).   Hospitals that are reimbursed under state cost control systems approved under 42 CFR Part 403; Psychiatric Hospitals (provider numbers xx-4000 - xx-4499) in the State of Maryland are paid under the IPF PPS.  Psychiatric distinct part units located in an acute care hospital in Maryland identified by S in the third position of the CMS Certificatio n Number (CCN) are waived from the IPF PPS, as is the acute hospital in which they are located.  Currently there are no CAHs in Maryland.   Hospitals that are reimbursed in accordance with demonstration projects authorized under 402(a) of Pub. L. 90-248 (42 U. S. C. 1395b-1) or 222(a) of Pub. L. 92-603 (42 U. S. C. 1395b- 1); See 42 CFR 412.22 (c). IPFs in acute care hospitals that participate in demonstration projects are paid in accordance with the demonstration project;   Nonparticipating hospitals furnishing emergency services to Medicare beneficiaries are paid in accordance with 42 CFR 412. 22 (c).   Payment to foreign hospitals is made in accordance with the provisions set forth in 42 CFR 413.74 .  190.4 - Federal Per Diem Base Rate  (Rev. 1101, Issued: 11- 03-06, Effective: 01-01-05, Implementation: 12-04-06)  Payments to IPFs under the IPF PPS are based on a single Federal per diem base rate computed from both the inpatient operating and capital-related costs of IPFs (including routine and ancillary services), but not certain pass-through costs (i.e., bad debts , direct graduate medical education, and nursing and allied health education).  The Federal per diem payment under the IPF PPS is comprised of the Federal per diem base rate (which is broken into a labor- related share and a non -labor- related share) and applicable patient and facility adjustments that are described in 190.5 and 190.6.  The standardized Federal per diem base rates and adjustment factors are updated July 1 every year, beginning July 1, 2006.  For the updated standardized Federal per diem base rates for subsequent years refer to the Federal Register rules and accompanying Recurring Update Notifications.  See  http://www.cms.gov/Medicare/Medicare- Fee-for-Service-Payment/InpatientPsychFacilPPS/IPF -PPS-Regulations- and-Notices.html   190.4.1 - Standardization Factor  (Rev. 1101, Issued: 11- 03-06, Effective: 01-01-05, Implementation: 12-04-06)  The CMS standardized the IPF PPS Federal per diem base rate in order to account for the overall positive effects of the IPF PPS payment adjustment factors.  To standardize the IPF PPS payments, CMS compared the IPF PPS payment amounts calculated from the F Y 2002 MedPAR file to the projected TEFRA payments from the FY 2002 cost report file updated to the midpoint of the IPF PPS implementation period (that is, October 2005).  The standardization factor was calculated by dividing total estimated payments under the TEFRA payment system by estimated payments under the IPF PPS.  CMS then applied this factor to the average per diem cost of an IPF stay.   190.4.2 - Budget Neutrality  (Rev. 1101, Issued: 11- 03-06, Effective: 01-01-05, Implementation: 12-04-06)  The BBRA required that total payments under the PPS must equal the amount that would have been paid if the PPS had not been implemented.  Therefore, in the November 2004 IPF PPS final rule, CMS calculated the budget neutrality factor by setting the total estimated IPF PPS payments to be equal to the total estimated payments that would have been made under the TEFRA methodology had the IPF PPS not been implemented.  CMS calculated the final Federal per diem base rate to be budget neutral during the implementation period under the IPF PPS using a July 1 update cycle.  The implementation period for the IPF PPS is the 18-month period of January 1, 2005 through June 30, 2006.  190.4.2.1 - Budget Neutrality Components (Rev. 1543; Issued:  06-27- 08; Effective Date:  07 -01-08; Implementation Date:  07-07-08)  The following are the three components of the budget neutrality adjustment:   (1) Outlier Adjustment: Since the IPF PPS payment amount for each stay includes applicable outlier amounts, CMS reduced the standardized Federal per diem base rate to account for aggregate IPF PPS payments estimated to be made as outlier payments.  The appropriate outlier amount was determined by comparing the adjusted prospective payment for the entire stay to the computed cost per case.  If costs were above the prospective payment plus the adjusted fixed dollar loss threshold amount, an outlier payment wa s computed using the applicable risk-sharing percentages.  The outlier adjustment was calculated to be 2 percent of total IPF PPS.  As a result, the standardized Federal per diem base rate was reduced by 2 percent to account for projected outlier payments;   (2) Stop -Loss Adjustment:  CMS  provides a stop-loss payment to ensure that an IPF's total PPS payments are no less than a minimum percentage of their TEFRA payment, had the IPF PPS not been implemented.  CMS reduced the standardized Federal per diem base rate by the percentage of aggregate IPF PPS payments estimated to be made for stop -loss payments.  As a result, the standardized Federal per diem base rate was reduced by 0.39 percent to account for stop-loss payments.  Since the transition will be completed for RY 2009, for cost reporting periods beginning on or after January 1, 2008, IPFs will be paid 100 percent PPS and, therefore, the stop loss provision will no longer be applicable.  The CMS has previously stated that we would remove this 0.39 percent adjustment to the Federal per diem base rate after the transition.  Therefore, for RY 2009, the Federal per diem base rate and ECT rates will be increased by 0.39 percent.    (3) Behavioral Offset:  The implementation of the IPF PPS may result in certain changes in IPF practices especially with respect to coding for comorbid medical conditions.  As a result, Medicare may incur higher payments than assumed in the calculations.  Accounting for these effects through an adjustment is commonly known as a behavioral offset.  The behavioral offset for the IPF PPS was calculated to be 2.66 percent.  As a result, CMS reduced the standardized Federal per diem base rate by 2.66 percent to account for behavioral changes.   190.4.3 - Annual Update  (Rev. 11543; Issued: 08-04 -2022; Effective: 10-01-22; Implementation:  10-03-22)  Prior to rate year (RY) 2012, the Inpatient Psychiatric Facility Prospective Payment System  (IPF PPS) was on a July 1st - June 30th annual update cycle. The first update to the IPF PPS occurred on July 1, 2006 and every July 1st thereafter.  Effective with RY 2012, the IPF PPS payment rate update period switched from a rate year that began on July 1st ending on June 30th to a period that coincides with a fiscal year (FY).   To transition from a RY to a FY, the IPF PPS RY 2012 covered the15 month period from July 1st -September 30th.  This change to the payment update period will allow one consolidated annual update to both the rates and the ICD-10-CM/PCS coding changes (MS-DRG, comorbidities, and code first).  Coding and rate changes will continue to be effective October 1st-September 30th of each year thereafter.  In accordance with 42 CFR 412.428 , the annual update includes revisions to the Federal per diem base rate, the hospital wage index, ICD-10-CM coding and Diagnosis- Related Groups (DRGs) classification changes discussed in the annual update to the hospital IPPS regulations, the electroconvulsive therapy (ECT) payment per treatment, the fixed dollar loss threshold amount and the national urban and rural cost- to-charge medians and ceilings.  Below are the Change Requests (CRs) for the applicable Rate Years (RYs) and Fiscal Years (FYs), which are issued via a Recurring Update Notification.  RY 2009 - CR 6077 RY 2010 - CR 6461  RY 2011 - CR 6986 RY 2012 - CR 7367 FY 2013 - CR 8000 FY 2014 - CR 8395 FY 2015 - CR 8889 FY 2016 - CR 9305 FY 2017 - CR 9732 FY 2018 - CR 10214 FY 2019 - CR 10880 FY 2020 - CR 11420 FY 2021  CR 11949 FY 2022- CR 12417 FY 2023  CR 12859  Change Requests can be accessed through the following CMS Transmittals Website: http://www.cms.gov/Medicare/Medicare- Fee-for-Service-Payment/InpatientPsychFacilPPS/Inpatient- Psychiatric -Facility -PPS- Transmittals.html   190.4.4 - Calculating the Federal Payment Rate  (Rev. 11140, Issued:12-02-21, Effective: 01-04-22, Implementation: 01-04-22)   To calculate an IPF PPS payment, follow the steps below:  1 - Multiply the Federal per diem base rate by the labor share.  2 - Multiply the resulting amount by the appropriate wage index factor.  3 - Multiply the Federal per diem base rate by the non- labor share.   4 - Multiply the resulting amount from this by any applicable cost- of-living adjustment (COLA) (Alaska or Hawaii).   5 - Add the adjusted labor portion of the Rate to the adjusted non-labor portion of the Rate (Add the results of steps 2 and 4).  This is the Federal rate.  You must multiply this sum (step 5) by the all applicable facility and patient level adjustment factors described in 190.5 and 190.6, to calculate the final payment.  190.5 - Patient -Level Adjustments  (Rev. 1543; Issued:  06-27- 08; Effective Date:  07 -01-08; Implementation Date:  07-07-08)  Patient -level adjustments include a DRG, or MS-DRG, adjustment, comorbidity adjustment, an age adjustment, and a variable per diem adjustment.  190.5.1 - Diagnosis - Related Groups (DRGs) Adjustments   (Rev. 4104, Issued: 08- 03-18, Effective: 10 -01-18, Implementation: 10- 01-18)