[Federal Register Volume 90, Number 82 (Wednesday, April 30, 2025)]
[Proposed Rules]
[Pages 18494-18531]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-06298]
[[Page 18493]]
Vol. 90
Wednesday,
No. 82
April 30, 2025
Part III
Department of Health and Human Services
-----------------------------------------------------------------------
Centers for Medicare & Medicaid Services
-----------------------------------------------------------------------
42 CFR Part 412
Medicare Program; FY 2026 Inpatient Psychiatric Facilities Prospective
Payment System--Rate Update; Proposed Rule
Federal Register / Vol. 90 , No. 82 / Wednesday, April 30, 2025 /
Proposed Rules
[[Page 18494]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 412
[CMS-1831-P]
RIN 0938-AV46
Medicare Program; FY 2026 Inpatient Psychiatric Facilities
Prospective Payment System--Rate Update
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This rulemaking proposes to update 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 rulemaking
also proposes to revise the payment adjustment factors for teaching
status and for IPFs located in rural areas. These proposed changes
would be effective for IPF discharges occurring during the fiscal year
beginning October 1, 2025 through September 30, 2026. We are proposing
to make changes to measures used in the Inpatient Psychiatric
Facilities Quality Reporting (IPFQR) Program, to update and codify the
Extraordinary Circumstances Exception policy, and to solicit feedback
through requests for information on future changes to the IPFQR
Program.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by June 10, 2025.
ADDRESSES: In commenting, please refer to file code CMS-1831-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1831-P, P.O. Box 8010,
Baltimore, MD 21244-8010.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1831-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
The IPF Payment Policy mailbox at [email protected] for
general information.
Nick Brock (410) 786-5148, for information regarding the inpatient
psychiatric facilities prospective payment system (IPF PPS) and
regulatory impact analysis.
Kaleigh Emerson, [email protected], for information
regarding the inpatient psychiatric facilities quality reporting
(IPFQR) program.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to
view public comments. CMS will not post on Regulations.gov public
comments that make threats to individuals or institutions or suggest
that the commenter will take actions to harm an individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at https://www.regulations.gov/.
Deregulation Request for Information (RFI): On January 31, 2025,
President Trump issued Executive Order (E.O.) 14192 ``Unleashing
Prosperity Through Deregulation,'' which states the Administration
policy to significantly reduce the private expenditures required to
comply with Federal regulations to secure America's economic prosperity
and national security and the highest possible quality of life for each
citizen. We would like public input on approaches and opportunities to
streamline regulations and reduce administrative burdens on providers,
suppliers, beneficiaries, and other interested parties participating in
the Medicare program. CMS has made available an RFI at https://www.cms.gov/medicare-regulatory-relief-rfi. Please submit all comments
in response to this RFI through the provided weblink.
Availability of Certain Tables Exclusively Through the Internet on the
CMS Website
Addendum A to this proposed rule summarizes the fiscal year (FY)
2026 IPF PPS payment rates, outlier threshold, cost of living
adjustment factors (COLA) for Alaska and Hawaii, national and upper
limit cost-to-charge ratios, and adjustment factors. In addition,
Addendum B to this proposed rule shows the complete listing of ICD-10
Clinical Modification (CM) and Procedure Coding System (PCS) codes, the
FY 2026 IPF PPS comorbidity adjustment, and electroconvulsive therapy
(ECT) procedure codes. Addenda A and B to this proposed rule are
available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility/tools-and-worksheets.
Tables setting forth the FY 2026 Wage Index for Urban Areas Based
on Core Based Statistical Area (CBSA) Labor Market Areas, the FY 2026
Wage Index Based on CBSA Labor Market Areas for Rural Areas, and the FY
2026 CBSA Labor Market Areas are available exclusively through the
internet, on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility/wage-index.
I. Executive Summary
A. Purpose
This proposed rule would update 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). This rule includes a proposal to
revise the payment adjustment factors for teaching status and for IPFs
located in rural areas. Lastly, this proposed rule would update a
quality measure, remove four quality measures, and update and codify
the Extraordinary Circumstances Exception (ECE) policy under the
Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program.
[[Page 18495]]
B. Summary of the Major Provisions
1. Inpatient Psychiatric Facilities Prospective Payment System (IPF
PPS)
For the IPF PPS, we propose to:
Revise the facility-level IPF PPS adjustment factors for
teaching status and for IPFs located in rural areas.
Make technical rate setting updates: The IPF PPS payment
rates will be adjusted annually for input price inflation, as well as
statutory and other policy factors.
This rule proposes to update:
++ The IPF PPS Federal per diem base rate from $876.53 to $891.99.
++ The IPF PPS Federal per diem base rate for providers who failed
to report quality data to $874.57.
++ The electroconvulsive therapy (ECT) payment per treatment from
$661.52 to $673.19.
++ The ECT payment per treatment for providers who failed to report
quality data to $660.04.
++ The labor-related share from 78.8 percent to 78.9 percent.
++ The wage index budget neutrality factor to 1.0011. This proposed
rule would apply a refinement standardization factor of 0.9927.
++ The fixed dollar loss threshold amount from $38,110 to $39,360,
to maintain estimated outlier payments at 2 percent of total estimated
aggregate IPF PPS payments.
2. Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program
For the Inpatient Psychiatric Facilities Quality Reporting (IPFQR)
Program, we propose to modify the reporting period of the 30-Day Risk-
Standardized All Cause Emergency Department (ED) Visit Following an IPF
Discharge measure, to remove the COVID-19 Vaccination Coverage Among
Healthcare Personnel (HCP) measure, to remove the Facility Commitment
to Health Equity measure, to remove the Screening for Social Drivers of
Health and Screen Positive Rate for Social Drivers of Health measures,
and to update and codify changes to the Extraordinary Circumstances
Exception (ECE) policy. In addition, we are soliciting feedback on
three topics through requests for information on a potential future
star rating system for IPFs, future measures for the IPFQR Program, and
on using the Fast Healthcare Interoperability Resources[supreg]
(FHIR[supreg]) standard for electronic exchange of healthcare
information for patient assessment reporting.
C. Summary of Impacts
------------------------------------------------------------------------
Total transfers & cost
Provision description reductions
------------------------------------------------------------------------
FY 2026 IPF PPS payment update......... The overall economic impact of
this proposed rule is an
estimated $70 million in
increased payments to IPFs
during FY 2026.
IPFQR Program update, including measure We estimate a cost reduction of
removals. $1,746,474 ($1,731,712 in
CY2026 and a further $14,761
in CY 2027) for facilities and
patients due to the policies
we are proposing for the IPFQR
Program.
------------------------------------------------------------------------
II. Background
A. Overview of the Legislative Requirements of the IPF PPS
Section 124 of the Medicare, Medicaid, and State Children's Health
Insurance Program Balanced Budget Refinement Act of 1999 (BBRA) (Pub.
L. 106-113) required the establishment and implementation of an IPF PPS
in a budget neutral manner. Specifically, section 124 of the BBRA
mandated that the Secretary of Health and Human Services (the
Secretary) develop a per diem prospective payment system (PPS) for
inpatient hospital services furnished in psychiatric hospitals and
excluded psychiatric units including an adequate patient classification
system that reflects the differences in patient resource use and costs
among psychiatric hospitals and excluded psychiatric units. ``Excluded
psychiatric unit'' means a psychiatric unit of an acute care hospital
or of a Critical Access Hospital (CAH), which is excluded from payment
under the Inpatient Prospective Payment System (IPPS) or CAH payment
system, respectively. These excluded psychiatric units will be paid
under the IPF PPS.
Section 405(g)(2) of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173) extended the IPF
PPS to psychiatric distinct part units of CAHs.
Sections 3401(f) and 10322 of the Patient Protection and Affordable
Care Act (Pub. L. 111-148) as amended by section 10319(e) of that Act
and by section 1105(d) of the Health Care and Education Reconciliation
Act of 2010 (Pub. L. 111-152) (hereafter referred to jointly as ``the
Affordable Care Act'') added subsection (s) to section 1886 of the
Social Security Act (the Act).
Section 1886(s)(1) of the Act titled ``Reference to Establishment
and Implementation of System,'' refers to section 124 of the BBRA,
which relates to the establishment of the IPF PPS.
Section 1886(s)(2)(A)(i) of the Act requires the application of the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act to the IPF PPS for the rate year (RY) beginning in 2012 (that
is, a RY that coincides with a FY) and each subsequent RY.
Section 1886(s)(2)(A)(ii) of the Act required the application of an
``other adjustment'' that reduced any update to an IPF PPS base rate by
a percentage point amount specified in section 1886(s)(3) of the Act
for the RY beginning in 2010 through the RY beginning in 2019. As noted
in the FY 2020 IPF PPS final rule (84 FR 38424), for the RY beginning
in 2019, section 1886(s)(3)(E) of the Act required that the other
adjustment reduction be equal to 0.75 percentage point; that was the
final year the statute required the application of this adjustment.
Because FY 2021 was a RY beginning in 2020, FY 2021 was the first year
that section 1886(s)(2)(A)(ii) of the Act did not apply since its
enactment.
Sections 1886(s)(4)(A) through (D) of the Act require that for RY
2014 and each subsequent RY, IPFs that fail to report required quality
data with respect to such a RY will have their annual update to a
standard Federal rate for discharges reduced by 2.0 percentage points.
This may result in an annual update being less than 0.0 for a RY, and
may result in payment rates for the upcoming RY being less than such
payment rates for the preceding RY. Any reduction for failure to report
required quality data will apply only to the RY involved, and the
Secretary will not consider such reduction in computing the payment
amount for a subsequent RY. Additional information about the specifics
of the current IPFQR Program is available in the FY 2020 IPF PPS final
rule (84 FR 38459 through 38468).
Section 4125 of the Consolidated Appropriations Act, 2023 (CAA,
2023) (Pub. L. 117-328), which amended section 1886(s) of the Act,
requires CMS to revise the Medicare prospective payment system for
psychiatric hospitals and psychiatric units. Specifically, section
4125(a) of the CAA,
[[Page 18496]]
2023 added section 1886(s)(5)(A) of the Act to require the Secretary to
collect data and information, as the Secretary determines appropriate,
to revise payments under the IPF PPS. CMS discussed this data
collection in the FY 2024 IPF PPS final rule (88 FR 51054), as CMS was
required to begin collecting this data and information not later than
October 1, 2023. As discussed in that rule, the agency has already been
collecting data and information consistent with the types set forth in
the CAA, 2023 as part of our extensive and years-long analyses and
consideration of potential payment system refinements. We refer readers
to the FY 2024 IPF PPS final rule (88 FR 51095 through 51098) where we
discussed existing data collection and requested information to inform
future IPF PPS revisions.
In addition, section 1886(s)(5)(D) of the Act, as added by section
4125(a) of the CAA, 2023 required that the Secretary implement
revisions to the methodology for determining the payment rates under
the IPF PPS for psychiatric hospitals and psychiatric units, effective
for RY 2025 (FY 2025). Section 1886(s)(5)(D) of the Act provided that
these revisions may be based on a review of the data and information
collected under section 1886(s)(5)(A) of the Act. For a detailed
discussion on the revisions implemented for FY 2025, we refer readers
to the FY 2025 IPF PPS final rule (89 FR 64590 through 64636).
Section 4125(b) of the CAA, 2023 amended section 1886(s)(4) of the
Act by inserting a new subparagraph (E)--and redesignating the existing
subparagraph (E) as subparagraph (F)--which requires IPFs participating
in the IPFQR Program to 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. IPFs must submit such data with respect to at least the admission
and discharge of an individual, or more frequently as the Secretary
determines appropriate. For IPFs to meet this new data collection and
reporting requirement for RY 2028 and each subsequent rate year, the
Secretary must implement a standardized patient assessment instrument
that collects data with respect to the following categories: functional
status; cognitive function and mental status; special services,
treatments, and interventions; medical conditions and comorbidities;
impairments; and other categories as determined appropriate by the
Secretary. This patient assessment instrument must enable comparison of
such patient assessment data that IPFs submit across all such IPFs to
which such data are applicable.
Section 4125(b) of the CAA, 2023 further amended section 1886(s) of
the Act by adding a new subparagraph (6) that requires the Secretary to
implement revisions to the methodology for determining the payment
rates for psychiatric hospitals and psychiatric units (that is, payment
rates under the IPF PPS), effective for RY 2031 (FY 2031), as the
Secretary determines to be appropriate, to take into account the
patient assessment data described in paragraph (4)(E)(ii).
To implement and periodically update the IPF PPS, we have published
various proposed and final rules and notices in the Federal Register.
For more information regarding these documents, we refer readers to the
CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/index.html?redirect=/
InpatientPsychFacilPPS/.
B. Overview of the IPF PPS
We issued the rate year (RY) 2005 IPF PPS final rule which appeared
in the November 15, 2004 Federal Register (69 FR 66922). The RY 2005
IPF PPS final rule established the IPF PPS, as required by section 124
of the BBRA and codified at 42 CFR part 412, subpart N. The RY 2005 IPF
PPS final rule set forth the Federal per diem base rate for the
implementation year (the 18-month period from January 1, 2005 through
June 30, 2006) and provided payment for the inpatient operating and
capital costs to IPFs for covered psychiatric services they furnish
(that is, routine, ancillary, and capital costs, but not costs of
approved educational activities, bad debts, and other services or items
that are outside the scope of the IPF PPS). Covered psychiatric
services include services for which benefits are provided under the
fee-for-service Part A (Hospital Insurance Program) of the Medicare
program.
The IPF PPS established the Federal per diem base rate for each
patient day in an IPF derived from the national average daily routine
operating, ancillary, and capital costs in IPFs in FY 2002. The average
per diem cost was updated to the midpoint of the first year under the
IPF PPS, standardized to account for the overall positive effects of
the IPF PPS payment adjustments, and adjusted for budget neutrality.
The Federal per diem payment under the IPF PPS is comprised of the
Federal per diem base rate described previously and certain patient-
and facility-level payment adjustments for characteristics that were
found in the regression analysis to be associated with statistically
significant per diem cost differences, with statistical significance
defined as p less than 0.05. A complete discussion of the regression
analysis that established the IPF PPS adjustment factors can be found
in the RY 2005 IPF PPS final rule (69 FR 66933 through 66936).
The patient-level adjustments include age, Diagnosis-Related Group
(DRG) assignment, and comorbidities, as well as adjustments to reflect
higher per diem costs at the beginning of a patient's IPF stay and
lower costs for later days of the stay. Facility-level adjustments
include adjustments for the IPF's wage index, rural location, teaching
status, a cost-of-living adjustment for IPFs located in Alaska and
Hawaii, and an adjustment for the presence of a qualifying emergency
department (ED).
The IPF PPS provides additional payment policies for outlier cases,
interrupted stays, and a per treatment payment for patients who undergo
ECT. During the IPF PPS mandatory 3-year transition period, stop-loss
payments were also provided; however, since the transition ended as of
January 1, 2008, these payments are no longer available.
C. Annual Requirements for Updating the IPF PPS
Section 124 of the BBRA did not specify an annual rate update
strategy for the IPF PPS and was broadly written to give the Secretary
discretion in establishing an update methodology. Therefore, in the RY
2005 IPF PPS final rule, we implemented the IPF PPS using the following
update strategy:
Calculate the final Federal per diem base rate to be
budget neutral for the 18-month period of January 1, 2005 through June
30, 2006.
Use a July 1 through June 30 annual update cycle.
Allow the IPF PPS first update to be effective for
discharges on or after July 1, 2006 through June 30, 2007.
The RY 2005 final rule (69 FR 66922) implemented the IPF PPS. In
developing the IPF PPS, and to ensure that the IPF PPS can account
adequately for each IPF's case-mix, we performed an extensive
regression analysis of the relationship between the per diem costs and
certain patient and facility characteristics to determine those
characteristics associated with statistically significant cost
differences on a per diem basis. That regression analysis is described
in detail in our RY 2004 IPF proposed rule (68 FR 66923; 66928 through
66933) and our RY 2005 IPF final rule (69 FR 66933 through 66960). For
characteristics with
[[Page 18497]]
statistically significant cost differences, we used the regression
coefficients of those variables to determine the size of the
corresponding payment adjustments.
In the RY 2005 IPF final rule, we explained the reasons for
delaying an update to the adjustment factors, derived from the
regression analysis, including waiting until we have IPF PPS data that
yields as much information as possible regarding the patient-level
characteristics of the population that each IPF serves. We indicated
that we did not intend to update the regression analysis and the
patient-level and facility-level adjustments until we complete that
analysis. Until that analysis is complete, we stated our intention to
publish a notice in the Federal Register each spring to update the IPF
PPS (69 FR 66966).
We issued a final rule which appeared in the May 6, 2011 Federal
Register titled, ``Inpatient Psychiatric Facilities Prospective Payment
System--Update for Rate Year Beginning July 1, 2011 (RY 2012)'' (76 FR
26432), which changed the payment rate update period to a RY that
coincides with a FY update. Therefore, final rules are now published in
the Federal Register in the summer to be effective on October 1st of
each year. When proposing changes in IPF payment policy, a proposed
rule is issued in the spring, and the final rule in the summer to be
effective on October 1st. For a detailed list of updates to the IPF
PPS, we refer readers to our regulations at 42 CFR 412.428. Beginning
October 1, 2012, we finalized that we would refer to the 12-month
period from October 1 through September 30 as a ``fiscal year'' (FY)
rather than a RY (76 FR 26435). Therefore, in this proposed rule we
refer to rules that took effect after RY 2012 by the FY, rather than
the RY, in which they took effect.
The most recent IPF PPS annual update, the FY 2025 IPF PPS final
rule (89 FR 64582), appeared in the Federal Register on August 7, 2024.
The FY 2025 IPF PPS final rule updated the patient-level adjustments
and the Emergency Department adjustment as well as increased the ECT
per treatment payment amount for FY 2025, in accordance with section
1886(s)(5)(D)(i) of the Act. That final rule also updated the IPF PPS
Federal per diem base rates that were published in the FY 2024 IPF PPS
final rule (88 FR 51054). In revising the IPF PPS patient-level
adjustment factors, and to ensure that the IPF PPS can account
adequately for each IPF's case-mix, we performed an extensive
regression analysis of the relationship between the per diem costs and
patient characteristics to determine those characteristics associated
with statistically significant cost differences on a per diem basis.
That regression analysis is described in detail in our FY 2025 IPF PPS
proposed rule (89 FR 23154 through 23161) and our FY 2025 IPF PPS final
rule (89 FR 64594 through 64601). For characteristics with
statistically significant cost differences, we used the regression
coefficients of those variables to determine the size of the
corresponding payment adjustments.
As required by section 1886(s)(5)(D)(iii) of the Act, revisions to
the IPF PPS payment rates implemented pursuant to section
1886(s)(5)(D)(i) of the Act must be budget neutral. Therefore, we
finalized a refinement standardization factor for the FY 2025 IPF PPS
payment rates to maintain budget neutrality for FY 2025. The
application of the FY 2025 standardization factor is described in
detail in our FY 2025 IPF PPS proposed rule (89 FR 23194) and our FY
2025 IPF PPS final rule (89 FR 64640 and 64641).
III. Provisions of the FY 2026 IPF PPS Proposed Rule
A. Proposed FY 2026 Market Basket Increase and Productivity Adjustment
for the IPF PPS
1. Background
Originally, the input price index used to develop the IPF PPS was
the Excluded Hospital with Capital market basket. This market basket
was based on 1997 Medicare cost reports for Medicare-participating
inpatient rehabilitation facilities (IRFs), IPFs, long-term care
hospitals (LTCHs), cancer hospitals, and children's hospitals. Although
``market basket'' technically describes the mix of goods and services
used in providing health care at a given point in time, this term is
also commonly used to denote the input price index (that is, cost
category weights and price proxies) derived from that market basket.
Accordingly, the term ``market basket,'' as used in this document,
refers to an input price index.
Since the IPF PPS inception, the market basket used to update IPF
PPS payments has been rebased and revised to reflect more recent data
on IPF cost structures. We last rebased and revised the IPF market
basket in the FY 2024 IPF PPS rule, where we adopted a 2021-based IPF
market basket, using Medicare cost report data for both Medicare
participating freestanding psychiatric hospitals and psychiatric units.
We refer readers to the FY 2024 IPF PPS final rule for a detailed
discussion of the 2021-based IPF market basket and its development (88
FR 51057 through 51081). Prior to the 2021-based IPF market basket, we
used the 2016-based IPF market basket which was adopted in the FY 2020
IPF PPS final rule (84 FR 38426 through 38447). References to the
historical market baskets used to update IPF PPS payments prior to the
FY 2020 IPF PPS rule are listed in the FY 2016 IPF PPS final rule (80
FR 46656).
2. Proposed FY 2026 IPF Market Basket Update
For FY 2026 (beginning October 1, 2025 and ending September 30,
2026), we are proposing to update the IPF PPS payments by a market
basket increase factor, with a productivity adjustment as required by
section 1886(s)(2)(A)(i) of the Act. Consistent with historical
practice, we are proposing to estimate the market basket update for the
IPF PPS based on the most recent forecast available at the time of
rulemaking from IHS Global Inc. (IGI). IGI is a nationally recognized
economic and financial forecasting firm with which CMS contracts to
forecast the components of the market baskets and productivity
adjustment. For this proposed rule, based on IGI's fourth quarter 2024
forecast with historical data through the third quarter of 2024, the
proposed 2021-based IPF market basket increase factor for FY 2026 is
3.2 percent.
Section 1886(s)(2)(A)(i) of the Act requires that, after
establishing the increase factor for a FY, the Secretary shall reduce
such increase factor for FY 2012 and each subsequent FY, by the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act. Section 1886(b)(3)(B)(xi)(II) of the Act sets forth the
definition of this productivity adjustment. The statute defines the
productivity adjustment to be equal to the 10-year moving average of
changes in annual economy-wide, private nonfarm business multifactor
productivity (MFP) (as projected by the Secretary for the 10-year
period ending with the applicable FY, year, cost reporting period, or
other annual period) (the ``productivity adjustment''). The United
States Department of Labor's Bureau of Labor Statistics (BLS) publishes
the official measures of productivity for the United States economy. We
note that previously the productivity measure referenced in section
1886(b)(3)(B)(xi)(II) of the Act was published by BLS as private
nonfarm business MFP. Beginning with the November 18, 2021 release of
productivity data, BLS replaced the term ``multifactor productivity''
with ``total factor productivity'' (TFP). BLS noted that this is a
change in
[[Page 18498]]
terminology only and will not affect the data or methodology. As a
result of the BLS name change, the productivity measure referenced in
section 1886(b)(3)(B)(xi)(II) of the Act is now published by BLS as
private nonfarm business TFP. However, as mentioned previously, the
data and methods are unchanged. We refer readers to www.bls.gov for the
BLS historical published TFP data. A complete description of IGI's TFP
projection methodology is available on the CMS website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. In
addition, in the FY 2022 IPF PPS final rule (86 FR 42611), we noted
that effective with FY 2022 and forward, CMS changed the name of this
adjustment to refer to it as the productivity adjustment rather than
the MFP adjustment.
Section 1886(s)(2)(A)(i) of the Act requires the application of the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act to the IPF PPS for the RY beginning in 2012 (a RY that
coincides with a FY) and each subsequent RY. For this FY2026 IPF PPS
proposed rule, based on IGI's fourth quarter 2024 forecast, the
proposed productivity adjustment for FY2026 (the 10-year moving average
of TFP for the period ending FY 2026) is projected to be 0.8 percentage
point. Accordingly, we are proposing to reduce the proposed 3.2 percent
IPF market basket increase by this proposed 0.8 percentage point
productivity adjustment, as mandated by the Act. This results in a
proposed FY 2026 IPF PPS payment rate update of 2.4 percent (3.2
percent-0.8 percentage point = 2.4 percent). We are also proposing that
if more recent data become available, we would use such data, if
appropriate, to determine the FY 2026 IPF market basket increase and
productivity adjustment for the final rule.
We solicit comments on the proposed IPF market basket increase and
productivity adjustment for FY 2026.
3. Proposed FY 2026 IPF Labor-Related Share
Due to variations in geographic wage levels and other labor-related
costs, we believe that payment rates under the IPF PPS should continue
to be adjusted by a geographic wage index, which would apply to the
labor-related portion of the Federal per diem base rate (hereafter
referred to as the ``labor-related share''). The labor-related share is
determined by identifying the national average proportion of total
costs that are related to, influenced by, or vary with the local labor
market. We are proposing to continue to classify a cost category as
labor-related if the costs are labor-intensive and vary with the local
labor market.
Based on our definition of the labor-related share and the cost
categories in the 2021-based IPF market basket, we are proposing to
continue to include in the labor-related share the sum of the relative
importance of Wages and Salaries; Employee Benefits; Professional Fees:
Labor-Related; Administrative and Facilities Support Services;
Installation, Maintenance, and Repair Services; All Other: Labor-
Related Services; and a portion of the Capital-Related relative
importance from the 2021-based IPF market basket. For more details
regarding the methodology for determining specific cost categories for
inclusion in the labor-related share based on the 2021-based IPF market
basket, we refer readers to the FY 2024 IPF PPS final rule (88 FR 51078
through 51081).
The relative importance reflects the different rates of price
change for these cost categories between the base year (FY 2021) and FY
2026. Based on IGI's fourth quarter 2024 forecast of the 2021-based IPF
market basket, the sum of the FY 2026 relative importance moving
average of Wages and Salaries; Employee Benefits; Professional Fees:
Labor-Related; Administrative and Facilities Support Services;
Installation, Maintenance, and Repair Services; All Other: Labor-
Related Services is 75.8 percent. We are proposing, consistent with
prior rulemaking, that the portion of Capital-Related costs that are
influenced by the local labor market is 46 percent. Since the relative
importance for Capital-Related costs is 6.7 percent of the 2021-based
IPF market basket for FY 2026, we are proposing to take 46 percent of
6.7 percent to determine a labor-related share of Capital-Related costs
for FY 2026 of 3.1 percent. Therefore, we are proposing a total labor-
related share for FY 2026 of 78.9 percent (the sum of 75.8-percent for
the labor-related share of operating costs and 3.1 percent for the
labor-related share of Capital-Related costs). We are also proposing
that if more recent data become available, we would use such data, if
appropriate, to determine the FY 2026 labor-related share for the final
rule. For more information on the labor-related share and its
calculation, we refer readers to the FY2024 IPF PPS final rule (88 FR
51078 through 51081).
Table 1 shows the proposed FY 2026 labor-related share and the
final FY 2025 labor-related share using the 2021-based IPF market
basket relative importance.
Table 1--FY 2026 Proposed IPF Labor-Related Share and FY 2025 IPF Labor-Related Share
----------------------------------------------------------------------------------------------------------------
Relative importance,
Relative importance, proposed labor-
labor-related share related share FY
FY 2025 \1\ 2026 \2\
----------------------------------------------------------------------------------------------------------------
Wages and Salaries................................................ 53.6 53.7
Employee Benefits................................................. 14.1 14.1
Professional Fees: Labor-Related.................................. 4.7 4.7
Administrative and Facilities Support Services.................... 0.6 0.6
Installation, Maintenance and Repair Services..................... 1.2 1.2
All Other Labor-Related Services.................................. 1.5 1.5
---------------------------------------------
Subtotal...................................................... 75.7 75.8
----------------------------------------------------------------------------------------------------------------
Labor-related portion of Capital-Related (.46).................... 3.1 3.1
---------------------------------------------
Total Labor-Related Share................................. 78.8 78.9
----------------------------------------------------------------------------------------------------------------
\1\ Based on the 2nd quarter 2024 IGI forecast of the 2021-based IPF market basket.
\2\ Based on the 4th quarter 2024 IGI forecast of the 2021-based IPF market basket.
[[Page 18499]]
We solicit comment on the proposed labor-related share for FY 2026.
B. Proposed Updates to the IPF PPS Rates for FY Beginning October 1,
2025
The IPF PPS is based on a standardized Federal per diem base rate
calculated from the IPF average per diem costs and adjusted for budget
neutrality in the implementation year. The Federal per diem base rate
is used as the standard payment per day under the IPF PPS and is
adjusted by the patient-level and facility-level adjustments that are
applicable to the IPF stay. A detailed explanation of how we calculated
the average per diem cost appears in the RY 2005 IPF PPS final rule (69
FR 66926).
1. Determining the Standardized Budget Neutral Federal Per Diem Base
Rate
Section 124(a)(1) and (c) of the BBRA requires that we implement
the IPF PPS in a budget neutral manner. In other words, the amount of
total payments under the IPF PPS, including any payment adjustments,
must be projected to be equal to the amount of total payments that
would have been made if the IPF PPS were not implemented. Therefore, we
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 Tax Equity and Fiscal Responsibility Act of
1982 (TEFRA) (Pub. L. 97-248) methodology had the IPF PPS not been
implemented. A step-by-step description of the methodology used to
estimate payments under the TEFRA payment system appears in the RY 2005
IPF PPS final rule (69 FR 66926).
Under the IPF PPS methodology, we calculated the final Federal per
diem base rate to be budget neutral during the IPF PPS implementation
period (that is, the 18-month period from January 1, 2005, through June
30, 2006) using a July 1 update cycle. We updated the average cost per
day to the midpoint of the IPF PPS implementation period (October 1,
2005), and this amount was used in the payment model to establish the
budget neutrality adjustment.
Next, we standardized the IPF PPS Federal per diem base rate to
account for the overall positive effects of the IPF PPS payment
adjustment factors by dividing total estimated payments under the TEFRA
payment system by estimated payments under the IPF PPS. The information
concerning this standardization can be found in the RY 2005 IPF PPS
final rule (69 FR 66932) and the RY 2006 IPF PPS final rule (71 FR
27045). We then reduced the standardized Federal per diem base rate to
account for the outlier policy, the stop loss provision, and
anticipated behavioral changes. A complete discussion of how we
calculated each component of the budget neutrality adjustment appears
in the RY 2005 IPF PPS final rule (69 FR 66932 and 66933) and in the RY
2007 IPF PPS final rule (71 FR 27044 through 27046). The final
standardized budget neutral Federal per diem base rate established for
cost reporting periods beginning on or after January 1, 2005 was
calculated to be $575.95.
The Federal per diem base rate has been updated in accordance with
applicable statutory requirements and 42 CFR 412.428 through
publication of annual notices or proposed and final rules. A detailed
discussion on the standardized budget neutral Federal per diem base
rate and the ECT payment per treatment appears in the FY 2014 IPF PPS
update notice (78 FR 46738 through 46740). These documents are
available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/index.html.
As discussed in sections III.D.3.5 and III.D.6 of this proposed
rule, we are proposing to revise the facility-level adjustment factors
for FY 2026 pursuant to section 1886(s)(5)(D)(i) of the Act. Section
1886(s)(5)(D)(iii) of the Act requires that revisions to IPF payment
rates implemented pursuant to section 1886(s)(5)(D)(i) of the Act must
be made budget-neutrally. Therefore, as discussed in section III.D.9 of
this proposed rule, we are proposing to apply a standardization factor
to the FY 2026 base rate that takes these refinements of facility-level
adjustments into account to keep total IPF PPS payments budget neutral.
2. Determining the Electroconvulsive Therapy (ECT) Payment per
Treatment
In the RY 2005 IPF PPS final rule (69 FR 66951), we analyzed the
costs of IPF stays that included ECT treatment using the FY 2002
Medicare Provider and Analysis Review (MedPAR) data based on comments
we received on the RY 2005 IPF PPS proposed rule. Consistent with the
comments we received about ECT, our analysis and review indicated that
cases with ECT treatment are substantially more costly than cases
without ECT treatment. Based on this analysis, in that final rule we
finalized an additional payment for each ECT treatment furnished during
the IPF stay. This ECT payment per treatment is made in addition to the
per diem and outlier payments under the IPF PPS. To receive the payment
per ECT treatment, IPFs must indicate on their claims the revenue code
and procedure code for ECT (Rev Code 901; procedure code 90870) and the
number of units of ECT, that is, the number of ECT treatments the
patient received during the IPF stay.
To establish the ECT per treatment payment, we used the pre-scaled
and pre-adjusted median cost for procedure code 90870 developed for the
Hospital Outpatient Prospective Payment System (OPPS), based on
hospital claims data. We explained in the RY 2005 IPF PPS final rule
that we used OPPS data because after a careful review and analysis of
IPF claims, we were unable to separate out the cost of a single ECT
treatment (69 FR 66922). We used the unadjusted hospital claims data
under the OPPS because we did not want the ECT payment under the IPF
PPS to be affected by factors that are relevant to OPPS, but not
specifically applicable to IPFs. The median cost was then standardized
and adjusted for budget neutrality. We also adjusted the ECT rate for
wage differences in the same manner that we adjust the per diem rate.
Since the ECT payment rate was established in the RY 2005 IPF PPS
rule, it has been updated annually by application of each year's market
basket, productivity adjustment, and wage index budget neutrality
factor to the previous year's ECT payment rate (referred to as our
``standard methodology'' in this section).
We last updated the ECT payment amount per treatment for FY 2025.
As we explained in the FY 2025 IPF PPS proposed rule (89 FR 23146), we
analyzed recent data from both the IPF PPS and the OPPS. Findings
revealed that costs for IPF stays involving ECT were significantly more
costly than stays without ECT, with cost driven primarily by longer
stays and higher ancillary expenses. These IPF stays with ECT
treatment, which accounted for only 1.7 percent of all IPF stays in
2022 (down from 6.0 percent in 2002), were approximately three times
more costly than IPF stays without ECT treatment. We noted that on
average, IPF stays with ECT cost $44,687.50 compared to $15,432.30 for
IPF stays without ECT treatment in 2022, with notable increases in per-
day costs and ancillary expenses. While our standard payment update
methodologies would have resulted in only minor adjustments, the
analysis indicated that the updates to the ECT payment rates since 2005
had not kept pace with rising costs.
To address this, we finalized a new ECT payment calculation based
on the pre-scaled and pre-adjusted CY 2024 OPPS geometric mean cost,
adjusted by the market basket update and wage index budget neutrality
factor. We
[[Page 18500]]
stated that the change to the ECT per treatment amount aligned payments
more closely with the actual cost of providing ECT. We noted that the
increase to the ECT per treatment amount would be associated with a
minor decrease to the IPF per diem base rate as a result of the
refinement standardization factor, and it would increase payments to
facilities providing ECT. A complete discussion of the final FY 2025
ECT payment per treatment can be found in the FY 2025 IPF PPS final
rule (89 FR 64591 through 64593).
3. Proposed Update of the Federal Per Diem Base Rate and
Electroconvulsive Therapy Payment per Treatment
The current (FY 2025) Federal per diem base rate is $876.53 and the
ECT payment per treatment is $661.52. For the proposed FY 2026 Federal
per diem base rate, we are proposing to apply the proposed of 2.4
percent IPF market basket update (that is, the proposed 2021-based IPF
market basket percentage increase for FY 2026 of 3.2 percent reduced by
the proposed productivity adjustment of 0.8 percentage point), the
proposed wage index budget neutrality factor of 1.0011 (as discussed in
section III.D.4.c of this proposed rule), and the proposed refinement
standardization factor of 0.9927 (as discussed in section III.D.9 of
this proposed rule) to the FY 2025 Federal per diem base rate of
$876.53, yielding a proposed Federal per diem base rate of $891.99 for
FY 2026. We are proposing to apply the proposed 2.4 percent IPF market
basket update, the proposed 1.0011 wage index budget neutrality factor,
and the proposed 0.9927 refinement standardization factor to the final
FY 2025 ECT payment per treatment of $661.52, yielding a proposed ECT
payment per treatment of $673.19 for FY 2026.
Section 1886(s)(4)(A)(i) of the Act requires that for RY 2014 and
each subsequent RY, in the case of an IPF that fails to report required
quality data with respect to such RY, the Secretary will reduce any
annual update to a standard Federal rate for discharges during the RY
by 2.0 percentage points. Therefore, we applied a 2.0 percentage point
reduction to the proposed annual update to the Federal per diem base
rate and the proposed ECT payment per treatment as follows:
For IPFs that fail to report required data under the IPFQR
Program, we would apply a proposed 0.4 percent IPF market basket update
for FY 2026--that is, the proposed IPF market basket increase for FY
2026 of 3.2 percent reduced by the proposed productivity adjustment of
0.8 percentage point for an update of 2.4 percent, and further reduced
by 2.0 percentage points in accordance with section 1886(s)(4)(A)(i) of
the Act. We also propose to apply the refinement standardization factor
of 0.9927 and the wage index budget neutrality factor of 1.0011 to the
FY 2025 Federal per diem base rate of $876.53, yielding a proposed
Federal per diem base rate of $874.57 for FY 2026.
For IPFs that fail to report required data under the IPFQR
Program, we would apply the proposed 0.4 percent annual IPF market
basket update, the proposed 0.9927 refinement standardization factor,
and the proposed 1.0011 wage index budget neutrality factor to the FY
2025 ECT payment per treatment of $661.52, yielding a proposed ECT
payment per treatment of $660.04 for FY 2026.
C. Proposed Updates to the IPF PPS Patient-Level Adjustment Factors
1. Overview of the IPF PPS Adjustment Factors
The IPF PPS payment adjustment factors were originally derived from
a regression analysis of 100 percent of the FY 2002 MedPAR data file,
which contained 483,038 cases. For a more detailed description of the
data file used for this regression analysis, we refer readers to the RY
2005 IPF PPS final rule (69 FR 66935 and 66936).
In FY 2025, we implemented revisions to the methodology for
determining payment rates under the IPF PPS, as required by section
1886(s)(5)(D) of the Act. We developed the current (FY 2025) adjustment
factors based on a regression analysis of IPF cost and claims data. The
primary sources of this analysis were CY 2019 through 2021 MedPAR files
and Medicare cost report data (CMS Form 2552-10, OMB No. 0938-0050)
from the FY 2019 through 2021 Hospital Cost Report Information System
(HCRIS). For a more detailed description of the data files used for
this regression analysis, we refer readers to the FY 2025 IPF PPS final
rule (89 FR 64593 through 64601).
For FY 2026, we propose to use the existing regression-derived
patient-level adjustment factors established for FY 2025. We are not
proposing any changes to the patient-level adjustment factors for FY
2026; however, we have used more recent claims data to simulate
payments to finalize the outlier fixed dollar loss threshold amount and
to assess the impact of the IPF PPS updates.
2. Proposed IPF PPS Patient-Level Adjustments
The IPF PPS includes payment adjustments for the following patient-
level characteristics: Medicare Severity Diagnosis Related Groups (MS-
DRGs) assignment of the patient's principal diagnosis, selected
comorbidities, patient age, and the variable per diem adjustments.
a. Proposed Update to MS-DRG Assignment
We believe it is important to maintain for IPFs the same diagnostic
coding and DRG classification used under the IPPS for providing
psychiatric care. For this reason, when the IPF PPS was implemented for
cost reporting periods beginning on or after January 1, 2005, we
adopted the same diagnostic code set (ICD-9 Clinical Modification (CM))
and DRG patient classification system (MS-DRGs) that were utilized at
the time under the IPPS. In the RY 2009 IPF PPS notice (73 FR 25709),
we discussed CMS's effort to better recognize resource use and the
severity of illness among patients. CMS adopted the new MS-DRGs for the
IPPS in the FY 2008 IPPS final rule with comment period (72 FR 47130).
In the RY 2009 IPF PPS notice (73 FR 25716), we provided a crosswalk to
reflect changes that were made under the IPF PPS to adopt the new MS-
DRGs. For a detailed description of the mapping changes from the
original DRG adjustment categories to the current MS-DRG adjustment
categories, we refer readers to the RY 2009 IPF PPS notice (73 FR
25714).
The IPF PPS includes payment adjustments for designated psychiatric
DRGs assigned to the claim based on the patient's principal diagnosis.
The DRG adjustment factors were expressed relative to the most
frequently reported psychiatric DRG in FY 2002, that is, DRG 430
(psychoses). The coefficient values and adjustment factors were derived
from the regression analysis discussed in detail in the RY 2004 IPF
proposed rule (68 FR 66923; 66928 through 66933) and the RY 2005 IPF
final rule (69 FR 66933 through 66960). Mapping the DRGs to the MS-DRGs
resulted in 17 IPF MS-DRGs, instead of the original 15 DRGs, for which
the IPF PPS provides an adjustment.
In the FY 2015 IPF PPS final rule (79 FR 45945 through 45947), we
finalized conversions of the ICD-9-CM-based MS-DRGs to ICD-10-CM/
Procedure Coding System (PCS)-based MS-DRGs, which were implemented on
October 1, 2015. Further information on the ICD-10-CM/PCS MS-DRG
conversion project can be found on the CMS ICD-
[[Page 18501]]
10-CM website at https://www.cms.gov/medicare/coding-billing/icd-10-codes/icd-10-ms-drg-conversion-project.
In the FY 2025 IPF PPS final rule (89 FR 64602 through 64606), we
revised the payment adjustments for designated psychiatric DRGs
assigned to the claim based on the patient's principal diagnosis,
following our longstanding policy of using the ICD-10-CM/PCS-based MS-
DRG system. In that final rule, we identified 19 DRGs for which the IPF
PPS adjusts payment. In addition, we implemented a sub-regulatory
process to adopt routine coding updates that incorporate new or revised
codes with an April 1 effective date (89 FR 64602 and 64603).
For FY 2026, we propose to continue making the existing payment
adjustments for psychiatric diagnoses that group to one of the existing
19 IPF MS-DRGs listed in Addendum A. Addendum A is available on our
website at https://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/InpatientPsychFacilPPS/tools.html. Psychiatric principal
diagnoses that do not group to one of the 19 designated MS-DRGs would
still receive the Federal per diem base rate and all other applicable
adjustments, but the payment would not include an MS-DRG adjustment.
The diagnoses for each IPF MS-DRG will be updated as of October 1,
2025, using the final IPPS FY 2026 ICD-10-CM/PCS code sets. The FY 2026
IPPS/LTCH PPS final rule will include tables of the changes to the ICD-
10-CM/PCS code sets that underlie the proposed FY 2026 IPF MS-DRGs.
Both the FY 2026 IPPS/LTCH PPS final rule and the tables of final
changes to the ICD-10-CM/PCS code sets, which underlie the FY 2026 MS-
DRGs, will be available on the CMS IPPS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps.
Additionally, as discussed in the ICD-10-CM Official Guidelines for
Coding and Reporting, certain conditions have both an underlying
etiology and multiple body system manifestations due to the underlying
etiology. For such conditions, the ICD-10-CM has a coding convention
that requires the underlying condition be sequenced first, followed by
the manifestation. Wherever such a combination exists, there is a ``use
additional code'' note at the etiology code, and a ``code first'' note
at the manifestation code. These instructional notes indicate the
proper sequencing order of the codes (etiology followed by
manifestation). In accordance with the ICD-10-CM Official Guidelines
for Coding and Reporting, when a primary (psychiatric) diagnosis code
has a code first note, the provider will follow the instructions in the
ICD-10-CM Tabular List. The submitted claim goes through the CMS
processing system, which will identify the principal diagnosis code as
non-psychiatric and search the secondary codes for a psychiatric code
to assign a DRG code for adjustment. The system will continue to search
the secondary codes for those that are appropriate for comorbidity
adjustment. For more information on the code first policy, we refer
readers to the RY 2005 IPF PPS final rule (69 FR 66945). We also refer
readers to sections I.A.13 and I.B.7 of the FY 2020 ICD-10-CM Coding
Guidelines, which is available at https://www.cdc.gov/nchs/data/icd/10cmguidelinesFY2020_final.pdf. In the FY 2015 IPF PPS final rule, we
provided a code first table for reference that highlights the same or
similar manifestation codes where the code first instructions apply in
ICD-10-CM that were present in ICD-10-CM (79 FR 46009).
As discussed in the FY 2025 IPF PPS final rule (89 FR 64602 and
64603), we adopted a sub-regulatory approach to handle the coding
updates, rather than discussing coding updates in the Federal Register
during regulatory updates prior to implementation. This approach
mirrors the approach taken by the IPPS, allows for flexibility in the
ICD-10 code update process for the IPF PPS, and reduces the lead time
for making routine coding updates to the IPF PPS code first list,
comorbidities, and ECT coding categories. The proposed FY 2026 Code
First table is shown in Addendum B on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-forServicePayment/InpatientPsychFacilPPS/tools.html.
b. Proposed Payment for Comorbid Conditions
The intent of the comorbidity adjustments is to recognize the
increased costs associated with active comorbid conditions by providing
additional payments for certain existing medical or psychiatric
conditions that are expensive to treat.
Comorbidities are specific patient conditions that are secondary to
the patient's principal diagnosis and that require active treatment
during the stay. Diagnoses that relate to an earlier episode of care
and have no bearing on the current hospital stay are excluded and must
not be reported on IPF claims. Comorbid conditions must exist at the
time of admission or develop subsequently, and affect the treatment
received, length of stay (LOS), or both treatment and LOS.
For each claim, an IPF may receive only one comorbidity adjustment
within a comorbidity category, but it may receive an adjustment for
more than one comorbidity category. Current billing instructions for
discharge claims, on or after October 1, 2015, require IPFs to enter
the complete ICD-10-CM codes for up to 24 additional diagnoses if they
co-exist at the time of admission, or develop subsequently and impact
the treatment provided.
The IPF PPS comorbidity adjustments were originally determined
based on the regression analysis using the diagnoses reported by IPFs
in FY 2002. The principal diagnoses were used to establish the DRG
adjustments and were not accounted for in establishing the comorbidity
category adjustments, except where ICD-9-CM code first instructions
applied. In a code first situation, the submitted claim goes through
the CMS processing system, which identifies the principal diagnosis
code as non-psychiatric and searches the secondary codes for a
psychiatric code to assign an MS-DRG code for adjustment. The system
continues to search the secondary codes for those that are appropriate
for a comorbidity adjustment.
In FY 2025, we revised the comorbidity adjustment factors based on
the results of the 2019 through 2021 regression analysis described in
the FY 2025 IPF PPS final rule (89 FR 64606 through 64612). In
addition, we made additions and changes to the comorbidity categories
for which we adjust payment based on our analysis of ICD-10-CM codes
currently included in each category as well as public comments received
in response to the FY 2022 and FY 2023 IPF PPS proposed rules.
Specifically, we removed 3 existing comorbidity categories, revised 2
existing comorbidity categories, and added 1 new comorbidity category.
We finalized 15 comorbidity categories for FY 2025. For FY 2026, we
propose to use the same comorbidity adjustment factors in effect in FY
2025. The proposed FY 2026 comorbidity adjustment factors are found in
Addendum A, available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientPsychFacilPPS/tools.html.
As noted previously, it is our policy to maintain the same
diagnostic coding set for IPFs that is used under the IPPS for
providing the same psychiatric care. In the FY 2015 IPF PPS final rule
(79 FR 45947 through 45955), the comorbidity categories formerly
defined using ICD-
[[Page 18502]]
9-CM codes were converted to ICD-10-CM/PCS. The goal for converting the
comorbidity categories is referred to as replication, meaning that the
payment adjustment for a given patient encounter is the same after ICD-
10-CM implementation as it would be if the same record had been coded
in ICD-9-CM and submitted prior to ICD-10-CM/PCS implementation on
October 1, 2015. All conversion efforts were made with the intent of
achieving this goal.
As previously discussed in section III.C.2.a of this proposed rule,
in the FY 2025 IPF PPS final rule (89 FR 64602 and 64603) we adopted an
April 1 implementation date for ICD-10-CM diagnosis and ICD-10-PCS
procedure code updates, in addition to the annual October 1 update,
beginning with April 1, 2025 for the IPF PPS. Coding updates related to
the IPF PPS comorbidity categories are adopted following a sub-
regulatory process as finalized in the FY 2025 IPF PPS final rule (89
FR 64602 and 64603). For April 1, 2025, we added two ICD-10-PCS
procedure codes to the Oncology Treatment Procedures list.
The proposed FY 2026 comorbidity codes are shown in Addenda B,
available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientPsychFacilPPS/tools.html.
c. Proposed Patient Age Adjustments
As explained in the RY 2005 IPF PPS final rule (69 FR 66922), we
analyzed the impact of age on per diem cost by examining the age
variable (range of ages) for payment adjustments. In general, we found
that the cost per day increases with age. The older age groups are
costlier than the under 45 age group, the differences in per diem cost
increase for each successive age group, and the differences are
statistically significant. In FY 2025, we adopted revised patient age
adjustments derived from the regression model using a blended set of
2019 through 2021 data (89 FR 64612 and 64613). For FY 2026, we propose
to use the patient age adjustments currently in effect for FY 2025, as
shown in Addendum A of this proposed rule (see https://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientPsychFacilPPS/tools.html).
d. Proposed Variable Per Diem Adjustments
We explained in the RY 2005 IPF PPS final rule (69 FR 66946) that
the regression analysis indicated that per diem cost declines as the
LOS increases. The variable per diem adjustments to the Federal per
diem base rate account for ancillary and administrative costs that
occur disproportionately in the first days after admission to an IPF.
As discussed in the RY 2005 IPF PPS final rule, where a complete
discussion of the variable per diem adjustments can be found, we used a
regression analysis to estimate the average differences in per diem
cost among stays of different lengths (69 FR 66947 through 66950). As a
result of this analysis, we established variable per diem adjustments
that begin on day 1 and decline gradually over the course of the
patient's stay. In addition, the adjustment applied to day 1 depends
upon whether the IPF has a qualifying ED. If an IPF has a qualifying
ED, it receives a higher adjustment factor for day 1 of each stay than
it would receive if it did not have a qualifying ED. The ED adjustment
is explained in more detail in section III.D.8 of this proposed rule.
In FY 2025, we revised the variable per diem adjustment factors
based on the 2019 through 2021 regression analysis (89 FR 64613 and
64614). For FY 2026, we propose to use the variable per diem adjustment
factors currently in effect in FY 2025, as shown in Addendum A of this
proposed rule (available at https://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/InpatientPsychFacilPPS/tools.html).
D. Proposed Updates to the IPF PPS Facility-Level Adjustments
1. Overview of the IPF PPS Facility-Level Adjustment Factors
The IPF PPS includes facility-level adjustments for the wage index,
IPFs located in rural areas, teaching IPFs, cost of living adjustments
for IPFs located in Alaska and Hawaii, and IPFs with a qualifying ED.
The facility-level adjustment factors currently in place for rural
location and teaching status are the existing regression-derived
factors established in the RY 2005 IPF final rule. As discussed in the
following sections, we are proposing annual updates to the FY 2026 IPF
PPS wage index. In addition, we are proposing to update the facility-
level adjustment factors for rural location and teaching status for FY
2026 to reflect more recent cost and claims data.
2. History of IPF PPS Cost and Claims Analyses
In the FY 2023 IPF PPS proposed rule (87 FR 19428 and 19429), we
briefly discussed past analyses and areas of interest for future
refinement, about which we previously solicited comments. At the same
time, CMS also released a technical report posted to the CMS website
\1\ accompanying the rule, summarizing these analyses. In that same
proposed rule, we described the results of the agency's latest analysis
of the IPF PPS and solicited comments on certain topics from the
report. We summarized the considerations and findings related to our
analyses of the IPF PPS adjustment factors in the FY 2023 IPF PPS final
rule (46864 through 46865).
---------------------------------------------------------------------------
\1\ https://www.cms.gov/files/document/technical-report-medicare-program-inpatient-psychiatric-facilities-prospective-payment-system.pdf.
---------------------------------------------------------------------------
In the FY 2024 IPF PPS proposed rule (88 FR 21269 through 21272),
we requested information from the public to inform revisions to the IPF
PPS required by the CAA, 2023. Specifically, we sought information
about which data and information would be most appropriate and useful
for the purposes of refining IPF PPS payments. We requested information
related to the specific types of data and information mentioned in the
CAA, 2023. We also solicited comments on the reporting of ancillary
charges, such as labs and drugs, on IPF claims.
In response to those requests for information in the FY 2024 IPF
PPS proposed rule, commenters offered a number of suggestions for
further analysis, including recommendations to consider adjusting
payment for patients with sleep apnea, violent behavior, and patients
that transfer from an acute care unit.
In the FY 2025 IPF PPS proposed rule, we discussed our latest
regression analysis results and the methodology we used to calculate
proposed revisions to the patient-level adjustment factors (89 FR 23154
through 23161). In that same proposed rule (89 FR 23161 through 23172),
we also discussed the analyses that we conducted and our findings, as
related to patient-level adjustment factors, in response to the
comments we received on the FY 2024 IPF PPS proposed rule.
As we have previously noted in the FY 2025 IPF PPS proposed rule
(89 FR 23154), the primary goal in refining the IPF PPS payment
adjustment factors is to pay each IPF an appropriate amount for the
efficient delivery of care to Medicare beneficiaries. The system must
be able to account adequately for each IPF's case-mix to allow for both
fair distribution of Medicare payments and access to adequate care for
those beneficiaries who require more costly care. As required by
section 1886(s)(5)(D)(iii) of the Act, revisions to the IPF PPS
adjustment factors made pursuant to section 1886(s)(5)(D)(i) of the Act
must be budget neutral. As
[[Page 18503]]
discussed in section III.D.9 of this proposed rule, we are applying a
refinement standardization factor to the proposed IPF PPS payment rates
to maintain budget neutrality for FY 2026.
3. Development of the Proposed Revised Regression for Facility-Level
Refinements
For this FY 2026 IPF PPS proposed rule, we performed an extensive
regression analysis of the relationship between the per diem costs and
certain patient- and facility-level characteristics to analyze those
characteristics associated with statistically significant cost
differences. As discussed in section III.C of this proposed rule, we
finalized revisions to the IPF PPS patient-level adjustments in the FY
2025 IPF PPS final rule (89 FR 64593 through 64614). As a result, we
used a constrained regression model for FY 2026 to hold the patient-
level adjustments at the level finalized for FY 2025. We discuss the
results of this constrained regression analysis in section III.D.3.e of
this proposed rule. We further discuss proposed policies related to the
proposed revisions to the IPF PPS facility-level adjustment factors
based on this regression analysis in sections III.D.5 and III.D.6 of
this proposed rule.
For this FY 2026 IPF PPS proposed rule, we calculated a per diem
cost (including routine and ancillary components) and identified
patient and facility characteristics for each Medicare inpatient
psychiatric stay using information from MedPAR files, Common Working
File (CWF) inpatient claims, Medicare hospital cost reports, and other
data sources for FY 2020 through FY 2022. We refer readers to the FY
2025 IPF PPS final rule for a discussion of the impact of the COVID-19
PHE and the benefits of using a combined set of data for the accuracy
of the results (89 FR 64594).
We began with a base sample of IPF stays by Medicare FFS
beneficiaries in MedPAR from the FY 2020 through FY 2022, which contain
a total of 712,543 stays from 1,650 IPFs. We applied several data
restrictions and exclusions to remove stays with missing and or
aberrant data. The final sample used for the regression analysis
contained 704,494 stays from 1,633 IPFs, which reflects the removal of
17 providers and 8,049 stays.
In preparing the cost regression sample and analysis, we
incorporated more recent input data and refined our data processing
method, as described in this section. We estimated a baseline
regression using the constrained model and conducted sensitivity
analysis to confirm the robustness of our results.
a. Data Sources
For the regression analysis, our primary data sources include the
annual MedPAR files, which provide stay-level summaries of IPF stays,
and Medicare hospital cost reports, which contain provider-level data
on costs, utilization, and other financial information. Additionally,
we used the Common Working File (CWF) claims data, the Provider of
Services (POS) files, and the Provider Specific File (PSF) to identify
provider and patient characteristics and to construct variables in the
regression model.
More specifically, we used the following sources of data:
MedPAR Files: The annual MedPAR file compiles final action
claims records for IPF stays discharged during the fiscal year. Each
MedPAR record provides a summary of clinical characteristics, service
utilization, facility billings, and Medicare coverage for an inpatient
hospital stay. We use MedPAR to identify all IPF stays by Medicare fee-
for-service (FFS) beneficiaries during the fiscal year, along with key
variables such as MS-DRG, principal and secondary diagnosis, length of
stay, patient age, admission source, provider charges by revenue
center, and other patient and provider attributes. For the FY 2026
proposed rule cost regression, we used MedPAR files for FY 2020 through
FY 2022.
Hospital Cost Reports: Medicare hospital cost reports (CMS
Form 2552-10; OMB control number 0938-0050) provide the key inputs for
estimating the per diem cost of IPF stays, specifically the facility's
routine per diem cost and Cost-to-Charge Ratios (CCRs) for detailed
cost centers for each Federal FY. We also use hospital cost reports to
obtain key facility characteristics, including teaching status, bed
counts, and ownership type. For providers whose own fiscal periods
align with the FY, we directly match their FY 2020-FY 2022 hospital
cost reports to the corresponding MedPAR stays. For providers whose own
fiscal periods differ from the FY, we use multiple years of hospital
cost reports data and proportionally allocate and align them to the FY
basis for FY 2020 through FY 2022 before linking them to other data
sources. This allocation and alignment is discussed in greater detail
later in this section of this proposed rule.
Common Working File (CWF) Inpatient Claims Data: We use
detailed claims data from the CWF to supplement MedPAR stay records,
specifically obtaining data on covered charges by detailed revenue
center and utilization of ECT treatments during each IPF stay. To
promote internal consistency, we use the CWF claims data with the same
final action week as the corresponding MedPAR record.
Provider of Services (POS) File: The POS file contains
facility characteristics such as name, address, and types of services
provided. For the regression analysis for this FY 2026 IPF PPS proposed
rule, we primarily use the POS file to identify providers' Federal
Information Processing Series (FIPS) codes, which determine each
provider's designated Core-Based Statistical Area (CBSA). The CBSA is
then used to match providers with the corresponding geographic cost
adjustment factor. Additionally, we use the POS file as a secondary
source for provider ownership type.
Provider Specific Data for Public Use Files for the IPF
PPS: We use the Provider Specific File (PSF) to identify providers'
COLA factors and other facility-level characteristics, including
whether a facility has a qualified Emergency Department (ED).
IPF Market Baskets: We used the historical IPF market
basket increases and labor-related shares for the FY 2020-FY 2022
period.
IPF PPS Wage Index: We use the IPF PPS wage index, along
with COLA and labor-related share, to calculate the geographic cost
adjustment factor, which accounts for regional cost differences among
providers in each year. In this analysis, we used the FY 2024 IPF PPS
wage index to adjust IPF costs in FY 2020, and FY 2025 IPF PPS wage
index to adjust IPF costs in FY 2021 and FY 2022.
b. Trims and Assumptions
For the FY 2026 proposed rule regression analysis, we used a
combined set of FY 2020 through FY 2022 MedPAR data, consistent with
the approach we adopted for the FY 2025 IPF PPS proposed and final
rules to revise the patient-level adjustment factors. Our analysis
demonstrated that combining multiple years of data yields the most
stable and consistent result. We continue to believe that using a 3-
year combined set of data in the regression analysis helps smooth the
impact of utilization changes driven by the COVID-19 public health
emergency (PHE), as well as significant changes in staffing and labor
costs that commenters noted in response to the FY 2023 and FY 2024 IPF
PPS proposed rules. This data set best reflects the current cost of
care as impacted by the COVID-19 PHE, which has an ongoing impact on
IPF cost and utilization trends. Our
[[Page 18504]]
approach mitigates the effect of these impacts in any single year by
expanding the set of data.
Within the MedPAR dataset, we included inpatient hospital stays
that met the following criteria:
Hospital CMS Certification Number (CCN) contains ``40'',
``41'', ``42'', ``43'', or ``44'' in the third and fourth positions
(freestanding psychiatric hospitals), a special unit code of ``S'' in
the third position (psychiatric unit in an acute care hospital), a
special unit code of ``M'' in the third position (psychiatric unit in a
critical access hospital), or a special unit code of ``SA'', ``SB'',
``SC'', ``SD'', or ``SE'' in the third and fourth positions
(psychiatric unit in a long-term care hospital (LTCH), rehabilitation
hospital, or children's hospital).
Beneficiary primary payer code is ``M'', ``N'', or blank,
indicating that Medicare is the primary payer.
Group Health Organization (GHO) paid code is zero or
blank, indicating that a GHO has not paid the facility for the stay.
National Claims History (NCH) claim type code is ``60,''
indicating a fee-for-service (FFS) inpatient claim.
Covered charge and covered days (or Medicare utilization
days) are greater than zero.\2\
---------------------------------------------------------------------------
\2\ For the purposes of regression analysis, we include ``same-
day transfers'' (with positive covered charges) and assign them a
length of stay of 1 day. A same-day transfer occurs when a patient
is admitted to an IPF and is subsequently transferred for acute care
(or another type of inpatient facility care) on the same day. If the
patient is admitted to an IPF with the expectation that the patient
will remain overnight, but is discharged before midnight, the day is
counted as a full day for the cost report but is not counted as a
Medicare covered day for purpose of charging the beneficiary
utilization. The purpose for the difference in coding is to ensure
that the beneficiary is charged for only one day of utilization when
two facilities are billing for the same patient. Payments are made
for 1 day.
---------------------------------------------------------------------------
For the FY 2020-FY 2022 sample period, a total of 712,543 patient
stays from 1,650 unique providers in MedPAR met these selection
criteria. That includes 284,176 stays from 1,587 providers in FY 2020,
231,668 stays from 1,546 providers in FY 2021, and 196,699 stays from
1,522 providers in FY 2022.
Using this base sample, we applied a series of additional trimming
steps to remove stays with missing or outlier cost data. A detailed
description of how we estimate IPF per diem costs is provided in
section III.D.3.c of this proposed rule. We removed the following:
Stays with missing routine per diem cost data or missing
provider hospital cost reports for the FY 2020-FY 2022 period. This
step removed 240 stays from the sample, which came from 13 unique
providers.
Stays with extraordinarily high or low costs per day.
Specifically, we removed 2,315 stays whose routine per diem costs fell
outside the mean plus or minus 3.00 standard deviations of the natural
logarithm of routine per diem costs in the combined 3-year sample. We
also removed an additional 1,639 stays with total per diem costs that
fell outside the mean plus or minus 3.00 standard deviations of the
natural logarithm of total per diem costs in the combined 3-year
sample. (All cost estimates were adjusted for geographic differences
and year-over-year inflation.) In total, this trimming step removed
3,954 stays with extraordinarily high or low costs per day from 322
providers across the 3-year sample.\3\
---------------------------------------------------------------------------
\3\ That includes 1 stay from 1 freestanding facility and 791
stays from 2 unit-based facilities that were removed for having
extraordinarily low per diem cost estimates (that is, a routine per
diem cost lower than $309 or a total per diem cost lower than $291
in 2022 dollars); and 552 stays from 38 freestanding facilities and
2,613 stays from 282 unit-based facilities that were removed for
having extraordinarily high per diem cost estimates (that is, a
routine per diem cost higher than $3,145 or a total per diem cost
higher than $4,202 in 2022 dollars). There were 3 stays with very
low routine per diem costs but extraordinarily high ancillary and
total per diem costs, which were trimmed for both reasons.
---------------------------------------------------------------------------
Finally, we excluded all stays with an MS-DRG that is not
recognized by the IPF PPS, which removed 3,855 stays from 954 providers
from the remaining sample.
After these trimming steps, our final cost regression sample
included 704,494 IPF stays by Medicare FFS beneficiaries from 1,633
unique IPF providers in MedPAR FY 2020 through FY 2022. This final
sample consists of 280,956 stays from 1,569 providers in FY 2020,
229,125 stays from 1,521 providers in FY 2021, and 194,413 stays from
1,492 providers in FY 2022.
c. Calculation of the Dependent Variable
The regression model for this FY 2026 IPF PPS proposed rule uses
the natural logarithm of the total per diem cost, adjusted for
geographic differences and inflation, as the dependent variable. Total
per diem costs are calculated as the sum of routine per diem costs and
ancillary per diem costs, with both components including operating and
capital costs.
Routine per diem costs are derived from facility-level
average routine cost per day reported in provider hospital cost reports
as total inpatient routine costs divided by total inpatient days
(Worksheet D-1, Part II, column 1, Line 41 divided by Line 9) \4\ and
assigned to individual patient stays within the facility.
---------------------------------------------------------------------------
\4\ If Line 41 data is missing, Line 38 information--which is
inpatient routine cost that excludes the medically necessary private
room cost that is included in Line 41--is used. Line 38 is not
divided by inpatient days as it is already in per diem units.
---------------------------------------------------------------------------
Ancillary per diem costs are calculated by applying the
cost center cost-to-charge ratio (CCR) from the cost report to the
covered charges from ancillary departments on CWF inpatient claims,
then dividing by the number of Medicare covered days of the stay
(available in MedPAR).
The total per diem costs (or costs per day) are further adjusted
for geographic cost differences using IPF wage indices (for the labor-
related share portion) and COLA factors (for the non-labor-related
share portion for IPFs located in Alaska and Hawaii). Cost estimates
are also adjusted for annual inflation based on the historical growth
rates of the 2021-based IPF market basket.
To promote consistency, accuracy, and comparability of our data, we
apply a series of methodological steps when calculating the dependent
variable as follows:
(1) Addressing Variation in Cost Report Reporting Periods
Because providers can select their own fiscal/reporting periods for
hospital cost reports, there is a lack of uniformity in the time
periods covered by the raw cost report data from different providers.
For example, within each annual HCRIS file, roughly 40 percent of the
reports have a January through December cost reporting period (Calendar
Year), 30 percent have a July through June cost reporting period, 15
percent have an October through September cost reporting period
(Federal fiscal year (FFY), and the remaining 15 percent cover various
other cost reporting periods. Moreover, some providers change their
fiscal/reporting periods mid-year (sometimes due to an ownership
change), resulting in shorter or longer hospital cost reports and, in
some cases, multiple hospital cost reports within a single year.
To address this lack of uniformity in provider reporting periods
and enhance data accuracy and consistency, we apply a re-allocation
procedure to align all provider hospital cost reports data to the FFY
basis before matching them to MedPAR stays. First, we allocate each
provider's annual cost report data across the months, assuming uniform
values per month within the reporting period. Then we regroup the
monthly data to align with the FFY for each provider and calculate
annual averages. When
[[Page 18505]]
data for some months are missing, we use available partial-year data to
extrapolate and construct the annual estimate.
For example, suppose a provider uses the CY as its cost reporting
period. Its reported average routine per diem cost was $900 in CY 2019,
$950 in CY 2020, $1000 in CY 2021, and $1100 in CY 2022. Its CCR for
laboratory services is 0.30 in CY 2019, 0.25 in CY 2020, 0.32 in CY
2021, and 0.28 in CY 2022. Using the reallocation method, this
provider's average routine per diem costs were $937.50 for FY 2020 (=
3/12*$900 + 9/12*$950), $987.50 for FY 2021, and $1,075.00 for FY 2022.
Its CCR for laboratory services were 0.2625 for FY 2020, 0.3025 for FY
2021, and 0.2900 for FY 2022.
(2) Obtaining CCRs for Ancillary Cost Estimation
To estimate the costs of non-routine services provided during IPF
stays, we group the cost centers from hospital cost reports and the
revenue centers from CWF claims into 25 ``ancillary departments'':
Pharmacy, Laboratory, Emergency Room, Medical/Surgical Supplies,
Cardiology, Radiology, Magnetic Resonance Imaging (MRI), Physical
Therapy, Occupational Therapy, Inhalation Therapy, Speech Pathology,
Anesthesia, Operating Room, Intensive Care Unit (ICU), Coronary Care
Unit (CCU), End Stage Renal Disease (ESRD), Professional Fees, Clinic
Visit, Outpatient Services, Durable Medical Equipment (DME), Used DME,
Blood, Blood Storage and Processing, Lithotripsy, and Other
Services.\5\
---------------------------------------------------------------------------
\5\ The methodology for grouping revenue centers under each
ancillary department is consistent with MedPAR: https://resdac.org/cms-data/files/medpar/data-documentation. The crosswalk we use to
group cost centers under each ancillary department is similar to
that used for the IPPS.
---------------------------------------------------------------------------
For each ancillary department, we calculate each provider's CCR
using the provider's cost report, Worksheet D. Specifically, we take
ancillary department costs (Worksheet D-3, Column 3), subtract any
positive inpatient pass-through costs (Worksheet D, Part IV, Column
11), and divide the result by ancillary department charges (Worksheet
D-3, Column 2).\6\
---------------------------------------------------------------------------
\6\ Since costs for special care units, including ICU and CCU,
are not present in Worksheet D-3, Column 3, we instead obtain these
cost data from Worksheet D-1, Part II, Column 5, Lines 43-47.
---------------------------------------------------------------------------
To address extreme values and missing data in CCRs, we apply
winsorization and imputation. For extreme values, we examine the
distribution of CCR data (after aligning to FFY) for each ancillary
department across providers from FY 2020 through FY 2022 and winsorize
values at the 2nd and 98th percentiles. In addition, we consider all
CCRs lower than 0.01 or higher than 10.0 as improbable and recode them
to 0.01 or 10.0, respectively.
After adjusting for extreme values, we impute missing CCRs using
available data, prioritizing provider-specific information. (A CCR is
considered missing only if the provider had charges from the ancillary
department on MedPAR and CWF claims for that year but did not report a
CCR.) If a provider's CCR for an ancillary department is missing for a
given year but available in other years, we use the weighted average of
the provider's CCRs for that ancillary department from other years
(weights based on the provider's stay counts in those years) to fill in
the missing value. If those data are unavailable, we use the provider's
all-ancillary CCR for that year, the weighted average of the provider's
all-ancillary CCRs from other years, or the median CCR for that
ancillary department from other providers of the same type
(freestanding or unit-based) for that year, in descending order of
preference. For ancillary departments such as ICU and CCU, where CCRs
are rarely reported despite the presence of service charges on claims,
we use the median all-ancillary CCR from other providers of the same
type to fill in missing values.
(3) Accounting for Geographic Differences and Inflation
To account for geographic differences in costs, we construct a
geographic adjustment factor using the formula:
Geographic cost adjustment factor = IPF wage index * labor-related
share + COLA for AK and HI * (1-labor-related share).
We adjust the labor-related portion of per diem costs using the IPF
wage index to account for regional differences in labor costs, while
the non-labor portion is adjusted using COLA factors for IPFs in Alaska
and Hawaii. Because the IPF wage index reflects local cost differences
with a lag, we adjust for that timing discrepancy by applying more
recent IPF wage indexes to the FY 2020-FY 2022 MedPAR stays. (We remind
readers that the IPF PPS wage index is based on the pre-floor, pre-
reclassified IPPS hospital wage index, which in turn is derived from
hospital cost reports data from approximately 3-4 years prior. For
example, the FY 2025 IPF PPS wage index reflects cost data from local
labor markets around 2021-2022.) For this analysis, we used the FY 2024
IPF PPS wage index to adjust IPF costs in FY 2020, and FY 2025 IPF PPS
wage index to adjust IPF costs in FY 2021 and FY 2022.
Finally, to promote comparability across the 3 years, we adjust
cost estimates for year-over-year inflation using historical IPF market
basket increases and labor-related shares, converting all cost
estimates into 2022 dollars.
We calculated routine per diem cost, ancillary per diem cost, and
the total per diem using the approach outlined in this section for all
IPF stays in our FY 2020-FY 2022 MedPAR sample. We then excluded stays
with missing routine costs and outlier routine or total per diem costs,
based on the approach described earlier in section III.D.3.b of this
proposed rule.
Among the 704,494 stays in the final FY 2020-FY 2022 cost
regression sample, the median total per diem cost was $1,135 in 2022
dollars, with a range of $355 to $4,201 and a mean of $1,205 (the
standard deviation was $539). Consistent with our approach in the FY
2025 IPF PPS final rule (89 FR 64596), the stays with zero ancillary
charges were retained in the sample.
d. Independent Variables
The independent variables in the regression model represent
patient-level and facility-level characteristics that influence the
cost of an IPF stay. Some of these variables are adjustment-related,
meaning that they are used for payment adjustments, while others are
control variables, which are used to account for variation in the
dependent variable associated with factors outside the adjustment
factors in the payment model.
(1) Adjustment-Related Variables
Patient-level adjustment-related variables in the model include MS-
DRG, comorbidity categories, patient age, and length of stay. Because
we are not proposing any changes to these patient-level adjustment
factors in this FY 2026 IPF PPS proposed rule, we constrained their
coefficients to their corresponding FY 2025 adjustment factor values in
the regression, instead of estimating them in the model.
Facility-level adjustment-related variables in the model include
the facility's teaching status and whether the facility is located in a
rural area. (A facility's rural status in each year is determined based
on its CBSA designation.) We refer readers to sections III.D.4 and
III.D.5 of this proposed rule for a more detailed explanation of the
payment adjustment for rural location. In sections III.D.5 and III.D.6
of this proposed rule, we are
[[Page 18506]]
proposing to revise the IPF PPS payment adjustment factors for these
two facility-level characteristics based on the estimated coefficients
of these variables in the constrained regression.
(2) Control Variables
As we noted in the FY 2025 IPF PPS proposed and final rules (89 FR
23157; and 89 FR 64596 and 64597, respectively), the original
regression model included a control variable for the presence of ECT
because ECT is paid on a per-treatment basis under the IPF PPS. We
continue to observe that IPF stays with ECT have significantly higher
costs per day. For FY 2026 we are proposing to continue paying for ECT
on a per-treatment basis; therefore, we included a control variable to
account for the additional costs associated with ECT, which will
continue to be paid outside the regression model.
Similarly, we included a control variable for stays with positive
covered emergency department (ED)-related charges. To address the costs
of maintaining an ED and providing ED services, IPF PPS pays facilities
with a qualified ED an additional 26 percent of the payment rate for
the first day of the stay. To prevent ED adjustment from serving as an
incentive for unnecessary ED use, all stays in facilities with
qualifying EDs receive the payment, except in cases when the admission
source code is ``D,'' indicating that the patient was transferred from
the inpatient part of the same facility. (In such cases, the ED costs
would have already been covered under the preceding claim.) The 26
percent ED adjustment, updated in the FY 2025 IPF PPS final rule (89 FR
64635 and 64636), was calculated in a way that accounts for the
percentage of stays with ED charges and different admission sources,
and that calculation was performed outside the cost regression
framework. Since our regression model includes all costs associated
with each IPF stay, including ED costs, we included a control variable
for stays with positive covered ED charges to control for the
additional costs associated with ED services in this FY 2026 IPF PPS
proposed rule.
Lastly, we included control variables for the data year. Since the
model uses a combined set of data from 3 years, we adjusted cost
estimates for year-over-year inflation using historical IPF market
basket increases and labor-related shares. However, external factors
beyond this inflation adjustment may have influenced cost differences
across the 3 years included in our sample. These factors, such as the
impact of the COVID-19 PHE, may affect cost variation in our sample
period. To account for these additional year-related factors, we
continue to include a set of year controls in the FY 2026 IPF PPS
proposed rule regression model.
e. Regression Results
We estimated the constrained regression using ordinary least
squares (OLS) on 704,494 IPF stays from FY 2020 to FY 2022, clustering
standard errors at the provider level. Table 2 presents the estimation
results, along with the number and percentage of stays associated with
each independent variable. The regression model has an R-squared value
of 0.27841, meaning that the independent variables included in the
regression (facility characteristics and control variables) were able
to explain approximately 27.8 percent of the variation in per diem
costs among IPF stays. We note that the R-squared value of our
regression model is comparable to the R-squared values of prior models
used for the IPF PPS (for example, see the R-squared value of 0.32340
in the FY 2025 IPF PPS final rule (89 FR 64597) and the finding that
the payment model explained 33 percent of the variation in per diem
cost among IPFs in the RY 2005 IPF PPS final rule (69 FR 66957)).
Except for the teaching variable, each of the adjustment factors
presented in Table 2 is the exponentiated regression coefficient from
our regression model, which as we previously noted uses the natural
logarithm of per diem total cost as the dependent variable. We present
the exponentiated regression results, as these most directly translate
to the way that IPF PPS adjustment factors are calculated for payment
purposes. That is, the exponentiated adjustment factors presented in
this proposed rule represent a percentage increase or decrease in per
diem cost for IPF stays with each characteristic. In the case of the
teaching variable, the result presented is the un-exponentiated
regression coefficient. As discussed in section III.D.6 of this
proposed rule, the current IPF PPS teaching adjustment is calculated as
1 + a facility's ratio of interns and residents to its average daily
census, raised to the power of 0.5150. The coefficient for teaching
status presented in Table 2 can be interpreted in the same way.
Lastly, we consider regression factors to be statistically
significant when the p-value is less than or equal to the significance
level of 0.05 (*), 0.01 (**), and 0.001 (***), as notated in the Table
2 presented in this proposed rule.
We discuss the proposed changes to the adjustment factors for IPFs
located in rural areas and for teaching status in sections III.D.5 and
III.D.6 of this proposed rule, respectively, and the proposed
refinement standardization factor in section III.D.9 of this proposed
rule.
Table 2--IPF PPS Per Diem Cost Regression Results With Data From FY 2020 Through FY 2022
----------------------------------------------------------------------------------------------------------------
Number of Percentage FY 2025
stays FY of stays FY current Estimated Statistical
Variable description 2020- FY 2020- FY adjustment adjustment significance
2022 2022 factor factor
----------------------------------------------------------------------------------------------------------------
Total......................................... 704,494 100.0
Provider: Rural............................... 88,429 12.6 1.17 1.18 (***)
Provider: Teaching Status, log(1 + FTE 145,960 20.7 0.5150 0.7981 (***)
Residents/ADC)...............................
Control Variable: Stay Has ECT treatment...... 11,268 1.6 N/A 1.32 (***)
Control Variable: Stay Has Positive Covered ED 227,654 32.3 N/A 1.46 (***)
Charge.......................................
Control Variable: Stay Discharged in FY 2020.. 280,956 39.9 N/A 1.00 ............
Control Variable: Stay Discharged in FY 2021.. 229,125 32.5 N/A 1.01 (**)
Control Variable: Stay Discharged in FY 2022.. 194,413 27.6 N/A 1.03 (***)
MS-DRG 056: Degenerative Nervous System 4,251 0.6 1.12 ........... ............
Disorders w MCC..............................
MS-DRG 057: Degenerative Nervous System 33,402 4.7 1.11 ........... ............
Disorders w/out MCC..........................
MS-DRG 876: OR Procedures with Principal 671 0.1 1.29 ........... ............
Diagnosis of Mental Health...................
MS-DRG 880: Acute Adjustment Reaction and 6,996 1.0 1.08 ........... ............
Psychosocial Dysfunction.....................
MS-DRG 881: Depressive Neuroses............... 19,758 2.8 1.06 ........... ............
[[Page 18507]]
MS-DRG 882: Neuroses Except Depressive........ 8,943 1.3 1.02 ........... ............
MS-DRG 883: Disorders of Personality and 5,067 0.7 1.17 ........... ............
Impulse Control..............................
MS-DRG 884: Organic Disturbances and 48,587 6.9 1.08 ........... ............
Intellectual Disability......................
MS-DRG 885: Psychosis......................... 529,875 75.2 1.00 ........... ............
MS-DRG 886: Behavioral and Developmental 1,340 0.2 1.07 ........... ............
Disorders....................................
MS-DRG 887: Other Mental Disorder Diagnoses... 309 0.0 1.00 ........... ............
MS-DRG 894: Alcohol, Drug Abuse or Dependence, 2,631 0.4 0.86 ........... ............
Left AMA.....................................
MS-DRG 895: Alcohol, Drug Abuse or Dependence 10,346 1.5 0.90 ........... ............
w Rehab Therapy..............................
MS-DRG 896: Alcohol, Drug Abuse or Dependence 920 0.1 1.00 ........... ............
w/out rehab therapy w MCC....................
MS-DRG 897: Alcohol, Drug Abuse or Dependence 29,883 4.2 0.95 ........... ............
w/out rehab therapy w/out MCC................
MS-DRG 917: Poisoning and Toxic Effects of 128 0.0 1.19 ........... ............
Drugs w MCC..................................
MS-DRG 918: Poisoning and Toxic Effects of 743 0.1 1.12 ........... ............
Drugs w/out MCC..............................
MS-DRG 947: Signs and Symptoms w MCC.......... 56 0.0 1.12 ........... ............
MS-DRG 948: Signs and Symptoms w/out MCC...... 588 0.1 1.09 ........... ............
Comorbidity: Artificial Openings--Digestive & 3,217 0.5 1.07 ........... ............
Urinary......................................
Comorbidity: Cardiac Conditions............... 19,480 2.8 1.04 ........... ............
Comorbidity: Chronic Obstructive Pulmonary 40,003 5.7 1.09 ........... ............
Disease and Sleep Apnea......................
Comorbidity: Developmental Disabilities....... 24,783 3.5 1.04 ........... ............
Comorbidity: Eating Disorders................. 2,577 0.4 1.09 ........... ............
Comorbidity: Gangrene......................... 207 0.0 1.12 ........... ............
Comorbidity: Oncology Treatment............... 10 0.0 1.44 ........... ............
Comorbidity: Poisoning........................ 5,436 0.8 1.16 ........... ............
Comorbidity: Renal Failure, Acute............. 17,466 2.5 1.06 ........... ............
Comorbidity: Renal Failure, Chronic........... 42,547 6.0 1.08 ........... ............
Comorbidity: Severe Musculoskeletal & 3,765 0.5 1.05 ........... ............
Connective Tissue Disease....................
Comorbidity: Severe Protein Malnutrition...... 4,907 0.7 1.17 ........... ............
Comorbidity: Tracheostomy..................... 260 0.0 1.09 ........... ............
Comorbidity: Uncontrolled Diabetes............ 20,001 2.8 1.05 ........... ............
Comorbidity: Intensive Management for High- 18,815 2.7 1.07 ........... ............
Risk Behavior................................
Ages: Under 45................................ 208,346 29.6 1.00 ........... ............
Ages: 45 and under 55 years................... 102,699 14.6 1.02 ........... ............
Ages: 55 and under 60 years................... 61,731 8.8 1.05 ........... ............
Ages: 60 and under 65 years................... 58,702 8.3 1.06 ........... ............
Ages: 65 and under 70 years................... 83,972 11.9 1.09 ........... ............
Ages: 70 and under 80 years................... 113,413 16.1 1.11 ........... ............
Ages: 80 years and over....................... 75,631 10.7 1.13 ........... ............
Length of stay--1 day......................... 15,429 2.2 1.28 ........... ............
Length of stay--2 days........................ 24,436 3.5 1.20 ........... ............
Length of stay--3 days........................ 36,245 5.1 1.15 ........... ............
Length of stay--4 days........................ 41,060 5.8 1.12 ........... ............
Length of stay--5 days........................ 46,859 6.7 1.08 ........... ............
Length of stay--6 days........................ 50,854 7.2 1.06 ........... ............
Length of stay--7 days........................ 54,639 7.8 1.03 ........... ............
Length of stay--8 days........................ 44,677 6.3 1.02 ........... ............
Length of stay--9 days........................ 36,939 5.2 1.01 ........... ............
Length of stay--10 days....................... 33,644 4.8 1.00 ........... ............
Length of stay--11 days....................... 30,419 4.3 1.00 ........... ............
Length of stay--12 days....................... 28,017 4.0 1.00 ........... ............
Length of stay--13 days....................... 28,089 4.0 1.00 ........... ............
Length of stay--14 days....................... 30,556 4.3 1.00 ........... ............
Length of stay--15 days....................... 21,954 3.1 1.00 ........... ............
Length of stay--16 days....................... 16,503 2.3 1.00 ........... ............
Length of stay--17 days....................... 14,128 2.0 1.00 ........... ............
Length of stay--18 days....................... 12,301 1.7 1.00 ........... ............
Length of stay--19 days....................... 11,467 1.6 1.00 ........... ............
Length of stay--20 days....................... 11,703 1.7 1.00 ........... ............
Length of stay--21 days....................... 11,018 1.6 1.00 ........... ............
Length of stay--22 days or longer............. 103,557 14.7 1.00 ........... ............
----------------------------------------------------------------------------------------------------------------
4. Wage Index Adjustment
a. Background
As discussed in the RY 2007 IPF PPS final rule (71 FR 27061), and
the RY 2009 IPF PPS (73 FR 25719) and RY 2010 IPF PPS notices (74 FR
20373), to provide an adjustment for geographic wage levels, the labor-
related portion of an IPF's payment is adjusted using an appropriate
wage index. Currently, an IPF's geographic wage index value is
determined based on the actual location
[[Page 18508]]
of the IPF in an urban or rural area, as defined in Sec.
412.64(b)(1)(ii)(A) and (C).
Due to the variation in costs and because of the differences in
geographic wage levels, in the RY 2005 IPF PPS final rule, we required
that payment rates under the IPF PPS be adjusted by a geographic wage
index. We proposed and finalized a policy to use the unadjusted, pre-
floor, pre-reclassified IPPS hospital wage index to account for
geographic differences in IPF labor costs. We implemented use of the
pre-floor, pre-reclassified IPPS hospital wage data to compute the IPF
wage index since there was not an IPF-specific wage index available. We
believe that IPFs generally compete in the same labor market as IPPS
hospitals, and therefore, the pre-floor, pre-reclassified IPPS hospital
wage data should be reflective of labor costs of IPFs. We believe this
pre-floor, pre-reclassified IPPS hospital wage index to be the best
available data to use as proxy for an IPF-specific wage index. As
discussed in the RY 2007 IPF PPS final rule (71 FR 27061 through
27067), under the IPF PPS, the wage index is calculated using the IPPS
wage index for the labor market area in which the IPF is located,
without considering geographic reclassifications, floors, and other
adjustments made to the wage index under the IPPS. For a complete
description of these IPPS wage index adjustments, we refer readers to
the FY 2019 IPPS/LTCH PPS final rule (83 FR 41362 through 41390). Our
wage index policy at Sec. 412.424(a)(2) provides that we use the best
Medicare data available to estimate costs per day, including an
appropriate wage index to adjust for wage differences.
When the IPF PPS was implemented in the RY 2005 IPF PPS final rule,
with an effective date of January 1, 2005, the pre-floor, pre-
reclassified IPPS hospital wage index that was available at the time
was the FY 2005 pre-floor, pre-reclassified IPPS hospital wage index.
Historically, the IPF wage index for a given RY has used the pre-floor,
pre-reclassified IPPS hospital wage index from the prior FY as its
basis. This has been due in part to the pre-floor, pre-reclassified
IPPS hospital wage index data that were available during the IPF
rulemaking cycle, where an annual IPF notice or IPF final rule was
usually published in early May. This publication timeframe was
relatively early compared to other Medicare payment rules because the
IPF PPS follows a RY, which was defined in the implementation of the
IPF PPS as the 12-month period from July 1 to June 30 (69 FR 66927).
Therefore, the best available data at the time the IPF PPS was
implemented was the pre-floor, pre-reclassified IPPS hospital wage
index from the prior FY (for example, the RY 2006 IPF wage index was
based on the FY 2005 pre-floor, pre-reclassified IPPS hospital wage
index).
In the RY 2012 IPF PPS final rule, we changed the reporting year
timeframe for IPFs from a RY to FY, which begins October 1 and ends
September 30 (76 FR 26434 and 26435). In that FY 2012 IPF PPS final
rule, we continued our established policy of using the pre-floor, pre-
reclassified IPPS hospital wage index from the prior year (that is,
from FY 2011) as the basis for the FY 2012 IPF wage index. This policy
of basing a wage index on the prior year's pre-floor, pre-reclassified
IPPS hospital wage index has been followed by other Medicare payment
systems, such as hospice and inpatient rehabilitation facilities. By
continuing with our established policy, we remained consistent with
other Medicare payment systems.
In FY 2020, we finalized the IPF wage index methodology to align
the IPF PPS wage index with the same wage data timeframe used by the
IPPS for FY 2020 and subsequent years. Specifically, we finalized the
use of the pre-floor, pre-reclassified IPPS hospital wage index from
the FY concurrent with the IPF FY as the basis for the IPF wage index.
For example, the FY 2020 IPF wage index was based on the FY 2020 pre-
floor, pre-reclassified IPPS hospital wage index rather than on the FY
2019 pre-floor, pre-reclassified IPPS hospital wage index.
We explained in the FY 2020 proposed rule (84 FR 16973), that using
the concurrent pre-floor, pre-reclassified IPPS hospital wage index
will result in the most up-to-date wage data being the basis for the
IPF wage index. We noted that it would also result in more consistency
and parity in the wage index methodology used by other Medicare payment
systems. We indicated that the Medicare skilled nursing facility (SNF)
PPS already used the concurrent IPPS hospital wage index data as the
basis for the SNF PPS wage index. We proposed and finalized similar
policies to use the concurrent pre-floor, pre-reclassified IPPS
hospital wage index data in other Medicare payment systems, such as
hospice and inpatient rehabilitation facilities. Thus, the wage
adjusted Medicare payments of various provider types are based upon
wage index data from the same timeframe. For FY 2026, we are proposing
to continue to use the concurrent pre-floor, pre-reclassified IPPS
hospital wage index as the basis for the IPF wage index.
In the FY 2023 IPF PPS final rule (87 FR 46856 through 46859), we
finalized a permanent 5-percent cap on any decrease to a provider's
wage index from its wage index in the prior year, and we stated that we
will apply this cap in a budget neutral manner. In addition, we
finalized a policy that a new IPF will be paid the wage index for the
area in which it is geographically located for its first full or
partial FY with no cap applied because a new IPF will not have a wage
index in the prior FY. We amended the IPF PPS regulations at Sec.
412.424(d)(1)(i) to reflect this permanent cap on wage index decreases.
We refer readers to the FY 2023 IPF PPS final rule for a more detailed
discussion about this policy.
We are proposing to apply the IPF wage index adjustment to the
labor-related share of the national IPF PPS base rate and ECT payment
per treatment. The proposed labor-related share of the IPF PPS national
base rate and ECT payment per treatment is 78.9 percent in FY 2026.
This percentage reflects the labor-related share relative importance of
the 2021-based IPF market basket for FY 2026 and is 0.1 percentage
point higher than the FY 2025 labor-related share (see section III.A.3
of this proposed rule).
b. Office of Management and Budget (OMB) Bulletins
The wage index used for the IPF PPS is calculated using the
unadjusted, pre-reclassified and pre-floor IPPS wage index data and is
assigned to the IPF based on the labor market area in which the IPF is
geographically located. IPF labor market areas are delineated based on
the Core-Based Statistical Area (CBSAs) established by the OMB.
Generally, OMB issues major revisions to statistical areas every 10
years, based on the results of the decennial census. However, OMB
occasionally issues minor updates and revisions to statistical areas in
the years between the decennial censuses through OMB Bulletins. These
bulletins contain information regarding CBSA changes, including changes
to CBSA numbers and titles. In accordance with our established
methodology, the IPF PPS has historically adopted any CBSA changes that
are published in the OMB bulletin that corresponds with the IPPS
hospital wage index used to determine the IPF wage index and, when
necessary and appropriate, has proposed and finalized transition
policies for these changes.
In the RY 2007 IPF PPS final rule (71 FR 27061 through 27067), we
adopted the changes discussed in OMB Bulletin No. 03-04 (June 6, 2003),
which
[[Page 18509]]
announced revised definitions for Metropolitan Statistical Areas
(MSAs), and the creation of Micropolitan Statistical Areas and Combined
Statistical Areas. We refer readers to the FY 2007 IPF PPS final rule
(71 FR 27064 and 27065) for a complete discussion regarding treating
Micropolitan Areas as rural. In adopting the OMB CBSA geographic
designations in RY 2007, we did not provide a separate transition for
the CBSA-based wage index since the IPF PPS was already in a transition
period from TEFRA payments to PPS payments.
In the RY 2009 IPF PPS notice, we incorporated the CBSA
nomenclature changes published in the most recent OMB bulletin that
applied to the IPPS hospital wage index used to determine the current
IPF wage index and stated that we expected to continue to do the same
for all the OMB CBSA nomenclature changes in future IPF PPS rules and
notices, as necessary (73 FR 25721).
Subsequently, CMS adopted the changes that were published in past
OMB bulletins in the FY 2016 IPF PPS final rule (80 FR 46682 through
46689), the FY 2018 IPF PPS rate update (82 FR 36778 and 36779), the FY
2020 IPF PPS final rule (84 FR 38453 and 38454), and the FY 2021 IPF
PPS final rule (85 FR 47051 through 47059). We direct readers to each
of these rules for more information about the changes that were adopted
and any associated transition policies.
As discussed in the FY 2023 IPF PPS final rule, we did not adopt
OMB Bulletin 20-01, which was issued March 6, 2020, because we
determined this bulletin had no material impact on the IPF PPS wage
index. This bulletin creates only one Micropolitan statistical area,
and Micropolitan areas are considered rural for the IPF PPS wage index.
That is, the constituent county of the new Micropolitan area was
considered rural effective as of FY 2021 and would continue to be
considered rural if we adopted OMB Bulletin 20-01.
In the FY 2025 IPF PPS final rule (89 FR 64614 through 64633), we
adopted the updates set forth in OMB Bulletin No. 23-01 effective July
21, 2023, beginning with the FY 2025 IPF PPS wage index. These updates
included material changes to the OMB statistical area delineations
which included 53 urban counties that became rural, 54 rural counties
that became urban, and 88 counties that moved to a new or modified
CBSA. These updates also included replacing the 8 counties in
Connecticut with 9 new ``Planning Regions.'' Planning regions now serve
as county-equivalents within the CBSA system. OMB Bulletin No. 23 may
be accessed online at https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf.
Given the scope of changes involved in adopting the CBSA
delineations for FY 2025, we finalized a budget neutral 3-year phase
out policy for IPFs transitioning from rural to urban based on CBSA
revisions, as discussed further in section III.D.5.c of this proposed
rule. We also applied the permanent 5-percent cap on wage index
decreases described at Sec. 412.424(d)(1)(i).
c. Proposed Wage Index Budget Neutrality Adjustment
In accordance with Sec. 412.424(c)(5), changes to the wage index
are made in a budget neutral manner so that updates do not increase
expenditures. Therefore, for FY 2026, we are proposing to continue to
apply a budget neutrality adjustment in accordance with our existing
budget neutrality policy. This policy requires us to update the wage
index in such a way that total estimated payments to IPFs for FY 2026
are the same with or without the changes (that is, in a budget neutral
manner) by applying a budget neutrality factor to the IPF PPS rates. We
are proposing to use the following steps to ensure that the rates
reflect the FY 2026 update to the wage indexes (based on FY 2022
hospital cost report data) and the labor-related share in a budget-
neutral manner:
Step 1: Simulate estimated IPF PPS payments, using the FY 2025 IPF
wage index values (available on the CMS website) and labor-related
share (as published in the FY 2025 IPF PPS final rule (89 FR 64582)).
Step 2: Simulate estimated IPF PPS payments using the FY 2026 IPF
wage index values (available on the CMS website), and the FY 2026
labor-related share (based on the latest available data as discussed
previously).
Step 3: Divide the amount calculated in step 1 by the amount
calculated in step 2. The resulting quotient is the FY 2026 budget
neutral wage adjustment factor of 1.0011.
Step 4: Apply the FY 2026 budget neutral wage adjustment factor
from step 3 to the FY 2025 IPF PPS Federal per diem base rate after the
application of the proposed IPF market basket increase reduced by the
proposed productivity adjustment described in section III.A.2 of this
proposed rule to determine the proposed FY 2026 IPF PPS Federal per
diem base rate. As discussed in section III.D.9 of this proposed rule,
we are also applying a refinement standardization factor to determine
the FY 2026 IPF PPS Federal per diem base rate.
5. Proposed Adjustment for Rural Location
a. Background
In the RY 2005 IPF PPS final rule (69 FR 66954), we provided a 17-
percent payment adjustment for IPFs located in a rural area. This
adjustment was based on the regression analysis, which indicated that
the per diem cost of rural facilities was 17 percent higher than that
of urban facilities after accounting for the influence of the other
variables included in the regression. This 17-percent adjustment has
been part of the IPF PPS each year since the inception of the IPF PPS.
In the FY 2025 IPF PPS final rule, we revised the patient-level
adjustment factors and changed the CBSA delineations. To minimize the
scope of changes that would impact providers in any single year, we
maintained the existing regression-derived adjustment factor, which was
established in RY 2005, for IPFs located in a rural area as defined at
Sec. 412.64(b)(1)(ii)(C) for FY 2025. See the RY 2005 IPF PPS final
rule (69 FR 66954) for a complete discussion of the adjustment for
rural locations.
b. Proposed Adjustment for Rural Location
As discussed in section III.D.3 of this FY 2026 IPF PPS proposed
rule, we have completed analysis of more recent cost and claims data,
which indicate that revisions to the facility-level IPF PPS payment
adjustment factors would be appropriate.
In the FY 2025 IPF PPS proposed rule, we included a request for
information (RFI) regarding a potential revision to the payment
adjustment for rural location (89 FR 23194 and 23195); we refer readers
to section V.A. of the FY 2025 IPF PPS final rule (89 FR 64641) for
summaries of the comments we received, and our responses. We have taken
the comments received into consideration for development of this FY
2026 proposed revision of the payment adjustment for rural location.
As discussed in section III.D.3 of this FY 2026 IPF PPS proposed
rule, we are proposing to derive updated IPF PPS facility-level
adjustment factors for FY 2026 using a regression analysis of data from
the FY 2020 through 2022 MedPAR data files and Medicare cost report
data from the FY 2020 through 2022 Hospital Cost Report Information
System (HCRIS). More information about the data used for the impact
[[Page 18510]]
simulations is found in section VII.C of this FY 2026 IPF PPS proposed
rule.
For FY 2026, we are proposing to increase the rural adjustment to
18 percent. Our regression analysis described in section III.D.3 of
this proposed rule indicates that this revised adjustment more
accurately represents the difference in costs between urban and rural
IPFs. As discussed in section III.D.9 of this proposed rule, we are
proposing to implement this revision to the rural adjustment budget-
neutrally. A detailed discussion of the distributional impacts of this
proposed change is found in section VII.C of this proposed rule.
We solicit comments on this proposed revision to the payment
adjustment for rural location. Lastly, we are proposing that if more
recent data become available, we would consider using such data to
determine the final FY 2026 adjustment factor for rural location.
c. Continuation of Rural Transition
The adoption of OMB Bulletin No. 23-01 in the FY 2025 IPF PPS final
rule (89 FR 64632) in accordance with our established methodology
determines whether a facility is classified as urban or rural for
purposes of the rural payment adjustment in the IPF PPS. Implementation
of the updated OMB delineations results in the rural payment adjustment
being applied where it is appropriate to adjust for higher costs
incurred by IPFs in rural locations; however, these changes have
distributional effects among IPF providers. Some providers lost
eligibility for the rural payment adjustment in FY 2025 as a result of
these changes. Therefore, we provided a transition period to implement
the updated OMB delineations (89 FR 64633).
In the FY 2025 IPF PPS final rule, we phased out the rural
adjustment for facilities located in a county that transitioned from
rural to urban due to the changes outlined in OMB Bulletin 23-01. We
implemented a 3-year budget neutral phase-out of the rural adjustment
for IPFs located in the 54 rural counties that would become urban under
the new OMB delineations, given the potentially significant payment
impacts for these IPFs (89 FR 64632 and 64633), consistent with the
transition policy we adopted for IPFs in FY 2016 (80 FR 46682 through
46689). Under this 3-year phase-out, for FY 2026, IPFs that became
urban due to these OMB delineation changes will receive one-third of
the rural adjustment that was applicable in FY 2024. For FY 2027, these
IPFs will not receive a rural adjustment.
6. Proposed Teaching Adjustment
a. Background
In the RY 2005 IPF PPS final rule, we implemented regulations at
Sec. 412.424(d)(1)(iii) to establish a facility-level adjustment for
IPFs that are, or are part of, teaching hospitals. The teaching
adjustment accounts for the higher indirect operating costs experienced
by hospitals that participate in graduate medical education (GME)
programs. The payment adjustments are made based on the ratio of the
number of fulltime equivalent (FTE) interns and residents training in
the IPF and the IPF's average daily census.
Medicare makes direct GME payments (for direct costs such as
resident and teaching physician salaries, and other direct teaching
costs) to all teaching hospitals including those paid under a PPS and
those paid under the TEFRA rate-of-increase limits. These direct GME
payments are made separately from payments for hospital operating costs
and are not part of the IPF PPS. The direct GME payments do not address
the estimated higher indirect operating costs teaching hospitals may
face.
The results of the regression analysis of FY 2002 IPF data
established the basis for the payment adjustments included in the RY
2005 IPF PPS final rule. The results showed that the indirect teaching
cost variable is significant in explaining the higher costs of IPFs
that have teaching programs. We calculated the teaching adjustment
based on the IPF's ``teaching variable,'' which is (1 + [the number of
FTE residents training in the IPF's average daily census]). The
teaching variable is then raised to the 0.5150 power to result in the
teaching adjustment. This formula is subject to the limitations on the
number of FTE residents, which are described in this section of this
proposed rule.
We established the teaching adjustment in a manner that limited the
incentives for IPFs to add FTE residents for the purpose of increasing
their teaching adjustment. We imposed a cap on the number of FTE
residents that may be counted for purposes of calculating the teaching
adjustment. The cap limits the number of FTE residents that teaching
IPFs may count for the purpose of calculating the IPF PPS teaching
adjustment, not the number of residents teaching institutions can hire
or train. We calculated the number of FTE residents that trained in the
IPF during a ``base year'' and used that FTE resident number as the
cap. An IPF's FTE resident cap is ultimately determined based on the
final settlement of the IPF's most recent cost report filed before
November 15, 2004 (69 FR 66955). A complete discussion of the temporary
adjustment to the FTE cap to reflect residents due to hospital closure
or residency program closure appears in the RY 2012 IPF PPS proposed
rule (76 FR 5018 through 5020) and the RY 2012 IPF PPS final rule (76
FR 26453 through 26456). As discussed in section III.D.6.c of this
proposed rule, we are proposing to make conforming changes to the IPF
resident cap regulation beginning in FY 2026 to recognize permanent cap
increases awarded under Section 4122 of the CAA, 2023.
In the regression analysis that informed the RY 2004 IPF PPS final
rule, the logarithm of the teaching variable had a coefficient value of
0.5150. We converted this cost effect to a teaching payment adjustment
by treating the regression coefficient as an exponent and raising the
teaching variable to a power equal to the coefficient value. We note
that the coefficient value of 0.5150 was based on the regression
analysis holding all other components of the payment system constant. A
complete discussion of how the teaching adjustment was calculated
appears in the RY 2005 IPF PPS final rule (69 FR 66954 through 66957)
and the RY 2009 IPF PPS notice (73 FR 25721).
b. Proposed Revision to the IPF PPS Teaching Adjustment
As we previously described in section III.D.3.e of this proposed
rule, we have completed analysis of more recent cost and claims data,
which indicate that revisions to the facility-level IPF PPS payment
adjustment factors would be appropriate. Accordingly, we are proposing
to revise the IPF PPS teaching adjustment for FY 2026 based on these
results.
In the FY 2025 IPF PPS proposed rule, we included an RFI regarding
a potential revision to the payment adjustment for teaching status (89
FR 23194 and 23195); we refer readers to section V.A of the FY 2025 IPF
PPS final rule (89 FR 64641) for summaries of the comments we received,
and our responses. In general, commenters were supportive of increasing
the IPF teaching adjustment based on the more recent analysis presented
in that proposed rule. We have taken the comments received into
consideration for development of this FY 2026 proposed revision of the
payment adjustment for teaching status.
For FY 2026, we are proposing to increase the teaching adjustment
to 0.7981, based on the results of our latest
[[Page 18511]]
regression model discussed earlier in this proposed rule. As detailed
in section III.D.3.e of this FY 2026 IPF PPS proposed rule, this un-
exponentiated regression coefficient for the teaching status variable
was found to be statistically significant at the 0.001 level. In
accordance with our longstanding methodology, we would convert this
cost effect to a teaching payment adjustment by treating the regression
coefficient as an exponent and raising the teaching variable to a power
equal to the coefficient value. We believe that increasing the teaching
adjustment from 0.5150 to 0.7981 would more appropriately adjust IPF
PPS payments for IPFs that have qualified teaching programs and would
address the estimated higher indirect operating costs for teaching
IPFs. As discussed in section III.D.9 of this proposed rule, we are
proposing to implement this revision to the teaching adjustment budget-
neutrally. A detailed discussion of the distributional impacts of this
proposed change is found in section VII.C of this proposed rule.
We solicit comments on this proposed revision to the payment
adjustment for teaching status. Lastly, we are proposing that if more
recent data become available, we would consider using such data to
determine the final FY 2026 adjustment factor for teaching status.
c. Proposed Update to IPF PPS Resident Caps
As we described earlier in this FY 2026 IPF PPS proposed rule, the
IPF PPS teaching adjustment includes a policy of capping the number of
FTE residents that an IPF can include in the calculation of its
teaching adjustment. As previously noted, we established this policy to
limit the incentives for IPFs to add FTE residents for the purpose of
increasing their teaching adjustment. In the RY 2005 IPF PPS final rule
(69 FR 66955), we noted that the IPF PPS statute did not require us to
impose resident FTE caps, but we recognized that if we imposed no
limits on the teaching adjustment under the IPF PPS, teaching programs
in those facilities could grow and receive payments in a manner that
would be inconsistent with the methodology for teaching hospitals paid
under the IPPS. In addition, we were concerned that if a teaching
hospital had a distinct part psychiatric unit and had a number of FTE
residents above the amount recognized for reimbursement under the
limits established by the Balanced Budget Act of 1997 (BBA) (Pub. L.
105-33), the hospital could potentially circumvent those limits by
assigning residents to train in the IPF. We explained that after
carefully reviewing the public comments, we decided to adopt a cap on
the number of FTE residents that may be counted under the IPF PPS for
the teaching adjustment. We stated that we made this decision in order
to--(1) exercise our statutory responsibility under the BBA to prevent
any erosion of the resident caps established under the IPPS that could
result from the perverse incentives created by the facility adjustment
for teaching under the IPF PPS; and (2) avoid creating incentives to
artificially expand residency training in IPFs, and ensure that the
resident base used to determine payments is related to the care needs
in IPF institutions.
Since the establishment of the IPF PPS, there have been numerous
statutory resident cap increases, which have impacted GME payments as
well as IME payments under the IPPS. These statutory resident cap
increases have generally not been applicable to IPF hospitals or
subunits, because caps are awarded to IPPS hospitals which receive both
direct GME payments and indirect medical education (IME) payments under
the IPPS.
Section 4122 of the CAA, 2023 provided for the distribution of at
least 100 resident FTEs to be distributed for hospitals with a
psychiatry or psychiatry subspecialty residency, which the CAA, 2023
defines as a residency in psychiatry as accredited by the Accreditation
Council for Graduate Medical Education for the purpose of preventing,
diagnosing, and treating mental health disorders. Hospitals with a
psychiatry or psychiatry subspecialty residency could include not only
acute care hospitals paid under the IPPS, but also freestanding
psychiatric hospitals paid under the IPF PPS.
The CAA, 2023 also included a provision for IME payments under the
IPPS, which stated that for discharges occurring on or after July 1,
2026, insofar as an additional payment amount under section 4122 is
attributable to resident positions distributed to a hospital that is
identified under subsection (h)(10), the indirect teaching adjustment
factor would be computed in the same manner as provided under section
1886(d)(5)(B)(ii) with respect to such resident positions (in other
words, utilizing 1.35 as the value of ``c'' in the adjustment formula).
We note that IPF hospitals paid under the IPF PPS are not considered a
hospital under subsection (h)(10) and do not receive IME payments under
the IPPS, but under section 1886(d)(5)(B) of the Act.
Historically, the IPF PPS teaching adjustment has not recognized
permanent resident cap increases, which as we noted earlier have
historically impacted GME payments and IME payments under the IPPS.
However, current regulations at Sec. 412.424(d)(1)(iii)(D) allow for
an adjustment to an IPF's resident FTE cap for a new approved GME
program. When we initially established this regulation in the RY 2005
IPF PPS final rule (69 FR 66955 and 66956), we explained that for new
teaching IPFs and for teaching IPFs that start new programs, we were
adopting the policy that was applied under the BBA for IPPS teaching
hospitals that start new teaching programs as specified in Sec.
413.79(e)(1). We noted that under Sec. 412.105(f)(1)(vi) concerning
IME payments under the IPPS, hospitals that have shared residency
rotational relationships may elect to apply their respective IME
resident caps on an aggregate basis via a Medicare GME affiliation
agreement. We explained that our intent was not to affect affiliation
agreements and rotational arrangements for hospitals that have
residents that train in more than one hospital. We did not implement a
provision concerning affiliation agreements specifically pertaining to
the FTE caps used in the teaching adjustment under the IPF PPS. We also
stated that we believe these policies fairly balance our
responsibilities under the statute to assure appropriate enforcement of
the BBA and the overall limits on payment adjustments for teaching
hospitals with the greater precision that can be achieved by adjusting
payments for teaching IPFs. We also stated that we believe that we have
designed a cap that balances the need for limits with the unique
conditions of teaching programs in freestanding psychiatric hospitals
and in distinct part psychiatric units. We noted, however, that we
would monitor the impact of these policies closely and consider changes
in the future when appropriate.
In summary, the CAA, 2023 provides for the distribution of at least
100 psychiatry or psychiatry subspecialty resident FTEs and provides
for corresponding increases to IME payments under the IPPS but makes no
provisions pertaining to the indirect operating costs for IPFs with
teaching programs. For FY 2026, we are proposing to recognize resident
FTE cap increases that are awarded under section 4122 of the CAA, 2023,
either to an IPF hospital or to an IPPS hospital for resident FTEs that
are allocated to the IPF subunit paid under the IPF PPS. Specifically,
we are proposing that such resident FTE cap increases would align
[[Page 18512]]
with our current IPF PPS teaching regulation at Sec.
412.424(d)(1)(iii)(D), which allows for increases to IPF resident FTE
caps for a new approved graduate medical education program. As we
previously noted, we established the teaching cap policy under the IPF
PPS to maintain alignment with the requirements of the BBA that applied
to IME payments under the IPPS, and we have noted that Sec.
412.424(d)(1)(iii)(D) is intended to achieve the same purpose. We
believe that this proposal would be consistent with our current
regulation and our longstanding policy of maintaining IPF PPS teaching
cap policies that align with IME cap policies under the IPPS. We
further believe that this proposal would continue to appropriately
limit the incentives for IPFs to add FTE residents for the purpose of
increasing their teaching adjustment. We are soliciting comments on
this proposed update to the IPF PPS teaching policy.
7. Cost of Living Adjustment for IPFs Located in Alaska and Hawaii
The IPF PPS includes a payment adjustment for IPFs located in
Alaska and Hawaii based upon the area in which the IPF is located. As
we explained in the RY 2005 IPF PPS final rule, the FY 2002 data
demonstrated that IPFs in Alaska and Hawaii had per diem costs that
were disproportionately higher than other IPFs. As a result of this
analysis, we provided a COLA in the RY 2005 IPF PPS final rule. We
refer readers to the FY 2024 IPF PPS final rule for a complete
discussion of the currently applicable COLA factors (88 FR 51088 and
51089).
In the FY 2013 IPPS/LTCH final rule (77 FR 53700 and 53701), we
established a new methodology to update the COLA factors for Alaska and
Hawaii and adopted this methodology for the IPF PPS in the FY 2015 IPF
PPS final rule (79 FR 45958 through 45960). We also specified that the
COLA updates will be determined every 4 years, in alignment with the
IPPS market basket labor-related share update (79 FR 45958 through
45960). Because the labor-related share of the IPPS market basket was
updated for FY 2022, the COLA factors were updated in FY 2022 IPPS/LTCH
rulemaking (86 FR 45547) reflecting CPI data through 2020. As such, we
also finalized an update to the IPF PPS COLA factors in the FY 2022 IPF
PPS final rule to reflect the updated COLA factors finalized in the FY
2022 IPPS/LTCH rulemaking effective for FY 2022 through FY 2025 (86 FR
42621 and 42622).
Generally, under our existing methodology, we update the 2009 COLA
factors published by the U.S. Office of Personnel Management (OPM) by a
comparison of the growth in the Consumer Price Indices (CPIs) for the
areas of Urban Alaska and Urban Hawaii, relative to the growth in the
CPI for the average U.S. city as published by the Bureau of Labor
Statistics (BLS). Using the respective CPI commodities index and CPI
services index and using the approximate commodities/services shares
obtained from the IPPS market basket, we create reweighted CPIs for
each of the respective areas to reflect the underlying composition of
the IPPS market basket nonlabor-related share. Lastly, we apply a 25
percent cap, which was incorporated into our methodology to reflect the
statutory cap used to calculate OPM's COLA factors. For a complete
discussion, we refer readers to the FY 2015 IPF PPS final rule (79 FR
45958 through 45960) as well as the FY 2022 IPF PPS final rule (86 FR
42621 and 42622).
Table 3 lists the COLA factors for IPFs located in Alaska and
Hawaii as calculated under our current methodology, using updated CPI
data through 2024 and the approximate 60 percent commodities/40 percent
services shares obtained from the proposed 2023-based IPPS market
basket.
Table 3--IPF PPS Cost-of-Living Adjustment Factors: IPFs Located in Alaska and Hawaii
----------------------------------------------------------------------------------------------------------------
FY 2022 Updated COLA
through FY factors under
Area 2025 COLA current Difference
factors methodology
----------------------------------------------------------------------------------------------------------------
Alaska:
City of Anchorage and 80-kilometer (50-mile) radius by road. 1.22 1.18 -0.04
City of Fairbanks and 80-kilometer (50-mile) radius by road. 1.22 1.18 -0.04
City of Juneau and 80-kilometer (50-mile) radius by road.... 1.22 1.18 -0.04
Rest of Alaska.............................................. 1.24 1.20 -0.04
Hawaii:
City and County of Honolulu................................. 1.25 1.25 0
County of Hawaii............................................ 1.22 1.21 -0.01
County of Kauai............................................. 1.25 1.25 0
County of Maui and County of Kalawao........................ 1.25 1.25 0
----------------------------------------------------------------------------------------------------------------
We believe it is appropriate to have a consistent policy approach
with that of other hospitals in Alaska and Hawaii. At this time, we
believe it would be appropriate to maintain the current COLA factors to
allow CMS to consider whether any other data sources or methodology
changes may improve the adjustment we make to hospital payments that
accounts for the unique circumstances of hospitals located in Alaska
and Hawaii. Therefore, we are proposing to continue to use the FY 2025
COLA factors to adjust the non-labor-related portion of the
standardized amount for IPFs located in Alaska and Hawaii for FY 2026.
For a complete discussion of the proposed FY 2026 COLA factors, we
refer readers to the FY 2026 IPPS/LTCH proposed rule, published
elsewhere in the Federal Register. Table 4 lists the proposed FY 2026
COLA factors.
Table 4--Proposed FY 2026 Cost of Living Adjustment (COLA) Factors: IPFs
Located in Alaska and Hawaii
------------------------------------------------------------------------
Area Proposed COLA
------------------------------------------------------------------------
Alaska:
City of Anchorage and 80-kilometer (50-mile) 1.22
radius by road..................................
City of Fairbanks and 80-kilometer (50-mile) 1.22
radius by road..................................
[[Page 18513]]
City of Juneau and 80-kilometer (50-mile) radius 1.22
by road.........................................
Rest of Alaska................................... 1.24
Hawaii:
City and County of Honolulu...................... 1.25
County of Hawaii................................. 1.22
County of Kauai.................................. 1.25
County of Maui and County of Kalawao............. 1.25
------------------------------------------------------------------------
The proposed IPF PPS COLA factors for FY 2026 are also shown in
Addendum A to this rule, which is available on the CMS website at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html.
8. Proposed Adjustment for IPFs With a Qualifying ED
The IPF PPS includes a facility-level adjustment for IPFs with
qualifying EDs. As defined in Sec. 412.402, qualifying emergency
department means an emergency department that is staffed and equipped
to furnish a comprehensive array of emergency services and meets the
requirements of Sec. 489.24(b) and Sec. 413.65.
We provide an adjustment to the Federal per diem base rate to
account for the costs associated with maintaining a full-service ED.
The adjustment is intended to account for ED costs incurred by a
psychiatric hospital with a qualifying ED, or an excluded psychiatric
unit of an IPPS hospital or a critical access hospital (CAH), and the
overhead cost of maintaining the ED. This payment applies to all IPF
admissions (with one exception which we describe in this section),
regardless of whether the patient was admitted through the ED. The ED
adjustment is made on every qualifying claim except as described in
this section of this proposed rule. As specified at Sec.
412.424(d)(1)(v)(B), the ED adjustment is not made when a patient is
discharged from an IPPS hospital or CAH and admitted to the same IPPS
hospital's or CAH's excluded psychiatric unit. We clarified in the RY
2005 IPF PPS final rule (69 FR 66960) that an ED adjustment is not made
in this case because the costs associated with ED services are
reflected in the DRG payment to the IPPS hospital or through the
reasonable cost payment made to the CAH.
In the FY 2025 IPF PPS final rule, we updated the adjustment factor
from 1.31 to 1.53 for IPFs with qualifying EDs using the same
methodology used to determine ED adjustments in prior years (89 FR
64636). Beginning in FY 2025, IPFs with a qualifying ED receive an
adjustment factor of 1.53 as the variable per diem adjustment for day 1
of each patient stay. If an IPF does not have a qualifying ED, it
receives an adjustment factor of 1.27 as the variable per diem
adjustment for day 1 of each patient stay. For FY 2026, we propose to
maintain the 1.53 adjustment factor for IPFs with qualifying EDs. A
complete discussion of the steps involved in the most recent
calculation of the ED adjustment factor can be found in the FY 2025 IPF
PPS final rule (89 FR 64636).
9. Refinement Standardization Factor
Section 1886(s)(5)(D)(iii) of the Act provides that revisions in
payment implemented pursuant to section 1886(s)(5)(D)(i) for a rate
year shall result in the same estimated amount of aggregate
expenditures under Title XVIII of the Act for psychiatric hospitals and
psychiatric units furnished in the rate year as would have been made
under this Title for such care in such rate year if such revisions had
not been implemented. We interpret this to mean that revisions in
payment adjustments implemented for FY 2026 (and for any subsequent
fiscal year) must be budget neutral.
Historically, we have maintained budget neutrality in the IPF PPS
using the application of a standardization factor, which is codified in
our regulations at Sec. 412.424(c)(5) to account for the overall
positive effects resulting from the facility-level and patient-level
adjustments. As discussed in section III.B.1 of this proposed rule,
section 124(a)(1) of the BBRA required that we implement the IPF PPS in
a budget neutral manner. In other words, the amount of total payments
under the IPF PPS, including any payment adjustments, must be projected
to be equal to the amount of total payments that would have been made
if the IPF PPS were not implemented. Therefore, we calculated the
standardization factor by setting the total estimated IPF PPS payments,
taking into account all of the adjustment factors under the IPF PPS, to
be equal to the total estimated payments that would have been made
using TEFRA methodology had the IPF PPS not been implemented. A step-
by-step description of the methodology used to estimate payments under
the TEFRA payment system appears in the RY 2005 IPF PPS final rule (69
FR 66926).
We believe the budget neutrality requirement of section
1886(s)(5)(D)(iii) of the Act is consistent with our longstanding
methodology for maintaining budget neutrality under the IPF PPS
pursuant to section 124(a)(1) of the BBRA. We note that for the FY 2025
IPF PPS rule (89 FR 64640 and 64641), we applied a refinement
standardization factor to the FY 2024 IPF Federal per diem base rate
and ECT per treatment amount to maintain budget neutrality for the
change in the patient-level adjustment factors, ED adjustment, and ECT
per treatment amount finalized in the FY 2025 IPF PPS rule.
Therefore, for FY 2026, we are proposing to apply a refinement
standardization factor in accordance with our existing policy at Sec.
412.424(c)(5). Under this policy, we would update IPF PPS adjustment
factors for teaching status and for IPFs located in rural areas, as
proposed in this FY 2026 IPF PPS proposed rule, in such a way that
total estimated payments to IPFs for FY 2026 are the same with or
without the changes (that is, in a budget neutral manner) by applying a
refinement standardization factor to the IPF PPS rates. We are
proposing to use the following steps to ensure that the rates reflect
the proposed FY 2026 update to the facility-level adjustment factors
(as previously discussed in sections III.D.5 and III.D.6 of this
proposed rule and summarized in Addendum A) in a budget neutral manner:
Step 1: Simulate estimated IPF PPS payments using the FY 2025 IPF
facility-level adjustment factor values (available on the CMS website).
Step 2: Simulate estimated IPF PPS payments using the proposed FY
2026 IPF facility-level adjustment factor
[[Page 18514]]
values (see Addendum A of this proposed rule, which is available on the
CMS website).
Step 3: Divide the amount calculated in step 1 by the amount
calculated in step 2. The resulting quotient is the proposed FY 2026
refinement standardization factor of 0.9927.
Step 4: Apply the FY 2026 refinement standardization factor from
step 3 to the FY 2025 IPF PPS Federal per diem base rate and ECT per
treatment amount, after the application of the wage index budget
neutrality factor and the IPF market basket increase reduced by the
productivity adjustment described in section III.A of this proposed
rule to determine the proposed FY 2026 IPF PPS Federal per diem base
rate and FY 2026 ECT payment amount per treatment.
E. Other Payment Adjustments and Policies
1. Outlier Payment Overview
The IPF PPS includes an outlier adjustment to promote access to IPF
care for those patients who require expensive care and to limit the
financial risk of IPFs treating unusually costly patients. In the RY
2005 IPF PPS final rule, we implemented regulations at Sec.
412.424(d)(3)(i) to provide a per case payment for IPF stays that are
extraordinarily costly. Providing additional payments to IPFs for
extremely costly cases strongly improves the accuracy of the IPF PPS in
determining resource costs at the patient and facility level. These
additional payments reduce the financial losses that would otherwise be
incurred in treating patients who require costlier care; therefore,
reduce the incentives for IPFs to under-serve these patients. We make
outlier payments for discharges where an IPF's estimated total cost for
a case exceeds a fixed dollar loss threshold amount (multiplied by the
IPF's facility-level adjustments) plus the Federal per diem payment
amount for the case.
In instances when the case qualifies for an outlier payment, we pay
80 percent of the difference between the estimated cost for the case
and the adjusted threshold amount for days 1 through 9 of the stay
(consistent with the median LOS for IPFs in FY 2002), and 60 percent of
the difference for day 10 and thereafter. The adjusted threshold amount
is equal to the outlier threshold amount adjusted for wage area,
teaching status, rural area, and the COLA factor (if applicable), plus
the amount of the Medicare IPF payment for the case. We established the
80 percent and 60 percent loss sharing ratios because we were concerned
that a single ratio established at 80 percent (like other Medicare
PPSs) might provide an incentive under the IPF per diem payment system
to increase LOS to receive additional payments.
After establishing the loss sharing ratios, we determined the
current fixed dollar loss threshold amount through payment simulations
designed to compute a dollar loss beyond which payments are estimated
to meet the 2 percent outlier spending target. Each year when we update
the IPF PPS, we simulate payments using the latest available data to
compute the fixed dollar loss threshold so that outlier payments
represent 2 percent of total estimated IPF PPS payments.
2. Proposed Update to the Outlier Fixed Dollar Loss Threshold Amount
In accordance with the update methodology described in Sec.
412.428(d), we are proposing to update the fixed dollar loss threshold
amount used under the IPF PPS outlier policy. Based on the regression
analysis and payment simulations used to develop the IPF PPS, we
established a 2 percent outlier policy, which strikes an appropriate
balance between protecting IPFs from extraordinarily costly cases while
ensuring the adequacy of the Federal per diem base rate for all other
cases that are not outlier cases. We are proposing to maintain the
established 2 percent outlier policy for FY 2026.
Our longstanding methodology for updating the outlier fixed dollar
loss threshold involves using the best available data, which is
typically the most recent available data. We note that for FY 2022 and
FY 2023 only, we made certain methodological changes to our modeling of
outlier payments, and we discussed the specific circumstances that led
to those changes for those years (86 FR 42623 and 42624; 87 FR 46862
through 46864). We direct readers to the FY 2022 and FY 2023 IPF PPS
proposed and final rules for a more complete discussion.
We are proposing to update the IPF outlier threshold amount for FY
2026 using FY 2024 claims data and the same methodology that we have
used to set the initial outlier threshold amount each year beginning
with the RY 2007 IPF PPS final rule (71 FR 27072 and 27073). For this
FY 2026 IPF PPS rulemaking, consistent with our longstanding practice,
based on an analysis of the latest available data (the December 2024
update of FY 2024 IPF claims) and rate increases, we believe it is
necessary to update the fixed dollar loss threshold amount to maintain
an outlier percentage that equals 2 percent of total estimated IPF PPS
payments. Based on an analysis of these updated data, we estimate that
IPF outlier payments as a percentage of total estimated payments would
be slightly higher than 2.0 percent in FY 2025. Therefore, we are
proposing to update the outlier threshold amount to $39,360 to maintain
estimated outlier payments at 2 percent of total estimated aggregate
IPF payments for FY 2026. This proposed update would be an increase
from the FY 2025 threshold of $38,110. Lastly, we are proposing that if
more recent data become available for the FY 2026 IPF PPS final rule,
we would consider using such data to determine the final outlier fixed
dollar loss threshold amount for FY 2026.
3. Proposed Update to IPF Cost-to-Charge Ratio Ceilings
Under the IPF PPS, an outlier payment is made if an IPF's cost for
a stay exceeds a fixed dollar loss threshold amount plus the IPF PPS
amount. To establish an IPF's cost for a particular case, we multiply
the IPF's reported charges on the discharge bill by its overall CCR.
This approach to determining an IPF's cost is consistent with the
approach used under the IPPS and other PPSs. In the RY 2004 IPPS final
rule (68 FR 34494), we implemented changes to the IPPS policy used to
determine CCRs for IPPS hospitals, because we became aware that payment
vulnerabilities resulted in inappropriate outlier payments. Under the
IPPS, we established a statistical measure of accuracy for CCRs to
ensure that aberrant CCR data did not result in inappropriate outlier
payments.
As indicated in the RY 2005 IPF PPS final rule (69 FR 66961), we
believe that the IPF outlier policy is susceptible to the same payment
vulnerabilities as the IPPS; therefore, we adopted a method to ensure
the statistical accuracy of CCRs under the IPF PPS. Specifically, we
adopted the following procedure in the RY 2005 IPF PPS final rule:
Calculated two national ceilings, one for IPFs located in
rural areas and one for IPFs located in urban areas.
Computed the ceilings by first calculating the national
average and the standard deviation of the CCR for both urban and rural
IPFs using the most recent CCRs entered in the most recent Provider
Specific File (PSF) available.
For FY 2026, we are proposing to continue following this
methodology. To determine the proposed rural and urban ceilings, we
multiplied each of the standard deviations by 3 and added the result to
the appropriate national CCR average (either rural or urban). The
proposed upper threshold CCR for IPFs
[[Page 18515]]
in FY 2026 is 2.3331 for rural IPFs, and 1.7585 for urban IPFs, based
on current CBSA-based geographic designations. If an IPF's CCR is above
the applicable ceiling, the ratio is considered statistically
inaccurate, and we assign the appropriate national (either rural or
urban) median CCR to the IPF.
We apply the national median CCRs to the following situations:
New IPFs that have not yet submitted their first Medicare
cost report. We continue to use these national median CCRs until the
facility's actual CCR can be computed using the first tentatively or
final settled cost report.
IPFs whose overall CCR is in excess of three standard
deviations above the corresponding national geometric mean (that is,
above the ceiling).
Other IPFs for which the Medicare Administrative
Contractor (MAC) obtains inaccurate or incomplete data with which to
calculate a CCR.
We are proposing to update the FY 2026 national median and ceiling
CCRs for urban and rural IPFs based on the CCRs entered in the latest
available IPF PPS PSF.
Specifically, for FY 2026, to be used in each of the three
situations listed previously, using the most recent CCRs entered in the
CY 2024 PSF, we provide an estimated national median CCR of 0.5720 for
rural IPFs and a national median CCR of 0.4200 for urban IPFs. These
calculations are based on the IPF's location (either urban or rural)
using the current CBSA-based geographic designations. A complete
discussion regarding the national median CCRs appears in the RY 2005
IPF PPS final rule (69 FR 66961 through 66964).
Lastly, we are proposing that if more recent data become available,
we would consider using such data to calculate the rural and urban
national median and ceiling CCRs for FY 2026.
IV. Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program
A. Background and Statutory Authority
The Inpatient Psychiatric Facilities Quality Reporting (IPFQR)
Program is authorized by section 1886(s)(4) of the Act, and it applies
to psychiatric hospitals and psychiatric units paid by Medicare under
the IPF PPS (see section II.A. of this proposed rule for a detailed
discussion of entities covered under the IPF PPS).7 8 We
refer readers to the FY 2019 IPF PPS final rule (83 FR 38589) for a
discussion of the background and statutory authority of the IPFQR
Program. We have codified procedural requirements and reconsideration
and appeals procedures for IPFQR Program decisions in our regulations
at 42 CFR 412.433 and 412.434. Consistent with previous IPFQR Program
regulations, we refer to both inpatient psychiatric hospitals and
psychiatric units as ``inpatient psychiatric facilities'' (at times,
simply ``facilities'' where the context is clear) or ``IPFs.'' This
usage follows the terminology in our IPF PPS regulations at Sec.
412.402.
---------------------------------------------------------------------------
\7\ We note that the statute uses the term ``rate year'' (RY).
However, beginning with the annual update of the inpatient
psychiatric facility prospective payment system (IPF PPS) that took
effect on July 1, 2011 (RY 2012), we aligned the IPF PPS update with
the annual update of the ICD codes, effective on October 1 of each
year. This change allowed for annual payment updates and the ICD
coding update to occur on the same schedule and appear in the same
Federal Register document, promoting administrative efficiency. To
reflect the change to the annual payment rate update cycle, we
revised the regulations at 42 CFR 412.402 to specify that, beginning
October 1, 2012, the IPF PPS RY means the 12-month period from
October 1 through September 30, which we refer to as a ``fiscal
year'' (FY) (76 FR 26435). Therefore, with respect to the IPFQR
Program, the terms ``rate year,'' as used in the statute, and
``fiscal year'' as used in the regulation, both refer to the period
from October 1 through September 30. For more information regarding
this terminology change, we refer readers to section III of the RY
2012 IPF PPS final rule (76 FR 26434 through 26435).
\8\ For the IPFQR Program, we refer to the year in which an IPF
would receive the 2-percentage point reduction to the annual update
to the standard Federal rate as the payment determination year. An
IPF generally meets IPFQR Program requirements by submitting data on
specified quality measures in a specified time and manner during a
data submission period that occurs prior to the payment
determination year. These data reflect a period prior to the data
submission period during which the IPF furnished care to patients;
this period is known as the reporting period, sometimes also
referred to as the performance period. For example, for a measure
for which CY 2026 is the reporting period which is required to be
submitted in CY 2027 and affects FY 2028 payment determination, if
an IPF did not submit the data for this measure as specified during
CY 2027 (and meets all other IPFQR Program requirements for the FY
2028 payment determination) we would reduce by 2-percentage points
that IPF's update for the FY 2028 payment determination year.
---------------------------------------------------------------------------
Section 1886(s)(4)(E) of the Act requires IPFs participating in the
IPFQR Program to collect and submit to the Secretary certain
standardized patient assessment data, using a standardized patient
assessment instrument (PAI) developed by the Secretary, for RY 2028 (FY
2028) and each subsequent rate year. In the FY 2025 IPF PPS proposed
rule, we solicited public comment on the principles and approach that
CMS should consider when developing the IPF-PAI (89 FR 23200 through 89
FR 23204), which we summarized in the final rule (89 FR 64642 through
64649).
B. Proposal To Modify the Reporting Period of the 30-Day Risk-
Standardized All-Cause Emergency Department Visit Following an IPF
Discharge Measure, Beginning With the FY 2029 Payment Determination
1. Background
In the FY 2025 IPF PPS final rule, we adopted the 30-Day Risk-
Standardized All-Cause Emergency Department (ED) Visit Following an IPF
Discharge measure (IPF ED Visit measure) for the IPFQR Program
beginning with the FY 2027 payment determination (89 FR 64650 through
89 FR 64659). The measure was adopted with a calendar year (CY)
reporting period starting with the CY 2025 reporting period for the FY
2027 payment determination (89 FR 64659).\9\ We adopted this measure to
address a gap in the existing IPFQR Program measure set related to
patient outcomes in the period following discharge from the IPF (89 FR
64651). While the Thirty Day All-Cause Unplanned Readmission Following
Psychiatric Hospitalization measure (IPF Unplanned Readmission
measure), adopted in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57241
through 57246), assesses hospital readmissions, it does not assess
another type of post-discharge use of acute care: ED visits that do not
result in a hospital admission. Therefore, we adopted the IPF ED Visit
measure to fill this gap and to provide IPFs and patients with a more
complete picture of acute care among IPF patients after discharge from
the IPF (89 FR 64650 through 64659).
---------------------------------------------------------------------------
\9\ We note that we used ``performance period'' in the FY 2025
IPF PPS final rule to refer to the reporting period.
---------------------------------------------------------------------------
2. Proposal To Modify the Reporting Period of the IPF ED Visit Measure
To Begin Q3 CY 2025-Q2 CY 2027 Reporting Period/FY 2029 Payment
Determination
We intended for the IPF ED Visit measure and the IPF Unplanned
Readmission measure to complement the IPF Unplanned Readmission measure
to the extent possible (89 FR 64652 through 64653). Our rationale was
that maintaining similarities between these two measures--the same
timeframe (that is, the 30 days post-discharge from an IPF),the same
definitions of index admission, and same patient populations--would
provide IPFs and patients with a more complete picture of acute care
among IPF patients after discharge. However, the IPF Unplanned
Readmission measure uses a 2-year reporting period, which differs from
the 1-year reporting
[[Page 18516]]
period we finalized for the IPF ED Visit measure. To fully align the
measures so that the same cohort of patients can be compared, it is
necessary to modify the reporting period of the IPF ED Visit Measure.
For these reasons, we propose to modify the current 1-year
reporting period for the IPF ED Visit measure to a 2-year reporting
period. We propose that this 2-year reporting period would run from
July 1st, 4 years prior to the applicable fiscal year payment
determination, to June 30th, 2 years prior to the applicable fiscal
year payment determination. This proposed 2-year reporting period for
the IPF ED Visit measure would align with the IPF Unplanned Readmission
measure. This proposal would modify the first reporting period for the
measure to Quarter (Q)3 CY 2025-Q2 CY 2027 for the FY 2029 payment
determination.\10\ This proposed 2-year reporting period would allow
the IPF ED Visit measure to better complement the IPF Unplanned
Readmission measure, resulting in more meaningful IPFQR Program measure
data for providers and consumers.
---------------------------------------------------------------------------
\10\ As finalized in prior rulemaking (89 FR 64659), the IPF ED
Visit measure would have been used in the FY 2027 payment
determination. This proposal to modify the reporting period changes
the first year that this measure will be used in the payment
determination to FY 2029.
---------------------------------------------------------------------------
Because the data used to calculate the IPF ED Visit measure are
available on Medicare claims and enrollment data, this measure requires
no additional data collection or submission by IPFs (89 FR 64667). We
are not proposing any other changes to the measure. We note the IPF ED
Visit measure for the FY 2029 payment determination, which would
reflect a Q3 CY 2025-Q2 CY 2027 reporting period, would first be
publicly reported in the January 2029 release on the Compare tool on
medicare.gov (https://www.medicare.gov/care-compare/) or their
successor websites.
We invite public comment on our proposal to modify the reporting
period of the IPF ED Visit Measure.
C. Proposal To Remove the Facility Commitment to Health Equity Measure
Beginning With the CY 2024 Reporting Period/FY 2026 Payment
Determination
We refer readers to the FY 2024 IPF PPS final rule where we adopted
the Facility Commitment to Health Equity (hereafter referred to as
FCHE) structural measure into the IPFQR Program (88 FR 51100 through
51107). We propose to remove the FCHE measure beginning with the FY
2026 payment determination due to the costs associated with achieving a
high score on the measure outweighing the benefit of its continued use
in the program. When adopted, we intended the collection of data
described in the five domains of this measure to provide IPF leadership
with meaningful and actionable health data to drive quality
improvements to eliminate health disparities. Based on feedback
received from IPFs as well as a re-focus on clinical outcomes measures,
for which the FCHE measure, as a structural measure, does not directly
measure clinical outcomes, the burden of collecting this measure may
outweigh the benefits. Removal of this measure would alleviate an
estimated annual burden of approximately 267 hours, at a cost of
$11,978, across all participating IPFs (88 FR 51151).
One of the goals of the IPFQR Program is to move forward in the
least burdensome manner possible, while maintaining a parsimonious set
of the most meaningful quality measures and continuing to incentivize
improvement in the quality of care provided to patients. Removing this
measure from the IPFQR Program is an effective way to accomplish this
goal. Our priority is a re-focus on measurable clinical outcomes as
well as identifying quality measures on topics of prevention,
nutrition, and well-being, and as such we refer readers to our request
for comment on ``Request for Information on Future Measures for the
IPFQR Program'' in section IV.H.2. The IPFQR Program continues to
incentivize the improvement of care quality and health outcomes for all
patients through measurement and transparency with other measures. It
may be costly for IPFs to continue reporting on the FCHE measure and
achieve high performance scores, and removal of this measure would make
room both in the program's measure set to enhance the program's focus
on measurable clinical outcomes and for IPF leadership to focus on
other priority quality and safety areas. We acknowledge that some IPFs
may have expended resources to implement some or all of the activities
described in the FCHE measure attestation statements in order to be
able to attest ``yes'' for measure reporting purposes, however, IPFs
that had already implemented such activities prior to adoption of the
measure would have been able to attest ``yes'' without expending
similar resources.
If finalized, IPFs that do not report their CY 2024 reporting
period data for the FCHE measure to CMS would not be considered
noncompliant with the measure for purposes of their FY 2026 payment
determination (that is, IPFs that do not report CY 2024 reporting
period data would not be penalized for FY 2026 payments due to this
measure). Any FCHE measure data received by CMS would not be used for
public reporting or payment purposes.
If not finalized, IPFs that do not report their CY 2024 reporting
data for the FCHE measure to CMS would be considered noncompliant with
the measure for their FY 2026 payment determination, and would receive
a letter of noncompliance after August 1, 2025, at which time the
required 30 day reconsideration period would begin. Payment adjustments
would apply to FY 2026 payment determinations fee-for-service claims as
previously finalized.
We invite public comment on our proposal to remove the FCHE
structural measure from the IPFQR Program beginning with the FY 2026
payment determination.
D. Proposal To Remove the COVID-19 Vaccination Coverage Among
Healthcare Personnel Measure Beginning With CY 2024 Reporting Period/FY
2026 Payment Determination
We refer readers to the FY 2022 IPF PPS final rule where we adopted
the COVID-19 Vaccination Coverage Among Healthcare Personnel (HCP)
measure into the IPFQR Program (86 FR 42633 through 42640) and the FY
2024 IPF PPS final rule where we modified the COVID-19 Vaccination
Coverage Among HCP measure to account for updated vaccine guidance (88
FR 51128 through 51133).
We propose to remove the COVID-19 Vaccination Coverage Among HCP
beginning with the CY 2024 reporting period/FY 2026 payment
determination under removal Factor 8, the costs associated with a
measure outweigh the benefit of its continued use in the program (Sec.
412.433(e)(3)(i)(H)). We note that reporting on this measure currently
requires reporting data on COVID-19 vaccination coverage among HCP for
1 week each month for each of the 3 months in a quarter. This requires
IPFs to track current vaccination status for all employees, licensed
independent practitioners, adult students/trainers and volunteers, and
other contract personnel and log in to the National Healthcare Safety
Network (NHSN) to report the data monthly either manually in the NHSN
or by uploading a comma-separated value (CSV) file (86 FR 42636). The
estimated burden of collecting this information annually across all
1,596 IPFs is between $721,392 and $841,730 annually. We refer readers
to section V.B.3. of this proposed rule for more details on this
estimated burden calculation.
[[Page 18517]]
When we first adopted the COVID-19 Vaccination Coverage Among HCP
measure, the United States was in a Public Health Emergency (PHE) with
millions of cases and over 550,000 COVID-19 deaths (86 FR 42633). While
preventing the spread of COVID-19 remains a public health goal, the PHE
ended on May 11, 2023.\11\ In addition, the number of deaths due to
COVID-19 in the U.S. has decreased since the adoption of this measure.
In March 2021, when this measure was being proposed, the United States
was averaging over 5,000 deaths per week. In April 2023, the last full
month of the PHE, weekly number of deaths due to COVID-19 averaged
around 1,300.\12\ With the end of the PHE and the decrease in COVID-19
deaths, we believe the continued costs and burden to providers of
tracking and monthly reporting on this measure outweigh the benefit of
continued information collection on COVID-19 vaccination coverage among
HCP. As it may be costly for IPFs to continue to report on the COVID-19
Vaccination Coverage Among HCP measure, removal of this measure would
allow the IPFQR Program to focus on goals such as measuring clinical
outcomes.
---------------------------------------------------------------------------
\11\ https://www.hhs.gov/coronavirus/covid-19-public-health-emergency/index.html.
\12\ Provisional COVID-19 Deaths, by Week, in The United States,
Reported to CDC. Accessed on March 27, 2025 via https://covid.cdc.gov/covid-data-tracker/#trends_weeklydeaths_select_00.
---------------------------------------------------------------------------
If finalized, IPFs that do not report their CY 2024 reporting
period data for the COVID-19 HCP Vaccination measure to CMS would not
be considered noncompliant with the measures for purposes of their FY
2026 payment determination (that is, IPFs that do not report CY 2024
reporting period data would not be penalized for FY 2026 payments due
to this measure). Any COVID-19 HCP Vaccination measure data received by
CMS would not be used for public reporting or payment purposes.
If not finalized, IPFs that do not report their CY 2024 reporting
data for the COVID-19 HCP Vaccination measure to CMS would be
considered noncompliant with the measure for their FY 2026 payment
determination, and would receive a letter of noncompliance after August
1, at which time the required 30 day reconsideration period would
begin. Payment adjustments would apply to FY 2026 payment determination
as previously finalized.
We invite public comment on our proposal to remove the COVID-19
Vaccination Coverage Among HCP measure from the IPFQR Program beginning
with the FY 2026 payment determination.
E. Proposed Removal of Two Social Drivers of Health Measures Beginning
With CY 2024 Reporting Period/FY 2026 Payment Determination
We propose to remove two social drivers of health process measures
from the IPFQR Program beginning with the FY 2026 payment
determination: Screening for Social Drivers of Health measure
(Screening for SDOH) (adopted at 88 FR 51107 through 51117); and Screen
Positive Rate for Social Drivers of Health measure (Screen Positive)
(adopted at 88 FR 51117 through 51122).
We propose to remove the Screening for SDOH and Screen Positive
measures beginning with the FY 2026 payment determination under removal
Factor 8, the costs associated with the measure outweigh the benefit of
its continued use in the program. We have previously heard from some
IPFs concerned with the costs and resources associated with screening
patients via manual processes, manually storing such data, training
hospital staff, and altering workflows for these measures. In the FY
2024 IPF PPS final rule we estimated a total annual burden of surveying
IPF patients for health-related social needs under the Screening for
Social Drivers of Health measures will be 66,414 hours (1,596
facilities x 1,261 patients per facility x 0.033 hr) at a cost of
$1,375,434 (66,414 hour x $20.71/hour) across all patients (88 FR
51152). We estimated that the submission of the Screen Positive measure
to CMS would have incurred an additional 266 hours across all IPFs, at
a cost of $11,933 (88 FR 51152 through 51153). Further, we note that
these measures document an administrative process and report aggregate
level outcomes, and do not shed light on the extent to which providers
are ultimately connecting patients with resources or services and
whether patients are benefiting from these screenings. We have
concluded that the costs of the use of these measures in the IPFQR
Program outweigh the benefits to providers and patients. Removal of
these measures will alleviate the burden on IPFs to manually screen
each patients and submit data each reporting cycle, allowing IPFs to
focus resources on measurable clinical outcomes. This will also remove
the patient burden associated with repeated SDOH screenings across
multiple healthcare facilities. We refer readers to our request for
comment ``Request for Information on Future Measures for the IPFQR
Program'' in section IV.E. for more information regarding our areas of
focus for new measures. We acknowledge that some IPFs may have expended
resources to implement SDOH screenings, however, IPFs that had already
implemented such screenings prior to adoption of the measures would not
have expended similar resources in response to the measure. The
objectives of the IPFQR Program continue to incentivize the improvement
of care quality and health outcomes for all patients through
transparency and use of appropriate quality measures.
If finalized, IPFs that do not report to CMS their CY 2024
reporting period data for the SDOH measures would not be considered
noncompliant with the measures for purposes of their FY 2026 payment
determination (that is, IPFs that do not report CY 2024 reporting
period data would not be penalized for FY 2026 payments due to this
measure). Any SDOH measure data received by CMS would not be used for
public reporting or payment purposes.
If not finalized, IPFs that do not report their CY 2024 reporting
data for the SDOH measures to CMS would be considered noncompliant with
the measures for their FY 2026 payment determination, and would receive
a letter of noncompliance after August 1, at which time the required 30
day reconsideration period would begin. Payment adjustments would apply
to FY 2026 payment determinations as previously finalized.
We invite public comment on our proposal to remove these two social
drivers of health measures from the IPFQR Program beginning with the FY
2026 payment determination.
F. Summary of IPFQR Program Measures for the FY 2028 Payment
Determination and Subsequent Years
As previously discussed, we propose to modify the reporting period
of one measure (the IPF ED Visit Measure) and remove four other
measures (the Facility Commitment to Health Equity measure, the COVID-
19 Vaccination Coverage Among Healthcare Personnel (HCP) Measure, the
Screening for Social Drivers of Health measure, and the Screen Positive
Rate for Social Drivers of Health measure). We are not proposing any
new measures for the IPFQR Program in this proposed rule. Table 5 sets
forth the measures in the FY 2028 IPFQR Program.
[[Page 18518]]
Table 5--IPFQR Program Measure Set for the FY 2028 IPFQR Program
------------------------------------------------------------------------
Consensus-based entity (CBE)
# Measure ID Measure
------------------------------------------------------------------------
0640.......................... HBIPS-2.......... Hours of Physical
Restraint Use.
0641.......................... HBIPS-3.......... Hours of Seclusion
Use.
N/A........................... FAPH............. Follow-Up After
Psychiatric
Hospitalization.
N/A *......................... SUB-2 and SUB-2a. Alcohol Use Brief
Intervention
Provided or Offered
and SUB-2a Alcohol
Use Brief
Intervention.
N/A *......................... SUB-3 and SUB-3a. Alcohol and Other
Drug Use Disorder
Treatment Provided
or Offered at
Discharge and SUB-3a
Alcohol and Other
Drug Use Disorder
Treatment at
Discharge.
N/A *......................... TOB-3 and TOB-3a. Tobacco Use Treatment
Provided or Offered
at Discharge and TOB-
3a Tobacco Use
Treatment at
Discharge.
1659.......................... IMM-2............ Influenza
Immunization.
N/A *......................... TR-1............. Transition Record
with Specified
Elements Received by
Discharged Patients
(Discharges from an
Inpatient Facility
to Home/Self Care or
Any Other Site of
Care).
N/A........................... SMD.............. Screening for
Metabolic Disorders.
N/A........................... PIX.............. Psychiatric Inpatient
Experience Survey.
2860.......................... IPF Unplanned Thirty-Day All-Cause
Readmission. Unplanned
Readmission
Following
Psychiatric
Hospitalization in
an Inpatient
Psychiatric
Facility.
N/A........................... IPF ED Visit..... 30-Day Risk-
Standardized All-
Cause Emergency
Department Visit
Following an
Inpatient
Psychiatric Facility
Discharge.[dagger]
3205.......................... Med Cont......... Medication
Continuation
Following Inpatient
Psychiatric
Discharge.
N/A........................... COVID HCP........ COVID-19 Vaccination
Coverage Among
Healthcare Personnel
(HCP).[Dagger]
N/A........................... Facility Facility Commitment
Commitment. to Health
Equity.[Dagger]
N/A........................... Screening for Screening for Social
SDOH. Drivers of
Health.[Dagger]
N/A........................... Screen Positive.. Screen Positive Rate
for Social Drivers
of Health.[Dagger]
------------------------------------------------------------------------
* Measure is no longer endorsed by the CBE but was endorsed at the time
of adoption. We note that although section 1886(s)(4)(D)(i) of the Act
generally requires measures specified by the Secretary be endorsed by
the entity with a contract under section be endorsed by the entity
with a contract under section 1890(a) of the Act, section
1886(s)(4)(D)(ii) of the Act states that in the case of a specified
area or medical topic determined appropriate by the Secretary for
which a feasible and practical measure has not been endorsed by the
entity with a contract under section 1890(a) of the Act, the Secretary
may specify a measure that is not so endorsed as long as due
consideration is given to measures that have been endorsed or adopted
by a consensus organization identified by the Secretary. We attempted
to find available measures for each of these clinical topics that have
been endorsed or adopted by a consensus organization and found no
other feasible and practical measures on the topics for the IPF
setting.
[dagger] We note that we propose to modify the reporting period of this
measure in section IV.B. of this proposed rule.
[Dagger] We note that we propose to remove these measures in section
IV.C., IV.D., and IV.E of this proposed rule.
G. IPFQR Program Extraordinary Circumstances Exception (ECE) Policy
1. Background
Under the current Extraordinary Circumstances Exception (ECE)
policy as set forth in our regulations at 412.433(f), we have granted
exceptions with respect to quality data reporting requirements in the
event of extraordinary circumstances beyond the control of an IPF. An
exception may be granted for extraordinary circumstances including, but
not limited to, natural disasters or systemic problems with data
collection systems. We refer readers to 412.433(f) for our current ECE
regulations, as well as the FY 2013 IPPS/LTCH PPS final rule (77 FR
53659 through 53660), FY 2014 IPPS/LTCH PPS final rule (78 FR 50903),
FY 2015 IPF PPS final rule (79 FR 45978), and FY 2018 IPPS/LTCH PPS
final rule (82 FR 38473 through 38474) for further background and
details of the ECE policy. We also refer readers to the CMS QualityNet
website for the specific requirements for submission of an ECE request
in the IPFQR Program.\13\
---------------------------------------------------------------------------
\13\ https://qualitynet.cms.gov/ipf/ipfqr/participation.
---------------------------------------------------------------------------
Our ECE policy provides flexibility for IPFQR Program participants
to ensure continuity of quality care delivery and measure reporting in
the event of an extraordinary circumstance. For instance, we recognize
that, in circumstances where a full exception is not applicable, it is
beneficial for an IPF to report data later than the reporting deadline.
Delayed reporting authorized under our ECE policy allows temporary
relief for an IPF experiencing an extraordinary circumstance while
preserving the benefits of data reporting, such as transparency and
informed decision-making for beneficiaries and providers alike.
Accordingly, we propose to update our regulations to specify that an
ECE could take the form of an extension of time for an IPF to comply
with a data reporting requirement if CMS determines that this type of
relief would be appropriate under the circumstances.
2. Proposal To Update the Extraordinary Circumstance Exception (ECE)
Policy for the IPFQR Program
We propose to update the current ECE policy codified at 42 CFR
412.433(f) to include extensions of time as a form of relief and to
further clarify the policy. Specifically, in the introductory text at
proposed 42 CFR 412.433(f)(1), we propose that CMS may grant an ECE
with respect to reporting requirements in the event of an extraordinary
circumstance--defined as an event beyond the control of an IPF (for
example a natural or man-made disaster such as a hurricane, tornado,
earthquake, terrorist attack, or bombing)--that affected the ability of
the hospital to comply with one or more applicable reporting
requirements with respect to a fiscal year.
We propose that the steps required for requesting or granting an
ECE would remain the same as the current ECE process, detailed by CMS
at the QualityNet website or a successor website.\14\ At proposed 42
CFR 412.433(f)(2)(i), we propose that an IPF may request an ECE within
30 calendar days of the date that the extraordinary circumstance
occurred. Our current policy allows a request within 90 days; however,
this proposed change would align the IPFQR Program policy with CMS
systems implementation requirements across all quality reporting
[[Page 18519]]
programs. Under this proposed codified policy, we clarify that CMS
retains the authority to grant an ECE as a form of relief at any time
after the extraordinary circumstance has occurred. At proposed 42 CFR
412.433(f)(2)(ii), we propose that CMS notify the requestor with a
decision in writing, via email. In the event that CMS grants an ECE to
the IPF, the written decision will specify whether the IPF is exempted
from one or more reporting requirements or whether CMS has granted the
IPF an extension of time to comply with one or more reporting
requirements.
---------------------------------------------------------------------------
\14\ https://qualitynet.cms.gov/inpatient/iqr/participation#tab3.
---------------------------------------------------------------------------
Additionally, at 42 CFR 412.433(f)(3), we propose that CMS may
grant an ECE to one or more IPFs that have not requested an ECE if CMS
determines that: a systemic problem with a CMS data collection system
directly impacted the ability of the IPF to comply with a quality data
reporting requirement, or that an extraordinary circumstance has
affected an entire region or locale. As is the case under our current
policy, any ECE granted will specify whether the affected IPFs are
exempted from one or more reporting requirements or whether CMS has
granted the IPFs an extension of time to comply with one or more
reporting requirements.
At 42 CFR 412.433(f)(4), we state that CMS' evaluation of an
extraordinary circumstance will include, but is not limited to whether
the extraordinary circumstance was beyond the control of the IPF, and
affected the ability of the IPF to provide high-quality healthcare and
report required measure data by specified deadlines. At 42 CFR
412.433(f)(5) we state that CMS will notify the IPF of a denial of an
ECE in writing, via email.
This proposed ECE policy would provide further reporting
flexibility for IPFs and clarify the ECE process.
We invite public comment on our proposals to modify the IPFQR
Program's policy.
H. Requests for Information on Future Changes to the IPFQR Program
In this section we are soliciting public comment on three topics
that may have future impacts on the IPFQR Program. Please note, this is
a request for information (RFI) only. In accordance with the
implementing regulations of the Paperwork Reduction Act of 1995 (PRA),
specifically 5 CFR 1320.3(h)(4), this general solicitation is exempt
from the PRA. Facts or opinions submitted in response to general
solicitations of comments from the public, published in the Federal
Register or other publications, regardless of the form or format
thereof, provided that no person is required to supply specific
information pertaining to the commenter, other than that necessary for
self-identification, as a condition of the agency's full consideration,
are not generally considered information collections and therefore not
subject to the PRA. Respondents are encouraged to provide complete but
concise responses. This RFI is issued solely for information and
planning purposes; it does not constitute a Request for Proposal (RFP),
applications, proposal abstracts, or quotations. This RFI does not
commit the U.S. Government to contract for any supplies or services or
make a grant award. Further, CMS is not seeking proposals through this
RFI and will not accept unsolicited proposals. Responders are advised
that the U.S. Government will not pay for any information or
administrative costs incurred in response to this RFI; all costs
associated with responding to this RFI will be solely at the interested
party's expense. Not responding to this RFI does not preclude
participation in any future procurement, if conducted. It is the
responsibility of the potential responders to monitor this RFI
announcement for additional information pertaining to this request.
Please note that CMS will not respond to questions about the policy
issues raised in this RFI. CMS may or may not choose to contact
individual responders. Such communications would only serve to further
clarify written responses. Contractor support personnel may be used to
review RFI responses. Responses to this notice are not offers and
cannot be accepted by the U.S. Government to form a binding contract or
issue a grant. Information obtained as a result of this RFI may be used
by the U.S. Government for program planning on a non-attribution basis.
Respondents should not include any information that might be considered
proprietary or confidential. This RFI should not be construed as a
commitment or authorization to incur cost for which reimbursement would
be required or sought. All submissions become U.S. Government property
and will not be returned. CMS may publicly post the comments received,
or a summary thereof.
1. Request for Information on Future Star Ratings for IPFs
Section 1886(s)(4)(F) of the Act requires that the Secretary
establish procedures for making data submitted under the IPFQR Program
available to the public. Such procedures must ensure the IPFs
participating in the IPFQR Program have the opportunity to review the
data prior to such data being made public. The Secretary must publicly
report quality measures that relate to services furnished in IPFs on
the CMS website. Currently, we publicly report data on measures under
the IPFQR Program on the Compare tool on Medicare.gov.\15\
---------------------------------------------------------------------------
\15\ https://www.medicare.gov/care-compare.
---------------------------------------------------------------------------
Star ratings summarize facility or provider performance using
symbols to help patients and caregivers quickly and easily understand
quality of care information. Star ratings serve an important function
for patients, caregivers, and families, helping them to more quickly
comprehend complex information about a health care providers' care
quality and to easily assess differences among providers. Star ratings
also spotlight differences in health care quality and identify areas
for improvement and may motivate providers to perform well on measures
in CMS quality reporting programs. This transparency serves an
important educational function for consumers, while also helping to
promote competition in health care markets. Informed patients and
consumers are more empowered to select among health care providers,
fostering continued quality improvement.
The Compare tool currently displays star ratings for many provider
types, including doctors and clinicians, some types of hospitals not
including inpatient psychiatric hospitals, nursing homes, home health,
hospice, and dialysis facilities. The method to calculate star ratings
differs by provider type. Differences include data sources, which
measures are included, and how the components of the star ratings are
combined. Some providers receive ``patient survey'' star ratings, a
composite score derived from patient experience of care surveys, in
addition to ``overall star ratings,'' which are a composite score
calculated using different data sources, such as quality measures or
survey results.
Although we publicly report data on measures under the IPFQR
Program on the Compare tool, there are currently no star ratings
displayed for IPFs, and IPFs are not included in hospital star ratings.
We are seeking feedback on the development of a five-star methodology
for IPFs that can meaningfully describe the quality of care offered by
IPFs. Star ratings for IPFs would be designed to help consumers quickly
identify differences in quality when selecting an IPF. We are committed
to developing a well-tested, data-driven methodology that encourages
continuous quality improvement. We plan to engage with the IPF
community and provide multiple opportunities for IPFs and
[[Page 18520]]
other interested parties to give input on the development of a star
rating system for IPFs. We note that IPFs would have the ability to
preview their own facility's quality data before public posting of the
IPF's star rating on the Compare tool in accordance with section
1886(s)(4)(F) of the Act.\16\
---------------------------------------------------------------------------
\16\ Currently IPFs preview their data via the ``IPF-specific
report (ISR)'' distributed to providers through CMS' Hospital
Quality Reporting system.
---------------------------------------------------------------------------
Specifically, we invite public comment on the following topics.
Please note that we have numbered the questions continuously across the
topic areas to aid readers in providing feedback.
Criteria for Measure Selection
1. Are there specific criteria CMS should use to select measures
for an IPF star rating system, such as a measure's generalizability
(degree to which a measure is applicable to a broad segment of
patients)?
2. Should an IPF star rating system be limited to or more heavily
weight certain types of measures (for example, outcome measures,
process measures, structural measures; measures that address certain
topics, such as safety, psychiatric treatment, substance use treatment,
whole-person care, or patient experience)?
Suitability of Measures Currently in the IPFQR Program
3. From the perspective of patients and families or other
caregivers, which measures currently adopted for the IPFQR Program are
most important when attempting to summarize quality of care in IPFs?
Which are least important? Are there any measures in the program that
should be specifically excluded or included in IPF Star Ratings? For
the list of IPFQR Program measures, we refer the reader to Table 5 in
section IV.F. in this proposed rule.
4. From the perspective of referring providers, payers, or other
interested parties, which measures currently adopted for the IPFQR
Program are most important when attempting to summarize quality of care
in IPFs? Which are least important? Are there any measures in the
program that should be specifically excluded or included in an IPF star
ratings system?
5. Two measures currently in the IPFQR Program--Hours of Physical
Restraint Use (HBIPS-2) and Hours of Seclusion (HBIPS-3)--are
calculated and publicly reported as a rate per 1000 hours of patient
care. Does the way these measures are currently specified and displayed
create challenges for including these measures in a star rating
calculation? If these measures were selected to be included in a star
rating calculation, are there recommendations about how these measures
should be included in a larger star rating methodology? For example,
should the rate be made into a categorical variable (for example,
quartiles)?
Future Use of Additional Data for an IPF Star Rating System
6. In the FY 2024 IPF PPS final rule (88 FR 51128), we finalized
the Psychiatric Inpatient Experience (PIX) survey as a measure of
patient experience in IPFs. The PIX survey will become mandatory for
the FY 2028 payment determination--that is, data collection occurring
in CY 2026. Although PIX data may not be available for an initial
version of an IPF star rating system, what considerations should CMS
give these data, when they become available? For example, should they
be included as part of an overall star rating, or used to derive a
stand-alone patient experience star rating? See for example the
Hospital patient experience star rating,\17\ which is derived from the
Hospital Consumer Assessment of Healthcare Providers and Systems
(HCAHPS(copyright)) survey and displayed as ``Patient survey rating''
on the Compare tool.
---------------------------------------------------------------------------
\17\ https://hcahpsonline.org/en/hcahps-star-ratings/.
---------------------------------------------------------------------------
7. Are there other measurement topics that are currently not
addressed by an IPFQR Program measure, but would be valuable in an IPF
star rating?
We intend to use this input to inform our future star rating
development efforts. We intend to consider how a rating system would
determine an IPF's star rating, the methods used for such calculations,
and an anticipated timeline for implementation. We will consider
comments in response to this RFI for future rulemaking.
2. Request for Information on Future Measures for the IPFQR Program
We are seeking input on the importance, relevance, appropriateness,
and applicability of two concepts under consideration for future years
in the IPFQR Program.
We are seeking input on a quality measure concept of well-being for
future quality measures. Well-being is a comprehensive approach to
disease prevention and health promotion, as it integrates mental,
social, and physical health \18\ \19\ while emphasizing preventive care
to proactively address potential health issues. This comprehensive
approach emphasizes person-centered care by promoting well-being of
patients and their family members. We request input and comment on
tools and measures that assess for overall health, happiness, and
satisfaction in life that could include aspects of emotional well-
being, social connections, purpose, fulfillment, and self-care work.
Please provide input on the relevant aspects of well-being for the IPF
setting.
---------------------------------------------------------------------------
\18\ Overall well-being. See more information at https://odphp.health.gov/healthypeople/objectives-and-data/overall-health-and-well-being-measures/overall-well-being-ohm-01.
\19\ Well-Being Measurement. See more information at https://www.va.gov/WHOLEHEALTH/professional-resources/well-being-measurement.asp.
---------------------------------------------------------------------------
We are also seeking input on a quality measure concept of nutrition
for future quality measures. Assessment of an individual's nutritional
status may include various strategies, guidelines, and practices
designed to promote healthy eating habits and ensure individuals
receive the necessary nutrients for maintaining health, growth, and
overall well-being. This also includes aspects of health that support
or mediate nutritional status, such as physical activity and sleep. In
this context, preventable care plays a vital role by proactively
addressing factors that may lead to poor nutritional status or related
health issues. These efforts not only support optimal nutrition but
also work to prevent conditions that could otherwise hinder an
individual's health and nutritional needs. We request input and comment
on tools and frameworks that promote healthy eating habits, exercise,
nutrition, or physical activity for optimal health, well-being, and
best care for all. Please provide input on the relevant aspects of
nutrition for the IPF setting.
We intend to use this input to inform our future measure
development efforts.
3. Request for Information on Digital Quality Measurement Strategy:
Approach to FHIR[supreg] Patient Assessment Reporting in the IPFQR
Program
Section 4125(b) of the Consolidated Appropriations Act of 2023
(CAA, 2023) (Pub. L. 117-328, Dec. 29, 2022) \20\ amended section
1886(s)(4) of the Act by adding a new subparagraph (E), which requires
an IPF participating in the IPFQR Program to collect and submit
specified standardized patient assessment data using a new standardized
patient assessment instrument, for rate year 2028 and each subsequent
year.
---------------------------------------------------------------------------
\20\ https://www.congress.gov/117/plaws/publ328/PLAW-117publ328.pdf.
---------------------------------------------------------------------------
[[Page 18521]]
As noted in the RFI \21\ in the FY 2025 IPF PPS proposed rule
(``Patient Assessment Instrument Under IPFQR Program (IPF PAI) to
Improve the Accuracy of PPS''), achieving interoperability is important
and it is our goal to facilitate safe and secure data sharing, access,
and utilization of electronic health information to enhance decision-
making and create a more efficient healthcare system (89 FR 23201
through 23204). We also stated that we are considering ways to ensure
that the Inpatient Psychiatric Facility Patient Assessment Instrument
(IPF-PAI) can be represented using Fast Healthcare Interoperability
Resources[supreg] (FHIR[supreg]) standards (89 FR 23201). As part of
that RFI, we requested and received input on topics including: Whether
Standardized Patient Assessment Data Elements already in use in the CMS
Data Element Library (DEL) \22\ are appropriate and clinically relevant
for the IPF setting, use of CMS reporting systems, and other
interoperability-related considerations (89 FR 23201). In the FY 2025
IPF PPS final rule, we acknowledged a recommendation to align the IPF-
PAI with United States Core Data for Interoperability (USCDI) \23\ and
several commenters noted IPFs did not receive funding to adopt CEHRT,
suggesting we consider how the implementation of the IPF-PAI would
affect providers without EHRs (89 FR 64646).
---------------------------------------------------------------------------
\21\ ``Patient Assessment Instrument Under IPFQR Program (IPF
PAI) to Improve the Accuracy of PPS'' (89 FR 23200 through 23204).
\22\ https://del.cms.gov/DELWeb/pubHome.
\23\ https://www.healthit.gov/isp/united-states-core-data-interoperability-uscdi.
---------------------------------------------------------------------------
We are considering opportunities to advance FHIR-based reporting of
patient assessment data for the IPF-PAI mandated by the CAA, 2023. The
questions in this section seek to gain an understanding of the current
adoption and use of EHRs, other health IT, and data standards
supporting interoperability (such as FHIR and USCDI) within IPFs. We
also aim to identify the extent of technology adoption beyond certified
health IT and EHRs and seek a better understanding of how FHIR-
standardized data can be generated, used, and shared through other
technologies, without use of EHRs. Our objective is to explore how IPFs
typically integrate technologies with varying complexity into existing
systems and how this affects IPF workflows. We seek to identify the
challenges or opportunities that may arise during this integration, and
determine the support needed to complete and submit the IPF-PAIs in
ways that protect and enhance care delivery. This insight will help
inform the technologies we may consider for use with the IPF-PAI and
quality data reporting. We note that we intend for this same RFI to
also appear in the FY 26 IPPS proposed rule, as a majority of IPFs are
hospital-based,\24\ to increase the number of interested parties who
learn about this opportunity to provide feedback.
---------------------------------------------------------------------------
\24\ We refer readers to the FY 2025 IPF PPS-Rate Update final
rule, Table 24 (89 FR 64670). Based on this data, 59.3 percent of
IPFs were hospital-based units, a figure derived by dividing the sum
of urban and rural units by the total number of facilities.
---------------------------------------------------------------------------
We seek feedback on the current state of health IT use, including
EHRs, in IPFs:
To what extent does your facility use health IT systems to
maintain and exchange patient records?
If your facility has transitioned to using electronic
records in whole or in part, what types of health IT does your IPF use
to maintain patient records? Are these health IT systems certified
under the Office of the National Coordinator for Health Information
Technology (ONC) Health IT Certification program? \25\ Does your
facility use EHRs or other health IT products or systems that are not
certified under the ONC Health IT Certification Program? If so, do
these systems exchange data using standards and implementation
specifications adopted by HHS? \26\ Please specify.
---------------------------------------------------------------------------
\25\ https://www.healthit.gov/topic/certification-ehrs/about-onc-health-it-certification-program.
\26\ For instance, see standards adopted by ASTP/ONC on behalf
of HHS in 45 CFR part 170, subpart B.
---------------------------------------------------------------------------
Does your IPF submit patient data to CMS directly from
your health IT system, without the assistance of a third-party
intermediary? If a third-party intermediary is used to report data,
what type of intermediary service is used? How does your facility
currently exchange health information with other healthcare providers
or systems, specifically between IPFs and other provider types, or with
public health agencies? What challenges do you face with the electronic
exchange of health information?
Are there any challenges with your current electronic
devices (for example, tablets, smartphones, computers) that hinder your
ability to easily exchange information across health IT systems? Please
describe any specific issues you encounter.
Does limited internet or lack of internet connectivity
impact your ability to exchange data with other healthcare providers,
including community-based care services, or your ability to submit
patient data to CMS?
What steps does your IPF take to ensure compliance in
using health IT with security and patient privacy requirements such as
the requirements of the regulations promulgated under the Health
Insurance Portability and accountability Act (HIPAA) and related
regulations?
Does your IPF refer to the SAFER Guides (see newly revised
versions published in January 2025 at https://www.healthit.gov/topic/safety/safer-guides) to self-assess EHR safety practices? \27\
---------------------------------------------------------------------------
\27\ The SAFER Guides are an evidence-based set of
recommendations in the form of nine stand-alone, subject-oriented
chapters that present the health IT community, including eligible
hospitals and CAHs that use health IT, with best practice
recommendations to improve the safety and safe use of EHRs. See
https://www.healthit.gov/topic/safety/safer-guides.
---------------------------------------------------------------------------
What challenges or barriers does your IPF encounter when
submitting quality measure data to CMS as part of the IPFQR Program?
Please identify any factors that hinder successful data submission.
What opportunities or factors could improve your facility's successful
data submission to CMS?
What types of technical assistance, guidance, workforce
training resources, and other resources would help IPFs to successfully
implement FHIR-based technologies for submitting the IPF-PAI to CMS?
What strategies can CMS, HHS or other Federal partners take to ensure
that technical assistance is both comprehensive and user-friendly? How
could Quality Improvement Organizations (QIOs) or other entities
enhance this support?
Is your facility using technology that utilizes APIs based
on the FHIR standard to enable electronic data sharing? If so, with
whom are you sharing data using the FHIR standard and for what
purpose(s)? For example, have you used FHIR APIs to share data with
public health agencies? Does your facility use any Substitutable
Medical Applications and Reusable Technologies (SMART) on FHIR \28\
applications? If so, are the SMART on FHIR applications integrated with
your EHR or other health IT?
---------------------------------------------------------------------------
\28\ https://smarthealthit.org/.
---------------------------------------------------------------------------
What benefits or challenges have you experienced with
implementing technology that uses FHIR-based APIs? How can adopting
technology that uses FHIR-based APIs to facilitate the reporting of
patient assessment data impact provider workflows? What impact, if any,
does adopting this technology have on quality of care?
Does your facility have any experience using technology
that shares electronic health information using one
[[Page 18522]]
or more versions of the USCDI standard? \29\
---------------------------------------------------------------------------
\29\ For more information about USCDI see https://www.healthit.gov/isp/united-states-core-data-interoperability-uscdi.
---------------------------------------------------------------------------
Would your IPF and/or vendors be interested in
participating in testing to explore options for transmission of
assessments, for example, testing methods to transmit assessments that
incorporate FHIR-enabled data to CMS?
What other information should we consider, to facilitate
successful adoption and integration of FHIR-based technologies and
standardized data for patient assessment instruments like the IPF-PAI?
We invite any feedback, suggestions, best practices, or success stories
related to the implementation of these technologies.
V. Collection of Information Requirements
This rule proposes updates to the prospective payment rates,
outlier threshold, and wage index for Medicare inpatient hospital
services provided by IPFs. In addition, we propose the removal of one
measure in the IPFQR Program that would affect the information
collection burden under OMB control number 0938-0050.
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.), we are required to provide 60-day notice in the Federal Register
and solicit public comment before a ``collection of information''
requirement is submitted to the Office of Management and Budget (OMB)
for review and approval. For the purposes of the PRA and this section
of the preamble, collection of information is defined under 5 CFR
1320.3(c) of the PRA's implementing regulations.
To fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment (see section V.E. of this proposed
rule) on each of these issues for the following sections of this
document that contain information collection requirements. Comments, if
received, will be responded to within the subsequent final rule.
The following changes will be submitted to OMB for review under
control number 0938-1171 (CMS-10432). We are not proposing any changes
that would change any of the data collection instruments that are
currently approved under that control number.
In section V.B. of this proposed rule, we restate our currently
approved burden estimates. In section V.C. of this proposed rule, we
estimate the changes in burden associated with the update to more
recent wage rates. Then in section V.D. of this proposed rule, we
discuss the policies proposed in this proposed rule.
A. Wage Estimates
In the FY 2025 IPF PPS final rule, we utilized the median hourly
wage rate for Medical Records Specialists, in accordance with the
Bureau of Labor Statistics (BLS), to calculate our burden estimates for
the IPFQR Program (89 FR 64664). While the most recent data from the
BLS reflects a mean hourly wage of $25.81 per hour for all medical
records specialists, $27.69 is the mean hourly wage for ``general
medical and surgical hospitals,'' which is an industry within medical
records specialists.\30\ We believe the industry of ``general medical
and surgical hospitals'' is more specific to the IPF setting for use in
our calculations than other industries that fall under medical records
specialists, such as ``office of physicians'' or ``nursing care
facilities (skilled nursing facilities).'' We calculated the cost of
indirect costs, including fringe benefits, at 100 percent of the median
hourly wage, consistent with previous years. This is necessarily a
rough adjustment, both because fringe benefits and other indirect costs
vary significantly by employer and methods of estimating these costs
vary widely in the literature. Nonetheless, we believe that doubling
the hourly wage rate ($27.69 x 2 = $55.38) to estimate total cost is a
reasonably accurate estimation method. Accordingly, unless otherwise
specified, we would calculate cost burden to IPFs using a wage plus
benefits estimate of $55.38 per hour throughout the discussion in this
section of this rule for the IPFQR Program.
---------------------------------------------------------------------------
\30\ https://www.bls.gov/oes/current/oes292072.htm.
---------------------------------------------------------------------------
Some of the activities previously finalized for the IPFQR Program
require beneficiaries to undertake tasks such as responding to survey
questions on their own time. In the FY 2025 IPF PPS final rule, we
estimated the hourly wage rate for these activities to be $24.04/hr (89
FR 64664). We are updating that estimate to a post-tax wage of $24.04/
hr. The Valuing Time in U.S. Department of Health and Human Services
Regulatory Impact Analyses: Conceptual Framework and Best Practices
identifies the approach for valuing time when individuals undertake
activities on their own time.\31\ For FY 2026 we propose to derive the
costs for beneficiaries using the usual weekly earnings of wage and
salary workers of $1,192, divided by 40 hours to calculate an hourly
pre-tax wage rate of $29.80/hr.\32\ We propose to adjust this rate
downwards by an estimate of the effective tax rate for median income
households of about 14 percent calculated by comparing pre- and post-
tax income,\33\ resulting in the post-tax hourly wage rate of $25.63/
hr. Unlike our State and private sector wage adjustments, we are not
adjusting beneficiary wages for fringe benefits and other indirect
costs since the individuals' activities, if any, would occur outside
the scope of their employment.
---------------------------------------------------------------------------
\31\ https://aspe.hhs.gov/reports/valuing-time-us-department-health-human-services-regulatory-impact-analyses-conceptual-framework.
\32\ https://www.bls.gov/news.release/pdf/wkyeng.pdf. Accessed
January 24, 2025.
\33\ https://www.census.gov/library/publications/2024/demo/p60-282.html. Accessed January 24, 2025.
---------------------------------------------------------------------------
B. Information Collection Requirements for the Inpatient Psychiatric
Facilities Quality Reporting (IPFQR) Program
1. Previously Finalized IPFQR Program Estimates
For the purposes of calculating burden, we attribute the costs to
the year in which the costs begin. Under our previously finalized
policies, data submission for the measures that affect the FY 2028
payment determination occurs during CY 2027 and generally reflects care
provided during CY 2026. Our currently approved burden for CY 2026 is
set forth in Table 6.
[[Page 18523]]
Table 6--Previously Finalized IPFQR Program Information Collection Burden for CY 2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Total Time per Time per Applicable Cost per
Measure/response description Number responses/ annual response facility Total annual wage rate facility Total annual
respondents respondent responses (hrs) (hrs) time (hrs) ($/hr) ($) cost ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hours of Physical Restraint Use.. 1,596 1,261 2,012,556 0.25 315 503,139 52.12 16,431 26,223,605
Hours of Seclusion Use........... 1,596 1,261 2,012,556 0.25 315 503,139 52.12 16,431 26,223,605
Follow-Up After Psychiatric 1,596 0 0 0 0 0 52.12 0 0
Hospitalization.................
Alcohol Use Brief Intervention 1,596 609 971,964 0.25 152 242,991 52.12 7,935 12,664,691
Provided or Offered and SUB-2a
Alcohol Use Brief Intervention..
Alcohol and Other Drug Use 1,596 609 971,964 0.25 152 242,991 52.12 7,935 12,664,691
Disorder Treatment Provided or
Offered at Discharge and SUB-3a
Alcohol and Other Drug Use
Disorder Treatment at Discharge.
Tobacco Use Treatment Provided or 1,596 609 971,964 0.25 152 242,991 52.12 7,935 12,664,691
Offered at Discharge and TOB-3a
Tobacco Use Treatment at
Discharge.......................
Influenza Immunization........... 1,596 609 971,964 0.25 152 242,991 52.12 7,935 12,664,691
Transition Record with Specified 1,596 609 971,964 0.25 152 242,991 52.12 7,935 12,664,691
Elements Received by Discharged
Patients (Discharges from an
Inpatient Facility to Home/Self
Care or Any Other Site of Care).
Screening for Metabolic Disorders 1,596 609 971,964 0.25 152 242,991 52.12 7,935 12,664,691
Thirty-Day All-Cause Unplanned 1,596 0 0 0 0 0 52.12 0 0
Readmission Following
Psychiatric Hospitalization in
an Inpatient Psychiatric
Facility........................
30-Day Risk-Standardized All- 1,596 0 0 0 0 0 52.12 0 0
Cause Emergency Department Visit
Following an Inpatient
Psychiatric Facility Discharge
measure.........................
Medication Continuation Following 1,596 0 0 0 0 0 52.12 0 0
Inpatient Psychiatric Discharge.
Modified COVID-19 Healthcare 1,596 0 0 0 0 0 52.12 0 0
Personnel (HCP) Vaccination
Measure *.......................
Facility Commitment to Health 1,596 1 1,596 0.167 0 267 52.12 9 13,892
Equity *........................
Screening for Social Drivers of 798 1 798 0.167 0 133 52.12 9 6,946
Health (Data Submission) *......
Screen Positive Rate for Social 798 1 798 0.167 0 133 52.12 9 6,946
Drivers of Health *.............
Non Measure Data Collection...... 1,596 4 6,384 0.5 2 3,192 52.12 104 166,367
----------------------------------------------------------------------------------------------------------------------
Subtotal for Medical Records 1,596 6,183 9,866,472 Varies 1,547 2,467,949 52.12 80,604 128,629,505
Specialists.................
Screening for Social Drivers of 1,596 1,261 2,012,556 0.033 42 66,414 24.04 1,000 1,596,601
Health (Patient Screening) *....
Psychiatric Inpatient Experience 798 300 239,400 0.121 36 28,967 24.04 873 696,376
Survey..........................
----------------------------------------------------------------------------------------------------------------------
Subtotal for Individuals..... 1,596 1,561 2,251,956 Varies 78 95,382 24.04 1,873 2,292,977
----------------------------------------------------------------------------------------------------------------------
Totals................... 1,596 7,744 12,118,428 Varies 1,624 2,563,331 N/A 82,477 130,922,482
--------------------------------------------------------------------------------------------------------------------------------------------------------
* We note that we propose to remove these measures in this proposed rule.
2. Updates Due to More Recent Information
In section V.A. of this proposed rule, we described our updated
wage rates which increase from $52.12/hr to $55.38/hr (an increase of
$3.26/hr) for activities performed by Medical Records Specialists and
from $24.04/hr to $25.63/hr (an increase of $1.59/hr) for activities
performed by individuals. The effects of these updates are set forth in
Table 7.
[[Page 18524]]
Table 7--Effects of Wage Rate Updates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in
Total annual Time per response Time per Total annual applicable Change in cost Change in
Measure/response description responses (hrs) facility (hrs) time (hrs) wage rate ($/ per facility total annual
hr) ($) cost ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Subtotal for Medical Records 9,866,472 Varies.............. 1,547 2,467,949 3.26 5,042 8,045,514
Specialists.
Subtotal for Individuals.......... 2,251,956 Varies.............. 78 95,382 1.59 124 151,657
---------------------------------------------------------------------------------------------------------------------
Totals........................ 12,118,428 Varies.............. 1,624 2,563,331 Varies 5,165 8,197,171
--------------------------------------------------------------------------------------------------------------------------------------------------------
3. Updates Due to Proposals in This Proposed Rule
In section IV.B. of this proposed rule, we propose to begin use of
the 30-Day Risk-Standardized All-Cause Emergency Department (ED) Visit
Following an IPF Discharge measure (IPF ED Visit measure) in the IPFQR
Program with the FY 2029 payment determination instead of the FY 2027
payment determination, and to modify the reporting period for the IPF
ED Visit measure to a two-year reporting period that runs from July 1st
four years prior to the applicable fiscal year payment determination to
June 30th two years prior to the applicable fiscal year payment
determination. As discussed in the FY 2025 IPF PPS final rule, the IPF
ED Visit measure is a claims-based measure and there is no additional
burden outside of submitting a claim, the submission of which is
approved under OMB control number 0938-0050 (89 FR 64667). This
proposal does not warrant any changes under that control number.
In section IV.C. of this proposed rule, we propose to remove the
Facility Commitment to Health Equity measure from the IPFQR Program
beginning with the FY 2026 payment determination. This measure and the
associated information collection burden was previously finalized in
the FY 2024 IPF PPS final rule and is approved under OMB control number
0938-1171 (88 FR 51151). We estimate that this proposal would result in
a total annual burden decrease of 267 hours (0.167 hours x 1,596 IPFs)
at a savings of $14,761 (267 hours x $55.38/hour). This estimate is
summarized in Table 8.
In section IV.D. of this proposed rule, we propose to remove the
COVID-19 Vaccination Coverage among Healthcare Personnel (HCP) measure
from the IPFQR Program beginning with the FY 2026 payment
determination. This measure and the associated information collection
burden was previously finalized in the FY 2022 IPF PPS final rule and
is approved under OMB control number 0920-1317 (86 FR 42668 and 42669).
IPFs have the option to manually enter data directly into the Centers
for Disease Control and Prevention (CDC) National Healthcare Safety
Network (NHSN) web-based application or by uploading a CSV file. CDC
estimates that each IPF requires between 40 minutes (0.67 hours) to
upload a CSV file and 45 minutes (0.75 hours) monthly to enter the data
manually. Therefore, we estimate that this proposal would result in a
decrease in burden of between 12,768 hours (0.67 hours x 12 months x
1,596 IPFs) and 14,364 hours (0.75 hours x 12 months x 1,596 IPFs)
annually across all 1,596 IPFs. While there is no information
collection burden associated with this measure under OMB control number
0938-0050, we have included the removal of this measure in Table 8 to
be consistent with the measure's inclusion in Table 6.
In section IV.E. of this proposed rule, we propose to remove the
Screening for Social Drivers of Health and Screen Positive Rate for
Social Drivers of Health measures from the IPFQR Program beginning with
the FY 2026 payment determination. These measures and the associated
information collection burden were previously finalized in the FY 2023
IPF PPS final rule and are approved under OMB control number 0938-1171
(88 FR 51150 through 51153). With regard to the Screening for Social
Drivers of Health measure, there are two components: patient screening
for five health related social needs domains and IPF submission of
aggregated IPF-level measure data. For the Screen Positive Rate for
Social Drivers of Health measure, IPFs are required to report on an
annual basis the number of patients who screen positive for one or more
of the five Social Drivers of Health domains divided by the total
number of patients screened (reported as five separate rates). With
regard to patient screening, the currently approved burden estimate
under OMB control number 0938-1171 for the FY 2026 payment
determination and subsequent years is 66,414 hours annually for
2,012,556 patients (0.033 hours x 2,012,556 patients). With regard to
measure reporting, due to data submission being voluntary for the FY
2026 payment determination, the currently approved burden estimate is
133 hours annually across 798 IPFs (0.167 hours x 798 IPFs) per
measure. For mandatory data submission in the FY 2027 payment
determination and subsequent years, the currently approved burden
estimate is 267 hours annually across 1,596 IPFs (0.167 hours x 1,596
IPFs) per measure. Therefore, we estimate that this proposal would
result in a decrease in burden of 66,680 hours (66,414 + 133 + 133)
annually across all 1,596 IPFs for the FY 2026 payment determination
and 66,948 hours (66,414 + 267 + 267) annually across all 1,596 IPFs
for the FY 2027 payment determination and subsequent years. These
estimates are summarized in Tables 8 through 10.
In section IV.F. of this proposed rule, we propose updates to our
codified ECE policy. Because the process for requesting or granting an
ECE would remain the same as the current ECE process, these updates
would not affect burden associated with the submission of the ECE form,
which is accounted for under OMB control number 0938-1022 (expiration
date April 30, 2027).
In total, for CY 2026 we estimate a decrease in burden of 66,947
hours (267 + 66,414 + 133 + 133) at a savings of $1,731,712 ($14,761 +
$1,702,191 + $7,380 + $7,380). We estimate that beginning with CY 2027
the savings will increase to a total reduction in burden of 67,215 (267
+ 66,414 + 267 + 267) hours at a savings of $1,746,474 ($14,761 +
$1,702,191 + $14,761 + $14,761) associated with these proposals.
[[Page 18525]]
Table 8--Total CY 2026 Facility Information Collection Burden Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of
Measure/response description Number responses/ Total annual Time per Time per Total annual Total annual
respondents respondent responses response (hrs) facility (hrs) time (hrs) cost ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Facility Commitment to Health Equity.... 1,596 1 (1,596) 0.167 (0.167) (267) (14,761)
Modified COVID-19 Healthcare Personnel 1,596 0 0 0 0 0 0
(HCP) Vaccination Measure..............
Screening for Social Drivers of Health 798 1 (798) 0.167 (0.167) (133) (7,380)
(Data Submission)......................
Screen Positive Rate for Social Drivers 798 1 (798) 0.167 (0.167) (133) (7,380)
of Health..............................
---------------------------------------------------------------------------------------------------------------
Total............................... 1,596 1 (3,192) 0.167 (0.5) (533) (29,521)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 9--Total CY 2026 Patient Survey Information Collection Burden Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of
Measure/response description Number responses/ Total annual Time per Time per Total annual Total annual
respondents respondent responses response (hrs) facility (hrs) time (hrs) cost ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Screening for Social Drivers of Health 1,596 1,261 (2,012,556) 0.033 (41.6) (66,414) (1,702,191)
(Patient Screening)....................
---------------------------------------------------------------------------------------------------------------
Total............................... 1,596 1,261 (2,012,556) 0.033 (41.6) (66,414) (1,702,191)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 10--Total CY 2027 Facility Information Collection Burden Changes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of
Measure/response description Number responses/ Total annual Time per Time per Total annual Total annual
respondents respondent responses response (hrs) facility (hrs) time (hrs) cost ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Screening for Social Drivers of Health 798 1 (798) 0.167 (0.167) (133) (7,380)
(Data Submission)......................
Screen Positive Rate for Social Drivers 798 1 (798) 0.167 (0.167) (133) (7,380)
of Health..............................
---------------------------------------------------------------------------------------------------------------
Total............................... 798 1 (1,596) 0.167 (0.33) (267) (14,761)
--------------------------------------------------------------------------------------------------------------------------------------------------------
We invite public comments on the proposed removal of the SDOH
information collection requirements and whether our estimated burden
reduction of 0.033 hours per patient and an annual decrease of 0.167
hours in burden per IPF for each measure is an accurate estimate.
C. Submission of PRA-Related Comments
We have submitted a copy of this proposed rule's information
collection requirements to OMB for their review. The requirements are
not effective until they have been approved by OMB.
To obtain copies of the supporting statement and any related forms
for the proposed collections discussed above, please visit the CMS
website at https://www.cms.gov/regulationsand-guidance/legislation/paperworkreductionactof1995/pralisting, or call the Reports Clearance
Office at 410-786-1326.
We invite public comments on the modifications to previously
finalized information collection requirements. If you wish to comment,
please submit your comments electronically as specified in the DATES
and ADDRESSES sections of this proposed rule and identify the rule
(CMS-1831-P), the ICR's CFR citation, and OMB control number.
VI. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
VII. Regulatory Impact Analysis
A. Statement of Need
This rule proposes updates to the prospective payment rates for
Medicare inpatient hospital services provided by IPFs for discharges
occurring during FY 2026 (October 1, 2025 through September 30, 2026).
We are proposing to apply the proposed 2021-based IPF market basket
increase for FY 2026 of 3.2 percent, reduced by the proposed
productivity adjustment of 0.8 percentage point as required by section
1886(s)(2)(A)(i) of the Act for a proposed total FY 2026 payment rate
update of 2.4 percent. In this proposed rule, we are proposing to
update the outlier fixed dollar loss threshold amount, update the IPF
labor-related share and update the IPF wage index to reflect the FY
2026 hospital inpatient wage index. Section 1886(s)(4) of the Act
requires IPFs to report data in accordance with the requirements of the
IPFQR Program for purposes of measuring and making publicly available
information on health care quality; and links the quality data
submission to the annual applicable percentage increase.
B. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866, ``Regulatory Planning and Review''; Executive Order 13132,
``Federalism''; Executive Order 13563, ``Improving Regulation and
Regulatory Review''; Executive Order 14192, ``Unleashing Prosperity
Through Deregulation''; the Regulatory Flexibility Act (RFA) (Pub. L.
96-354); section 1102(b) of the Social Security Act; and section 202 of
the Unfunded
[[Page 18526]]
Mandates Reform Act of 1995 (Pub. L. 104-4).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select those regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; distributive impacts;
and equity). Section 3(f) of Executive Order 12866 defines a
``significant regulatory action'' as any regulatory action that is
likely to result in a rule that may: (1) have an annual effect on the
economy of $100 million or more or adversely affect in a material way
the economy, a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or State, local, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, or the President's priorities.
A regulatory impact analysis (RIA) must be prepared for a
regulatory action that is significant under section 3(f)(1) of E.O.
12866. We estimate that the total impact of these changes for FY 2026
payments compared to FY 2025 payments will be an increase of
approximately $70 million. This reflects a $70 million increase from
the proposed update to the payment rates (+$90 million from the
proposed 2021-based IPF market basket increase of 3.2 percent, and -$20
million for the proposed productivity adjustment of 0.8 percentage
point). Outlier payments are estimated to be approximately 2.0 percent
in FY 2025 and to remain at 2.0 percent of total estimated IPF payments
in FY 2026.
Based on our estimates, OMB's Office of Information and Regulatory
Affairs has determined that this rulemaking is ``significant,'' though
not significant under section 3(f)(1) of Executive Order 12866.
Nevertheless, because of the potentially substantial impact to IPF
providers, we have prepared an RIA that to the best of our ability
presents the costs and benefits of the rulemaking. OMB has reviewed
these proposed regulations, and the Departments have provided the
following assessment of their impact.
C. Detailed Economic Analysis
In this section, we discussed the historical background of the IPF
PPS and the impact of the final rule on the Federal Medicare budget and
on IPFs.
1. Budgetary Impact
As discussed in the RY 2005 and RY 2007 IPF PPS final rules, we
applied a budget neutrality factor to the Federal per diem base rate
and ECT payment per treatment to ensure that total estimated payments
under the IPF PPS in the implementation period would equal the amount
that would have been paid if the IPF PPS had not been implemented. This
budget neutrality factor included the following components: outlier
adjustment, stop loss adjustment, and the behavioral offset. As
discussed in the RY 2009 IPF PPS notice (73 FR 25711), the stop-loss
adjustment is no longer applicable under the IPF PPS.
As discussed in section III.D.4.c of this proposed rule, we propose
to update the wage index and labor-related share in a budget neutral
manner by applying a wage index budget neutrality factor to the Federal
per diem base rate and ECT payment per treatment. In addition, as
discussed in section III.D.9 of this proposed rule, we propose to apply
a refinement standardization factor to the Federal per diem base rate
and ECT payment per treatment to account for the proposed revisions to
the adjustment factors for teaching status and for IPFs located in
rural areas (as previously discussed in sections III.D.5 and III.D.6 of
this proposed rule, and summarized in Addendum A), which must be made
budget-neutrally. Therefore, the budgetary impact to the Medicare
program of the proposed rule will be due to the proposed market basket
increase for FY 2026 of 3.2 percent (see section III.A.2 of this
proposed rule) reduced by the proposed productivity adjustment of 0.8
percentage point required by section 1886(s)(2)(A)(i) of the Act and
the update to the outlier fixed dollar loss threshold amount.
We estimate that the FY 2026 impact will be a net increase of $70
million in payments to IPF providers. This reflects an estimated $70
million increase from the update to the payment rates. This estimate
does not include the implementation of the required 2.0 percentage
point reduction of the proposed market basket update factor for any IPF
that fails to meet the IPF quality reporting requirements (as discussed
in section III.B.3 of this proposed rule).
2. Impact on Providers
To show the impact on providers of the changes to the IPF PPS
discussed in this proposed rule, we compared estimated payments under
the IPF PPS rates and factors for FY 2026 versus those under FY 2025.
We determined the percent change in the estimated FY 2026 IPF PPS
payments compared to the estimated FY 2025 IPF PPS payments for each
category of IPFs. In addition, for each category of IPFs, we have
included the estimated percent change in payments resulting from the
update to the outlier fixed dollar loss threshold amount; the revisions
to the facility-level adjustment factors; the updated wage index data
and labor-related share; and the market basket increase for FY 2026, as
reduced by the productivity adjustment according to section
1886(s)(2)(A)(i) of the Act.
To illustrate the impacts of the proposed FY 2026 changes in this
rule, our analysis begins with FY 2024 IPF PPS claims (based on the
2024 MedPAR claims, December 2024 update). We estimated FY 2025 IPF PPS
payments using these 2024 claims, the finalized FY 2025 IPF PPS Federal
per diem base rate and ECT per treatment amount, and the finalized FY
2025 IPF PPS patient and facility level adjustment factors (as
published in the FY 2025 IPF PPS final rule (89 FR 64582)). We then
estimated the FY 2025 outlier payments based on these simulated FY 2025
IPF PPS payments using the same methodology as finalized in the FY 2025
IPF PPS final rule (89 FR 64636 and 64637) where total outlier payments
are maintained at 2 percent of total estimated FY 2025 IPF PPS
payments.
Each of the following changes is added incrementally to this
baseline model in order to isolate the effects of each change:
The update to the outlier fixed dollar loss threshold
amount.
The revisions to facility-level adjustment factors for
teaching status and for IPFs located in rural areas.
The FY 2026 IPF wage index and the FY 2026 labor-related
share.
The proposed market basket increase for FY 2026 of 3.2
percent reduced by the proposed productivity adjustment of 0.8
percentage point in accordance with section 1886(s)(2)(A)(i) of the Act
for a proposed payment rate update of 2.4 percent.
Our column comparison in Table 11 illustrates the percent change in
payments from FY 2025 (that is, October 1, 2024, to September 30, 2025)
to FY 2026 (that is, October 1, 2025, to September 30, 2026) including
all the proposed payment policy changes.
[[Page 18527]]
Table 11--FY 2026 IPF PPS Payment Impacts
----------------------------------------------------------------------------------------------------------------
Refinement of Wage index FY26, Total
Facility by type Number of Outlier facility-level labor-related percent
facilities adjustments share, and 5% cap change \1\
(1) (2) (3) (4) (5) (6)
----------------------------------------------------------------------------------------------------------------
All Facilities..................... 1,393 0.0 0.0 0.0 2.4
Total Urban.................... 1,148 0.0 0.0 0.1 2.4
Urban unit................. 626 -0.1 0.4 0.1 2.8
Urban hospital............. 522 0.0 -0.5 0.0 1.9
Total Rural.................... 245 0.0 0.2 -0.3 2.2
Rural unit................. 184 0.0 0.2 -0.3 2.2
Rural hospital............. 61 0.0 0.2 -0.4 2.2
By Type of Ownership:
Freestanding IPFs:
Urban Psychiatric
Hospitals:
Government............. 112 -0.1 0.8 0.3 3.4
Non-Profit............. 98 0.0 -0.3 0.0 2.1
For-Profit............. 312 0.0 -0.7 -0.1 1.5
Rural Psychiatric
Hospitals:
Government............. 28 -0.1 0.2 0.2 2.7
Non-Profit............. 13 -0.1 0.3 -0.9 1.7
For-Profit............. 20 0.0 0.1 -0.5 2.0
IPF Units:
Urban:
Government............. 91 -0.1 1.5 -0.2 3.6
Non-Profit............. 414 -0.1 0.3 0.3 3.0
For-Profit............. 121 0.0 -0.4 -0.2 1.8
Rural:
Government............. 42 0.0 0.2 -0.6 1.9
Non-Profit............. 103 0.0 0.3 0.0 2.7
For-Profit............. 39 0.0 0.1 -0.7 1.8
By Teaching Status:
Non-teaching................... 1,189 0.0 -0.6 0.0 1.8
Less than 10% interns and 101 -0.1 0.5 0.0 2.9
residents to beds.............
10% to 30% interns and 77 -0.1 3.0 0.1 5.5
residents to beds.............
More than 30% interns and 26 -0.1 10.3 -0.5 12.3
residents to beds.............
By Region:
New England.................... 94 -0.1 0.1 1.1 3.6
Mid-Atlantic................... 192 -0.1 0.3 -0.2 2.5
South Atlantic................. 221 0.0 0.4 -0.4 2.4
East North Central............. 220 0.0 -0.3 0.5 2.6
East South Central............. 138 0.0 -0.3 0.2 2.4
West North Central............. 91 -0.1 0.0 1.2 3.5
West South Central............. 215 0.0 -0.2 -0.5 1.6
Mountain....................... 97 0.0 -0.3 0.3 2.4
Pacific........................ 125 -0.1 -0.1 -0.8 1.4
By Bed Size:
Psychiatric Hospitals:
Beds: 0-24................. 91 0.0 -0.4 -0.2 1.8
Beds: 25-49................ 89 0.0 -0.7 0.4 2.1
Beds: 50-75................ 93 0.0 -0.4 0.1 2.1
Beds: 76+.................. 310 0.0 -0.4 -0.2 1.8
Psychiatric Units:
Beds: 0-24................. 409 0.0 -0.1 0.0 2.2
Beds: 25-49................ 231 0.0 0.6 0.1 3.1
Beds: 50-75................ 100 -0.1 0.6 0.2 3.2
Beds: 76+.................. 70 -0.1 0.6 0.0 2.9
----------------------------------------------------------------------------------------------------------------
\1\ This column includes the impact of the updates in columns (3) through (5) above, and of the proposed IPF
market basket update factor for FY 2026 (3.2 percent), reduced by 0.8 percentage point for the productivity
adjustment as required by section 1886(s)(2)(A)(i) of the Act.
3. Impact Results
Table 11 displays the results of our analysis. The table groups
IPFs into the categories listed here based on characteristics provided
in the Provider of Services file, the IPF PSF, and cost report data
from the Healthcare Cost Report Information System:
Facility Type.
Location.
Teaching Status Adjustment.
Census Region.
Size.
The top row of the table shows the overall impact on the 1,393 IPFs
included in the analysis. In column 2, we present the number of
facilities of each type that had information available in the PSF and
had claims in the MedPAR dataset for FY 2024.
In column 3, we present the effects of the update to the outlier
fixed dollar loss threshold amount. We estimate that IPF outlier
payments as a percentage of total IPF payments are 2.0 percent in FY
2025. Therefore, we propose to adjust the outlier threshold amount to
[[Page 18528]]
maintain total estimated outlier payments equal to 2.0 percent of total
payments in FY 2026. We note that there is no projected change in
aggregate payments to IPFs, as indicated in the first row of column 3.
The largest decrease in payments due to this change is estimated to be
0.1 percent for urban IPF units.
In column 4, we present the effects of the proposed revisions to
the facility-level adjustment factors and the application of the
refinement standardization factor that is discussed in section III.D.9
of this proposed rule. We estimate the largest payment increases would
be for teaching IPFs with more than 30 percent interns and residents to
beds. Conversely, we estimate that for-profit IPF hospitals in urban
areas and IPFs with 25 to 49 beds would experience the largest payment
decrease of 0.7 percent. Payments to IPF units in urban areas would
increase by 0.4 percent, and payments to IPF units in rural areas would
increase by 0.2 percent.
In column 5, we present the effects of the proposed budget-neutral
update to the IPF wage index and the proposed labor-related share. In
addition, this column includes the application of the 5-percent cap on
any decrease to a provider's wage index from its wage index in the
prior year as finalized in the FY 2023 IPF PPS final rule (87 FR 46856
through 46859). The change in this column represents the effect of
using the concurrent hospital wage data as discussed in section
III.D.4.c of this proposed rule. That is, the impact represented in
this column reflects the proposed update from the FY 2025 IPF wage
index to the proposed FY 2026 IPF wage index, which includes basing the
FY 2026 IPF wage index on the FY 2026 pre-floor, pre-reclassified IPPS
hospital wage index data, applying a 5-percent cap on any decrease to a
provider's wage index from its wage index in the prior year, and
updating the labor-related share from 78.8 percent in FY 2025 to 78.9
percent in FY 2026. We note that there is no projected change in
aggregate payments to IPFs, as indicated in the first row of column 5;
however, there would be distributional effects among different
categories of IPFs. For example, we estimate the largest increase in
payments to be 1.2 percent for IPFs located in the West North Central
region, and the largest decrease in payments to be 0.9 percent for
freestanding rural non-profit IPFs.
Overall, IPFs are estimated to experience a net increase in
payments of 2.4 percent as a result of the updates in this proposed
rule. IPF payments are therefore estimated to increase by 2.4 percent
in urban areas and 2.2 percent in rural areas. The largest payment
increase is estimated at 12.3 percent for teaching IPFs with more than
30 percent interns and residents to beds.
4. Effect on Beneficiaries
Under the FY 2026 IPF PPS, IPFs would continue to receive payment
based on the average resources consumed by patients for each day. Our
longstanding payment methodology reflects the differences in patient
resource use and costs among IPFs, as required under section 124 of the
BBRA. We expect that updating IPF PPS rates in this rule would improve
or maintain beneficiary access to high quality care by ensuring that
payment rates reflect the best available data on the resources involved
in inpatient psychiatric care and the costs of these resources. We
continue to expect that paying prospectively for IPF services under the
FY 2026 IPF PPS will enhance the efficiency of the Medicare program.
5. Effects of the Proposed Updates to the IPFQR Program
In section IV.B. of this rule, we propose to begin use of the IPF
ED Visit measure in the IPFQR Program with the FY 2029 payment
determination instead of the FY 2027 payment determination, and to
modify the reporting period for the IPF ED Visit measure to a 2-year
reporting period that runs from July 1st 4 years prior to the
applicable fiscal year payment determination to June 30th 2 years prior
to the applicable fiscal year payment determination. While this
proposed modification may allow providers additional time to
incorporate changes to IPF workflows and clinical processes to improve
care coordination and discharge planning, we do not expect any
additional effects beyond those discussed in the FY 2025 IPF PPS final
rule (89 FR 64672).
In section IV.C. of this rule, we propose to remove the Facility
Commitment to Health Equity measure beginning with the FY 2026 payment
determination. Because this measure requires IPFs to attest yes or no
if they have in place certain structures or processes of care, we do
not expect the removal of this measure to impact providers beyond
reduction in information collection costs.
In section IV.D. of this rule, we propose to remove the COVID-19
Vaccination Coverage Among HCP measure beginning with the FY 2026
payment determination. Because this measure requires IPFs to track
current vaccination status for all employees, licensed independent
practitioners, adult students/trainers and volunteers, and other
contract personnel and report the data monthly to NHSN, we expect the
removal of this measure to reduce information collection burden on
providers.
In section IV.E. of this rule, we propose to remove the Screening
for Social Drivers of Health and Screen Positive Rate for Social
Drivers of Health measures from the IPFQR Program beginning with the FY
2026 payment determination. Because this measure requires IPFs to
screen patients for five health related social needs domains and submit
aggregated IPF-level measure data, we expect the removal of this
measure to reduce information collection burden on providers and
patients.
In section IV.G. of this rule, we propose updates to our ECE
policy. Because the process for requesting or granting an ECE would
remain the same as the current ECE process, we do not expect these
updates to impact providers.
In accordance with section 1886(s)(4)(A) of the Act, we would apply
a 2-percentage point reduction to the FY 2026 market basket update for
IPFs that have failed to comply with the IPFQR Program requirements for
the FY 2026 payment determination, including reporting on the mandatory
measures. For the FY 2025 payment determination, of the 1,514 IPFs
eligible for the IPFQR Program, 126 IPFs did not receive the full IPF
market basket update because of the IPFQR Program; 40 of these IPFs
chose not to participate and 86 did not meet the requirements of the
program. We intend to closely monitor the effects of the IPFQR Program
on IPFs and help facilitate successful reporting outcomes through
ongoing education, national trainings, and a technical help desk.
6. Regulatory Review Costs
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret the proposed rule, we
should estimate the cost associated with the regulatory review. Due to
the uncertainty involved with accurately quantifying the number of
entities that will review the rule, we assume that the total number of
unique commenters on last year's proposed rule (that is, 69 commenters)
will be the number of reviewers of this proposed rule. We acknowledge
that this assumption may understate or overstate the costs of reviewing
this rule. It is possible that not all commenters reviewed last year's
rule in detail, and it is also possible that some reviewers chose not
to comment on the proposed rule. For these reasons we thought that
[[Page 18529]]
the number of past commenters would be a fair estimate of the number of
reviewers of this rule. We welcome any comments on the approach in
estimating the number of entities which will review this proposed rule.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of this proposed rule,
and therefore for the purposes of our estimate we assume that each
reviewer reads approximately 50 percent of the rule. We seek comments
on this assumption.
Using the May, 2023 mean (average) wage information from the Bureau
of Labor Statistics (BLS) for medical and health service managers (Code
11-9111), we estimate that the cost of reviewing this rule is $129.28
per hour, including overhead and fringe benefits (https://www.bls.gov/oes/2023/may/oes119111.htm). (https://www.bls.gov/oes/current/oes_nat.htm). Assuming an average reading speed of 250 words per
minute, we estimate that it would take approximately 1.23 hours for the
staff to review half of this proposed rule which contains a total of
approximately 37,000 words. For each entity that reviews the rule, the
estimated cost is $159.01 (1.23 hours x $129.28). Therefore, we
estimate that the total cost of reviewing this regulation is $10,971.69
($159.01 x 69).
D. Alternatives Considered
The statute gives the Secretary discretion in establishing an
update methodology to the IPF PPS. We continued to believe it is
appropriate to routinely update the IPF PPS so that it reflects the
best available data about differences in patient resource use and costs
among IPFs, as required by the statute. Therefore, we are proposing
updates to the IPF PPS using the methodology published in the RY 2005
IPF PPS final rule (our ``standard methodology''), pre-floor, pre-
reclassified IPPS hospital wage index as its basis. Additionally, we
apply a 5- percent cap on any decrease to a provider's wage index from
its wage index in the prior year. In addition, we are proposing to
revise the facility-level adjustment factors for teaching status and
for IPFs located in rural areas. We also considered, but did not
propose, maintaining the existing adjustment factors for teaching
status and for IPFs located in rural areas. However, for the reasons
discussed earlier in this proposed rule, we believe it would be more
appropriate to propose updating these adjustment factors based on the
results of our latest available analysis.
Lastly, as discussed in section III.D.7 of this proposed rule, we
are proposing to maintain the existing COLA factors for IPFs located in
Alaska and Hawaii. We considered, but did not propose, updating the
COLA factors for IPFs based on the results of our existing methodology.
However, as discussed earlier in this proposed rule; in order to
maintain consistency in payments for IPFs and other hospitals located
in Alaska and Hawaii, we are proposing for FY 2026 to maintain the
existing COLA factors that are applicable for FY 2025.
E. Accounting Statement
Consistent with OMB Circular A-4 (available at https://trumpwhitehouse.archives.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Table 12, we have prepared an accounting statement
showing the classification of the expenditures associated with the
updates to the IPF wage index and payment rates in this proposed rule.
Table 12 provides our best estimate of the increase in Medicare
payments under the IPF PPS as a result of the changes presented in this
proposed rule and is based on 1,393 IPFs that had data available in the
PSF and claims in our FY 2024 MedPAR claims dataset. Lastly, Table 12
also includes our best estimate of the costs of reviewing and
understanding this proposed rule.
Table 12--Accounting Statement: Classification of Estimated Costs, Savings, and Transfers
----------------------------------------------------------------------------------------------------------------
Primary
estimate
Category ($million/ Year dollars Period covered
year)
----------------------------------------------------------------------------------------------------------------
Regulatory Review Costs.................... 0.01 2025 FY 2026.
IPFQR Information Collection Burden........ -1.72 2025 FY 2026.
Annualized Monetized Transfers from Federal 70 2025 FY 2026.
Government to IPF Medicare Providers.
----------------------------------------------------------------------------------------------------------------
F. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
of small entities if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. The great majority of hospitals and most
other health care providers and suppliers are small entities, either by
being nonprofit organizations or by meeting the Small Business
Administration (SBA) definition of a small business (having revenues of
less than $47 million in any 1 year).
According to the SBA's website at http://www.sba.gov/content/small-business-size-standards, IPFs fall into the North American Industrial
Classification System (NAICS) code 622210, Psychiatric and Substance
Abuse hospitals. The SBA defines small Psychiatric and Substance Abuse
hospitals as businesses having less than $47 million in total annual
revenue.
As discussed earlier in this proposed rule, the only costs imposed
by this proposed rule are the regulatory review costs, which we
estimate at $159.01 per IPF. However, as discussed in section V.B.3 of
this proposed rule, our proposals to remove the Facility Commitment to
Health Equity, Screening for Social Drivers of Health, and Screen
Positive Rate for Social Drivers of Health measures from the IPFQR
Program result in an estimated decrease in cost of $1,794 per IPF. As a
result, there are negative costs (that is, savings) of $935 per IPF
imposed as a result of this proposed rule.
Table 13--NAICS 622210 Psychiatric and Substance Abuse Hospitals Size Standards
----------------------------------------------------------------------------------------------------------------
Industry subsector SBA size standard/small Total small
NAICS (6-digit) description entity threshold businesses
----------------------------------------------------------------------------------------------------------------
622210.................................. Psychiatric and Substance $47 Million............... 213
Abuse Hospitals.
----------------------------------------------------------------------------------------------------------------
Source: U.S. Census 2017 SUSB.
[[Page 18530]]
Table 14--Concentration Ratios (NAICS 622210) Psychiatric and Substance Abuse Hospitals
----------------------------------------------------------------------------------------------------------------
Firm size (by receipts) Firm count % of small firms Average revenue
----------------------------------------------------------------------------------------------------------------
Small Hospitals: 213 100.0 $20,634,779.34
<100,000........................................ 0 0 ....................
100,000-499,999................................. 4 1.9 250,750
500,000-999,999................................. 5 2.3 713,000
1,000,000-2,499,999............................. 3 1.4 1,249,000
2,500,000-4,999,999............................. 13 6.1 3,870,077
5,000,000-7,499,999............................. 10 4.7 5,523,800
7,500,000-9,999,999............................. 12 5.6 7,507,917
10,000,000-14,999,999........................... 23 10.8 12,227,391
15,000,000-19,999,999........................... 27 12.7 14,432,111
20,000,000-24,999,999........................... 21 9.9 19,257,762
25,000,000-29,999,999........................... 21 9.9 26,277,000
30,000,000-34,999,999........................... 23 10.8 28,937,261
35,000,000-39,999,999........................... 21 9.9 35,550,095
40,000,000-49,999,999........................... 30 14.1 38,400,433
Large Hospitals:
Receipts >49 million............................ 181 NA 104,798,552.49
----------------------------------------------------------------------------------------------------------------
Source: U.S. Census 2017 SUSB.
Table 15--(NAICS 622210) Psychiatric and Substance Abuse Hospitals Impacts on Small Entities
----------------------------------------------------------------------------------------------------------------
Average annual Annualized cost
Firm size (by receipts) revenue per firm % of small firms Revenue test
----------------------------------------------------------------------------------------------------------------
All Hospitals....................... $125,433,331.83 $(935) N/A 0.00
Small Hospitals..................... 20,634,779.34 (935) 100% 0.00
<100,000........................ 0 0 0 .................
100,000-499,999................. 250,750 (935) 1.9 0.37
500,000-999,999................. 713,000 (935) 2.3 0.13
1,000,000-2,499,999............. 1,249,000 (935) 1.4 0.07
2,500,000-4,999,999............. 3,870,077 (935) 6.1 0.02
5,000,000-7,499,999............. 5,523,800 (935) 4.7 0.02
7,500,000-9,999,999............. 7,507,917 (935) 5.6 0.01
10,000,000-14,999,999........... 12,227,391 (935) 10.8 0.01
15,000,000-19,999,999........... 14,432,111 (935) 12.7 0.01
20,000,000-24,999,999........... 19,257,762 (935) 9.9 0.00
25,000,000-29,999,999........... 26,277,000 (935) 9.9 0.00
30,000,000-34,999,999........... 28,937,261 (935) 10.8 0.00
35,000,000-39,999,999........... 35,550,095 (935) 9.9 0.00
40,000,000-49,999,999........... 38,400,433 (935) 14.1 0.00
----------------------------------------------------------------------------------------------------------------
Source: U.S. Census 2017 SUSB.
According to Table 14, 213 psychiatric and substance abuse
hospitals can be considered small according to the SBA. As we stated
earlier, the SBA defines small Psychiatric and Substance Abuse
hospitals as businesses having less than $47 million in total annual
revenue. We note that Tables 14 and 15 show revenue up to $49.9 million
since the data does not provide the exact estimate for $47 million.
Table 14 shows that there are 181 Psychiatric and Substance Abuse
hospitals that earn revenue in excess of $49 million.
As its measure of significant economic impact on a substantial
number of small entities, HHS uses a change in revenue of more than 3
to 5 percent. For the purposes of the RFA, as can be seen in Table 14,
we estimate that average revenue for the small Psychiatric and
Substance Abuse hospitals is only 0.2 percent ($20,634,779.34/
$125,433,331.83) of the average revenue earned in the industry.
Furthermore, according to the IPF database with 1,392 small Psychiatric
and Substance Abuse hospitals, and for the purposes of the RFA, we
estimate that approximately 0.2 percent (213/1,392) of small
Psychiatric and Substance Abuse hospitals are small entities as that
term is used in the RFA. As shown in Table 15, 100 percent of these
small Psychiatric and Substance Abuse hospitals would reduce costs as
opposed to incurring any costs that would have an impact on their
revenue. That is, there would be no revenue impact on this industry.
According to Table 15, this proposed rule would have a 0.00 percent
impact on small Psychiatric and Substance Abuse hospitals. As such, we
believe that the threshold for significant economic impact on a
substantial number of small entities will not be reached by the
requirements in this proposed rule. Therefore, the Secretary has
certified that this proposed rule will not have a significant economic
impact on the small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds.
As discussed in section VII.C.2 of this proposed rule, the rates
and policies set forth in this proposed rule will not have an adverse
impact on the rural hospitals
[[Page 18531]]
based on the data of the 184 rural excluded psychiatric units and 61
rural psychiatric hospitals in our database of 1,393 IPFs for which
data were available. Therefore, the Secretary has determined that this
proposed rule will not have a significant impact on the operations of a
substantial number of small rural hospitals.
G. Unfunded Mandate Reform Act (UMRA)
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2025, that
threshold is approximately $187 million. This proposed rule does not
mandate any requirements for State, local, or tribal governments, or
for the private sector. This proposed rule will not impose a mandate
that will result in the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of more than
$187 million in any 1 year.
H. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. This proposed rule does not impose substantial direct
costs on state or local governments or preempt State law.
I. E.O. 14192, ``Unleashing Prosperity Through Deregulation''
Executive Order 14192, entitled ``Unleashing Prosperity Through
Deregulation'' was issued on January 31, 2025, and requires that ``any
new incremental costs associated with new regulations shall, to the
extent permitted by law, be offset by the elimination of existing costs
associated with at least 10 prior regulations.'' This proposed rule, if
finalized as proposed, is expected to be considered an E.O. 14192
deregulatory action. We estimate that this rule would generate $1.7
million in annualized cost savings at a 7 percent discount rate,
discounted relative to year 2024, over a perpetual time horizon.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
Stephanie Carlton, Acting Administrator of the Centers for Medicare
& Medicaid Services, approved this document on April 8, 2025.
List of Subjects in 42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR part 412 as set forth
below:
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
0
1. The authority citation for part 412 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
2. Section 412.433 is amended by revising paragraph (f) to read as
follows:
Sec. 412.433 Procedural requirements under the IPFQR Program.
* * * * *
(f) Extraordinary Circumstance Exception (ECE)--(1) General rule.
CMS may grant an extraordinary circumstance exception (ECE) with
respect to the reporting requirements under this section in the event
of extraordinary circumstances beyond the control of the IPF. For
purposes of this paragraph (f), an extraordinary circumstance is an
event beyond the control of an IPF (for example, a natural or man-made
disaster such as a hurricane, tornado, earthquake, terrorist attack, or
bombing) that affected the ability of the IPF to comply with one or
more applicable reporting requirements with respect to a fiscal year.
(2) Process for requesting an ECE. (i) An IPF may request an ECE
within 30 calendar days of the date that the extraordinary circumstance
occurred by submitting the information specified by CMS at QualityNet
or a successor website.
(ii) CMS notifies the IPF of its decision on the request, in
writing, via email. In the event that CMS grants an ECE to the IPF, the
written decision will specify whether the IPF is exempted from one or
more reporting requirements or whether CMS has granted the IPF an
extension of time to comply with one or more reporting requirements.
(3) Authority to grant an ECE. CMS may grant an ECE to one or more
IPFs that have not requested an ECE if CMS determines that--
(i) A systemic problem with a CMS data collection system directly
impacted the ability of the IPF to comply with a quality data reporting
requirement; or
(ii) An extraordinary circumstance has affected an entire region or
locale. Any ECE granted under this paragraph (f)(3) will specify
whether the affected IPFs are exempted from one or more reporting
requirements or whether CMS has granted the IPF an extension of time to
comply with one or more reporting requirements.
* * * * *
Robert F. Kennedy, Jr.,
Secretary, Department of Health and Human Services.
[FR Doc. 2025-06298 Filed 4-11-25; 4:15 pm]
BILLING CODE 4120-01-P