[Federal Register Volume 91, Number 146 (Friday, July 31, 2026)]
[Rules and Regulations]
[Pages 48514-48586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-15588]
[[Page 48513]]
Vol. 91
Friday,
No. 146
July 31, 2026
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 412
Medicare Program; FY 2027 Inpatient Psychiatric Facilities Prospective
Payment System--Rate Update; Final Rule
Federal Register / Vol. 91, No. 146 / Friday, July 31, 2026 / Rules
and Regulations
[[Page 48514]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 412
[CMS-1847-F]
RIN 0938-AV77
Medicare Program; FY 2027 Inpatient Psychiatric Facilities
Prospective Payment System--Rate Update
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule updates the prospective payment rates, the
outlier threshold, and the wage index for Medicare inpatient hospital
services provided by Inpatient Psychiatric Facilities (IPFs), which
include psychiatric hospitals and excluded psychiatric units of an
acute care hospital or critical access hospital. This final rule also
refines the Inpatient Psychiatric Facilities Prospective Payment System
(IPF PPS) outlier policy. These changes will be effective for IPF
discharges occurring during the fiscal year beginning October 1, 2026,
through September 30, 2027. We are also finalizing the implementation
of a standardized IPF patient assessment instrument, and removing two
measures used in the Inpatient Psychiatric Facilities Quality Reporting
Program.
DATES: These regulations are effective October 1, 2026.
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 IPF Quality Reporting Program.
SUPPLEMENTARY INFORMATION:
Availability of Certain Tables Exclusively Through the Internet on the
CMS Website
Addendum A to this final rule summarizes the fiscal year (FY) 2027
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
final rule shows the complete listing of ICD-10 Clinical Modification
(CM) and Procedure Coding System (PCS) codes, the FY 2027 IPF PPS
comorbidity adjustment, and electroconvulsive therapy (ECT) procedure
codes. Addenda A and B to this final rule are available on the CMS
website at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility-pps/tools-and-worksheets.
Tables setting forth the FY 2027 Wage Index for Urban and Rural
Labor Market Areas (based on Core Based Statistical Area (CBSA)
delineations) 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 final rule updates the prospective payment rates, the outlier
threshold, and the wage index for Medicare inpatient hospital services
provided by Inpatient Psychiatric Facilities (IPFs) for discharges
occurring during fiscal year (FY) 2027 (beginning October 1, 2026,
through September 30, 2027). This rule also limits an IPF's outlier
payments to no more than 20 percent of its total IPF PPS payments in a
year, effective October 1, 2027, and provides for an exemption to that
limit for IPFs with fewer than 50 stays per year. Lastly, this final
rule implements a standardized IPF patient assessment instrument and
removes two quality measures.
B. Summary of the Major Provisions
1. Inpatient Psychiatric Facilities Prospective Payment System (IPF
PPS)
For the IPF PPS, we are finalizing our proposals to:
Establish a 20 percent cap on outlier payments under the
IPF PPS. As discussed in section IV.E.c. of this final rule, we are
modifying the effective date of this policy and limiting it to IPFs
with 50 or more stays per year.
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 updates:
++ The IPF PPS Federal per diem base rate from $892.87 to $912.40.
++ The IPF PPS Federal per diem base rate for providers who failed
to report quality data to $894.56.
++ The electroconvulsive therapy (ECT) payment per treatment from
$673.85 to $688.59.
++ The ECT payment per treatment for providers who failed to report
quality data to $675.13.
++ The labor-related share from 79.0 percent to 78.9 percent.
++ The wage index budget neutrality factor to 0.9989.
++ The fixed dollar loss threshold amount from $39,360 to $40,750,
to maintain estimated outlier payments at 2 percent of total estimated
aggregate IPF PPS payments.
2. Inpatient Psychiatric Facilities Quality Reporting Program
For the IPF Quality Reporting Program, we are implementing a
standardized IPF patient assessment instrument (IPF-PAI), as mandated
by section 4125(b)(1) of the Consolidated Appropriations Act of 2023
(CAA, 2023) (Pub. L. 117-328), and removing two measures from the
program: Alcohol Use Brief Intervention Provided or Offered and Alcohol
Use Brief Intervention (SUB-2/2a) and Tobacco Use Treatment Provided or
Offered at Discharge (TOB-3/3a).
C. Summary of Impacts
[GRAPHIC] [TIFF OMITTED] TR31JY26.022
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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 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 IPF Quality Reporting 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, 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 IPF Quality Reporting 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 that appeared
in the
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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 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 final 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 2026 IPF PPS final
rule (90 FR 37628), appeared in the Federal Register on August 5, 2025.
The FY 2026 IPF PPS final rule revised the payment adjustment factors
for teaching status and for IPFs located in rural areas 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
2025 IPF PPS final rule (89 FR 64582). In revising the IPF PPS
adjustment factors, we performed an extensive regression analysis of
the relationship between the per diem costs 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 FY 2026 IPF PPS
proposed rule (90 FR 18503 through 18507) and our FY 2026 IPF PPS final
rule (90 FR 37639 through 37644).
As required by section 1886(s)(5)(D)(iii) of the Act, we finalized
a refinement standardization factor for the FY 2026 IPF PPS payment
rates to maintain budget neutrality for FY 2026. The application of the
FY 2026 standardization factor is described in detail in our FY 2026
IPF PPS proposed rule (90 FR 18513 and18514) and our FY 2026 IPF PPS
final rule (90 FR 37652 and 37653). For FY 2027, we did not propose a
refinement standardization factor.
III. Analysis of and Responses to the Public Comments
We received 176 public comments that pertain to proposed IPF PPS
payment policies, requests for information, and the proposed updates to
the IPFQR Program. Comments were from inpatient psychiatric facilities,
health systems, national and state level providers and patient advocacy
organizations, health information
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technology providers, and individuals. We reviewed each comment and
grouped related comments, after which we placed them in categories
based on subject matter or section(s) of the regulation affected.
Summaries of the public comments received and our responses to those
comments are provided in the appropriate sections in the preamble of
this final rule.
In addition, we received a few comments that were out of the scope
of the FY 2027 IPF PPS proposed rule. We appreciate these comments but
note that, because they fall outside the scope of this rulemaking, we
do not address them in this rule. We may consider these comments as we
continue to develop policies for future rulemaking, as applicable.
IV. Provisions of the FY 2027 IPF PPS Final Rule and Responses to
Comments
A. FY 2027 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 that 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. FY 2027 IPF Market Basket Update
For FY 2027 (beginning October 1, 2026, and ending September 30,
2027), we are updating 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
proposed to estimate the market basket update for the IPF PPS based on
the most recent forecast available at the time of rulemaking. For the
proposed rule, based on IHS Global Inc.'s (IGI) fourth quarter 2025
forecast with historical data through the third quarter of 2025, the
proposed 2021-based IPF market basket increase factor for FY 2027 was
3.1 percent. IGI is a nationally recognized economic and financial
forecasting firm with which CMS currently contracts to forecast the
components of the market baskets and productivity adjustment.\1\
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\1\ https://www.spglobal.com/en.
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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 (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 U.S. economy. The
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the
Act is published by BLS as private nonfarm business total factor
productivity ((TFP) previously referred to as multifactor
productivity).\2\ We refer readers to www.bls.gov/productivity 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.
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\2\ https://www.bls.gov/productivity/notices/2021/mfp-to-tfp-term-change.htm.
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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 the FY 2027 IPF PPS
proposed rule, based on IGI's fourth quarter 2025 forecast, the
proposed productivity adjustment for FY 2027 (the 10-year moving
average change of TFP for the period ending FY 2027) was projected to
be 0.8 percentage point. Accordingly, we proposed to reduce the
proposed 3.1 percent IPF market basket increase by the proposed 0.8
percentage point productivity adjustment, as mandated by the Act. This
resulted in a proposed FY 2027 IPF PPS payment rate update of 2.3
percent (3.1 percent-0.8 percentage point = 2.3 percent). We also
proposed that if more recent data became available, we would use such
data, if appropriate, to determine the FY 2027 IPF market basket
increase and productivity adjustment for the final rule.
We solicited comments on the proposed IPF market basket increase
and productivity adjustment for FY 2027. The following is a summary of
the comments we received and our responses.
Comment: Several commenters expressed appreciation for the FY 2027
IPF payment update; however, many commenters stated that the proposed
payment update is inadequate to address the current cost pressures IPFs
are facing, and is below current inflation data (as measured by the
Consumer Price Index (CPI)). Commenters noted that IPFs continue to
face significant and sustained cost pressures, including rising labor
costs driven by behavioral health workforce shortages, increased
reliance on contract staffing, escalating pharmaceutical and supply
costs, and growing administrative burdens associated with prior
authorization. A commenter cited American Hospital Association data
showing total hospital expenses, drug costs, and supply costs increased
by more than the proposed update. Multiple commenters noted that MedPAC
had reported negative Medicare margins for IPFs over the 2016 through
2021 time period.
Commenters urged CMS to use the most current available data when
finalizing the FY 2027 market basket update and to consider all
available policy options to ensure the final update more accurately
reflects the cost of furnishing inpatient psychiatric care.
Response: We appreciate the commenters' concerns regarding cost
pressures facing IPFs and the proposed FY 2027 market basket update.
[[Page 48518]]
As stated in the FY 2024 IPF final rule (88 FR 541057), FY 2025 IPF
final rule (89 FR 64586), and the FY 2026 IPF final rule (90 FR 37632),
the 2021-based IPF market basket is a fixed-weight, Laspeyres-type
index that measures price changes over time. Any changes in the
quantity or mix of goods and services (that is, intensity) purchased
over time relative to the base period are not measured. Since the
inception of the IPF PPS, the IPF payment rates (with the exception of
statutorily-mandated updates) have been updated by a projection of the
market basket's percentage increase, consistent with other CMS PPS
updates (including IPPS, SNF, and HHA). Additionally, the market basket
updates appropriately differ from other payment updates (such as the
projected increase in the average per capita payments to Medicare
Advantage organizations) that are not consistent in concept with the
statutory requirement as they would reflect anticipated volume and
intensity of services.\3\ Likewise, the market basket updates may
differ from other overall inflation indexes (such as the CPI) as it
measures different mixes of products and services.
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\3\ Announcement of Calendar Year 2027 Medicare Advantage
Capitation Rates and Part C and Part D Payment Policies. https://www.cms.gov/files/document/2027-announcement.pdf.
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As is our general practice, we proposed in the FY 2027 IPF proposed
rule that if more recent data became available, we would use such data,
if appropriate, to derive the final FY 2027 IPF market basket update
for the final rule. The projection of the 2021-based IPF market basket
is based on the most recent forecast from IHS Global Inc., a nationally
recognized economic and financial forecasting firm with which CMS
contracts to forecast the price proxies of the market baskets. We also
note that when developing its forecast for labor prices, IHS Global
Inc. considers overall labor market conditions (including rise in
contract labor employment due to tight labor market conditions) as well
as trends in contract labor wages, which both have an impact on wage
pressures for workers employed directly by the hospital. For this final
rule, based on IHS Global Inc.'s second quarter 2026 forecast with
historical data through the first quarter of 2026, the projected 2021-
based IPF market basket increase factor for FY 2027 is 3.2 percent,
which is 0.1 percentage point higher than the projected FY 2027 market
basket increase factor in the proposed rule.
Comment: Several commenters conveyed concerns regarding the ongoing
application of the productivity adjustment to IPFs. Several commenters
stated that they believe the productivity adjustment to be
inappropriate and unrealistic when applied to inpatient psychiatric
providers. Commenters stated that the productivity adjustment is based
on economy-wide private nonfarm business total factor productivity
(TFP), which does not reflect the operational realities of IPFs. They
explain that inpatient psychiatric care is highly labor-intensive,
relies on direct human interaction, and is subject to strict staffing,
safety, and regulatory requirements that leave little opportunity to
achieve productivity gains comparable to those in the broader economy.
A couple of commenters further noted that CMS's Office of the Actuary
(OACT) has found that hospital sector productivity growth ranges from
0.2 percent to 0.5 percent annually, roughly half the rate used in the
proposed adjustment, making the 0.8 percentage point offset
inconsistent with CMS's own analytical findings.\4\ A few other
commenters specifically urged CMS to invoke its ``special exceptions
and adjustments'' authority to waive or reduce the productivity
adjustment for FY 2027 and called on CMS to work with the Congress to
modify the statutory framework to base the productivity adjustment on
hospital sector productivity rather than private non-farm business
productivity.
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\4\ Paul Spitalnic, Stephen Heffler, Bridget Dickensheets and
Mollie Knight, ``Hospital Multifactor Productivity: An Update
Presentation of Two Methodologies Using Data through 2019.''
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A commenter also stated that they find it especially troubling that
the productivity adjustment appears to be applied only when it reduces
Medicare payments.
Response: 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. Therefore, as required by statute, the FY 2027
productivity adjustment is derived based on the 10-year moving average
growth in economy-wide private nonfarm business total factor
productivity for the period ending FY 2027. We recognize the concerns
of the commenters regarding the appropriateness of the productivity
adjustment; however, section 1886(s)(2)(A)(i) of the Act requires us to
apply the specific productivity adjustment described here.
We have always made available on the CMS website the general method
for calculating the productivity adjustment. This includes providing a
link to the most recent BLS historical TFP data, which allows
interested parties to obtain historical TFP annual index levels for
1987 through 2025. We also provide the IGI projection model (https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/medicareprogramratesstats/downloads/tfp_methodology.pdf), which
is used to derive annual TFP growth rates for 2026 and 2027. The annual
index level derived from this method is then interpolated to quarterly
levels, and the FY 2027 productivity adjustment is equal to the percent
change in the 40-quarter moving average projected level for the period
ending September 30, 2027, relative to the 40-quarter moving average
projected level for the period ending September 30, 2026. We believe
our methodology for the productivity adjustment is consistent with
section 1886(b)(3)(B)(xi)(II) of the Act which states that the
productivity adjustment is equal to the 10-year moving average of
changes in annual economy-wide private nonfarm business multi-factor
productivity (as projected by the Secretary for the 10-year period
ending with the applicable fiscal year, year, cost reporting period, or
other annual period).
At the time of this final rule, the 2027 productivity adjustment
reflects BLS historical TFP data through 2025 (released on March 19,
2026) and IGI's forecasted TFP growth for 2026 and 2027. The average
annual growth rate of historical TFP published by BLS for 2018 through
2025 is currently 1.0 percent and IGI is projecting average TFP growth
of about 0.7 percent for 2026 and 2027 based on IGI's second-quarter
2026 forecast. Combining the historical and projected TFP data over the
entire 10-year time period and interpolating into quarterly index
levels results in a 10-year moving average growth rate of TFP of 0.9
percent for FY 2027. The productivity adjustment (based on the 10-year
period ending with FY 2027) for the FY 2027 final rule is 0.1
percentage point higher than the FY 2027 IPF proposed rule mainly due
to the incorporation of updated BLS historical data.
In response to commenters' concerns about the productivity
adjustment only being applied if it reduces the payment update, and as
noted in the FY 2026 IPF final rule (90 FR 37628), we note that the
productivity adjustment was established under the Affordable Care Act
with a specific policy intent to encourage efficiency improvements in
healthcare delivery by linking Medicare
[[Page 48519]]
payment updates to economy-wide productivity gains. The statutory
language in section 1886(b)(3)(B)(xi)(II) of the Act requires that the
Secretary reduce (not increase) the market basket percentage increase
by changes in economy-wide productivity; therefore, only positive
productivity adjustments are applied.
Comment: Several commenters have noted concerns about CMS's
estimation of the IPF market basket updates since the COVID-19
pandemic, stating that it has resulted in several consecutive years of
underpayments to IPF health care providers since the COVID-19 pandemic.
A few commenters cited CMS Office of the Actuary data showing that
market basket forecasts used in the final rules for FY 2021 through FY
2024 understated actual IPF inflation by a cumulative 4.2 percentage
points. They argue that these understatements are now permanently
embedded in the IPF PPS base rate and continue to compound year over
year, widening the gap between Medicare payment rates and the actual
cost of care. Several commenters urged CMS to adopt a one-time forecast
error adjustment to correct for this cumulative underestimation, and
for it to be added to the to the currently proposed 2.3 percent
increase for FY 2027. A couple of commenters noted that CMS's reliance
on lagged cost data has caused payment updates to persistently trail
actual cost growth, and urged CMS to use the most current available
data, and to work with the Congress where necessary, to ensure the FY
2027 update more accurately reflects the inflationary environment IPFs
are operating in.
Response: The IPF market basket updates are set prospectively,
which means that the update relies on a mix of both historical data for
part of the period for which the update is calculated and forecasted
data for the remainder. For instance, the FY 2027 market basket update
in this final rule reflects historical data through the first quarter
of CY 2026 and forecasted data for the second quarter of CY 2026
through the third quarter of CY 2027. While there is no precedent to
adjust for market basket forecast error in the IPF payment update, a
forecast error can be calculated by comparing the actual market basket
increase for a given year less the forecasted market basket increase.
Due to the uncertainty regarding future price trends, forecast errors
can be both positive and negative. The forecast error has been both
positive and negative during past years, and over longer periods of
time the cumulative forecast hasn't deviated significantly from the
historical measures. Only considering the forecast error for years when
the IPF market basket update was lower than the actual market basket
update does not consider the full experience and impact of the
cumulative forecast error.
Final Decision: After consideration of the comments received, we
are finalizing our proposal to update IPF PPS payment rates using the
latest available productivity-adjusted market basket increase factor.
Based on IGI's second quarter 2026 forecast, the 2021-based IPF market
basket percentage increase for FY 2027 is 3.2 percent and the projected
FY 2027 productivity adjustment is 0.9 percentage point. Therefore, the
final FY 2027 IPF market basket update is equal to 2.3 percent (3.2
percent market basket percentage increase reduced by the 0.9 percentage
point productivity adjustment).
3. FY 2027 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 will 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 proposed 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 proposed 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
2027. Based on IGI's fourth quarter 2025 forecast of the 2021-based IPF
market basket, the sum of the FY 2027 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 76.0 percent. We proposed, 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 2027, we proposed to take 46 percent of 6.7
percent to determine a labor-related share of Capital-Related costs for
FY 2027 of 3.1 percent. Therefore, we proposed a total labor-related
share for FY 2027 of 79.1 percent (the sum of 76.0 percent for the
labor-related share of operating costs and 3.1 percent for the labor-
related share of Capital-Related costs). We also proposed that if more
recent data became available, we would use such data, if appropriate,
to determine the FY 2027 labor-related share for the final rule. For
more information on the labor-related share and its calculation, we
refer readers to the FY 2024 IPF PPS final rule (88 FR 51078 through
51081.
We solicited comments on the proposed labor-related share for FY
2027. The following is a summary of the comments we received and our
responses.
Comment: A few commenters expressed support for the increase in the
labor-related share from 79.0 percent to 79.1 percent for FY 2027,
noting that while CMS estimates a labor-related share of approximately
79 percent for IPFs, they continue to face workforce challenges
including shortages of psychiatrists, behavioral health nurses, and
support personnel that the labor-related share does not adequately
reflect.
Response: We appreciate the commenters' support for the FY 2027 IPF
labor-related share. As described above, we define the labor-related
share as those expenses that are labor-intensive and vary with, or are
influenced by, the local labor market. Each year, we calculate a
revised labor-related share based on the relative importance of labor-
related cost categories in the input price index. For the 2021-based
IPF market basket, those cost categories are: (1) Wages and Salaries
(including allocated contract labor costs); (2) Employee Benefits
(including allocated contract labor costs); (3) Professional Fees:
Labor-Related; (4) Administrative and Facilities Support Services; (5)
Installation, Maintenance, and Repair Services; (6) All Other: Labor-
Related Services; and (7) a proportion of capital-
[[Page 48520]]
related expenses. The full methodology for determining the labor-
related share of the 2021-based IPF market basket is detailed in the FY
2024 IPF PPS Final Rule (88 FR 51078).
We proposed to use the FY 2027 relative importance values for the
labor-related cost categories from the 2021-based IPF market basket
because it accounts for more recent data regarding price pressures and
cost structure of IPFs. This methodology is consistent with the
determination of the labor-related share since the implementation of
the IPF PPS. As stated in the FY 2027 IPF proposed rule, we also
proposed that if more recent data became available, we would use such
data, if appropriate, to determine the FY 2027 labor-related share for
the final rule. Based on IHS Global Inc.'s second quarter 2026 forecast
with historical data through the first quarter of 2026, the FY 2027
labor-related share for the final rule is 78.9 percent.
Final Decision: After consideration of the comments, we are
finalizing a FY 2027 labor-related share based on the latest available
data. Based on IGI's second quarter 2026 forecast of the 2021-based IPF
market basket, the sum of the FY 2027 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. Since the relative importance for
Capital-Related costs is 6.7 percent of the 2021-based IPF market
basket for FY 2027, we take 46 percent of 6.7 percent to determine a
labor-related share of Capital-Related costs for FY 2027 of 3.1
percent. Therefore, the total labor-related share for FY 2027 is 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).
Table 1 shows the final FY 2027 labor-related share and the final
FY 2026 labor-related share using the 2021-based IPF market basket
relative importance.
[GRAPHIC] [TIFF OMITTED] TR31JY26.023
B. Updates to the IPF PPS Rates for FY Beginning October 1, 2026
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
[[Page 48521]]
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/payment/prospective-payment-systems/inpatient-psychiatric-facility.
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 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.
Most recently, 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. 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. 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).
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).
3. Update of the Federal per Diem Base Rate and Electroconvulsive
Therapy Payment per Treatment
The current (FY 2026) Federal per diem base rate is $892.87 and the
ECT payment per treatment is $673.85. For the final FY 2027 Federal per
diem base rate, we applied the final IPF market basket update of 2.3
percent (that is, the 2021-based IPF market basket percentage increase
for FY 2027 of 3.2 percent reduced by the productivity adjustment of
0.9 percentage point), and the final wage index budget neutrality
factor of 0.9989 (as discussed in section IV.D.1.c. of this final rule)
to the final FY 2026 Federal per diem base rate of $892.87, yielding a
final Federal per diem base rate of $912.40 for FY 2027. We applied the
final IPF market basket update of 2.3 percent and the wage index budget
neutrality factor of 0.9989 to the final FY 2026 ECT payment per
treatment of $673.85, yielding a final ECT payment per treatment of
$688.59 for FY 2027.
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 final annual update to the Federal per diem base rate
and the final ECT payment per treatment as follows:
For IPFs that fail to report required data under the IPF
Quality Reporting Program, we will apply a 0.3 percent payment rate
update--that is, the final IPF market basket increase for FY 2027 of
3.2 percent reduced by the final productivity adjustment of 0.9
percentage point for an update of 2.3 percent, and further reduced by
2.0 percentage points in accordance with section 1886(s)(4)(A)(i) of
the Act. We also applied the wage index budget neutrality factor of
0.9989 to the FY 2026 Federal per diem base rate of $892.87, yielding a
Federal per diem base rate of $894.56 for FY 2027.
For IPFs that fail to report required data under the IPF
Quality Reporting Program, we will apply the 0.3 percent payment rate
update and the 0.9989 wage index budget neutrality factor to the FY
2026 ECT payment per treatment of $673.85, yielding an ECT payment per
treatment of $675.13 for FY 2027.
C. 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 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
[[Page 48522]]
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 2027, we proposed to use the existing regression-derived
patient-level adjustment factors established for FY 2025. We did not
propose any changes to the patient-level adjustment factors for FY
2027; however, we 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. 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. 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-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 2027, we proposed 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. We did not receive any comments on
this proposal, and we are finalizing it as proposed. Addendum A to this
final rule is available on our website at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility-pps/
tools-and-worksheets. 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,
2026, using the final IPPS FY 2027 ICD-10-CM/PCS code sets. The FY 2027
IPPS/LTCH PPS final rule will include tables of the changes to the ICD-
10-CM/PCS code sets that underlie the final FY 2027 IPF MS-DRGs. Both
the FY 2027 IPPS/LTCH PPS final rule and the tables of final changes to
the ICD-10-CM/PCS code sets, which underlie the FY 2027 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 ICD-10 MS-
DRG GROUPER Software, 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 software 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/10cmguidelines-FY2020_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 final FY 2027 Code First
table is shown in Addendum B on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility-pps/tools-and-worksheets.
b. Payment for Comorbid Conditions
The intent of the comorbidity adjustments is to recognize the
[[Page 48523]]
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. A
detailed discussion of the revised comorbidity adjustment factors is
described in the FY 2025 IPF PPS final rule (89 FR 64606 through
64612).
We did not propose any changes to the comorbidity adjustment
factors, and we are retaining the existing comorbidity adjustment
factors for FY 2027. The FY 2027 comorbidity adjustment factors are
found in Addendum A to this final rule, available on the CMS website at
https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility-pps/tools-and-worksheets.
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-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 discussed in section IV.C.2.a. of this final 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, 2026, we added three ICD-10-PCS procedure codes to
the Oncology Treatment Procedures list and two ICD-10-PCS procedure
codes to the Chronic Obstructive Pulmonary Disease & Sleep Apnea
Procedures list. We did not receive any comments on the April 1, 2026,
coding changes.
For this FY 2027 IPF PPS final rule, we are adding 10 ICD-10-CM
diagnosis codes to the Poisoning code list, nine ICD-10-CM diagnosis
codes to the Cardiac Conditions list, three ICD-10-CM diagnosis codes
to the Oncology Treatment Diagnoses list, and six ICD-10-CM diagnosis
codes to the Severe Musculoskeletal and Connective Tissue Diseases
list. In addition, we are removing eight ICD-10-CM diagnosis codes from
the Severe Musculoskeletal and Connective Tissue Diseases list, and 12
ICD-10-CM diagnosis codes from the Code First list. The final FY 2027
comorbidity codes are shown in Addenda B, available on the CMS website
at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility-pps/tools-and-worksheets.
c. 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). We did not propose any
changes to the patient age adjustment factors, and we are retaining the
existing patient age adjustment factors for FY 2027, as shown in
Addendum A of this final rule (see https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility-pps/
tools-and-worksheets).
d. 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 IV.D.5. of this final 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). We did not propose any changes to the variable per diem
adjustment factors, and we are retaining the existing variable per diem
adjustment factors for FY 2027, as shown in Addendum A of
[[Page 48524]]
this final rule (available at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility-pps/tools-
and-worksheets).
D. Updates to the IPF PPS Facility-Level Adjustments
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 IPF PPS facility-level adjustment factors for rural location and
teaching status were originally derived from regression analysis of 100
percent of the FY 2002 MedPAR data file. 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 2026, in a continuation of the FY 2025 implementation of
revisions to the methodology for determining payment rates under the
IPF PPS as required by section 1886(s)(5)(D) of the Act, we revised the
facility-level adjustment factors for rural location and teaching
status based on a regression analysis of cost and claims data for IPF
stays from FY 2020 to FY 2022 (90 FR 37639 through 37649). As discussed
in the following sections, we proposed annual updates to the FY 2027
IPF PPS wage index and to the cost of living adjustments for IPFs
located in Alaska and Hawaii. For FY 2027, we proposed to use the
facility-level adjustment factors for rural location, teaching status,
and IPFs with a qualifying ED currently in effect for FY 2026, as shown
in Addendum A to this final rule.
1. 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 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.
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
[[Page 48525]]
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.
For FY 2027, we proposed to apply the IPF wage index adjustment to
the labor-related share of the national IPF PPS base rate and ECT
payment per treatment. As discussed in section IV.A.3. of this final
rule, the labor-related share of the IPF PPS national base rate and ECT
payment per treatment is 78.9 percent in FY 2027. This percentage
reflects the labor-related share relative importance of the 2021-based
IPF market basket for FY 2027 and is 0.1 percentage point lower than
the FY 2026 labor-related share.
For FY 2027, we proposed to continue to use the concurrent pre-
floor, pre-reclassified IPPS hospital wage index as the basis for the
IPF wage index. We explained that we continue to consider this an
appropriate source of wage index data to estimate costs per day, in
accordance with our longstanding wage index policy at Sec.
412.424(a)(2)(ii).
The following is a summary of the comments we received on the
proposed wage index adjustment.
Comment: Several commenters expressed support for the proposed use
of the concurrent pre-floor, pre-reclassified IPPS hospital wage index
as the basis for the IPF wage index pre-floor for FY 2027. Commenters
agreed with CMS that IPFs compete in the same labor market as
hospitals. Other commenters stated that IPFs compete within a distinct
labor market that includes community-based behavioral health providers,
outpatient treatment programs, and correctional settings.
Response: We appreciate these comments. We did not propose any
changes to our longstanding IPF PPS wage index policy, which is based
on the concurrent pre-floor, pre-reclassified IPPS hospital wage index.
As we have previously stated, we believe that IPFs generally compete in
the same labor market as IPPS hospitals. As discussed later in this
final rule, we are considering whether alternative data sources could
enhance the accuracy of the IPF wage index in future years, including
the extent to which IPFs compete with other non-hospital settings for
labor.
Comment: Some commenters encouraged CMS to closely align the IPF
wage index with various policies applied to the IPPS wage index,
including reclassifications, application of the rural floor, and the
use of a lower labor-related share for IPFs in low-wage areas.
Response: We appreciate the commenters' recommendations. We did not
propose the specific policies suggested by commenters, but we will take
these recommendations into consideration to potentially inform future
rulemaking. As we have previously discussed in the RY 2007 final rule
(71 FR 27066), we believe that the actual location of an IPF (as
opposed to the location of affiliated providers) is most appropriate
for determining the wage adjustment because the prevailing wages in the
area in which the IPF is located influence the cost of a case. In that
same RY 2007 final rule (71 FR 27066), we also stated that we believe
the ``rural floor'' is required only for the acute care hospital
payment system because section 4410 of the Balanced Budget Act of 1997
(Pub. L. 105-33) applies specifically to acute care hospitals and not
excluded hospitals and excluded units. As we have previously discussed,
the IPF wage index is intended to be a relative measure of the value of
labor in prescribed labor market areas (87 FR 46857). In addition,
there are a variety of reasons why our longstanding IPF wage index
policy has not applied floors or reclassifications, which, as we
previously noted, are not applied to the IPF wage index by statute. For
example, applying floors and reclassifications to the IPF wage index
would significantly increase administrative burden, both for IPFs and
for CMS, associated with IPFs reclassifying from one CBSA to another,
and it would significantly increase the complexity of the methodology.
Furthermore, because floors and reclassifications would be applied
budget-neutrally under the wage index, these policies would increase
the wage index for some IPFs while reducing IPF PPS payments for all
other IPFs, which would upset the long-settled expectations with which
IPFs across the country have been operating. For these reasons, we
believe using the pre-floor, pre-reclassified IPPS hospital wage index
is the most appropriate data to use as a proxy for an IPF wage index.
We appreciate the commenter's suggestion to apply an out-migration
adjustment to IPFs to account for employment of hospital staff who
commute to work in counties with a higher wage index. However, we note
that the out-migration adjustment is applied to the IPPS hospital wage
index under section 1886(d)(13) of the Act, which is a statutory
provision that specifically applies to subsection (d) hospitals paid
under the IPPS. As discussed in the prior paragraph, we do not believe
it is appropriate for the IPF PPS to apply an out-migration adjustment
that is not statutorily required, because such a policy would increase
administrative burden and have distributional impacts on IPFs.
Comment: A commenter recommended CMS apply the wage index 5-percent
cap in a non-budget neutral manner.
Response: We did not propose any new policies this year pertaining
to the 5-percent cap, and accordingly, we are not finalizing any new
policies in this final rule. In accordance with our longstanding policy
under the IPF PPS, we updated the wage index in such a way that total
estimated payments to IPFs for FY 2027 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 applied the wage index cap
in a budget-neutral manner in accordance with this overall budget
neutrality policy for the IPF PPS wage index so that wage index changes
do not increase aggregate Medicare spending. In the FY 2023 IPF PPS
proposed rule (87 FR 19423 through 19425), we noted that applying a 5-
percent cap on all wage index decreases would have a very small effect
on the wage index budget neutrality factor for FY 2023. We explained
that we anticipate that in the absence of proposed policy changes, most
providers will not experience year-to-year wage index declines greater
than 5 percent in any given year and that we expect the impact to the
wage index budget neutrality factor in future years will continue to be
minimal.
Final Decision: After consideration of the comments received, we
are finalizing our proposal for FY 2027 to continue to use the
concurrent pre-floor, pre-reclassified IPPS hospital wage index as the
basis for the IPF wage index. We will apply the IPF wage index
adjustment to the labor-related share of the national rate and ECT
payment per treatment. The labor-related share of the national rate and
ECT payment per treatment will change from 79.0 percent in FY 2026 to
78.9 percent in FY 2027. This percentage reflects the labor-related
share of the 2021-based IPF market basket for FY 2027 (see section
IV.A.3. of this final rule).
Lastly, we explained in the proposed rule that we routinely assess
whether more recent or alternative data sources may further enhance the
accuracy and representativeness of our estimates. We noted that other
payment systems have explored and are exploring alternative wage index
methodologies under their specific programmatic and statutory
circumstances. For example, CMS
[[Page 48526]]
finalized changes to the ESRD PPS wage index using Bureau of Labor
Statistics (BLS) occupation-level wage data in the CY 2025 ESRD PPS
final rule (89 FR 89116). We acknowledged that this approach was
developed under the specific programmatic and statutory circumstances
of the ESRD PPS and may not be directly transferable to the IPF PPS,
but we stated that CMS is interested in exploring whether similar
methodologies using publicly available wage data could be adapted to
better reflect the geographic variation in labor costs for inpatient
psychiatric facilities.
We also noted that in its 2023 Report to Congress,\5\ MedPAC
discussed various conceptual approaches to Medicare wage indexes,
including the use of county-level wage data from BLS with an
occupational mix to construct wage indexes that are more specific to
the payment setting. We explained that MedPAC has previously written
about using all-employer, occupation-level wage data to establish
different weights for setting-specific occupational labor mixes as one
approach to geographic adjustments.
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\5\ https://www.medpac.gov/wp-content/uploads/2022/07/Wage-index-March-2023-SEC.pdf.
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We solicited comments on whether we should consider using
alternative data sources to construct an IPF-specific wage index for
potential use in future years. CMS sought feedback to understand the
potential advantages and limitations of using alternative data sources,
such as BLS data and IPF cost reports, as well as other methodologies
that interested parties believe could appropriately reflect the
geographic variation in labor costs for psychiatric facilities. In
addition, as discussed elsewhere in the Federal Register, we noted that
we are also considering the potential use of alternative data sources
in other payment systems including the Inpatient Rehabilitation
Facilities PPS, Skilled Nursing Facilities PPS, and Hospice payment
system. We sought feedback on the unique considerations applicable to
IPFs that should inform how CMS could consider the potential use of
alternative data sources.
We received numerous comments in response to this comment
solicitation. Commenters offered a wide variety of considerations
related to the potential development of an IPF-specific wage index.
These comments addressed specific aspects of the wage index methodology
including information about the extent to which IPFs typically compete
with other healthcare settings for labor, thoughts about potential
sources of wage data, and considerations related to geographical
categorization of IPFs. We thank the commenters for these suggestions,
and we will take them into consideration as we consider potential
future changes to the IPF PPS wage index.
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 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 adoption of material changes to the OMB statistical area
delineations, which resulted in our determination that 53 urban
counties became rural, 54 rural counties became urban, and 88 counties
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. 23-01 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 our
adoption of CBSA revisions, as discussed further in section IV.D.2.b.
of this final rule. We also applied the permanent 5-percent cap on wage
index decreases described at Sec. 412.424(d)(1)(i).
c. 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 2027, we proposed 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
[[Page 48527]]
way that total estimated payments to IPFs for FY 2027 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 proposed
to use the following steps to ensure that the rates reflect the FY 2027
update to the wage indexes (based on FY 2023 hospital cost report data)
and the labor-related share in a budget-neutral manner:
Step 1: Simulate estimated IPF PPS payments, using the FY 2026 IPF
wage index values (available on the CMS website) and labor-related
share (as published in the FY 2026 IPF PPS final rule (90 FR 37635)).
Step 2: Simulate estimated IPF PPS payments using the FY 2027 IPF
wage index values (available on the CMS website), and the FY 2027
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 2027 budget
neutral wage adjustment factor of 0.9989.
Step 4: Apply the FY 2027 budget neutral wage adjustment factor
from step 3 to the FY 2026 IPF PPS Federal per diem base rate after the
application of the IPF market basket increase reduced by the
productivity adjustment described in section IV.A.2. of this final rule
to determine the final FY 2027 IPF PPS Federal per diem base rate.
2. Adjustment for Rural Location
a. Payment for Rural Location
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 adopted the new 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 for FY 2025.
Our analysis of more cost and claims data from FY 2020 through 2022 for
the FY 2026 final rule indicated that an increase in the payment
adjustment for IPFs in rural areas would be appropriate. Based on this
analysis, we revised the adjustment for rural location to 18 percent
for FY 2026 to more accurately represent the difference in costs
between urban and rural IPFs (90 FR 37647). See the FY 2026 IPF PPS
final rule for the full explanation of the regression analysis that
yielded the revised 18 percent adjustment for rural location (90 FR
37639 through 37644) and the RY 2005 IPF PPS final rule (69 FR 66954)
for a complete discussion of the adjustment for rural locations.
We did not propose any changes to the 18 percent adjustment factor
for IPFs located in a rural area.
b. End 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. Adoption 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 adopt 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
our adoption of 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 our adoption of these OMB delineation
changes received one-third of the rural adjustment that was applicable
in FY 2024. For FY 2027, these IPFs will not receive a rural
adjustment.
3. Teaching Adjustment
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 (69 FR 66954 through
66957). The teaching adjustment accounts for the higher indirect
operating costs experienced by hospitals that participate in graduate
medical education (GME) programs. As detailed further in the following
paragraphs, the payment adjustments are made based on the ratio of the
number of fulltime equivalent (FTE) interns and residents training in
the IPF to 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 IPFs divided by the IPF's average daily
census]). The teaching variable was then raised to the 0.5150 power,
resulting in the IPF PPS teaching adjustment. This formula is subject
to limitations on the number of FTE residents, which are discussed in
greater detail in the following paragraph.
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
[[Page 48528]]
proposed rule (76 FR 5018 through 5020) and the RY 2012 IPF PPS final
rule (76 FR 26453 through 26456). As discussed in section IV.D.6.c. of
the FY 2026 IPF PPS final rule (90 FR 37649 through 37651), we made
conforming changes to the IPF resident cap policy 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 into 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).
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 IV.A. of the FY 2025
IPF PPS final rule (89 FR 64641) for summaries of the comments we
received and our responses. We took the comments received into
consideration when we developed our proposal for the FY 2026 revision
of the payment adjustment for teaching status.
In the FY 2026 IPF PPS final rule, we increased the teaching
adjustment to 0.7957 based on the results of our latest regression
model (90 FR 37648 and 37649). This cost effect is converted 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 implemented this revision to the teaching
adjustment budget-neutrally.
For FY 2027, we did not propose any changes to the teaching
adjustment.
4. 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).
In the FY 2026 IPF PPS final rule, we stated that we believe it is
appropriate to have a consistent policy approach with that of other
hospitals in Alaska and Hawaii (90 FR 37651 and 37652). We used 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 FY 2026 COLA factors, we refer readers
to the FY 2026 IPPS/LTCH final rule (90 FR 37229 and 37230).
Effective for FY 2027, to continue our consistent policy approach
with that of other hospitals in Alaska and Hawaii, we proposed to
adjust non-labor related costs for IPFs located in Alaska and Hawaii
using the Overseas Cost-of-Living Allowance (OCOLA) data \6\ published
by the Department of War (DOW). We believe the DOW OCOLAs are an
appropriate data source to capture the cost differences of hospital
non-labor-related inputs purchased in the areas in Hawaii and Alaska
compared to the continental U.S. Additionally, we proposed to no longer
cap the COLA factors for Alaska and Hawaii at 25 percent. We also
solicited any additional information with regard to these results.
---------------------------------------------------------------------------
\6\ https://www.travel.dod.mil/Allowances/Overseas-Cost-of-Living-Allowance/.
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For this FY 2027 IPF PPS final rule, we are finalizing our proposed
methodology to derive the COLA factors for IPFs located in Alaska and
Hawaii using the DOW OCOLAs. In addition, we are finalizing our
proposal to no longer cap the COLA factors for Alaska and Hawaii at 25
percent. Based on comments received under the IPPS, we are finalizing a
``hold harmless'' policy in FY 2027 for any area that would experience
a reduction to their COLA factor under the OCOLA methodology. For a
complete discussion of the FY 2027 COLA factors, we refer readers to
the FY 2027 IPPS/LTCH proposed rule (91 FR 19813 and 19814) and the FY
2027 IPPS/LTCH final rule, published elsewhere in the Federal Register.
The FY 2027 IPF PPS COLA factors for Alaska and Hawaii are shown in
Table 2.
[[Page 48529]]
[GRAPHIC] [TIFF OMITTED] TR31JY26.024
The IPF PPS COLA factors for Alaska and Hawaii for FY 2027 are also
shown in Addendum A to this final rule, which is available on the CMS
website at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility-pps/tools-and-worksheets.
5. 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. 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 1.54 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 1.54 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. 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).
For FY 2027, we did not propose any changes to the adjustment
factor for IPFs with qualifying EDs.
E. Other Payment Adjustments and Policies
1. Outlier Payment Overview
a. Background on the Current IPF PPS Outlier Payment Policy
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 an outlier adjustment 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
upward payment adjustments reduce the financial losses that would
otherwise be incurred in treating patients who require costlier care,
and therefore, reduce the incentives for IPFs to under-serve these
patients. We make payments under the outlier adjustment 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
adjustment, 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
[[Page 48530]]
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.
b. Analysis of Recent Outlier Payments Under the Current Methodology
In the proposed rule, we explained that we conducted an analysis of
the latest available data (the December 2025 update of FY 2025 IPF
claims) and rate increases, following our longstanding methodology. We
stated that based on an analysis of these updated data, 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. We estimated that IPF outlier payments as a
percentage of total estimated payments would be 2.2 percent in FY 2026.
Therefore, we proposed to update the outlier threshold amount to
$42,720 to maintain estimated outlier payments at 2 percent of total
estimated aggregate IPF payments for FY 2027. We noted that this update
would be an increase from the FY 2026 threshold of $39,360.
For the FY 2027 proposed rule, we analyzed the distribution of IPF
PPS outlier payments. Comparison of outlier payments in RY 2005 and FY
2027 demonstrated that IPF outlier payments are now concentrated among
a smaller number of stays with significantly higher average costs and
among a smaller number of IPFs. In FY 2025, the 20 IPFs that had the
highest amounts of total outlier payments accounted for more than 50
percent of total outlier payments.
We also analyzed clinical characteristics from IPF PPS claims to
determine the extent to which such differences could be driving outlier
payments. Outlier stays tended to be significantly longer than non-
outlier stays (approximately 46 days versus 12 days) and tended to have
significantly higher daily routine charges. Although we noted that
there were certain case-mix differences between providers with a high
share of outliers and those with a lower share or with no outliers, our
analysis indicated that these differences alone did not fully explain
the substantial difference in per diem routine charges. We explained in
the proposed rule that our analyses of clinical characteristics of
outlier stays suggested that a substantial share of outlier payments
may be driven by higher facility-level costs rather than by patient
complexity. We refer readers to the FY 2027 IPF PPS proposed rule (91
FR 17732 and 17733) for a detailed account of our analysis and
findings.
As discussed in the following sections, we proposed changes to our
outlier policy and the methodology for determining the outlier fixed
dollar loss threshold amount for FY 2027.
c. Changes to the Outlier Payment Policy and Update to the Outlier
Fixed Dollar Loss Threshold Amount
In accordance with the update methodology described in Sec.
412.428(d)(3)(i)(D), we proposed 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 proposed to maintain the
established 2 percent outlier policy for FY 2027.
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 proposed to update the IPF outlier threshold amount for FY 2027
using FY 2025 claims data in accordance with the 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).
That is, we proposed to determine the FY 2027 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. However, we proposed to change the outlier
policy for FY 2027 to minimize the impact of a small number of high-
cost IPFs on the outlier fixed dollar loss threshold amount.
Accordingly, we proposed to modify our methodology for simulating
payments to determine the outlier fixed dollar loss threshold amount
for FY 2027. As we discuss in the following paragraphs, we estimated
that this proposed change to the outlier policy would have a meaningful
impact on the outlier fixed dollar loss threshold amount in FY 2027.
In summary, we proposed to modify the IPF PPS outlier payment
policy beginning in FY 2027 to better align outlier payments with their
intended purpose of promoting access to care for patients requiring
unusually costly treatment while ensuring an appropriate distribution
of outlier payments across all IPFs. We note that the authorizing
language for the IPF PPS, Section 124 of the BBRA, requires that the
IPF PPS include an adequate patient classification system that reflects
the differences in patient resource use and costs among IPFs. The IPF
PPS has a longstanding policy of making appropriate adjustments for
other factors that drive resource use and costs among IPFs, and of
doing so in a way that limits incentives for inappropriate utilization.
The IPF PPS facility-level adjustments strengthen the accuracy of the
IPF PPS in adjusting payment to align with resource costs that are
associated with rural status, geographical location, the presence of a
full-service ED, and the higher indirect operating costs experienced by
hospitals that participate in GME programs. As discussed in section
IV.D.3. of this final 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 by imposing a cap
on the number of FTE residents that may be counted for purposes of
calculating the teaching adjustment.
In addition, section 1886(s)(5)(D) of the Act authorizes the
Secretary to implement revisions to the methodology for determining the
payment rates under the IPF PPS, for FY 2025 and subsequent years. We
explained in the proposed rule that given the emphasis on patient- and
facility-level cost differences in Section 124 of the BBRA, and under
the authority of section 1886(s)(5)(D) of the Act to consider and
implement revisions to our payment methodology, it is appropriate to
ensure that IPF outlier payments recognize patient-level cost
differences across a broad range of services and facilities. We
considered the precedent of the IPF PPS teaching cap policy as a
potential tool to strengthen the accuracy of the IPF PPS by limiting
potential incentives for IPFs to inappropriately increase their
[[Page 48531]]
costs and charges for IPF services. We explained that our analysis of
recent claims data revealed that outlier payments have become
increasingly concentrated among a small subset of facilities with
exceptionally high reported costs. According to our simulations, each
of these providers' outlier payments would account for more than 20
percent of its total IPF PPS payments. For additional information about
the characteristics of providers included in our payment simulations
for this FY 2027 IPF PPS final rule, see the FY 2027 IPF PPS Final Rate
Setting Impact File, available on the CMS web page for the FY 2027 IPF
PPS final rule at https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility/ipf-pps-regulations-and-notices.
As we discussed in the proposed rule, we observed that these
facilities' high overall costs are primarily driven by elevated routine
costs, which can include costs such as labor, real estate, or overhead
expenses. We noted that routine costs are fixed at the provider level
and do not vary based on individual patient characteristics or
treatment intensity. We explained that outlier stays tend to be
significantly longer than non-outlier stays; however, since the IPF PPS
is a per diem payment system in which a longer length of stay results
in higher payment, this difference only drives outlier payments when
daily costs are also high. We also stated that outlier stays, as well
as providers with a large share of outlier payments, tend to have
higher daily routine charges, which drive higher costs. We noted that
we did not observe case-mix differences that would explain the
significantly higher routine costs for facilities with a high share of
outlier payments.
Under the current outlier methodology, these high-cost facilities
have necessitated substantial increases to the outlier threshold to
maintain outlier payments at the 2 percent target. In the proposed
rule, we explained that the significant increase to the outlier fixed
dollar loss threshold under our current policy would make it more
difficult for the majority of IPFs to receive outlier payments for
treating Medicare beneficiaries whose care is exceptionally costly. We
stated that we believe that establishing a policy to limit the impact
to the outlier fixed dollar loss threshold amount from the small number
of high-cost IPFs that we have identified in our analysis would better
align with the outlier policy's core objective of protecting facilities
from the financial risk of treating unusually expensive patients. We
also stated our belief that the current concentration of outlier
payments does not best serve the intended purpose of this policy and
may inadvertently limit access to care for high-cost patients at
facilities that cannot reach the higher threshold.
In the proposed rule, we explained that we considered changes to
limit the impact to the outlier fixed dollar loss threshold amount from
high-cost IPFs for which outlier payments comprise an unusually large
share of their total IPF PPS payments. We stated in the proposed rule
that our analysis found that 47.8 percent of all simulated outlier
payments were attributable to approximately 37 IPFs with more than 20
percent outlier payments to total IPF PPS payments. We estimated that
if we applied a 20-percent facility-level cap (that is, outlier
payments for an IPF are less than or equal to 20 percent of the IPF's
total IPF PPS payments, including outliers), the FY 2027 outlier fixed
dollar loss threshold amount would be approximately $37,820, lower than
what it would be under our current outlier policy and much closer to
the FY 2026 outlier fixed dollar loss threshold amount of $39,360. We
estimated that 40 more providers would receive payments under the
outlier adjustment than under our current policy (increasing from 379
providers to 419 providers), due to the lower outlier fixed dollar loss
threshold that we proposed. Additionally, we estimated that
approximately 1.9 percent of IPF stays would qualify for outlier
payments, with an average outlier payment amount of approximately
$1,012. We noted in the proposed rule that in comparison to the current
outlier policy, applying a 20-percent facility-level cap on outlier
payments would reduce the outlier fixed dollar loss threshold,
resulting in outlier payments that would be expanded to a larger number
of stays and providers. We stated that we also considered the potential
impact of a facility-level cap on total outlier payments. We stated
that we believe it would be appropriate to set a facility-level outlier
cap at a percentage that protects the outlier fixed dollar loss
threshold amount while limiting the number of IPFs that would be
subject to the cap. Looking retrospectively at FY 2025 billing
patterns, we estimated that around 3.6 percent of providers would be
affected by a facility-level outlier cap at 20 percent. We estimated
that a larger share of between 5 and 10 percent of IPFs would be
impacted in a typical year by a 10 or 15 percent cap; however, a lower
cap would also result in a lower outlier fixed dollar loss threshold.
Conversely, we estimated that a smaller share of IPFs would be affected
in a given year by a 25 or 30 percent cap (between 1 and 3 percent of
IPFs), but this policy would require a higher outlier fixed dollar
threshold amount. We refer readers to Table 3 in the FY 2027 IPF PPS
proposed rule for a summary of the share of providers impacted at
outlier cap levels from 10 to 30 percent (91 FR 17734).
We stated in the proposed rule that we believe that a 20-percent
facility-level outlier cap would strike an appropriate balance between
protecting the outlier fixed dollar loss threshold amount and limiting
the impact of the cap to only those IPFs with an unusually high share
of outlier payments. Therefore, we proposed to establish a facility-
level cap on outlier payments beginning in FY 2027. Specifically, we
proposed to limit total outlier payments to no more than 20 percent of
a facility's total IPF PPS payments. Under this proposal, if an IPF
exceeded the 20 percent facility-level cap, it would no longer receive
an outlier payment for high-outlier cases but would receive the IPF PPS
per diem payment. We solicited comments on the proposed cap policy as
well as comments about setting the cap at 20 percent versus an
alternative percentage.
We proposed to codify this policy for the IPF PPS at Sec.
412.424(d)(3)(i)(D) for discharges occurring in cost reporting periods
beginning on or after October 1, 2026. We proposed to calculate and
apply this cap on an interim basis on IPF PPS claims beginning in FY
2027. Because outlier payments are finalized at cost report settlement,
we proposed to apply this cap on an annual basis by calculating a
facility's outlier percentage using a methodology that we detailed in
the FY 2027 IPF PPS proposed rule (91 FR 17734 and 17735). We sought
comment on the proposed implementation approach for interim payments as
well as at cost report settlement.
We also discussed in the proposed rule the possibility of exempting
IPFs from this cap policy if they do not exceed a minimum threshold of
annual stays. We stated that applying the cap only to facilities with
more than 25 stays per year would result in a slightly higher outlier
threshold of $37,880 (compared to $37,820 if the cap applies to all
facilities) but would reduce the number of facilities subject to the
cap (from approximately 2.7 percent of all IPFs to approximately 1.8
percent) and potential payment adjustments. We sought comment on
whether such a
[[Page 48532]]
minimum stay threshold would be appropriate and, if so, what the
appropriate threshold should be.
Under our proposed policy, we estimated that the outlier threshold
for FY 2027 would be $37,820, which we previously noted would be lower
than it would have been under our current outlier policy and much
closer to the FY 2026 outlier fixed dollar loss threshold amount of
$39,360. By moderating the threshold increase, we stated that we
believed this proposal would make outlier payments accessible to a
broader range of facilities treating high-cost patients, which we
believe better aligns with the purpose of the IPF PPS outlier policy.
Finally, in conjunction with this proposal, we solicited comments
on the factors that contribute to higher costs at facilities that
routinely receive an unusually high share of outlier payments. We
stated that we were interested in understanding whether there are other
factors for which the IPF PPS does not already adjust payment that
could explain differences in patient resource use and costs among these
IPFs, in accordance with Section 124 of the BBRA. We stated that we
were particularly interested in understanding the following:
What specific patient characteristics, clinical
complexities, or treatment modalities drive higher costs at these
facilities?
To what extent do geographic factors, local labor market
conditions, or real estate costs contribute to elevated routine costs?
Do these facilities provide specialized services or treat
patient populations that are not adequately reflected in the current
IPF PPS payment adjustments?
Are there structural changes to the IPF PPS facility
adjustments or case-mix system that would more appropriately account
for the notable cost differences across facilities?
Are facilities incentivized to provide longer lengths of
stay to receive outlier payments, particularly if there is bed
capacity? If so, what is the impact for beneficiaries who are subject
to a 190-day lifetime limit on IPF services? Could the proposed changes
to the outlier policy, or potential further changes, reduce incentives
for unnecessarily long lengths of stay?
Do beneficiaries perceive differences in quality,
outcomes, or value between higher-cost and lower-cost facilities?
The following is a summary of the comments we received on the
proposed 20 percent facility-level outlier cap and our responses.
Comment: Several commenters supported the proposed outlier cap,
stating that it is a good solution to the concentration of outlier
payments among a small number of facilities. One of these commenters
stated that this policy would increase the number of IPFs that qualify
for outlier payments and noted that the purpose of the outlier policy
should be to be a safety valve for unusually costly stays rather than a
recurring financing mechanism for a limited number of providers. A
commenter stated that the outlier cap strikes a good balance between
preserving access and maintaining accountability and strengthens the
IPF PPS by advancing payment accuracy, program integrity, and
sustainability. This commenter appreciated that our proposal
additionally projected how the outlier cap would affect the outlier
threshold. In response to the comment solicitation regarding the
factors that contribute to higher costs at facilities that routinely
receive an unusually high share of outlier payments, commenters offered
insights about costs related to adequate staffing, as well as
challenges in post-discharge placement including shortages in community
behavioral health capacity, supportive housing, substance use treatment
services, and post-acute behavioral health resources.
Response: We thank the commenters for their support and insights
regarding the drivers of unusually high costs at IPFs. We agree about
the importance of striking the appropriate balance between protecting
access for unusually costly stays while ensuring the outlier threshold
is set at a reasonable level that makes outlier payments available for
more beneficiaries receiving care at IPFs across the country. As
discussed in the following paragraphs, we are finalizing certain
modifications to our proposed outlier cap in response to comments. We
anticipate that these modifications will strike the appropriate balance
between the goals we articulated in the proposed rule and the concerns
that several commenters raised.
In addition, we intend to perform additional analyses of the cost
drivers and challenges that commenters highlighted, and we will take
these comments into consideration to potentially inform future
rulemaking.
Comment: Some commenters requested that CMS monitor the potential
effect of the cap on access to care and to evaluate whether certain
tailored exemptions to the policy would be appropriate. Some commenters
also requested that CMS consider whether the proposed 20 percent cap
best addresses the concentration of outlier payments among a few
facilities or whether another cap level would be appropriate. Other
commenters who opposed the 20 percent cap stated that the process for
developing this policy appeared to be arbitrary and requested that CMS
do more analysis before finalizing it. Additionally, some commenters
stated that their analysis found variation in the providers that would
have reached the 20 percent cap from year to year, indicating the
providers whose outlier payment would be capped would not be the same
group of providers every year. Commenters stated that this instability
in the pool of providers hitting the cap indicates that the proposed
cap policy would not target providers with structurally higher costs.
Response: We appreciate these comments regarding the basis for the
20 percent cap. As we explained in the proposed rule, we analyzed the
impact of different levels of caps on the percent of IPFs affected and
on the outlier fixed dollar loss threshold. We found that a 20-percent
facility-level outlier cap would strike an appropriate balance between
protecting the outlier fixed dollar loss threshold amount and limiting
the impact of the cap to only those IPFs with an unusually high share
of outlier payments. Specifically, we noted that the proposed 20
percent cap would result in an outlier fixed dollar loss threshold for
FY 2027 that was much closer to the current FY 2026 outlier fixed
dollar loss threshold, while only 3.9 percent of providers would be
affected by the cap. As we discussed in the proposed rule, we also
evaluated higher cap levels, including cap levels above 20 percent.
While higher cap levels would reduce the number of providers affected
by the policy, payment simulations indicated that they would have a
correspondingly smaller effect on moderating growth in the fixed-dollar
loss threshold amount. We explained in the proposed rule that we
believe a 20-percent cap appropriately balances the objective of
preserving access to outlier payments across a broader range of
providers while limiting the policy's impact to a relatively small
number of facilities with unusually high concentrations of outlier
payments (91 FR 17734).
We also appreciate the comments about the consistency of the pool
of providers hitting the outlier cap over multiple years. We further
analyzed IPF outlier payments by provider from FY 2023 through FY 2025
to better understand whether or not providers would consistently exceed
the proposed 20 percent outlier cap. We note that the proposed cap
policy, which did not provide for any exclusions, would have
[[Page 48533]]
applied to all providers regardless of the number of annual IPF PPS
stays. We found that providers with fewer stays would exceed the
proposed 20 percent cap less consistently than providers with more
stays. For example, 13 providers had greater than 20 percent outlier
payments in FY 2025 and had 25 stays or fewer in that year; we found
that only three of these providers would have exceeded 20 percent
outliers in FY 2023 and FY 2024 as well. Similarly, among the nine
providers that had greater than 20 percent outlier payments and between
25 and 50 stays in FY 2025, only three would have exceeded 20 percent
outliers in FY 2023 and FY 2024. There were 19 providers with greater
than 20 percent outlier payments and 50 or more stays in FY 2025, and
we found that seven of these providers would have exceeded 20 percent
outliers in all three years.
In response to the public comments, we are modifying our proposed
outlier cap policy to apply to only providers with 50 or more stays per
year. We find that applying the 20 percent cap to providers with 50 or
more stays per year would impact 0.8 percent of providers in a typical
year, as compared to 3.6 percent of providers under our proposed
policy. At the same time, we estimate that if this policy were applied
for FY 2027, the outlier fixed dollar loss threshold would be
approximately $39,390, which is lower than what it would be in the
absence of a cap, resulting in 157 more providers receiving outlier
payments. Approximately 1.7 percent of IPF PPS stays would qualify for
outlier payments with the average outlier payment being $19,054 per
stay. As discussed in the following paragraphs, we are modifying the
effective date of the proposed outlier cap policy to begin in FY 2028.
We will continue monitoring claims and cost report data and take
commenters' suggestions into consideration for future potential
rulemaking.
Comment: A few commenters who disagreed with the proposed outlier
cap stated that more analysis is needed to determine why outlier
payments are concentrated among a small number of providers. These
commenters analyzed IPF claims data and concluded that their
statistical modeling only explained a limited share of variation in
outlier payment patterns. They found that facilities whose outlier
payments would reach the 20 percent cap were more likely to treat
patients with a comorbidity and were more likely to offer ECT, which
they concluded indicated that these were facilities that were better
equipped for more intensive treatments for patients with more complex
needs. They also found that these facilities were more likely to be
urban and to be teaching facilities and that variables like whether an
IPF is a freestanding hospital or a unit and the IPF's wage index
contributed more to variations in costs than patient characteristics
did.
Some commenters expressed concern that a 20 percent cap on outlier
payments could impact IPFs' willingness to treat patients requiring
longer stays and more resource-intensive treatment, limiting access to
care. A commenter stated that an outlier cap, by reducing reimbursement
for very costly cases, could result in shorter lengths of stay for
Medicare beneficiaries and a reluctance on the part of IPFs to treat
patients who need ECT treatment. A commenter stated that our impact
analysis showed that facilities impacted by the cap tend to serve a
higher percentage of patients who are disabled, are dually eligible for
Medicare and Medicaid, whose primary diagnosis is schizophrenia or
schizoaffective disorder, and whose stays are longer, and concluded
that these facilities are safety-net providers, and that their high
costs are not likely driven by high routine costs like labor, real
estate, and overhead. Instead, this commenter and others stated that
the long lengths of stay often leading to outlier payments are due to
the unavailability of appropriate discharge options.
Several commenters expressed concern that the effect of an outlier
cap could incentivize IPFs whose outlier payments have been capped to
turn away patients with high-cost needs or discharge patients
prematurely, shifting costs for these patients' care to emergency rooms
and increasing overall Medicare payments. One of these commenters
recommended that we consider a higher cap of 25 to 30 percent to
protect the outlier pool while preserving access at safety-net
facilities, a minimum stay threshold to exempt low-volume facilities;
add payment for various discharge pathways; and exempt facilities
meeting certain safety-net criteria from the cap.
Another commenter also suggested modifications or exemptions for
providers treating disproportionate numbers of high acuity or safety-
net populations. Another suggested that CMS add modifications to the
outlier cap policy to account for patient acuity, length-of-stay
drivers outside provider control, and concentration of high-cost cases
within certain facilities. Another commenter also stated that patients'
stays may be extended while waiting for a bed to become available at an
appropriate facility for discharge (like a state facility or a skilled
nursing facility), and pointed out that a facility may therefore have
more outlier payments not as a result of their own costs, but because
of insufficient capacity at long-term care facilities in the area. A
commenter who disagreed with the cap stated that the policy would
create a disincentive for IPFs to treat high-acuity patients, impacting
emergency rooms, law enforcement, families, and community crisis
centers. This commenter requested CMS withdraw the proposal, phase in,
or delay implementation of the cap and conduct ongoing monitoring,
reporting, and impact analysis on a variety of facility and patient-
level characteristics. They also requested that CMS implement an
exceptions process that would evaluate whether a facility's outlier
payments reflect patient complexity or inappropriate billing or
utilization.
Response: We appreciate the commenters' concerns regarding the
effect of any policy changes on access to care for Medicare
beneficiaries. Protecting access to care for Medicare beneficiaries has
been central to our development of this reform of the outlier policy.
In response to these concerns, we are modifying the effective date of
the final outlier cap policy. We believe it is appropriate to delay the
implementation of this policy until FY 2028 (that is, October 1, 2027)
to allow for IPFs that receive a high share of outlier payments to make
appropriate adjustments to their cost structures and business practices
to ensure that access to care is not disrupted because of changes in
outlier policy. In addition, we intend to conduct additional analysis
of the potential drivers of cost that commenters noted in their
responses. While we are sensitive to concerns that a cap on outlier
payments would affect certain high-cost facilities, the concentration
of outlier payments among a few facilities and a declining share of
stays accompanied by an increasing fixed-dollar loss threshold has a
corresponding impact on access to care at IPFs nationwide. Accordingly,
as we discuss later in this final rule, we are finalizing our proposal
to cap outlier payments at the provider level in order to increase
access to care at IPFs nationwide.
We further note that commenters' concern about length of stay alone
driving high outlier payments is not supported by the data. As we
explained in the FY 2027 IPF PPS proposed rule (91 FR 17734) and
earlier in this final rule, outlier stays tend to have higher daily
routine charges, which drive
[[Page 48534]]
higher costs. Overall, these providers charge nearly twice as much per
day as compared to the average ($6,000 vs. $2,600). We also note that
as a per diem payment system, the IPF PPS inherently accounts for the
cost impact of longer lengths of stay through higher IPF PPS payments.
We appreciate the comments regarding patient acuity and commenters
advocating for modifications or exemptions for providers treating
disproportionate numbers of high acuity patients. However, we remind
readers that the IPF PPS payment framework currently accounts for
patient acuity as a driver of cost. The IPF PPS provides for payment
adjustments for a variety of patient and facility-level characteristics
that broadly recognize the impact of these factors on resource use for
a stay. These include adjustments for age, DRG, comorbid conditions,
and an additional payment per unit of ECT. We further note that in FY
2025, we increased the ECT payment per treatment from $385.58 to
$661.52 based on more recent cost information. Although commenters
stated that IPFs receiving high outlier payments are more likely to
offer ECT, we do not find that IPF PPS outlier payments are associated
with the provision of ECT.
We likewise considered the comments pertaining to safety net
populations. We considered establishing a provider-specific exceptions
process. However, we believe that such an approach would increase
administrative burden for both providers and the agency, require
individualized determinations that may vary from year to year, and
reduce predictability in payment policy. We believe that a uniform
policy applied according to objective criteria provides greater
transparency and administrative simplicity while maintaining
consistency across providers.
We further note that our prior analyses have identified a
relationship between per diem IPF costs and various measures of safety
net status. At the inception of the IPF PPS, we explored the
application of the disproportionate share hospital (DSH) variable used
in other Medicare prospective payment systems (that is, the sum of the
proportion of Medicare days of care provided to recipients of
Supplemental Security Income and the proportion of the total days of
care provided to Medicaid beneficiaries) for the IPF PPS. In the RY
2005 IPF PPS final rule (69 FR 66958 through 66959), we explained that
the DSH variable was highly significant in our cost regressions;
however, we found that facilities with higher DSH had lower per diem
costs. We noted that a study for the American Psychiatric Association
also found the same results. We explained that the relationship of high
DSH with lower costs could not be attributed to downward bias in the
Medicaid proportion due to the IMD exclusion. We stated that this was
because public psychiatric hospitals had lower costs on average than
other types of IPFs. Therefore, we explained in the RY 2005 IPF PPS
final rule that if we had proposed a DSH adjustment based on the
regression analysis, IPFs with high DSH shares would have been paid
lower per diem rates (69 FR 66958).
More recently, in the FY 2025 IPF PPS proposed rule, we discussed
and solicited comments about our analysis of the relationship between
IPF per diem cost and our construction of a Medicare Safety Net Index
(MSNI) for our IPF provider population (89 FR 23196 through 23198).
Subsequently, in the FY 2025 IPF PPS final rule (89 FR 64641 through
64642), we noted that the majority of commenters who responded to the
RFI about a payment adjustment for MSNI opposed the addition of this
adjustment factor under the construction presented in the proposed
rule, either because of insufficient data to support the adjustment,
because of the substantial decrease to the base rate, or because of the
redistribution of resources away from IPFs with a low MSNI. We also
stated that MedPAC recommended CMS conduct certain alternate analyses
of the components of the MSNI.
As we discussed in the FY 2027 IPF PPS proposed rule, we identified
that providers with a high share of outliers tend to have patients who
are more often disabled (66.3 percent vs. 57.1 percent) or dual-
eligible (68.1 percent vs. 60.8 percent). We intend to further study
the relationship between safety net status and IPF costs, including
outlier payments, and may consider proposing changes to the IPF PPS in
the future, if appropriate.
With respect to the comments regarding challenges finding post-
discharge placement, we note that the November 15, 2004 Inpatient
Psychiatric Facility Prospective Payment System final rule (69 FR
66952) explains that the IPF PPS does not have an administrative
necessary days policy and does not provide payment for days that do not
meet an active level of treatment. Only a physician can determine the
need for continued hospitalization and or discharge. If the physician
determines continued inpatient hospitalization is medically necessary,
it is conveyed through a physician recertification. When a patient
falls below an active level of care, the provider identifies the day as
such on the claim, and it is not paid under the Inpatient Psychiatric
Facility Prospective Payment System. Instead, the provider can bill, if
applicable, Medicare Part B services.
We also appreciate the comments regarding facility-level factors
such as urbanicity, wage index, teaching status, and whether an IPF is
unit-based or freestanding of cost as drivers of outlier payments. We
note that aside from facility type (unit-based or freestanding), each
of these facility-level factors is already accounted for in the IPF PPS
and, accordingly, in the outlier policy. As we discuss earlier in this
final rule, we are evaluating whether additional sources of data could
potentially improve the accuracy of the IPF wage index in the future.
We also intend to explore whether certain drivers of cost that
commenters identified, such as staffing intensity, could help explain
structural cost differences between unit-based and freestanding IPFs.
We continue to analyze claims and cost report data to identify
additional revisions to the IPF PPS that may improve the accuracy of
the payment system in ways that are responsive to these commenters'
concerns. As we have previously stated, the purpose of the outlier
payment is 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.
Comment: A commenter supported efforts to reduce the outlier
threshold for all providers but was concerned that a 20 percent cap
would cut legitimate outlier payments. They requested that in place of
a cap; CMS instruct the Medicare Administrative Contractors to assess
claims with high outlier payments to target providers with high outlier
payments on a case-by-case basis. Another commenter who disagreed with
the outlier cap also discussed program integrity regarding outlier
payments and stated that in place of a facility-level cap, CMS should
pursue remedies targeted toward post-payment reviews and documentation
requirements of providers with high outlier payments.
Response: We appreciate the comments regarding actions that CMS
could take to ensure program integrity for IPF PPS outlier payments.
While targeted audits, medical review, or other program integrity
activities may be appropriate to address potential billing or
documentation issues in individual cases, CMS does not believe they
would address the broader payment policy concern identified in this
rulemaking.
[[Page 48535]]
Specifically, the increasing concentration of outlier payments among a
small number of providers contributes to growth in the fixed-dollar
loss threshold amount, which affects access to outlier payments across
the IPF PPS. Audits alone would not address this threshold-setting
dynamic because they do not modify the methodology used to determine
outlier payments prospectively. Our analysis indicates that the
concentration of outlier payments among a small number of facilities is
due to high fixed costs. In addition to the existing outlier
reconciliation process, CMS continues to monitor IPFs and other
providers for potential indicators of fraud, waste, and abuse and take
appropriate action where necessary. In addition, we may consider
changes to our instructions to the MACs in the future, if appropriate.
Comment: A commenter requested that CMS adopt a forecasting error
adjustment for the outlier threshold to ensure total payments meet
projected targets.
Response: We recognize that there can be differences between
projected growth and actual growth of total payments. The IPF fixed
dollar loss threshold is set prospectively, which means that the update
relies on a mix of both historical data for part of the period for
which the update is calculated and forecasted data for the remainder.
Due to the uncertainty regarding future trends, forecast errors can be
both positive and negative. For example, the forecast error for the IPF
market basket has been both positive and negative during past years,
and over longer periods of time the cumulative forecast has not
deviated significantly from the historical measures. As we have
previously stated, our longstanding methodology for updating the
outlier fixed-loss threshold continues to rely on using the best
available data to maintain outlier payments at 2 percent of total IPF
PPS payments, and any deviations from this established approach are
carefully considered based on specific data quality concerns rather
than as standard practice. We will continue to monitor the IPF PPS
outlier policy and propose the application of appropriate statistical
methods when necessary to ensure the integrity of the outlier policy
while maintaining the balance between protecting facilities from
extraordinarily costly cases and ensuring adequacy of the Federal per
diem base rate for non-outlier cases.
Comment: Several commenters requested that CMS not implement the
proposed outlier cap but maintain the FY 2026 outlier threshold of
$39,360 for FY 2027 while conducting further analysis to determine the
drivers of outlier payments.
Response: In response to the suggestion that CMS hold the outlier
threshold at $39,360 for FY 2027, we remind readers that our
longstanding outlier policy uses the latest available data to target
outlier payments at 2 percent. Our modeling based on the latest
available FY 2025 claims and cost information indicates that the
current outlier threshold would result in 2.1 percent outlier payments
in FY 2027. Therefore, our analysis indicates that maintaining the
current outlier threshold of $39,360 for FY 2027 would not be
appropriate because it would not target outlier payments at 2 percent
of total payments in FY 2027.
Final Decision: After consideration of the public comments we
received, we are finalizing our proposal, with modification, to
implement a provider-level outlier cap. Specifically, we are finalizing
our proposal to limit outlier payments to 20 percent of a facility's
total IPF PPS payments. However, we are deferring the effective date of
this policy until October 1, 2027 (FY 2028). Additionally, we are
applying an exception to the outlier cap policy for facilities with
fewer than 50 stays during the cost reporting year. We are codifying
this policy for the IPF PPS at Sec. 412.424(d)(3)(i)(D) for discharges
occurring in cost reporting periods beginning on or after October 1,
2027.
Under this policy, if an IPF exceeds the 20 percent facility-level
cap, it will no longer receive an outlier payment for high-outlier
cases. We will calculate and apply this cap on an interim basis on IPF
PPS claims beginning in FY 2028. Because outlier payments are finalized
at cost report settlement, we will apply this cap on an annual basis
using the following methodology:
Step 1: Determine whether the number of IPF PPS stays during the
facility's cost reporting period is greater than or equal to 50.
Step 2: Calculate the facility's total non-outlier payments (that
is, IPF PPS payments excluding outlier payments) for all discharges
occurring during the cost reporting year.
Step 3: Divide the facility's total non-outlier payments by 80
percent (0.8) to determine the maximum allowable total IPF PPS payment
amount (including outlier payments and non-outlier payments).
Step 4: Subtract the provider's maximum allowable total IPF PPS
payment from its actual total IPF PPS payment amount. If the result of
this calculation is greater than 0, then the facility's total outlier
payments exceed 20 percent of its total IPF PPS payments.
Step 5: If the facility's total outlier payments exceed the 20
percent cap, reduce the outlier payment by the result of the
calculation in Step 4.
For example, if a facility has $10 million in total IPF PPS
payments (excluding outliers) and would otherwise receive $3 million in
outlier payments, the facility would have an actual total IPF PPS
payment amount of $13 million. Following the formula in Step 3, the
provider's maximum allowable total IPF PPS payment amount would be $10
million/0.8 = $12.5 million. The facility's outlier payments would
therefore be capped at $2.5 million (20 percent of $12.5 million).
In addition, for FY 2027, we are finalizing our proposal to update
the fixed dollar loss threshold amount used under the IPF PPS outlier
policy. For this FY 2027 IPF PPS rulemaking, consistent with our
longstanding practice, based on an analysis of the latest available
data (the March 2026 update of FY 2025 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 are approximately 2.0 percent in FY 2026. Therefore,
we are finalizing an update to the outlier threshold amount to $40,750
to maintain estimated outlier payments at 2 percent of total estimated
aggregate IPF payments for FY 2027.
2. 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 cost-
to-charge ratio (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
[[Page 48536]]
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 2027, we proposed to continue following this methodology. To
determine the final 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 final upper threshold
CCR for IPFs in FY 2027 is 2.4179 for rural IPFs and 1.8699 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 proposed to update the FY 2027 national median and ceiling CCRs
for urban and rural IPFs based on the CCRs entered in the latest
available IPF PPS PSF. We did not receive any comments on this
proposal, and we are finalizing it as proposed.
Specifically, for FY 2027, to be used in each of the three
situations listed previously, using the most recent CCRs entered in the
CY 2025 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).
V. Inpatient Psychiatric Facility Quality Reporting Program
A. Background and Statutory Authority
The IPF Quality Reporting 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 final rule for a detailed discussion of entities covered under
the IPF PPS). 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 IPF Quality Reporting Program. We have codified procedural
requirements and reconsideration and appeals procedures for IPF Quality
Reporting Program decisions in our regulations at 42 CFR 412.433 and
412.434. Consistent with previous IPF Quality Reporting 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.
Section 4125(b)(1) of the Consolidated Appropriations Act of 2023
(CAA, 2023) amended section 1886(s)(4)(E) of the Act, which requires
IPFs participating in the IPF Quality Reporting 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. We
discuss policies related to the implementation of the IPF-PAI in
section IV.C. of this final rule.
B. Quality Measures in the IPF Quality Reporting Program
1. Removal of the Alcohol Use Brief Intervention Provided or Offered
and Alcohol Use Brief Intervention (SUB-2/2a) Measure
In the FY 2027 IPF PPS proposed rule, we proposed to remove the
Alcohol Use Brief Intervention Provided or Offered (SUB-2) and subset
Alcohol Use Brief Intervention (SUB-2a) measure from the IPF Quality
Reporting Program beginning with the calendar year (CY) 2026 reporting
period/FY 2028 payment determination and subsequent years under measure
removal factor 8--that is, that the costs associated with a measure
outweigh the benefit of its continued use in the program--and measure
removal factor 3--that is, that the measure can be replaced by a more
broadly applicable measure. In the proposed rule, we described how the
IPF Quality Reporting Program measure set currently includes two
measures that address alcohol use disorders: SUB-2/2a, described above,
and Alcohol and Other Drug Use Disorder Treatment Provided or Offered
at Discharge (SUB-3) and the subset Alcohol and Other Drug Use Disorder
Treatment at Discharge (SUB-3a). SUB-2/2a assesses whether patients who
screened positive for unhealthy alcohol use received or refused a brief
alcohol use intervention during their IPF stay (80 FR 46699 through
46701). SUB-3/3a assesses whether patients who are identified as having
an alcohol or drug use disorder are offered a referral or prescription
for treatment at discharge. SUB-2/2a was adopted into the IPF Quality
Reporting Program beginning with the CY 2016 reporting period (80 FR
46699 through 46701), and SUB-3/3a was adopted in the program beginning
with the CY 2017 reporting period (81 FR 57239 through 57241). Both
measures require facilities to submit chart-abstracted measure data for
a sample of IPF patient records, in accordance with established
sampling policies (80 FR 46717 through 46719).
The IPF Quality Reporting Program strives to maintain a balanced
set of meaningful quality measures with minimal burden. To meet that
goal, we evaluated both SUB-2/2a and SUB-3/3a to ensure that the IPF
Quality Reporting Program measure set is responsive to our objectives
for improving quality of care and minimizing burden for facilities. We
conducted an internal analysis of performance data for SUB-2 and SUB-3
to determine performance gaps and greater potential for improvement.
Mean and median scores for the most recent three years of performance
for both measures show room for improvement--median scores on SUB-2 and
SUB-3 ranged from 0.73 to 0.79 between 2023 and 2025 \7\--but we
observed no substantial difference in performance between the two
measures.
---------------------------------------------------------------------------
\7\ CMS internal analysis.
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While SUB-2 and SUB-3 are similar measures, with similar
performance rates, SUB-3/3a captures a broader patient population than
SUB-2/2a--specifically, it includes patients who have screened positive
for either alcohol use disorder or substance use disorder while SUB-2/
2a only includes patients who have screened positive for alcohol use
disorder. Therefore, we proposed to remove the SUB-2/2a measure to
reduce reporting burden associated with the IPF Quality Reporting
Program. We estimated that this would reduce the collection of
information burden for IPFs by $13,110,832 per year and
[[Page 48537]]
eliminate CMS program costs for oversight of the measure. We stated
that the costs of keeping the SUB-2/2a measure in the IPF Quality
Reporting Program exceed the benefits of retaining the measure. The
SUB-2/2a measure was also recently retired from The Joint Commission's
ORYX[supreg] requirements effective CY 2026.
We proposed to remove the SUB-2/2 measure from the IPF Quality
Reporting measure to reduce burden on facilities for collecting and
reporting these data and because the measure can be replaced by SUB-3/
3a, a more broadly applicable measure. However, we stated that we
continue to believe that brief alcohol use interventions are valuable
and encourage IPFs to continue to offer this intervention to patients
for whom it is appropriate, should we finalize the removal of the SUB-
2/2a measure from the program. We also recognize that the goals and
priorities of an IPF stay vary among patients based on their clinical
needs as well as personal preferences. By proposing to remove this
measure, we intended for IPF clinicians to collaborate with patients to
prioritize the types of activities and areas of focus that best support
individual patient treatment goals while reducing the burden associated
with the current collection of measures related to substance use
treatment. While both SUB-2/2a and SUB-3/3a address alcohol use and
show similar performance trends, the retention of SUB-3/3a in the
program addresses both alcohol and substance use disorder treatment in
the IPF setting while reducing the burden of having two measures
addressing the same condition.
We received public comments on this proposal.
Comment: Many commenters supported removing SUB-2/2a, agreeing with
CMS' rationale that it is duplicative of SUB-3/3a and other reporting
expectations, and stated that its burden outweighs its usefulness in
the program. Commenters stated that removal would streamline reporting
and stated that reducing administrative burden would allow facilities
to redirect time and resources to increase focus on patient care
activities.
Response: We thank the commenters for their support and agree that
the removal of this measure will alleviate reporting burden for
facilities and may allow facilities to spend more time on patient care
or quality improvement. We appreciate that they agree with our
rationale for measure removal, that the costs associated with a measure
outweigh the benefit of its continued use in the program, and that the
measure can be replaced by a more broadly applicable measure, SUB-3/3a.
Comment: Several commenters supported the removal of the measure,
stating that performance has plateaued, topped out, or remained
stagnant over three years, showing the measure is no longer driving
meaningful improvement. A few commenters stated that SUB-2/2a has
limited clinical usefulness, is not necessary for the IPF Quality
Reporting Program, does not provide meaningful insight into IPF quality
of care, and no longer provides sufficient clinical value. Some
commenters stated that these concerns also apply to the SUB-3/3a
measure.
Response: We thank the commenters for their support for removing
SUB-2/2a and acknowledge that the consistent performance of this
measure suggests it is no longer driving clinical quality improvement.
We disagree with commenters that the same concerns regarding measure
performance and clinical usefulness equally apply to the SUB-3/3a
because we believe that it is still important and clinically meaningful
for IPFs to address both alcohol use and substance use in the IPF
setting. We are removing the SUB-2/2a measure from the IPF Quality
Reporting Program because retaining SUB-3/3a in the program addresses
both alcohol and substance use disorder treatment in the IPF setting
while reducing the burden of having two measures addressing alcohol
use.
Comment: A commenter supported removal stating that many state
hospitals treat patients whose length of stay excludes them from SUB-2/
2a patient population, making the measure's burden exceed its benefit
for these facilities.
Response: We thank the commenter for their support and acknowledge
that IPFs treating patients with stays greater than 120 days may find
this measure less beneficial because it does not apply to much of their
patient population.
Comment: Many commenters supported removing SUB-2/2a, stating that
SUB-3/3a covers a broader patient population, preserves substance use
disorder treatment reporting at discharge, or is duplicative of SUB-2/
2a.
Response: We thank the commenters for their support and agree that
SUB-3/3a covers a broader patient population and preserves the focus on
treatment for substance use disorder.
Comment: Several commenters recommended removing SUB-3/3a stating
that performance has plateaued, The Joint Commission announced it will
stop maintaining related specifications after 2026, and there is burden
associated with reporting it.
Response: Because substance use disorder has negative effects on
treatment outcomes and patient wellbeing it remains appropriate to
retain a measure related to treatment of substance use disorder in the
IPF Quality Reporting Program. We recognize that performance on SUB-3/
3a has plateaued but are retaining the measure to ensure the IPF
Quality Reporting Program continues to focus on this important
condition. We acknowledge that The Joint Commission has announced it
will no longer include SUB-3/3a as a requirement for data submission to
ORYX; we understand this to be a part of The Joint Commission's overall
transition away from chart-abstracted measures and will ensure that the
specifications remain appropriate for reporting. We understand
commenters' concerns regarding the burden of reporting this measure and
continue to evaluate potential lower burden options to collect data
regarding substance use treatment in the IPF setting.
Comment: Some commenters expressed concern about removal of
measures from the IPF Quality Reporting Program, including the removal
of SUB-2/2a, stating that quality measures have multiple benefits,
including driving quality improvement and providing information to the
public. Some commenters stated that alcohol use, substance use, tobacco
use, and related interventions are directly tied to behavioral health
outcomes, physical and mental health, comprehensive patient care, and
treatment quality in psychiatric settings.
Response: We agree that alcohol use, substance use, tobacco use,
and related interventions are important components of behavioral health
care and overall treatment quality. IPFs are responsible for providing
clinically appropriate care regardless of whether treatment for these
conditions is measured in the IPF Quality Reporting Program. We
proposed removal of SUB-2/2a to maintain a balanced measure set with
minimal burden and note that SUB-3/3a captures a broader patient
population to continue supporting the program's objectives.
Comment: A commenter stated that the SUB-2/2a performance should
not justify removal because 21 to 27 percent of patients who screened
positive still did not receive or refuse a brief intervention, and the
plateau supports intensified focus and technical assistance rather than
removing the measure and eliminating accountability. This commenter
cited evidence
[[Page 48538]]
supporting the effectiveness of hospital-based Screening, Brief
Intervention, Referral to Treatment (SBIRT) approach.
Response: We appreciate this feedback. We note that SUB-2/2a and
SUB-3/3a performance showed similar room for improvement. By retaining
SUB-3/3a we expect that we will retain a focus on treatment for
substance use disorders, including alcohol use disorder, while reducing
data collection and reporting burden. While providing technical
assistance to improve measure performance is outside the scope of the
IPF Quality Reporting Program, we agree with commenters regarding the
effectiveness of SBIRT interventions and note that the Substance Abuse
and Mental Health Services Administration (SAMHSA) has information
regarding systems-level implementation of SBIRT which provides
resources to support health systems in addressing substance use
disorder including through referrals.\8\
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\8\ SAMHSA, Systems-Level Implementation of Screening, Brief
Intervention, and Referral to Treatment Available at https://library.samhsa.gov/sites/default/files/sma13-4741.pdf.
---------------------------------------------------------------------------
Comment: A few commenters who opposed removal stated that SUB-3/3a
may not provide equivalent alcohol-specific coverage, stated that
offering intervention during treatment is different from offering help
at or after discharge, and that patients may be less likely to receive
brief interventions through referral at discharge.
Response: Clinicians should use their clinical judgment to
determine what intervention or referral is most appropriate for each
patient, based on the patient's clinical needs and preferences, both
during the stay and at discharge. For that reason, and to reduce
burden, we are removing SUB-2/2a while retaining SUB-3/3a, which
captures a broader patient population and continues to support
substance use disorder treatment at discharge.
Comment: Some commenters stated that co-occurring substance use
disorders are common among patients with inpatient psychiatric stays,
alcohol use disorder is highly prevalent, and alcohol or tobacco use is
associated with readmissions, treatment resistance, mortality, long-
term recovery concerns, and missed treatment opportunities. Some
commenters stated that screening, brief intervention, motivational
interviewing, and personalized referral to treatment can improve
insight, post-discharge engagement, overall wellness, and
rehospitalization or readmission outcomes.
Response: We agree that co-occurring substance use disorders are
common in the IPF population and that there are many available
evidence-based treatments that can support recovery and other outcomes.
Removing SUB-2/2a does not change the responsibility of IPFs to deliver
high-quality care, and we encourage IPFs to continue to use clinical
judgment and shared decision-making to determine which interventions
are appropriate for each patient. We are removing the measure to reduce
burden while retaining SUB-3/3a, which continues to address substance
use disorder treatment at discharge and captures a broader patient
population.
Comment: A few commenters acknowledged burden, duplication,
limitations, or accountability concerns with the current measures, but
recommended that CMS provide clear justification or alternative
accountability methods, and reconsider or delay removal until improved
replacement measures, technical assistance, or adequate accountability
measures are operational.
Response: We appreciate the concern and recognize commenters'
interest in preserving accountability while addressing burden. At this
time, removing SUB-2/2a is appropriate as the measure's costs outweigh
its benefits and SUB-3/3a remains in the program to continue publicly
reporting substance use-related interventions. We continuously review
the IPF Quality Reporting Program measure set to maintain a balanced
set of meaningful quality measures with minimal burden, and we may
consider future IPF-PAI or measure additions on topics related to
substance use and treatment as program needs and priorities evolve.
Comment: A commenter opposed removal, stating concerns that removal
could introduce or reinforce diagnostic upcoding and make patients who
need substance use related counseling less likely to receive proper
care.
Response: The removal of SUB-2/2a will not impact an IPF's
obligation to code accurately or to provide medically necessary, high-
quality care consistent with the patient's clinical needs and Medicare
requirements. We encourage IPFs to continue to use appropriate clinical
judgment and shared decision-making in determining whether substance
use related counseling or other interventions are warranted.
Comment: A commenter recommended that CMS consider alcohol use
assessment for all new admissions because of safety risks, including
potential contraband access during transport or admission, and stated
that future safety-related measures or IPF-PAI assessments should
acknowledge the importance of early detection of alcohol use.
Response: We thank the commenter for this recommendation and will
consider it as we continue to evaluate measures for the IPF Quality
Reporting Program.
Final Decision: After consideration of the comments received, we
are finalizing the removal of the SUB-2/2a measure as proposed.
2. Removal of the Tobacco Use Treatment Provided or Offered at
Discharge (TOB-3/3a) Measure
We proposed to remove the Tobacco Use Treatment Provided or Offered
at Discharge (TOB-3) and subset Tobacco Use Treatment at Discharge
(TOB-3a) measure from the IPF Quality Reporting Program beginning with
the CY 2026 reporting period/FY 2028 payment determination and
subsequent years under measure removal factor 8, the costs associated
with a measure outweigh the benefit of its continued use in the
program. TOB-3 assesses whether patients were offered evidence-based
outpatient counseling and offered a prescription for FDA-approved
cessation medication upon discharge. TOB-3a identifies the subset of
those IPF patients who received a referral and received a prescription
for FDA-approved cessation medication upon discharge. This measure
began to be used in the IPF Quality Reporting Program with the CY 2016
reporting period (80 FR 46696 through 46699), and requires facilities
to submit chart-abstracted measure data on a sample of IPF patient
records, in accordance with established sampling policies (80 FR 46717
through 46719). Our internal analysis of performance data for TOB-3
found median scores on TOB-3 from 0.58 to 0.63 between 2023 and 2025,
remaining stable over time, with no indication of improvement. This
suggests that this measure is no longer driving facilities to increase
their offerings of these interventions.
We stated in the proposed rule that the IPF Quality Reporting
Program strives to maintain a balanced set of meaningful quality
measures with minimal burden. Removal of this measure would reduce
collection of information burden for IPFs by $13,110,832 \9\ per year
and eliminate CMS program costs for oversight of the measure. We stated
we recognize that smoking and other forms of tobacco use are common
among IPF patients 10 11 and
[[Page 48539]]
it would remain appropriate for IPFs to offer evidence-based tobacco
cessation counseling and FDA-approved cessation medication to patients
for whom it is clinically indicated even if we finalized the proposal
to remove the TOB-3/3a measure from the program. We noted the TOB-3/3a
measure was also recently retired from The Joint Commission's
ORYX[supreg] requirements effective CY 2026.\12\ Given the burden, we
believe the costs of keeping the measure in the IPF Quality Reporting
Program now exceed the benefits of retaining the measure.
---------------------------------------------------------------------------
\9\ For further discussion of the collection of information
costs of this measure, see section V.C. of this final rule.
\10\ Kagabo, R., Gordon, A. J., & Okuyemi, K. (2020). Smoking
cessation in inpatient psychiatry treatment facilities: A review.
Addictive Behaviors Reports, 11, 100255. https://doi.org/10.1016/j.abrep.2020.100255.
\11\ Fornaro, M., Carvalho, A. F., De Prisco, M., Mondin, A. M.,
Billeci, M., Selby, P., Iasevoli, F., Berk, M., Castle, D. J., & De
Bartolomeis, A. (2021). The prevalence, odds, predictors, and
management of tobacco use disorder or nicotine dependence among
people with severe mental illness: Systematic review and meta-
analysis. Neuroscience & Biobehavioral Reviews, 132, 289-303.
https://doi.org/10.1016/j.neubiorev.2021.11.039.
\12\ The Joint Commission. (Oct. 2025). 2026 ORYX Performance
Measurement Reporting Requirements. Available at https://jointcommission-ddsp.atlassian.net/wiki/spaces/DCS/pages/1030619137/2026+ORYX+Performance+Measurement+Reporting+Requirements. Access on:
December 17, 2025.
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We received public comments on this proposal.
Comment: Many commenters supported removing TOB-3/3a, with some
stating that the measure creates administrative burden without
providing sufficient clinical value; the cost outweighs the benefit;
the measure no longer drives meaningful improvement as demonstrated by
consistent measure performance; and that reducing duplicative or low-
value reporting would allow IPFs to focus more time and resources on
higher-value activities such as direct patient care and clinically
meaningful quality improvement.
Response: We thank the commenters for their support and agree that
removing the TOB-3/3a measure will reduce administrative burden which
will allow focus on patient care and other quality improvement efforts.
Comment: A few commenters supported removal and stated that IPF
stays are short and focused on mental health concerns or acute
psychiatric stabilization. These commenters stated that acute mental
health crises are often not the most appropriate time to address
tobacco use and that more routine or stable care settings may be more
appropriate intervention points.
Response: We thank the commenters for their support and appreciate
their perspective on the scope of the inpatient psychiatric stay.
However, we encourage IPFs to continue to deliver clinically
appropriate, patient-centered care, which may include lifestyle
interventions, including tobacco and nicotine cessation, when those are
appropriate for the individual patient.
Comment: A few commenters supported the removal of the measure and
stated that discharging patients with nicotine replacement therapy may
entail clinical risks when cessation programs are inaccessible,
community follow-up support is limited, IPF staff cannot ensure
continued tobacco cessation support, and patients may return to tobacco
use after discharge.
Response: We acknowledge the commenters' feedback. The Department
of Health and Human Services has long recognized tobacco use as a
leading preventable cause of disease, disability, and death in the
United States and has supported evidence-based efforts to reduce
tobacco use across health care settings. Evidence demonstrates that
tobacco cessation interventions, including counseling and FDA-approved
cessation medications, are safe and effective and can improve health
outcomes, including among individuals with behavioral health
conditions.13 14 We acknowledge the commenters' concern
about the risks of using nicotine replacement therapy while resuming
tobacco or other nicotine use, but we disagree that the risks outweigh
the potential benefits to patients of reducing or eliminating tobacco
use. We encourage IPFs to continue to provide clinically appropriate
tobacco cessation counseling or medication when indicated and when
aligned with the patient's goals for treatment.
---------------------------------------------------------------------------
\13\ Rigotti NA, Kruse GR, Livingstone-Banks J, Hartmann-Boyce
J. Treatment of Tobacco Smoking: A Review. JAMA. 2022;327(6):566-
577. doi:10.1001/jama.2022.0395.
\14\ Anthenelli RM, Benowitz NL, West R, St. Aubin L, McRae T,
Lawrence D, Ascher J, Russ C, Krishen A, & Evins AE (2016).
Neuropsychiatric safety and efficacy of varenicline, bupropion, and
nicotine patch in smokers with and without psychiatric disorders
(EAGLES): A double-blind, randomised, placebo-controlled clinical
trial. The Lancet, 387(10037), 2507-2520. https://doi.org/10.1016/S0140-6736(16)30272-0.
---------------------------------------------------------------------------
Comment: A few commenters expressed support for removing the TOB-3/
3a measure, stating that it does not adequately address the current
patient population, other nicotine delivery systems, expanded access to
medications, patient interest in tobacco cessation at discharge, or the
need to measure tobacco use and treatment received at the facility
rather than discharge practices. A few commenters noted limitations in
the current measure, including the inability to track patient refusal,
the prevalence of workarounds for hospitals, lack of data for
improvement, and that the measure tracks facility processes instead of
patient outcomes. A few commenters recommended alternative ways to
measure tobacco use and treatment received at the facility or other
pathways for reducing nicotine use. A commenter recommended that the
measure could be reconsidered and updated in the future.
Response: We thank the commenters for identifying their concerns
with TOB-3/3a and for their suggestions regarding other dimensions of
tobacco and nicotine use and cessation treatment that could be
appropriate for quality measures. We will continue to evaluate ways to
address tobacco and nicotine use in future IPF-PAI or measure
development.
Comment: A few commenters supported the removal of the measure but
stated that IPFs should continue evidence-based tobacco cessation
counseling, education about available resources, care coordination,
smoking cessation counseling, cessation medications, and other
appropriate interventions when clinically indicated or aligned with
patient-centered treatment planning.
Response: We thank the commenters for the support and agree that
IPFs should continue to provide appropriate interventions around
tobacco and nicotine cessation when clinically indicated.
Comment: Several commenters opposed the removal of this measure,
stating that alcohol use, substance use, and tobacco use are closely
tied to outcomes, and that appropriate screenings and cessation
interventions are part of comprehensive patient care, improving
behavioral health outcomes. Several commenters stated that tobacco use,
alcohol use, and co-occurring substance use disorders are common among
patients in IPFs, that tobacco and alcohol use are linked to mortality
and worse outcomes, and that tobacco use can complicate psychiatric
treatment, affect psychiatric medications, and worsen behavioral health
symptoms or recovery. Several commenters cited evidence supporting
alcohol and tobacco interventions and treatment during hospitalization
or at discharge; they stated these interventions can improve outcomes,
reduce readmissions or costs, improve quit rates, support recovery, or
improve mood and quality of life.
Response: We agree that these are important issues in the care of
IPF patients. However, removing TOB-3/3a does not change an IPFs'
ability to
[[Page 48540]]
provide clinically appropriate tobacco, alcohol, or substance use
interventions when indicated, and we encourage IPFs to continue to use
clinical judgment in developing care plans that address each patient's
individual needs.
Comment: Many commenters opposed removal stating that quality
measures support accountability, transparency, visibility into patient
outcomes and facility performance, data on interventions offered or
received, and incentives for health care professionals or facilities to
address tobacco dependence, tobacco cessation, and substance use
treatment.
Response: We note that we proposed to remove the TOB-3/3a measure
because the costs associated with reporting measure data outweighs the
measure's benefits in the IPF Quality Reporting Program, and we are
removing the measure to reduce reporting burden on IPFs. The TOB-3/3a
measure requires facilities to submit chart-abstracted measure data on
a sample of IPF patient records. Because chart-abstracted is a resource
intensive process the TOB-3/3a burden is costly to maintain in the
program. We continue to recognize the value of accountability and
transparency and encourage IPFs to provide clinically appropriate
tobacco cessation counseling and medication when indicated, even in the
absence of a publicly reported measure.
Comment: Several commenters recommended that CMS reconsider
removal, clearly justify removal, consider alternative metrics or
approaches, or delay removal until adequate replacement or improved
measures are operational.
Response: In deciding to propose to remove the TOB-3/3a measure, we
carefully evaluated the IPF Quality Reporting Program's measure to
ensure that we maintain a balanced set of meaningful quality measures
with minimal burden. As part of this evaluation, we determined that the
costs associated with the TOB-3/3a measure outweigh the benefits of
continuing to maintain the measure in the IPF Quality Reporting
Program. That is, that the costs associated with annual reporting on
this chart-abstracted measure were not proportional to the benefits of
keeping the measure in the program. We will continue to evaluate ways
to address tobacco and nicotine use in future IPF-PAI or measure
development. We thank the commenters for their recommendations related
to potential replacements for the TOB-3/3a measure.
Comment: A few commenters stated that plateaued or low performance
does not justify removal. They expressed concern that TOB-3/3a
performance remains low and recommended that stable performance should
lead CMS to intensify focus, maintain incentives, or improve
performance rather than remove the measure. A commenter recommended
that CMS consider performance improvement rather than removal,
including targeted technical assistance, provider education, or
modified measure specifications to move performance above the plateau
before eliminating accountability entirely.
Response: Although TOB-3/3a performance showed room for improvement
we note that annual reporting of this measure, which is accomplished
through chart abstraction of a sample of patients, is time-consuming
for IPFs and that, as other commenters described, it does not fully
address current tobacco use patterns. We refer readers to section
VI.C.3 of this final rule for details on the estimated decrease in
information collection burden for IPFs by removing this measure. We
note that the SBIRT approach (described in more detail in response to
comments on the removal of the SUB-2/2a measure in section V.B.1. of
this final rule) can be used for addressing nicotine use.\15\ We
continue to encourage IPFs to provide clinically appropriate
interventions for patients who use nicotine. Removing this measure
reduces burden now while allowing us to consider alternatives in future
rulemaking if a more effective or less burdensome measure can better
address this topic.
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\15\ SAMHSA, Systems-Level Implementation of Screening, Brief
Intervention, and Referral to Treatment Available at https://library.samhsa.gov/sites/default/files/sma13-4741.pdf.
---------------------------------------------------------------------------
Comment: A few commenters acknowledged administrative burden,
duplication, or limitations in current measures, but stated that
removal without an improved measure could reduce clinician attention to
tobacco use or lose useful accountability while failing to address
patient refusal, patient progress, and the realities of inpatient
treatment. A commenter expressed concern that removing TOB-3/3a could
reduce the number of clinicians asking about tobacco use and
recommended that CMS develop a better measure or revise the current
measure to provide better data. A few commenters recommended replacing
TOB-3/3a with the Tobacco Use Screening and Cessation Intervention
measure and stated that it would support tobacco use treatment
reporting, encourage IPFs to offer cessation interventions, and improve
outcomes for people with behavioral health conditions. A commenter
stated that CMS should not remove TOB-3/3a before a replacement or
bridge is operational, and that the proposed IPF-PAI does not currently
include tobacco use assessment items and would not be fully implemented
for several years, creating a gap in addressing tobacco use.
Response: We appreciate these comments. We are removing TOB-3/3a to
reduce burden in the IPF Quality Reporting Program, while encouraging
IPFs to continue to address tobacco use when clinically appropriate.
Although it is reasonable to expect that the IPF Quality Reporting
Program influences clinical quality and care--by, for example,
emphasizing certain care processes or outcomes--clinical judgment and
shared decision-making with patients inform treatment planning. We also
remain open to potential future IPF-PAI items or better, less
burdensome measures on the topic of tobacco and nicotine use.
Comment: A commenter opposed removal stating that removing TOB-3/3a
could introduce or reinforce diagnostic upcoding and make patients
needing substance abuse counseling less likely to receive proper care.
Response: The removal of TOB-3/3a does not impact IPFs' obligation
to code accurately and to provide medically appropriate, high-quality
care consistent with the patient's clinical needs and Medicare
requirements. We encourage IPFs to continue to use appropriate clinical
judgment and shared decision-making in determining whether tobacco
cessation counseling or other interventions are warranted, regardless
of whether this specific measure remains in the program.
In addition, as discussed above, we recognize the prevalence of
nicotine use among patients treated in IPFs, and the importance of
interventions and treatment. Therefore, we also solicited comment on
alternative ways to address this topic, potentially through the
proposed standardized patient assessment, the IPF Patient Assessment
Instrument (IPF-PAI), described in Section IV.C. of this final rule. We
invited comments on how to assess nicotine use (for example, mode of
delivery, frequency of use, level of dependence) as well as treatments
and interventions for nicotine use (for example, type of treatment or
intervention, timing of delivery).
We received public comments.
Comment: A commenter recommended aligning tobacco use tracking with
Draft United States Core Data for Interoperability (USCDI) v7 to
[[Page 48541]]
support consistency and data sharing across healthcare settings, and
advocated for well-vetted, standardized tools that are accessible to
EHR developers. A commenter recommended that future tobacco use
treatment measures include digital and web-based tobacco cessation
interventions so IPFs can be reimbursed when referring patients to
these programs at discharge. A commenter stated that pay-for-
performance could provide a stronger incentive than pay-for-reporting
for improving tobacco-related metrics, and encouraged us to support
community programs that help reduce tobacco use after IPF patients are
discharged. A commenter recommended that CMS not add assessment items
on nicotine use to the IPF-PAI.
Response: We thank the commenters for these recommendations and
will consider these in future rulemaking.
Final Decision: After consideration of the comments received, we
are finalizing the removal of the TOB-3/3a measure as proposed.
3. Summary of IPF Quality Reporting Program Measures for Future Years
Table 3 sets forth the measures in the FY 2028 IPF Quality
Reporting Program and reflects the measures being removed in this final
rule.
[GRAPHIC] [TIFF OMITTED] TR31JY26.025
[[Page 48542]]
Table 4 sets forth the measures in the FY 2029 IPF Quality
Reporting Program.
[GRAPHIC] [TIFF OMITTED] TR31JY26.026
C. Implementation of the Inpatient Psychiatric Facilities Patient
Assessment Instrument (IPF-PAI)
1. Background
As required by section 1886(s)(4)(E) of the Act, IPFs must submit
such data with respect to admissions and discharges of an individual
from the IPF, and more frequently as the Secretary determines
appropriate. For IPFs to meet this new data collection and reporting
requirement for FY 2028 and each subsequent year, the Secretary must
implement a standardized PAI that collects data with respect to the
following categories: functional status; cognitive function and mental
status; special services, treatments, and interventions for psychiatric
conditions; medical conditions and comorbidities; impairments; and
other categories as determined appropriate by the Secretary.\16\ To
enable meaningful comparison of the patient assessment data across all
IPFs submitting data, the IPF-PAI must be standardized. Each IPF must
administer the same assessment instrument with identical questions,
response options, standards and definitions.\17\
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\16\ Sections 1886(s)(4)(E)(ii)(I) through 1886(s)(4)(E)(ii)(VI)
of the Act.
\17\ We note that while the data elements of the IPF-PAI would
be standardized--that is, identical question and identical sets of
response options--standardization does not extend to the order of
the data elements within the instrument.
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In the FY 2025 IPF PPS proposed rule, we solicited comments for
consideration in the development of a standardized assessment
instrument (89 FR 23200 through 23204). Specifically, we solicited
comment on the following considerations: a set of principles for
selecting standardized patient assessment data elements \18\ (to
include overall clinical relevance; interoperable exchange to
facilitate care coordination during transitions in care; ability to
describe medical complexity and risk factors that can inform both
payment and quality; and scientific reliability and validity, including
general consensus agreement for its usability); any patient assessments
recommended for use in the IPF-PAI on clinical topics related to the
data categories required by statute; implementation considerations; and
the relationship between the IPF-PAI and the IPF Quality Reporting
Program, such as use of IPF-PAI data in program measures. In the FY
2026 IPF PPS proposed rule, we further solicited comments for
consideration with respect to potential interoperable exchange of IPF-
PAI data using the HL7[supreg] Fast Healthcare Interoperability
Resources[supreg] (FHIR[supreg]) \19\ standards (90 FR 18520 through
18523).
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\18\ While this RFI discussed ``data elements,'' we note that we
have transitioned to using the term ``assessment items'' to refer to
the components of the standardized patient assessment.
\19\ FHIR[supreg] is the registered trademark of Health Level
Seven International (HL7) and the use does not constitute
endorsement by HL7.
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[[Page 48543]]
2. Considerations in Selecting Assessment Items and Related Data
Elements for the IPF-PAI
Between 2023 and 2025, CMS and its contractors engaged in a multi-
stage process to conceptualize and scope a new, statutorily mandated
PAI for the IPF setting that included: identifying key clinical topic
areas within the broad CAA, 2023 data categories, identifying and
evaluating candidate assessment items within those topic areas, and
conducting formative (alpha) and field (beta) testing on those
candidate assessment items. This process also included engagement with
subject matter experts, clinicians and administrators at IPFs, and
individuals who have experience as patients in an IPF setting, as well
as guidance from interoperability experts on how to structure
assessment items and their related data elements so that the patient-
level data that are collected by the IPF-PAI would be interoperable and
aligned with current health IT standards.
We first identified key topics and candidate assessment items that
aligned with the data categories identified in section
1886(s)(4)(E)(ii) of the Act by reviewing clinical practice guidelines;
papers and reports from academic journals, government agencies, and
other organizations; clinical assessments related to inpatient
psychiatric care; and existing standardized patient assessment data
elements used in other provider settings. We reviewed the United States
Core Data for Interoperability (USCDI) \20\ and United States Core Data
for Interoperability (USCDI)+ Behavioral Health \21\ data elements to
understand the interoperable data landscape for inpatient acute care as
well as outpatient and ambulatory behavioral health care. We also
considered comments submitted in response to the requests for
information in the FY 2025 IPF PPS final rule (89 FR 64645 through 89
FR 64650) described above. Candidate assessment items were reviewed for
relevance and feasibility for the IPF setting, as well as the potential
to reflect resource use or quality of care. An initial list of
candidate assessment items selected from our review was advanced to
subsequent phases of testing and expert input. Formative (alpha)
testing was conducted to evaluate the feasibility and face validity of
candidate assessment items in the IPF setting. Field (beta) testing was
conducted to assess inter-rater reliability (IRR),\22\ estimate burden,
and to confirm content validity and feasibility in the IPF setting.
More information about the design and results of the testing is
available in the IPF-PAI Testing Report, available under IPF-PAI
Development and Testing resources at https://qualitynet.cms.gov/ipf/PAI. In addition, a technical expert panel (TEP) was convened by the
IPF-PAI development contractor to give input on the extent to which
topics of assessment items were clinically relevant to patient care in
IPFs, likely to inform CMS' understanding of resource use or costs of
care, and considered feasible and relatively low burden to collect. The
TEP included clinicians and administrators at IPFs, behavioral health
clinicians, academic researchers, health information technology
specialists, and individuals who have experience as patients in an IPF
setting. More information on the two meetings of the TEP held during
IPF-PAI development is available under IPF-PAI Development and Testing
resources at https://qualitynet.cms.gov/ipf/PAI.
---------------------------------------------------------------------------
\20\ https://www.healthit.gov/isp/united-states-core-data-interoperability-uscdi. Accessed February 4, 2026.
\21\ https://www.healthit.gov/topic/interoperability/uscdi-plus.
Accessed February 4, 2026.
\22\ Interrater reliability is the extent of agreement among
data collectors. See: McHugh, M.L., 2012. Interrater reliability:
the kappa statistic. Biochemia medica, 22(3), pp. 276-282.
---------------------------------------------------------------------------
3. Implementation of the Inpatient Psychiatric Facilities Patient
Assessment Instrument (IPF-PAI) in the IPF Quality Reporting Program
a. IPF-PAI
In the FY 2027 IPF PPS proposed rule, we proposed to implement the
IPF-PAI as the assessment instrument for the submission of standardized
patient assessment data as required by section 1886(s)(4)(E)(ii) of the
Act for all patients aged 18 and older. This initial version of the
IPF-PAI is intended to meet our statutory obligation to collect
standardized patient assessment data on each of the statutorily-
delineated data categories while being mindful of reporting burden on
IPFs; we purposefully selected a minimal set of assessment items to
propose. We reiterate that the IPF Quality Reporting Program strives to
maintain a minimal set of requirements while meeting statutory
requirements and encouraging quality through transparency and public
reporting. To that end, the IPF-PAI proposed in the FY 2027 IPF PPS
proposed rule was also intended to establish a structure and processes
for data collection and submission that we could modify or expand
through future rulemaking, to stay responsive to priorities of IPF
quality and payment. We stated that future enhancements may include the
addition, removal, or changes of assessment items, but also that we
anticipated using results and feedback from the proposed IPF-PAI to
propose revisions or improvements to policies that will increase
utility or reduce burden of the IPF-PAI for patients and IPFs.
We proposed that IPFs paid under the IPF PPS be required to
complete the IPF-PAI for all patients aged 18 and older. Assessment
items would be administered at admission and discharge, except where
specified in the proposals. Later in this section, we discuss the
standardized patient assessment items and related data elements that
were proposed for the initial version of the IPF-PAI. We refer readers
to section V.C.4. of this final rule for more information on the method
and schedule for data submission, as well as compliance thresholds for
annual payment determination under the IPF Quality Reporting Program.
We acknowledged that this new requirement of the IPF Quality
Reporting Program may impact workflow and increase administrative
burden, especially early in the implementation of the IPF-PAI as IPFs
learn about and become familiar with the assessment and work to
integrate it into their workflows. We proposed that the assessment
items discussed in section IV.C.3.b of the FY 2027 IPF PPS proposed
rule would be collected at admission and discharge. In the proposed
rule, we estimated that completing both assessments for a patient would
take 14.7 minutes, and that most administrative and clinical data on
the IPF-PAI would be available in the patient's medical record as part
of routine medical record keeping practices. We refer readers to
section VI.C.3. of this final rule for discussion of our revised
estimated costs associated with the collection of the IPF-PAI based on
this final rule.
We proposed to codify the IPF-PAI as part of the IPF Quality
Reporting Program at Sec. 412.433(a) and (d) by adding ``standardized
patient assessment data'' in the description of the statutory authority
and as a type of data that IPFs that participate in the IPF Quality
Reporting Program must submit to CMS.
We received public comments on this proposal.
Comment: Many commenters supported the proposal to adopt the IPF-
PAI into the IPF Quality Reporting Program based on its potential to
provide comparable data across IPFs, support care coordination, and
facilitate more consistent data collection to improve patient care as
well as to
[[Page 48544]]
inform future quality measurement and policy development.
Response: We thank the commenters for their support and agree that
collecting standardized patient assessment data across IPFs will
support the IPF PPS and the IPF Quality Reporting Program and will
create infrastructure that has the potential to improve interoperable
data exchange.
Comment: Several commenters stated that the IPF-PAI, as proposed,
is focused on administrative data rather than clinical assessment, does
not fully capture clinically meaningful information or outcomes and is
not aligned with inpatient psychiatric practice. A commenter further
stated that the proposed IPF-PAI is not clinically meaningful, and
would add burden without improving treatment planning, psychiatric
hospital quality, or mental health outcome measurement. A few
commenters expressed concern that requiring a standardized assessment
for all patients may oversimplify complex mental health conditions,
with the practical effect of constraining independent clinical judgment
and undermining the inherently individualized psychiatric evaluation
process.
Response: We do not agree that the IPF-PAI is primarily
administrative nor misaligned with inpatient psychiatric practice.
While the IPF-PAI does include administrative items, these are limited
to the items necessary for record matching and database management. The
instrument was designed as an initial set of standardized items that
includes statutorily-mandated and clinically relevant information about
patient complexity and resource use, and is not intended to replace
clinical assessment, intake, or treatment planning. We note that we are
implementing the IPF-PAI to meet the CAA, 2023 requirement to collect
standardized patient assessment data on each of the statutorily-
delineated data categories. While there are many more types of clinical
information we considered for the IPF-PAI, and will continue to
consider for future rulemaking, for the initial rollout of the IPF-PAI
we strove to minimize reporting burden on IPFs. As to the assessment
items we ultimately proposed, the TEP, which included behavioral health
clinicians and staff from IPFs, endorsed assessment items in the
statutorily mandated categories as clinically meaningful and
appropriate for admission, discharge, or both. Quantitative and
qualitative evidence from the 16 IPFs and 51 IPF staff included in the
field (beta) testing supports that these assessment items are
clinically meaningful, feasible to complete in routine admission and
discharge workflows, and useful for understanding patient complexity,
resource use, and care planning. We agree with commenters that the IPF-
PAI should not constrain individualized psychiatric evaluation or
function as a diagnostic instrument. We expect that clinicians will
continue to exercise judgment in determining diagnosis, treatment, and
the level of care needed for individual patients.
Comment: Many commenters stated that the IPF-PAI, as proposed, does
not meet the clinical or methodological standards necessary to fulfill
the statutory mandate of the CAA, 2023. For example, some commenters
stated that the data collection for the IPF-PAI would not be
sufficiently detailed or valid to be used in determining payment rates
for the IPF PPS. A few commenters stated that the IPF-PAI as proposed
fails to meet CMS' stated objectives in developing a patient assessment
instrument regarding clinical relevance, validity, feasibility, and
ability to inform resource intensity.
Response: We maintain that the IPF-PAI could support future payment
policy and enable comparison of IPF data across IPFs. We discuss each
of the assessment items in more detail in section V.C.3.b. We note that
the proposed instrument was developed through a multi-stage process
which included a review of clinical practice guidelines, an
environmental scan of existing standardized assessment items in
behavioral health settings or in CMS quality reporting programs, an RFI
in the FY 2025 IPF PPS proposed rule (89 FR 23200 through 23204), and
continual engagement with IPFs, clinicians, vendors, health IT experts,
and individuals with experience as patients in the IPF setting. We
evaluated candidate items for relevance and feasibility in the IPF
settings, as well as the potential to reflect resource use, which
corresponds to the purposes described in the CAA, 2023 requiring
assessment data which enable comparison of assessment data across all
IPFs and which could be taken into account for potential future
revisions to the IPF PPS methodology for determining payment rates. We
evaluated the candidate assessment items through formative (alpha)
testing to evaluate the feasibility and face validity of each item.
Following formative (alpha) testing, feedback was gathered through two
meetings of the TEP, which was comprised of clinicians and
administrators at IPFs, behavioral health clinicians, academic
researchers, health IT specialists, and individuals who have experience
as patients in an IPF setting. Narrative input and voting during
meetings of the TEP also support that candidate items selected for the
IPF-PAI were viewed as clinically useful and appropriate for admission,
discharge, or both, with alignment to the statutory categories, and
relatively low-burden collection. In the Fall 2025 meetings of the TEP,
at least two-thirds of TEP members responded ``Strongly Agree'' or
``Agree'' to including each of the proposed assessment items on the
IPF-PAI. Quantitative and qualitative evidence from the 16 IPFs and 51
IPF staff included in the field (beta) testing supports that these
assessment items are clinically meaningful and thus relevant, feasible
to complete in routine admission and discharge workflows, and
sufficiently detailed to be useful for understanding patient
complexity, resource use, and care planning. We also intend to use
results and feedback based on implementation of the IPF-PAI to propose
revisions or improvements to policies that will increase utility or
reduce burden of the IPF-PAI (91 FR 17739).
Comment: Several commenters stated that implementation of the IPF-
PAI would impose administrative, operational, financial, and workflow
burdens, including additional staff time and diversion of resources
away from patient care. Several commenters also stated that the
substantial costs and burden associated with the proposal would not be
matched by proportional benefit.
Response: We recognize that the IPF-PAI will require staff time and
workflow changes, especially early in implementation, which is why the
IPF-PAI was developed to minimize reporting burden on IPFs by
leveraging data already assessed in existing workflows and available in
the patient's treatment record while IPFs gain experience collecting
and reporting IPF-PAI data. As stated at the end of this section, we
are finalizing several modifications to the IPF-PAI reporting
requirements to further reduce burden, as discussed in sections V.C.3.
and V.C.4. of this final rule, and have revised our burden estimate as
discussed in section VI.C. of this final rule. We will also provide
guidance and training resources intended to support the initial
implementation (91 FR 17739).
Comment: Several commenters stated that the proposed IPF-PAI
duplicates information already collected through existing assessments,
reporting requirements, or accreditation activities. Many commenters
requested that CMS streamline the instrument and eliminate
[[Page 48545]]
assessment items that duplicate or overlap with other CMS reporting
requirements.
Response: We acknowledge that the IPF-PAI was developed to leverage
data already assessed in existing workflows and available in the
patient's treatment record to the greatest extent feasible to minimize
the need for IPFs to collect new data. We acknowledge that some
information may overlap with accreditation requirements or current
measures for some patient populations (for example, Medicare patients),
but we maintain that collecting this information for all patients aged
18 and older through the IPF-PAI will provide more accurate information
regarding resource use and may support the development of future
quality measures. We will consider the recommendation to streamline the
instrument and reduce or eliminate overlap in data collection in future
rulemaking.
Comment: A few commenters stated that IPFs may face significant
implementation challenges related to EHR modifications, HL7[supreg]
FHIR[supreg] integration, vendor readiness, training, and workflow
redesign, in the proposed timeframe, especially IPFs with fewer
resources. A few commenters stated that workflow and system changes
would require sufficient lead time for facilities to operationalize the
IPF-PAI consistently and reliably, including modifying systems,
training staff, testing workflows, validating data, and resolving
vendor or technical issues before payment impacts begin. A commenter
stated that implementation challenges would be heightened by behavioral
healthcare facilities' lower EHR adoption rates and limited
interoperable EHR capability. A few commenters recommended additional
support to address operational readiness and infrastructure limitations
related to health IT.
Response: We appreciate these comments and recognize that
implementation will require time, training, and workflow changes which
will vary across IPFs, including for IPFs with fewer resources and IPFs
without EHRs. We are committed to supporting IPF-PAI implementation
through the provision of technical guidance, implementation guides,
webinars, listserv updates, and a help desk. We note that IPFs may
submit IPF-PAI data to CMS using a free, CMS-developed web application
called the Patient Assessment Reporting Interoperability Tool (PARIT).
This method for data submission, described more in section V.C.4. of
this final rule, provides an option for IPFs to submit IPF-PAI data
other than the FHIR[supreg] APIs.
Comment: Many commenters recommended that CMS delay implementation
of the IPF-PAI, return the instrument to development and testing, and
allow additional time before mandatory reporting or payment impacts
begin. Many commenters recommended that CMS engage clinicians,
researchers, interested parties, and policymakers in further
development of the IPF-PAI. A commenter recommended that interested
parties throughout engagement should include frontline staff who
complete documentation. A few commenters further recommended that CMS
delay payment-related impacts. Several commenters requested non-
punitive transition periods, voluntary reporting periods, or other
implementation flexibilities while IPFs and vendors prepare to
operationalize the assessment.
Response: Based on the comments, in an effort to provide more time
for IPFs and their EHR vendors to integrate the requirements for the
IPF-PAI into their workflows and technical resources, we are modifying
the timelines for mandatory reporting, including adding a voluntary
reporting period, and modifying data completeness thresholds that would
impact payment determination under the IPF Quality Reporting Program,
as further discussed in section V.C.4. of this final rule. Regarding
engagement with experts and interested parties, as we described in the
proposal rule, we developed the IPF-PAI through a multi-stage, multi-
interested party process that included engagement with subject matter
experts, researchers, clinicians and administrators at IPFs,
individuals with experience as patients in an IPF setting,
interoperability experts, and a technical expert panel, and we also
solicited public comment through FY 2025 and FY 2026 rulemaking to
inform development of the instrument. The alpha (formative) and beta
(field) testing both occurred with IPF staff, with the beta test
including 51 IPF staff who would be responsible for collecting PAI data
after finalization. We plan to continue to engage interested parties,
including IPF clinicians and staff, to support the implementation of
the IPF-PAI and potential changes that would occur through future
rulemaking.
Comment: A few commenters recommended that CMS or interested
parties work with the Congress to change the requirements of the CAA,
2023, to better align them with the inpatient psychiatric setting.
Response: We thank the commenters for their recommendations. We
maintain that the assessment items proposed for the IPF-PAI, which meet
the categories required by the CAA, 2023, are relevant to the
psychiatric inpatient setting and contribute to an understanding of
resource intensity. We will continue to incorporate feedback from
interested parties to support possible refinements to the IPF-PAI that
would occur through future rulemaking.
Comment: A commenter recommended that CMS conduct a formal impact
assessment, including an evaluation of effects on rural and resource-
limited IPFs.
Response: We recognize that the IPF-PAI requirement will have
impacts for rural and resource-limited IPFs. We plan to provide
implementation support in the form of trainings, webinars, listserv
announcements, and a help desk that will be available to all IPFs. In
addition, we will provide a free web application (91 FR 17745) that
allows IPFs to submit IPF-PAI data without an EHR, a vendor, or changes
to their health IT. We intend this resource to mitigate the impact of
this new requirement on IPFs with fewer resources. We refer readers to
section V.C.4. of this final rule for more information on the PARIT,
the free web application.
Comment: A few commenters recommended limiting the IPF-PAI to
Medicare patients at first, with a commenter recommending that CMS
begin with Medicare Fee-for-Service (FFS) and later add Medicare
Advantage beneficiaries, to minimize burden and phase implementation.
Response: We appreciate these comments and the need to phase
implementation to minimize burden, which is why we are finalizing
several modifications to reduce reporting burden. With these
modifications, we think the benefits outweigh the burden of collecting
data on all adult IPF patients regardless of payer types. We note that
standardized data collection will allow us to gain useful information
on resource use and quality. Therefore, we are requiring mandatory
collection of the IPF-PAI for IPF patients aged 18 and older beginning
July 1, 2028; in section V.C.4. of this final rule, we address
modifications to the timelines for mandatory reporting and payment
impacts.
Comment: Many commenters expressed concern that CMS discussed
potential refinement or modification to the IPF-PAI that would be done
in future rulemaking, stating that changing program requirements are
challenging for IPFs.
Response: Similar to our approach to the IPF Quality Reporting
Program measure set, we intend to monitor IPF-
[[Page 48546]]
PAI data and feedback from interested parties and may propose revisions
to the instrument as needs and priorities evolve. We intend to provide
adequate time and implementation guidance for any IPF Quality Reporting
Program changes, including the IPF-PAI.
Comment: A commenter recommended that CMS meet the statutory
requirement for data collection with a patient assessment instrument
not through the proposed IPF-PAI, but by using existing data that are
collected through quality measures in the IPF Quality Reporting
Program. Another commenter stated that while CMS must comply with the
statute, CMS retains substantial discretion over the content of the
instrument, the form and manner of submission, the compliance
threshold, and the payment penalty tied to data reporting through the
IPF Quality Reporting Program.
Response: While we agree that we have substantial discretion over
the instrument and the form, manner, and timing of data collection,
existing data collections do not cover the full range of categories
required by the CAA, 2023. In section V.C.4. of this final rule, we
address modifications to the timelines for mandatory reporting,
compliance thresholds, and payment impacts.
Comment: A commenter stated that the CAA, 2023 does not specify
that the IPF-PAI must be completed for all patients.
Response: We maintain that collecting this information for all
patients aged 18 and older through the IPF-PAI will provide more
accurate information regarding resource use which can be used to inform
payment rates for IPFs, consistent with the statutorily defined
purposes for data collection under CAA, 2023. Accordingly, at this
time, we are finalizing policies to require mandatory collection of the
IPF-PAI for all patients aged 18 and older beginning July 1, 2028, and
that--as discussed in section V.C.4.b. of this final rule--IPFs will
need to complete 100 percent of the required IPF-PAI assessment items
(that is, completeness requirement) on 50 percent of the IPF-PAIs
submitted to meet the IPF Quality Reporting Program's IPF-PAI
requirement (that is, compliance threshold) for the applicable annual
payment determination. Beginning with the CY 2030 reporting period
impacting the FY 2032 payment determination, the compliance threshold
will increase to 70 percent. See section V.C.4. of this final rule, for
additional information on modifications to the timelines for mandatory
reporting and compliance thresholds.
Comment: A commenter stated that CMS has not provided sufficient
clarity regarding how IPF-PAI data will be used in future payment and
quality measurement programs and recommended that CMS provide this
information as well as time and flexibility around implementation to
support successful adoption, while minimizing unintended disruptions to
patient care.
Response: We have developed the IPF-PAI to meet the uses described
in the statute, that is, to enable comparison of the assessment data
across IPFs, and to be taken into consideration when implementing
revisions to the IPF PPS payment methodology. In section V.C.4. of this
final rule, we address modifications to the timelines for mandatory
reporting and payment impacts.
Comment: A commenter stated support for the direction of the
proposal because of statements CMS made about the IPF-PAI supporting
interoperability.
Response: We thank the commenter for their support and agree that
there is value in promoting interoperability in healthcare.
Final Decision: After consideration of the comments received, we
are finalizing the proposal to adopt the IPF-PAI into the IPF Quality
Reporting Program.
Additionally, we solicited comment on the proposed age requirement
for the IPF-PAI of 18 years and older, specifically the potential
inclusion of adolescents in the population for the IPF-PAI. We were
interested in feedback on any specific guardrails or sensitivities CMS
should consider with the potential inclusion of adolescents, or
specific assessment items that would not be appropriate for this
population.
We received public comments on this proposal.
Comment: A few commenters supported the proposal to require the
IPF-PAI be submitted for patients aged 18 years and older. One of these
commenters stated that requiring the IPF-PAI for adolescents would
negatively impact their admission experience by diverting staff
attention. Another commenter supported the proposed aged 18 and older,
but encouraged CMS to consider differences in care, treatment, and
outcomes across adult age groups by analyzing stratified data.
Response: We appreciate the commenters' support for this proposal,
and acknowledge the recommendation to explore differences between adult
age groups when IPF-PAI are received.
Comment: A commenter recommended that CMS require the IPF-PAI also
be submitted for adolescents to ensure quality care for that
population. A commenter recommended that CMS develop a comparable
instrument for pediatric populations enrolled in Medicare. This
commenter stated that it is important because many of the pediatric or
adolescent patients enrolled in Medicare qualify due to end-stage renal
disease, which can pose additional care needs.
Response: We thank the commenters for their recommendations. During
the development of the IPF-PAI, we received feedback from the TEP that
CMS should develop policies around the assessment that are responsive
to the unique needs of distinct patient groups, including adolescents.
In feedback on assessment items, however, the TEP discussed how the
tools and assessments that are appropriate for adolescents sometimes
differ from those for adults. Because of these concerns, this initial
version of the IPF-PAI was developed with assessment items that are
appropriate for use in adult patients--that is, we did not include
adolescent-specific items or test general items in the adolescent
population.
b. Assessment Items for the IPF-PAI
In the FY 2027 IPF PPS proposed rule, we proposed that the IPF-PAI
would collect data related to the five statutory data categories
specified in section 1886(s)(4)(E)(ii) of the Act and fulfill the
requirements of section 4125(b) of the CAA, 2023 for a standardized
assessment instrument (see Table 5). In the FY 2025 IPF PPS proposed
rule (89 FR 23200 through 23204) we issued a Request for Information
(RFI) to solicit public input to inform the development of the IPF-PAI.
In this RFI, we noted that goals for the IPF-PAI include improving the
quality of care in IPFs and improving the accuracy of the IPF PPS. As
provided by section 1886(s)(6) of the Act, added by section 4125(b) of
the CAA, 2023, data collected through the IPF-PAI may be considered in
future revisions to the methodology for determining the IPF PPS
payment.
In the proposed rule, we explained that standardized assessment
items generally take the form of a question or instructional text that
is followed by a set of response options. For example, the assessment
item Speech Clarity would contain instructional text ``Select best
description of speech pattern,'' and three response options: 0. Clear
speech--distinct intelligible words; 1. Unclear speech--slurred or
mumbled words; 2. No speech--absence of spoken words. Responses to
assessment items can also take the form of structured numeric or text
input, such as the responses given to Admission Date or
[[Page 48547]]
Patient Last Name. The proposed assessment items are standardized in
the sense that all IPFs will be assessing patients using the same
assessment items--that is, the same question or instructions and
response options. In the proposals of assessment items to include in
the IPF-PAI, we referred to the name of the assessment item. The
complete assessment items, including instructional text and response
options, are shown together on the IPF-PAI Item Set, available under
IPF-PAI Resources at https://qualitynet.cms.gov/ipf/PAI. The IPF-PAI
Item Set is a PDF document that shows the proposed assessment items
displayed like a questionnaire. In order to support consistency in the
administration of the IPF-PAI, as we have done for assessment
instruments used in post-acute care settings, we stated that we will
provide IPFs with a detailed reference manual that will provide
additional guidance. A draft of the IPF-PAI Guidance Manual is
available under IPF-PAI Resources at https://qualitynet.cms.gov/ipf/PAI.
We proposed to include items for each of the five data categories
required by statute in the IPF-PAI assessment. In addition, we proposed
an additional category of administrative items. The proposed
administrative items were determined appropriate by the Secretary and
are necessary for record matching and database management. Table 5
lists the proposed IPF-PAI assessment items by category. We referred
readers to the Admission and Discharge forms that contained the
proposed assessment items of the IPF-PAI are available under IPF-PAI
Resources at https://qualitynet.cms.gov/ipf/PAI. For additional
information on the testing process and the testing results in further
details, we referred readers to the IPF-PAI Testing Report, available
under IPF-PAI Development and Testing resources at https://qualitynet.cms.gov/ipf/PAI.
[GRAPHIC] [TIFF OMITTED] TR31JY26.027
Evidence from field (beta) testing and engagement with experts and
interested parties support these proposed assessment items as meeting
our goals for the IPF-PAI, as stated in prior rulemaking (89 FR 23200
through 23204): clinically relevant to patients in IPFs; standardized
and interoperable; capturing medical complexity and risk factors that
can inform payment and quality; and reliable and valid, with consensus
agreement for usability (89 FR 23200 through 23204). To determine the
clinical relevance to patients in IPFs and the ability of assessment
items to assess medical complexity and risk factors that would inform
payment and quality, we sought and summarized input through the RFI in
the FY 2025 IPF PPS proposed and final rules (89 FR 64642 through
64649). Building on that feedback we reviewed potential assessment
items with CMS Medical Officers and engaged with clinicians through a
TEP. To ensure that the assessment items allowed data to be recorded in
a standardized format we evaluated the inter-rater-reliability (IRR) of
each of the items as part of our field (beta) testing. High IRR scores
show that the data are likely to be standardized across different
raters at different IPFs. We also evaluated each assessment item in the
field (beta) test for feasibility. Information about the TEP's input on
each assessment item is included in the following subsections.
Information about field (beta) test results for IRR and feasibility is
included in Table 6.
In the FY 2027 IPF PPS proposed rule, we noted that the IPF-PAI was
developed and would be implemented in a way to support interoperable
exchange of data. The standardized assessment items and response
options are intended to yield comparable data across IPFs. The
assessment items would be managed centrally in CMS' Data Element
Library (DEL),\23\ enabling consistency in usage across versions or
updates. Each assessment item is represented as a machine-readable data
element with a stable identifier and metadata, such as definition,
datatype, and permissible values. The DEL would assign LOINC \24\ and
SNOMED \25\ codes to questions and response options, where possible;
LOINC and SNOMED are widely-used terminology standards for clinical
data that support consistent meaning across systems.
---------------------------------------------------------------------------
\23\ https://del.cms.gov/DELWeb/pubHome. Accessed March 19,
2026.
\24\ https://loinc.org/. Accessed March 19, 2026.
\25\ https://www.snomed.org/. Accessed March 19, 2026.
---------------------------------------------------------------------------
i. IPF-PAI Functional Status Category
Section 1886(s)(4)(E)(i)(I) of the Act requires the inclusion of
patient assessment data with respect to functional status, such as
mobility and self-care. In the FY 2027 IPF PPS proposed rule, we
proposed the assessment item Mobility: Chair/Bed-to-Chair Transfer for
the Functional Status category of the IPF-PAI. This assessment item
evaluates the patient's physical ability to move around, one of the
basic activities of daily living. Specifically, the proposed assessment
[[Page 48548]]
item assesses the patient's ability to transfer to and from a bed to a
chair (or wheelchair). For patients who do not complete this activity
independently, the level of assistance required would need to be
recorded. This information would be recorded by selecting the patient's
functional status from the options provided. The instructional text and
response options are included in the IPF-PAI Item Set, available under
IPF-PAI Resources at https://qualitynet.cms.gov/ipf/PAI. Additionally,
detailed instructions for administration would be provided through
training and the IPF-PAI Guidance Manual, the draft of which is
available under IPF-PAI Resources at https://qualitynet.cms.gov/ipf/PAI. For results of inter-rater reliability (IRR) and feasibility from
field (beta) testing, see Table 6. Most TEP members (78 percent)
responded Strongly Agree or Agree to including the Mobility assessment
item on the IPF-PAI.
ii. IPF-PAI Cognitive Function and Mental Status Category
Section 1886(s)(4)(E)(i)(II) of the Act requires the inclusion of
patient assessment data with respect to cognitive function, such as the
ability to express ideas and to understand, and mental status, such as
depression and dementia. In the FY 2027 IPF PPS proposed rule, we
proposed the assessment item Suicide Screening for the Cognitive
Function and Mental Status category of the IPF-PAI. We note that we do
not consider suicide-related thoughts and behaviors to be related to
cognitive impairment. Rather, we understand mental status to encompass
a wide range of cognition, orientation, mood, and decision-making
capacities, including thought content. In our review of IPFs' core
clinical assessment practice, the mental status exam, we identified
screening for suicidal thoughts and behaviors to be an important
clinical topic with relevance to quality of care and resource use.
The assessment item evaluates whether and with what method a
patient was screened for suicide risk. This information would be
recorded by indicating that a patient was screened with a standardized
tool, screened through clinical assessment, or not screened, in the
case that the patient declined or was unable to respond. This
assessment item, including instructional text and response options, is
shown on the IPF-PAI Item Set, available under IPF-PAI Resources at
https://qualitynet.cms.gov/ipf/PAI. Additionally, detailed instructions
for administration would be provided through training and the IPF-PAI
Guidance Manual, the draft of which is available under IPF-PAI
Development and Testing resources at https://qualitynet.cms.gov/ipf/PAI. For results of IRR and feasibility from field (beta) testing, see
Table 6. All TEP members (100 percent) responded Strongly Agree or
Agree to including a Suicide Screening assessment item on the proposed
IPF-PAI. After the field (beta) test and receiving TEP input, we
revised this assessment item based on further input from individuals
who have experience as patients in an IPF, clinical subject matter
experts, and assessment item developers. We believe the proposed
assessment item included in the IPF-PAI is more feasible to implement
than the version used in testing.
iii. IPF-PAI Special Services, Treatments, and Interventions for
Psychiatric Conditions Category
Section 1886(s)(4)(E)(i)(III) of the Act requires the inclusion of
patient assessment data with respect to special services, treatments,
and interventions for psychiatric conditions. In the FY 2027 IPF PPS
proposed rule, we proposed the assessment item Special Services,
Treatments, and Interventions in the Inpatient Psychiatric Setting for
the Special Services, Treatments, and Interventions category of the
IPF-PAI. This assessment item requires the assessor to indicate which
psychiatric treatments, or restrictive interventions may have been used
during the IPF stay.
Psychiatric Treatments and Restrictive Interventions allow the
assessor to check off all that apply from the list. Psychiatric
Treatments include medications, brain stimulation, and non-
pharmacological treatments other than brain stimulation. Restrictive
Interventions include the use of seclusion, restraints, or other
restrictive interventions. This assessment item, including
instructional text and response options, is shown on the IPF-PAI Item
Set, available under IPF-PAI Resources at https://qualitynet.cms.gov/ipf/PAI. Additionally, detailed instructions for administration would
be provided through training and the IPF-PAI Guidance Manual, the draft
of which is available under IPF-PAI Development and Testing resources
at https://qualitynet.cms.gov/ipf/PAI. For results of IRR and
feasibility from field (beta) testing, see Table 6. When asked about
their agreement for including the six treatment or intervention types,
most TEP members replied Strongly Agree or Agree (100 percent for
Medications; 89 percent for Brain Stimulation, Non-pharmacological
Treatment, Seclusion, and Restraints; and 67 percent for Other
Restrictive Interventions).
In the FY 2027 IPF PPS proposed rule, we noted that the IRR for
some assessment items in this category were low. In our investigation
of the low reliability statistics for the treatment or intervention
Non-pharmacological Treatment, which included reviewing the testing
data, comparing discrepancies in coding responses, and reviewing the
hypothetical case studies and guidance manuals, we determined that the
structure and definitions in some of the assessment items related to
this treatment/intervention type were not well understood. We did not
find this to be unexpected considering the complexity of the assessment
item (that is, a multi-part, branch item), and that IPF staff were
unfamiliar with administering this assessment. Non-pharmacological
treatments, including but not limited to psychotherapy and psychosocial
interventions, are recommended by clinical practice
guidelines,26 27 and have been shown to be beneficial to
patients.28 29 For these reasons, we considered it important
to retain an assessment item on this topic. As noted, 89 percent of TEP
members responded Strongly Agree or Agree with the inclusion of Non-
pharmacological Treatment in the IPF-PAI. We stated that we believed
that low reliability indicates a need for targeted support, by means of
revising the guidance manual to provide distinct definitions for each
component of this assessment item, examples of coding to emphasize the
multi-part nature of the item, provider training, and focused
Frequently Asked Questions documents to help select the appropriate
response, which we stated we will develop and provide if this proposal
is finalized.
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\26\ Practice Guideline for the Treatment of Patients with
Schizophrenia, Third Edition (2021) https://psychiatryonline.org/doi/book/10.1176/appi.books.9780890424841.
\27\ VA/DoD Clinical Practice Guideline for the Management of
Major Depressive Disorder Version 4.0--2022. VA/DoD Clinical
Practice Guideline. (2022). The Management of Major Depressive
Disorder Work Group. Washington, DC: U.S. Government Printing
Office. https://www.healthquality.va.gov/guidelines/MH/mdd/.
\28\ McGuire, Alan B., et al. ``Recovery-oriented inpatient
mental health care and readmission.'' Psychiatric Rehabilitation
Journal 45.4 (2022): 331.
\29\ Kinney, Adam R., et al. ``Association of inpatient
occupational therapy utilization with reduced risk for psychiatric
readmission among Veterans.'' Psychiatric Services 75.11 (2024):
1084-1091.
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iv. IPF-PAI Medical Conditions and Comorbidities Category
Section 1886(s)(4)(E)(i)(IV) of the Act requires the inclusion of
patient assessment data with respect to medical
[[Page 48549]]
conditions and comorbidities, such as diabetes, congestive heart
failure, and pressure ulcers. In the FY 2027 IPF PPS proposed rule, we
proposed the assessment item Primary Medical Condition for the Medical
Conditions and Comorbidities category of the proposed IPF-PAI. This
assessment item assesses the category of the primary diagnosis
associated with the IPF stay; assessors would select their response
from the list of common diagnostic categories (for example, anxiety
disorders, mood disorders, schizophrenia and other psychotic
disorders). This assessment item, including instructional text and
response options, is shown on the IPF-PAI Item Set, available under
IPF-PAI Resources at https://qualitynet.cms.gov/ipf/PAI. Additionally,
we stated that detailed instructions for administration would be
provided through training and the IPF-PAI Guidance Manual, the draft of
which is available under IPF-PAI Development and Testing resources at
https://qualitynet.cms.gov/ipf/PAI. For results of IRR and feasibility
from field (beta) testing, see Table 6. Most TEP members (89 percent)
responded Strongly Agree or Agree to including the Primary Medical
Condition data element on the IPF-PAI. In future potential versions of
the IPF-PAI, we could consider the addition of comorbidities.
v. IPF-PAI Impairments Category
Section 1886(s)(4)(E)(i)(V) of the Act requires the inclusion of
patient assessment data with respect to impairments, such as
incontinence and an impaired ability to hear, see, or swallow. In the
FY 2027 IPF PPS proposed rule, we proposed the Hearing, Speech Clarity,
and Vision assessment items for the Impairments category of the IPF-
PAI. For these assessment items, the assessor records a patient's
ability to hear, a description of their speech pattern, and their
ability to see in adequate light by selecting the level of impairment
from a set of response options within each assessment item. These
assessment items, including instructional text and response options,
are shown on the IPF-PAI Item Set, available under IPF-PAI Resources at
https://qualitynet.cms.gov/ipf/PAI. Additionally, we stated that
detailed instructions for administration would be provided through
training and the IPF-PAI Guidance Manual, the draft of which is
available under IPF-PAI Development and Testing resources at https://qualitynet.cms.gov/ipf/PAI. We proposed that the Hearing, Speech
Clarity, and Vision assessment item be evaluated at admission only, in
recognition that they are unlikely to change during the IPF stay, which
is typically brief (about 7 days, on average). For results of IRR and
feasibility from field (beta) testing, see Table 6. When asked about
their agreement for including these assessment items in the proposed
IPF-PAI, most TEP members replied Strongly Agree or Agree (89 percent
for Hearing; 78 percent for Speech Clarity; 67 percent for Vision).
[[Page 48550]]
[GRAPHIC] [TIFF OMITTED] TR31JY26.028
vi. Administrative Data Category
Section 1886(s)(4)(E)(ii)(VI) of the Act authorizes other
categories of assessment items as determined appropriate by the
Secretary. In the FY 2027 IPF PPS proposed rule, in addition to the
assessment items discussed above, we proposed including an
Administrative data category to collect certain administrative
information to enable database management and record matching. We
stated that collecting data in this category would support accurate
linkage of assessment records within CMS' Internet Quality Improvement
and Evaluation System (iQIES), or a successor system, and facilitate
analyses by CMS, including linking assessment data with other CMS data
sources (for example, payment and claims data). We noted that these
data could also enable stratification of outcomes by patient and stay
characteristics, which would support accurate comparisons between
facilities and patient populations. These proposed data elements
included: Legal Name of Patient, Birth Date, Sex, Social Security [SSN]
and Medicare Numbers, Facility Provider Numbers (National Provider
Identifier, CMS Certification Number (CCN)), Admission/Discharge Date,
Payer Information Primary Payer, Type of Record, Assessment Reference
Date, Reason for Assessment, Type of Admission/Type of Discharge, and
IPF-PAI Completion Date. These assessment items, including
instructional text and response options, are shown on the IPF-PAI Item
Set, available under IPF-PAI Resources at https://qualitynet.cms.gov/ipf/PAI. Additionally, we stated that detailed instructions for
administration would be provided through training and the IPF-PAI
Guidance Manual, the draft of which is available under IPF-PAI
Development and Testing resources at https://qualitynet.cms.gov/ipf/PAI. We proposed that assessment items for the Administrative category
be collected at both admission and discharge.
We received public comments on these proposals.
Comment: A commenter stated that admission assessments should be
used to foster meaningful patient-provider conversations and patient
engagement, noting that when patient-reported outcome measures are
discussed and incorporated into care planning, they can build trust,
support collaborative goal setting, and improve retention in treatment
rather than serving as merely administrative data collection.
Response: We acknowledge the commenter's view that admission
assessments, including patient-reported
[[Page 48551]]
outcome measures, can foster patient-provider conversations, patient
engagement, trust, collaborative goal setting, retention in treatment,
and care planning. We wish to clarify that the IPF-PAI is not intended
to fully replace the intake assessment or discharge planning process,
to replace the clinical conversation, or to function merely as
administrative data collection without other uses. Rather, we designed
the instrument to minimize burden while meeting the statutory
requirement for standardized assessment data that will enable
comparison of assessment data across IPFs and inform our understanding
of resource use. We agree on the importance of patient-reported
outcomes to understanding quality--the IPF Quality Reporting Program
currently uses the Psychiatric Inpatient Experience (PIX) measure of
patient experience--but note that because the IPF-PAI is completed by
clinicians rather than patients it is not the appropriate tool for
collecting patient-reported outcomes as currently designed.
Comment: Many commenters stated that the IPF-PAI, as proposed, is
misaligned with the needs and realities of the inpatient psychiatric
setting, and rather, that it is based on a post-acute care model. A few
commenters stated that needs, treatments, outcomes, and overall case
mix are very different between post-acute care providers and IPFs and
therefore the existing post-acute care PAIs are not a good source for
IPF-PAI development.
Response: We agree that the IPF-PAI should reflect the inpatient
psychiatric setting and not simply import a post-acute care model for a
patient assessment instrument. Existing post-acute care patient
assessments were only one of the many sources that we reviewed in
developing the IPF-PAI; the clinical and setting specific expertise
provided by the TEP was fundamental in selecting the most appropriate
assessment items. As discussed in section V.C.2. of this final rule,
the item-selection process included review of clinical practice
guidelines, prior public comment, alpha and beta testing, and input
from behavioral health clinicians, IPF administrators, and individuals
with IPF patient experience. Although IPFs serve patients with distinct
clinical needs, we recognize the importance of IPFs documenting a full
range of patient characteristics in a standardized way, including
functional status, mobility, and impairments, because these factors are
relevant to care planning, safety, and discharge planning as well as an
IPF's resource use.
Comment: Several commenters expressed concern that misalignment
between the content of the IPF-PAI and core constructs of the inpatient
psychiatric setting will produce data that are prone to
misinterpretation. A few commenters stated that data quality matters
because once data are captured, they are used for benchmarking,
comparisons, and policy evaluation.
Response: The initial assessment items were selected for the IPF
setting to meet the statutory categories. We seek to ensure consistent
collection of information by including standardized assessment items
and response options, with clear guidance available for clinicians
documenting the assessment. Detailed instructions for administration
will be provided through training for all applicable IPF staff and the
IPF-PAI Guidance Manual. We will monitor the data and make refinements
as needed, through future rulemaking, to ensure IPF-PAI data are
suitable for its intended use.
Comment: Many commenters stated that the IPF-PAI is not clinically
relevant to the IPF setting, does not assess what matters most in
psychiatric treatment, and is not useful for treatment planning.
Several commenters gave examples of topics that they consider to be
most important to inpatient psychiatric treatment that are not
represented or represented adequately in the IPF-PAI, including illness
presentation, symptom severity, suicide risk, co-occurring behavioral
or medical conditions, treatment response, behavioral functioning,
psychiatric outcomes, and clinical progress. Several commenters stated
that because of these missing topics and what they stated is
misalignment with the care setting, the IPF-PAI is not able to inform
future payment or to produce data useful to CMS or the public for
understanding the care that IPFs deliver.
Response: The IPF-PAI was designed to be integrated with existing
admission and discharge processes and is not intended to be a
comprehensive treatment planning record. We appreciate commenters'
input on additional topics that are relevant to the IPF setting. The
initial IPF-PAI includes a minimal set of assessment items which were
selected to address each statutorily required category while minimizing
implementation burden associated with a new instrument. These
assessment items include clinically relevant topics on suicide
screening, primary medical conditions, and special services,
treatments, and interventions. However, it does not include all topics
that are clinically relevant to the IPF patient population because
including all such topics would expand the initial instrument and
increase burden for IPFs.
Comment: A commenter stated that the IPF-PAI does not assess
clinical factors that would indicate evidence-based practice, and that
the items are based on chart abstraction not assessment, and will not
supply meaningful data to IPFs or CMS. A few commenters expressed
concern that the IPF-PAI requirements do not adequately reflect the
unique clinical and operational realities of inpatient psychiatric
care, which is largely focused on stabilizing individuals in crisis and
supporting recovery. These commenters stated that because psychiatric
progress fluctuates across the course of the stay assessment is a
continuous clinical process which depends on real-time observations. A
few commenters stated that the items that have relevance to psychiatric
treatment are process measures and not quality or outcome-related
items. A commenter stated that it is unclear how the proposed
assessment items provide useful information to facilities and patients,
and how these items would lead to improved quality of care. The
commenter recommended that CMS consider whether the items finalized for
the IPF-PAI assessment will help facilities improve care and help guide
individuals and families in choosing facilities based on quality. A few
commenters stated that, because the assessment is not clinically
relevant and does not reflect quality or outcomes of psychiatric
treatment, it would introduce significant workflow, staffing, and
resource burdens without clear benefit to patients, potentially
shifting focus from direct clinical care. A few commenters stated that
if the IPF-PAI does not inform treatment planning, it will be treated
as compliance work, rather than be integrated into the clinical
workflow.
Response: The instrument was developed through TEP review and alpha
and beta testing, which showed that the items were viewed as clinically
useful for IPF assessment, care planning, and discharge planning, while
being feasible to collect in routine workflows. We wish to clarify that
that IPF-PAI does not contain any quality measures, only assessment
items that are meant to collect data about patient characteristics and
treatment processes in a standardized way. The IPF-PAI is intended to
collect standardized information that can enable comparison across all
IPFs, as described by the CAA, 2023; it is not intended to replace
clinical assessment, limit the clinical phases at which assessment
occurs, or
[[Page 48552]]
serve as a comprehensive treatment planning tool.
Comment: Several comments stated that the IPF-PAI includes items
that are unlikely to change or be improved during the IPF stay because
they are not clinically relevant to the visit and not addressed
clinically in IPFs. A commenter stated that it is unlikely that the
IPF-PAI will lower costs as the metrics are not relevant to outcomes
that can be improved in a short inpatient stay.
Response: We agree that some IPF-PAI items may be unlikely to
change during an IPF stay or may not be the primary focus of
psychiatric treatment. This initial version of the IPF-PAI is not
focused on items expected to improve during the stay. Section
1886(s)(4)(E) of the Act requires standardized patient assessment data
across specified categories, and some items describe patient status,
patient complexity, or stay characteristics at the relevant assessment
time point. We did not propose the IPF-PAI as a cost-reduction
intervention. It is being implemented to collect standardized patient
assessment data, and section 1886(s)(6) of the Act provides that IPF-
PAI data may be considered in future revisions to the IPF PPS payment
methodology. After reviewing these comments and comments received
regarding specific assessment items (described later in this section),
we are finalizing policies that IPFs that collect and submit Hearing,
Speech Clarity, Vision, and Mobility: Chair/Bed-to-Chair Transfer with
respect to admission will be deemed to have collected and submitted
these items with respect to both admission and discharge because it
unlikely that the assessment of those items at admission would differ
from assessment of the same item at discharge during the typical IPF
stay. Refer to section V.4.b. of this final rule for a complete
discussion of assessment timing.
Comment: A commenter stated that if the IPF-PAI identified a change
or deficit, IPFs may need to establish workflows that include a process
to provide additional resources for patients where a need is
identified, which may require additional staffing on units. The
commenter gave the example of patients with mobility issues that put
them at greater risk of falls potentially needing 1:1 staffing to
ensure safety.
Response: We acknowledge the commenter's concern that identifying a
need, change, or deficit through the IPF-PAI may affect workflows,
resources, or staffing. The IPF-PAI collects standardized patient
assessment data; it does not itself specify a required staffing model
or intervention. We note that IPFs are responsible for identifying and
providing clinically appropriate interventions and staffing.
Comment: A few commenters stated that the IPF-PAI does not function
as a true patient assessment instrument but is a hybrid documentation
form containing process checkboxes, administrative items, and only a
few screening questions, that capture whether a process occurred but
not that patient's status. A commenter stated that the IPF-PAI is not
well-matched to the workflows of IPFs, and that rather than being
informed by real-time clinical evaluations, the IPF-PAI would likely be
completed by reviewing medical records and copying information on the
standard form, creating burden without providing actionable information
to the care team. A commenter expressed concern that many IPF patients
will not be able to complete these assessment items and that refusals
will be the response entered for most of the assessment.
Response: We note that Section 1886(s)(4)(E) of the Act requires a
standardized patient assessment instrument that collects data across
specified categories and any other category determined appropriate by
the Secretary. Administrative items are necessary to support admission
and discharge record matching and database management; other items
collect standardized patient assessment data across the statutory
categories. We understand the commenters' reference to a ``true''
patient assessment instrument to mean that the commenters do not
believe it is a comprehensive clinical assessment. Standardized patient
assessment data may include patient status, patient characteristics,
services and interventions during the stay, and administrative
information needed to link records accurately. The IPF-PAI was designed
to complement and rely on existing admission and discharge assessment
processes which remain clinically valuable and appropriate. We note
that the IPF-PAI is not designed to be completed by patients
themselves. The IPF-PAI was developed to be completed based on
assessments conducted during the three days following admission or on
the day of discharge using information available in patients' records.
As discussed in the FY 2027 IPF PPS proposed rule (91 FR 17739),
feedback and evidence gathered from our TEP and through field testing
indicates that most administrative and clinical data will be available
in the medical record as part of routine recordkeeping, which may
reduce duplicative collection.
The available testing results do not indicate that refusals would
be entered for most of the assessment. Field (beta) testing found the
candidate assessment items generally feasible. An assessment item was
considered feasible if data could be collected from more than 90
percent of assessed patients (that is, less than 10 percent missing
data). The IPF-PAI Testing Report also found generally low missingness
across most items. CMS will provide detailed administration
instructions through the IPF-PAI Guidance Manual and training.
Comment: Several commenters stated the IRR of assessment items was
low, which may affect comparison of data across IPFs. Several
commenters stated that CMS should revise and retest the IPF-PAI to
demonstrate higher reliability before mandatory reporting begins. A few
commenters expressed concern that expanding the guidance manual and
training would not address reliability concerns.
Response: In developing the initial version of the IPF-PAI, we
considered reliability together with validity, feasibility, TEP input,
the statutorily mandated data categories, and burden. Field (beta)
testing assessed IRR using percent agreement and Cohen's Kappa and
showed that reliability varied by item (FR 91 17742), with the lowest
performance on both measures of reliability (that is, percent agreement
and Cohen's Kappa) observed for Psychiatric Treatments: Non-
pharmacological treatment other than brain stimulation, Restrictive
Interventions: Other restrictive interventions, and relatively low but
fair reliability for Vision. For the 3 of 13 assessment items which had
the lowest or lower reliability results, we analyzed the reasons for
lower agreement or consistency among testers and will address these
issues as appropriate (for example, through additional guidance and
training) prior to the beginning of data collection for the IPF-PAI.
Specifically, we noted low IRR in areas that require staff to assess
whether ``other'' interventions occurred (such as for Non-
pharmacological Treatment within the Special Services, Treatments, and
Interventions Category). Nonetheless, these assessment items were
supported by the TEP, determined to be valid and feasible, low in
burden, and aligned with one or more statutorily mandated data
categories. We note that we received comments recommending that CMS
clarify what types of treatments and interventions should be coded with
these ``other'' response options, which supports our interpretation
that low IRR was in part
[[Page 48553]]
due to lack of clear guidance during field (beta) testing.
Regarding the Vision assessment item, after analyzing the results
of the field (beta) testing, we determined that one vignette depicted a
clinical presentation which would require additional guidance. Based on
this analysis, we have made revisions to the Guidance Manual to clarify
the use of assistive devices for the Vision and Hearing assessment
items. We wish to clarify that completing the Vision assessment item
does not require administering a comprehensive vision exam. Rather, any
IPF staff person who has completed training on the IPF-PAI and reviewed
the Guidance Manual will be able to complete the assessment item using
information from typical interaction with the patient, the medical
record, patient self-report, or reports from caregivers. We trust that,
with appropriate familiarizing and training, IPF staff will also be
able to use this assessment item reliably. We also expect that IPFs
will provide a level of assessment and accommodations appropriate for
the patient, as required by the Conditions of Participation.
To improve consistency of data collection among IPFs, we will
continue to expand our guidance manual to provide more detailed
information about what types of ``other'' non-pharmacological
treatments and restrictive interventions should be included, and
detailed training and guidance on how to complete the Vision
assessment. In addition, we will continue to use feedback from IPFs in
refining guidance and note that a clinical help desk will be available
to answer specific questions on coding. This expanded guidance,
training, and help desk resources will provide more clarity to IPF
staff and improve consistent data collection.
Comment: Many commenters expressed concern that results from the
field test may not be applicable to some of the proposed assessment
items because these items were added or modified after testing.
Response: The version of the assessment used in field (beta)
testing contained more assessment items than we proposed as the initial
version of the IPF-PAI. Of the individual items proposed for the IPF-
PAI, only the Suicide Screening assessment item was modified in
response to TEP and tester feedback after field (beta) testing had
ended. Specifically, we revised the item to collect standardized
information on whether suicide screening occurred and the method of
assessment, rather than require the use of a specific standardized
suicide risk assessment tool. TEP members gave feedback that IPFs use a
variety of established screening and assessment approaches and
expressed preferences for different screening tools. The revised
approach supports comparability across facilities while preserving the
flexibility to use the screening or assessment approach that best fits
the IPF's clinical practice and the patient's needs. Because of the
importance of the suicide screening topic, and the version of the
assessment item used during field (beta) testing was otherwise deemed
to be valid, feasible, supported by the TEP, low burden, and fulfilled
one of the statutorily mandated data categories, we did not want to
delay inclusion of this assessment item in the IPF-PAI. We provide more
information about the changes to the Suicide Screening item later in
this section.
Comment: A few commenters expressed concern that the development
and testing processes were insufficient to implement the IPF-PAI in the
IPF Quality Reporting Program. A few commenters stated that CMS
selected items for inclusion in the IPF-PAI without due consideration
of the testing results. A commenter expressed concern that there was
insufficient discussion during the TEP meeting. Another commenter
expressed concern that psychiatrists were underrepresented in the
development and testing processes.
Response: We used a multi-stage, multi-stakeholder process to
identify, evaluate, and test candidate assessment items. This process
included identifying applicable clinical topic areas within the
statutorily mandated categories, reviewing clinical practice guidelines
and standardized assessment items used in behavioral health settings or
CMS quality reporting programs, considering prior public comments (89
FR 23200 through 23204), conducting alpha and beta testing, and
obtaining input from the TEP through several meetings and written
feedback. The TEP members were selected by the IPF-PAI development
contractor following a request for interested participants from the
general public communicated through our existing IPF Quality Reporting
Program list-serves and communication channels. The 16 TEP members (10
of whom were IPF clinicians) included a psychiatrist, a psychiatric
nurse practitioner, psychologists, nurses, and social workers, IPF
executives and administrators, individuals with experience as patients
in IPFs, and an interoperability expert.\30\ Through this process we
selected the IPF-PAI assessment items from an initial set of dozens of
candidate assessment items based on the item's relevance, feasibility,
validity, extent to which it meets the statutorily mandated
requirements, and whether it was supported. We then used results from
alpha and beta testing, and input from the TEP, to select the final set
of items to propose. We may consider additional domains or items
through future rulemaking.
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\30\ More information on the two meetings of the TEP held during
IPF-PAI development is available under IPF-PAI Development and
Testing resources at https://qualitynet.cms.gov/ipf/PAI.
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Comment: A few commenters expressed concern that the field test was
limited to approximately 1 percent of IPFs which may not be a
representative sample.
Response: We note that while recruitment for the field test used
convenience sampling, the IPFs that participated in the field test
represented a heterogeneous mix with respect to facility type, size,
ownership, geographic region, patient case mix, and urban and rural
facilities to improve the validity of the results and applicability to
a national program.
Comment: A commenter expressed concern that testing results may be
improved by using actual assessment of real IPF patients instead of
relying on hypothetical case data.
Response: Field (beta) testing used both hypothetical case studies
and an observational field test with real patients in participating
IPFs. The hypothetical case studies assessed inter-rater reliability,
while the observational field test confirmed feasibility and validity
in a real-world setting. Both testing modes were used to collect data
on time-to-complete.
Comment: A few commenters stated that the IPF-PAI uses different
numeric codes for the same response options, such as Yes and No, across
assessment items which may increase the risk of coding errors or
increase training burden.
Response: The CMS Data Element Library assigns numbers to the
response options on our standardized patient assessment instruments.
These numbers serve as identifiers to support data management and long-
term comparability across systems. These numbers are not intended to
imply rank, order, or severity. Instead, each number simply points to a
predefined category used for data management and long-term
comparability across systems. The meaning of each response option is
conveyed entirely by the text label, and users should rely on those
labels rather
[[Page 48554]]
than the numeric codes when selecting a response option.
Comment: A few commenters recommended that CMS provide clear coding
guidance to increase the feasibility and consistency of implementation,
with some commenters specifically recommending guidance with respect to
``Other'' response categories. A commenter recommended ensuring the
Guidance Manual is concise so that it can be used effectively for
implementation and training.
Response: We note that the revised IPF-PAI Guidance Manual, posted
with the publication of this final rule, incorporates additional
guidance based on comments received in response to our proposals. The
IPF-PAI Guidance Manual describes the intent for each assessment item,
the steps for assessment, coding instructions, coding tips, and
examples. For assessment items with ``Other'' response options, the
appropriate use of this response, coding tips, and examples are
included in the guidance manual. To support systematic collection of
IPF-PAI data and improve clarity, we will continue to work with IPF
staff, clinicians, and other interested parties, to provide training
and improve guidance materials in advance of implementation. We will
monitor questions received by the help desk and the IPF-PAI data that
is submitted to CMS to identify areas for additional guidance or
training.
Comment: A commenter stated that many inpatient psychiatric
patients are unable to appropriately answer assessment questions, and
that the proposed IPF-PAI does not have exclusions for patients who are
unwilling or unable to answer questions.
Response: Although we did not propose a patient-level exclusion to
the IPF-PAI as a whole due to patient refusal or inability to respond,
IPFs are able to indicate nonresponse as a valid response option for
certain applicable assessment items (for example, Suicide Screening).
Comment: A commenter recommended that CMS provide guidance
regarding which staff are appropriate to complete the IPF-PAI.
Response: We recognize that treatment team composition and staff
roles vary across IPFs, and therefore, we provide IPFs the flexibility
to implement the IPF-PAI into their existing assessment workflows as
appropriate. IPFs are responsible for ensuring that staff members
participating in the assessment process, and completing the section(s)
of the IPF-PAI, have the requisite knowledge and are qualified to
complete an accurate assessment per facility, state, and federal policy
and requirements. For purposes of estimating information collection
burden, we assumed that the IPF-PAI would most often be completed by a
variety of clinical or other IPF staff, including Medical Records
Specialists, Registered Nurses, Licensed Practical or Licensed
Vocational Nurses, and Mental Health and Substance Abuse Social
Workers.
Comment: Many commenters stated that significant mobility
limitations are typically identified during existing screening and
intake processes to ensure the facility can safely meet a patient's
medical needs. Many commenters stated that some IPFs do not provide
physical therapy or occupation therapy and may not admit patients who
require these services. A few commenters stated that IPFs typically
admit only ambulatory patients, based on not having the capacity to
care for patients with significant physical health needs, such as those
that impact mobility or those that are not able to transfer from chair
to bed independently.
Response: We appreciate this feedback. We maintain that patient
functional status provides important information to CMS on resource
intensity.
Comment: Many commenters stated the Mobility: Chair/Bed-to-Chair
Transfer item reflects other care settings (such as post-acute
settings) rather than the acute psychiatric setting. Many commenters
stated that most IPF admissions are not related to mobility
rehabilitation. A few commenters stated that while function is
important in inpatient psychiatric treatment, it is not the focus of
psychiatric treatment and therefore that Chair/Bed-to-Chair Transfer is
not a meaningful dimension of behavioral health. A commenter
recommended that we exclude mobility from bonus payment calculations if
the IPF-PAI is used for payment and consider it only for cost
adjustment if evidence shows reduced mobility increases IPF clinical
needs or costs.
Response: We acknowledge that mobility is generally not related to
the patient's primary reason for being admitted to an IPF and that a
patient at an IPF likely will not receive services during their IPF
stay related to improving mobility if they have mobility limitations,
whereas mobility may be more closely tied to a patient's reason for
admission and treatment plan in post-acute care settings. We note that
we did not propose Mobility: Chair/Bed-to-Chair Transfer in the IPF-PAI
because we believe that IPFs are providing or should be providing
specialized services related to mobility treatment and rehabilitation.
Rather, we proposed this assessment item because a majority of TEP
members supported its inclusion on the IPF-PAI, noting that this
information is routinely collected as it informs service delivery
during the inpatient stay and discharge planning. In addition, this
assessment item meets the statutorily required category of Functional
Status, specifically the mobility example set forth in the CAA, 2023. A
patient's ability to transfer to and from a bed to a chair or
wheelchair, including the level of assistance required when the patient
does not complete activities independently, reflects added resource
intensity and this information could therefore be used to adjust
payments to IPFs. For example, patients that require assistance to
transfer from a bed to a chair may also require assistance to transfer
to a dining chair to participate in meals. We acknowledge the
commenter's recommendation to only consider this assessment item for
payment adjustment if we find that mobility is related to IPF resource
use. We note that the IPF Quality Reporting Program is a pay-for-
reporting program; an IPF's performance on any of the assessment items
in the IPF-PAI will not impact payments. Rather, the only impact on
payments would be if an IPF does not comply with reporting requirements
or meet the compliance threshold (see section V.C.4.b. of this final
rule).
Comment: Several commenters stated that mobility or other items
related to functional status, impairments, medical conditions, or
comorbidities are unlikely to change meaningfully during shorter IPF
stays. These commenters stated that assessing this topic at admission
and discharge was duplicative and would not produce meaningful
information. Several commenters stated that, because IPFs generally
cannot improve mobility during a typical stay, the assessment item may
not produce meaningful quality information. A few commenters
recommended assessing mobility only at admission.
Response: We note that although we proposed requiring this item on
both admission and discharge assessments, we did not propose that this
item would be used to assess change in functional status between
admission and discharge. However, in response to comments and in
recognition that meaningful change in mobility is not expected for an
IPF stay, we are finalizing to require the Mobility: Chair/Bed-to-Chair
Transfer assessment item at the admission only. Under this finalized
policy, IPFs that collect and submit the Mobility: Chair/Bed-to-Chair
[[Page 48555]]
Transfer item with respect to admission will be deemed to have
collected and submitted it with respect to both admission and
discharge. In our convenience sample of IPF patients in the field
(beta) test, around 10 percent of patients were assessed as having
functional limitations (mobility) at admission. Although the sample is
small and not nationally representative, the findings indicate that
some patients in IPFs require assistance that may impact resource use.
We maintain that assessing this information in a standardized way will
enable comparison across IPFs and will provide useful information to
CMS for understanding the resource needs of IPFs.
Comment: A few commenters recommended assessing mobility through
patient self-report rather than through structured observation.
Response: We acknowledge the importance of patient self-report when
assessing mobility and note that the Guidance Manual states that the
steps for assessing the Mobility: Chair/bed-to-chair transfer
assessment item includes the option of incorporating patient-self
report combined with direct observation. Specifically, the Guidance
Manual states that assessors should ``assess the patient's mobility
performance based on direct observation, incorporating patient self-
report and reports from qualified clinicians, care staff, or family
documented in the patient's medical record during the assessment
period.''
Comment: A few commenters recommended different functional status
items for the statutorily mandated Functional Status data category,
including self-care, medication management, activities for daily living
(ADLs), need for walking assistance, need for modifications and
accommodations, and fall risk.
Response: We thank commenters for these recommendations. During the
development of the IPF-PAI, including in alpha and beta testing, and in
meetings with the TEP, we considered a broader range of functional
status topics, including self-care, mobility (other than bed-to-chair
transfer), medication management, use of assistive devices, and other
ADL-related items. To select appropriate assessment items for the IPF-
PAI we took into account testing results, reported clinical usefulness,
and perceived challenges or workflow issues identified by the TEP and
in field (beta) testing. This approach helps minimize burden while
capturing core functional status information, as required by statute.
We may consider whether additional or different functional status
assessment items should be included in future versions of the IPF-PAI
through future rulemaking.
Comment: A few commenters supported including the suicide screening
assessment item at admission and discharge.
Response: We thank the commenters for their support for the
inclusion of Suicide Screening on the IPF-PAI at admission and
discharge.
Comment: A few commenters stated that reporting on suicide
screening may not produce valuable information because suicide
screening is a routine activity that is already required under
accreditation requirements. Many commenters stated the suicide
screening item records whether screening occurred and by what
assessment method, rather than information such as assessed risk level,
ideation, whether the individual was actively suicidal or homicidal,
violent tendencies, safety plan, protective factors, clinical response,
treatment planning needs, or change over time. These commenters stated
that these limitations decrease the usefulness of the item for patient
care, quality measurement, outcomes, and cross-facility comparison. A
few commenters also recommended that the item show whether risk was
identified and addressed.
Response: As discussed in section V.C.3.b.ii. of this final rule,
we identified screening for suicidal thoughts and behaviors as an
important clinical topic with relevance to quality of care and resource
use. We note that all TEP members responded Strongly Agree or Agree to
including a Suicide Screening assessment item on the IPF-PAI. We chose
not to require use of a specific standardized suicide risk assessment
tool which could provide more detailed information--for example, on the
patient's risk level and treatment plans--in the initial version of the
IPF-PAI because TEP members noted that IPFs use a variety of
established screening and assessment approaches, and expressed
preferences for different screening tools. Instead, we designed the
item to collect standardized information on whether suicide screening
occurred and the method of assessment, which supports comparability
across facilities while preserving the flexibility to use the screening
or assessment approach that best fits their clinical practice and the
patient's needs. We recognize that the additional types of information
commenters suggested we include are important for clinicians in IPFs,
and CMS may consider collecting this information through future
rulemaking; however, we maintain that collecting whether and how
patients were screened for suicide risk will provide CMS with
standardized information across IPFs on an important topic.
Comment: A few commenters stated that suicide risk changes during
an IPF stay and should be assessed at clinically appropriate points,
including admission or intake, during the stay, and discharge. A
commenter stated the Suicide Screening item is a process measure and
raised concerns about the assessment window and stated discharge-
related suicide screening should occur within 24 hours of discharge,
not any time after the first three days.
Response: We proposed that the Suicide Screening assessment item be
collected at admission and discharge, however IPFs may assess for
suicide risk throughout the stay, as clinically appropriate. As with
other aspects of the IPF-PAI, in this initial version we strived to
collect the most important information while minimizing burden to
facilities. This includes burden that may be introduced if the IPF-PAI
is unnecessarily restrictive, for example, by requiring a specific
screening tool or clinical care process, such as screening for suicide
risk within 24 hours of discharge, when a less restrictive data
collection was likely to yield the information we need at this time. We
wish to clarify that we did not propose Suicide Screening as a quality
measure. Its inclusion on the IPF-PAI is intended to collect
standardized data across IPFs that could inform payment and aspects of
the IPF Quality Reporting Program. This assessment item collects
information that is not currently available to CMS. For this initial
version of the IPF-PAI, we sought to meet the statutorily mandated
categories while minimizing data collection burden, and we may consider
this recommendation as we evaluate potential future refinements to the
IPF-PAI through future rulemaking.
Comment: A few commenters stated that converting the suicide
assessment into a process item may render prior testing conclusions
inapplicable to the new assessment item. A few commenters recommended
additional testing or monitoring to ensure that the assessment item is
relevant and valid.
Response: We interpret these comments as referring to changes that
were made to the Suicide Screening item between alpha and beta testing,
and subsequent to beta testing. We maintain that the changes between
beta testing and the initial version of the IPF-PAI do not undermine
evidence of face validity and feasibility drawn from the testing and
TEP input. We note that
[[Page 48556]]
all members of the TEP (100 percent) responded Strongly Agree or Agree
to inclusion of a Suicide Screening item on the IPF-PAI indicating that
the assessment item is relevant. Descriptive statistics in the field
(beta) test supported face validity for a question that asks whether
the patient has been screened for suicide risk.\31\
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\31\ See Exhibit 23 in Appendix B of the IPF-PAI Testing Report.
Available at: https://qualitynet.cms.gov/files/69cd2666346406199a2239f2?filename=IPF-PAI_Testing_Report.pdf.
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To clarify, we included Columbia Suicide Severity Rating Scale (C-
SSRS) in alpha testing, and in beta testing, as an optional assessment
item, if the assessor first indicated that the patient was screened
using this tool. For the Suicide Screening assessment item on the
initial version of the IPF-PAI, we do not include the C-SSRS. During
developing of the IPF-PAI, we received feedback from alpha test
participants as well as the TEP that while the C-SSRS was in widespread
use, there are other suicide risk screening tools used in IPFs. The TEP
encouraged CMS to allow flexibility to IPFs, and to not require the use
of a standardized screening that they would not otherwise use. Although
the C-SSRS was included in the field (beta) test, requiring it to be
collected for all patients could have been burdensome and duplicative
of other standardized suicide screening tools. In addition, the
inclusion of the C-SSRS as an optional screening--to be used if the IPF
did not indicate they screened with another tool--would have produced
incomplete data for IPF patients, limiting its usefulness. Because of
broad support for this topic being on the IPF-PAI, and based on the
information about workflow and processes, we proposed an item that
would collect the information that is important to CMS at this time,
meets the statutory requirement, and is applicable across IPFs.
Comment: A few commenters recommended separating ``patient
declined'' from ``unable to respond.''
Response: In response to these comments, we are updating the
response options for this assessment item. The final version of the
IPF-PAI will include separate response options for ``patient declined''
and ``unable to respond'' for the Suicide Screening assessment item.
Comment: Several commenters recognized the importance of suicide
screening but stated that it does not measure cognitive function or
broader mental status. The commenters recommended addition of
assessment items on functional cognition, fluctuations in cognitive
function, and other dimensions of mental status.
Response: We do not consider suicide-related thoughts and behaviors
to be indicative of cognitive impairment. Rather, we understand mental
status to encompass a wide range of cognition, orientation, mood, and
decision-making capacities, including thought content. Of the candidate
assessment items considered for the IPF-PAI in this category, results
of our development and testing activities consistently identified
Suicide Screening as the most important, broadly applicable, and
feasible topic to use to meet this statutorily mandated category. We
acknowledge commenters' recommendations to add functional cognition or
other aspects of mental status, and we may consider these
recommendations as we evaluate potential future refinements to the IPF-
PAI through future rulemaking.
Comment: A few commenters include broader mental status and
symptom-improvement measures in the domain of Cognitive Function and
Mental Status, such as Patient Health Questionnaire-9 (PHQ-9),
Generalized Anxiety Disorder 7-item scale (GAD-7), or Positive and
Negative Syndrome Scale (PANSS).
Response: We also acknowledge commenters' recommendation to include
broader mental status and symptom-improvement measures, such as PHQ-9,
GAD-7, or PANSS. In the development of the IPF-PAI, we did consider
screening tools for depression and anxiety, such as the PHQ-9 and the
GAD-7, even including the PHQ-9 in the alpha test. However, we received
feedback in the alpha test that the PHQ-9 was not in widespread use in
IPFs, and participants believed it was a tool designed for use in
primary care or outpatient behavior health settings, rather than for
individuals facing acute psychiatric symptoms who are being treated in
an IPF. In addition, IPF staff described a preference to use the
assessment tools appropriate for their patient population, for example,
a depression assessment tailored for geriatric patients. With regard to
symptom improvement, while we acknowledge the importance of the IPF
stay in moderating severe symptoms, we also understand that improvement
for many symptoms often happens over weeks or months.
The initial version of the IPF-PAI is intended to meet the
statutorily mandated requirement to collect standardized patient
assessment data across the required categories while being mindful of
reporting burden on IPFs. For that reason, we proposed a minimal set of
assessment items for the initial IPF-PAI. Adding additional symptom-
improvement would expand the initial IPF-PAI beyond the assessment
items proposed for this rulemaking. We may reconsider these
recommendations in the future.
Comment: A commenter was supportive of the Primary Medical
Condition Category assessment item.
Response: We thank the commenter for supporting the Primary Medical
Condition Category assessment item. Most TEP members responded Strongly
Agree or Agree to including this item on the IPF-PAI. Field (beta)
testing also supported the feasibility and reliability of this item,
with no feasibility challenges identified and good IRR.
Comment: Several commenters expressed concern that the Medical
Condition category assessment item may increase burden because the
response options are not aligned with ICD-10 diagnostic codes which are
used on claims. A commenter stated that this assessment item duplicates
information that CMS already gets through claims.
Response: We note that these categories are aligned with the
categories on which IPFs report annually as part of the IPF Quality
Reporting Program, not with ICD-10 diagnostic codes, with the exception
of the Eating Disorders response option, which was added at the
recommendation of the TEP. To support assessors in correctly
classifying primary diagnosis category, we will provide crosswalk
tables of ICD-10-CM codes with the primary diagnosis categories on the
IPF Quality Reporting Program page on QualityNet.
This item is intended to collect a structured primary diagnosis
category that supports comparability across IPFs. We note that
diagnosis information submitted through claims is limited to Medicare
patients only, and data collection for the IPF-PAI is applicable to all
IPF patients aged 18 years and older.
Comment: A few commenters expressed concerns about inconsistent
coding, stating that it is difficult to code primary diagnosis
appropriately because the reasons for admission are not present or are
represented in multiple diagnostic categories. A commenter recommended
that CMS revise this assessment item to allow free text completion.
Response: In our development and testing activities, we found that
the Primary Medical Condition Category had no feasibility challenges
and good IRR. Detailed instructions for administration, including
guidance for situations in which a patient's reason for admission could
relate to more than
[[Page 48557]]
one diagnostic category, will be provided through training and the IPF-
PAI Guidance Manual. We are requiring structured data instead of free
text to comply with the CAA, 2023 by enabling comparison of data across
IPFs.
Comment: A commenter recommended that CMS collect this information
once per stay, stating that primary diagnosis is unlikely to change
meaningfully between admission and discharge, making repeated
collection unnecessary and burdensome.
Response: Input from IPF clinicians during development and testing
affirmed that many patients are admitted with a provisional diagnosis
that may be updated during the IPF stay. Therefore, we will retain the
requirement to assess Primary Medical Condition Category at admission
and discharge.
Comment: Several commenters stated that some conditions listed in
the response options for the Primary Medical Condition Category
assessment item, including delirium, dementia, amnestic disorders, and
substance use disorder are not eligible primary diagnoses for IPF
stays.
Response: The response options to the Primary Medical Condition
Category assessment item are based on the categories on which IPFs
report annually to CMS at the facility level, as part of the IPF
Quality Reporting Program (79 FR 45973). For reference, a 2024 report
showed approximately 15.5 percent of Medicare beneficiaries treated in
an IPF had a primary diagnosis of Alzheimer's Disease and Related
Dementias and approximately 6.3 percent had a primary diagnosis of
alcohol or drug abuse or dependence.\32\ We note that the IPF-PAI is
intended to collect comparable data for all IPF patients regardless of
payer, and that not all payers have the same eligibility policies.
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\32\ Office of the Assistant Secretary for Planning and
Evaluation (ASPE). Use of Inpatient Psychiatric Facilities by
Medicare Beneficiaries with Dementia. November 2024. https://aspe.hhs.gov/sites/default/files/documents/6056d67f812cb75290d9d9fc3bb31715/ipf-use-medicare-beneficiary-dementia.pdf.
---------------------------------------------------------------------------
Comment: A few commenters stated that the data generated from the
Primary Medical Condition Category assessment item would not be
meaningful or useful to the public, because they are too broad to
understand facility expertise in treating specific conditions and do
not provide data on patient outcomes.
Response: We are not publicly reporting data from the IPF-PAI at
this time. We proposed this assessment item to fulfill the statutorily
mandated category of Medical Conditions and Co-Morbidities to collect
information that can, for example inform resource intensity, or be used
to stratify patient data, not as a metric of the quality or
effectiveness of treatment.
Comment: A few commenters recommended that CMS include secondary
diagnoses and comorbidities as indicators of medical complexity,
stating that comorbidities are common in this patient population and
can require additional resources. A few commenters stated that the IPF-
PAI does not assess illness presentation, acuity, co-occurring
behavioral health or medical conditions, or trauma history and adverse
childhood experiences, that would impact costs of care and could be
used to adjust payments. A commenter recommended that CMS include an
assessment item, ``Consultation from a non-psychiatric medical
specialist was required'' to better address the resources required in
caring for patients with significant medical comorbidities.
Response: We thank commenters for their suggestions regarding
additional assessment items related to Medical Conditions or Co-
Morbidities that they believe could help inform resource use across
IPFs. For this initial version, we sought to meet the statutory
categories while minimizing data collection burden. We may consider
additional assessment items to collect information on medical
complexity, including information about secondary diagnoses or
comorbidities in future rulemaking.
Comment: A commenter supported the IPF-PAI assessment items for
impairments related to hearing, speech clarity, and vision at
admission.
Response: We thank the commenter for this support.
Comment: Many commenters stated that hearing, speech clarity, and
vision assessments do not support psychiatric treatment planning
because these items are rarely aligned with the reason for psychiatric
treatment. These commenters stated that these assessments appeared to
be drawn from non-psychiatric settings. Many commenters stated that IPF
staff are not experienced in administering hearing, speech clarity, and
vision assessments and therefore including these items would require
staff training. A few commenters also stated that reporting hearing,
speech clarity, and vision would not provide useful clinical, quality,
or outcomes information.
Response: As described earlier in this section of this final rule,
we undertook a multi-step process to identify appropriate assessment
items for each statutorily mandated category. One step of that process
was to review standardized assessment items used in other settings for
clinical relevance and the ability to reflect resource use. As part of
that review, we determined that the hearing, speech clarity, and vision
assessment items are clinically relevant to IPF patients, in that
comprehensive assessment is a basic component of good inpatient care,
and information such as whether a patient can hear, see, and speak
clearly is important for communication, safety, and care planning. In
testing and TEP review, these assessment items were described as
clinically useful and already part of routine IPF assessment practices,
supporting their inclusion in the IPF-PAI. We will provide training and
guidance on how IPF staff can assess a patient's hearing, vision, and
speech clarity. We wish to clarify that completing these assessment
items requires only usual interaction with the patient or review of the
medical record, and does not require a comprehensive hearing or vision
exam, or evaluation of speaking ability. Data collected on these
assessment items could reflect resource intensity. We note that these
are standardized assessment items, not quality measures, and their
inclusion on the IPF-PAI is not to provide information on quality or
outcomes. The IPF-PAI is intended to collect standardized patient
assessment data across IPFs using the same assessment items, response
options, standards, and definitions.
Comment: Many commenters stated that hearing, speech clarity, and
vision assessments may be difficult or inappropriate for patients
experiencing acute psychiatric symptoms. A few commenters stated that
medication side effects or psychiatric symptoms such as hallucinations
may affect these assessments. A few commenters recommended an option
for patient refusal or clinician inability to assess. A few commenters
stated that hearing, vision, and speech clarity are typically
identified prior to admission to ensure that the facility can meet the
patient's needs.
Response: We note that these are not patient interview items, but
rather assessments of level of impairment completed by IPF staff based
on information in the medical record and interactions with the patient.
The IPF-PAI Guidance Manual includes information including ``Coding
Tips'' to help IPF staff complete these assessment items for patients
who may be unable to respond to standard assessments including due to
acute psychiatric
[[Page 48558]]
symptoms.\33\ The causes of any impairments, such as an impairment
resulting from the side effects of a psychiatric medication side
effects, are not relevant to the completion of the assessment items.
Furthermore, assessors have until day 3 of the IPF stay to assess the
patient's hearing, speech clarity, and vision, which provides time for
IPF staff to interact with and observe patients in ways that can inform
their completion of the assessment items. We intend the policy we are
finalizing in Section V.C.4.B. of this final rule, which lowers the
compliance threshold from that which we proposed, to provide
flexibility for IPFs when they encounter challenges with completing the
IPF-PAI during initial implementation.
---------------------------------------------------------------------------
\33\ CMS, Draft Inpatient Psychiatric Facilities Patient
Assessment Instrument Manual. https://qualitynet.cms.gov/files/69cd28a56c16b5dc32991a9b?filename=IPF-PAI_GuidManual_v1.0.pdf (For
Hearing, Speech, and Vision Guidance, see Chapter 3: Section B).
---------------------------------------------------------------------------
Comment: A few commenters recommended changes to the impairment
items, including assessing speech clarity at both admission and
discharge, collecting static impairment-related items only once during
the IPF stay, modifying hearing, speech clarity, and vision to yes/no
questions, combining mobility and sensory impairments into one item,
and adding assessment items for urinary incontinence, bowel
incontinence, and dysphagia.
Response: We proposed Hearing, Speech Clarity, and Vision for
admission-only collection based on testing and clinician input and to
reflect the fact that these items are unlikely to change during the IPF
stay. As a result, IPFs that collect and submit Hearing, Speech
Clarity, and Vision with respect to admission will be deemed to have
collected and submitted these items with respect to both admission and
discharge. For the purpose of reflecting resource intensity, the multi-
level response options will provide more granular information than a
binary yes/no option. We may consider refinements or additional
impairment items through future rulemaking.
Comment: A few commenters supported the data elements for the
Special Services, Treatments, and Interventions Category, specifically
the Other Restrictive Interventions item (which includes unit
restrictions, one-to-one observation, and line-of-sight supervision)
and the non-pharmacological therapies. Commenters stated that these
assessment items will provide information that is important for the IPF
setting.
Response: We thank commenters for their support for these
assessment items within the Special Services, Treatments, and
Interventions Category and agree that these items are important for the
IPF setting. We note that we have revised the name of the Other
Restrictive Interventions response option to be Other Interventions as
it is a response option to the Restrictive Interventions section of the
Special Services, Treatments, and Interventions in the Inpatient
Psychiatric Setting assessment item.
Comment: Several commenters stated that guidance was limited or
unclear for components of the Special Services, Treatments, and
Interventions in the Inpatient Psychiatric Setting item. Commenters
specifically recommended clarifying the Medications item, the Non-
Pharmacological Treatment item, Unit Restrictions, One-to-One
Observations, and ``Other'' response options. Several commenters stated
that nearly all patients receive interventions in the psychiatric
treatments item and recommended additional response options (for
example, categories of medication type) to improve the value of the
data.
Response: We appreciate these recommendations. The revised IPF-PAI
Guidance Manual, posted with the publication of this final rule, will
incorporate additional guidance based on comments received in response
to our proposals. In addition, to support collection of accurate
standardized IPF-PAI data, we will offer training in advance of
implementation, as well as a help desk for ongoing support, and
continue to improve guidance materials as challenges are identified. We
will monitor data submitted for the initial IPF-PAI to determine if
additional assessment items or response options would increase the
value of these data.
Comment: Several commenters stated that CMS underestimated the
burden of reporting data on Special Services, Treatments, and
Interventions. Several commenters stated that information on special
services and restrictive interventions is not readily available in
structured EHR fields so data collection would require burdensome
mapping between the EHR and the IPF-PAI.
Response: We understand commenters' concerns about our estimate of
collection of information burden for the Special Services, Treatments,
and Interventions Category. As discussed in the FY 2027 IPF PPS
proposed rule (91 FR 17749), our estimates for completing each
assessment item part of 0.30 minutes per assessment item part is
similar to estimates used in other CMS PAI data collections, and was
supported by field (beta) testing, in which we calculated that median
time to complete was 0.15 minutes per assessment item part (see section
VI.C.2. of this final rule for more information). We also acknowledge
that reporting data directly from the EHR may require updates to
existing documentation processes and workflows. To provide IPFs more
time to make these and other updates and in response to concerns raised
by commenters, we are providing three quarters of voluntary reporting
prior to mandatory reporting of the IPF-PAI in Q3 of 2028. To further
reduce burden and because these data are specific to the IPF stay, we
are making a modification to require data for the Special Services,
Treatments, and Interventions Category to be collected at Discharge
only, with a lookback period of the entire IPF stay. This extended
lookback period will ensure that the data is submitted with respect to
the entirety of the IPF stay, including admission and discharge.
Comment: A commenter expressed concern that documenting Special
Services, Treatments, and Interventions at discharge for patients with
longer stays would be burdensome because patients may have received
many different special services, treatments, and interventions
throughout their stay, and identifying those would require review of
the patient's entire medical record.
Response: The data reported in response to the Special Services,
Treatments, and Interventions Category collects important elements of
IPF treatment for all patients for whom the IPF-PAI is completed. We
note that the discharge assessment captures whether the patient
received each listed service, treatment, or intervention at least once
during the inpatient stay. Facilities are not expected to determine the
number of occurrences or dates on which services were provided. We
encourage IPFs that routinely treat patients with longer stays to
identify strategies, such as incorporating ongoing tracking of these
services through developing logs for these items, rather than relying
on retrospective review of patient medical records at discharge.
Comment: Several commenters recommended that CMS not include the
Seclusion and Restraint sections of this assessment item because of
duplication with the Hours of Physical Restraint Use (HBIPS-2) and
Hours of Seclusion Use (HBIPS-3) quality measures in the IPF Quality
Reporting Program or the Conditions of Participation reporting
requirements. A commenter stated that CMS had previously proposed
removing
[[Page 48559]]
the HBIPS-2 and HBIPS-3 measures because of high and unvarying
performance and that collecting data on similar data elements will not
provide meaningful information to compare IPFs. A few commenters
recommended modified or additional response options (such as
distinguishing between manual and mechanical restraint) to collect more
meaningful data.
Response: We recognize that IPFs currently collect and report
similar information related to seclusion and restraint use to CMS.
Because IPFs routinely collect and maintain records of the use of
seclusion and restraint in compliance with the Conditions of
Participation, we believe reporting whether a patient received these
interventions during the applicable assessment period represents a
limited additional burden. We also believe there is value in collecting
patient-level information on the use of seclusion and restraint during
an individual's inpatient psychiatric stay, in addition to the
facility-level rates of restraint and seclusion hours per 1,000 patient
hours captured by the HBIPS-2 and HBIPS-3 quality measures. We also
note that the IPF-PAI will collect more granular data than existing
requirements, including type of restraint (chemical or physical), and
use of other interventions such as unit restrictions, line of sight
supervision, and 1:1 observation. We appreciate commenters' suggestions
to add additional response options to add more granularity, such as
manual versus mechanical restraint, and will consider these
recommendations as we evaluate potential future refinements to the IPF-
PAI through future rulemaking. Regarding the comment that we previously
proposed removing HBIPS-2 and HBIPS-3 because these measures had high
and unvarying performance, we note that we did not finalize that
proposal because we agreed with many commenters who stated that these
measures continued to provide meaningful information despite their
performance (83 FR 38603), and we believe that collecting complimentary
information through the IPF-PAI will also provide meaningful
information.
Comment: A few commenters expressed concern about including
information regarding ECT utilization because of the sensitive nature
of ECT data and potential uses of publicly available data sets. A
commenter stated that CMS already receives data regarding ECT use as
part of IPF claims.
Response: We note that under the Special Services, Treatments, and
Interventions Category we require IPFs to report data on Brain
Stimulation treatments received by the patient. While we do receive
some information regarding ECT on claims for Medicare patients, data on
the use of brain stimulation, including ECT, Transcranial Magnetic
Stimulation, and other types of brain stimulation, would provide
valuable information about resource use in the IPF setting. We note
that we do not currently have any policies under which we would
publicly report data collected under the IPF-PAI.
Comment: A few commenters recommended additional assessment items
for the Special Services, Treatments, and Interventions Category,
specifically ``high-cost technology, treatments, and interventions''
and ``Involuntary Commitment/Treatment Over Objection.'' A commenter
recommended including detailed information about the timing and use of
recreational therapy in the IPF setting.
Response: We thank the commenters for these recommendations. We may
consider refinements or additional items related to Special Services,
Treatments, and Interventions through future rulemaking. We note that
we included an item for voluntary/involuntary admission in the
administrative data required for submission of the IPF-PAI.
Comment: A commenter supported aligning administrative data
elements between the IPF-PAI and existing patient assessment
instruments.
Response: We thank the commenter for their support.
Comment: A commenter requested clarification regarding whether
patient name, birth date, and sex are required if other identifiers
like Medicare number and SSN are submitted.
Response: As discussed in the FY 2027 IPF PPS proposed rule (91 FR
17742), assessment items in the Administrative category, will support
accurate linkage of assessment records within iQIES. Because some
individuals share names and birth dates, iQIES' matching algorithm uses
multiple pieces of information for each patient to ensure that the
correct records are matched; internal analysis has found that having
multiple pieces of information about a patient increases the likelihood
of correct matching. Patient name, birth date, and sex are therefore
essential for record matching. As discussed later in this section, we
are not finalizing the inclusion of SSN for this initial version of the
IPF-PAI, and we will require Medicare Number only for patients for whom
Medicare is the primary payer.
Comment: Several commenters stated that SSN may be unavailable
because some facilities do not routinely collect this information or
because SSN is unknown. Several commenters stated that collecting
detailed identification information, including SSN, would likely not be
approved by patient advocacy committees and may impact patient trust,
engagement, and willingness to disclose sensitive information
throughout the course of their stay. Several commenters expressed
concerns that collection of SSN poses a privacy risk. A commenter
stated that CMS has neither demonstrated the necessity of requiring
SSNs for all patients, regardless of payer, nor that there are not less
burdensome options available to operate the IPF Quality Reporting
Program and recommended that CMS designate SSN as optional.
Response: We appreciate these comments. We proposed collecting SSN
because it improves our ability to uniquely identify patient records
and to match assessment data for the same patient longitudinally. After
consideration of public comments regarding the collection of SSN, we
are removing SSN from the initial version of the IPF-PAI.
Comment: A commenter expressed concerns that the items in the
Administrative Data category are covered under HIPAA and raise concerns
about breach-risk and associated penalties. A few commenters
recommended providing additional information about the necessity of
data collection, the intended uses of these data, and the planned data
protections because of the sensitive nature of psychiatric inpatient
admission and the importance of maintaining patient privacy.
Response: We appreciate these comments. We are collecting certain
identifiable data in the Administrative Data category to support
patient identification, record matching, and database management
functions associated with standardized assessment data. We are
collecting these data on all patients aged 18 and older because the
IPF-PAI is to be collected for all such patients in an IPF. In the FY
2027 IPF PPS proposed rule (91 FR 17745), we stated that submission of
IPF-PAI data to CMS through the web app, PARIT, would follow standard
HIPAA-compliant encryption protocols. For IPFs who work with vendors to
develop custom HL7[supreg] FHIR[supreg] submission pathways--for
example, to extract data directly from the EHR-we expect IPFs to
operate in compliance with applicable privacy and security requirements
for transmitting health care data. After IPF-PAI data are received by
CMS, they will be stored in iQIES, a CMS system that operates under
federal security requirements and
[[Page 48560]]
is compliant with the Federal Information Security Management Act of
2014 (FISMA).\34\ In practice, this level of security means that users
must verify their identity, use multi-factor authentication, and have
approved access roles, and that the system is subject to ongoing
security and privacy reviews and monitoring.
---------------------------------------------------------------------------
\34\ Federal Information Security Modernization Act of 2014,
Public Law 113-283, 128 Stat. 3073 (2014).
---------------------------------------------------------------------------
Comment: A few commenters asked CMS to provide guidance on how
facilities should respond to assessment items where a patient refuses
to provide information on their Sex, and if CMS will consider an
assessment incomplete if a patient declines to provide this
information.
Response: We thank the commenter for these questions. Sex remains a
required administrative data element, as proposed, to support record
matching and database management. If a patient declines to self-report
sex during their intake process, we defer to the IPF's policy on
medical recordkeeping for how to complete this information.
Comment: A commenter recommended that CMS replace the term ``sex''
with ``sex at birth.''
Response: We thank the commenter for the feedback. It is the policy
of HHS to use the term ``sex'' when referring to person's biological
classification as male or female.\35\ We intend for IPFs to populate
this field with the corresponding information, even if it is labeled
differently in the IPF's medical recording keeping system.
---------------------------------------------------------------------------
\35\ HHS, Office on Women's Health. ``Sex-Based Definitions.''
https://womenshealth.gov/article/sex-based-definitions. Accessed
June 19, 2026.
---------------------------------------------------------------------------
Comment: A commenter stated that Payer information may be
burdensome to collect, as this information is often stored separately
from the patient's record of treatment.
Response: We appreciate this feedback. We maintain that payer
information will be useful to CMS for stratifying patients in analyses
and understanding differences in case mix and resource use across payer
type. Although it may require some additional effort to collect, it
provides important standardized information for CMS and can usually be
obtained from administrative records.
Comment: Several commenters expressed concern about the proposed
use of multiple administrative assessment items for patient matching,
stating that routine variations or errors in data entry in these fields
could result in mismatched assessment data and financial consequences
for IPFs. A commenter stated that CMS has acknowledged that minor
discrepancies can trigger financial penalties.
Response: We thank the commenters for their feedback. We wish to
clarify that the matching process described in section V.C.3.b.vi. of
this final rule supports CMS in associating admission assessments with
discharge assessments in our databases. We wish to clarify that data
matching is not required to meet the compliance threshold, and
therefore, variations or errors in data entry in the administrative
fields will not have financial consequences for IPFs.
Comment: A commenter expressed concerns about manual entry
requirements for NPI, CCN, and assessment reference dates and
recommended that these be automated.
Response: We appreciate this feedback and recognize that automating
some administrative assessment items would reduce burden and data entry
errors. IPFs that use the FHIR[supreg] APIs for data submission have
flexibility in how the tool is integrated into their EHR. That is, some
IPFs may purchase or develop solutions that reduce burden by auto-
populating administrative data or other information. For the initial
version of PARIT, the free web app, we are not able to offer this
functionality. We will consider this functionality for future versions
of the web app.
Comment: A few commenters stated that additional patient-level
information would provide useful information about resource needs.
These commenters specifically recommended language and cultural
factors, social determinants of health, and information about social
isolation. A few commenters also recommended including items regarding
the need for patients and providers to attend legal hearings and the
need for staff to collaborate with outside entities.
Response: For this initial version of the IPF-PAI, we sought to
meet the statutorily mandated categories while minimizing data
collection burden. We may consider refinements or additional items
related to Special Services, Treatments, and Interventions through
future rulemaking.
Final Decision: After consideration of the comments received, we
are finalizing these assessment items for the IPF-PAI, to fulfill the
categories named in the CAA, 2023, and to establish a new category of
Administrative Data, with modifications. We will require the assessment
item Mobility: Chair/Bed-to-Chair Transfer to be collected at admission
only. IPFs that collect and submit Mobility: Chair/Bed-to-Chair
Transfer with respect to admission will be deemed to have collected and
submitted it with respect to both admission and discharge. We will
require that the assessment item Special Services, Treatments, and
Interventions in the Inpatient Psychiatric Setting be collected at
Discharge only, with an extended lookback period of the entire IPF
stay, from admission through discharge. In the Administrative Data
category, we are not finalizing inclusion of SSN for the IPF-PAI, and
the Medicare Number will only be required for patients for whom
Medicare is the primary payer (see section V.C.4.b. of this final
rule).
4. Form, Manner, and Timing of Data Collection and Submission of the
IPF-PAI
a. Reporting Periods and Data Submission Deadlines for the IPF-PAI
In the FY 2027 IPF PPS proposed rule, we proposed mandatory
reporting of the IPF-PAI beginning with a reporting period of October
1, 2027, through December 31, 2027, impacting the FY 2029 payment
determination. That is, IPFs would be required to collect and submit
IPF-PAI admission and discharge assessments for all patients aged 18
years and older, regardless of payer, beginning October 1, 2027;
admission and discharge assessments conducted October 1, 2027, through
December 31, 2027, would impact the FY 2029 payment determination.
We proposed that beginning with the FY 2030 payment determination
and for subsequent years, IPF would be required to report data with
respect to admissions and discharges for all patients age 18 years and
older that occur during the calendar year from January 1 through
December 31, that is, the calendar year two years preceding the FY
payment determination year (for example, January 1, 2028 through
December 31, 2028 for the FY 2030 payment determination, January 1,
2029 through December 31, 2029 for the FY 2031 payment determination,
and so on). We proposed that for each calendar year reporting period,
the IPF-PAI data must be submitted as quarterly reporting periods by a
submission deadline of the 15th day of the second month after the end
of the calendar quarter, as outlined in Table 7. See Table 7 for
proposed submission deadlines through the FY 2031 payment
determination. We stated that we would also publish upcoming submission
deadlines on the CMS QualityNet website at https://qualitynet.cms.gov/.
Specifically for the purpose of determining which applicable
reporting quarter the admission or discharge falls within, we proposed
to use the Assessment Reference Date (ARD) associated with each
admission and
[[Page 48561]]
discharge. The Admission ARD would be not later than 3 days after the
admission and the Discharge ARD would be the day of discharge. We
proposed to require that an IPF submits an admission assessment by the
15th day of the second month after the end of the calendar quarter in
which the ARD for the admission assessment occurred. We likewise
proposed that an IPF submits a discharge assessment by the 15th day of
the second month following the calendar quarter in which the ARD for
the discharge occurred. The submission deadlines and associated payment
determination years that we proposed for the first nine quarters of
IPF-PAI data collection are shown in Table 7. We noted that when the
submission deadline falls on a Friday, Saturday, Sunday, or Federal
holiday, we would move the data submission deadline to the next
business day.
[GRAPHIC] [TIFF OMITTED] TR31JY26.029
We noted that notwithstanding the quarterly submission deadlines
for IPF-PAI data described in this section, based on best practices
learned from our long-standing experience with standardized patient
assessment instruments for post-acute care providers, we recommended
rolling submissions of IPF-PAI records to CMS throughout the data
collection period as patients are admitted and discharged for more
timely, accurate, and efficiently collected assessment data. The data
submission methods we proposed are described in section V.C.4.c. of
this final rule. We noted that ongoing submission of IPF-PAI records
allows an IPF to monitor their compliance rates through on-demand
provider reports available through internet Quality Improvement and
Evaluation System (iQIES). We stated that we would issue technical sub-
regulatory guidance for the IPF-PAI assessment items and data
collection, including recommended frequency of submissions via the IPF-
PAI Guidance Manual (draft available under IPF-PAI Resources at https://qualitynet.cms.gov/ipf/PAI).
We received public comment on these proposals.
Comment: A commenter expressed support for the consistency of IPF-
PAI reporting periods and data submission deadlines with existing
Inpatient Rehabilitation Facility -Patient Assessment Instrument (IRF-
PAI) processes.
Response: We thank the commenter for their support. We agree that
alignment across standardized patient assessment instruments can be
helpful.
Comment: Many commenters recommended that CMS delay implementation
until additional instrument development and interested parties
engagement take place. Several commenters recommended less burdensome
reporting structures, including completing the PAI only at admission,
using one PAI rather than separate admission and discharge PAIs,
avoiding an initial one-quarter partial-year reporting period, delaying
reporting until January 1, 2028, or avoiding payment impacts during
initial implementation.
Response: We are finalizing our proposal to require separate IPF-
PAI submissions for admission and discharge, but based on commenters'
feedback, we are modifying the requirements to no longer require some
items to be collected at both time points. As described in section
V.C.3. of this final rule, we will require the Mobility assessment item
at Admission only--rather than at Admission and Discharge, as proposed.
IPFs that collect and submit the Mobility assessment item with respect
to admission will be deemed to have collected and submitted it with
respect to both admission and discharge. We will require the Special
Services, Treatments, and Interventions in the Inpatient Psychiatric
Setting assessment item at Discharge only--rather than at both
Admission and Discharge--with an extended lookback period to ensure
that the data is collected with respect to the entirety of the IPF
stay, from admission through discharge. These modifications reduce the
reporting burden at each time point.
Additionally, based on commenters' feedback we are modifying the
proposed beginning date for mandatory reporting. As described in
section V.C.4.b. of this final rule, we are finalizing a policy in
which IPFs may begin voluntary reporting of the IPF-PAI beginning
October 1, 2027. Mandatory reporting of the IPF-PAI then begins on July
1, 2028 for Q3 CY 2028. Successful submission of IPF-PAI data for Q3
2028 and Q4 2028 will impact the FY 2030 payment determination under
the IPF Quality Reporting Program. We interpret commenters' concern
regarding partial year reporting periods to be based on the potential
for small data sets reported through an unfamiliar reporting structure
to impact IPF payments. Because we are providing three quarters of
voluntary data submission during which IPFs can become familiar with
IPF-PAI data collection and reporting, and increasing the partial year
reporting
[[Page 48562]]
period from one quarter to two quarters this concern is mitigated by
our modified policies.
Comment: Several commenters recommended aligning with IPF Quality
Reporting Program data submission requirements by requiring annual
reporting rather than aligning with quarterly patient assessment
reporting in other settings.
Response: We understand commenters' concerns that quarterly
submission deadlines for the IPF-PAI will increase the number of
reporting deadlines that IPFs are required to meet. However, as
described in the FY 2027 IPF PPS proposed rule (91 FR 17744), based on
best practices learned from our experience with standardized patient
assessment instruments for post-acute care providers, we recommended
rolling submissions of IPF-PAI records to CMS throughout the data
collection period as patients are admitted and discharged for more
timely, accurate, and efficiently collected assessment data. We note
that we define timeframes for data collection for both Admission and
Discharge: the Admission ARD of 3 days and the Discharge ARD of the day
of discharge. We expect an IPF to complete the IPF-PAI during those
timeframes, rather than attempting to complete the IPF-PAI
retrospectively at the time of the data submission requirement. In
addition, to support accuracy, ongoing submission of IPF-PAI records
allows IPFs to monitor their compliance rate through the provider
reports available through iQIES.
Comment: A few commenters raised burden concerns, including
significant workflow changes and labor resource needs, difficulty
recruiting and maintaining staff for the work, the risk that smaller
facilities may struggle with quarterly submission deadlines, and
clinical concerns with assessing patients during the first two days of
psychiatric admission when they may be in acute crisis, medically
unstable, or unable to meaningfully participate in assessment.
Response: As described in section V.C.4.b. of this final rule,
based on commenters' feedback we are finalizing a policy in which IPFs
will have three voluntary quarters of data submission beginning October
1, 2027, to become familiar with the IPF-PAI and adapt their workflows
as needed, before mandatory submission. We are also finalizing a lower
compliance threshold than the proposed 80 percent, beginning at 50
percent for when the quarterly reporting periods become mandatory, then
increasing to 70 percent beginning with the CY 2030 reporting period,
which starts January 1, 2030 (see section V.C.4.b.). Additionally, our
finalized policy reduces the number of assessment items collected at
each time point, as described in this section. These several
modifications to reduce reporting burden, provide a longer
implementation timeline for IPFs, and provide additional flexibilities
including the voluntary reporting period help address the anticipated
challenges described by commenters including for smaller facilities in
order to facilitate successful implementation. We understand the
commenters' concern that patients may be in acute crisis or medically
unstable during the first days of their stay. We note that the ARD for
the admission assessment is 3 days from the date of admission, not two
as indicated by the commenter. We acknowledge there may be situations
in which IPFs may report data as ``not applicable'' if they are unable
to assess patients due to acute crisis or medical instability. We refer
readers to the IPF PAI Manual for additional information on use of the
``not applicable'' code.\36\ As discussed in response to other comments
in this section and described in the FY 2027 IPF PPS proposed rule (91
FR 17744), we maintain that there are benefits to the quarterly
submission deadlines for IPF-PAI data that will support IPFs in
submitting accurate data on an ongoing basis, and allowing them to
monitor their compliance rates throughout the year, providing early
feedback on compliance issues, should they occur.
---------------------------------------------------------------------------
\36\ IPF-PAI Guidance Manual--Draft, Available at https://qualitynet.cms.gov/ipf/PAI#tab2.
---------------------------------------------------------------------------
Comment: A commenter stated that Special Services, Treatments, and
Interventions reporting would be more feasible using the first three
days of admission, a seven-day lookback before discharge, or
prospective tracking of physician-ordered special treatments, rather
than requiring long lookbacks across hybrid records and multiple
reporting systems.
Response: We acknowledge the commenter's concerns about challenges
related to completing the Special Services, Treatments, and
Interventions in the Inpatient Psychiatric Setting assessment item. We
note that, as described in section V.C.3. of this final rule, based on
commenters' feedback, we are finalizing a modified policy to require
the Special Services, Treatments, and Interventions (SSTI) assessment
item at Discharge only--rather than at both Admission and Discharge.
Because the first three days will no longer be captured under the
Admission assessment for this assessment item, we are also changing the
lookback period for it to the entire stay. That is, the modified
assessment item will be collected only at the Discharge time point, but
assessors will populate this item with treatments and interventions
administered during the first three days of the stay (the Admission
period), as well as during the remainder of the stay. We intend for
this change to reduce some reporting burden for this item, while still
providing information on SSTI in the Inpatient Psychiatric Setting from
across the entire stay, from admission to discharge. This information
is valuable for CMS to understand resource intensity and the types of
treatments and interventions used in IPFs.
Final Decision: After consideration of the public comments
received, we are finalizing the reporting periods and data submission
policies and deadlines with modifications. Because of concerns
expressed by commenters regarding the burden and complexity associated
with requiring both admission and discharge assessments for patients
with stays of less than 3 calendar days we are finalizing a policy
under which IPFs will not be required to complete a separate discharge
assessment for patients whose length of stay is less than 3 calendar
days. Instead, for these patients, IPFs will be required to collect
limited items from the discharge assessment item set as part of the
admission assessment.\37\ This modification reduces burden and
simplifies processes while still collecting the important patient
assessment information. In addition, we are finalizing that, for the
purpose of determining which applicable reporting quarter the admission
or discharge falls within, the IPF should use the admission or the
discharge date, rather than the Admission ARD and the Discharge ARD, as
we had proposed.
---------------------------------------------------------------------------
\37\ The assessment items from the Discharge assessment required
for patients with stays of less than 3 days will be specified in the
Guidance Manual and represented as skip patterns in the FHIR[supreg]
Implementation Guides. For the implementation of the IPF-PAI on
October 1, 2027, those items are Discharge Date, Discharge Type, and
Special Services, Treatments, and Interventions in the Inpatient
Psychiatric Setting.
---------------------------------------------------------------------------
Table 8. shows data submission deadlines through the FY 2031
payment determination using the finalized reporting period and data
submission deadline policies, updated to reflect the voluntary
reporting period and starting reporting quarter for mandatory
reporting, as described in section V.C.4.b. of this final rule.
[[Page 48563]]
[GRAPHIC] [TIFF OMITTED] TR31JY26.030
b. Compliance Threshold for the IPF-PAI To Receive the Applicable
Annual Payment Update Beginning With the FY 2029 Payment Determination
In the FY 2027 IPF PPS proposed rule, we proposed that an IPF would
need to complete 100 percent of the IPF-PAI assessment items on 80
percent of the IPF-PAIs submitted to satisfy the IPF Quality Reporting
Program data reporting requirements for the applicable annual payment
determination. We proposed that an IPF that fails to submit 100 percent
of the assessment items on at least 80 percent of the IPF-PAIs
submitted to CMS would be deemed non-compliant with the IPF Quality
Reporting Program reporting requirements and, as a result, would be
subject to a 2-percentage point reduction to its annual payment update
as required by section 1886(s)(4)(A) of the Act.
We proposed this 80 percent compliance threshold as a starting
point (rather than proposing a 100 percent threshold), understanding
that it will take time for IPFs to become familiar with the data
collection and submission workflows of this new program requirement. We
stated that we will monitor data completion rates and provide training
and other implementation resources to help IPFs be successful in
meeting or exceeding the 80 percent compliance threshold. We stated
that over time, in future rulemaking, we plan to incrementally increase
the compliance rate that an IPF would need to achieve in order to be
considered compliant with the IPF Quality Reporting Program IPF-PAI
requirement. We noted that we adopted a similar approach of
incrementally increasing the compliance threshold over time with the
standardized patient assessment instruments used by post-acute care
providers.
We proposed that for the FY 2029 payment determination, the
compliance rate for each IPF would be calculated for the Q4 2027
reporting quarter, and that for the FY 2030 payment determination and
subsequent years, the compliance rate for each IPF would be calculated
based on the entire CY 2028 reporting period (that is, four CY
reporting quarters of IPF-PAI data).
We proposed to codify the data completion requirement of 100
percent of required assessment items for at least 80 percent of
submitted assessments for the IPF-PAI at the proposed new Sec.
412.433(h).
We received public comments on this proposal.
Comment: A commenter expressed support for the alignment of IPF-PAI
compliance thresholds with IRF-PAI compliance thresholds.
Response: We thank the commenter for their support.
Comment: Several commenters expressed concern that the 80 percent
compliance threshold for complete assessments is too high for initial
implementation. These commenters described implementation challenges
and stated that it will take time for the IPF-PAI to be integrated into
workflows in a way that IPFs will be able to achieve such a high
completion rate. A few commenters expressed concern regarding the
effects of a 2-percentage point payment reduction and recommended
reducing the compliance threshold, postponing payment reductions, or
both. A commenter recommended a three-year phased implementation
transitioning from 60 percent in year 1 to 80 percent by year 3. A
commenter suggested that CMS could consider adjustments to the
threshold based on facility size, stating that smaller facilities are
often under resourced and understaffed, especially rural facilities.
Response: We appreciate the commenters' concerns. Based on
commenters' feedback we are finalizing a compliance policy with a lower
compliance threshold than proposed Specifically for the initial
mandatory reporting period of Q3 and Q4 CY 2028, impacting the 2030
payment determination, the compliance threshold will be 100 percent of
the required data elements on 50 percent of the IPF-PAIs submitted. The
compliance threshold will increase to 100 percent of the required data
elements on 70 percent of the IPF-PAIs submitted beginning with the CY
2029 reporting period. We intend that this modification will give IPFs,
including under-resourced facilities, additional flexibility during
implementation of the IPF-PAI. We refer readers to Table 9 at the end
of this section for more information on these updated requirements. We
note that in section V.C.3.b of this final rule we are also
establishing policies under which some data elements will not be
required or will only be required at admission or discharge, not both.
Table 10, which is included at the end of this section, summarizes
which data elements are required to meet the 100 percent completion
requirement.
Comment: A commenter stated that IPFs may falsely report items to
meet the compliance threshold, given what the commenter stated was the
IPF-PAI's lack of clinical relevance, inappropriateness for patients
with acute mental health needs, burden on staff, and financial risk for
non-completion.
[[Page 48564]]
Response: We expect IPFs to submit accurate and complete data in
accordance with the reporting requirements. We refer readers to section
V.C.2 of this final rule in which we describe the multi-stage process
we undertook to identify assessment items that would be responsive to
the statutory mandate and clinically appropriate for patients in the
IPF setting. To reduce burden on staff we are also finalizing policies
to provide more flexibilities to IPFs as they become familiar with the
IPF-PAI and adjust their workflows as needed. These flexibilities
include three quarters of voluntary submission before mandatory
submission, a lower compliance threshold than proposed, and a reduction
in the number of assessment items collected at each time point (see
section V.C.3.b. of this final rule).
Comment: Several commenters stated that the admission and discharge
assessment windows may overlap, especially for patients who are
discharged on Day 2 or Day 3, creating duplicative documentation or
uncertainty about whether both assessments would be required. They
asked CMS to provide guidance on how to complete the IPF-PAI when the
assessment windows overlap and recommended that CMS allow for a
combined or single IPF-PAI to meet the requirement for assessment at
admission and discharge.
Response: We understand commenters' concerns regarding the overlap
in assessment windows. In response to this concern we are establishing
a modified policy under which IPFs will not be required to complete a
separate discharge assessment for patients whose length of stay is less
than 3 calendar days. Instead, for these patients, IPFs will be
required to collect limited items from the discharge assessment item
set as part of the admission assessment thus eliminating duplicative
documentation. In addition, for the purposes of calculating the
compliance threshold, when an IPF completes an IPF-PAI on a patient
whose length of stay is less than 3 calendar days, that IPF-PAI will be
counted as both an admission and a discharge assessment in the IPF-PAI
compliance calculation. At this time, we do not plan to change any
requirements for patients with longer lengths of stay, but we intend to
monitor data submissions and help desk questions associated with such
patients.
Comment: Several commenters stated that the IPF-PAI Guidance Manual
was unclear on how blank assessment items due to missing data or
patient refusals are included in the compliance calculation.
Response: As described in section V.C.3.b of this final rule, we
are finalizing a policy where Medicare Number will be required only for
patients for whom Medicare is the primary payer. In addition, IPFs are
able to indicate nonresponse or inability to assess as a valid response
option for certain applicable assessment items (for example, Suicide
Screening, Mobility: Chair/Bed-to-Chair Transfer). We will provide
additional guidance and training on data completeness with respect to
the compliance threshold as the IPF-PAI is implemented. We note that
the updated Guidance Manual, which is available on the QualityNet
website (https://qualitynet.cms.gov/ipf/PAI#tab2) includes guidance on
indicating when items are unable to be assessed.
Comment: A commenter expressed concern about an 80 percent match
and described a data match requirement in other payment programs. This
commenter discussed the possibility of mismatched data due to spelling
or keystroke errors.
Response: For clarification, the proposed 80 percent completion
requirement was referring to the percent of IPF-PAIs submitted to CMS
that must be complete for the IPF to meet the IPF Quality Reporting
Program IPF-PAI requirement and not to any matching. In the proposed
rule we described the need to collect certain administrative
information to enable database management and record matching, but
these database management and record matching capabilities are not
related to the compliance thresholds.
Final Decision: After consideration of the public comments
received, we are finalizing, with modification, the compliance
threshold for the IPF-PAI. We are making four modifications from the
policy which was proposed:
We are finalizing three quarters of voluntary reporting
beginning October 1, 2027, with mandatory reporting of the IPF-PAI
beginning July 1, 2028.
We are finalizing a policy in which the compliance
threshold--that is, the required percent of IPF-PAIs submitted by an
IPF that are 100 percent complete in order to meet the IPF Quality
Reporting Program IPF-PAI requirement for the applicable annual payment
determination--will begin at 50 percent for the Q3 and Q4 CY 2028 and
CY 2029 reporting periods, and increase to 70 percent for CY 2030 and
subsequent reporting periods. In other words, to comply with IPF
Quality Reporting Program requirements for the IPF-PAI, at least 50
percent of IPF-PAIs submitted by an IPF must be contain responses for
all required items for Q3 and Q4 CY 2028 and CY 2029 reporting periods,
and at least 70 percent of IPF-PAIs submitted by an IPF must be fully
complete for CY 2030 and subsequent reporting periods. For the FY 2030
payment determination, the compliance rate for each IPF would be
calculated using the 2028 Q3 and Q4 reporting period, and for the FY
2031 payment determination and subsequent years, the compliance rate
for each IPF would be calculated based on the entire CY reporting
period (that is, four CY reporting quarters of IPF-PAI data). An IPF
that does not submit 100 percent of the assessment items on at least
the required percent of the IPF-PAIs submitted to CMS, as determined by
the reporting period, would not meet the IPF Quality Reporting Program
IPF-PAI requirement. As a result, the IPF would be subject to a 2
percentage-point reduction to its annual payment update, as required by
section 1886(s)(4)(A) of the Act. We are codifying these data
completion thresholds for the IPF-PAI at Sec. 412.433(h).
We are finalizing that Medicare Number will be required
only for patients for whom Medicare is the primary payer.
We are also finalizing that an IPF-PAI submitted for
patients whose length of stay is less than 3 calendar days, will be
counted as both an admission and a discharge assessment determining
whether the IPF meets the compliance threshold. Specifically, although
there will not be a separate discharge IPF-PAI for these patients, the
admission assessment with some select discharge items will be counted
as two assessments for purposes of determining whether the IPF meets
the compliance threshold. That is, if all required items are completed,
it will be counted as two complete assessments, while if some required
items are not complete, it will count as two incomplete assessments for
purposes of determining whether the IPF meets the compliance threshold.
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[[Page 48566]]
c. Methods of Data Submission for the IPF-PAI
i. Background
In the FY 2026 IPF PPS proposed rule (90 FR 18520 through 18523),
we requested comments on the potential use of the HL7[supreg]
FHIR[supreg] standard for IPF-PAI data submission because we believe
that the collection and submission of data through health information
technology (IT), including digital capture and transfer of program data
through FHIR[supreg], could reduce administrative burden on IPFs
submitting the IPF-PAI in the long-term. In response to this request
for comment, commenters expressed support for CMS' intent to transition
to the FHIR[supreg]-based standard in the IPF Quality Reporting
Program, particularly for the IPF-PAI, noting the opportunity for a
FHIR[supreg]-based standard to improve care coordination, enable
actionable insights, and integrate structured data into electronic
health records (EHRs) (90 FR 37665 through 37666). A few commenters
responding to the request for comment highlighted the potential for
FHIR[supreg] to modernize behavioral health data reporting, enhance
discharge planning, and enable meaningful performance measurement. In
the FY 2027 IPF PPS proposed rule (91 FR 17744), we acknowledged that,
as IPFs have not yet used FHIR[supreg] for program data submission,
technological, monetary, and staffing barriers may present challenges
to adoption and use in some facilities. Therefore, we proposed that for
the submission of IPF-PAI data, we would offer facilities two tools to
integrate into their existing systems and workflows:
Web application (web app)
FHIR[supreg] application programming interfaces (APIs)
We describe these submission methods in detail in the following
sections.
In the proposed rule, we noted that both methods of data submission
would require user or system authentication using CMS' Health Care
Quality Information Systems (HCQIS) Access Roles and Profile (HARP), or
a successor or equivalent CMS-designated identity management system,
consistent with CMS security and access control requirements. We stated
that this is the same identity management system that IPFs and their
vendors currently use to submit other IPF Quality Reporting Program
data to the CMS Hospital Quality Reporting system, and that both
proposed methods of IPF-PAI data submission would transmit IPF-PAI data
securely to CMS, using data security standards required for any CMS
system, where it would be received and reside in the iQIES environment.
iQIES is CMS' long-standing system for patient assessment data; post-
acute care providers have been reporting assessment data electronically
to iQIES since 2019. We clarified that data transfer to CMS via either
method--the FHIR[supreg] API or web app--would follow standard HIPAA-
compliant encryption protocols. Since the proposed rule, we named the
web app the Patient Assessment Reporting Interoperability Tool, or
PARIT.
We stated that, if finalized, the IPF Quality Reporting Program
would be the first CMS statutory quality reporting program to use the
FHIR[supreg] standard to support patient assessment data submission, as
both data submission methods--the free web app (that is, PARIT) and the
FHIR[supreg] API--are reliant on underlying FHIR[supreg] resources.\38\
Additionally, we stated that introducing the FHIR[supreg] standard to
the IPF Quality Reporting Program's IPF-PAI requirement involves
establishing related policies and requirements, such as submission
methods, data standards and formats, and other program-specific
requirements.
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\38\ Either method of IPF-PAI data submission includes an
opportunity to use the Substitutable Medical Applications and
Reusable Technologies (SMART) on FHIR[supreg] framework to either
configure an EHR-launched workflow that securely authenticates and
launches the web app, or to implement a custom SMART on FHIR[supreg]
application, developed by an IPF or a third-party vendor, that
integrates with the publicly available CMS FHIR[supreg] APIs.
---------------------------------------------------------------------------
ii. Web App Method of Data Submission for IPF-PAI Data
In the FY 2027 IPF PPS proposed rule, we proposed a CMS-developed
web app, PARIT, as a method for collecting and submitting IPF-PAI data
to the iQIES system via the internet. We proposed that we would provide
and maintain this web app for IPFs to use, free of charge, to enter and
submit the IPF-PAI admission and discharge assessments for individual
patients. We proposed that an IPF would be able to review, correct, and
change these data until the close of each submission deadline using the
web app. An IPF could use a third party vendor to submit IPF-PAI data
via the web app on the IPF's behalf. We stated that the open-source web
app would be accessible in one of two ways: (1) directly through a web
browser, or (2) configured for launch from an EHR using Substitutable
Medical Applications and Reusable Technologies (SMART) on FHIR[supreg].
In accordance with the Source code Harmonization And Reuse in
Information Technology Act (SHARE IT Act; Pub. L. 118-187), we stated
that we would ensure that the source code, documentation, configuration
scripts, as appropriate, revision history, and other files are located
in a software storage location (that, a public repository) to which
access is open to the public.
We stated that we plan to make this web app available in spring or
summer 2027, prior to the start of the proposed reporting period that
would begin October 1, 2027, to allow time for IPFs to gain familiarity
with the web app and for CMS to provide training.
We received public comments on this proposal.
Comment: A commenter recognized the flexibility of offering
multiple forms of submission but expressed concern that the web
application would not be available for testing until spring or summer
of 2027. Another commenter recommended that the web app be released at
least six months before implementation to allow IPFs time to become
familiar with the tool. A commenter stated that it is important that
CMS is planning to provide training on the application and recommended
that CMS also consider usability testing and technical assistance, such
as short video tutorials, for users after training.
Response: We appreciate the commenters' concerns about needing time
for IPFs to train their staff and become familiar with the PARIT web
app. We plan to provide training on the IPF-PAI, which will support
staff in becoming familiar with the assessment items and coding
guidance. Training on the PARIT web app--as one of the available tools
for data submission--will begin at least six months before the web app
becomes available for IPF-PAI data submission, with the web app itself
going ``live'' for IPF-PAI data submission no later than October 1,
2027 when the first voluntary reporting quarter begins. As described in
section V.C.4.b. of this final rule, we are finalizing a policy in
which IPFs may begin voluntary reporting of the IPF-PAI beginning
October 1, 2027. Mandatory reporting of the IPF-PAI then begins on July
1, 2028 for Q3 CY 2028, at which time the PARIT web app will have been
available for use by IPFs and their vendors for approximately nine
months. Assessments submitted for Q3 2028 and Q4 2028 will impact the
FY 2030 payment determination. We expect that the voluntary period will
provide an opportunity to address any significant challenges
encountered during the data submission process.
Final Decision: After consideration of the comments received, we
are finalizing the web app--PARIT, or a successor tool--as a method of
data
[[Page 48567]]
submission for the IPF-PAI data as proposed.
iii. HL7[supreg] FHIR[supreg] API Method of Data Submission for IPF-PAI
Data
In the FY 2027 IPF PPS proposed rule, we proposed the use of two
APIs built from the HL7[supreg] FHIR[supreg] specification, based on
FHIR[supreg] v4.0.1, as another method for submitting IPF-PAI data to
iQIES via the internet. An API is a documented set of rules and
specifications that lets one computer program or system request and
receive information or data from another; specifically, it defines how
one software component or system can request and use the functions or
data of another software component or system through a defined
interface, without requiring knowledge of its internal implementation.
For healthcare data exchange using an API, the FHIR[supreg] standard
defines how such data are structured and exchanged. It organizes the
data into discrete clinical and administrative units called resources,
such as Patient, Observation, Condition, Medication, and Encounter.
This method would be suitable for IPFs that use health IT that can be
modified to support these APIs or that engage with third party vendors
to implement a custom tool or a custom SMART on FHIR[supreg]
application using the APIs we have developed to collect and submit IPF-
PAI data to CMS. Under the proposed submission method, we described how
an IPF could integrate IPF-PAI data collection and submission within
their EHR workflow using one API to retrieve the applicable IPF-PAI
assessment items from the EHR, and another API to submit IPF-PAI data
to CMS. We stated that an IPF could also use a third party vendor to
submit IPF-PAI data via the FHIR[supreg] API on the IPF's behalf.
For the proposed implementation of the IPF-PAI, we stated that the
Data Element Library (DEL) FHIR[supreg] API and associated DEL
FHIR[supreg] Implementation Guide would support the retrieval of the
assessment items, and the iQIES FHIR[supreg] API and associated iQIES
FHIR[supreg] Receiving System Implementation Guide would support the
assessment data submission to CMS. We made draft versions of the DEL
FHIR[supreg] Implementation Guide and the iQIES FHIR[supreg] Receiving
System Implementation Guide available at https://qualitynet.cms.gov/ipf/PAI. We noted that these implementation guides will be updated as
needed on an annual basis for technical updates and published at the
same location. We proposed that annual updates will be limited to
technical, non-substantive updates. Substantive changes to the IPF-PAI
will be implemented through notice and comment rulemaking. IPFs and
their vendors will need to use the most recently published
implementation guides for the applicable IPF-PAI reporting period,
which we will publish at least six months before the beginning of the
applicable reporting period. We stated that additional technical
resources for IPFs and health IT vendors will be made available at
https://qualitynet.cms.gov/ipf/PAI to support FHIR[supreg] API
implementation. We noted that we will also engage with software
developers and vendors through various interested party engagement
efforts, during which we will respond to questions, comments, and
suggestions about technical requirements.
We recognized that IPFs and the health IT vendors supporting IPFs
will require time to develop and implement data collection and
submission tools for the IPF-PAI. Therefore, we proposed that, if an
IPF does not submit IPF-PAI data via the FHIR[supreg] API method
described in section V.C.4.d.ii. of this final rule, the IPF would be
required to use the web app for IPF-PAI data submission. Likewise, we
proposed that if an IPF does not submit IPF-PAI data using the web app,
the IPF would not meet the IPF-PAI data submission requirement unless
the IPF submits the data via the FHIR[supreg] API method described in
section V.C.4.d.iii. of this final rule.
We received public comments on this proposal.
Comment: Several commenters supported or recognized the value of
offering both a web application and FHIR[supreg]-based submission
pathway, stating that multiple pathways could reduce long-term burden,
support interoperability, or accommodate varying facility readiness.
Several commenters also stated that the web application, FHIR[supreg]
APIs, implementation guides, specifications, sandbox environments, and
training should be available early enough for facilities and vendors to
evaluate, test, train, and implement workflows before mandatory
reporting.
Response: We appreciate the commenters' support for multiple
submission methods, and the recommendation that we provide sufficient
time for IPFs and vendors to implement and test data submission
solutions. We are updating the DEL FHIR[supreg] Implementation Guide
and the iQIES FHIR[supreg] Receiving System Implementation Guide based
on the modified policies in this final rule as soon as feasible,
between six to twelve months in advance of the voluntary reporting
period that begins October 1, 2027. In addition, we plan to make
available testing and validation tools, so that vendors and IPFs will
be able to verify that files are being transmitted in the proper format
to be received by CMS systems. We also note that, as described in
section V.C.4.b. of this final rule, we are finalizing a policy in
which IPFs may begin voluntary reporting of the IPF-PAI beginning
October 1, 2027. Mandatory reporting of the IPF-PAI then begins on July
1, 2028 for Q3 CY 2028. Assessments submitted in Q3 and Q4 2028 will be
considered for the FY 2030 payment determination. We expect that the
voluntary period will provide an opportunity to address any significant
challenges encountered during the data submission process.
Comment: Many commenters stated concerns that IPFs and behavioral
health lag behind other healthcare settings with regard to EHR adoption
and interoperability readiness. Several commenters attribute this to
IPFs being left out of federal EHR incentive programs. The commenters
said that required FHIR[supreg]-based reporting beginning October 1,
2027 may be premature for the IPF setting and would require time for
specification development, EHR development, training, workflow testing,
submission validation, and identification of problems. Many commenters
recommended delaying, phasing, or extending implementation.
Response: By offering PARIT, the free web app, an IPF can meet the
IPF-PAI submission requirements regardless of its existing EHR
capabilities. That is, PARIT uses the same FHIR[supreg] APIs specified
in this rule that EHR vendors or third-party intermediaries would use
to submit IPF-PAI data to CMS. By providing a web-based user interface
to these APIs, PARIT enables an IPF to submit IPF-PAI data without
needing an EHR, EHR development, or its own implementation of the
FHIR[supreg] specifications or a FHIR[supreg]-based reporting system.
However, whether an IPF chooses to utilize the PARIT web application or
FHIR API integration, we recommend training of relevant staff, testing,
and submission validation. We note that, as described in section
V.C.4.b. of this final rule, we are finalizing a policy in which IPFs
may begin voluntary reporting of the IPF-PAI beginning October 1, 2027,
with mandatory reporting beginning July 1, 2028, which is a phased
implementation responsive to commenters' recommendations. While not all
provider types were eligible for EHR meaningful use incentives payments
[[Page 48568]]
under the Health Information Technology for Economic and Clinical
Health (HITECH) Act and this may partly explain the slower start for
many IPFs, survey data from 2024 found that approximately 78 percent of
psychiatric hospitals and 86 percent of separate psychiatric units of
general hospitals use EHRs.\39\ This indicates that although EHR
adoption among IPFs is lower relative to other hospital provider types
and often occurs alongside paper-based documentation, many IPFs have
implemented EHRs.
---------------------------------------------------------------------------
\39\ Internal analysis of National Substance Use and Mental
Health Services Survey, 2024. Source: https://datatools.samhsa.gov/das/n-sumhss/2024/n-sumhss-2024-ds0001/crosstab?row=EHR1A&column=FACILITYTYPE. Accessed on July 19, 2026.
---------------------------------------------------------------------------
Comment: Several commenters stated that IPF-PAI data may be
difficult to retrieve from their facilities' EHR, as currently
configured, and that the manual entry, manual aggregation, or temporary
web app processes that would be required may necessitate additional
staffing. A few commenters recommended that we consider technological
solutions or data-extraction mechanisms that use assessment data
already documented in EHRs, automate extraction as much as possible,
work with existing EHR infrastructure, and avoid additional
implementation costs for IPFs.
Response: We acknowledge the systems and data extraction challenges
that facilities may face in their initial implementation of the IPF-
PAI. We took these challenges into account in our decision to develop
FHIR APIs to support the collection and reporting of the IPF-PAI. We
understand that the transition to automated data reporting via the FHIR
APIs will take time, and that IPFs may need to integrate IPF-PAI
assessment items in their EHRs and in their clinical workflows in a way
that will avoid an ongoing need for manual data extraction. We note
that we are providing PARIT, the free web app for data submission, as
an interim solution for IPFs that are not yet ready to adopt EHR-
integrated technical solutions for data collection and reporting. We
intend to provide robust training, technical documentation, and
technical help desk support to help IPFs and health IT vendors, and
staff understand and operationalize the extraction of EHR data and
submission required by the IPF-PAI.
Comment: A few commenters recommended implementation guides, sample
data, regular feedback channels, technical collaboration with EHR
vendors and implementers, production-like testing, consistent iQIES-
connected authentication and endpoint conventions, and bulk or batch
submission capability. A few commenters also expressed concern about
submission accuracy, payment penalties, workflow disruption, compliance
risk, or data integrity if implementation was rushed or guidance was
unclear. A few commenters stated that the new data collection and
submission process would create administrative burden, particularly for
facilities submitting through FHIR[supreg] for the first time, meeting
a high data threshold, or managing accuracy, payment penalty,
compliance, and data integrity concerns.
Response: We agree that technical resources and communication
mechanisms are important for the successful implementation of the IPF-
PAI. In addition to the DEL FHIR[supreg] Implementation Guide and the
iQIES FHIR[supreg] Receiving System Implementation Guide, we will
provide comprehensive documentation, engagement opportunities, and
access to a technical help desk to help resolve issues with submitting
FHIR[supreg] data to CMS systems. Regarding authentication and endpoint
conventions, there are two endpoints, one for the DEL, to support
retrieval of the assessment items, and one for iQIES, to support the
assessment data submission. The DEL endpoint does not require
authentication, as it provides the assessment items only and does not
handle any user-specific or patient information. The iQIES endpoint
requires HARP authentication to associate the user with the IPF or its
authorized vendor(s) and endorse authorization controls regarding what
users can see, edit, and submit. For the initial version of the IPF-
PAI, CMS' FHIR[supreg] receiving system will not be able to support
batch submission, but we will actively evaluate this functionality. We
will provide more information on validation tools and other resources
after the publication of this final rule.
We recognize commenters' concerns regarding submission accuracy,
workflow impacts, compliance risk, data integrity, and potential
payment implications. We believe that the advance availability of the
IPF-PAI implementation guides, together with the release of training
and educational materials at least 6 months before voluntary reporting
begins, will provide stakeholders with sufficient opportunity to
prepare for implementation and support accurate and timely data
submission. We are allowing for three quarters of voluntary data
reporting prior to the first mandatory reporting, which will be in the
third quarter of 2028. Additionally, CMS also anticipates using
implementation support resources, such as the Patient Information
Quality Improvement (PIQI) Framework,\40\ to help providers and vendors
identify and address issues related to data accuracy, completeness,
structure, and conformance before production submission. We will
continue to engage with stakeholders and consider operational feedback
throughout the implementation process. We note we are finalizing a
policy to begin mandatory reporting with a 50 percent compliance
threshold, increasing to 70 percent beginning with the CY 2030
reporting period (for the FY 2032 payment determination), which should
alleviate commenters' concerns about an immediate burden to meet a high
level of completion before the IPF has had time to adjust.
---------------------------------------------------------------------------
\40\ https://build.fhir.org/ig/HL7/piqi/en/, Accessed July 6,
2026.
---------------------------------------------------------------------------
Final Decision: After consideration of the comments received, we
are finalizing the FHIR[supreg] API method of data submission for IPF-
PAI data as proposed. As discussed in section V.C.4., we are
implementing the IPF-PAI on October 1, 2027 with three quarters of
voluntary data submission. Mandatory reporting will begin on July 1,
2028. We intend that the voluntary data submission period will provide
IPFs and their health IT vendors with sufficient time to develop and
implement data submission processes.
Additionally, in the FY 2027 IPF PPS proposed rule (91 FR 17746),
we invited public comment on ways that CMS could reduce burden in
implementing the IPF-PAI. For example, we asked if any of the
requirements currently proposed for the IPF-PAI are duplicative of any
other CMS reporting and recordkeeping requirements.
We received public comments on this issue which we addressed in the
sections of this final rule to which they most directly applied.
5. Maintenance of Technical Specifications for the IPF-PAI
a. Background
In the FY 2013 IPPS/LTCH PPS final rule, we adopted a policy to use
subregulatory process to make non-substantive updates to measures used
in the IPF Quality Reporting Program, to make the determination of what
constitutes a substantive versus a non-substantive change on a case-by-
case basis, and to continue to use rulemaking to adopt substantive
updates (77 FR 53653). In addition, in the FY 2014 IPPS/LTCH PPS final
rule, we established a policy under which we provide and maintain
information to
[[Page 48569]]
support collection of measures used in the program (78 FR 50896). As
part of this policy, we provide a user manual with links to measure
specifications, data abstraction information, data submission
information, and other information necessary for IPFs to participate in
the IPF Quality Reporting Program. We maintain this manual at the IPF
Quality Reporting Program Quality Net website at https://qualitynet.cms.gov/ipf/specifications-manuals. In addition, we update
technical specifications in this manual periodically, notify program
participants of changes, and strive to provide sufficient time to allow
users to respond to changes.
b. Policy for Maintenance of Technical Specifications for the IPF-PAI
In alignment with our policy for maintaining the IPF Quality
Reporting Program specifications manual for quality measures, and as
described in section IV.C.5.a of the FY 2027 IPF PPS proposed rule (91
FR 17746), we proposed that non-substantive updates to the technical
specifications for the IPF-PAI would be made through subregulatory
mechanisms such as website postings and listserv messaging. Non-
substantive updates could include minor changes to data collection or
submission specifications which might be required to align with updates
to HL7[supreg] FHIR[supreg] or other health IT standards, and will be
determined on a case-by-case basis. We stated that we will provide
notification of any future changes to the CMS designated system and the
required format for IPF-PAI data submission designated by CMS to IPFs
and vendors using subregulatory mechanisms including updates of
technical specifications in the Guidance Manual and Implementation
Guides as well as through our regular program communication channels
such as website postings, listserv messaging, and webinars. We
clarified that substantive changes to the IPF-PAI, such as the addition
or removal of data categories or assessment items, or changes in the
data collection deadlines, will be done through rulemaking.
We received public comments on this proposal.
Comment: Several commenters expressed concerns about CMS' statement
that the IPF-PAI may be modified in future rulemaking. The commenters
stated that modifications would create burden related to system
updates, retraining, workflow redesign, and reconfiguration.
Response: We acknowledge that future changes to the requirements
for IPF-PAI data may result in burden for IPFs. We strive to collect
meaningful data about inpatient psychiatric stays while minimizing
burden. We note that if we make subregulatory technical updates they
will be changes required to align with updates to FHIR[supreg] or other
health IT standards. In the case of modifications through future
rulemaking, we will carefully evaluate the impact of these changes with
respect to IPF burden.
Comment: A few commenters recommended limiting or stabilizing
future technical changes, including keeping IPF-PAI changes minor for
at least three years, limiting FHIR[supreg] changes, and standardizing
FHIR[supreg] technology across vendors and data recipients. A commenter
also recommended expanding communication methods to keep IPFs and
vendors informed, avoiding sub-regulatory processes for large or
impactful changes, and preserving adequate testing and implementation
timelines.
Response: We appreciate these comments. We understand that IPFs and
vendors need clear guidance and time to incorporate the IPF-PAI. We
will continue to provide guidance manuals, implementation materials,
webinars, listserv updates, and other technical support. We also intend
to make substantive changes through future notice-and-comment
rulemaking, while keeping technical updates as limited and targeted as
possible so the IPF-PAI can be implemented in a stable manner.
Comment: A commenter recommended detailed implementation guidance
on FHIR[supreg] API privacy and security features, stating that IPFs
must be able to evaluate the privacy and security architecture before
integrating technology that may retrieve and transmit sensitive
behavioral health information.
Response: We appreciate this comment and recognize the importance
of privacy and security. CMS will provide technical documentation and a
technical help desk so that IPFs and vendors can understand the
submission architecture and assess readiness before implementation. We
also expect that IPFs and vendors will ensure that FHIR[supreg]-based
submission operates with applicable privacy and security requirements
for IPFs. We will continue to refine operational guidance as necessary
through future technical updates and rulemaking.
Final Decision: After consideration of the comments received, we
are finalizing our policy for maintenance of technical specifications
for the IPF-PAI as proposed.
VI. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501-
3520, we are required to provide 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. To fairly evaluate whether an information collection
should be approved by OMB, 44 U.S.C. 3506(c)(2)(A) 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.
The following changes will be submitted to OMB for review under
control number 0938-1171 (CMS-10432). In addition, we are submitting a
Paperwork Reduction Act package for the IPF Patient Assessment
Instrument (IPF-PAI) required by section 4125(b)(1) of the Consolidated
Appropriations Act of 2023, to OMB for review under a new control
number.
In section VI.C.1. of this final rule, we restate our currently
approved burden estimates. In section VI.C.2. of this final rule, we
estimate the changes in burden associated with the update to more
recent wage rates. In section VI.C.3. of this final rule, we discuss
the policies in this final rule that will impact information collection
burden.
A. Wage Estimates
In the FY 2026 IPF PPS final rule, we utilized the median hourly
wage rate of $27.69 for Medical Records Specialists, in accordance with
the Bureau of Labor Statistics (BLS), to calculate our burden estimates
for the IPF Quality Reporting Program (90 FR 37667). In the FY 2027 IPF
PPS proposed rule, using the most recent data from the BLS for medical
records specialists (SOC 29-2072), entitled, the May 2024 Occupational
Employment and Wage Estimates, we used the median hourly wage for
medical records specialists for the industry, ``general medical and
surgical hospitals,'' (Industry# 622100) which is $27.53.\41\ We stated
the industry of
[[Page 48570]]
``general medical and surgical hospitals'' is more specific to the IPF
setting for use in our calculations compared to other industries under
medical records specialists, such as ``office of physicians'' or
``nursing care facilities.'' We calculated the cost of overhead,
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 overhead 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
($27.53 x 2 = $55.06) to estimate total cost is a reasonably accurate
estimation method. Unless otherwise specified, we will calculate cost
burden to hospitals using a wage plus benefits estimate of $55.06 per
hour throughout the discussion in this section of this final rule. As
noted in the FY 2027 IPF PPS proposed rule, although BLS released
updated wage rates after the proposed rule appeared in the Federal
Register and before this final rule will appear in the Federal
Register, we are maintaining the wage rates used in the proposed rule
(91 FR 17746).
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\41\ U.S. Bureau of Labor Statistics. Occupational Employment
and Wage Statistics: General Medical and Surgical Hospitals, Medical
Records Specialists. Accessed December 29, 2025. Available at
https://data.bls.gov/oes/#/home.
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Some of the activities previously finalized for the IPF Quality
Reporting Program require patients' time and attention, such as
responding to survey questions. In the FY 2026 IPF PPS final rule, we
estimated the hourly wage rate for these activities to be $25.63/hr (90
FR 37667). We are updating that estimate to a post-tax wage of $25.89/
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. In the FY 2027 IPF PPS proposed rule, we
derived the costs for patients using the usual weekly earnings of wage
and salary workers of $1,204, divided by 40 hours to calculate an
hourly pre-tax wage rate of $30.10/hr. We adjusted 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,
resulting in the post-tax hourly wage rate of $25.89/hr. Unlike 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.
B. Estimates of the Number of Respondents
In the FY 2026 IPF PPS final rule, we based estimates of
information collection burden on the assumption that 1,596 IPFs would
report data for 1,261 discharges, on average per facility, for the IPF
Quality Reporting Program in CY 2026 and subsequent years. For this
final rule, based on data from the FY 2027 payment determination, we
are updating our assumption and estimate that 1,564 IPFs will report
data for an average of 1,342 discharges annually per facility for the
IPF Quality Reporting Program in CY 2027 and subsequent years.
C. Information Collection Requirements for the IPF Quality Reporting
Program
1. Previously Finalized IPF Quality Reporting 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 2029
payment determination occurs during CY 2028 and generally reflects care
provided during CY 2027. Our currently approved burden for CY 2027 is
set forth in Table 11.
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2. Updates Due to More Recent Information
In section VI.A. of this final rule, we describe our updated wage
rates which decrease from $55.38/hr to $55.06/hr (a decrease of $0.32/
hr) for activities performed by Medical Records Specialists and
increase from $25.63/hr to $25.89/hr (an increase of $0.26/hr) for
activities performed by individuals. The effects of these updates are
set forth in Table 12.
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In section VI.B. of this final rule, we describe our updated
assumptions of the number of responses which decrease from 1,596
facilities to 1,564 (a decrease of 32) and an increase in the number of
annual discharges per IPF from 1,261 to 1,342 (an increase of 81). The
effects of these updates are set forth in Table 13.
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The total net impact of updates due to more recent information is
an increase of 10,308 hours and $601,464 annually.
3. Updates Due to Policies Finalized in This Rule
In section V.B.1. of this final rule, we are removing the Alcohol
Use Brief Intervention Provided or Offered (SUB-2) and subset Alcohol
Use Brief Intervention (SUB-2a) measure from the IPF Quality Reporting
Program beginning with the FY 2028 payment determination and subsequent
years. This measure and the associated information collection burden
were previously finalized in the FY 2016 IPF PPS final rule and are
approved under OMB control number 0938-1171 (expiration date February
29, 2028) (80 FR 46699 through 46701 and 46720 through 46721). Using
the currently approved burden estimate under OMB control number 0938-
1171 of 15 minutes (0.25 hours) per case per IPF, we estimate this
policy will result in a decrease in burden of 238,119 hours (0.25 hours
x 609 cases x 1,564 IPFs) at a savings of $13,110,832 (238,119 x
$55.06/hour) across all 1,564 IPFs.
In section V.B.2. of this final rule, we are removing the Tobacco
Use Treatment Provided or Offered at Discharge (TOB-3) and subset
Tobacco Use Treatment at Discharge (TOB-3a) measure from the IPF
Quality Reporting Program beginning with the FY 2028 payment
determination and subsequent years. This measure and the associated
information collection burden were previously finalized in the FY 2016
IPF PPS final rule and are approved under OMB control number 0938-1171
(expiration date February 29, 2028) (80 FR 46696 through 46701 and
46720 through 46721). Using the currently approved burden estimate
under OMB control number 0938-1171 of 15 minutes (0.25 hours) per case
per IPF, we estimate this policy will result in a decrease in burden of
238,119 hours
[[Page 48574]]
(0.25 hours x 609 cases x 1,564 IPFs) at a savings of $13,110,832
(238,119 x $55.06/hour) across all 1,564 IPFs.
In section V.C. of this final rule, we are modifying our proposal
to implement the IPF-PAI beginning with Quarter 4 of the CY 2027
reporting period/FY 2029 payment determination, and instead are
finalizing voluntary data submission beginning October 1, 2027,
followed by mandatory data submission beginning July 1, 2028. The IPF-
PAI consists of two assessments, one administered at the time of
patient admission and the other administered at discharge. As proposed
in the FY 2027 IPF PPS proposed rule, the IPF-PAI consisted of 26 and
23 assessment item parts at admission and discharge, respectively (91
FR 17740 through 17743). In Section V.C.3., we finalized a modification
of the proposal of assessment items for the IPF-PAI that reduces the
number of assessment items: we will require the Mobility assessment
item at Admission only--rather than at Admission and Discharge, as
proposed; we will require the SSTI assessment item at Discharge only--
rather than at both Admission and Discharge; and we are not finalizing
the inclusion of SSN on this initial version of the IPF-PAI. These
modifications reduce the number of assessment item parts by 9 (1
assessment item part for Mobility, 6 assessment item parts for SSTI,
and 2 assessment item parts for SSN [at Admission and Discharge]). As
finalized, the IPF-PAI consists of 19 assessment item parts at
Admission and 21 assessment item parts at Discharge. For the purpose of
estimating collection of information burden, we estimate that each
assessment item part in the IPF-PAI will require approximately 0.3
minutes (18 seconds) to complete. Our estimate of 0.3 minutes is
similar to estimates used in other CMS PAI data collections and is
supported by the IPF-PAI field (beta) test. In field testing, which
used volunteer assessors and a convenience sample of patients,
assessors completed the beta test assessments, which contained 86
assessment item parts at Admission and 85 assessment parts at
Discharge, in a median time of 13 minutes, or approximately 0.15
minutes per assessment item part; time per assessment item part was
slightly higher for admission assessments (median time to complete of
16 minutes, or 0.19 minutes per assessment item part) than for
discharges (median time to complete of 11 minutes, or 0.13 minutes). We
proposed using 0.3 minutes for each assessment item part and estimated
that the IPF-PAI would require 14.7 minutes (0.3 minutes x 49
assessment item parts) or 0.245 hours per patient. In Section V.C.3.,
we finalized a modification of the proposal of assessment items for the
IPF-PAI that reduces the number of assessment item parts in the IPF-PAI
to 40 for admission and discharge combined. Under finalized policies,
using 0.3 minutes for each assessment item part, we estimate that the
IPF-PAI will require 12 minutes (0.3 minutes x 40 assessment item
parts) or 0.2 hours per patient.
We also assumed the IPF-PAI will be completed by a variety of
clinical or support staff. We estimated that approximately 50 percent
of data collected associated with the IPF-PAI will be completed by
Medical Records Specialists with the remaining 50 percent being split
equally by Registered Nurses (RNs), Licensed Practical/Licensed
Vocational Nurses (LP/LVNs), and Mental Health and Substance Abuse
Social Workers. Similar to our calculation of the wage rate for Medical
Records Specialists discussed in section VI.A. of this final rule, we
utilize the BLS median hourly wage rates of $46.74/hour, $28.09/hour,
and $37.49/hour for RNs (SOC 29-1141), LP/LVNs (SOC 29-2061), and
Mental Health and Substance Abuse Social Workers (SOC 21-1023) for the
industry, ``general medical and surgical hospitals'' (Industry #622100)
and calculated the cost of overhead, including fringe benefits, at 100
percent of the median hourly wage.\42\ As a result, we calculate a
weighted average labor rate of $65.04/hour [($55.06/hour x 50 percent)
+ ($46.74/hour x 2 x 16.7 percent) + ($28.09/hour x 2 x 16.7 percent) +
($37.49/hour x 2 x 16.7 percent)]. To calculate the number of patients
for which the IPF-PAI will be administered, we multiply the number of
IPFs by the average discharges per IPF, for a total of 2,098,888
patients (1,564 IPFs x 1,342 discharges/IPF). We estimate this policy
will result in an increase in burden of 419,778 hours annually (0.2
hours x 2,098,888 patients) at a cost of $27,302,361 (419,778 x $65.04/
hour), beginning with the CY 2029 reporting period which is the first
full reporting period that the IPF-PAI will be implemented with
mandatory data submission. For voluntary data submission in Quarter 4
of the CY 2027 reporting period and Quarters 1 and 2 of the CY 2028
reporting period, we assume 50 percent of IPFs will administer the IPF-
PAI to 25 percent of patients on average, resulting in a total number
of 65,590 patients ((50 percent x 1,564 IPFs) x (25 percent x ((1,342
discharges/IPF / 4 quarters) x 1 quarter))) and 131,181 patients ((50
percent x 1,564 IPFs) x (25 percent x ((1,342 discharges/IPF / 4
quarters) x 2 quarters))) in the CY 2027 and CY 2028 reporting periods,
respectively. For the CY 2027 reporting period, we estimate this policy
will result in an increase in burden of 13,118 hours (0.2 hours x
65,590 patients) at a cost of $853,195 (13,118 hours x $65.04/hour).
For mandatory data submission in Quarters 3 and 4 of the CY 2028
reporting period, we estimate the number of patients for which the IPF-
PAI will be administered to be 50 percent of the annual total of
2,098,888 patients, or 1,049,444 patients (2,098,888 patients x 50
percent). We note that 50 percent is because it is mandatory for half
of the year. As a result, for the CY 2028 reporting period, we estimate
this policy will result in an increase in burden of 236,125 hours (0.2
hours x (1,049,444 + 131,181 patients)) at a cost of $15,357,570
(236,125 hours x $65.04/hour). Because IPF-PAI data will be submitted
using the same web application or FHIR[supreg] API used to enter
assessment item responses into the assessment, the time to transmit
data to CMS is negligible, and therefore we assume no additional burden
for IPFs to submit IPF-PAI data. We note that our burden estimate
assumes manual entry of patient assessment data (that is, entry using
the web application) for all IPFs and therefore represents the most
conservative estimate. We expect that some IPFs will utilize the
FHIR[supreg] API and related guidance to partially or fully automate
their data collection and submission process, thereby reducing the
collection of information burden.
---------------------------------------------------------------------------
\42\ U.S. Bureau of Labor Statistics. Occupational Employment
and Wage Statistics: General Medical and Surgical Hospitals, Medical
Records Specialists. Accessed December 29, 2025. Available at:
https://data.bls.gov/oes/#/home.
---------------------------------------------------------------------------
4. Summary of Information Collection Requirements and Associated Burden
In this final rule, we are finalizing as proposed removal of the
Alcohol Use Brief Intervention Provided or Offered (SUB-2) and subset
Alcohol Use Brief Intervention (SUB-2a) measure, as well as the Tobacco
Use Treatment Provided or Offered at Discharge (TOB-3) and subset
Tobacco Use Treatment at Discharge (TOB-3a) measure beginning with the
CY 2026 reporting period/FY 2028 payment determination. In the FY 2027
IPF PPS proposed rule, we proposed to implement the IPF-PAI beginning
with Quarter 4 of the CY 2027 reporting period/FY 2029 payment
determination and assumed the 26 item admission assessment and 23 item
discharge assessment would require a
[[Page 48575]]
total of 14.7 minutes per patient to complete. As discussed in this
final rule, we are removing a total of 9 assessment items and
decreasing burden per patient to 12 minutes, while also finalizing
implementation of the IPF-PAI with voluntary data submission beginning
October 1, 2027, followed by mandatory data submission beginning July
1, 2028.
As a result of policies finalized in this rule, beginning with the
CY 2029 reporting period/FY 2031 payment determination when all
finalized policies will be mandatory for a full CY, the net information
collection burden associated with the IPF Quality Reporting Program is
estimated to decrease by 56,460 hours and increase $1,080,697 in costs
associated with these policies.
We will submit a revised PRA package for OMB control number 0938-
1171 reflecting the information collection burden decrease of 476,238
hours at a cost of $26,221,664 associated with removal of the SUB-2/2a
and TOB-3/3a measures. We will also submit a new PRA package under a
new OMB control number reflecting the information collection burden of
419,778 hours at a cost of $27,302,361 associated with implementation
of the IPF-PAI.
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We received comments on this proposal.
Comment: A commenter stated that the burden estimate was generally
appropriate once the proposed web app and FHIR[supreg] interfaces were
available.
Response: We thank the commenter for this feedback. Our burden
estimation process was based on field (beta) test data, and we intend
it to reflect typical clinical practice. We will monitor and update
burden estimates associated with the new PRA package for the IPF-PAI as
needed as IPFs gain more experience reporting IPF-PAI data.
Comment: Several commenters stated that field (beta) test results
could not be applied to the final instrument and that the 14.7-minute
estimate understated complexity.
Response: With respect to time-to-complete estimates, the field
(beta) test informed the burden estimate by providing total times for
data collection across the entire test instrument, which we used to
calculate the average per-assessment item part estimate. We maintain
that our time estimate for each assessment item part is valid; we used
only the portions of the field (beta) test in which IPF staff were
assessing real patients.
Comment: Many commenters stated that CMS' burden estimate focused
too narrowly on item completion time and understated the real-world
effort needed for EHR reconfiguration, vendor work, staff training,
workflow redesign, data correction, internal validation, quality
assurance, FHIR[supreg] or iQIES submission, reporting steps,
interoperability needs, and ongoing compliance monitoring. Several
commenters stated that treating the IPF-PAI like a single IPF Quality
Reporting Program measure understated the number of assessments.
Response: We recognize that there will be costs associated with
implementing the IPF-PAI that are not accounted for in these estimates
of collection of information. Consistent with PRA requirements, our
collection of information estimates are limited to recurring data
collection costs. These estimates were calculated using data collected
during the field (beta) test in which IPF clinicians assessed real
patients. These estimates do not extend to workforce training and other
start-up costs, nor to any data monitoring activities that IPFs may
choose to conduct. We note that the option of automated or semi-
automated reporting using FHIR[supreg] APIs, for IPFs that have or
develop that capability, is likely to reduce actual collection of
information burden. We acknowledge the systems and data extraction
challenges that facilities may face in their initial implementation of
the IPF-PAI. We took these challenges into account in our decision to
develop FHIR APIs to support the collection and reporting of the IPF-
PAI. We understand that the transition to automated data reporting via
the FHIR APIs will take time, and that IPFs may need to integrate IPF-
PAI assessment items in their EHRs and in their clinical workflows in a
way that will avoid an ongoing need for manual data extraction. We note
that we are providing PARIT, the free web app for data submission, as
an interim solution for IPFs that are not yet ready to adopt EHR-
integrated technical solutions for data collection and reporting. We
intend to provide robust training, technical documentation, and
technical help desk support to help IPFs and health IT vendors, and
staff understand and operationalize the extraction of EHR data and
submission required by the IPF-PAI. In addition, we are finalizing a
delay in mandatory reporting, to July 1, 2028, and allowing IPFs three
quarters of voluntary data submission beginning October 1, 2027. We
intend for this period to allow IPFs more flexibility on when and how
they integrate the IPF-PAI into their workflows and systems in a way
that minimizes burden.
[[Page 48577]]
VII. Regulatory Impact Analysis
A. Statement of Need
This rule updates the prospective payment rates for Medicare
inpatient hospital services provided by IPFs for discharges occurring
during FY 2027 (October 1, 2026, through September 30, 2027). We
applied the 2021-based IPF market basket increase for FY 2027 of 3.2
percent, reduced by the productivity adjustment of 0.9 percentage point
as required by section 1886(s)(2)(A)(i) of the Act for a total FY 2027
payment rate update of 2.3 percent. In this final rule, we updated the
outlier fixed dollar loss threshold amount, updated the IPF labor-
related share, and updated the IPF wage index to reflect the FY 2027
hospital inpatient wage index. Section 1886(s)(4) of the Act requires
IPFs to report data in accordance with the requirements of the IPF
Quality Reporting 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 Mandates Reform Act of 1995 (Pub. L. 104-4); and the
Congressional Review Act (5 U.S.C. 801-808).
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 2027
payments compared to FY 2026 payments will be an increase of
approximately $60 million. This reflects a $60 million increase from
the update to the payment rates (+$80 million from the 2021-based IPF
market basket increase of 3.2 percent, and -$20 million for the
productivity adjustment of 0.9 percentage point). Outlier payments are
estimated to remain at 2.0 percent of total estimated IPF payments in
FY 2027.
Based on our estimates, OMB's Office of Information and Regulatory
Affairs has determined that this rulemaking is ``significant'' under
section 3(f) of Executive Order 12866, though not significant under
section 3(f)(1). 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 final regulations, and the Departments have provided the
following assessment of their impact.
C. Detailed Economic Analysis
In this section, we discuss 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 IV.D.1.c. of this final rule, we updated
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. Therefore, the budgetary
impact to the Medicare program of this final rule is due to the market
basket increase for FY 2027 of 3.2 percent (see section IV.A.2. of this
final rule) reduced by the productivity adjustment of 0.9 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 impact of the FY 2027 IPF PPS final rule would
be a net increase of $60 million in payments to IPF providers. This
reflects an estimated $60 million increase from the update to the
payment rates. There is no impact as a result of the update to the
outlier threshold amount as noted earlier. This estimate does not
include the implementation of the required 2.0 percentage point
reduction of the market basket update factor for any IPF that fails to
meet the IPF Quality Reporting requirements (as discussed in section
V.B.3. of this final rule).
2. Impact on Providers
To show the impact on providers of the changes to the IPF PPS
discussed in this final rule, we compared estimated payments under the
final IPF PPS rates and factors for FY 2027 versus those under FY 2026.
We determined the percent change in the estimated FY 2027 IPF PPS
payments compared to the estimated FY 2026 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 updated
wage index data and labor-related share; and the market basket increase
for FY 2027, as reduced by the productivity adjustment according to
section 1886(s)(2)(A)(i) of the Act.
To illustrate the impacts of the FY 2027 changes to the IPF PPS
discussed in this final rule, our analysis begins with FY 2025 IPF PPS
claims (based on the 2025 MedPAR claims, December 2025 update). We
estimated FY 2026 IPF PPS payments using these 2025 claims, the
finalized FY 2026 IPF PPS Federal per diem base rate and ECT per
treatment amount, and the finalized FY 2026 IPF PPS patient- and
facility-level adjustment factors (as published in the FY 2026 IPF PPS
final rule (90 FR 37628)). We then estimated the FY 2026 outlier
payments based on these simulated FY 2026 IPF PPS payments using the
same methodology as finalized in the FY 2026 IPF PPS final rule (90 FR
37653 and 37654) where total outlier payments are maintained at 2
percent of total estimated FY 2026 IPF PPS payments.
[[Page 48578]]
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 FY 2027 IPF wage index and the FY 2027 labor-related
share.
The IPF market basket increase for FY 2027 of 3.2 percent
reduced by the productivity adjustment of 0.9 percentage point in
accordance with section 1886(s)(2)(A)(i) of the Act for a FY 2027
payment rate update of 2.3 percent.
Our column comparison in Table 16 illustrates the percent change in
payments from FY 2026 (that is, October 1, 2025, to September 30, 2026)
to FY 2027 (that is, October 1, 2026, to September 30, 2027) including
all the final payment policy changes.
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3. Impact Results
Table 16 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 Table 16 shows the overall impact on the 1,336 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 2025.
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
2026. However, as discussed in section IV.E.c. of this final rule, we
are adjusting the outlier threshold amount to maintain total estimated
outlier payments equal to 2.0 percent of total payments in FY 2027,
which results in no change in aggregate IPF PPS payments.
In column 4, we present the effects of the budget-neutral update to
the IPF wage index, the labor-related share, and the final COLA
changes. 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 IV.D.1.c. of this final rule. That is, the impact represented
in this column reflects the update from the FY 2026 IPF wage index to
the FY 2027 IPF wage index, which includes basing the FY 2027 IPF wage
index on the FY 2027 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 79.0 percent in FY 2026 to 78.9 percent in FY
2027. We note that there is no projected change in aggregate payments
to IPFs, as indicated in the first row of column 4; however, there
would be distributional effects among different categories of IPFs. For
example, we estimate the largest increase in payments to be 1.6 percent
for non-profit IPF hospitals located in rural areas, and the largest
decrease in payments to be 1.1 percent for IPF hospitals with 25-49
beds.
[[Page 48581]]
Overall, IPFs are estimated to experience a net increase in
payments of 2.3 percent as a result of the updates in this final rule.
IPF payments are therefore estimated to increase by 2.2 percent in
urban areas and 2.7 percent in rural areas. The largest payment
increase is estimated at 4.0 percent for non-profit IPF hospitals
located in rural areas.
4. Effect on Beneficiaries
Under the FY 2027 IPF PPS, IPFs will 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 will 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 2027 IPF PPS will enhance the efficiency of the Medicare program.
5. Effects of the Updates to the IPF Quality Reporting Program
In section V.B. of this final rule, we finalized the removal of two
measures from the IPF Quality Reporting Program beginning with the FY
2028 payment determination: Alcohol Use Brief Intervention Provided or
Offered and Alcohol Use Brief Intervention (SUB-2/2a) and Tobacco Use
Treatment Provided or Offered at Discharge (TOB-3/3a). Because these
measures require IPFs to abstract data from a sample of patients'
medical records, we estimate the removal of these measures to reduce
476,238 hours of annual information collection burden on IPFs, valued
at $26,221,664, in CY 2027.
In section V.C. of this final rule, we finalized the implementation
of the IPF Patient Assessment Instrument (IPF-PAI), required by section
4125(b)(1) of the Consolidated Appropriations Act of 2023, beginning
with voluntary reporting starting October 1, 2027--that is, Quarter 4
of CY 2027--and mandatory reporting beginning July 1, 2028--that is,
Quarter 3 of CY 2028. Quarters 3 and 4 of CY 2028 will impact the FY
2030 payment determination. IPFs will have the option of two methods
for submission of IPF-PAI data to CMS: web application and FHIR[supreg]
API. As IPFs have not yet used FHIR[supreg] for program data
submission, we acknowledge that technological, financial, and staffing
barriers may present challenges to adoption and use in some facilities.
We also recognize that IPFs and the health IT vendors that support IPFs
will require time to develop and implement data collection and
submission tools for the proposed IPF-PAI. Because each IPF and health
IT vendor is unique and we lack sufficient insight into the individual
workflows and decisions for each, the extent of these costs is
difficult to quantify. However, in Section VII.C.3. of this final rule,
we estimate the adoption of the IPF-PAI to increase collection of
information burden by 419,778 hours annually, valued at $27,302,361,
when fully implemented.
In accordance with section 1886(s)(4)(A) of the Act, we will apply
a 2-percentage point reduction to the FY 2027 market basket update for
IPFs that have failed to comply with the IPF Quality Reporting Program
requirements for the FY 2027 payment determination, including reporting
on the mandatory measures. Historically, approximately 70 IPFs, or
about 5 percent of IPFs that participate in the IPF Quality Reporting
Program do not receive the full annual percentage increase in any
fiscal year due to the failure to meet all requirements of the program.
We anticipate that the number of IPFs not receiving the full annual
percentage increase will be approximately the same as in past years
based on review of previous performance. We intend to closely monitor
the effects of the IPF Quality Reporting 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 this final 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 this final rule, we assume that the total
number of unique commenters on the most recent IPF PPS proposed rule
will be the number of reviewers of this final rule. For this FY 2027
IPF PPS final rule, the most recent IPF proposed rule was the FY 2027
IPF PPS proposed rule, and we received 176 unique comments on the
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 the FY 2027 IPF proposed 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 the number of commenters would
be a fair estimate of the number of reviewers of this rule. We welcomed
public comments on the approach in estimating the number of entities
that would review the proposed rule. We did not receive any public
comments specific to our solicitation.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of the proposed rule, and
therefore for the purposes of our estimate, we assume that each
reviewer reads approximately 50 percent of the rule. We sought public
comments on this assumption. We did not receive any public comments
specific to our solicitation.
Using the May, 2025 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 final rule is
$135.54 per hour, including overhead and fringe benefits (https://data.bls.gov/oes/#/area/0000000/2025). Assuming an average reading
speed of 250 words per minute, we estimate that it would take
approximately 2.24 hours for the staff to review half of this final
rule which contains a total of approximately 67,300 words. For each
entity that reviews the rule, the estimated cost is $303.61 (2.24 hours
x $135.54). Therefore, we estimate that the total cost of reviewing
this regulation is $53,435.29 ($303.61 x 176 reviewers).
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 updating to
the IPF PPS using the methodology published in the RY 2005 IPF PPS
final rule (our ``standard methodology''), with the 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.
As discussed in section IV.E.1. of this final rule, we considered
multiple alternative policy approaches, including maintaining the
current methodology, adjusting the fixed-dollar loss threshold alone,
implementing targeted audits, and establishing alternative cap levels.
We considered implementing the proposed changes to the outlier cap
policy effective for FY 2027, however,
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we intend to conduct additional analysis of the potential drivers of
cost. Based on the available claims and cost report data, CMS concludes
that the finalized policy most effectively advances the statutory
objective of appropriately accounting for differences in patient
resource use while preserving access to care and maintaining payment
accuracy.
Lastly, as discussed in section IV.D.4. of this final rule, we are
adjusting non-labor related costs for IPFs located in Alaska and Hawaii
using the Overseas Cost-of-Living Allowance (OCOLA) data published by
the DOW for FY 2027 consistent with payments for other hospitals
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.
E. Accounting Statement
Consistent with OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/2025/08/CircularA-4.pdf), in
Table 17, 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 final rule. Table 17 provides
our best estimate of the increase in Medicare payments under the IPF
PPS as a result of the changes presented in this final rule and based
on 1,336 IPFs that had data available in the PSF and claims in our FY
2025 MedPAR claims dataset. Lastly, Table 17 also includes our best
estimate of the costs of reviewing and understanding this final rule.
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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.
1. The Need for, Objectives of, and Legal Basis for the Rule
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.
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) (``the Affordable Care Act'') added
subsection (s) to section 1886 of 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.
2. Identify the Impacted Small Entities
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. SUSB data shows there are 190 firms below this threshold.
[[Page 48583]]
[GRAPHIC] [TIFF OMITTED] TR31JY26.042
According to Table 18, 190 psychiatric and substance abuse
hospitals, at the firm level, can be considered small according to the
SBA. As we stated earlier, the SBA defines small Psychiatric and
Substance Abuse hospitals (firms) as businesses having less than $47
million in total annual revenue. According to the U.S. Census, a firm
is a legal entity or parent company that owns and operates the
business, or hospital, in this case. Therefore, Table 17 only reflects
data at the firm level and not at the establishment level, where
multiple establishments could be owned by a firm.
3. Define ``Significant Impact'' and ``Substantial Number'' Thresholds
As its measure of significant economic impact on small entities,
HHS uses a change in revenue of more than 3 to 5 percent. The agency
considers the rule to have a significant impact on a substantial number
of small businesses when more than 5 percent of impacted small entities
meet the significant economic impact threshold defined above.
[[Page 48584]]
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4. The Estimated Impact to Small Businesses
As discussed in sections VII.C.5 and VII.C.6, costs imposed by this
final rule include the regulatory review costs which we estimate at
$303.61 per IPF (there were 176 IPFs that reviewed the rule); and the
implementation of the Inpatient Psychiatric Facilities-Patient
Assessment Instrument (IPF-PAI), which we estimate at $17,456.75 per
IPF ($27,302,361.00/1,564) (based on the estimate of 1,564 IPFs
described in section VI.B. of this final rule). However, as discussed
in sections V.B.1. and V.B.2. of this final rule, the removal of the
Alcohol Use Brief Intervention Provided or Offered (SUB-2) and subset
Alcohol Use Brief Intervention (SUB-2a) measure and the Tobacco Use
Treatment Provided or Offered at Discharge (TOB-3) and subset Tobacco
Use Treatment at Discharge (TOB-3a) measure from the IPF Quality
Reporting Program would result in an estimated decrease in cost of
$8,382.88 per IPF ($13,110,832.00/1,564) for each measure removal,
totaling a decrease in cost of $16,765.77 per IPF ($8,382.88 * 2). As a
result, there are increased costs of $994.59 per IPF (($303.61 +
$17,456.75) - $16,765.77) imposed as a result of this final rule.
As shown in Table 19, 100 percent of these small Psychiatric and
Substance Abuse hospitals will incur costs as a result of this final
rule.
5. Does the impact on small entities meet the two-part threshold?
According to Table 19, this final rule will have almost no impact
(0.01 percent impact) on small Psychiatric and Substance Abuse
hospitals. Costs for small Psychiatric and Substance Abuse hospitals
are estimated to increase by $994.59 per IPF ($690.98 as a result of
the IPF Quality Reporting Program requirements ($17,456.75 -
$16,765.77), and $303.61 as a result of the regulatory review costs.)
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. Moreover, given that the annual revenue for the 5th percentile
firm is $462,500 and 3 percent of this revenue gives a significant
impact threshold of $13,875, then any cost estimates smaller than this
estimate will not have a significant impact on a substantial number of
small entities.
Assuming the firm size distribution provided in Table 19, we expect
the annualized costs estimated as a result of this final rule to fall
below this significant impact threshold. We also believe this estimate
to be an upper-
[[Page 48585]]
bound since the cost increase from the implementation of the IPF-PAI
will scale based on the number of patients treated. As such, we
anticipate that small Psychiatric and Substance Abuse hospitals will
likely have a lower burden due to having fewer patient stays; and
therefore, fewer IPF-PAI assessments to be completed on an annual
basis. 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 final rule.
6. Steps Taken To Minimize Impact on Small Entities
Section 603(c) mandates that agencies shall contain a description
of any significant alternatives to the final rule which accomplish the
stated objectives of applicable statutes and which minimize any
significant economic impact of the final rule on small entities. As
discussed in section V.C. of this final rule, we are implementing the
IPF-PAI in the IPF Quality Reporting Program to comply with section
1886(s)(4)(E) of the Act, which requires each IPF participating in the
IPF Quality Reporting Program to collect and submit to the Secretary
certain standardized patient assessment data, using a standardized
patient assessment instrument (PAI) implemented by the Secretary. We
are finalizing several modifications to the IPF-PAI timelines for
mandatory reporting and compliance thresholds to reduce burden. The
revised burden estimate is discussed in section VII.C. of this final
rule. At this time, we have not identified any viable alternative that
would accomplish the stated objectives of section 1886(s)(4)(E) of the
Act while further reducing the economic impact of the final rule on
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 604 of the RFA. For
the 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 VI.C.2. of this final rule, the rates and
policies set forth in this final rule will not have an adverse impact
on the rural hospitals based on the data of the 167 rural excluded
psychiatric units and 64 rural psychiatric hospitals in our database of
1,336 IPFs for which data were available. Therefore, the Secretary has
certified that this final 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 2026, that
threshold is approximately $193 million. This final rule does not
mandate any requirements for State, local, or tribal governments, or
for the private sector. This final 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 $193 million
in 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 final 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 final rule is
expected to be considered an Executive Order 14192 regulatory action.
We estimate that this final rule will generate $2.59 million in
annualized cost at a 7 percent discount rate, over a perpetual time
horizon.
This final regulation is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.) and has been transmitted to the Congress
and the Comptroller General for review.
Mehmet Oz, Administrator of the Centers for Medicare & Medicaid
Services, approved this document.
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 amends 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 412.424 is amended by adding paragraph (d)(3)(i)(D) to read
as follows:
Sec. 412.424 >Methodology for calculating the Federal per diem
payment amount.
* * * * *
(d) * * *
(3) * * *
(i) * * *
(D) For discharges occurring in cost reporting periods beginning on
or after October 1, 2027, an IPF's total outlier payments are limited
to no more than 20 percent of its total IPF PPS payments. If an IPF has
fewer than 50 IPF PPS discharges in the cost reporting period, then the
20 percent cap on outlier payments shall not apply.
* * * * *
0
3. Section 412.433 is amended by--
0
a. Revising paragraphs (a) and (d); and
0
b. Adding paragraph (h).
The revisions and addition read as follows:
Sec. 412.433 >Procedural requirements under the IPFQR Program.
(a) Statutory authority. Section 1886(s)(4) of the Act requires the
Secretary to implement a quality reporting program for inpatient
psychiatric hospitals and psychiatric units. Under section 1886(s)(4)
of the Act, for an IPF paid under the IPF PPS that fails to submit data
required for the quality measures and standardized patient assessment
data selected by the Secretary in a form and manner and at a time
specified by the Secretary, we reduce the otherwise applicable annual
update to the standard Federal rate by 2.0 percentage points with
respect to the applicable fiscal year.
* * * * *
(d) Submission of IPFQR Program data. In general, except as
provided in paragraph (f) of this section, IPFs that participate in the
IPFQR Program must submit to CMS data on measures selected under
section 1886(s)(4)(D) of
[[Page 48586]]
the Act and specified non-measure data, including standardized patient
assessment data under section 1886(4)(E) of the Act, in a form and
manner, and at a time specified by CMS. With respect to data collection
for the standardized patient assessment instrument, mandatory data
collection will begin with the third quarter 2028 reporting period.
Data submitted prior to this will not affect payment.
* * * * *
((h) Compliance threshold for the IPF Patient Assessment Instrument
(IPF-PAI). IPFs must meet or exceed a compliance threshold for
standardized patient assessment data collected using the IPF-PAI to
avoid receiving a 2 percentage point reduction to their annual payment
update for a given fiscal year as set forth in paragraph (a) of this
section. We define the compliance threshold as the required percent of
assessments IPFs submit through the CMS designated data submission
system that are 100 percent complete--that is, that contain all
required IPF-PAI standardized patient assessment items. For the FY 2030
and FY 2031 IPF Quality Reporting Program payment updates, the
compliance threshold is set as at least 50 percent. For the FY 2032 and
all subsequent payment updates, the compliance threshold is set at 70
percent.
Robert F. Kennedy, Jr.,
Secretary, Department of Health and Human Services.
[FR Doc. 2026-15588 Filed 7-29-26; 4:15 pm]
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