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*Fiscal Year 2026 Medicare Inpatient Psychiatric Facility Prospective Payment System and Quality Reporting Updates Proposed Rule CMS-1831-P*

On April 11, 2025, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that proposes updates to Medicare payment policies and rates for Inpatient Psychiatric Facility, under the Inpatient Psychiatric Facility Prospective Payment System (IPF PPS) and Quality Reporting (IPFQR) Updates Proposed Rule (CMS-1831-P), for fiscal year (FY) 2026. CMS is publishing this proposed rule consistent with its statutory authority to update Medicare payment policies for IPFs annually. 

This fact sheet discusses the major provisions of the proposed rule, including proposed annual updates to the prospective payment rates, the outlier threshold, the wage index, and associated impact analysis. In addition, the rule includes a proposal to update the facility-level adjustment factors, with increases to payments for teaching status and rural location.

For the IPF Quality Reporting (IPFQR) Program, CMS is proposing to remove four measures from the program, as well as modify the reporting period of one measure. In addition, CMS is proposing to update the Extraordinary Circumstances Exception (ECE) policy and codify the process for requesting or granting an ECE. CMS is also issuing Requests for Information regarding future changes to the IPFQR Program, including future star ratings for IPFs, measure concepts on well-being and nutrition, and digital quality measurement.

*Request for Information on Streamlining Regulations and Reducing Administrative Burdens in Medicare*

On January 31, 2025, President Trump issued Executive Order (EO) 14192 "Unleashing Prosperity Through Deregulation," which states the Administration’s policy to significantly reduce the private expenditures required to comply with Federal regulations to secure America’s economic prosperity and national security and the highest possible quality of life for each citizen.  To comply with the Executive Order, CMS, is including in the proposed rule a Request for Information seeking public input on approaches and opportunities to streamline regulations and reduce burdens on those participating in the Medicare program. The RFI is available at https://www.cms.gov/medicare-regulatory-relief-rfi and the public should submit all comments in response to this RFI through the provided weblink. *            *

*Proposed Changes to Payments Under the IPF PPS*

"_Proposed Updates to IPF Payment Rates_"

For FY 2026, CMS is proposing to update the IPF PPS payment rates by 2.4%, based on the proposed 2021-based IPF market basket increase of 3.2% less a proposed 0.8 percentage point productivity adjustment.CMS is proposing that if more recent data become available (for example, a more recent estimate of the market basket update or productivity adjustment), CMS would use this data, if appropriate, to determine the FY 2026 market basket update percentage increase and the productivity adjustment in the final rule. Additionally, CMS proposes to update the outlier threshold so that estimated outlier payments remain at 2.0% of total payments. Total estimated payments to IPFs would increase by 2.4%, or $70 million, in FY 2026, relative to IPF payments in FY 2025.

"_Proposed Updates to IPF PPS Facility-Level Adjustment Factors_"

In accordance with section 1886(s)(5)(D)(i) of the Social Security Act, as added by the Consolidated Appropriations Act, 2023 (CAA) (Pub. L. 117–328), CMS is proposing updates to the IPF PPS facility-level adjustment factors for teaching status and rural location.

In FY 2025, CMS finalized updates to the patient-level adjustment factors and revised the per treatment payment amount for electroconvulsive therapy. We also finalized maintaining the facility-level adjustment factors for FY 2025 to minimize the impact to IPFs in a single year but noted that updating these facility-level adjustment factors in future rulemaking could more accurately pay for care, support psychiatry residency training, and support IPFs in rural and underserved areas.

For FY 2026, we have updated the regression model used to determine IPF PPS payment adjustments to reflect costs and claims data for FY 2020, 2021, and 2022. Based on our analysis of these more recent claims and costs data, along with the public comments received in response to the FY 2025 IPF PPS proposed rule Request for Information (RFI) on facility-level adjustment factors, we are proposing to increase the adjustment factors for facility teaching status and rural location. In addition, CMS is proposing to recognize increases to IPF teaching caps for resident full-time equivalents (FTEs) awarded under Section 4122 of the CAA, 2023. 

As required under section 1886(s)(5)(D)(iii) of the Social Security Act and section 124(a)(1) of the Medicare, Medicaid, and State Children’s Health Insurance Program Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106–113), we are proposing to make these updates to the IPF PPS in a budget-neutral manner (that is, total estimated payments to IPFs for FY 2026 would be the same with or without the proposed revisions).

*Proposed Updates to the IPFQR Program*

The IPFQR Program requires that all IPFs paid under the IPF PPS submit certain specified quality data to CMS, in a form and manner and within the timeframes that CMS prescribes. IPFs that do not submit the specified data on quality measures as required by the IPFQR Program receive a 2.0 percentage point reduction to their annual payment update. The IPFQR Program aims to assess and foster improvement in the quality of care provided to patients in IPFs. By requiring IPFs to submit quality data to CMS and by CMS publicly reporting these data under the IPFQR Program, CMS ensures that patients can make more informed decisions about their health care options.

In this proposed rule, CMS is proposing to make changes to quality measures in the IPFQR Program. CMS is proposing to modify the reporting period of one measure — the 30-Day Risk-Standardized All-Cause Emergency Department Visit Following an Inpatient Psychiatric Facility Discharge measure (also referred to as the IPF ED Visit measure) — from a one year, calendar year to a two year, fiscal year period, to bring this measure’s reporting period into alignment with another program measure with which it is intended to be comparable. CMS is also proposing to remove four measures, all beginning with the CY 2024 reporting period/FY 2026 payment determination: Facility Commitment to Health Equity; COVID–19 Vaccination Coverage among Health Care Personnel; Screening for Social Drivers of Health; and Screen Positive Rate for Social Drivers of Health. 

CMS is proposing to update changes to the IPFQR Program’s ECE policy to explicitly include extensions as a type of relief that CMS may grant in the event of an extraordinary circumstance that affects the ability of an IPF to comply with reporting requirements. CMS is also proposing to codify the process for requesting or granting an ECE, which would remain the same as the current process, in regulation. 

Additionally, CMS is issuing three Requests for Information related to the IPFQR Program. CMS is seeking input on a potential future star rating system for the IPFQR Program for display on the Medicare.gov Care Compare tool. The Compare tool currently displays star ratings for many provider and facility types but does not include IPFs. This RFI solicits feedback on the development of a five-star methodology for IPFs that can meaningfully describe an IPF’s quality of care. 

In this proposed rule, CMS is seeking input on future measure concepts on the topics of well-being and nutrition. Additionally, CMS is requesting information on potentially using Fast Healthcare Interoperability Resources® (FHIR®) standards for IPFs reporting patient assessment data to CMS. CMS seeks to understand the current adoption and use of electronic health records, other health information technology, and data standards supporting interoperability. 

The proposed rule can be viewed at the "Federal Register" at: https://www.federalregister.gov/public-inspection/current

Information on the Inpatient Psychiatric Facility PPS is available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility. 

Information on the Inpatient Psychiatric Facility QRP is available at: https://www.cms.gov/medicare/quality/initiatives/hospital-quality-initiative/inpatient-psychiatric-facility-quality-reporting-ipfqr-program. 

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Press Office, Centers for Medicare & Medicaid Service


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