CMS Proposes 1.9% Medicare Payment Increase to Inpatient Psychiatric Facilities, Floats Plan to Boost Bed Count

The U.S. Centers for Medicare & Medicaid Services (CMS) has released a 2024 proposed rule for prospective payments and policies for Medicare-reimbursed inpatient psychiatric facilities. 

On Tuesday, CMS proposed to increase the pool of total payments doled out for all inpatient psychiatric facilities by a net of 1.9%. The agency also said it will pursue several other initiatives via the proposed rule.

Last year, CMS proposed a 2.7% rate increase.


The proposed rule reveals plans to rejigger CMS’s care quality reporting program and update the metrics it uses to determine prospective payment rates.

It would also allow hospitals to open inpatient psychiatric facilities in the middle of the reporting year, a move meant to increase access to care. CMS is seeking to kick off a request for information process (RFI) for further rate changes for 2025.

On the whole, total payments to inpatient psychiatric facilities would increase by $55 million in fiscal year 2024, if the proposal is finalized. CMS is basing the increase on a 3% rate increase as well as downward adjustments for productivity measures and a fixed share of payments for outlier cases.


CMS uses a “market basket” to assess prospective payments to psychiatric facilities that take Medicare, the government health plan for seniors and those with certain conditions. That basket was last updated in the proposed rule for fiscal 2020 and was based on data from 2016.

“The proposal for FY 2024 would be to adopt a 2021-based [inpatient psychiatric facilities] market basket and includes proposed changes to the market basket cost weights, price proxies, market basket update, and labor-related share,” a CMS fact sheet reads.

That reassessment of the market basket will result in labor-related costs being considered slightly more, an increase of 1.1 percentage points to 78.5% of the basket.

The move to allow inpatient psychiatric facilities to open during a reporting year is meant to allow greater flexibility in opening new beds. Should the rule become effective, hospitals would be able to open new beds and bill Medicare following a 30-day notice to the hospital’s CMS regional office and regional Medicare Administrative Contractor.

“CMS believes this proposal would alleviate unnecessary burden and administrative complexity placed upon hospitals when opening new psychiatric units, helping to expand access to behavioral health care in line with the CMS Behavioral Health Care Strategy,” the fact sheet states.

The quality program for inpatient psychiatric facilities, rolled out in 2013, would see three new measures added if the proposed rule becomes effective as is. They are the “Facility Commitment to Health Equity measure,” the “Screening for Social Drivers of Health (SDOH) measure” and the “Screen Positive Rate for SDOH measure.” The first would become effective in fiscal 2026 while the latter two would become effective in fiscal 2027.

These measures are meant to focus hospitals on assessing and addressing patient’s non-clinical needs as well as social forces that may prevent patients from receiving quality care. Specific factors of the three proposed reporting elements include things identifying if and how equity is part of a hospital’s strategy and hospitals addressing patient needs for food and housing security, for example.

The rule also proposes the adoption of the PIX survey for patient satisfaction and changing COVID-19 vaccination reporting to include a cumulative count of all recommended vaccinations and boosters as recommended by the Centers for Disease Control and Prevention (CDC).

CMS would also remove two quality measures starting in fiscal 2025 — related to discharge of patients on multiple antipsychotics and tobacco use interventions.

“CMS is proposing to remove this measure because the clinical guidelines, which form the basis for this measure, have been updated and therefore the measure no longer aligns with the current clinical guidelines,” the fact sheet says of the antipsychotic reporting requirement.

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