CMS Proposes 2.7% Rate hike for Inpatient Psychiatric Facilities in 2025

The Centers for Medicare and Medicaid Services (CMS) has released its 2025 proposed rule for prospective payments and policies for Medicare-reimbursed inpatient psychiatric facilities.

CMS has proposed a 2.7% increase in the payment rate of inpatient psychiatric facilities (IPFs) for 2025. The agency estimates that the total payments to IPFs in 2025 will increase by 2.6% or $70 million.

In 2024, CMS raised the total estimated Medicare spending for IPFs by 2.3% and updated payment rates for IPFs by 3.3%.


“Changes included in this proposed rule would support the provision of high-quality behavioral health treatment in inpatient psychiatric facilities, consistent with the Biden Administration’s Unity Agenda and focus on addressing the mental health crisis,” a statement from CMS reads.

CMS is also proposing changes to how it calculates payment rates for IPFs. In particular, it plans to change the methodology it uses to determine these payment rates based on information collected over previous years as part of the Consolidated Appropriations Act of 2023.

It also proposes revisions to the IPF patient-level adjustment factors to include Medicare Severity Diagnosis Related Groups based on the patient’s principal diagnosis, as well as the patient’s principal diagnosis, selected comorbidities, age and variable per diem adjustments.


CMS noted that it currently uses a regression model first that was implemented in 2005 to determine patient and facility-level adjustment factors. The proposed rule plans to modernize these models to calculate adjustments by using data from 2019 to 2021.

The proposal also plans to increase payments for electroconvulsive therapy ECT. Specifically, CMS currently pays $385.58 per ECT treatment. In 2025, it proposes an increase to $660.30 per treatment.

“We believe this increase would help ensure that the patients who need ECT are more able to access it,” CMS said in the fact sheet.

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