On Friday, the Centers for Medicare & Medicaid Services (CMS) released the final rule for inpatient psychiatric facilities (IPF) prospective payments and care quality reporting for Medicare payments.

According to an announcement from CMS, the coming fiscal year 2026 will see an increase in net payments within the IPF prospective payment system of 2.4%, or about $70 million, compared to the fiscal year 2025. The overall cap on outlier payments is 2% for the organization’s psychiatric facilities-related spending, as originally proposed in the rule.

The rule was originally proposed in April. The new federal fiscal year starts Oct. 1.

The final rule specifically updates the payment methodology for teaching and rural hospitals based on more recent data and models. This is the first update to these adjustment models since 2005, according to the announcement.

The final rule also eliminates four quality reporting metrics, which were in the proposed rule: “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.”

It also changes the reporting period for 30-day adjusted emergency department visits following an inpatient stay from a one-year to a two-year reporting period.

The rule finalizes time extensions as a form of relief for facilities operating under exceptional circumstances and seeking exemption from reporting requirements.

The proposed rule called for comments on a five-star rating system, similar to what CMS does for other types of health facilities such as nursing homes and hospitals. The final rule includes that commentary, but the announcement doesn’t present the government’s reaction to the comments from industry leaders.

“Although we publicly report data on measures under the [quality program] on the Compare tool (on Medicare.com), there are currently no star ratings displayed for IPFs, and IPFs are not included in hospital star ratings,” the finalized rule states. 

In brief, CMS said commenters were worried about the methodological rigor, CMS’ use of the stars, the star system’s usefulness to consumers, and industry participation in the development of the star-rating system.