Medicare Payment Adjustment for Inpatient Psychiatric Facilities: A Review and Potential Refinements

Medicare Payment Adjustment for Inpatient Psychiatric Facilities: A Review and Potential Refinements

Abstract

In 2005, CMS implemented a prospective payment system (PPS) to pay for Medicare services provided by inpatient psychiatric facilities (IPFs). Using FY 2003 administrative data, this study independently replicates the analyses used in developing the IPF PPS. It considers alternative comorbidity classifiers and conducts the first facility-level analyses of the IPF-PPS. Payments are found to vary less than proportionately with costs at the facility level, suggesting payments may not fully reflect the higher costs of facilities that treat sicker patients.It also demonstrates how an expansion of the current set of comorbidities would more closely match payments to patient costs.

Research Area: 

Centers

To reuse content from Urban Institute, visit copyright.com, search for the publications, choose from a list of licenses, and complete the transaction.