Corporate Compliance

Note from the Instructor: Review of hospital inpatient mental health services payable under the inpatient psychiatric facility prospective payment system (IPF PPS)

Medicare Insider, February 24, 2015

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This week’s note from the instructor is written by Judith L. Kares, JD, regulatory specialist for HCPro.  
 
This note is the third installment in a three-part series focusing on Medicare rules relating to hospital outpatient and inpatient mental health services (alternatively referred to as “psychiatric services”). In two earlier issues, we discussed non-partial hospitalization and partial hospitalization outpatient psychiatric services. This week we will review Medicare rules relating to coverage and payment for hospital inpatient psychiatric services payable under the IPF PPS.
 
Definitions
The IPF PPS is the primary payment methodology for inpatient psychiatric services. Both psychiatric hospitals and psychiatric distinct part units (DPUs) of hospitals and CAHs may qualify as IPFs, so long as they meet applicable CMS certification requirements. 
 
An IPF is an institution certified by Medicare as an inpatient psychiatric hospital, which is primarily engaged in providing psychiatric services, by or under the supervision of a psychiatrist, for the diagnosis and treatment of mentally ill patients. To be certified as an IPF, a psychiatric hospital must not only meet the conditions of participation for a hospital, but also the special conditions of participation for a psychiatric hospital.
 
A DPU may also meet IPF certification requirements so long as the DPU:
  • Admits only patients who require active inpatient treatment for a psychiatric principal diagnosis;
  • Furnishes psychological and social work services, psychiatric nursing, and therapeutic activities through qualified personnel; and
  • Meets medical record and staffing standards similar to those specified in the special conditions of participation for psychiatric hospitals.
 
Coverage                                            
An inpatient psychiatric hospital or psychiatric DPU must meet the following requirements for their services to be covered under the IPF PPS:
  • Certification and recertification requirements, including the following:
o   Initial physician certification at the time of admission that inpatient psychiatric hospital services are medically necessary for treatment which can reasonably be expected to improve the patient’s condition or for diagnostic study; and
 
o   Physician recertification after 12 days, and then at least every 30 days thereafter, that services furnished were intensive treatment services or for diagnostic study and continue to be medically necessary to improve the patient’s condition or for diagnostic study, including active treatment on a daily basis, directly by, or requiring the supervision of, inpatient psychiatric facility personnel;
 
  • A psychiatric evaluation within 60 hours of admission;
  • Active treatment reasonably expected to improve the patient’s condition or for diagnostic study;
  • An individualized treatment or diagnostic plan, including substantiation of the diagnosis, short and long term goals, and treatment modalities; and
  • Appropriate medical records that include development of assessment and diagnostic data, appropriate progress notes, and discharge plan or summary.  
 
Payment
Federal Per Diem Base Rate.
Payment under theIPF PPS is based on a Federal per diem base rate, adjusted by patient and facility-specific adjustments, with additional separate payment for electroconvulsive therapy (ECT) treatments. For FY 2015, the Federal per diem base rate, prior to facility specific adjustments, is $728.31, and the ECT base rate is $313.55. Beginning in FY 2014, the otherwise applicable Federal per diem base rate and the ECT base rate is reduced by 2% for any IPF that fails to meet its quality reporting requirements under the Inpatient Psychiatric Facilities Quality Reporting (IPFQR) program. 
 
To calculate the facility-specific per diem base rate for FY 2015, the IPF should do the following:
 
  • Step 1: Multiply the unadjusted Federal per diem base rate by the labor related share of 69.294% to derive the labor portion of the Federal per diem base rate, and multiply that portion by the hospital’s wage index.
  • Step 2: Multiply the unadjusted Federal per diem base rate by the non-labor related share of 30.706% to derive the non-labor portion of the Federal per diem base rate, and, if applicable, multiply that portion by the Cost of Living Adjustment (COLA) for hospitals in Alaska and Hawaii. 
  • Step 3: Add the labor related amount from Step 1 to the non-labor related amount from Step 2 to derive the total facility specific Federal per diem base rate.
 
An IPF may also qualify for one or more of the following patient-specific adjustments to its facility specific Federal per diem base rate:
 
  • An MS-DRG adjustment, which is a percentage adjustment (up or down) to the facility’s Federal per diem base rate for cases grouping to a set of 17 designated psychiatric MS-DRGs;
  • A comorbidity adjustment, which is an upward percentage adjustment to the facility’s Federal per diem base rate for cases with secondary diagnoses that fit into 17 specific comorbidity categories;
  • An age adjustment, which is an upward percentage adjustment to the facility’s Federal per diem base rate for beneficiaries 45 years of age and older; and
  • A variable per diem adjustment, which is a percentage adjustment (up or down) to the facility’s Federal per diem base rate based on the number of days the patient has been admitted to the facility to account for the higher costs at the initiation of an admission. (The adjustment decreases through day 21, and all days after day 21 of an admission receive the same .92 (92%) adjustment).
 
An IPF may also qualify for two additional facility specific adjustments to its facility-specific Federal per diem base rate:
 
  • A rural location adjustment, which is a 17% upward adjustment for IPFs located in a rural area; and
  • A teaching facility adjustment, which is an upward percentage adjustment, based on the number of interns and residents and the facility’s average daily census.
 
Separate Payment for ECT
As noted above, under the IPF PPS, there is additional separate payment for ECT treatments, whether provided directly or under arrangements. For FY 2015, the ECT base rate is $313.55, subject to a 2% reduction for those IPFs that fail to meet their quality reporting requirements under the IPFQR. The ECT base rate is also subject to applicable wage index and COLA adjustments. The IPF should report ECT services, as follows:
 
  • Revenue code 0901, with the units of ECT provided to the patient during the IPF stay; and
  • ICD-9-CM procedure code 94.27 for ECT, with the date of the last ECT treatment received by the patient.
 
Outlier Payments
An outlier payment may also be available for unusually costly cases based on a Fixed Dollar Loss Threshold, which CMS updates each year. For FY 2015, the Fixed Dollar Loss Threshold is $8755.00. For more information on the eight-step outlier calculation process, see the Medicare Claims Processing Manual, Chapter 3 § 190.7.2.
 
Future focus
In a future issue of the Medicare Insider, we will discuss some of the limitations on coverage of outpatient and inpatient hospital psychiatric services.
 
Additional resources on this topic
 
Medicare Benefit Policy Manual, Chapters 2 and 4
Medicare Claims Processing Manual, Chapter 3 § 190-190.17.1

 



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