CMS finalizes FY 2027 inpatient psychiatric facility rates

What did CMS publish for FY 2027?

CMS published Medicare Program; FY 2027 Inpatient Psychiatric Facilities Prospective Payment System--Rate Update on July 31, 2026 (CMS-1847-F, RIN 0938-AV77, 91 FR 48514). The regulations are effective October 1, 2026 and apply to IPF discharges from October 1, 2026 through September 30, 2027. IPFs are psychiatric hospitals and psychiatric units of acute care or critical access hospitals.

On October 1, 2026 CMS published a correction (CMS-1847-CN, 91 FR 62323, effective October 1, 2026). A wage data error for one hospital in the Hattiesburg, Mississippi area (CBSA 25620) forced CMS to recalculate the wage index and the budget neutrality factor, which moved the rates.

What are the corrected FY 2027 rates?

CMS applied the 2021-based IPF market basket increase of 3.2 percent and subtracted a 0.9 percentage point productivity adjustment, for a total FY 2027 payment rate update of 2.3 percent. It estimates that total payments rise by about $60 million, with outlier payments staying at 2.0 percent of total IPF payments.

What changed on the claim side?

• CMS adds ICD-10-CM codes to some comorbidity lists for FY 2027. As corrected, the Poisoning list gains 20 codes, the Cardiac Conditions list 9, the Oncology Treatment Diagnoses list 3 and the Severe Musculoskeletal and Connective Tissue Diseases list 6, while that list loses 8 and the Code First list loses 12.
• The facility adjustment for an IPF with a qualifying emergency department stays at 1.54 on day 1 of a stay. For an IPF without one, the correction changes the stated factor from 1.27 to 1.28.
• From October 1, 2027, outlier payments are capped at 20 percent of an IPF's total payments for facilities with 50 or more stays in the cost reporting year. IPFs with fewer than 50 stays are exempt.
• CMS also implements a standardized patient assessment instrument for the IPF Quality Reporting Program and removes two quality measures (SUB-2/2a and TOB-3/3a).

Who is affected?

Free-standing psychiatric hospitals and psychiatric units of hospitals, along with the mental health professionals who bill them, see the change on inpatient psychiatric claims with an October 1, 2026 or later discharge.

What should billing teams do now?

1. Load the corrected rates ($912.13 per diem, $688.38 per ECT treatment) into your payment-check sheet, not the July figures.
2. Review remittances for discharges since October 1, 2026 against those rates, adjusted for your wage index, rural status and teaching status.
3. Ask your MAC to reopen any claim that paid at a July rate.
4. Add the new comorbidity diagnosis codes to your coder lists before you code FY 2027 discharges.
5. Plan for the 20 percent outlier cap on October 1, 2027 if outliers are a large share of your payments.

What is still open?

The outlier cap starts in FY 2028, and the Consolidated Appropriations Act, 2023 requires IPFs to submit standardized patient assessment data for FY 2028 and later years. Coverage and medical necessity for inpatient psychiatric stays follow Medicare policy and local coverage articles, covered in LCDs and NCDs, and the Medicare payer guide explains how MACs process facility claims. For denials, see the denial management playbook.

Our team handles UB-04 inpatient claims as part of medical billing. Book a call to check how your October remittances compare.