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Federal Register / Vol. 86, No. 147 / Wednesday, August 4, 2021 / Rules and Regulations for the labor-related cost categories based on the most recent forecast IGIs second quarter 2021 forecast of the 2016-based IPF market basket laborrelated share cost weights, as proposed.

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B. Final Updates to the IPF PPS Rates for FY Beginning October 1, 2021
The IPF PPS is based on a standardized Federal per diem base rate calculated from the IPF average per diem costs and adjusted for budgetneutrality in the implementation year.
The Federal per diem base rate is used as the standard payment per day under the IPF PPS and is adjusted by the patient-level and facility-level adjustments that are applicable to the IPF stay. A detailed explanation of how we calculated the average per diem cost appears in the November 2004 IPF PPS
final rule 69 FR 66926.
1. Determining the Standardized Budget-Neutral Federal per Diem Base Rate Section 124a1 of the BBRA
required that we implement the IPF PPS
in a budget-neutral manner. In other words, the amount of total payments under the IPF PPS, including any payment adjustments, must be projected to be equal to the amount of total payments that would have been made if the IPF PPS were not implemented.
Therefore, we calculated the budgetneutrality factor by setting the total estimated IPF PPS payments to be equal to the total estimated payments that would have been made under the Tax Equity and Fiscal Responsibility Act of 1982 TEFRA Pub. L. 97248
methodology had the IPF PPS not been implemented. A step-by-step description of the methodology used to estimate payments under the TEFRA
payment system appears in the November 2004 IPF PPS final rule 69
FR 66926.
Under the IPF PPS methodology, we calculated the final Federal per diem base rate to be budget-neutral during the IPF PPS implementation period that is, the 18-month period from January 1, 2005 through June 30, 2006 using a July 1 update cycle. We updated the average cost per day to the midpoint of the IPF
PPS implementation period October 1, 2005, and this amount was used in the payment model to establish the budgetneutrality adjustment.
Next, we standardized the IPF PPS
Federal per diem base rate to account for the overall positive effects of the IPF
PPS payment adjustment factors by dividing total estimated payments under the TEFRA payment system by estimated payments under the IPF PPS.
In addition, information concerning this
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standardization can be found in the November 2004 IPF PPS final rule 69
FR 66932 and the RY 2006 IPF PPS
final rule 71 FR 27045. We then reduced the standardized Federal per diem base rate to account for the outlier policy, the stop loss provision, and anticipated behavioral changes. A
complete discussion of how we calculated each component of the budget-neutrality adjustment appears in the November 2004 IPF PPS final rule 69 FR 66932 through 66933 and in the RY 2007 IPF PPS final rule 71 FR 27044
through 27046. The final standardized budget-neutral Federal per diem base rate established for cost reporting periods beginning on or after January 1, 2005 was calculated to be $575.95.
The Federal per diem base rate has been updated in accordance with applicable statutory requirements and 412.428 through publication of annual notices or proposed and final rules. A
detailed discussion on the standardized budget-neutral Federal per diem base rate and the electroconvulsive therapy ECT payment per treatment appears in the FY 2014 IPF PPS update notice 78
FR 46738 through 46740. These documents are available on the CMS
website at https www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/InpatientPsychFacilPPS/
index.html.
IPFs must include a valid procedure code for ECT services provided to IPF
beneficiaries in order to bill for ECT
services, as described in our Medicare Claims Processing Manual, Chapter 3, Section 190.7.3 available at https
www.cms.gov/Regulations-andGuidance/Guidance/Manuals/
Downloads/clm104c03.pdf. There were no changes to the ECT procedure codes used on IPF claims as a result of the final update to the ICD10PCS code set for FY 2022. Addendum B to this final rule shows the ECT procedure codes for FY 2022 and is available on our website at https www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
InpatientPsychFacilPPS/tools.html.
2. Final Update of the Federal Per Diem Base Rate and Electroconvulsive Therapy Payment per Treatment The current FY 2021 Federal per diem base rate is $815.22 and the ECT
payment per treatment is $350.97. For the final FY 2022 Federal per diem base rate, we applied the payment rate update of 2.0 percentthat is, the 2016based IPF market basket increase for FY
2022 of 2.7 percent less the productivity adjustment of 0.7 percentage pointand the wage index budget-neutrality factor of 1.0017 as discussed in section III.D.1
of this final rule to the FY 2021 Federal
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per diem base rate of $815.22, yielding a final Federal per diem base rate of $832.94 for FY 2022. Similarly, we applied the 2.0 percent payment rate update and the 1.0017 wage index budget-neutrality factor to the FY 2021
ECT payment per treatment of $350.97, yielding a final ECT payment per treatment of $358.60 for FY 2022.
Section 1886s4Ai of the Act requires that for RY 2014 and each subsequent RY, in the case of an IPF
that fails to report required quality data with respect to such RY, the Secretary will reduce any annual update to a standard Federal rate for discharges during the RY by 2.0 percentage points.
Therefore, we are applying a 2.0
percentage point reduction to the Federal per diem base rate and the ECT
payment per treatment as follows:
For IPFs that fail requirements under the IPFQR Program, we applied a 0.0 percent payment rate updatethat is, the IPF market basket increase for FY
2022 of 2.7 percent less the productivity adjustment of 0.7 percentage point for an update of 2.0 percent, and further reduced by 2 percentage points in accordance with section 1886s4Ai of the Actand the wage index budgetneutrality factor of 1.0017 to the FY
2021 Federal per diem base rate of $815.22, yielding a Federal per diem base rate of $816.61 for FY 2022.
For IPFs that fail to meet requirements under the IPFQR Program, we applied the 0.0 percent annual payment rate update and the 1.0017
wage index budget-neutrality factor to the FY 2021 ECT payment per treatment of $350.97, yielding an ECT payment per treatment of $351.57 for FY 2022.
C. Final Updates to the IPF PPS PatientLevel Adjustment Factors 1. Overview of the IPF PPS Adjustment Factors The IPF PPS payment adjustments were derived from a regression analysis of 100 percent of the FY 2002 Medicare Provider and Analysis Review MedPAR data file, which contained 483,038 cases. For a more detailed description of the data file used for the regression analysis, see the November 2004 IPF PPS final rule 69 FR 66935
through 66936. We are finalizing our proposal to continue to use the existing regression-derived adjustment factors established in 2005 for FY 2022.
However, we have used more recent claims data to simulate payments to finalize the outlier fixed dollar loss threshold amount and to assess the impact of the IPF PPS updates.

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