Section 124 (c) of Public Law 106-113, the Balance Budget Requirement Act of 1999 (BBRA) required the implementation of a per diem prospective payment system (PPS) for Inpatient Psychiatric Facilities (IPF). The per diem prospective payment system was implemented for inpatient psychiatric services that are furnished in a psychiatric hospital, units in an acute care hospitals or a critical access hospital.

Under this system, payment to IPFs is based on a Federal per diem base rate that includes both inpatient operating and capital-related costs (including routine and ancillary services) but excludes certain pass-through costs (i.e., bad debt and direct medical education). The Federal per diem base rate provides patient-level and facility-level adjustments including wage index and teaching adjustments and an add-on for rural facilities. The payment for an individual patient is further adjusted for factors such as the Diagnosis Related Group classification, age, length of stay, and the presence of specified comorbidities. Additional payments are provided for cost outlier cases, a qualifying emergency department (ED) and electroconvulsive therapy treatments.

The IPF PPS PC PRICER makes all reimbursement calculations applicable under the IPF PPS including all payment adjustments, and outlier adjustments.

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