Inpatient Psychiatric Facilities: Patient Population and Readmissions

The Affordable Care Act has required that CMS begin to address excess readmissions in short term acute care hospitals paid under the Inpatient Prospective Payment System (IPPS) through the Hospital Readmissions Reduction program.  This program requires CMS to reduce payments to IPPS hospitals with excessive readmissions for a set of three conditions—acute myocardial infarction (AMI), heart failure, and pneumonia…In the 2013 IPPS Final Rule, CMS has estimated that the Hospital Readmissions Reduction Program would save $280 million for the first year.

What would happen if CMS extended the hospital readmission reductions program to inpatient psychiatric facilities (IPF) through the IPF Prospective payment System (IPF PPS)?  Currently, IPF PPS is used to reimburse two types of IPF: those that are specific units within a larger hospital and those that are freestanding units.    A policy paper by the Moran Company provides some details on current patient population using IPF PPS as well as readmission rates.

  • Medicare discharges made up around 25% of IPFs’ total discharges
  • Beneficiaries who use IPFs are likely to be poor and disabled.  In fact, a majority of Medicare beneficiaries admitted to an IPF qualified due to disability (rather than age).  Further, over half of these beneficiaries with an IPF admission are dual-eligibles.
  • Freestanding IPFs have longer lengths of stay (29 days for government facilities, 12 days for non-government) compared to inpatient psychiatric units (12 days for government facilities and 11 days for non-government).
  • Patients admitted to an IPF have higher rates of chronic illness (e.g., HIV/AIDS, diabetes) than those non-psychiatric patients in the inpatient setting.  Patients with serious mental illness are much more likely to have substance abuse problems.
  • Readmission rates for IPF are high.  Thirty percent of Medicare beneficiaries with at least one psychiatric facility stay in a given calendar  have a readmission during the same calendar year.


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