Medicare raises psychiatric inpatient payment rates 2.3% starting Oct. 1

Payment increase for Alaska psychiatric care

Inpatient psychiatric facilities will get a 2.3% increase in Medicare payment rates for patients discharged on or after Oct. 1, under a final rule from the Centers for Medicare & Medicaid Services. The updated rates run through Sept. 30, 2027.

CMS estimates the change adds $60 million nationally in fiscal 2027 compared with this year. The agency said the increase comes from a 3.2% market basket increase minus a 0.9 percentage point productivity adjustment.

Why this reaches Alaska hospitals

The rule reaches Alaska because the payment class isn't limited to standalone psychiatric hospitals. CMS said it covers "psychiatric hospitals and excluded psychiatric units of an acute care hospital or critical access hospital." That is the model much of the state relies on. The rule also resets the wage index, which ties reimbursement to local labor costs.

CMS set the outlier threshold so unusually expensive cases keep drawing about 2% of total payments. The agency is also dropping two measures from the psychiatric quality reporting program.

What's next

A new standardized patient assessment form takes effect for facilities a year later, on Oct. 1, 2027.

How federal rules classify mental health facilities remains contested. Mental Health America has argued that CMS should state clearly that mental health crisis centers are not institutions for mental disease when a stay runs under 24 hours. The group says that distinction shapes whether short-stay crisis care can be paid for.