PPS System Overview Inpatient Psychiatric Facility

PPSSystem Overview: Inpatient Psychiatric Facility

PPSSystem Overview: Inpatient Psychiatric Facility


Psychiatricdisorders have existed throughout human history, but the first publichealth care facilities addressing this type of illness were startedin the late 1700s (Groff, 2015). However, the hospitalization of thepatients suffering from psychiatric disorder gained significance in1942-1947 when a strong psychiatric care system was established underthe Civil Public Service. The rapid increase in the number ofpatients made funding of the system a challenge, which necessitatedthe inclusion of the services offered in the inpatient psychiatricfacilities in the Medicaid reimbursement in order to safeguard thegoing concern of these facilities. This resulted in a drasticincrease in the number of IPFs from 579 in 1988 to the current 1,410facilities (Lave, 2013).

Servicesand components of reimbursement

Someof the services that are reimbursed under the IPFs include diagnosticevaluation, referral services, treatment planning, psychotherapy,medication management, and crisis intervention services (Optum,2015). Reimbursement of IPF costs is made on the basis of per diemper patient, which includes the capital related costs and in-patientoperation costs with an exemption of pass through costs, such as baddebts (Center for Medicaid and Medicare, 2015). Inpatient psychiatricservice is considered to be an optional service in many states andeligibility for reimbursement is limited to patients under the age of21 years and people aged 65 years and above (Medicaid, 2015). Inaddition, the payment methodology offers the facility-level andpatient level adjustments, such as teaching and wage adjustments.

Advantagesand disadvantages

TheIPFs has two major benefits. First, the system takes account ofdifferent variables (such as the teaching-related costs) and the mostcritical services that needed by clients with psychiatric disorders.Secondly, the system is flexible and is subject to frequent changes,which creates room for the inclusion of emerging factors (Medicaid,2015). However, the formula used to determine reimbursement iscomplex and can only be understood by professionals. In addition, theeligibility criterion is quite stringent and it is likely to excludemany patients suffering from psychiatric disorders.

Inconclusion, Inpatient Psychiatric Facility is a critical PPS systemthat has revolutionized the health care system by facilitating theconsideration of psychiatric disorders as crucial health needs thatrequire Medicaid reimbursement. The reimbursement criteria cover themost crucial health services that are necessary for the majority ofpeople suffering from psychiatric disorders.


Centerfor Medicaid and Medicare (2015). Inpatient psychiatric facilityprospective payment system PC price. CMS.Retrieved August 23, 2015, fromhttps://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PCPricer/inppsy.html

Groff,K. (2015). Dix and the growth of institutions. TheLibrary of Congress.Retrieved August 23, 2015, fromhttp://www.tiki-toki.com/timeline/entry/37146/A-History-of-Mental-Institutions-in-the-United-States/#vars!panel=403819!

Lave,R. (2013). Developing a Medicare prospective payment system forinpatient psychiatric care. HealthAffairs,22 (5), 97-109.

Medicaid(2015). Inpatient psychiatric services for individuals under age 21.Medicaid.Retrieved August 23, 2015 fromhttp://www.medicaid.gov/medicaid-chip-program-information/by-topics/long-term-services-and-supports/inpatient-psychiatric-services-for-individuals-under-age-21.html

Optum(2015). Psychiatricinpatient hospitalization Medicare coverage summary.Washington, DC: United Behavioral Health.