Department of Health and Human Services, Centers for Medicare & Medicaid Services: Medicare Program; FY 2026 Inpatient Psychiatric Facilities Prospective Payment System – Rate Update

B-337744

August 21, 2025

The Honorable Mike Crapo
Chairman
The Honorable Ron Wyden
Ranking Member
Committee on Finance
United States Senate

The Honorable Brett Guthrie
Chairman
The Honorable Frank Pallone, Jr.
Ranking Member
Committee on Energy and Commerce
House of Representatives

The Honorable Jason Smith
Chairman
The Honorable Richard Neal
Ranking Member
Committee on Ways and Means
House of Representatives

Subject: Department of Health and Human Services, Centers for Medicare & Medicaid Services: Medicare Program; FY 2026 Inpatient Psychiatric Facilities Prospective Payment System – Rate Update

Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS) titled “Medicare Program; FY 2026 Inpatient Psychiatric Facilities Prospective Payment System – Rate Update” (RIN: 0938-AV46). We received the rule on August 6, 2025. It was published in the Federal Register on August 5, 2025. 90 Fed. Reg. 37628. The stated effective date of the rule is October 1, 2025.

According to CMS, this rule updates the prospective payment rates, the outlier threshold, and the wage index for Medicare inpatient hospital services provided by Inpatient Psychiatric Facilities (IPFs), which include psychiatric hospitals and excluded psychiatric units of an acute care hospital or critical access hospital. CMS stated that the rule also revises the payment adjustment factors for teaching status and for IPFs located in rural areas. CMS also stated that these changes will be effective for IPF discharges occurring during the fiscal year beginning October 1, 2025, through September 30, 2026. CMS stated further that it is finalizing changes to measures used in the Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program, updating and codifying the Extraordinary Circumstances Exception policy, and summarizing comments received through requests for information regarding future changes to the IPFQR Program.

The Congressional Review Act (CRA) requires a 60-day delay in the effective date of a major rule from the date of publication in the Federal Register or receipt of the rule by Congress, whichever is later. 5 U.S.C. § 801(a)(3)(A). This rule was published in the Federal Register on August 5, 2025. In its submission to us, CMS provided documentation showing that the rule was delivered to both the House and Senate on August 8, 2025. HHS, Signature Receipt for Congressional Review Act Filing (Aug. 8, 2025) (unpublished document) (on file with GAO). The rule has a stated effective date of October 1, 2025. The stated effective date is less than 60 days from the date of receipt by Congress. Thus, the rule's stated effective date does not comply with CRA's 60-day delay requirement.

Enclosed is our assessment of CMS's compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. If you have any questions about this report or wish to contact GAO officials responsible for the evaluation work relating to the subject matter of the rule, please contact Charlie McKiver, Assistant General Counsel, at (202) 512-5992.

Shirley A. Jones
Managing Associate General Counsel

Enclosure

cc: Calvin E. Dukes II
Regulations Coordinator
Department of Health and Human Services

ENCLOSURE

REPORT UNDER 5 U.S.C. § 801(a)(2)(A) ON A MAJOR RULE
ISSUED BY THE
DEPARTMENT OF HEALTH AND HUMAN SERVICES,
CENTERS FOR MEDICARE & MEDICAID SERVICES
TITLED
“MEDICARE PROGRAM; FY 2026 INPATIENT PSYCHIATRIC FACILITIES
PROSPECTIVE PAYMENT SYSTEM – RATE UPDATE”
(RIN: 0938-AV46)

(i) Cost-benefit analysis

The Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS) prepared an analysis of the cost and benefits of this rule. CMS estimates that, in FY 2026, the rule will result in an annual transfer of approximately $70 million from the federal government to inpatient psychiatric facilities (IPFs), reflecting increased Medicare payments to the 1,387 IPFs included in the analysis. Additionally, CMS estimates that stakeholders will incur approximately $12,164 (in 2025 dollars) in cost to review and understand the rule. 90 Fed. Reg. 37628, 37674 (Aug. 5, 2025).

(ii) Agency actions relevant to the Regulatory Flexibility Act (RFA), 5 U.S.C. §§ 603–605, 607, and 609

CMS stated that the Secretary of HHS has certified that this rule will not have a significant economic impact on a substantial number of small entities. 90 Fed. Reg. at 37674.

(iii) Agency actions relevant to sections 202–205 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. §§ 1532–1535

CMS determined that this rule will not impose a mandate that will result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of more than $187 million in any one year. 90 Fed. Reg. at 37675.

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

On April 30, 2025, CMS issued a proposed rule. 90 Fed. Reg. 18494. CMS stated that it received comments on the proposal from various interested parties. 90 Fed. Reg. at 37631.

Paperwork Reduction Act (PRA), 44 U.S.C. §§ 3501–3520

CMS determined that this rule contains information collection requirements under the Act. 90 Fed. Reg. at 37668.

Statutory authorization for the rule

CMS promulgated this rule pursuant to sections 1302 and 1395hh of title 42, United States Code.

Executive Order No. 12866 (Regulatory Planning and Review)

CMS stated that the Office of Management and Budget has determined that this rule is significant under the Order. 90 Fed. Reg. at 37670.

Executive Order No. 13132 (Federalism)

CMS determined that this rule does not impose substantial direct costs on state or local governments or preempt state law. 90 Fed. Reg. at 37675.