Inpatient Psychiatric Facility (IPF) Services

Published 08/20/2025

Answer: Medically necessary inpatient psychiatric services can be provided in a general hospital, a distinct part unit (DPU) of a hospital, a freestanding psychiatric facility, or a critical access hospital (CAH).

Last Reviewed: 08/18/2025
Answer: The personnel requirements for each Medicare patient are:
  • Director of Inpatient Psychiatric Services
  • Medical Doctor (M.D.) / Doctor of Osteopathy (D.O.)
  • Director of Psychiatric Nursing
  • Registered Nurse (Master’s degree in psychiatric or mental health nursing)
  • Psychological Services
  • Psychological services to meet the needs of patients
  • Director of Social Services (Master’s degree in social work)
  • Therapeutic Services
  • Therapeutic activities program

Last Reviewed: 08/18/2025

Answer: Examples of admission criteria include:
  • Threat to self and others requiring 24-hour professional observation
  • Suicidal ideation or gesture with 72 hours prior to admission
  • Assaultive behavior threatening others within 72 hours prior to admission
  • Self-destructive behavior (e.g., bulimic, substance abuse) that poses a threat to life, limb, or bodily function
  • Self-mutilation

Last Reviewed: 08/18/2025

Answer: Documentation supporting medical necessity should be legible and maintained in the patient's medical record. Documentation should include:
  • Certification and recertification
  • Initial psychiatric evaluation
  • Physician orders
  • Plan of treatment
  • Physician progress notes
  • Individual, group psychotherapy, patient education and training progress notes

Last Reviewed: 08/18/2025

Answer: Physician orders should include:
  • Types of psychiatric and medical therapy services and medications
  • Laboratory and other diagnostic testing
  • Allergies
  • Provisional diagnoses
  •  Types and duration of precautions (e.g., constant observation X 24 hours due to suicidal plans, restraints)

Last Reviewed: 08/18/2025

Answer: The treatment plan is the tool used by the physician and multi-disciplinary team to implement services ordered. It should move the patient toward the expected outcomes and goals. The treatment plan should:
  • Be developed by the physician, multi-disciplinary team, and the patient within the first three program days after admission
  • Be based on the problems identified in the physician’s diagnostic evaluation, psychosocial and nursing assessments
  • Include the specific treatments ordered, including the type, amount, frequency and duration of the services to be furnished
  • Include the expected outcome for each problem addressed
  • Include outcomes that are measurable, functional, time-framed, and directly related to the cause of the patient’s admission

Last Reviewed: 08/18/2025

Answer: Progress notes should include:
  • Pertinent patient history, changes in signs and symptoms
  • Changes to the patient’s mental status, and results of any diagnostic testing
  • An appraisal of the patient’s status and progress, and the immediate plans for continued treatment or discharge
  • The course of the patient’s inpatient diagnostic evaluation and treatment should be able to be inferred from reading the physician progress notes

Last Reviewed: 08/18/2025

Answer: Per Local Coverage Determination (LCD) L34570, these services do not represent reasonable and medically necessary inpatient psychiatric services and coverage is excluded:
  • Social, recreational or diversion activities, or custodial or respite care
  • Treatment of chronic conditions without acute exacerbation
  • Vocational training
  • Electrosleep therapy
  • Electrical aversion therapy for treatment of alcoholism
  • Hemodialysis for the treatment of schizophrenia
  • Transcendental meditation
  • Multiple electroconvulsive therapy (MECT)

Last Reviewed: 08/18/2025

Answer: The benefit period is a set number of days that Medicare will cover inpatient psychiatric services.
  • A new benefit period begins each time a patient is admitted to the hospital
  • Patients must pay the Part A deductible for each benefit period
  • There is no limit to the number of benefit periods in a general hospital

Last Reviewed: 08/18/2025

Answer: A freestanding IPF is an independent facility that is not associated with a hospital.
 

Last Reviewed: 08/18/2025

Answer: Yes. A physically separate facility on the campus of a hospital is considered freestanding unless it is integrated with, or a department of, the hospital.

Last Reviewed: 08/18/2025
Answer: No. the 190-day limit does not apply to care in a general hospital, psychiatric DPU within a general hospital or CAH.

Last Reviewed: 08/18/2025
Answer: Under Medicare Part A fee-for-service, the benefit period is 90 days for a patient who is in a general hospital or CAH.

Last Reviewed: 08/18/2025
Answer: If additional inpatient psychiatric services are medically necessary after using the 90-day benefit in a general hospital or CAH, patients may use their lifetime reserve (LTR) days (if not already used from a previous inpatient stay).

Last Reviewed: 08/18/2025
Answer: Each Medicare fee-for-service patient has a total of 60 LTR days that can be:
  • Used after exhausting a 90-day benefit period in a general hospital or CAH
  • Used once during lifetime (60 LTR days are a lifetime benefit)
  • Applied toward different benefit periods

Last Reviewed: 08/18/2025

Answer: No. patients cannot use LTR days at a freestanding IPF, as only 190 days are available for psychiatric services at a freestanding IPF.

Last Reviewed: 08/18/2025
Answer: Yes. Patients can use retroactive LTR days only if:
  • The hospital agrees to retroactive election within 90 days of discharge
  • The election is made while still in hospital or within 90 days of discharge
  • There are no other third-party payers covering services

Last Reviewed: 08/18/2025

Answer: Yes. These are the limitations on using LTR days:
  • LTR days are not available if the beneficiary has been in a psychiatric hospital during the 150-day period immediately preceding the first day of entitlement to hospital insurance benefits and is still in a psychiatric hospital on the first day of entitlement
  • LTR days are not available to a beneficiary who is in a psychiatric hospital after using 190 days in a freestanding IPF

Last Reviewed: 08/18/2025

Answer: Yes. Reserve days are available if a beneficiary receives nonpsychiatric services in a general hospital or if the beneficiary starts a new benefit period (if beneficiary has not used all LTR days during a previous hospital stay).

Last Reviewed: 08/18/2025

Answer: Medicare pays for covered psychiatric services in inpatient psychiatric facilities (IPFs) under the IPF prospective payment system (PPS).
 

Last Reviewed: 08/18/2025

Answer: Payments utilizing the IPF PPS is a federal requirement (42 CFR 412, Subpart N) and are determined by these payment rules:
  • Payments are based on a single Federal per diem base rate paid to all IPFs based on national average operating, ancillary, and capital costs for each patient (meaning it’s a fixed, daily payment regardless of the specific services or costs incurred)
  • Payment is adjusted for age, medical severity, diagnosis-related groups and comorbidity (patients have two or more diseases)
  • The IPF PPS includes payment for extraordinarily high-cost patients through an outlier policy
  • Medicare may make additional payment to protect hospitals from financial loss for unusually expensive cases that exceed a certain cost threshold

Last Reviewed: 08/18/2025

Answer: Yes. Providers can use the inpatient psychiatric Web Pricer to estimate Medicare PPS payments (Web Pricer IPF PPS); however, the final estimate may not match payments determined in the Medicare claims processing system because some data is factored in the Web Pricer estimate amount that is paid by Medicare via provider cost reports.
 

Last Reviewed: 08/18/2025

Answer: When it’s determined that services are not covered, or medical necessary, the hospital can provide a Hospital-Issued Notice of Noncoverage (HINN) to the patient prior to admission, at admission, or at any point during an inpatient stay. Providers can also issue an Advance Beneficiary Notice of Noncoverage (ABN) informing the patient (or representative) that Medicare may not cover the service, and the patient may be responsible for the cost.
 

Last Reviewed: 08/18/2025

Answer: Some IPF services may not be covered because they are:
  • Not medically necessary
  • Not delivered in the most appropriate setting
  • Custodial in nature, meaning care is non-medical:
    • For instance, services are to help a beneficiary with activities of daily living (such as help with eating, bathing, dressing)

Last Reviewed: 08/18/2025

Answer: A same-day transfer happens when the patient is admitted to an IPF and transferred to another hospital on the same day.
 

Last Reviewed: 08/18/2025

Answer: For same-day transfers, the receiving hospital should bill its claim as usual. The initial hospital should:
  • Bill the day as noncovered with condition code 40
  • Bill room and board revenue codes with charges as covered
  • Report discharge status code
    • 02 – Acute Care Hospital
    • 65 – Psychiatric Hospital or Unit

Last Reviewed: 08/18/2025

Answer: An interrupted stay occurs when the patient is discharged and readmitted to the same or different IPF before midnight on the third consecutive day. If this occurs, it is considered one admission with one payment and reflected with days billed in non-covered (use 74 occurrence span code for date leave begins and 180 revenue code for number of days during interrupted stay with $0). This applies to leave of absence, same-day discharge and readmission, and outpatient charges during an interrupted stay.
 

Last Reviewed: 08/18/2025

Answer:
  • 110 TOB
    • No-pay/provider liable inpatient claim
    • Previously billed stay was not medically necessary
    • Include occurrence code A3 with benefits exhaust date
  • 111 TOB
    • Claim spans less than 60 days from admission to discharge
    • Initial, medically necessary inpatient claim
  • 112 TOB
    • Use for first interim claim
    • Use patient status code 30 (still in hospital)
    • Claim spans greater than 60 days from admit to discharge
  • 117 TOB
    • Use for interim or adjustment bills and final claims o Bill sequential claims in 60-day increments
    • Use patient status code 30 (still in hospital)
    • Include occurrence code A3 with benefits exhaust date

Last Reviewed: 08/18/2025

Answer: Payment for professional services is covered under Medicare Part B according to the Physician Fee Schedule (PFS). The PFS Lookup Tool gives information on payment amounts for each code so providers can calculate the patient coinsurance amount. Providers can use a single procedure code, a range of procedure codes, or a list of procedure codes to search for national payment amounts through a specific Medicare Administrative Contractor (MAC) or a specific MAC locality.
 

Last Reviewed: 08/18/2025

Answer: These ae the DRGs for mental diseases and disorders:
  • 876: Operating room procedure with a primary diagnosis of mental illness
  • 880: Acute adjustment reaction and psychosocial dysfunction
  • 881: Depressive neuroses
  • 882: Neuroses other than depressive
  • 883: Disorders of personality and impulse control
  • 884: Organic disturbances and intellectual disability
  • 885: Psychoses
  • 886: Behavioral and developmental disorders
  • 887: Other mental disorder diagnoses

Last Reviewed: 08/18/2025

Answer: No. Only eligible government-owned, Indian Health Service (IHS) facilities, or tribally owned IPF hospitals are permitted to file all-inclusive cost reports. To be an eligible hospital approved to file an all-inclusive cost report, the hospital must never have had a charge structure in place and uses an all-inclusive rate (one charge covering all services) or a no-charge structure. For additional information, review the Guidance for Inpatient Psychiatric Facilities (IPFs) about All-Inclusive Cost Reporting (PDF).
 

Last Reviewed: 08/18/2025

Answer: All IPFs that bill the Centers for Medicare & Medicaid Services (CMS) under the IPF PPS are eligible to participate in the IPF Quality Reporting (IPFQR) Program. IPFs must meet all requirements of the IPFQR Program to receive a full Annual Payment Update each year. IPFs that fail to report required quality data will have their annual payment update reduced by 2.0 percentage points. Program requirements are found at IPFQR Program.

Last Reviewed: 08/18/2025

Answer: These are links to IPF references and resources:

Last Reviewed: 08/18/2025


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