Today CMS published its final rule updating payment policies and rates for the Medicare Inpatient Psychiatric Facilities (IPF) Prospective Payment System (PPS) for FY 2016. The final rule provides a 1.5% increase to IPF PPS rates for FY 2016, which is expected to increase aggregate payments by $75 million compared to FY 2015 levels. This update reflects a 2.4% IPF-specific market basket update, reduced by a 0.5 percentage point productivity adjustment and an additional 0.2 percentage point reduction under the Affordable Care Act, which is further reduced by 0.2% as a result of an update of the outlier fixed-dollar loss threshold amount. The final rule also updates quality measures and reporting requirements for the IPF Quality Reporting Program, under which facilities that fail to report on specified quality measures are subject to a 2 percentage point reduction in their annual payment update. In addition, the rule finalizes CMS proposals to transition to new Core Based Statistical Area (CBSA) designations in IPF PPS wage index, and to phase out the rural adjustment for IPF providers whose status changes from rural to urban as a result of the wage index changes.