The Centers for Medicare & Medicaid Services has corrected several Medicare payment figures for inpatient psychiatric facilities after discovering an error in the wage data used to calculate fiscal year 2027 rates.
The correction, effective Oct. 1, 2026, makes relatively small changes to several payment amounts previously published in the July 31 final rule governing the Inpatient Psychiatric Facility Prospective Payment System, or IPF PPS. The official CMS correction notice makes clear that the agency isn’t changing the underlying payment policies or methodologies it previously adopted. Instead, CMS is correcting technical errors so the published rates accurately reflect those policies.
A Wage Index Error Changed Several Medicare Rates
The problem originated with the wage index CMS uses when calculating payments to inpatient psychiatric facilities. CMS discovered that wage data from one hospital had been incorrectly excluded from calculations involving Core-Based Statistical Area 25620, which covers Hattiesburg, Mississippi.
That omission required CMS to recalculate the final FY 2027 IPF PPS wage indexes. Because wage-index adjustments are designed to be budget neutral, correcting that data also changed the wage index budget neutrality factor from 0.9989 to 0.9986.
That small numerical change affected several payment rates.
The standard federal per diem base rate for inpatient psychiatric facilities was corrected from $912.40 to $912.13. The corresponding base rate for facilities that failed to meet required quality-reporting requirements was reduced from $894.56 to $894.29.
CMS also changed the Medicare payment per electroconvulsive therapy treatment from $688.59 to $688.38. For providers that failed to report required quality data, the ECT rate was corrected from $675.13 to $674.93.
The Broader 2027 Payment Increase Remains in Place
The corrections shouldn’t be confused with CMS reversing its broader FY 2027 payment update for psychiatric facilities.
Under the FY 2027 IPF PPS final rule, CMS originally estimated that total payments to inpatient psychiatric facilities would increase approximately 2.3%, or $60 million, compared with FY 2026. The update incorporated a 3.2% market-basket increase reduced by a 0.9-percentage-point productivity adjustment.
CMS’s corrected impact table continues to show an estimated 2.3% overall increase across the 1,336 facilities included in its analysis, although estimated changes vary by facility type and location.
The corrected table, for example, shows an estimated 2.2% total increase for urban facilities and 2.7% for rural facilities. Individual providers can experience different results because Medicare payments depend on numerous adjustments beyond the federal base rate.
CMS Also Fixed Several Typographical Errors
The agency identified additional mistakes that weren’t directly tied to the corrected base payment rates.
CMS changed the stated number of ICD-10-CM diagnosis codes added to the Poisoning comorbidity list from 10 to 20. It also corrected the adjustment factor for inpatient psychiatric facilities without a qualifying emergency department from 1.27 to 1.28 and restored an omitted footnote.
The agency additionally recalculated its payment-impact analysis to reflect the corrected wage indexes.
CMS explained that the underlying wage-index problem was connected to a separate error in the broader Medicare hospital inpatient payment calculations. A current hospital had incorrectly been treated as though it had converted to rural emergency hospital status, causing its wage data to be excluded from calculations.
What the Correction Means for Medicare Providers
For most readers, the individual rate changes may appear tiny—a 27-cent reduction in the federal per diem base rate and a 21-cent reduction in the standard ECT payment. But even small adjustments can matter when payment rates are applied repeatedly across large numbers of Medicare-covered services.
The corrections are also primarily a provider-payment issue, rather than an announcement that Medicare beneficiaries’ premiums or individual psychiatric-care bills are changing by these amounts. Hospitals and psychiatric units paid under the IPF PPS should use the corrected figures when evaluating their FY 2027 Medicare reimbursement.
CMS has also updated its FY 2027 IPF PPS payment files to reflect the revised calculations.
Providers that could be affected should review the corrected CMS materials and their facility-specific payment information rather than relying on figures published in the original July rule.
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