On May 6, 2011, CMS is publishing a final rule updating PPS rates for Medicare inpatient hospital services provided by inpatient psychiatric facilities (IPFs) for discharges occurring during rate year (RY) 2012, which begins July 1, 2011. CMS estimates that the rule would increase overall IPF PPS payments by approximately $120 million, reflecting a $130 million increase from an update to payment rates (a market basket update of 3.2% reduced by 0.25 percentage points as required by the ACA), and a $10 million decrease due to an adjustment to outlier threshold from approximately 2.2% in RY 2011 to 2.0% in RY 2012). The rule also changes the IPF PPS payment rate update period to coincide with federal fiscal years (beginning October 1); in order to transition to a FY update period, RY 2012 is a 15-month period. Other provisions of the rule modify the IPF PPS teaching adjustment, rebase and revise the applicable market basket, and make other clarifications to IPF PPS policies.