Medicare plans to stop limiting procedures to inpatient-only care

Medicare wants to allow about 1,730 procedures currently only reimbursed in inpatient settings to also be reimbursed in outpatient settings.

A July 17 proposed rule suggests getting rid of the inpatient-only (IPO) list, established in 2000, which dictates a list of procedures Medicare will only reimburse if performed in inpatient settings.

The list would be phased out over three years starting in 2026 with 285 mostly musculoskeletal procedures. These services have already started to shift from inpatient to outpatient setting, thanks to advancements in technology and medicine, the rule notes.

CMS says in the rule it has received public comments over the years that physicians should be trusted to decide where to perform each procedure for their patients, but others, like the American Hospital Association (AHA), have defended its importance.

“As medical practice continues to develop, we believe that the difference between the need for inpatient care and the appropriateness of outpatient care will continue to be less and less distinct for many services. Therefore, we believe that the IPO list is no longer necessary to identify services that require inpatient care,” CMS writes in the rule.

A 2023 study of more than 6 million patients found those who get outpatient procedures fare better in terms of mortality and morbidity than those who get the same procedure inpatient, though outpatients were generally healthier to start.

Sound familiar? The Centers for Medicare and Medicaid Services (CMS) tried to do this once before under the first Trump administration, to be effective in 2021. But the Biden-era CMS reinstated the IPO list in its final 2022 calendar year rule.

This proposal was one of many ideas buried within CMS’s 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Proposed Rule.

Other changes. The 2026 OPPS rule also proposes adding more site-neutral payments, meaning Medicare would pay the same amount regardless of where care is performed.

Right now, the program typically reimburses different amounts for outpatient care depending on if it’s performed in a hospital outpatient department, ambulatory surgical center, or freestanding physician’s office.

“We oppose the proposal to expand ‘site-neutral’ cuts and eliminate the inpatient-only list, as both policies fail to account for the real and crucial differences between hospital outpatient departments and other sites of care,” Ashley Thompson, AHA SVP of public policy analysis and development, said in a statement.