It’s official. Medicare’s Inpatient Only List (IPO), a catalog of medical procedures reimbursed by Medicare only when performed in a hospital setting, will be phased out by January 1, 2028 – a year earlier than anticipated. This list, which determines whether certain surgeries and treatments must be performed as inpatient rather than outpatient procedures, has significant implications for healthcare providers and patients. Its removal will result in a dramatic shift in how care is delivered and paid for.
For healthcare policy experts, this shift was not only expected but reflective of a broader, ongoing recalibration of the Centers for Medicare & Medicaid Services’ (CMS’s) approach to inpatient care.
So, what is the IPO List, and why are we talking about it?
Established by CMS in 2000, the IPO List comprises approximately 1,700 to 1,800 procedures considered too complex or high-risk – due to potential complications, infections, and other concerns – to be safely performed in an outpatient setting. Medicare reimburses providers for these procedures only when they are conducted on an inpatient basis.
Since its establishment, the IPO List has been updated annually to reflect evolving clinical practice guidelines. In recent years, CMS has allowed certain IPO procedures to be performed in an outpatient facility at the physician’s discretion.
In 2020, CMS announced its intention to eliminate the IPO List, citing advancements in medical practice that made performing many traditionally inpatient procedures in outpatient settings feasible. Without clearly defined criteria, CMS began the phase-out in 2021 by removing nearly 300 musculoskeletal-related services, with the goal of fully retiring the list by 2024. Physicians would be empowered to decide the appropriate site of care for their patients.
This plan was formalized in the calendar year (CY) 2021 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Final Rule. However, in 2021, CMS reversed course. Responding to stakeholder concerns about patient safety, the agency proposed reinstating the 298 removed procedures and reverting to its 2020 policy of only removing procedures that met newly established outpatient reimbursement criteria.
Now, CMS has officially announced the removal of the IPO List – this time over a two-year period beginning in CY 2026. The latest CY 2026 OPPS/ASC Proposed Rule outlines the removal of 285 procedures, primarily musculoskeletal, as the first step in this renewed phase-out effort.
How will the IPO List proposal impact providers and health systems?
Health systems should start planning for increased ambulatory surgery capacity and possibly decreased inpatient surgery capacity, reflecting the broader industry trend toward outpatient care.
For providers, CMS’s removal of the Inpatient Only (IPO) List carries significant implications across three critical areas of clinical operations:
- Reimbursement: Although the change gives hospitals and ASCs flexibility in choosing care settings, it also increases the risk of denials from other payers, such as Medicare Advantage or other commercial payers who may push to move patients to lower-cost sites of service.
- Surgery Scheduling and authorizations: It is essential to verify the approved site of care with each payer before scheduling surgery.
- Documentation and coding: Each inpatient surgery must include a clinical justification for why it cannot be performed at an outpatient center and clearly outline any safety risks or considerations supporting the need for an inpatient stay.
Thoughts on next steps
The elimination of the IPO List will require changes to your organization. Providers must determine whether a procedure qualifies for inpatient or ASC-covered reimbursement at the time of scheduling to avoid costly denials or resubmissions. Additionally, medical coding teams will require training on new status indicator assignments for the 285 ortho/spine procedures that were removed from the list.
IMO Health’s OR efficiency solution empowers organizations to optimize surgical scheduling and billing by identifying procedures suitable for ASCs. With a built-in ASC Covered Procedure list (CPL) and IPO indicators aligned to CMS updates, intuitive mapping tools, and expert-curated surgical dictionaries, it allows providers to confidently flag IPO and ASC-covered and excluded procedures, reduce errors, and ensure clinical and financial alignment – making it the gold standard for perioperative teams managing IPO and ASC compliance.
