Medicare’s Inpatient Only List (IPO), a catalog of medical procedures reimbursed by Medicare only when performed in a hospital setting, is again under serious reconsideration. 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 potential removal – or reinstatement – is stirring up debate, signaling another 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 adjusted annually to keep up with 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, in a familiar twist, CMS has once again proposed phasing out the IPO List – this time over a three-year period beginning in CY 2026. The latest CY 2026 OPPS/ASC Proposed Rule outlines plans to remove 285 procedures, primarily musculoskeletal, as the first step in this renewed phase-out effort.
While the proposal echoes previous attempts, it remains subject to stakeholder feedback and regulatory review. As history has shown, the IPO List’s future is anything but certain.
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 larger industry trend from inpatient to outpatient care.
For providers, CMS’s evolving stance on the Inpatient Only (IPO) List carries significant implications across three critical areas of clinical operations:
- Reimbursement: Performing an IPO-designated procedure in an outpatient setting can result in the loss of reimbursement – not just for the procedure itself, but for all associated services. Accurate IPO flagging is essential to avoid costly denials.
- Scheduling and workflows: Misclassifying a procedure as outpatient when it should be inpatient disrupts the entire perioperative workflow. It can lead to resource misallocation, delays, and coordination breakdowns across teams.
- Patient safety and care quality: CMS has acknowledged that the IPO List serves as a “programmatic safeguard,” reflecting widespread stakeholder concerns. While some advocate for clinical discretion, the list ensures consistent adherence to best practice guidelines and helps standardize care decisions.
Thoughts on next steps
Success in navigating CMS’s Inpatient Only (IPO) requirements centers on precisely identifying and coding IPO procedures. Providers must know whether a procedure qualifies for inpatient or ASC-covered reimbursement at the time of scheduling to avoid costly denials or resubmissions.
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.
