Phasing out the Inpatient-Only List: Changes Needed for Utilization Review

Beginning in 2026, the Centers for Medicare & Medicaid Services (CMS) will begin phasing out the Inpatient-Only (IPO) List by removing predominantly musculoskeletal and complex surgical procedures – and, in parallel, adding many of them to the Ambulatory Surgery Center (ASC) Covered Procedures List.

As these codes lose their “inpatient-only” protection, hospitals can no longer rely on the procedure itself to justify status and inpatient-level reimbursement. Instead, the expected need for hospital care spanning two midnights, supported by clinical risk and post-operative needs, is expected to be the new determinant.

Thanks to Dr. Ronald Hirsch’s summarized lists of the IPO List tables, in my review of the “removal file,” I thought I would provide some highlights from the removed cases, starting with anesthesia codes for radical pelvic, rib, hip, shoulder, and cervical spine procedures, including forequarter and hindquarter amputations, all being eliminated.

Many spine surgeries have also been removed from the List, including several thoracic and lumbar procedures, anterior and posterior arthrodesis across multiple segments, and posterior segmental instrumentation spanning 7-13+ levels; there have also been revisions or removals of lumbar and cervical total disc arthroplasty. For the limbs, those procedures previously involving limb salvage or amputations have been removed.

Additionally, prior procedures that seemed off-limits, such as opens, resections, and revisions, are no longer of a protected class. Removed were flaps, plus resections of the chest well, sternum, pelvis, femur, tibia, and fibula.

Additionally, there have been many revisions, such as the common total hips and knees, especially those with the complex procedures related to hardware removals, spacers, and eventual replacements. Other procedures that are more general surgery-related include the removal of major bowel perforations and ostomy revisions.

In short, these are not “easy day surgery” cases. Many of these cases present with blood loss, prolonged operative times, significant rehabilitation needs, likely post-operative management in the hospital setting, and complex discharge planning.

The wind-down of the IPO List will fundamentally change the pre-operative workflow for utilization review (UR). A major consideration in preparation for this change is the expectation that payors will contest more of these procedures as outpatient. That means the evaluation must occur, from not only matching codes to see if the procedure is “on the list,” but really, shoring up the front-end documentation and ensuring that the medical picture tells the true risk story. This requires appropriate documentation of comorbidities and anticipated post-operative medical complexity that may require hospitalization.

As we prepare for the wind-down of the Inpatient-Only List, it is critical to remember that a procedure’s removal from the list does not mean that inpatient hospitalization is always no longer necessary. It does mean that UR practices must adapt, with stronger partnerships between UR teams and surgeons’ offices to ensure that authorization requests clearly meet the Two-Midnight Rule, and that documentation justifies the need for an inpatient level of care.

For cases that begin as outpatient but evolve into hospitalization, UR must be ready to promptly reassess for medical necessity, determine whether conversion is appropriate, and obtain updated authorization for payers, particularly Medicare Advantage.