The Looming Consequences of the Elimination of the Inpatient-Only List

Well, by now I am sure all of you have had plenty of time to read the 1,657 pages of the Outpatient Final Rule, so there is no need for me to discuss it any further. I will note that the Centers for Medicare & Medicaid Services (CMS) finally posted the actual Inpatient-Only List and the new Addendum B, and I have posted both of those, along with a list of all the surgeries removed from the Inpatient-Only List, on my inpatient-only webpage at www.ronaldhirsch.com.

I have also mentioned that CMS has greatly expanded the number of procedures that can be done at ambulatory surgery centers (ASCs), as of Jan. 1, and as you may recall, a Medicare patient having a procedure at an ASC who does not have a Medicare supplement, which accounts for about 11 percent of beneficiaries, owes 20 percent of the approved payment. And unlike outpatient services at a hospital, where there is a statutory limit in the patient’s financial obligation, equal to the Part A deductible, which for 2026 is $1,736, there is no such limit for ASC procedures.

That means for 252 procedures, patients without a supplement will pay more at an ASC than at a hospital, with an out-of-pocket cost that averages about $3,000, but can go as high as almost $8,500.

What was the CMS response when I pointed that out? They noted that they have an online tool that patients can use to see an estimate of their costs. But I would bet that if they checked the number of times that a Medicare beneficiary used that tool, it would be miniscule. Well, at least I can say I tried.

Also, as a reminder, if a patient has an outpatient procedure at a hospital and has a delayed recovery or complication, they can be kept as outpatient or admitted as inpatient for that additional care. But if something happens in an ASC, the ASC will simply be picking up a phone and calling 911, shifting the responsibility of the care to the hospital and hospital-based physicians.

It is also worth noting that the payment for observation for 2026 is increasing, with the base payment increasing by a huge $24.42. In addition, the payment for an outpatient total joint will increase by $250, a 1.9-percent increase, which, of course, is less than the rate of inflation.

So, all you orthopedic case managers can forget about a raise in 2026.

And, as some might remember, when CMS first attempted to eliminate the Inpatient-Only List, one of the big complaints was that the payment rates for the surgeries as outpatient was far below the actual costs – so this time, CMS took great care in assigning payment rates, and even established a seventh APC for very high-cost orthopedic, spine, and neurosurgery procedures. That should make this transition a bit less financially painful.

I will also note that CMS has released another proposed rule for Medicare Advantage (MA) plans. And among the noteworthy items I saw were that CMS is proposing to remove from the Star Rating system measures of the timeliness of appeal decisions, complaints about customer service, and complaints about the health plans themselves.

Even though these will be removed, it is still important to urge your MA patients to file complaints with CMS when their MA plan deprives them of medically necessary care.