CMS’ decision to phase out the inpatient-only list over three years is expected to accelerate the migration of procedures to outpatient settings, particularly ASCs.
The policy would eliminate a longstanding Medicare rule that restricted reimbursement for certain complex procedures to inpatient hospitals. As those restrictions fall away, more procedures may become eligible for hospital outpatient departments and, in many cases, ASCs.
“These new codes will empower our existing physician specialties to deliver high-quality care directly within our center, rather than in hospital outpatient departments or traditional hospital settings,” John Petroni, managing partner of Las Vegas-based Silver State Surgery Center, told Becker’s. “This pivotal change enhances patient access while streamlining care and significantly improving physician scheduling efficiency.”
However, for ASC leaders, the move also means new growth opportunities, but also new operational, financial and clinical risks.
Here are 10 things to know:
1. It marks a major shift in CMS policy.
Historically, CMS has removed procedures from the inpatient-only list one at a time, based on outcomes data and stakeholder feedback, according to a Jan. 14 JAMA Surgery article. The new approach would phase out the list entirely over three years, raising concerns that policy could move faster than providers’ readiness.
2. Hundreds of procedures are already being affected.
In the first phase beginning in 2026, CMS finalized the removal of 285 mostly musculoskeletal procedures from inpatient-only restrictions. Of those, 271 would also be allowed in ASCs, significantly expanding the universe of cases that could move into lower-cost outpatient settings.
3. ASCs have a major growth opportunity, but not automatically.
The phaseout opens the door for ASCs to take on more complex, higher-acuity procedures. But growth will favor centers with the right surgeons, staffing, equipment, capacity and protocols. The opportunity will vary by specialty and market. Tina DiMarino, CEO of Custom Surgical Partners, told Becker’s the policy shift represents the ASC industry’s biggest growth opportunity in 2026, particularly in cardiac and orthopedic care, but warned against overextension.
“Development activity has gone through the roof, and it’s clear ASCs are seen as the future,” she said. “But centers still need to be mindful of location, staffing availability and infrastructure. Long-term success depends on expanding in the right markets, at the right pace.”
4. Patient safety remains the biggest concern.
Critics argue the inpatient-only list has functioned as a safety guardrail for procedures with higher complication risk or greater resource needs, according to the JAMA article. While advances in surgery and anesthesia have made more outpatient care possible, some leaders worry the policy could create mismatches between patient complexity, procedural risk and facility capabilities.
5. The financial stakes are significant.
The reimbursement gap between inpatient and outpatient settings is steep. An analysis by Trilliant Health found the average difference between inpatient and outpatient Medicare payment across the 285 procedures is about $16,334 less per procedure in the outpatient setting. Using 2024 Medicare volumes, total reimbursement for those procedures would be $9.3 billion if performed inpatient versus $4 billion if fully outpatient, a difference of $5.3 billion.
6. The shift will likely intensify site-of-care migration.
Past removals from the inpatient-only list, including hip and knee replacements, showed how quickly volume can move once inpatient restrictions are lifted, according to a blog post from Definitive Healthcare. Hospitals may retain the most complex patients, while ASCs and hospital outpatient departments capture more lower-risk cases.
7. Payers may move even faster than providers.
Commercial insurers and Medicare Advantage plans have historically used the inpatient-only list as a guide for coverage and site-of-care decisions. As the list disappears, payers may increasingly push procedures to outpatient settings, tighten prior authorization requirements or deny inpatient care even when physicians believe it is clinically appropriate, according to the JAMA article.
8. Patients could see both benefits and new burdens.
CMS says the change will expand access, improve flexibility and lower costs by allowing more care in lower-cost settings. But the JAMA study found that patients may face higher out-of-pocket costs under Medicare Part B, including coinsurance and multiple bills, instead of a single Part A deductible, especially if they do not have supplemental coverage.
9. Competition between hospitals and ASCs is likely to rise.
As more procedures become eligible for outpatient reimbursement, the fight for surgical volume is expected to intensify. ASC leaders say the shift could increase pressure from health systems that are investing more aggressively in outpatient surgery. At the same time, it may push all providers to improve efficiency, cost control and throughput.
Brian Bizub, CEO of Raleigh (N.C.) Orthopaedic, told Becker’s that “tensions are also rising with hospital systems as the IPO list nears elimination.”
Michael Bradley, MD, president and CEO of Ortho Rhode Island, said the shift will increase pressure to improve efficiency in orthopedics, especially around robotics and precision technology.
“That will force everybody to … create as much efficiency as possible — so that’s both cost and time,” he told Becker’s.
10. The policy has been debated for years, and more scrutiny could be coming.
CMS first moved toward a broader IPO rollback in 2020, then reversed course under the Biden administration in 2022 over safety concerns. The current plan revives the phaseout, with CMS signaling it intends to remove the rest of the list over the next three years. That means more regulatory scrutiny, more payer pressure and more urgency for ASCs and hospitals to define which cases can safely move outpatient.
