CMS’ decision to phase out the Medicare Inpatient Only list in 2026 marks a consequential site-of-service policy that could rapidly accelerate the migration of complex procedures to outpatient settings while introducing new risks around safety, access and payer behavior.
Under the plan, CMS will eliminate the IPO list over three years, ending a longstanding policy that restricted Medicare reimbursement for certain complex procedures to inpatient hospitals. The move represents a sharp departure from CMS’ historical, incremental approach to site-of-service changes, according to a Jan. 14 JAMA Surgery article that warns the policy could outpace the healthcare system’s readiness.
For decades, the IPO list functioned as a safety guardrail, ensuring that the most complex and highest-risk procedures were performed in inpatient settings with immediate access to advanced resources should complications arise, according to the article. Its elimination effectively removes a blanket inpatient requirement and gives physicians broader discretion to determine where care is delivered.
CMS argues the change will increase flexibility and patient choice, while lowering costs by enabling more procedures to move to lower-cost settings such as ASCs and hospital outpatient departments. The agency has also cited operating room efficiency in ASCs as a driver of potential Medicare savings.
The article authors caution that the move reverses CMS’ “long-standing incremental, evidence-based approach.” Rather than removing procedures incrementally based on outcomes data and stakeholder input, the policy will ultimately eliminate inpatient-only status for all remaining procedures, without uniform readiness standards across sites of care.
CMS attempted a similar approach in 2021, removing hundreds of procedures from the IPO list in a single year. That decision was reversed in 2022 after widespread safety concerns and insufficient data to support the change.
While CMS maintains that advances in surgical techniques and anesthesia make more outpatient care feasible today, the article warns that eliminating a blanket safeguard increases the risk of mismatches between patient complexity, procedural risk and facility capabilities, particularly for rare but serious complications.
Beyond safety, the authors raise concerns about how commercial insurers and Medicare Advantage plans may respond. Without an inpatient-only designation, payers could default to outpatient-only coverage or tighten prior authorization requirements, effectively restricting access to inpatient care, even when clinically appropriate.
Algorithm-driven denials and utilization controls could replace clinical judgment, delaying care, forcing site changes and increasing administrative burden for surgeons. Similar dynamics emerged after hip and knee arthroplasty were removed from the IPO list, leading to more documentation, appeals and patient confusion.
Patients may also face higher out-of-pocket costs under Medicare Part B — including multiple bills and coinsurance — rather than a single Part A deductible, particularly if they lack supplemental coverage.
The article authors also argue that quality measurement has not kept pace with site-of-service expansion. While inpatient outcomes are robustly tracked, outpatient quality reporting for ASCs and HOPDs remains far less developed, making it difficult to compare outcomes or identify harm as more complex cases shift to outpatient.
These concerns are amplified by the dominance of Medicare Advantage, where algorithmic decision-making already shapes access. Eliminating the IPO list could further accelerate denials or outpatient-only coverage, even when inpatient care is clinically justified.
Rather than full elimination, the authors recommend reforming the IPO process, strengthening it with surgeon input, registry data and facility-readiness criteria, to preserve patient safety while allowing appropriate evolution.
Despite the concerns, ASC leaders overwhelmingly view the policy shift as a catalyst for growth.
“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.”
Tracy Hoeft-Hoffmann, MSN, RN, administrator of Heartland Surgery Center in Kearney, Neb., called the move a “fundamental redefinition of surgical care delivery.”
“Giving physicians discretion on site-of-service decisions will increase migration to ASCs, reduce patient costs and improve outcomes,” she said. “These shifts will position ASCs as central to the future of surgical care.”
Still, some leaders argue CMS should move faster — and eliminate the IPO list entirely.
“CMS reviewing procedures for ASC approval is a step in the right direction, but eliminating the inpatient-only list would truly expand access,” said Sandra Germany, BSN, RN, administrator of Advanced Cardiovascular Specialists in Shreveport, La. “The same procedures are often reimbursed at significantly higher rates in hospitals. Shifting them to ASCs would reduce costs without compromising safety.”
Industry leaders caution that expansion must be deliberate, especially as ASCs contend with rising labor costs, tighter margins and infrastructure constraints.
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.”
