Changes to CMS Inpatient-Only List and Their Impact

Premier Pulse     July 2021

By Andrew B. Maigur, MD, system director of Premier Physician Advisor Program, Premier Health

For several years, the Centers for Medicare and Medicaid Services (CMS) has published a list of procedures that could only be performed and reimbursed in the hospital inpatient setting. It was considered unsafe to perform these procedures as hospital outpatients, let alone in Ambulatory Surgical Centers (ASCs), according to the rationale behind the Inpatient Only (IPO) List. Approximately 1,740 services are on the IPO List, and each year CMS reviews and removes or adds procedures to the list depending on established criteria. Over the past several years, CMS has moved some high-volume procedures off the list – namely Total Knee Arthroplasty (TKA) and Total Hip Arthroplasty (THA).

On January 1, 2021, nearly 300 procedures were removed from the IPO List, the majority of which are orthopedic and spine-orthopedic procedures. The newly removed procedures are not yet approved for ASCs, so they must still be done at the hospital as either inpatient or outpatient with Observation Care Services (OBS). CMS has indicated that procedures taken off the IPO List would not be subject to audit for two years, or until more than 50 percent of them are performed as outpatient. However, as with TKA & THA cases, CMS allowed the Quality Improvement Organizations (QIOs) to include these cases under Short Stay Reviews. CMS has proposed to eliminate the IPO List over the next three years.

Here are three areas of high impact:

  • Patients and the IPO List:
    • Patients will have a different set of rights or financial responsibilities
    • Patients will not have discharge appeal rights, or be given the Important Message of Medicare (IMM) when they have the surgery as outpatient
    • Commercial or Managed Medicare will have different copays for outpatient procedures and inpatient procedures
  • Surgeons and the IPO List:
    • When a procedure is not on the IPO List, it can be performed either as an inpatient or Outpatient with Observation Services (OBS)
    • CMS’ 2-Midnight Rule will now be applicable to this population of cases, which adds a layer of compliance (Medicare fee for service only)
    • To assist with compliant and accurate medical necessity documentation, we have created two smart phrases in EPIC
      • The .2MNRULERISK smart phrase for SRE providers to capture the peri-operative risk of an adverse outcome
      • .2MNRULEPOD1 for the orthopedic providers to capture medical necessity for a two or more-midnight hospital stay
  • Hospitals and the IPO List:
    • Elective procedures used to be the biggest revenue-generating service line until the changes to the IPO List and the arrival of ASCs
    • Given the advances in peri-operative management, anesthesia techniques, and medication management, patients recover faster from these procedures and the majority of these procedures will be done as outpatient
    • With a shift in these procedures from inpatient to outpatient reimbursement, hospitals will potentially see a decrease in revenue
    • An increased focus on reducing cost of care for these procedures to offset decreased revenue and maintain margins
    • Surgical Case Mix Index (CMIs) may see a potential decline

As physician advisors we hope to continue to monitor the impacts of these changes on our patients, providers, and health system, and advocate on your behalf. My team of physician advisors and myself are more than willing to bear the regulatory burden to assist you with status determinations on these patients. Contact the “Physician Advisor Group” via secure chat to reach the physician advisor on call.

Back to the July 2021 issue of Premier Pulse

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