CMS’ recent proposal to phase out the inpatient-only list is drawing mixed reactions from healthcare leaders.
As part of the Outpatient Prospective Payment System proposed rule for 2026, the agency shared plans to eliminate the inpatient-only list, starting with 285 musculoskeletal procedures in 2026. Should it come to fruition, the change would mean hospitals could no longer bill Medicare for certain procedures that were previously reimbursable only when performed in inpatient settings. It also would mark a dramatic acceleration in the shift of surgical care to outpatient settings.
CMS has said eliminating the list would give physicians and patients more choice and flexibility in determining the most appropriate setting for care. However, some healthcare groups and leaders have said the shift would add administrative complexity and present patient safety risks.
“We oppose the proposal to expand ‘site-neutral’ cuts and eliminate the inpatient-only list, as both policies fail to account for the real and crucial differences between hospital outpatient departments and other sites of care,” Ashley Thompson, senior vice president of policy analysis and development for the American Hospital Association, said in statement following release of the proposal.
Other health system leaders have raised similar concerns, pointing to the potential operational and administrative burdens the change would create.
“It creates additional work for all of us related to documentation, denial management and puts the patient in the middle,” Marjorie Bessel, MD, chief clinical officer at Phoenix-based Banner Health, told Becker’s. “There’s a whole bunch of ripple effects by elimination of the inpatient-only list that I do not think helps forward any of the overarching goals at the industry level that we need to have to serve our patients.”
Regardless of whether the proposal is finalized, Banner is among the systems well-positioned to navigate a continued shift toward outpatient care. Demand for outpatient care is expected to see the highest growth rate of any other healthcare segment over the next decade, according to an Sg2 forecasting report published in June. In recent years, Banner also has made a series of strategic moves to expand its outpatient footprint. In 2022, the health system invested in Atlas Healthcare Partners, an ambulatory surgery center management group it first partnered with in 2018. The health system now operates a network of ASCs in Arizona, Colorado and Wyoming, with plans to grow to more than 50 ASCs by the end of 2025.
“We know that that is the future of healthcare and we are absolutely in alignment with that,” Dr. Bessel said. “Those are great goals. But it needs to be done very carefully and methodically, and elimination of the inpatient-only list is not a good way to do that.”
Peter Pronovost, MD, PhD, chief quality and clinical transformation officer at Cleveland-based University Hospitals, said he supports the proposal under the condition that strong safety protocols are in place, such as robust structures and processes to monitor quality and safety in outpatient settings.
“Health systems need to start thinking about having more ambulatory surgery capacity and potentially less inpatient surgery capacity because this has been the future, and [this proposal] is going to be like rocket fuel on that,” Dr. Pronovost said. “Anytime you move something to a new care setting, you’re going to have to make sure that the quality monitoring is robust to make sure that you’re not causing harm. Inpatient quality monitoring is a lot more rigorous than ambulatory quality monitoring.”
Tiffany Murdock, DNP, RN, chief nursing officer at New Orleans-based Ochsner Health, expressed a similar sentiment, emphasizing that regulatory oversight will be key to ensuring strong outcomes for patients.
“The industry has been moving in that direction anyway, around inpatient versus outpatient,” she said. “We just have to be mindful that there are bad actors in every field. Hopefully our regulatory bodies will help us police the things that we need around patient safety and quality.”
