Inpatient-Only List: Is it Here to Stay?

In a rare reversal of policy, the Centers for Medicare & Medicaid Services (CMS) has indicated intent to retain the Inpatient-Only (IPO) list in the CY2022 Outpatient Prospective Payment System (OPPS) proposed rule released on July 19, 2021 (CMS-1753-P).  It appears that CMS is taking a more cautious approach to removal of procedures in order to maintain safety for beneficiaries.  The CY2021 OPPS Final Rule removed 298 services from the IPO list, and CMS stated a broader goal of eliminating the IPO list by 2024.  Now that initiative seems to be halted, and CMS has proposed adding back those services removed from the IPO list in 2021.

The IPO list was created in 2000 to identify procedures that were invasive in nature or required extensive postoperative care.  Historically, procedures placed on the IPO list were deemed high risk or required extra care.  The IPO list allowed CMS to control quality for beneficiaries through controlling patient status (i.e., a hospital would not be paid if procedure was performed in a setting other than inpatient).  Hospitals must insure inpatient admission status for procedures on the IPO list in order to receive appropriate payment from Medicare.

Procedures have historically been assessed for removal from the IPO list based on the following criteria:

  • Most outpatient (OP) departments are equipped to provide the service to the Medicare population
  • Simplest procedure described by the code may be furnished in most OP departments
  • Procedure is related to codes that have already been removed from the IPO list
  • Procedure determined to being furnished in numerous hospitals on an OP basis
  • Procedure determined to be safely furnished in an Ambulatory Surgery Center (ASC), and is on the list of approved ASC services (or has been proposed for addition to the ASC list)

While all five (5) criteria do not need to be met, at least one should be present, and the greater the number, the higher the chance the procedure or service may be removed from the IPO list.  Each year, the complete IPO list is published as Addendum E of the OPPS Final Rule.

In the 2021 OPPS Final Rule, CMS removed 298 procedures, mostly musculoskeletal procedures, from the IPO list effective January 1, 2021.  Data collected from January 1 through May 21, 2021, and reported by CMS in the 2022 OPPS proposed rule, indicate that less than 3% of services removed from the IPO list in 2021 had significant volume in the OP setting.  It would appear that removal from the IPO list did not significantly change admission decisions for those 298 procedures.  Furthermore, they have received a high number of comments from stakeholders opposing the broader goal of elimination of the IPO list due to patient safety concerns.  CMS also stated that a lack of supporting evidence that removed procedures met the historical criteria, and could be safely performed in the OP setting.  In CY2022 OPPS proposed rule, CMS has expressed their intent to codify the criteria for procedure removal, and apply a two year exemption for Recovery Audit Contractor (RAC) patient status reviews to services removed from the IPO list as of January 1, 2021.  CMS is seeking comments on these proposals through September 17, 2021.

Hospitals should be alert to the CY2022 IPO list, once the CY2022 OPPS Final Rule is released later this year, to insure systems are updated accordingly.  Physicians should continue to apply the Two-Midnight Rule when making admission decisions for patients, including those procedures removed from the IPO list in 2021.

If you have questions on this topic, please contact your BNN healthcare advisor at 800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, investment, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.