One year after deciding to phase out the inpatient only (IPO) list entirely, the Centers for Medicare & Medicaid Services (CMS) reversed course. Noting stakeholders’ concerns related to patient safety in rendering certain procedures on an outpatient basis, CMS concluded that the IPO list should remain in effect.
The History of the IPO List
Historically, CMS has effectuated such removals from the IPO list gradually, based on the evolution of acceptable medical practice. The criteria for evaluating whether to remove a procedure from the IPO list included the following:
- Most outpatient departments are equipped to provide the services to the Medicare population.
- The simplest procedure described by the code may be performed in most outpatient departments.
- The procedure is related to codes [CMS has] already moved off of the inpatient list…
- [T]he procedure is being performed in numerous hospitals on an outpatient basis; or
- [CMS has] determined that the procedure can be appropriately and safely performed in an [Ambulatory Surgery Center (ASC)] and is on the list of approved ASC procedures or proposed by us for addition to the ASC list.
Not all criteria need to be met for CMS to determine that a procedure may be appropriately removed from the IPO list.
CMS Moves Towards Complete Elimination of the IPO List
CMS concluded that the IPO list was no longer necessary due to the evolving nature of the practice of medicine, which had allowed more procedures to have a shorter recovery time, supporting coverage on an outpatient basis. In addition, CMS rationalized that physicians’ clinical judgment, state and local licensure requirements, accreditation requirements, hospital conditions of participation (CoPs), medical malpractice laws, and CMS quality initiatives provided sufficient guardrails to ensure that patient safety would not be compromised in the absence of an IPO list.
CMS Reverses Course, Halting (for Now) Elimination of the IPO List
To properly prepare for the elimination of the IPO list, providers needed more time to develop patient selection criteria and other protocols to identify whether a procedure can be safely provided in the hospital outpatient setting. CMS reiterated that Because procedures removed from the IPO list may be appropriately performed in both the hospital outpatient and inpatient settings, physicians and clinical care teams must
Importance of the Two-Midnight Rule
Under the two-midnight rule, unless an exception applies, an inpatient hospital admission is generally appropriate where the admitting physician expects a patient to require hospital care that will cross two midnights.
In the CY 2022 OPPS/ASC Final Rule, CMS summarized the following:
Regardless of the status of the IPO list, we believe that the 2-Midnight benchmark remains an important metric to help guide when Part A payment for inpatient hospital admissions is appropriate. As technology advances and more services may be safely performed in the hospital outpatient setting and paid under the OPPS, it is increasingly important for physicians to exercise their clinical judgment in determining the generally appropriate clinical setting for their patient to receive a procedure, whether that be as an inpatient or on an outpatient basis. Importantly, removal of a service from the IPO list has never meant that a beneficiary cannot receive the service as a hospital inpatient — as always, the physician should use his or her complex medical judgment to determine the appropriate setting on a case by case basis.
As stated previously, our current policy regarding IPO list procedures is that they are appropriate for inpatient hospital admission and payment under Medicare Part A regardless of the expected length of stay. Halting the elimination of the IPO list would mean that this will remain true for all services that are still on the list. As in previous years, any services that are removed from the list in the future will be subject to the 2-Midnight benchmark and 2-Midnight presumption. This means that for services removed from the IPO list, under the 2-Midnight presumption, inpatient hospital claims with lengths of stay greater than 2 midnights after admission will be presumed to be appropriate for Medicare Part A payment and will not be the focus of medical review efforts, absent evidence of systematic gaming, abuse, or delays in the provision of care in an attempt to qualify for the 2-Midnight presumption.
Complicating the analysis for hospitals, CMS does not recognize a difference in the intensity of services performed in the inpatient hospital or outpatient hospital “settings.” In issuing the two-midnight rule, CMS explained,The distinction between inpatient hospital care and outpatient hospital care is one of reimbursement. Regardless of whether a procedure is performed in the inpatient or outpatient “setting,” there should be no relative difference in the safety of a procedure performed in the hospital. From a compliance perspective, to mitigate potential audit risk, hospitals may choose to take a conservative position and admit a Medicare beneficiary as an inpatient to undergo a procedure formerly on the IPO list only if the admitting practitioner expects the beneficiary to require two midnights or more of hospital care and treat other beneficiaries on an outpatient basis.
Medical Review of Procedures Removed from the IPO List
When procedures are removed from the IPO list, providers oftentimes struggle to determine the proper status to assign patients undergoing the procedures (i.e., inpatient versus outpatient).over time CMS has implemented various medical review exemptions for procedures removed from the IPO list:
- In its CY 2020 OPPS/ASC Final Rule, CMS finalized a policy to exempt procedures that had been removed from the IPO list from reimbursement denials based on patient status determinations for two calendar years following their removal from the IPO list. During this time:
- was permitted to review these claims, it was not permitted to deny payment based on the patient’s status/setting of care (i.e., inpatient versus outpatient).
- Instead, the BFCC-QIO was tasked to provide education related to compliance with the two-midnight rule for such claims.
Future rulemaking will determine whether CMS will maintain its longer-term objective of eliminating the IPO list entirely, or whether it will systemically scale back the IPO list as supported by standards of practice.