In 2026, the Centers for Medicare and Medicaid Services (CMS) began the process to open the door to more hospital services and procedures to be provided on an outpatient basis by phasing out procedures and services included on something called the Inpatient Only (IPO) List. In its Calendar Year 2027 Outpatient Prospective Payment System rule, CMS proposes to eliminate 638 additional procedures and services from the IPO beginning January 1, 2027, covering clinical areas such as auditory, digestive, endocrine, diaphragm, respiratory, urinary, among others.

On January 1, 2026, CMS initiated the removal of 285 primarily musculoskeletal procedures from this list. LeadingAge flagged this change for our skilled nursing facility (SNF) members as potentially reducing their admissions for patient’s with these procedures. We have not heard from SNF members that they have experienced a profound decline in their admissions not an uptick in home health agency (HHA) admissions. This may not be surprising given that nearly 80% of Medicare beneficiaries may be eligible for a 3-day stay waiver either through their Medicare Advantage (MA) plan or as part of an accountable care organization (ACO).

CMS says the change reflects advances in technology, surgical techniques, and anesthesia that allow more procedures to be performed safely in outpatient settings. However, CMS also emphasizes that physicians should continue to determine whether inpatient or outpatient care is appropriate based on each patient’s clinical needs and best interests.

LeadingAge shared its concerns with CMS in its comments on the CY2026 rule noting the pressure on physician’s to reduce patient spending, through their participation in ACOs, and bundled payment programs along with pressure from MA plans, may influence their decision on the most appropriate setting. At this time, LeadingAge does not intend to comment on the CY2027 rule, as we made our concerns known last year.

LeadingAge will continue to advocate to Congress for changes that recognize all days spent in a hospital for determining eligibility for a SNF stay such as the Improving Access to Medicare Coverage Act (HR 3954 and S 4641).

Additionally, as care delivery options and patterns evolve, we will continue to encourage policymakers to pursue broader policy changes to allow SNFs and HHAs to apply their professional skills in different ways including testing the idea of direct admissions to SNFs without an inpatient hospital stay.

The elimination of the IPO list is on track to be completed in CY2028. It remains to be seen if we will see a dramatic reduction in SNF admissions due to this change but it does reinforce that more services are moving to OP settings and providers should be prepared for the shift.