Just when the procedures thought they were out(patient), CMS pulls them back in(patient).

Last year, in the final CY 2021 Outpatient PPS rule, CMS announced its intention to eliminate the Inpatient Only (IPO) List by January 1, 2024. The IPO list featured more than 1,700 procedures that were surgically invasive or required more than 24 hours of post-operational recovery time. As a result, any procedure on the list would only be paid for by Medicare on an inpatient basis.

With the CY 2021 rule, those procedures would be released to outpatient providers in stages, allowing physicians to clinically determine whether inpatient admission was indicated for a particular procedure.

However, in the proposed CY 2022 Outpatient PPS rule, announced on July 19, 2021, CMS reversed that decision and announced that it will now keep the IPO List, reinstating the 298 procedures that were removed by the 2021 rule. CMS said it was responding to concerns from stakeholders about patient safety. In particular, CMS indicated that the 2021 rule removed the procedures on too steep of a timeline. The agency said it wanted to provide “greater consideration of the impact removing services from the list has on beneficiary safety and to allow providers impacted by the COVID-19 PHE additional time to prepare to furnish appropriate services safely and efficiently before continuing to remove large numbers of services from the list.”

The obvious implication of the reinstatement of the IPO List means that these procedures will continue to largely only be performed in inpatient facilities. But, on that point, there is an added wrinkle to this rule change because the procedures on the IPO list are exempt from the Medicare two midnight rule for inpatient billing. This means that by their very nature they are inpatient procedures and do not require a stay across two midnights to qualify for the higher level of payment afforded to inpatient procedures.

Additionally, this proposed development comes on the heels of the November 2020 HHS-OIG workplan announcement that OIG would begin auditing the use of short stay inpatient procedures for compliance with the two midnight rule. The reinstatement of the IPO List should reduce the risk for hospitals that performing the listed procedures could draw the attention of the fraud enforcers at OIG.

But that is not the end of the story. The proposed rule, which is on public inspection with an expected Federal Register publication date of August 4, asks for comments on whether CMS should actually have a long term goal of eliminating the IPO List or to keep it and just scale it back substantially over time. Additionally, the rule seeks add section 419.23 to Title 42 of the CFR that would codify the five longstanding criteria that CMS has used to consider removal of a procedure from the IPO List.