Inpatient Only List Compliance

IPO List Compliance

A White Paper from AppriseMD

The often-murky waters of inpatient admission denials grow clearer under the Inpatient Only (IPO) list, which directs the level of care (LOC) for procedures covered by the Centers for Medicare & Medicaid Services (CMS) if performed in an inpatient hospital setting. The latest numbers from CMS show 68 million patients enrolled in Medicare, 50% of whom are also enrolled in Medicare Advantage plans.¹

The importance of ensuring IPO list compliance swells due to the sheer number of patient procedures the list impacts and the dollars those procedures represent. An annual review of the list and its updates is a must for hospitals because they will not receive reimbursement if a procedure on the IPO list takes place in the wrong setting.

IPO LIST BACKGROUND
CMS created the IPO list more than 20 years ago to ensure that high-risk, complex procedures were orchestrated in a safe setting with the appropriate medical resources.  Factors for inclusion on the IPO list include:

• Severity and complications associated with the procedure.
•  Post-operative recovery time requiring at least 24 hours of care.
• Underlying physical condition of the patient requiring the procedure.

Each year, procedures are added or removed from the list based on recommendations from the American Medical Association and public comment.²

Dr. Franklin Baumann, AppriseMD Founder and CEO, explains that the IPO list acts as a safety net for hospitals and patients. “The list establishes a guideline for certain inpatient procedures that require the monitoring and resources of an inpatient
hospital setting rather than an ambulatory surgery center (ASC) or even outpatient LOC,” Dr. Baumann points out. “By reviewing the list each year and adding procedures or even removing others, CMS helps eliminate some confusion and offers better clarity around the question of reimbursement.”

OPPS & REIMBURSEMENT

The IPO list falls under the hospital Outpatient Prospective System (OPPS), which determines items and services reimbursed under Medicare Part B. CMS publishes an updated list at the end of the year that goes into effect annually on Jan. 1. Services covered under Part B include outpatient procedures, prescriptions and physician office visits while Medicare Part A covers inpatient hospital care. CMS added the IPO list within the OPPS to ensure that Medicare does not cover inpatient procedures that take place at an outpatient facility. Therefore, hospitals will not be reimbursed if a procedure on the IPO list takes place in the outpatient setting, with payers often denying in full when “an incorrect authorization, such as completing an inpatient-only procedure in an outpatient setting” is billed.³

While the IPO list was intended for patients utilizing traditional Medicare, CMS finalized 4201-F in April 2023 that included a stipulation that Medicare Advantage Organizations (MAOs) must also adhere to the IPO list, bringing millions of additional patients under its directive. As AppriseMD reported in “The Use of AI in Claim Denials,”⁴ MA enrollment in 2023 was at 30.8 million. In 2024, MA enrollment increased to nearly 33 million, “accounting for more than half, or 54 percent, of the eligible Medicare population, and $462 billion (or 54%) of total federal Medicare spending,” according to KFF, an independent source of health policy research.⁵

With so much reimbursement at stake, providers should keep a close eye on CMS recommendations for changes in payment guidance, provide feedback when requested, and keep the current requirements and standards of care in all clinical care situations. Procedures are added or removed from the IPO list based on the safety of the procedure, Dr. Baumann explains. “For example, if a procedure comes off the list, it is likely because a new method is now available, such as a non-invasive treatment, or because the procedure can now be safely performed in the outpatient setting.”

HEALTHCARE ADVANCEMENTS & THE IPO LIST

The evolution of minimally invasive surgeries (MIS), which includes robotic surgeries, has resulted in better clinical outcomes with the reduced risk of complications, quicker recoveries and a better quality of life. These procedures are less invasive, utilize smaller incisions and are now common across many branches of medicine, including orthopedics, general surgery, urology, gynecology, vascular, thoracic and neurosurgery to namea few. MIS procedures have
revolutionized medicine, which in turn has affected their inclusion on the IPO list. We saw this with the remove of TKA in 2018, followed by the removal of THA in 2020.

When procedures are removed from the IPO list, it does not mean that they cannot take place in the inpatient setting, nor does it mean that other procedures and surgeries not on the IPO list cannot meet inpatient admission. The determination as to where the surgery should take place is decided on a case-by-case basis, with factors such as the patient’s pre-existing medical conditions and age playing a role in the perioperative risk. A fundamental tool in perioperative medicine is the American Society of Anesthesiologists (ASA) physical classification system, which is used to assess and communicate a patient’s pre-anesthesia medical co-morbidities. Patients with an ASA IV classification, for example, may meet npatient admission status for a surgery that is not on the IPO list, so it is important to note that there are always exceptions to guidelines.

IPO LIST 2025 UPDATES

As of Jan. 1, 2025, three new codes for liver allograft services were added to the IPO list, allowing providers a higher LOC reimbursement for three complex surgeries. According to a Mayo Clinic report last year, “late allocation liver grafts provide patients awaiting liver transplantation additional opportunities” for treatment, which is needed based on the increasing number of transplants. “In the U.S. in recent years, there's been an increase in both the number of liver transplants performed as well as the number of livers recovered with intent for transplant but ultimately not transplanted.”⁶

CMS removed one code for pelvic fixation device from the list and repacked as an Ambulatory Payment Classification (APC) rate. This means that procedures grouped as an APC rate are standardized. “Interestingly, CMS did not originally propose to remove this add-on code from the IPO list but decided to do so in the final reg based on a public comment,” according to McDermott+ 2. “Last year, CMS decided to remove a code from the ASC Covered Procedures List (CPL) in the OPPS final reg based on stakeholder input, so while it is rare for CMS to remove a code from a covered procedures list in a final reg when that code was not proposed for removal, this marks the second year in a row where CMS has done just that.”

SUMMARY

The financial impact of the IPO list magnified with the rise of CMS-4201-F, giving rise to inpatient reimbursement for all MAO patients who require services designated on the IPO list. Hospitals need to ensure that the proper setting is scheduled when any Medicare or MA patient undergoes a procedure designated on the IPO list, and they should also follow any proposed additions and removals to the list closely to ensure appropriate treatment and reimbursement.

SOURCES
1. Centers for Medicare & Medicaid Services, “Medicare Monthly Enrollment | CMS Data,” September 2024.
2. Davis, Jeffrey and Godes, Deborah, “Another Trip to the Buffet: Highlights from the CY 2025 OPPS Final Reg,” McDermott+. November 14, 2024.
3. Ferguson, Tiffany, “The Inpatient Only List & the Role Utilization Review Can Play,” RAC Monitor. October 16, 2023. https://racmonitor.medlearn.com/the-inpatient-only-list-the-role-utilization-review-can-play/
4. AppriseMD, “The Use of AI in Claim Denials,” apprisemd.com. March 2024.
5. Freed, Meredith; Biniek Jeannie Fuglesten; Damico, Anthony; and Neuman Tricia, “Medicare Advantage 2025 Spotlight: A First Look at Plan Premiums and Benefits,” KFF. November 15, 2024.
6. Mayo Clinic, “Late allocation grafts offer more opportunities for liver transplants at Mayo Clinic in Arizona.” July 12, 2024.
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