CMS Moves to Eliminate Inpatient-Only Procedures, Impacting Nursing Home Admissions

The Centers for Medicare & Medicaid Services (CMS) has finalized a significant change in its 2026 Hospital Outpatient Prospective Payment System rule, which will eliminate a list of 285 medical procedures designated as inpatient-only (IPO). This decision, effective January 1, 2026, is part of a broader initiative to allow more procedures to be performed in outpatient settings, potentially reducing the need for skilled nursing facility (SNF) care following surgeries. Historically, these IPO procedures have been a major driver of nursing home admissions.

CMS slashes inpatient-only procedures, threatening nursing home coverageHospitals slam Medicare’s move toward ‘site-neutral’ paymentsNewsweek

CMS has emphasized that the decision to remove these procedures from the IPO list does not mandate their performance in outpatient settings. Instead, it allows healthcare providers to determine the most clinically appropriate setting for each patient. Nicole Fallon, vice president of integrated services and managed care for LeadingAge, noted that many patients requiring these procedures may still need intensive post-operative care, which is often provided in skilled nursing facilities. She expressed concern that the new policy could inadvertently lead to patients being discharged without adequate post-acute care options.

CMS slashes inpatient-only procedures, threatening nursing home coverageNewsweekHospitals slam Medicare’s move toward ‘site-neutral’ payments

The American Hospital Association (AHA) and other hospital groups have voiced strong opposition to the CMS's site-neutral payment policies, which aim to standardize payments for outpatient services across various settings, including ambulatory surgery centers. Ashley Thompson, AHA's senior vice president, stated that these changes exacerbate the financial pressures on hospitals, particularly as they face rising operational costs and increased demand for care. Critics argue that the policy fails to recognize the complexities of patients treated in hospital outpatient departments, who often have more severe health conditions compared to those seen in independent facilities.

Hospitals slam Medicare’s move toward ‘site-neutral’ paymentsNewsweek

CMS officials, including Deputy Administrator Chris Klomp, have defended the changes, asserting that they will enhance care quality and reduce unnecessary hospitalizations. Klomp stated, “These comprehensive changes deliver greater predictability, accountability, and affordability in hospital care.” However, hospital representatives have countered that the new policies threaten their ability to provide high-quality care, particularly for vulnerable populations.

CMS slashes inpatient-only procedures, threatening nursing home coverage

Opponents of the CMS rule, including the AHA and America’s Essential Hospitals, argue that the elimination of the IPO list and the implementation of site-neutral payments could undermine access to necessary post-acute care. They contend that the policies do not adequately account for the unique challenges faced by hospitals, especially those serving rural and low-income communities. Jennifer DeCubellis, president and CEO of America’s Essential Hospitals, expressed concern that these cuts would hinder hospitals' capacity to deliver essential services.

Hospitals slam Medicare’s move toward ‘site-neutral’ payments

As the healthcare landscape evolves, stakeholders are calling for a reevaluation of the three-day inpatient stay requirement for SNF coverage, which many view as outdated. Lawmakers and healthcare advocates are expected to continue discussions on how to adapt Medicare policies to better reflect current medical practices and patient needs.

CMS slashes inpatient-only procedures, threatening nursing home coverage

• “While this is an important safeguard, the policy does not explicitly require surgeons to consider the types of post-acute care services a patient may need after surgery or whether they have appropriate home support,” — Nicole Fallon, LeadingAge

CMS slashes inpatient-only procedures, threatening nursing home coverage

• “The agency is exacerbating the challenging financial pressures under which hospitals are operating to serve their patients and communities,” — Ashley Thompson, AHA

Hospitals slam Medicare’s move toward ‘site-neutral’ payments

• “These Medicare cuts threaten hospitals’ ability to deliver high-quality care to their patients and communities.” — Jennifer DeCubellis, America’s Essential Hospitals

Hospitals slam Medicare’s move toward ‘site-neutral’ payments

• “We continue to advance Medicare payment reform by advancing policies that help prevent services from unnecessarily being performed in hospitals when they can be safely provided in less-intensive settings …” — Chris Klomp, CMS

CMS slashes inpatient-only procedures, threatening nursing home coverage