Medicare 2026

Medicare Is Phasing Out the Inpatient-Only List: What It Means for Your Surgery

For decades, Medicare has kept a list of procedures it would only pay for when done as a hospital inpatient stay — the Inpatient Only (IPO) list. That list is now being retired in phases, and the change could affect where your next surgery happens, what you pay, and how much say your surgeon has in the decision.

Here's what Medicare has announced so far, and what it means in practical terms.

What CMS announced

In its 2026 hospital outpatient payment rule, issued November 21, 2025, CMS began phasing out the IPO list over three years. For 2026, 285 procedures — mostly musculoskeletal — were removed, meaning Medicare can now pay for them in the hospital outpatient setting when the surgeon decides that's appropriate. CMS also added 271 of those procedures to the list of services Medicare covers in ambulatory surgical centers (ASCs).

The 2027 hospital outpatient payment final rule (CMS-1850-FC), placed on public inspection at the Federal Register on November 4, 2026, took the next step. CMS finalized removing 637 services from the IPO list for 2027. These come from a wide range of clinical families: auditory, digestive, endocrine, female genital, hemic and lymphatic, integumentary, male genital, maternity care and delivery, mediastinum and diaphragm, respiratory, and urinary. For 2027, CMS is also adding 618 codes to the list of procedures Medicare covers in ambulatory surgical centers, including services coming off the IPO list.

The third and final phase is expected for 2028 and will cover the remaining clinical families, including neurological and cardiovascular services and solid organ transplants.

Why CMS says it's doing this

CMS's rationale is that medical practice has evolved. Many surgeries that once required a hospital stay are now routinely done safely without one, thanks to advances in surgical technique, anesthesia, and recovery care. Removing procedures from the IPO list, CMS says, lets Medicare pay for them in the hospital outpatient setting when clinically appropriate, giving physicians more flexibility to choose the site of service and giving patients more choices — with the potential for lower out-of-pocket costs.

A key point: removing a service from the IPO list does not require it to be performed only as outpatient. Your surgeon can still admit you as an inpatient if that is the right call for your situation. Procedures removed from the list also remain exempt from certain two-midnight-rule medical review activities until CMS determines they are more commonly performed on an outpatient basis for the Medicare population.

How this can change what you pay

Inpatient and outpatient care are paid for differently under Medicare, so the site of service matters.

• Inpatient stays are generally covered under Part A. For 2026, the Part A inpatient hospital deductible is $1,736 per benefit period.
• Hospital outpatient care is generally covered under Part B. In a hospital outpatient department, patients usually pay 20 percent of the Medicare-approved amount for the doctor's services, plus a hospital copayment for each service. In most cases, that copayment can't be more than the Part A deductible for each service. At a critical access hospital, the copayment may be higher and may exceed the Part A deductible.
• Ambulatory surgical centers are another Part B setting that is now an option for many of the procedures coming off the IPO list.

Depending on your specific surgery and any supplemental coverage you have, outpatient care may cost you less — or in some cases, more — than an inpatient stay. There's no single answer. The practical step is to ask your surgeon's office and the hospital's billing department, before a scheduled procedure, how Medicare is expected to be billed and what your share of the cost may be.

What to ask before a scheduled surgery

• Is this procedure being scheduled as inpatient, hospital outpatient, or at an ambulatory surgical center?
• What does my Medicare coverage — and any Medicare Advantage plan, Medigap policy, or other secondary coverage I have — pay in that setting?
• If I'll be kept overnight for observation, am I being formally admitted as an inpatient?
• What is the estimated out-of-pocket cost for the facility and physician services?

A note on Original Medicare vs. Medicare Advantage

Where you are enrolled matters for how surgery costs are handled. With Original Medicare, Part A and Part B rules apply directly, and many people add a stand-alone Medigap policy and a Part D drug plan. Medicare Advantage plans must cover the same services as Original Medicare but set their own copays, networks, and prior authorization rules, which can affect which hospital or surgery center you use. Each path has trade-offs — flexibility of providers, predictability of costs, extra benefits, and paperwork — and only you can decide which fits your health and budget.

Looking ahead to 2027

A few program-level 2027 figures are confirmed:

• The Part D out-of-pocket cap rises to $2,400 in 2027 (it is $2,100 in 2026).
• The maximum Part D plan deductible in 2027 is $700.
• The Part D base beneficiary premium for 2027 is $41.33 (a national figure used in the late-enrollment penalty; actual plan premiums vary).
• Annual Enrollment (Open Enrollment) for 2027 coverage runs October 15 – December 7, 2026, with changes effective January 1, 2027.
• The Social Security Administration announced on October 14, 2026 a 3.6 percent cost-of-living adjustment for benefits payable beginning January 2027.

The 2027 Part B standard premium and deductible, and the 2027 IRMAA income brackets, have not yet been announced. CMS typically announces them in the fall.

If you receive Medicaid or Extra Help, you have a monthly Special Enrollment Period to move to Original Medicare with a stand-alone Part D plan, or switch stand-alone Part D plans. Full-benefit dual-eligible enrollees can join an integrated D-SNP in any month.

Where can you get help with Medicare questions?

For personalized questions about your coverage, costs, or upcoming surgery, go to Medicare.gov or call 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048.