The Medicare Inpatient Only (IPO) List, a critical aspect of healthcare finance, dictates specific procedures that must be performed on an inpatient basis. This list, encompassing around 1,800 codes, includes complex surgeries like coronary artery bypass grafts, which due to their invasive nature, fall under the “two midnight rule.” This rule requires patients to stay at least two nights post-surgery in a hospital setting, emphasizing the necessity of certain procedures being performed inpatient, not at Ambulatory Surgery Centers (ASCs).
Significant Changes and Industry Impact
In 2021, the Centers for Medicare and Medicaid Services (CMS) made substantial revisions to the IPO list, removing 298 codes. These changes continue annually, with more procedures being adjusted or added based on new medical advancements or reviews. The modifications affect the operation of the 6,000 ASCs across the United States, shifting certain procedures previously limited to hospital settings to these centers. This transition is pivotal as it allows ASCs, many of which are not owned by hospital systems, to compete directly with hospitals.
Financial Implications for Hospital Systems
For hospital systems, procedures shifting from the inpatient only list to being permissible at ASCs pose significant financial and operational challenges. Hospitals prefer retaining these procedures under their control due to the substantial revenue they generate. The modification of the IPO list has spurred major hospital systems to invest heavily in ASCs to prevent losing their outpatient surgery volume to independent centers. For instance, Hospital Corporation of America, one of the largest hospital operators, is significantly increasing its number of ASCs, which currently stands at 124 and represents 38% of their revenue.
The IPO List and Healthcare Transparency
The CMS updates the IPO list annually within its extensive 646-page Hospital Outpatient Prospective Payment and ASC Payment Rule. While the rule is publicly accessible, finding specific amendments, such as those to the IPO list found in Addendum E, can be daunting due to the complexity and volume of the document.
Furthermore, for a comprehensive understanding of the changes, healthcare professionals may need to access specialized resources like the American College of Physician Advisors, which offers a detailed breakdown of the list for a fee. This accessibility issue underscores a broader problem within healthcare finance: transparency and the ease of obtaining crucial operational information.
The Broader Market Reaction
The ongoing changes to the IPO list are not just administrative tweaks but are shaping the future of healthcare delivery. They reflect a broader trend towards outpatient care, driven by advancements in medical technology and procedures that allow for shorter recovery times and lower costs. As Medicare adapts to these changes, so too does the commercial insurance sector, influencing how procedures are billed and where they can be performed.
Conclusion: The IPO List’s Role in Competitive Healthcare Markets
The evolution of the IPO list is a testament to the dynamic nature of healthcare. It plays a crucial role in determining where and how surgeries are performed, impacting everything from hospital revenue to patient costs. For employer-sponsored health plans, especially those that are self-funded, these changes offer a strategic advantage. By establishing direct contracts with independent ASCs, companies can significantly reduce healthcare costs, showcasing the IPO list’s influence as both a challenge and opportunity within the healthcare industry.
This nuanced understanding of the IPO list is vital for anyone involved in healthcare finance, from hospital administrators and ASC operators to healthcare advisors and policy makers.