Jan. 1, 2026 marked the start of the Centers for Medicare & Medicaid Services (CMS) plan to end the Medicare Inpatient-Only list.
Most musculoskeletal procedures were removed first, with the entire list expected to be eliminated as of Jan. 1, 2028. This policy change creates a need for careful, patient-specific status determinations, rather than automatic assumptions based only on the procedure being performed.
As in 2018, when total knee arthroplasty was removed from the list, removal of a procedure does not mean that every such procedure must be classified as outpatient. Instead, the clinical team must evaluate the individual patient’s medical condition, functional needs, home situation, and anticipated post-operative course.
The points below should guide decisions to place a patient into inpatient status when the surgeon or treating clinician reasonably anticipates that the patient will require at least two midnights of hospitalization during recovery before being safe for discharge on post-operative day two or later.
Patient Factors That May Support Inpatient Status
If the patient has any of the following conditions or needs, inpatient hospitalization may be appropriate when the reason is clearly documented in the medical record
An expectation that the patient will require transfer to a Skilled Nursing Facility (SNF) after surgery for skilled care supports inpatient hospitalization when the documentation explains why skilled care in a facility will be needed, and why discharge home with home services will not be appropriate after surgery:
Examples include the absence of family or friends to assist at home, multiple stairs, or other unmanageable obstacles within the home environment.
CMS anticipates that these patients will not be ready for hospital discharge until post-operative day three, which allows them to use their Medicare SNF benefit for covered charges when all requirements are met.
However, the clinician still must document what services the patient is receiving while hospitalized, why the patient cannot safely discharge home, and what medical needs require a SNF setting, on a daily basis. SNF transfer for custodial needs alone will not be covered by Medicare.
- A body mass index (BMI) of 40 or greater may support inpatient hospitalization. Documentation should include the patient’s increased surgical and anesthesia risk due to elevated BMI and the need for careful post-operative monitoring.
- Poorly controlled diabetes mellitus with a HbA1C greater than 7.5 percent may support inpatient hospitalization.
- Documentation should include the increased risk of post-operative hyperglycemia and wound infection.
- Chronic anemia with a baseline hemoglobin under 11 may support inpatient hospitalization. Documentation should include the need for careful attention to blood loss and post-operative monitoring for signs and symptoms that could require transfusion.
- Chronic Kidney Disease Stage 4 or 5 (CKD IV or CKD V) may support inpatient hospitalization. Documentation should include the increased risk associated with anesthesia administration and the need for increased post-operative monitoring of fluid balance and possible development of acute kidney injury.
- Coronary Artery Disease (CAD) treated with chronic medication may support inpatient hospitalization. Documentation should include the increased surgical risk and the need for close post-operative monitoring.
- Uncontrolled hypertension while on medication therapy, such as blood pressure over 140/90 in previous documentation, may support inpatient hospitalization. Documentation should include the increased risk of surgery and increased risk of bleeding that requires close post-operative monitoring.
- Chronic Obstructive Pulmonary Disease (COPD) treated with regularly scheduled oral or inhaled medications may support inpatient hospitalization. Documentation should include the increased risk of perioperative respiratory failure and other respiratory complications.
- A baseline abnormal mental status may support inpatient hospitalization. Documentation should include the need for careful post-operative monitoring of mental status after anesthesia and while the post-operative pain management regimen is established and tailored for the patient.
Procedure-Related Factors That May Support Inpatient Status
In addition to patient-specific medical and functional risks, the anticipated complexity of the procedure and the expected post-operative course should be considered before assigning status:
o If the procedure is expected to be technically challenging or difficult because of anatomical factors unique to the patient, hospitalize the patient as inpatient and document the reasons in detail.
o If the patient is expected to require at least two midnights of post-operative care that can only take place in the hospital, hospitalize the patient as inpatient and document in detail why the patient is not expected to be medically ready for discharge on post-operative day one.
This must be a case-by-case decision based on the factors associated with the individual patient.
This cannot be a blanket assessment for all patients.
When Outpatient Status Is More Appropriate
If the patient is in relatively decent health, takes no or few routine medications, or is expected to discharge on the day of the procedure, enter a status order for outpatient care. If complications arise during the procedure or recovery period, change the status to outpatient with observation services. If the patient’s clinical condition or post-operative care needs will not allow discharge on post-operative day one, change the status to inpatient.
Key Documentation Takeaway
The central lesson is that status determinations after removal from the Inpatient-Only list must remain individualized, clinically justified, and thoroughly documented. The record should explain not only the diagnosis or risk factor, but also why that factor creates a reasonable expectation for at least two midnights of hospital-level care, why discharge home is not safe, when applicable, and what ongoing hospital services are required. Clear daily documentation is especially important when SNF placement is anticipated, because Medicare does not cover SNF transfer for custodial needs alone.
