The Continued Demise of the Inpatient-Only List and QIO Data

Well, the Centers for Medicare & Medicaid Services (CMS) has released the proposed outpatient rule for 2027, and as expected, they are proceeding with the elimination of the Inpatient-Only List by removing an additional 637 surgeries. Now, last year it was relatively tame, with the elimination affecting mainly orthopedic and spine procedures, but not this time. They are going wild: gastrointestinal, gynecologic, urinary, thoracic, and more. The list includes colon resection, nephrectomy, pancreatectomy, liver resection, esophagectomy, lung resection, and much, much more.

Now, of course, removal from the List does not mean that such procedures must be done as outpatient, but for the hospitals that have been sitting back and deferring to outpatient, it’s going to be financially painful to continue that in 2027. For example, the DRG for colon resection pays a community hospital about $14,000, but the planned 2027 outpatient payment rate for that surgery is about $4,000. And of those saying that “no colon resection goes home in one day,” I would advise you to read this article. I don’t know many hospitals that can take that kind of financial hit too many times and stay in business. If your utilization review team is not embedded in the pre-op area now, it’s time to start planning.

CMS is also proposing to add more Botox uses to its outpatient prior authorization program. While that in itself is not newsworthy, the interesting part is that in their press release, CMS stated that they are adding these new services to their “utilization management process.” They did not call it “prior authorization.” I think they realized that it looks bad when, on the one hand, you are calling on insurers to improve their prior authorization processes, as CMS has been doing, while at the same time adding more prior authorization requirements.

Moving on, Commence Health, one of the Quality Improvement Organizations (QIOs), released their annual report for 2025. Here are a few highlights. They reviewed over 57,000 inpatient hospital discharge appeals, and sided with the hospital in over 85 percent of cases. That speaks well for hospitals and utilization review staff, who should be proud of that statistic.

On the post-acute side, they reviewed over 36,000 appeals of termination of skilled nursing facility (SNF) care among Medicare patients, and over 250,000 appeals from Medicare Advantage (MA) patients. We all have heard that MA plans watch SNF utilization very carefully, and perhaps are too quick to cut off coverage; this certainly supports that. It also perhaps suggests that SNFs are more reluctant to tell a patient that their need has ended. A total of 57-60 percent of the time, the QIO reviewer agreed with the termination of care.

They also received 293 appeals for the pre-admission Hospital-Issued Notice of Noncoverage (HINN) 1, and sided with the hospital in 75 percent of appeals, as well as 32 appeals of HINN 10s, wherein the attending did not feel the patient was stable for discharge, but the hospital staff did, agreeing with discharge in 60 percent of cases.

There were also 144 appeals of a change from inpatient to outpatient status via the new Medicare Change of Status Notice, but they sadly provided no data on the success of those appeals.

Commence also received over 15,000 requests for immediate advocacy, and stated that they received over 962,000 total calls from Medicare beneficiaries. That’s just a lot of calls.

Who knew healthcare could be so complicated?