Site-neutral payment: The inpatient-only list — and maybe a breakthrough year?

Eliminating Medicare’s inpatient-only list reflects how advances in surgical techniques now allow many procedures, such as knee and hip replacements, to be safely performed on a same-day basis in outpatient or ambulatory surgical settings at lower cost and with better recovery outcomes. The three-year phaseout makes 2026 the strongest year to date for progress toward site-neutral payment, even as additional reforms remain possible, said Christopher M. Whaley, Ph.D., is associate professor, health services, policy and practice, and associate director of the Center for Advancing Health Policy through Research at Brown University. He’s the co-author of a Health Affairs analysis of 2026 Medicare physician payment.

Medical Economics: In the article, you cite the elimination of the inpatient-only list as a way to increase patient choice while saving money for Medicare. To expand on that, can you explain what is that list, and why is that so important?

Christopher M. Whaley, Ph.D.: One of the, I think, really encouraging things that we've seen over the last decade or so is that due to a variety of technological advancements, improvements in surgical techniques, many procedures that were formerly done in a hospital-based or inpatient setting can now be done in hospital outpatient or even in ambulatory surgical settings. And so I think the most common example is knee and hip replacements. If you got a knee and hip replacement even a decade or so ago, it was a very intensive procedure, it was a multiple day visit in the hospital and stay in the hospital. And that's both very expensive, it's also exposing patients to increase risk of infection and delaying in many cases their physical rehabilitation timelines. And so we've seen for many services is that they can now be done in noninpatient settings, whether it's a hospital outpatient department or an ASC, and can be done on a same day basis. This is both much less expensive for patients and payers, and then there's also lots of evidence that it's higher quality and improves recovery times.

Medical Economics: Based on the IPO list and the three-year phase out of that list, would you call 2026 a breakthrough year for site neutral payment?

Christopher M. Whaley, PhD: I think it's certainly the strongest year we've had. And so while there are always, you know, more that can be done, this is the the strongest shift towards site-neutral payments that at least I can remember.