You're about to get more choice in procedure locations

Why get surgery at the hospital, even if it's equally safe and costs less at an outpatient surgery center?

Because inpatient is the only way insurance will pay for it - at least until now.

Quick facts:

• When Medicare makes a reimbursement policy, the rest of the industry follows
• Big Insurance and Big Hospital lobbying set the Medicare reimbursement rule listing inpatient-only procedures
• Inpatient monopoly ties surgeons to hospital control (limiting innovation and competition)
• Decades of physician complaints drive this change to equalize inpatient and outpatient reimbursement rates.

MDHHS issued this provider alert on September 23.

The Michigan Department of Health and Human Services (MDHHS) is issuing this Provider Alert to inform all Medicaid providers of the gradual elimination of the Medicare inpatient only (IPO) services list announced in the CY 2026 OPPS Final Rule. These codes are presently reimbursable only when performed in an inpatient hospital setting.

MDHHS will follow Medicare’s phase‑out schedule, which began January 1, 2026. The IPO list will be obsolete January 1, 2028. As these codes transition out of the IPO designation, MDHHS closely aligns coverage with Medicare’s policy and reimburse applicable services under the Outpatient Prospective Payment System (OPPS) in accordance with CMS Addendum B. When service coverage/reimbursement methodology differences exist between Medicare and Medicaid, Medicaid fee schedules are utilized. The current Michigan Medicaid fee schedule is available at Information Specific to Different Providers.

Inpatient only services have a Medicare OPPS status indicator (SI) of “C” and are listed in addendum E of each year’s OPPS/ASC final rule located on the CMS Hospital Outpatient Regulations and Notices page.