Medicare 2026

Medicare Is Phasing Out the Inpatient-Only List: What It Means for Your Surgery

If you've had surgery under Medicare before, you may have heard the terms "inpatient" and "outpatient." That distinction matters, because it affects which part of Medicare pays, what you owe, and even where your procedure can take place. Big changes are now underway. Medicare is gradually ending a long-standing list called the Inpatient Only (IPO) list, and that will reshape how many common surgeries are handled over the next few years.

Here's a plain-English look at what's changing, what's still just a proposal, and what to think about before you schedule a procedure.

What the Inpatient Only list was — and why it's going away

For years, Medicare kept a list of procedures it would pay for only when performed on admitted hospital inpatients. If a surgery was on the IPO list, it had to be billed under Part A (hospital insurance), and the hospital stay was required.

In the 2026 hospital outpatient payment rule, issued November 21, 2025, CMS began a three-year phase-out of this list. The first step removed 285 procedures, most of them musculoskeletal — think certain joint, spine, and orthopedic surgeries. CMS also added 271 of those removed procedures to the list of services Medicare covers in ambulatory surgical centers (ASCs) for 2026, meaning some surgeries can now be done in a freestanding surgery center rather than a hospital.

CMS's rationale: when a procedure is safe to perform outside a traditional hospital admission, physicians should have the flexibility to choose the right setting, and patients should have more choices — with the potential for lower out-of-pocket costs in some cases.

What's proposed for 2027

On July 2, 2026, CMS proposed removing more than 600 additional services from the IPO list for 2027, as the second year of the phase-out. The proposal covers services from several clinical families, including digestive, respiratory, and urinary procedures, among others.

Important: this is a proposal, not a final rule. CMS typically reviews public comments before finalizing. Until a final rule is published, the specific procedures and effective dates can change.

How this affects what you pay

The inpatient-versus-outpatient distinction matters because Medicare pays differently in each setting.

• Inpatient (Part A). When you're formally admitted to the hospital, Part A applies. For 2026, the Part A inpatient hospital deductible is $1,736 per benefit period.
• Hospital outpatient department. You generally pay 20 percent of the Medicare-approved amount for the doctor's services, plus a hospital copayment for each service. In most cases, that copayment per service can't be more than the Part A deductible for that service. At a critical access hospital, the copayment may be higher and may exceed the Part A deductible.
• Ambulatory surgical center. ASCs are a different outpatient setting with their own payment structure under Part B.

Because cost sharing works differently in each setting, having the same procedure done as an outpatient instead of as an inpatient may raise or lower your share — depending on your coverage, where it's done, and what services are provided. There's no single answer that applies to everyone.

One technical note worth knowing: procedures newly removed from the IPO list remain exempt from certain two-midnight-rule medical review activities until CMS determines they are more commonly performed on an outpatient basis for the Medicare population. That's meant to give clinicians time to adjust without being second-guessed on short stays.

Questions to ask before surgery

If you're scheduling a procedure that could be affected, it helps to ask:

• Will I be admitted as an inpatient, or treated as an outpatient (including "observation")?
• Is this procedure being done in a hospital outpatient department or an ambulatory surgical center?
• How will Part A or Part B apply, and what cost sharing should I expect?
• If I have Medicare Advantage, what are the plan's rules for this procedure and setting?
• If I have a Medigap policy with Original Medicare, how does it apply to the hospital or outpatient costs?

Original Medicare paired with a Medigap policy and Medicare Advantage are structured differently. Original Medicare lets you see any provider that accepts Medicare, and a Medigap policy can help with cost sharing; Medicare Advantage plans often use networks and prior authorization, and may bundle extra benefits. Each has trade-offs. The right fit depends on your health, finances, and preferences.

Other 2027 Medicare basics to keep in mind

A few program-level numbers are already set for 2027:

• The Part D out-of-pocket cap rises to $2,400 (up from $2,100 in 2026).
• The maximum Part D deductible any plan may charge is $700.
• The Part D base beneficiary premium is $41.33, a national figure used to calculate the late-enrollment penalty; actual plan premiums vary by plan.
• Social Security announced a 3.6 percent cost-of-living adjustment for benefits payable starting January 2027.

The 2027 Part B standard premium and deductible, and the 2027 IRMAA income brackets, have not yet been announced. CMS typically releases those figures in the fall.

Annual Enrollment runs October 15 – December 7, 2026, with choices taking effect January 1, 2027.

If you have Medicaid or qualify for Extra Help, you have a monthly Special Enrollment Period to move to Original Medicare with a stand-alone Part D plan, or to switch stand-alone Part D plans. Full-benefit dual-eligible individuals can also join an integrated D-SNP in any month.

Where to learn more

For official, up-to-date information about Medicare coverage, enrollment, and costs, visit Medicare.gov or call 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048, 24 hours a day, 7 days a week.