News to Note – December 2025

  • Last month, the Centers for Medicare and Medicaid Services (CMS) released the 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Final Rule.  Here are the high-level take aways you should know:
    • CMS finalized the plan to eliminate the Inpatient-Only list over the next three years starting with the removal of 285 musculoskeletal-related surgeries and several miscellaneous procedures. 
    • They also finalized their proposal to greatly expand the number of procedures allowed at ambulatory surgery centers (ASCs) by adding 560 procedures to the covered procedure list including procedures such as tracheostomy, mediastinoscopy, laparoscopic radical prostatectomy, many cardiology and electrophysiology procedures, and of course, all of the musculoskeletal procedures removed from the Inpatient-Only list.
    • CMS addressed the “three-day rule” for skilled nursing facility (SNF) access by noting patients having Outpatient surgery are not expected to require SNF care following their surgery. A similar comment was made years ago when they removed total knee arthroplasty from the Inpatient-Only list. According to some, this means they are advising – in an indirect way – that if a patient requires care in a SNF following surgery, the patient may be hospitalized as Inpatient and kept hospitalized for three midnights to get access to their Medicare Part A benefit. But remember, the reason must be clinically valid such as lack of home support or limitations of their home environment and not simply patient preference.  Also, the patient must have medical reasons for continued hospitalization over the three days.  Finally, of course, there should be detailed documentation from the clinician about these factors, as well.
    • CMS stressed that surgeries not on the Inpatient-Only (IPO) list can be performed as Inpatient or Outpatient based on the patient’s medical conditions and needs. In fact, they even went as far as to state, “It would be a misinterpretation of CMS payment policy for providers to create policies or guidelines that establish the outpatient setting as the baseline or default site of service for a procedure based on its removal from the IPO list.” They went on to say, “the specific decision about the most appropriate care setting for a given surgical procedure is a complex medical judgment made by the physician based on the beneficiary’s individual clinical needs and preferences.” As such, we can continue to apply the case-by-case exception to all surgeries but ensure the high-risk factors are not only documented, but also clinically valid. 
    • As in the past, CMS continues to prohibit denials on admission status for surgeries removed from the IPO list until they are more commonly performed as Outpatient. However, this doesn’t mean your clinicians should hospitalize all of their patients in Inpatient status. 
  • A recently released OIG report described an event which took place at a Veterans Affairs hospital where a patient was hospitalized with suicidal ideation. She had diabetes mellitus and used an insulin pump to control her blood glucose. Per the hospital’s policy, they allowed her to control her diabetes using the pump and she attempted to harm herself by using the pump to deliver a large bolus of insulin. While it might be common for your hospital to allow patients with insulin pumps to treat themselves when hospitalized, consider establishing policies related to these patients when there are also mental health concerns. 
  • Aetna delayed the start date for their very unpopular and very immoral yet legal plan to pay for Inpatient hospitalizations which don’t meet MCG Inpatient criteria with a lower, Observation-like rate. 
    • They pushed back the start date to January 1st and will pay Inpatient hospitalizations of five or more days at the expected Inpatient rate. 
    • However, this doesn’t mean your finance team should stop fighting. The other payers are likely running the numbers and deciding when to adopt this as their payment policy if it works for Aetna. 
  • CMS has named the companies which are receiving contracts for the Wasteful and Inappropriate Service Reduction (WISeR) prior authorization demonstration project.  
    • There are six companies – Cohere Health, Genzeon, Humata Health, Innovaccer, Virtix IT, and Zyter. All of their websites state they work in healthcare involving artificial intelligence (AI). Yet, even with contractors named, so far not one of the companies has any information on their website about how requests should be submitted.
    • The program’s start is not a sure thing as six members of the House of Representatives introduced a bill prohibiting CMS from implementing WISeR or any similar program. With the House in recess, it’s doubtful the bill will be getting a vote any time soon, so affected providers should plan for a January 1 start. 
  • There’s still no sign of a new Important Message from Medicare (IM) or Medicare Outpatient Obsecration Notice (MOON) to replace the current forms which are expiring very soon. In the past when forms expired, CMS allowed the use of the expired form until the new forms were released.  There was also a grace period for hospitals to set the new forms into place, so don’t lose sleep over this. 
  • Maximus, the contractor that acts as the Qualified Independent Contractor (QIC) for Medicare performing review of second-level appeals, routinely publishes their findings for Medicare Advantage (MA) reviews and their data from 2025 is rather depressing. 
    • 10% of Inpatient hospitalizations were approved.
    • 1% of cases where patients appealed for access to Inpatient Rehabilitation Facilities (IRFs) were approved.
    • Only 2 of 2,680 appeals for LTACH approval were granted.
  • On a positive note, Maximus reversed a DRG downgrade where the MA plan claimed they downgraded the DRG of sepsis to the DRG of UTI because the documentation did not support the diagnosis of sepsis. 
    • At the same time, the MA plan informed Maximus they didn’t have any medical records to share and that they never even requested the records from the provider. 
    • Maximus gave them an earful for playing this kind of game which should serve as a reminder for all.  If your hospital receives a DRG downgrade from a payer, check and see if the payer actually requested the medical records from the hospital and if not, report them to the authorities. 
  • Dr. Ronald Hirsch recently suggested using the Against Medical Advice (AMA) designation for patients who discharge to home when the payer refuses to approve necessary and appropriate post-acute care, such as transfer to and IRF. 
    • The manner in which hospitals indicate a patient left AMA is to use discharge status code 07. The presence of the code excludes the hospitalization from the readmission reduction program and other quality programs. But if the patient goes home with home care services, the claim should include discharge status code 06. If a patient discharges to a SNF, discharge status code 03 is used. This is significant because of the Transfer DRG payment adjustment for certain hospitalizations for patients who receive post-acute care. 
    • Unlike the fields on the claim for multiple condition codes or procedure codes or diagnosis codes, the discharge status field only allows one code. So, what to do? The National Uniform Billing Committee (NUBC) which created the claim form, responded to the question that they never anticipated such a situation and that “best judgment” should be used to select which code to use. Back to the original question – what to do? 
      • First, look at the working DRG, obtain the GMLOS, and see if the transfer DRG payment adjustment would apply. If the length of stay wouldn’t result in a payment adjustment, use the AMA code. 
      • If the length of stay is more than one day less than the GMLOS, there is money at play and there should probably be discussion with compliance to make a decision.