The Inpatient-Only List Is Almost Gone: What the Proposed 2027 Outpatient Rule Means for Where You Operate
CMS released the CY 2027 OPPS/ASC proposed rule on July 2, 2026, and for orthopedics, the headline isn't the payment update—it's a structural shift reaching its endgame. The Inpatient-Only list is nearly gone, and hundreds more procedures are becoming payable in the ambulatory surgical center. Where a joint replacement happens is now a clinical question of acuity and patient preference, rather than a requirement of Medicare.
August 13, 2026
4 min. read
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CMS released the Calendar Year 2027 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center proposed rule (CMS-1850-P) on July 2, 2026. For orthopedics, the rule matters less for its payment update than for a structural change reaching its endgame: the Inpatient-Only list is nearly eliminated, and the ambulatory surgical center becomes a payable home for hundreds more procedures.
Where a joint replacement is performed is becoming a clinical decision and financial decision, not a regulatory one.
The payment update
CMS proposes a 2.4 percent increase to both OPPS and ASC payment rates for facilities that meet quality reporting requirements, based on a 3.2 percent market basket increase reduced by a 0.8 percentage point productivity adjustment.1 The proposed ASC conversion factor is $57.766 for compliant facilities.
That is the routine part of the rule. The consequential part is site of service.
The Inpatient-Only list is disappearing
Total knee arthroplasty came off the Inpatient-Only list in 2018, and total hip in 2020. The 2027 rule finishes what those changes started.
CMS proposes to remove 637 procedures from the list for CY 2027, with the remaining 801 more clinically complex procedures scheduled to come off in CY 2028, completing a three-year phaseout. Alongside it, CMS proposes adding 618 surgical procedures to the ASC Covered Procedures List.
The regulatory guardrail that once dictated the setting for major orthopedic surgery is being dismantled. What remains is clinical judgment about which patient is safe in which setting, the patient’s preferences, and the economics of the setting you choose.
For private practice: the ASC is the lever
For a practice-owning orthopedic surgeon, ASC ownership is the clearest revenue lever in this rule. As more joint and spine procedures become ASC-payable, the facility fee that once flowed only to hospitals becomes accessible to physician-owned centers, and the economics of appropriately selected outpatient arthroplasty improve.
That opportunity comes with a program-integrity climate to watch. The proposed rule advances site-neutral payment and—under Section 6225 of the Consolidated Appropriations Act, 2026—would condition payment for off-campus hospital outpatient departments on separate NPI billing and a provider-based attestation beginning in 2028. The direction of travel is toward paying the same rate regardless of setting, which changes how every site-of-service decision pencils out.
For health systems: the outpatient migration accelerates
For hospital and health-system orthopedic service lines, the same changes cut the other way. Cases that anchored inpatient and hospital outpatient volume can now move to lower-cost settings, including physician-owned ASCs. Site-neutral expansion erodes the payment premium that HOPDs have historically held over the physician office and ASC. Service-line leaders who assume their joint volume stays put are planning against the current.
There is a direct link to the bundled-payment world here. Under the proposed CJR-X model, outpatient hip and knee replacements identified by HCPCS 27130 and 27447 are episode-triggering procedures, so the same cases migrating to outpatient settings are also entering mandatory episode accountability. Site of service and episode risk are converging on the same patients.
What to do now
Map your case mix against the ASC list. Identify which of your procedures are becoming ASC-payable in CY 2027 and CY 2028, and model the facility economics in each setting.
Pressure-test site-neutral exposure. Health systems should quantify how much HOPD orthopedic revenue is exposed as the payment premium narrows.
Plan for all of your patients. Outpatient migration and CJR-X accountability affect the same joint replacement patients; plan them together, not separately. Consider self-management programs, remote monitoring, and monitored pathways to ensure engagement and the outcomes collection these programs require, while leveraging the power of the pathway to decrease your risks of complications.
The Inpatient-Only list gave orthopedics a clear answer about where surgery happened. That answer is expiring. The practices that decide deliberately where their patients are safest and their economics are strongest will do better than those who let the setting decide for them.
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