The Inpatient Only List: How Medicare Pays for Your Surgery

The difference between Part A and Part B coverage will cost you

Surgery doesn't come cheap and you will want to know how (or if) Medicare is going to pay for it long before you go under the knife. Simply put, Medicare will cover your surgery under either Part A or Part B. The latter could cost you thousands more in out of pocket expenses.

Wife sitting next to husband who is in hospital bed waiting for inpatient surgery
JodiJacobson / E+ / Getty Images

Preparing for Surgery

There are several things you need to think about before having surgery. The first, of course, is whether or not the procedure is necessary or if there are other treatment alternatives. After that comes the logistics of how and where your surgery will be performed. Finally, how much will insurance pay toward the bill? You should not undergo any elective surgery or procedure without addressing these issues beforehand.

Like most things under the Medicare umbrella, not everything is black and white. Few people are aware that the Centers for Medicare and Medicaid (CMS) has established a list of surgeries that will be covered by Medicare Part A. Other surgeries, as long as there are no complications and the person undergoing surgery does not have significant chronic conditions that put them at high risk for complications, default to Medicare Part B. This affects not only how much you will pay but where your surgery can be performed.

Medicare's Inpatient Only Surgery List

Every year CMS releases an updated inpatient-only surgery list. The surgeries on this list are not arbitrarily selected. Due to the complexity of the procedure, the risk for complications, the need for post-operative monitoring, and an anticipated prolonged time for recovery, CMS understands that these surgeries require a high level of care. Many of these are cardiovascular surgeries and procedures.

Examples of inpatient-only surgeries include:

You may be surprised to learn that very few spinal procedures are on the list. In fact, most types of spinal fusions and discectomies, are not inpatient-only. Other common procedures were once on the list but have since been removed. As of 2018, total knee replacements, i.e., total knee arthroplasty, are no longer covered by Part A. Total hip replacement was taken off the list in 2020. They are now considered Part B procedures.

For the safety of Medicare beneficiaries, inpatient-only surgeries must be performed in a hospital. Medicare Part A covers the majority of surgical costs, and you will pay a deductible of $1,484 in 2021 in addition to 20% of doctor fees.

Surgeries Performed in Ambulatory Surgery Centers

Surgeries on the inpatient-only list cannot be performed in an Ambulatory Surgery Center (ASC). In fact, CMS publishes a specific list of outpatient surgeries that can be performed at an ASC. This list is referred to as Addendum AA.

By definition, an ASC is an outpatient medical facility where surgeries are performed. It may or may not be affiliated with a hospital. You may also hear ASCs referred to as same-day surgery centers.

According to CMS guidelines, “the surgical codes that are included on the ASC list of covered surgical procedures are those that have been determined to pose no significant safety risk to Medicare beneficiaries when furnished in ASCs and that are not expected to require active medical monitoring at midnight of the day on which the surgical procedure is performed (overnight stay).” Simply put, these surgeries are low risk and are not expected to require care and monitoring beyond 24 hours.

Examples of procedures that can be performed in ACS include:

These surgeries will be covered by Medicare Part B. You will be required to pay a 20% co-insurance for all aspects of your care from anesthesia to IV therapy to medical supplies to medications to room and board and of course the surgery itself. Unless those costs are otherwise bundled by the ASC (and even if they are), it is easy to see you would spend far more than the Part A deductible amount.

CMS Surgery Lists and Patient Safety

The inpatient-only surgery list is not only about payment; it is also about safety.

Staffing in a hospital is very different than that in an ASC. Whereas a hospital has 24-hour resources, an ASC may have reduced staff overnight. Most ASCs will not have a physician on-site after hours.

If there is a complication after hours, it is unlikely that an ASC would have the proper resources and personnel available to manage it. This may necessitate transferring a patient to a nearby hospital. Since care in an ASC is limited to a 24-hour stay, if a patient required more time for recovery, the patient would also need to be transferred to a hospital.

For these reasons, all procedures on the Inpatient Only list must be performed in a hospital. However, that does not mean that other surgeries won't be performed in a hospital setting. If a surgery is not on the inpatient-only list and not on addendum AA, it must also be performed in a hospital.

Comparing Traditional Medicare to Medicare Advantage

Traditional Medicare (Part A and Part B) and Medicare Advantage (Part C) follow different rules. While traditional Medicare follows all the payment guidelines described above, Medicare Advantage plans do not have to. They can choose to pay for surgeries as inpatient or outpatient, i.e. pay more or less, regardless of their being on the Inpatient Only list. This could pose a financial hardship for you.

Regardless of the type of Medicare plan you have, a surgery on the Inpatient Only list must be performed in a hospital.​

There could be advantages to having a Medicare Advantage plan. Consider rehabilitation care after your surgery. In order for traditional Medicare to pay for a stay in a skilled nursing facility, you need to have been admitted for at least three consecutive days as an inpatient. Medicare Advantage plans have the option of waiving the three-day rule. This could save you considerably in rehabilitation costs if your hospital stay is shorter in duration.

A Word From Verywell

Medicare does not treat all surgeries the same. An inpatient-only surgery list is released every year by CMS. These procedures are automatically approved for Part A coverage and must be performed in a hospital. All other surgeries, as long as there are no complications, are covered by Part B.

CMS also releases an annual Addendum AA that specifies what outpatient (i.e. not inpatient-only) procedures can be performed in Ambulatory Surgery Centers. All remaining outpatient surgeries must be performed in a hospital for anyone on Medicare.

Find out which group your procedure falls into ahead of time so that you can better plan for it and avoid additional stress.

Was this page helpful?
Article Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. FY 2020 IPPS Final Rule Homepage. Centers for Medicare and Medicaid Services. Updated November 5, 2019.

  2. Centers for Medicare and Medicaid Services. CMS-1717-FC - Ambulatory Surgical Center Payment- Notice of Final Rulemaking with Comment (NFRM). Published 2020.