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6 Revenue Pressures Create Negative Outlook for NFP Hospitals

Rene Letourneau, for HealthLeaders Media, June 30, 2014

4. Observation status

The Centers for Medicare & Medicaid Services is putting a heavier burden on hospitals to prove medical necessity for inpatient stays through RAC audits and the eventual implementation of the two-midnight rule, and providers are feeling the financial pinch. CMS reimburses at a much lower rate for observation status patients, even though the cost of providing care remains the same as for inpatients.

"Observation care might be the right thing for the patient, and I think most hospitals want to do the right thing for their patients, but on the financial side is where they get hurt in the process," Arrick says. "You can end up shooting yourself in the foot while you are doing the right thing."

5. Defined contribution health benefits

Many employers will move to a defined contribution health benefit for their workforce, in which they will give people a set amount of money and send them to the private health insurance exchanges to shop for health coverage, Arrick says. This trend will further encourage the growth of high-deductible health plans as people try to keep their premiums low.

"There is a real movement to defined contribution health plans by employers. That is a national movement. We haven't seen it in huge numbers yet, but there is a real sense that this is where we are going to go in five or ten years," he says.

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