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An Unlikely Consequence, cont.

On Tuesday, I discussed the recent trend of hospital layoffs of staff, administrative and professional alike, in order to reduce costs despite expectations of an unprecedented number of individuals seeking health care services under the ACA.

One of the primary reasons hospitals are reducing their workforce is because Medicare reimbursements are now tied to quality of care. If certain criteria are not met by hospitals, then full reimbursements for services rendered will not be made. In addition, hospitals with excessive numbers of readmissions for Medicare patients will be subject to penalties. There are a host of other factors, including:

  • The federal budget cuts known as the sequester have cut Medicare reimbursements by 2%. This across-the-board cut will eliminate $9.9 billion from Medicare.
  • The National Institutes of Health reduced funding to hospitals by 5% due to the federal sequester, which resulted in a reduced amount of hospital research staff.
  • Inpatient hospital stays have decreased, which may be attributed to the ACA incentives for patients to use a primary doctor instead of a hospital emergency room for routine care.
  • An aging population means that more patients will be Medicare eligible and Medicare reimburses hospitals at a lower rate than those of private payers.

The new health care laws were intended to help hospitals by expanding Medicaid coverage to low-income Americans that traditionally use hospital services, but the layoffs may be an indication that there are unintended consequences with any sweeping reform. With 30 million Americans expected to gain health care coverage under the ACA, the question is whether there will be adequate hospital providers and staff to meet the increased patient volume.

 This article is intended as a summary of newly enacted federal and state law and does not constitute legal advice.

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