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Rising Costs and Payer Denials Threaten Hospital Margins in 2025

Rising Costs and Payer Denials Threaten Hospital Margins in 2025

According to Kaufman Hall's 2025 Health System Performance Outlook, U.S. hospitals are facing a 'financial trifecta' of rising non-labor expenses, workforce instability, and aggressive payer reimbursement pressures. Nearly 60% of health systems reported non-labor cost increases of up to 10%, driven by inflation and tariffs. Additionally, 44% of hospitals cited high claim denial rates as a top challenge. These financial pressures are compounded by rising bad debt and staffing level challenges, prompting hospitals to prioritize operational resilience and clinical integration to navigate the uncertainties of 2026.

Harvard Medical Executive Highlights Limitations of Philanthropy in Addressing Federal Funding Gaps

Harvard Medical Executive Highlights Limitations of Philanthropy in Addressing Federal Funding Gaps

A Harvard Medical executive has raised concerns about the reliance on philanthropic donations to fill gaps left by federal funding cuts in the healthcare sector. Despite significant donations from private entities, such as the $300 million from Sanford Health and $100 million from Boston Children's Hospital, the executive argues that these contributions cannot fully compensate for the shortfall in federal support. The American Hospital Association has noted that while philanthropy is crucial, it only accounts for a small fraction of the necessary funding. The executive warns that this reliance on private donations could exacerbate disparities between well-funded academic medical centers and struggling rural hospitals. The issue is particularly pressing as the healthcare industry faces challenges like hospital closures, workforce shortages, and the high costs of modernizing inpatient care.

IRS Expands Health Savings Account Eligibility Under President Trump's Legislation

IRS Expands Health Savings Account Eligibility Under President Trump's Legislation

The U.S. Department of the Treasury and the IRS have released new guidance on health savings account (HSA) updates as part of President Donald Trump's legislative initiative, referred to as the 'big beautiful bill.' This legislation introduces expanded eligibility for HSAs, allowing more individuals to save for healthcare costs through tax-free accounts. The changes include making bronze and catastrophic ACA marketplace plans HSA-compatible, even if they do not meet previous high-deductible health plan (HDHP) criteria. Starting in 2026, enrollees in these plans can contribute to HSAs. Additionally, the legislation makes permanent the 'safe harbor' for telehealth services under HDHPs, allowing individuals to use these services without affecting their HSA eligibility. The IRS also announced that certain direct primary care arrangements will not block HSA contributions, and HSAs can be used to cover these fees.

Senate Republicans Propose Health Savings Account Deposits to Replace ACA Subsidies

Senate Republicans Propose Health Savings Account Deposits to Replace ACA Subsidies

Senate Republicans, led by Senators Mike Crapo and Bill Cassidy, have introduced a bill proposing direct deposits into health savings accounts (HSAs) for eligible Americans. This initiative aims to replace the enhanced Affordable Care Act (ACA) subsidies that have been in place since the COVID-19 pandemic. The proposed legislation would allocate $1,000 to individuals aged 18 to 49 and $1,500 to those aged 50 to 64, provided they are enrolled in a bronze or catastrophic ACA plan. The eligibility is capped at individuals earning up to 700% of the federal poverty level. The bill is set for a Senate vote on December 11, alongside a Democratic proposal to extend the ACA's premium tax credits. The Republican plan emphasizes directing funds to patients rather than insurance companies, with the goal of reducing health insurance premiums and overall healthcare costs.

High-Deductible Health Plans Increase Financial Risk for U.S. Workers

High-Deductible Health Plans Increase Financial Risk for U.S. Workers

A new analysis reveals that over half of U.S. private-sector workers are now enrolled in high-deductible health plans (HDHPs) as employers struggle to manage rising healthcare costs. The report indicates that annual family premiums have surged to $24,540, outpacing inflation, while average family deductibles have surpassed $4,000 for the first time. This shift exposes millions of Americans to greater financial risk in medical emergencies, highlighting a deepening affordability crisis within the employer-sponsored insurance market. The trend represents a significant transfer of financial risk from corporations to individuals, with 51.7% of private-sector workers now enrolled in HDHPs.

Healthcare Costs Outpace Wages, Impacting U.S. Workforce Stability

Healthcare Costs Outpace Wages, Impacting U.S. Workforce Stability

Healthcare costs in the United States are increasingly consuming a larger portion of household budgets, with a RAND study indicating that healthcare payments average $9,393 per person, nearly 19% of household income. This financial burden affects decisions on medical care, prescription fills, and job security. Employer-sponsored health coverage costs have risen faster than wages, with family premiums increasing by 7% in 2024, averaging over $25,000. Employers cover 75% of these premiums, but the rising costs impact wage growth and overall compensation. Out-of-pocket expenses like deductibles and co-pays add further strain, leading to delayed medical care and more severe health issues. This financial pressure also affects mental health and workplace performance, as employees avoid necessary health visits due to cost concerns.

CMS Launches MAHA Medicare Payment Model to Enhance Chronic Care and Nutrition

CMS Launches MAHA Medicare Payment Model to Enhance Chronic Care and Nutrition

The Centers for Medicare & Medicaid Services (CMS) has introduced a new initiative under the Medicare program called the MAHA (Medicare Advantage Health and Accountability) payment model. This initiative aims to improve chronic care and nutrition by allocating $100 million to up to 30 organizations. These funds are intended to support prevention and wellness programs, focusing on enhancing the quality of care for Medicare beneficiaries. The MAHA model is designed to address the growing need for comprehensive care strategies that incorporate nutrition and chronic disease management, reflecting a shift towards more holistic healthcare approaches.

Senate Rejects Obamacare Credit Renewal, Leading to Potential Premium Increases

Senate Rejects Obamacare Credit Renewal, Leading to Potential Premium Increases

The U.S. Senate has rejected two partisan measures aimed at addressing the impending expiration of Obamacare subsidies, which could result in a significant increase in health insurance premiums for over 20 million Americans starting January 1. The failure to pass these measures, which required a 60-vote threshold, means that the enhanced Affordable Care Act tax credits, introduced during the pandemic, are set to expire. This development is expected to double the premium costs for those enrolled in Obamacare plans, potentially forcing many to reconsider their health coverage and financial priorities. The Congressional Budget Office estimates that nearly 4 million people could lose insurance over the next decade due to this change. The vote saw a few Republican senators, including Lisa Murkowski, Dan Sullivan, Susan Collins, and Josh Hawley, crossing party lines to support the Democrats' proposal for a three-year extension of the subsidies.

Federal Health Policy Shifts Under Trump Administration Impact Medicaid and Hospital Funding

Federal Health Policy Shifts Under Trump Administration Impact Medicaid and Hospital Funding

The Trump administration has initiated significant changes in healthcare policy, affecting Medicaid funding, ACA subsidies, and hospital finances. These changes are part of a broader shift in the federal government's approach to health technology. A recent roundtable at the Fierce Health Payer Summit discussed these developments, highlighting Medicaid cuts, coverage losses, and the preparation of hospitals for reduced government funding. The Centers for Medicare & Medicaid Services (CMS) is also introducing a new health tech ecosystem, while pharmacy benefit manager (PBM) reform remains under scrutiny.

Kaufman Hall Report Highlights Rising Costs and Payer Denials Impacting U.S. Hospitals

Kaufman Hall Report Highlights Rising Costs and Payer Denials Impacting U.S. Hospitals

According to Kaufman Hall's 2025 Health System Performance Outlook, U.S. hospitals are facing significant financial challenges due to rising non-labor costs and payer denials. Nearly 60% of health systems reported non-labor cost increases of up to 10%, driven by inflation and tariffs. Additionally, 44% of hospitals cited high claim denial rates as a major challenge. The report emphasizes the need for operational resilience and clinical integration to navigate these pressures. Hospitals are also dealing with workforce optimization issues, as staffing levels decrease while labor efficiency metrics rise, potentially leading to workforce burnout.

Fierce Healthcare Discusses Federal Health Policy Shifts Under Trump Administration

Fierce Healthcare Discusses Federal Health Policy Shifts Under Trump Administration

Fierce Healthcare recently hosted a roundtable discussion at the Fierce Health Payer Summit, focusing on significant changes in healthcare policy since President Trump took office. The discussion highlighted several key areas, including Medicaid funding cuts, changes to Affordable Care Act (ACA) subsidies, and the financial impact on hospitals. Additionally, the roundtable addressed the federal government's evolving approach to health technology, particularly through the Centers for Medicare & Medicaid Services (CMS) and its new health tech ecosystem. The conversation also touched on the ongoing scrutiny and potential reforms of Pharmacy Benefit Managers (PBMs), which have been a contentious issue in healthcare policy.

Hospitals Face Rising Non-Labor Costs and Workforce Challenges Amid Reimbursement Pressures

Hospitals Face Rising Non-Labor Costs and Workforce Challenges Amid Reimbursement Pressures

According to Kaufman Hall's 2025 Health System Performance Outlook report, hospitals are experiencing significant increases in non-labor costs, workforce retention issues, and reimbursement challenges. Nearly 60% of surveyed organizations reported non-labor cost increases of 6% to 10% over the past year, largely due to tariffs and reimbursement difficulties. Workforce optimization remains a priority, with hospitals focusing on staffing strategies, including raising wages and offering bonuses. The report also highlights the pressures from payer reimbursement, such as claim denials and administrative burdens. These challenges are compounded by rising bad debt and charity care, which are expected to continue into 2026.