Background: Medicare Advantage (MA) plans have strong incentives to reduce potentially wasteful healthcare, including costly acute care visits for ambulatory care-sensitive conditions (ACSC) [1-4]. It is unknown, however, whether MA plans lower acute care use relative to Traditional Medicare (TM) or instead shift patients from hospitalizations towards observation stays and emergency department (ED) direct discharges. [...]

Background: Insurance companies are issuing more denials and causing financial instability for hospitals. On average, hospitals are paid $6,000 less for a patient in outpatient observation status as compared to inpatient status. According to Kaiser Family Foundation Health, the average expense in 2022 for a hospital per inpatient day was $3,025 and is only increasing. [...]