Rural hospital leaders across the country are facing a tough decision when it comes to their contracts with Medicare Advantage companies. The lower reimbursement rates from these private insurers compared to traditional Medicare are putting a strain on rural hospitals, leading some to consider ending their contracts in order to maintain services and protect their patients.
Jason Merkley, the CEO of Brookings Health System in South Dakota, expressed concerns about the financial impact of the lower rates on his hospital. Last year, Brookings Health System made the decision to drop all four contracts it had with major Medicare Advantage companies to avoid staff layoffs and service cuts.
The issues with Medicare Advantage plans go beyond just reimbursement rates. Rural hospital operators have also raised concerns about payment delays and difficulties in getting authorization for patient care. Critical access hospitals in rural areas are particularly affected, as these facilities do not receive the additional payments from private insurers that they do from traditional Medicare.
The growth of Medicare Advantage in rural areas has outpaced urban areas, but the reimbursement rates have not kept up. On average, Medicare Advantage reimbursements to rural hospitals are around 90% of what traditional Medicare pays, which is already lower than what private plans pay hospitals.
Despite the potential benefits of Medicare Advantage plans, such as lower premiums and extra benefits like vision and dental coverage, some rural patients are finding it difficult to access and afford care under these plans. Patients may face higher costs if their local hospital no longer contracts with their Medicare Advantage plan, forcing them to seek care at in-network facilities that could be hours away.
Some rural health systems, like Great Plains Health and Kimball Health Services, have chosen to end all contracts with Medicare Advantage companies due to the administrative burdens and delays in care caused by these plans. Providers have had to set up specialized teams to deal with coverage denials and authorization requests, taking time away from patient care.
While some policy changes have been proposed to address these issues, including streamlining prior authorization processes and requiring equal payment to critical access hospitals, rural hospital leaders are still struggling to negotiate fair contracts with private insurers. They emphasize the need for a more equitable system that supports both rural facilities and patients.
