Rural hospitals across the country are facing a financial dilemma when it comes to their contracts with Medicare Advantage companies. As the main federal health insurance program for individuals 65 and older, Medicare offers participants the choice between traditional government-run Medicare or a Medicare Advantage plan run by a private insurance company. While Medicare Advantage plans often provide lower premiums and out-of-pocket costs, as well as additional benefits like vision, hearing, and dental coverage, the reimbursements to rural hospitals from these private insurers have been a cause for concern.
A recent report from the American Hospital Association revealed that average Medicare Advantage reimbursements to rural hospitals were only about 90% of what traditional Medicare paid. This is significant considering that traditional Medicare already pays hospitals considerably less than private plans, as shown in a study by the Rand Corporation. Carrie Cochran-McClain, chief policy officer at the National Rural Health Association, expressed worry over the financial strain this puts on rural hospitals, many of which are already struggling financially.
The consequences of these reimbursement discrepancies have already been felt, with nearly 200 rural hospitals ending inpatient services or closing altogether since 2005. Jason Merkley, CEO of Brookings Health System in rural South Dakota, made the tough decision to end all contracts with major Medicare Advantage companies to avoid staff layoffs and cuts to patient services. Similarly, Great Plains Health and Kimball Health Services, serving rural areas in Nebraska, Kansas, Colorado, and Wyoming, have also opted to terminate their contracts with private insurers.
In addition to financial concerns, rural hospital leaders have raised issues regarding Medicare Advantage payment delays and resistance to authorizing patient care. Despite these challenges, a recent report from the Better Medicare Alliance, a group advocating for Medicare Advantage, found that private plans are more affordable than traditional Medicare for rural beneficiaries. However, the decision to end contracts with Medicare Advantage companies is not taken lightly, as it can have significant implications for both hospitals and patients.
As rural hospitals grapple with the decision of whether to continue doing business with Medicare Advantage companies, the future of healthcare in these underserved areas hangs in the balance. It remains to be seen how these financial challenges will be addressed and whether alternative solutions will be put in place to ensure the sustainability of rural healthcare services.
