Medicare Advantage Plans Slow to Pay, Causing Financial Strain for Rural Hospitals
Rural hospitals across the United States are feeling the financial strain as Medicare Advantage plans, which provide Medicare benefits through private companies, are slow to pay or don’t pay at all. This delay in payment is impacting the viability and sustainability of small, rural hospitals that heavily rely on Medicare payments to compensate for low patient volumes. With the increasing enrollment in Medicare Advantage plans, many hospitals are reporting that their negotiated rates with the insurers do not match those of traditional Medicare, exacerbating the financial challenges they face.
The rise in Medicare Advantage plans has had a significant impact on rural hospitals, especially those designated as critical access hospitals by Medicare. These hospitals rely on the extra payments provided by the government to offset their low patient volumes. However, Medicare Advantage plans offer their own negotiated rates, which often fall short of the rates offered by traditional Medicare. As a result, hospitals like Battle Mountain General Hospital and Mesa View Regional Hospital in Nevada are struggling to receive timely payment from the plans.
Battle Mountain General Hospital’s CEO, Jason Bleak, made the decision to turn away representatives from private health insurance companies when they approached him with Medicare Advantage plan contracts. He believed the offers were not favorable enough for his hospital. Bleak suspects that insurance companies have not enrolled enough seniors in the area to necessitate including his hospital in their network. Similarly, Kelly Adams, the CEO of Mesa View Regional Hospital, expressed frustration with Medicare Advantage plans, stating that they are either slow to pay or do not pay at all. Adams highlighted the financial burden this places on his hospital, which has lost approximately $1.3 million in caring for patients due to unpaid bills.
The impact of Medicare Advantage plans goes beyond the financial strain on rural hospitals. Patients may face limited options for providers, as the contracting arrangements between hospitals and Medicare Advantage plans can steer patients towards specific providers. This can result in patients having to pay for out-of-network care if their preferred hospital or provider does not contract with their Medicare Advantage plan. Moreover, some services, like nursing homes and rehabilitation facilities, may refuse to accept Medicare Advantage patients due to issues with payment. This further restricts patients’ access to necessary care and limits their options within their communities.
The National Rural Health Association (NRHA) has raised concerns about the nationwide trend of Medicare Advantage plans impacting rural hospitals and patient access to care. NRHA’s chief policy officer, Carrie Cochran-McClain, highlighted the significant shift of Medicare beneficiaries towards Medicare Advantage plans in some communities and the subsequent financial strain on hospitals. With Medicare Advantage enrollment expected to increase, especially in rural areas, the challenges faced by small hospitals are likely to persist unless action is taken.
In response to these concerns, a bipartisan group of Congress members led by Senator Sherrod Brown sent a letter urging federal agencies to address the payment issues faced by health systems due to Medicare Advantage plans. In April, the Centers for Medicare & Medicaid Services (CMS) issued a final rule to address some of these concerns, aiming to speed up care and alleviate issues with prior authorization. CMS Administrator Chiquita Brooks-LaSure also mentioned a proposed rule that, once finalized, could require insurers to provide specific reasons for denying care within seven days. However, hospital operators like Adams and Bleak are calling for further federal action to ensure fair reimbursement rates and the financial viability of rural hospitals.
The growth of Medicare Advantage plans has undoubtedly brought about changes in healthcare delivery and payment models. While these plans offer certain advantages to seniors, such as cost savings and additional benefits, the slow payment and inadequate reimbursement rates have had profound implications for the financial health of rural hospitals. With thousands of rural hospitals across the country already burdened by closures since 2010, the issue of delayed or insufficient payments from Medicare Advantage plans poses a serious threat to their sustainability. As the healthcare landscape continues to evolve, finding solutions to address the financial challenges faced by rural hospitals is crucial to ensure equitable access to care for all Americans.
