Jazmin Orozco Rodriguez reports for Kaiser Health News on the failing finances of half of rural hospitals. They are losing money. A big part of the reason are the insurers offering Medicare Advantage plans who don’t pay these hospitals the money they are due.
“The rapid growth of rural enrollment in Medicare Advantage plans, which do not reimburse hospitals at the same rate as traditional Medicare, has had a particularly profound effect.” Insurers don’t profit as much from rural enrollees, so they do not pay rural hospitals adequately, which our government unforgivably allows them to do. (Most people don’t appreciate that government payments to Medicare Advantage plans are based on the payment rates in traditional Medicare.)
What’s happening? In many cases, rural hospitals are closing their operating rooms and obstetrics units. Hundreds of hospitals have stopped providing chemotherapy. Expenses are greater than revenue. Hospitals cannot find enough workers. And, administrative challenges are large.
Where are the hospital closures happening? All over the US, particularly in small communities. Chartis describes that, in the last year alone, one in two rural hospitals operated in the red. That’s nearly a ten percent increase from the year before.
How many hospitals are at risk? Chartis found that 418 rural hospitals were at risk of closing. Of note, those rural hospitals in states with expanded Medicaid coverage were in better shape financially than those in states that did not opt to expand Medicaid.
Medicaid expansion to low-income adults has helped ensure access to care health care in those states a lot: In Montana, for example, as a result of Medicaid expansion, there are half as many uninsured residents as there had been. Access to care for Montanans has improved. And, rural facilities are still operating. No hospitals have closed in the last nine years.
The future looks grim for rural hospitals and the people who live in their communities, according to Chartis. Even non-profit hospitals can’t survive financially in rural America. The hospitals have no profit margin. Rural residents tend to live on low incomes, to be older and in poorer health. Overall, they have shorter life expectancies than Americans living in other areas.
Alan Morgan, CEO of the National Rural Health Association notes that Congress needs to do more: “It’s just bad public policy. And bad policy for the local communities.”
Here’s more from Just Care:
- Rural hospitals accept Medicare Advantage at their peril
- People living in rural communities disenroll from Medicare Advantage at a high rate
- Higher drug prices for rural hospitals keep them from providing critical care
- Underpayments lead hospitals and specialists to cancel Medicare Advantage contracts
- Plan ahead for a hospital visit: Talk to the people you love about these seven important items