Impact of Medicare Advantage Growth on Rural Hospitals and Beneficiaries

The Changing Landscape of Medicare Advantage in Rural America

Medicare Advantage has quietly reshaped the healthcare landscape over the past decade. Today more than half of all Medicare beneficiaries are enrolled in MA plans, and rural America is seeing the most dramatic shift. Enrollment in rural communities climbed from just 11% in 2010 to 40% in 2023, creating new pressures and new questions for insurers, hospitals, and policymakers.

A System Under Strain

For many rural communities, the local hospital is more than a healthcare provider. It is often the economic anchor, a major employer, and the heartbeat of community well-being. That is why the shift to Medicare Advantage feels so consequential for Critical Access Hospitals. These facilities depend on traditional Medicare reimbursements that are higher and more predictable than the independently negotiated rates offered by MA plans.

When those negotiated rates fall short, hospitals feel it immediately. Since 2010, more than 150 Critical Access Hospitals have closed, and reimbursement challenges continue to play a major role in these losses.

“Critical Access Hospitals simply cannot survive on payment rates that do not reflect the realities of rural care.”
Stafford County Hospital leadership

Why Hospitals Are Pushing Back

Some rural hospitals decide they cannot continue contracting with certain MA plans. Their reasons tend to cluster around a few persistent issues:

• Lower negotiated reimbursements compared with traditional Medicare

• Payment delays and increased denials

• Heavy administrative burden surrounding authorizations

• The downstream impact on community access and local economies

The choice to walk away from certain MA contracts is never taken lightly. It often forces rural patients to travel farther or face higher out-of-pocket costs when care falls outside plan networks.

“Patients think they are choosing convenience, but they often do not see the ripple effects until their local hospital is at risk.”
Rural health policy analyst

Prior Authorization Challenges

Prior authorization remains one of the most scrutinized aspects of MA plan administration. Government reviews have shown that medically necessary care can be delayed or denied despite meeting Medicare coverage rules. For rural patients dealing with longer travel times, limited provider options, and chronic conditions, these delays can be more than an inconvenience. They can be dangerous.

The Marketing Maze

Every open enrollment season brings a surge of marketing activity, and rural seniors are frequent targets. Reports continue to surface about misleading sales strategies, unauthorized enrollments, and confusing plan switches. This environment leaves many enrollees uncertain about what they signed up for and what their options are.

Medicare beneficiaries who suspect they were misled or enrolled without consent still have avenues to seek help, including contacting Medicare directly to explore switching options.

Balancing Benefits With Accessibility

Medicare Advantage plans do offer meaningful perks. Gym memberships, supplemental coverage, and other add-on benefits can make MA plans attractive. Yet for rural beneficiaries, the tradeoff is often network access, and the question becomes whether those extras compensate for reduced provider choice.

As MA enrollment deepens in rural regions, the insurance industry faces an increasingly critical challenge. The future of rural healthcare may depend on whether payers, regulators, and communities can strike a balance between innovative plan benefits and the sustainable delivery of care in areas where every hospital matters.

The conversation will continue to evolve, but one truth remains clear: in rural America, the stakes could not be higher.