Rural Hospitals Struggle with Medicare Advantage Plan Contracts

Rural hospitals in the United States are facing significant challenges with Medicare Advantage plans, which often pay less than traditional Medicare. This financial strain has led some hospitals, like Brookings Health System in South Dakota, to terminate contracts with Medicare Advantage companies. The National Rural Health Association reports that these financial pressures are particularly acute for critical access hospitals, which do not receive equivalent compensations from private insurers as they do from traditional Medicare. This situation is exacerbating the financial vulnerability of rural hospitals, nearly 200 of which have ceased inpatient services or closed since 2005. The reimbursement rates from Medicare Advantage plans frequently stand at about 90% of what traditional Medicare pays, a disparity that can lead to significant losses for these essential medical centers. Moreover, the administrative burden of handling Medicare Advantage contracts, such as dealing with preauthorizations and denied claims, diverts resources away from patient care, further stressing these rural health systems.