Medicare Advantage Growth Strains New Hampshire Rural Hospitals Financially

Monadnock Community Hospital in Peterborough, NH, has experienced significant financial losses attributed to the increasing enrollment of local seniors in Medicare Advantage plans over the past decade. These plans, which are federally funded but privately managed, offer beneficiaries lower premiums and additional benefits but impose more restrictive provider networks, lower reimbursement rates, and more complex prior authorization processes. As a result, the hospital estimates annual losses from Medicare Advantage of $1.5 to $3 million, projecting up to $5 million in operational losses by fiscal year 2025.

Similarly, Cheshire Medical Center faces financial strain due to higher denial rates and increased administrative burdens associated with Medicare Advantage billing. Denied payments and prior authorization rejections often result in uncompensated care when patients are unable to pay out-of-pocket expenses. The administrative expenses and uncompensated care levels for Medicare Advantage plans substantially exceed those linked to traditional Medicare.

Medicare Advantage now accounts for over half of Medicare plans nationwide and roughly 36 to 39 percent of patients at the two hospitals. The growth of these plans poses particular challenges to rural critical access hospitals like Monadnock Community Hospital, which rely on cost-based reimbursement under traditional Medicare. Shifts from traditional Medicare to Medicare Advantage reduce hospital revenues as they receive payment rates akin to private insurance, which are lower and less predictable.

Market dynamics further complicate the landscape; in 2024, several private insurers, including major players like Harvard Pilgrim and WellCare, withdrew from New Hampshire's Medicare Advantage market, citing rising healthcare costs and reduced federal Medicare funding. Reduced insurer participation limits provider networks and complicates patient coverage continuity, placing additional operational pressures on healthcare providers.

The New Hampshire Department of Insurance monitors these developments but has limited regulatory authority over Medicare Advantage plans due to their federal oversight. Approximately half of Medicare-eligible residents in the state are enrolled in Medicare Advantage, reflecting national trends. These shifts impact hospital finances, administrative operations, and patient access to care, highlighting ongoing challenges in balancing cost containment with service provision in rural healthcare settings.