News: MA plans have overwhelmingly negative effect on rural hospitals, AHA report says

As Medicare Advantage (MA) plans continue to expand, a new report suggests this growth has had a disproportionate, detrimental impact on rural hospitals and the communities they serve.  

According to the American Hospital Association (AHA), MA plans have continued to reimburse below cost, deny and delay payments, and impose significant administrative hurdles for rural hospitals in the United States. In  the last ten years, over 100 U.S. rural hospitals have either closed or converted to other provider types.

“With MA plans accounting for more than half of total Medicare enrollment and growing, it’s more important than ever that the program works for patients and the providers who care for them,” said AHA President and CEO Rick Pollack. “It is critical for policymakers to address the harmful impact of Medicare Advantage’s low reimbursements and excessive administrative burdens to help ensure rural hospitals can continue to provide care to their patients and communities.”

According to the AHA, MA plans present rural hospitals with three primary and debilitating challenges:

• Reimbursement well below the cost of care: “Traditional Medicare often pays less than the cost of care, and increasingly rural hospitals report that MA plans pay even less—only 90.6% of Traditional Medicare rates on a cost basis.”
• Diminished access to quality care: “Delays, denials, and excessive prior authorization from certain MA plans can hinder timely care: 81% of rural clinicians report quality reductions due to insurer requirements, and MA patients face 9.6% longer stays before post-acute care compared to similar traditional Medicare patients.”
• Administrative burdens and payment challenges: “Delayed or denied MA payments worsen rural hospitals’ finances and increase administrative burdens. Nearly 4 in 5 rural clinicians report higher administrative tasks in five years, with 86% seeing negative impacts to patient outcomes.”

In light of these challenges, the AHA recommended that Congress or CMS take legislative action to address the following concerns:

• Streamline prior authorization processes to protect timely access to medical care and drugs covered under the medical benefit
• Provide cost-based reimbursement for critical access hospitals from MA plans
• Ensure prompt payment from insurers for medically necessary, covered health care services delivered to patients

Editor’s note: To read the AHA report, click here.