One of the biggest misconceptions out there right now is that Medicare Advantage is shortchanging rural hospitals and threatening their very existence.
It’s readily pushed in the national media. One recent article from Modern Healthcare included hand-wringing quotes from several rural healthcare providers warning they’d be forced to close if Washington didn’t “step in to curb practices by private Medicare plans that are driving small hospitals to the brink.” Pretty bleak stuff. And scary, if you’re one of the 57 million Americans who rely on a rural hospital.
And yet, the data couldn’t be further from the truth. The federal Department of Health and Human Services funded a study that found that as Medicare Advantage has grown in rural areas, there’s been a reduction in the risk of rural hospitals closing. In fact, Medicare Advantage enrollment quadrupled in rural areas between 2010 and 2023, and for every 1% increase in rural hospital Medicare Advantage penetration, there was a 4% decrease in the risk of closure.
So, the data shows rural hospitals are doing just fine as Medicare Advantage grows. How about the Medicare-eligible Americans living in rural areas? A second study found that MA beneficiaries are paying a lot less for their Medicare benefits than those enrolled in competing traditional Medicare programs. In fact, Medicare beneficiaries with traditional Medicare plans spend a shocking 49% more on health care premiums and out-of-pocket costs than Medicare Advantage enrollees.
Medicare Advantage is proving helpful to the financial stability of rural providers AND rural Americans who are Medicare-eligible. The question begs: Why is there a campaign claiming the opposite?
The answer is simple: Rural hospitals aren’t used to being accountable to anyone else for the quality of care they deliver. Until recently, rural hospitals have never had to deal with Medicare Advantage plans. They have simply billed the government to cover the care they delivered and that was that. No one else evaluated the frequency or quality of care they were delivering so they got away with volume instead of value. That is, until more and more seniors chose to enroll in Medicare Advantage plans.
Now, over half of seniors are enrolled in Medicare Advantage, and to serve Medicare Advantage seniors, rural hospitals are experiencing some extra oversight on the quality of care they provide. And because Medicare Advantage plans have clinical teams that review data from across every healthcare market, they can share best practices with providers. However, providers unused to partnering with plans are balking, unable to accept that someone else might be able to help them improve.
Now, those sour grapes rural hospitals are complaining to legislators and anyone else who will listen that they’d like to go back to the ways things were—when they could simply push a button to ask CMS for money, and it worked. You might say they’re upset their gravy train got disrupted.
But this is short-sighted. Because Medicare Advantage represents the future of healthcare managed care in this country, and it’s in rural hospitals own self-interest to accept that. Let me explain.
Due to the improved care coordination Medicare Advantage plans can deliver, it’s been proven that Americans enrolled in Medicare Advantage experience better health outcomes. The result is that mortality rates were found to be 15% lower among Medicare Advantage enrollees than those in original Medicare. If beneficiaries live longer, they’ll utilize their local healthcare facilities more, which will, as the data shows, improve the financial stability of rural hospitals.
Medicare Advantage is also uniquely equipped to help solve the challenges facing rural Americans. Plans offer transportation services to seniors and resources to providers to help improve their infrastructure—something that original Medicare isn’t equipped to do.
Additionally, Medicare Advantage is helping extend the life of the Medicare program for future generations, helping ensure this stream of revenue for rural providers remains open. It’s been shown that Medicare Advantage is helping boost Medicare’s solvency issues. In fact, the Board of Medicare Trustees reported earlier this year that the Medicare trust fund’s depletion date has been pushed back 5 years, on top of a three-year improvement last year. It’s no coincidence this has happened as enrollment in Medicare Advantage plans has ballooned.
Rather than take up a crusade against Medicare Advantage, rural providers should embrace a partnership with private health plans that manage the care for tens of millions of Americans. Yes, it’s probably easier to pull on legislators’ heart strings and lobby the government for more money. But choosing the easy path would be a disservice to everyone involved.
Former Young Republicans State Chair and former National Committeewoman, a Republican activist, and city councilwoman from O’Fallon.
