A leading healthcare advisory firm cautions that Medicare Advantage has become a major disadvantage for rural hospitals in this country. Michael Topchik, the national leader of the Chartis Center for Rural Health tells us the dire financial situation for rural hospitals has only worsened in recent years. “Over a decade ago, Chicken Little was saying the sky was falling in rural health when a third of rural hospitals were operating in the red,” explained Topchik. “And now that it’s 50% it’s I think prophetic. Chicken Little may have been correct.”
Topchik says government payers are not as favorable if you’re a provider. He says there was an old adage in the hospital industry that you make money on your commercial patients, you break even on Medicare and you lose money on Medicaid. Rural hospitals used to be able to write-off so-called “charity care.” But with healthcare reforms that is no longer allowed.
Topchik says in urban hospitals, two-thirds of their reimbursements come from commercial patients, and a third comes from government payers. The reverse is true for rural hospitals – and even worse, in recent years congress cut Medicare reimbursements by 2%. And the biggest problem now, according to Topchik, is Medicare Advantage. “The advantages of traditional Medicare are [that] everyone knows what’s covered. They know how much they’re going to be reimbursed. You know that your patient can come and see you,” began Topchik. “With Medicare Advantage, you’re sick. But we gotta go jump through some hoops to see if your insurance carrier is going to cover this, to get that pre-authorization. So, it slows down the whole clinical process, dropping a claim at the end, huge percentage of denials compared with traditional Medicare for things that have traditionally been covered.”
Topchik says the idea of rural hospitals trying to chase down those rejected reimbursements by Medicare Advantage becomes a massive disadvantage when you consider rural hospitals typically have an office staff of one or two employees - and they can’t keep up. Topchik concludes that the situation has gotten much worse because of the huge popularity of Medicare Advantage. “Rural executives tell us it is the number one existential threat facing rural health care. It has surged 50% since 2019.”
The perils facing rural healthcare have become more well known with the release of recent Chartis studies revealing that hundreds of rural hospitals are in danger of shutting down. Their research identified a total of 141 rural hospitals which have closed since 2010, with another 453 “at risk of closure.” In Arkansas, Louisiana, and Texas between 26% and 30% of rural hospitals are in danger of closing.
Topchik says congress did enact what’s called the Rural Emergency Hospital designation - as a means of ensuring emergency medical services in rural hospitals that may lack the resources to offer them. But the decision to convert is neither a simple nor easy process. And that’s why, explains Topchik, it is not seen as a widespread solution to a crisis that is only getting worse.
Since Chartis’ initial report four years ago on the dire situation at Louisiana’s rural hospitals, 30 hospitals once identified as vulnerable to close have since shut their doors. Rural hospitals are known as “safety nets” because they provide healthcare to people regardless of their insurance status, which further emphasizes why there is such widespread concern.
And now, a new study published in JAMA Health Forum shows Medicare Advantage patients are also receiving skimpier home healthcare compared with patients in traditional Medicare.
