In a recent report by NBC News, the detrimental impact of Medicare Advantage plans on rural hospitals has been unveiled. The CEOs of struggling nonprofit hospitals in six states echoed their concerns, stating that the routine denial of coverage by these plans not only puts the financial stability of their institutions at risk but also leaves residents without access to essential medical treatment.

Medicare Advantage plans were introduced by Congress in 2003 as private-sector alternatives to traditional Medicare with the aim of increasing efficiency in healthcare. Currently, over half of Americans on Medicare, around 31 million individuals, are enrolled in these plans offered by major insurance companies such as UnitedHealthcare and Humana.

The problems associated with Medicare Advantage plans have become increasingly apparent. Last year, a federal audit revealed that 8 out of the 10 largest plans had submitted inflated bills to Medicare in 2013. Additionally, a report from the Medicare Payment Advisory Commission (MedPAC), a non-partisan agency of Congress, stated that there is insufficient evidence to conclude that Medicare Advantage plans consistently deliver better quality care compared to regular Medicare.

The denial of coverage for necessary care by Medicare Advantage plans is now putting struggling rural hospitals in jeopardy. CEOs from hospitals in Arkansas, Colorado, Mississippi, Missouri, South Dakota, and Texas have all spoken out about the damaging consequences. The increasing number of older Americans relying on Medicare Advantage plans in rural areas leaves these hospitals to absorb the rising costs of care, ultimately causing some to close down and leaving residents without access to vital treatment.

Dr. Kenneth Williams, CEO of Alliance HealthCare in Holly Springs, Mississippi, highlighted the harm caused by these plans, stating, "They don't want to reimburse for anything - deny, deny, deny. They are taking over Medicare and taking advantage of elderly patients." The denial of coverage from Medicare Advantage plans forced Williams to shut down a geriatric psychiatry program that had provided eight years of dedicated service to the community.

Medicare Advantage plans, marketed as a better way for individuals eligible for Medicare to access insurance coverage, have experienced significant growth in recent years. Enrollment has more than doubled since 2013, potentially due to the plans being cheaper than Medicare supplements. However, state insurance commissioners have reported receiving numerous complaints from customers who were sold Medicare Advantage plans without fully understanding their limitations.

The financial impact of Medicare Advantage plans is cause for concern. Medicare pays the plans 6% more than it would spend on regular fee-for-service Medicare, amounting to $27 billion more in 2023, according to the MedPAC report projections. Insurers selling these plans, like UnitedHealth Group and Humana, have seen substantial revenue growth. UnitedHealth Group generated $257 billion in premium revenues in 2022, with a significant portion coming from their Medicare Advantage plans.

While Medicare Advantage plans may benefit brokers and insurers, the repercussions for rural hospitals are dire. The denial of reimbursements and the significantly lower payment rates compared to traditional Medicare make it increasingly difficult for these hospitals to sustain their operations. Rural hospital CEOs cite coverage denials and pre-authorization problems as significant factors contributing to their financial difficulties. Some smaller systems have resorted to rejecting Medicare Advantage plans altogether, but for hospitals in rural areas with a large number of plan customers and no alternative providers, this is not a viable option.

The impact on patients in rural areas is severe, as they face limited access to local healthcare. The survival of these hospitals hangs in the balance, with some even teetering on the brink of bankruptcy. The denial of claims by Medicare Advantage plans sets a dangerous precedent for the future of rural healthcare.

As a new enrollment period for Medicare Advantage plans begins this month, it is crucial for patients to fully understand the limitations and potential consequences when considering these plans. The healthcare system must address the fundamental issues plaguing Medicare Advantage plans to ensure that access to quality care is not compromised for millions of seniors and people with disabilities who rely on this program.