Medicare Advantage plans offer convenience and affordability for consumers, but also pitfalls -- and they can be problematic for rural health-care providers.
The Congressional Budget Office found in January that "not only do Medicare Advantage plans generally pay 3 percent less than traditional Medicare . . . but they often negotiate reimbursement rates even lower for rural hospitals," Susannah Luthi reported for Modern Healthcare. "Medicare law limits the payments hospitals can collect out-of-network, giving Medicare Advantage plans the upper hand with rural hospitals as they negotiate reimbursement rates. In effect, 'Medicare Advantage insurers can exclude hospitals from their networks and pay them Medicare FFS prices,' the CBO analysis said, referring to fee-for-service rates."
Luthi illustrated that with an example from Taos, N.M.: Holy Cross Hospital converted to critical-access status in July 2010, so it had "to change its billing setup with all the insurers in its network." UnitedHealthcare demanded a new contract saying that it "would no longer pay for its beneficiaries to stay in Holy Cross beyond four days." The hospital gave in. "Given our cash situation and our desire to get our past claims processed, we felt forced, that we had to accept those terms," CEO Bill Patten told Luthi. "Patten's story echoes a narrative of low reimbursements and uneven leverage between carrier and hospital from rural hospitals across the country," she writes.
"The scarcity of providers in rural communities also makes those markets less appealing for Medicare Advantage plans based on their overall financial targets," Luthi notes. But plenty of rural Americans who are about to go on Medicare get pitches from Advantage companies offering very low or zero premiums. The latest column from Trudy Lieberman of Rural Health News Service describes the pitfalls of basing decisions on premiums.
"The first basic choice is whether to select traditional Medicare, and buy a supplement to fill in what Medicare doesn’t pay, or to select a Medicare Advantage plan," Lieberman writes. "Increasingly, though, some people may not have a choice. More employers who fund part of their retirees’ health insurance are automatically enrolling their workers about to retire in Medicare Advantage plans, and those workers may not understand what they are getting."
The Congressional Budget Office found in January that "not only do Medicare Advantage plans generally pay 3 percent less than traditional Medicare . . . but they often negotiate reimbursement rates even lower for rural hospitals," Susannah Luthi reported for Modern Healthcare. "Medicare law limits the payments hospitals can collect out-of-network, giving Medicare Advantage plans the upper hand with rural hospitals as they negotiate reimbursement rates. In effect, 'Medicare Advantage insurers can exclude hospitals from their networks and pay them Medicare FFS prices,' the CBO analysis said, referring to fee-for-service rates."
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| Holy Cross Hospital in Taos found itself at a disadvantage. |
"The scarcity of providers in rural communities also makes those markets less appealing for Medicare Advantage plans based on their overall financial targets," Luthi notes. But plenty of rural Americans who are about to go on Medicare get pitches from Advantage companies offering very low or zero premiums. The latest column from Trudy Lieberman of Rural Health News Service describes the pitfalls of basing decisions on premiums.
"The first basic choice is whether to select traditional Medicare, and buy a supplement to fill in what Medicare doesn’t pay, or to select a Medicare Advantage plan," Lieberman writes. "Increasingly, though, some people may not have a choice. More employers who fund part of their retirees’ health insurance are automatically enrolling their workers about to retire in Medicare Advantage plans, and those workers may not understand what they are getting."
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