There’s been a recent push among the hospital sector to argue that Medicare Advantage is shortchanging them, leading some hospitals to engage in serious hardball tactics including terminating Medicare Advantage patients in an effort to force higher reimbursement rates from employer insurance plans. In particular, a narrative has been gaining steam in Washington, DC, and elsewhere that Medicare Advantage—the private insurance alternative to traditional fee-for-service Medicare that is now used by a majority of seniors— shortchanges rural hospitals.

Naturally, this narrative has caused Medicare Advantage reimbursement rates to hospital systems to become a big focus of concern for Republicans, whose base looks increasingly rural, older, and working class (think of a lot of Eastern Washington voters, less King County). There’s just one problem: A new(ish) study says it just isn’t so.

In November, the study was published with little fanfare or promotion in the American Journal of Managed Care. It indicates that Medicare Advantage is actually good for rural hospitals—probably including those in Eastern Washington.

According to the authors, rural hospital Medicare Advantage penetration grew from 6.5 percent in 2008 to 20.6 percent in 2019. However, the authors found that contrary to what you would think for a set-up alleged to be “short-changing” hospitals, the more penetration, the more financial stability the rural hospital encountered. In addition, for each 1 percent increase in penetration, a 4 percent reduction in risk of closure for rural hospitals was exhibited.

The authors concluded “Our findings counter the notion that Medicare Advantage plans financially hurt rural hospitals because they pay less generously than traditional Medicare.”

The study is important for Eastern Washington, especially, although it does not appear that hospitals in Washington State were specifically assessed as part of the research. (Hospitals in California, Connecticut, Florida, Georgia, Kansas, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, Tennessee, West Virginia and Wisconsin were included).

As far back as 2008, Rep. Cathy McMorris-Rodgers was pointing to eighteen Critical Access Hospitals in Eastern Washington that were of vital importance to rural communities, and expressing concerns about reimbursement rates to those hospitals. Despite the fact that the study did not assess Washington rural hospitals, McMorris-Rodgers will likely be heartened to learn of its results. 

[Image credit]