Ensuring Fair Medicare Advantage Reimbursement for Rural Hospitals
By Christina J. Maguire, President & CEO, Mount Desert Island Hospital
Rural hospitals are the backbone of healthcare in communities like ours. At Mount Desert Island Hospital, we serve patients who rely on us for emergency care, preventive services, and chronic disease management. As a Critical Access Hospital (CAH), we provide a safety net for a population that depends on Medicare and Medicare Advantage for their healthcare needs. Yet, an alarming financial disparity is threatening the sustainability of rural hospitals across the country—one that must be addressed if we are to continue providing high-quality care to our communities.
Medicare Advantage, a growing alternative to traditional Medicare, has reshaped the way seniors receive healthcare. While these plans often promise greater flexibility and benefits, they also introduce restrictive payment policies that undermine rural hospitals’ financial stability. Unlike traditional Medicare, which reimburses CAHs on a cost-based system, Medicare Advantage plans frequently deny or delay payments, impose lower reimbursement rates, and increase administrative burdens. These disparities are more than bureaucratic inconveniences—they are existential threats to rural healthcare providers like Mount Desert Island Hospital.
The Financial Reality for Rural Hospitals
As a designated CAH, our hospital receives cost-based reimbursement from Medicare to ensure we can sustain operations and continue serving our community. However, the exclusion of Medicare Advantage beneficiaries from this calculation creates an artificial financial gap. Medicare Advantage enrollees now represent a significant portion of our Medicare population—more than 50% in some areas. As this trend continues, rural hospitals face mounting shortfalls that threaten our ability to remain viable.
The solution is clear: The Centers for Medicare & Medicaid Services (CMS) must adjust its reimbursement policies to treat Medicare Advantage patient days the same as traditional Medicare patient days in CAH cost reports. This simple change would ensure fair, cost-based reimbursement and help sustain essential healthcare services in rural communities.
A Precedent for Change
This is not an unprecedented request. Since 2014, federally qualified health centers (FQHCs) have received supplemental payments to offset the financial strain caused by Medicare Advantage reimbursement disparities. If this policy adjustment is necessary for FQHCs, why should Critical Access Hospitals be treated differently? Our role in providing healthcare access is just as vital, and the financial challenges we face are just as urgent.
A Call to Action for Lawmakers
Policymakers must recognize the impact of Medicare Advantage reimbursement disparities on rural hospitals. We urge Congress to pass legislation like S. 803, the Save Rural Hospitals Act, which seeks to correct this issue by ensuring equitable reimbursement for CAHs. Addressing this financial imbalance is not just a matter of hospital sustainability—it is a matter of patient access, quality of care, and the long-term health of rural communities.
At Mount Desert Island Hospital, we are committed to delivering exceptional care to our patients. But we cannot do it alone. We need our lawmakers to stand with us and support the policies necessary to keep rural hospitals strong. The time to act is now—before more rural hospitals are forced to close their doors.
Christina J. Maguire
President & CEO, Mount Desert Island Hospital