The Effects of Medicare Advantage on Rural Hospitals With St. Bernards Healthcare

00;00;00;25 - 00;00;22;23
Tom Haederle
Today, half of all Medicare beneficiaries get their benefits through Medicare Advantage or "MA" plans. They're offered by private companies and supposed to provide at least the same level of coverage that traditional Medicare does. That's in theory, anyway. In practice, an alarming number of MA private insurers have made the process of getting a claim covered a nightmare for patients.

00;00;00;25 - 00;00;22;23
Tom Haederle
Today, half of all Medicare beneficiaries get their benefits through Medicare Advantage or "MA" plans. They're offered by private companies and supposed to provide at least the same level of coverage that traditional Medicare does. That's in theory, anyway. In practice, an alarming number of MA private insurers have made the process of getting a claim covered a nightmare for patients.

00;00;22;26 - 00;00;45;24
Tom Haederle
Policyholders report facing ever-higher administrative hurdles that resulted in long delays and inappropriate denials, while hospitals and other caregivers are being overwhelmed by all of the red tape. What can be done?

00;00;45;26 - 00;01;18;00
Tom Haederle
Welcome to Advancing Health, a podcast from the American Hospital Association. I'm Tom Haederle, with AHA Communications. In recent years, the growth of MA plans in rural areas has especially impacted rural and critical access hospitals, who already face a host of serious challenges as they strive to meet the health care needs of their communities. It's not overstating things to say that prior authorization, payment audits and delays and denials of patient care by some MA plans is threatening the financial solvency of our nation's rural safety net.

00;01;18;03 - 00;01;32;13
Tom Haederle
In this podcast, hosted by Michelle Millerick, AHA's senior associate director of health insurance coverage policy, one CEO of a rural health system describes the impact of the growth of MA plans on the communities it serves. Let's join them.

00;01;32;15 - 00;01;58;24
Michelle Millerick
Thanks, Tom. This is Michelle Millerick from the AHA Policy team and a senior associate director of health insurance coverage policy. And today, I'm joined by Chris Barber, who's the president and chief executive officer of St. Bernards Health Care in Jonesboro, Arkansas. Chris has been part of the leadership team at St. Bernards for over 30 years. So there's been tremendous on the ground experience and insight from the field to our conversation today about Medicare Advantage and some of the unique challenges facing our rural health care providers.

00;01;58;26 - 00;02;07;28
Michelle Millerick
So, Chris, I'm hoping we can start there. If you can tell us a little bit about yourself and more about St. Bernards and the types of patients and communities that you serve in Arkansas and Missouri.

00;02;08;00 - 00;02;32;09
Chris Barber
Thanks for having us, Michelle. During the malaria outbreak in the late 1890s, the brave women of the Olivetan Benedictine sisters followed their faith and responded to a desperate need by reaching out and inviting the sick into what was at that time was a six-room house referred to as St. Bernards to began a journey of sacrifice and unwavering service to others that has spanned over 123 years.

00;02;32;11 - 00;03;10;23
Chris Barber
Over that time, this small hospital has been transformed into the most extensive regional health system serving rural communities in northeast Arkansas and southeast Missouri, with a catchment area of approximately 624,000 individuals. The largest tertiary facility in the region of Saint Bernard Medical Center, which is a 454-bed facility, including a 74-bed behavioral health facility with multiple critical access hospitals under the umbrella, and recently transitioned a low-volume PPS hospital to the first Rural Emergency Hospital in Arkansas and one of the first rural pace programs in the country.

00;03;10;27 - 00;03;18;08
Chris Barber
The organization looks much different than it did in 1900, but our primary purpose and mission have transcended through time.

00;03;18;10 - 00;03;33;13
Michelle Millerick
Thanks, Chris. It's really helpful to hear more about your organization and especially the mission part of the work that you do and taking care of patients in your community. So as we think about Medicare Advantage and diving into our topic for today, you know, I think one of the reasons that this is so top of mind is that MA enrollment has been growing rapidly.

00;03;33;13 - 00;03;53;05
Michelle Millerick
As you now, you know, traditional Medicare for a long time was the predominant delivery system for Medicare coverage where most people were getting their Medicare coverage options. And now we've hit that tipping point this year where 50% of all Medicare beneficiaries are getting that care through Medicare Advantage and that enrollment is growing at about 8 to 10% per year nationwide.

00;03;53;08 - 00;04;15;01
Michelle Millerick
And I think, as you know, you know, we're really seeing sort of some of that growth in rural areas, in particular in a big way and perhaps as well some of the delays and denials and insurer practices that can be problematic for providers and patients that are following that. So I wonder if you can just tell us more about what you're seeing in Arkansas and Missouri in terms of MA growth and the impact that it's having on your organization?

00;04;15;03 - 00;04;50;25
Chris Barber
Sure. Similar to what's occurring nationally, we experience a rapid increase in Medicare eligible people choosing Medicare Advantage plans. These ongoing challenges with insurance companies over negotiations on reimbursement, prior authorization claims, denial and delayed payments have placed extreme financial pressures on hospitals in the state. The center of health care quality and payment reports revealed recently that 37 of our 49 rural hospitals, or 76%, are losing money in day-to-day operations of hospital services in Arkansas.

00;04;50;27 - 00;05;23;14
Chris Barber
Additionally, as more of these Medicare eligible population has transitioned to Medicare Advantage plans, our hospitals are reimbursed well below the rate of Medicare, resulting in a material financial impact on organization. This development of the shift in payer mix from Medicare to MA has had a profound effect on our organizations. For example, we have seen significant increases in our labor costs by just adding personnel to combat the massive number of claims, denials, pursue appeals and prior authorization.

00;05;23;16 - 00;05;32;13
Chris Barber
We are experiencing challenges just transferring patients to the appropriate level of care, often increasing length of stay in some of our acute care facilities.

00;05;32;15 - 00;05;50;07
Michelle Millerick
That's really striking, Chris, and especially some of the details you just shared on some of the financial impact of these shifts in the market. Do you have any data you can share with us just to help paint a picture as well about the environment and what you're seeing in MA? You know, certainly we're seeing some national trends with huge growth, but anything from from your market that you can share data wise?

00;05;50;14 - 00;06;19;19
Chris Barber
Yes, In our market, for St. Bernard’s Medical center, if you look at a ten year comparison of our percentage of charges for Medicare versus Medicare Advantage, it has changed dramatically. In 2015, Medicare represented 43% versus 9.5% of Medicare for our book of business. Our most recent records - 2024 percentage that Medicare Advantage is now more significant book of business than traditional Medicare.

00;06;19;21 - 00;06;46;19
Chris Barber
Medicare Advantage represents 29.8% versus Medicare, now 28.4%. Again, we've experienced these increased denials and payment delays and appeals. Our inpatient reimbursement for this population is roughly 7 to 9% below Medicare for this Medicare Advantage population. Additionally, we seeing an increase in self-pay with higher co-pays and deductibles in our market.

00;06;46;22 - 00;07;07;27
Michelle Millerick
That's really interesting, Chris, and I think consistent with what we're hearing from our members across the country. You know, I also think when you look at MA growth over the last decade or so, you see in rural areas, you know, ten years ago the uptake was pretty low. And it seems like in the last five or so years we've just seen a lot of dramatic growth, especially, you know, nationwide, but especially in rural areas, it's growing faster.

00;07;08;05 - 00;07;29;14
Michelle Millerick
And so I think some of the reasons that we're starting to see some of these pain points that that you alluded to, you know, really is correlated, especially with some increased growth and MA penetration in rural areas. So I wonder as we think about, you know, the bigger picture of what does this growth mean? You know, you've provided sort of an outline of some of the impacts on your organization, but I think a lot of this comes back to, especially for mission driven organizations like St. Bernards

00;07;29;18 - 00;07;46;17
Michelle Millerick
you know, what does this mean for patients and families? You know, there's real people behind delays and denials and, you know, people who are waiting for an authorization to be transferred to a rehabilitation facility or people who are told that they have cancer but need to wait for the treatment that might save their life while their insurer decides if they're going to cover it.

00;07;46;24 - 00;07;56;21
Michelle Millerick
And so I wonder if you can just talk a little bit about, you know, what some of these challenges translate to for patients and families that you serve and also for the clinicians and the nurses and doctors who are taking care of them.

00;07;56;23 - 00;08;21;08
Chris Barber
Absolutely. In terms of patients and their families, they can have a more exhausting experience when shopping for health insurance policies these days. They still have to educate themselves on common terms that we're all familiar with co-insurance, co-pays, deductibles and then what network. But these newer policies, however, may include some additional qualifiers or terms that may affect where and how individuals can receive care.

00;08;21;10 - 00;08;47;24
Chris Barber
If they don't meet all the criteria, they may have to pay more out-of-pocket penalties or a number of other requirements that were not present in older and more traditional policies. Anecdotally, many older individuals enroll in an MA   plan when they're healthy, seeing lower premium costs and additional benefits like dental and vision insurance. I know a recent report on NPR said those enrollees start feeling trapped as they encounter more health problems.

00;08;47;26 - 00;09;18;05
Chris Barber
They don't get to choose any doctor or hospital they want, like the traditional Medicare. To make matters worse, a recent federal review cited that more than half of MA plan directories contain inaccurate information on which providers they could see. You know, on the clinical side, we believe some insurance companies conduct business and write their clinical policies that has made it difficult for organizations to provide medical care and could jeopardize how, when and where individuals receive future care.

00;09;18;07 - 00;09;48;24
Chris Barber
Frequently, patients and families feel caught in the middle and really need trusted resources to provide honest and transparency and guidance. Clinicians are highly frustrated with the time required on the phone to receive a much needed test that has to be pre-authorized, thus creating unnecessary delays in determining a working diagnosis and appropriate treatment course. Again, we hear concerns about delays in transferring patients from the acute care setting to other levels of care.

00;09;48;26 - 00;10;14;11
Chris Barber
Finally, I would just add and underscore this point: these roadblocks to patient care really demonstrate the importance of community benefit and programs that not-for-profit hospitals and health systems play in addressing how rates of smoking, inadequate nutrition, substance abuse, help counter health risk assessments that we have in our communities. So it's imperative for us to continue to navigate these waters.

00;10;14;14 - 00;10;41;28
Michelle Millerick
Thanks, Chris, and I really appreciate your perspective on how some of these issues and trends affect patients. There's something you said that I want to just drill down on for a second. You know, particularly around some of the impact on clinicians and caregivers and how these policies are adding cost and burden to the health care system. You know, particularly as a system with rural presence, you know, workforce issues and shortages of health care providers is a national issue all over the country, but certainly something that's especially pronounced in rural areas.

00;10;42;00 - 00;11;01;10
Michelle Millerick
And as we think about, you know, peer-to-peers and the burden of prior authorization and clinician documentation and some of the things that play into insurer delays and denials or excessive use of prior authorization for things that are pretty routine. Can you talk a little bit more just about some of the workforce issues that you're seeing and maybe how some of your policies might play a role?

00;11;01;13 - 00;11;25;06
Chris Barber
Yes, this has certainly been a challenge, one, recruiting talent to rural communities. As you know, physicians primarily trained in urban markets. And we have to compete nationally on compensation, but also you have to have amenities to go along with that. So it is a challenge. We want to get physicians as well as clinicians to move to rural communities.

00;11;25;09 - 00;11;47;08
Chris Barber
So if they have a rural payback or program with physician training, that has certainly benefited some of our communities. It's also good to have a medical school, a residency that believes in rural medicine and encompasses that and provides rotations in a community. What we've found, if we can get them to the community, they can see what kind of quality medicine you can provide, an impact that you can have.

00;11;47;10 - 00;12;15;24
Chris Barber
It can be meaningful on a fulfilling career here, but is a challenge when you're trying to recruit to rural communities. Let me say some of the other aspects and critical access hospitals in regard to MA...timely payment in the payer mix of patients are essential to hospital survival. In many of these rural communities, we see less commercial insurance and more Medicaid and Medicare and now a significant percentage of Medicare advantage in our rural communities.

00;12;15;26 - 00;12;57;11
Chris Barber
You know, recently in the American Hospital Survey on Medicare Advantage plans, they have the highest denial rate at 19.1%. This significant operational challenges places organizations and exacerbate issues in smaller rural facilities that do not have either a dedicated resource for ongoing monitoring and continuously fighting to overturn these high number of denials. In many instances, Medicare plans are paying much less for critical access hospitals and Medicare, and we have one critical access facility that is receiving 37% less for inpatient reimbursement premiums for MAs, compared to Medicare, which is significant.

00;12;57;13 - 00;13;28;04
Chris Barber
Additionally, in specific markets, rural critical access hospitals are limited in their ability to negotiate a reasonable agreement with these large national insurers effectively. And as we all know, the margins on rural hospitals are extremely thin. And this shift in payer mix has dramatically impacted the financial deterioration of many hospitals with limited cash reserves. In our case, we're fortunate to have a system that helps some of these resources in alignment with our critical access hospitals.

00;13;28;06 - 00;13;38;01
Chris Barber
But in general, if there's no changes in the near future, unfortunately, I think we'll continue to see the deterioration of services and the number of providers in rural communities.

00;13;38;04 - 00;13;58;19
Michelle Millerick
Chris, that's really striking. And you know, I think when you describe one of your critical access hospitals getting 37% less than they would have under traditional Medicare...you know, you think back to 1997...Congress made a special payment designation for critical access hospitals to make sure in recognition of their unique status and their ability to ensure that people get access to health care services.

00;13;58;26 - 00;14;20;23
Michelle Millerick
I mean, rural areas that they get paid at 101% of their costs under Medicare. And so it's really striking, I think, an important policy question for us to think about, too, as Medicare Advantage continues growing and is rapidly becoming the predominant way that people get Medicare coverage. You know, it's really striking that that need perhaps isn't being met on the MA side in terms of what the reimbursement that critical access hospitals are getting.

00;14;20;23 - 00;14;36;12
Michelle Millerick
It doesn't match what Congress wanted them to get on the fee for service side. And then you add some of the other things that you're talking about in delays and denials of care and prior authorization. And that's that's really helpful perspective, Chris. You know, I want to think about sort of solutions and, you know, where do we go from here?

00;14;36;12 - 00;14;56;06
Michelle Millerick
And I think you've laid out what some of the issues are really well. You know, I think from a federal perspective, there's some good news, which is that these issues are getting a lot of attention from policymakers, from the media, and frankly, just from the public and people who are really worried about what's happening, you know, in open enrollment the last couple of months as people are out there making choices about Medicare coverage.

00;14;56;09 - 00;15;25;05
Michelle Millerick
There's been a lot of stories and attention on the impact on patient access to care for services that should be covered in MA and inappropriate denials. You know, in the last year or so, we've started to see a major government reports from the HHS Office of Inspector General raising concerns about inappropriate denials. The Centers for Medicare and Medicaid Services, which oversees the operation of the Medicare program, finalized a major new rule in April of this year that just went into effect January 1st

00;15;25;08 - 00;15;54;02
Michelle Millerick
that's really trying to better align coverage in May with traditional Medicare. So I think our voice is being heard and I think these perspectives are really being elevated and that there's consensus that something needs to be done. And, you know, I think from the AHA perspective this is really a full court press issue where we're actively working to develop policy solutions to help rural critical access hospitals and urging federal policymakers to continue increasing oversight and really focusing on enforcement and compliance of some of the new rules that just went into effect.

00;15;54;04 - 00;16;15;02
Michelle Millerick
But I wonder if, from your perspective, in leading a health system, Chris, you know, what else do you think was needed in terms of solutions? You know, what does your system, you know, need as you contemplate how to move forward and tackle this sort of new world that we live in and for rural hospitals in general, to be able to continue to be viable in serving their communities as this MA shift continues to take place?

00;16;15;05 - 00;16;38;17
Chris Barber
Well, first and foremost, I'd like to begin by applauding the AHA for the work done to date and the continued effort to advance this meaningful policy and regulatory oversight of the MA. And as you stated, it's important to let our voice be heard often and frequently. Please keep up the pace regarding the enforcement and compliance in calendar year 2024 of Medicare Advantage rule.

00;16;38;20 - 00;17;10;09
Chris Barber
We believe there are significant outstanding public policy issues and problems that need to be rectified for past underpayments to hospitals by MA, specifically the 340B remedy from 2018 to 2022. And as you stated, I want to underscore the significance. It'll be imperative to continue to explore payment mechanisms to secure essential services in rural communities while providing some organizational flexibility and selected markets where strategies that might work well in their area.

00;17;10;11 - 00;17;39;15
Chris Barber
Initially, when establishing the Critical Access Hospital designation, CMS recognized the need for cost plus payment mechanism for rural hospitals. In light of the current environment, we believe CMS should consider similar approaches to preserve our essential services in rural America. They need to be mindful of where we are and what's at risk at this point in time. We all are supportive of tighter alignment of the administration of these Medicare Advantage plans similar to that of traditional Medicare program.

00;17;39;18 - 00;17;51;19
Chris Barber
One example that has been identified is the appeal process, not having the plan conduct the appeal process, that you haved that QIO which would provide some benefit.

00;17;51;22 - 00;18;16;16
Michelle Millerick
Those are some great suggestions, Chris, And I think, you know, anything is on the table these days and totally agree that this is an area where this is ripe for opportunity. I think that's about all the time that we have for today. So I just want to thank you so much, Chris, for joining us on the Advancing Health AHA podcast and for all the work that you're doing on behalf of patients and families, especially for your willingness to tell your story about your organization and some of the challenges that you're facing.

00;18;16;16 - 00;18;30;15
Michelle Millerick
And, you know, I think as we try to tackle some of the big challenges of our time that our health care system is facing, it truly takes a village. So we look forward to our continued partnership with all of you and with your team at St. Bernards in 2024. So thanks again, Chris.

00;18;30;17 - 00;18;40;28
Chris Barber
Thanks, Michelle , for having us. And it's our pleasure to provide some contribution to the discussion. Please continue all the great work that you guys are doing. We look forward to an exciting 2024.