Nemaha Valley Community Hospital CEO Kiley Floyd is pleading with her local school district not to switch its retired teachers from traditional Medicare to Medicare Advantage.
Floyd believes it’s her only hope to slow enrollment in the program in Seneca, the small city in northeastern Kansas where her 18-bed facility is located. Fee-for-service Medicare can't compete with the marketing, benefits and low premiums Medicare Advantage plans offer, she said. But insurers finance those perks by paying her critical access hospital 52 cents for every dollar billed, she said.
Related: How rural hospitals are fighting Medicare Advantage
“As an industry, we have not done a very good job educating employers about how these plans are paying for their patients,” Floyd said. “I’m making a very concerted effort in 2025 to get to all of our employers in the area and just show them what the plans are paying us.”
Rural health systems have long urged consumers to avoid individual Medicare Advantage plans, arguing in newspaper articles, social media posts and community meetings that insurers underpay them, make them jump through unnecessary administrative hoops and delay transfers to post-acute care facilities.
Pressing employers not to move their retirees into Medicare Advantage is a new tactic for rural providers, said Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform, a think tank.
“Employers in the community don't recognize that whenever their Medicare beneficiary is signing up for a Medicare Advantage plan, that they may be helping to put their local hospital out of business,” Miller said. “It doesn’t do much good to have insurance if there's no place to use it.”
'Better thing for our community'
Medicare Advantage group coverage has represented a significant and steady portion of overall enrollment since at least 2010, the health policy research institution KFF reported in August. Seventeen percent of Medicare Advantage members, or 5.7 million people, received coverage through former employers this year, essentially the same as in 2023, according to the KFF analysis of Centers for Medicare and Medicaid Services data.
Although every contract is different, employers or labor unions generally pay Medicare Advantage carriers flat fees to administer retiree health benefits and the insurers assume financial risk for excess expenses.
Insurers compete fiercely for these contracts because the large patient population often remains stable from one year to the next. Health insurance companies prefer to retain members over time, which enables them to better understand their needs and their potential costs.
In addition, Medicare Advantage group plans also outperform individual plans in the Star Ratings quality incentive program, which means big bonuses.
Additionally, nabbing a high-profile employer can be a publicity coup for insurers.
But despite the expression, there is such a thing as bad publicity, as nonprofit Horizon Blue Cross Blue Shield of New Jersey learned in October. Although densely populated New Jersey is better known for its industrial base and its proximity to New York City and Philadelphia, its Garden State moniker acknowledges its rural regions and agriculture.
Horizon produced an ad featuring an actor portraying a police officer and encouraging state employees to sign up for health insurance.
New Jersey State Policemen’s Benevolent Association President Peter Andreyev slammed the advertisement, which does not mention the police union by name. “If Horizon was a police officer they wouldn’t be licensed simply for their lack of honesty and candor,” Andreyev said in a news release Oct. 11. “They need to be held accountable and not use images of police officers to sell their overpriced services.”
Andreyev accused Horizon of refusing to negotiate on premium increases. Horizon and the benevolent association did not respond to interview requests.
Some health systems simply stopped accepting Medicare Advantage in a bid to discourage employers from contracting with Medicare insurers.
In North Platte, Nebraska — home to the world’s largest rail yard — Great Plains Health contended with a flood of Medicare Advantage patients this year after Union Pacific Railroad moved its retirees to a group UnitedHealthcare plan, said Ivan Mitchell the nonprofit health system's CEO.
Medicare Advantage enrollees now represent 11% of the 116-bed hospital's patients, nearly three times the share from before Union Pacific opted into the program, Mitchell said. At the same time, he said, Medicare Advantage insurers amped up prior authorization requirements, denied payments and delayed transfers to rehabilitation facilities.
Great Plains Health just couldn't financially justify participating in Medicare Advantage networks next year, Mitchell said: “The math just doesn't work.”
Although Great Plains Health didn't persuade Union Pacific to reverse course, the health system's pleas motivated the company to offer union retirees a Medicare supplement next year they can pair with fee-for-service Medicare instead of choosing the Medicare Advantage plan, Mitchell said.
Great Plains Health’s decision not to accept Medicare Advantage patients is unfortunate, a spokesperson for the UnitedHealth Group subsidiary wrote in an email. Union Pacific referred to Modern Healthcare to the National Railway Labor Conference, which did not respond to an interview request.
Mitchell is promoting the Medigap option to Union Pacific retirees by sending letters to Great Plains Health patients, hosting community meetings, posting on social media and writing newspaper columns. Mitchell also worked with CMS to ensure Union Pacific Medicare Advantage members can sign up for Medigap coverage without medical underwriting, he said.
“When you make a decision like this, it feels a little icky. You don't like saying, ‘Hey, we're not going to accept your plan anymore.’ But I think in the long run it's the better thing for our community,” Mitchell said.
