Medicare Advantage penetration and the financial distress of rural hospitals

As MA plans increase their penetration in rural areas, their bargaining power increases relative to rural hospitals. MA plans use this increased bargaining power to reduce the number of paid inpatient days, which creates adverse financial conditions for rural hospitals. Policymakers can safeguard rural hospitals by modifying the fee-for-service prices received by rural hospitals or strengthening the network adequacy criteria of MA plans for rural areas.