While rural hospitals are currently dealing with an increase in Covid-19 cases, another crisis may be looming on the horizon – how to get paid for the treatment.

As insurance companies begin to phase out complete coverage of Covid-19 hospitalizations, rural hospitals, already struggling to stay afloat, will be left trying to recover their costs.

According to an analysis by the Kaiser Family Foundation, insurance companies found they were flush with profits as hospital use for things like elective surgeries and regular doctor visits dropped.

“Earlier in the pandemic, we found that the vast majority (88%) of people enrolled in fully-insured private health plans nonetheless would have had their out-of-pocket costs waived if they were hospitalized with Covid-19,” the analysis found. 

“At the time, health insurers were highly profitable due to lower-than-expected health care use, while hospitals and health care workers were overwhelmed with Covid-19 patients. Insurers may have also wanted to be sympathetic toward Covid-19 patients, and some may have also feared the possibility of a federal mandate to provide care free-of-charge to Covid-19 patients, so they voluntarily waived these costs for at least some period of time during the pandemic.”

Since then, however, many insurers began phasing out cost-sharing. Others have announced they will start phasing cost-sharing out starting in October.

Brock Slabach, COO with the National Rural Health Association, said the cost for those hospitalizations vary depending on the complexity of the stay, but averages between $35,000 and $40,000 for a three- or four-day stay.

“A hospital stay for longer could amount to $100,000 or more easily if the patient requires a ventilator,” he said.

A new study by the University of Michigan found that the change in insurance coverage could leave Covid patients with large unexpected bills.

Based on data from Covid patients in 2020, the study found that patients with job-related or self-purchased insurance could see bills of about $3,800, while those with Medicare Advantage plans could see bills around $1,500.

“It is premature for insurers to stop protecting patients from the costs of Covid-19 hospitalizations,” Kao-Ping Chua, M.D., Ph.D., a health policy researcher and pediatrician at Michigan Medicine, and the lead author of the study said. “The pandemic is not over.”  

By looking at 4,000 cases of Covid hospitalizations between March and September of 2020, the researchers found that the majority of patients had cost-sharing waived by their insurance companies. However, among the few patients whose insurance companies didn’t cover all of the expenses, out-of-pocket costs were in the thousands.

“Our findings illustrate the potential burden that patients now may face if they are covered by insurers that never implemented cost-sharing waivers or let their waivers expire,” said Chua. 

As insurance companies stop covering all of a Covid hospitalization, those charges fall to the patient to pay. 

“Any time you increase the probability someone is not going to pay their bills, you increase the amount of bad debt and charity a hospital is going to have,” Slabach said.

Many rural hospitals are already on the brink of financial failure. In 2020, 20 rural hospitals closed, despite federal assistance. Another 450 hospitals, nearly 25% of all rural hospitals, were on the brink of closing in 2021, a report from the Chartis Center for Rural Health found in February.

But the fact that rural hospitals have a higher percentage of uninsured patients than urban hospitals may work to rural hospitals’ advantage. Hospitals are reimbursed by the federal government when they care for uninsured Covid-19 patients.

Slabach said the impact of insurance companies’ change in coverage won’t be felt for some time. Billing cycles send hospital bills to insurance companies first, and then it takes sometimes two months for those bills to come back to the hospital. From there, the bills are sent to the patients.

“Once the patient gets the bill, hospitals won’t send them to collections for another 90 days, so it will be months before we see what impact this will have,” Slabach said.