Anemic insurance payments, weak internet leads to poor health results in Black Belt   

Running a hospital is tough anywhere, but just like everything else, it’s harder in the Black Belt.  

Thomasville Mayor Sheldon Day, who is trying to bring his community’s closed hospital back to life, said low reimbursement from Medicare, Medicaid and Blue Cross Blue Shield are keeping Alabama’s rural hospitals on the critical list.  

“Blue Cross Blue Shield is killing us,” Day said on the panel discussing a new report on rural health care released by The University of Alabama’s Education Policy Center. “They’re dictating what they will pay us, and it’s take it or leave it. In many cases (the BCBS reimbursement) is less than Medicare or Medicaid.”  

Blue Cross Blue Shield is Alabama’s dominant private health insurer. Medicare is a federal program that insures the elderly and disabled, and Medicaid is a joint federal and state program that pays for health care for indigent Alabamians.  

Day received national attention when he made the same comments about BCBS in a Time magazine article that appeared the same week as his panel discussion.  

Thomasville Hospital is among the 10 rural hospitals in Alabama that have closed since 2005, according to The University of Alabama report. Day said Thomasville Hospital opened just as the COVID-19 virus swept through Alabama, sweeping the new hospital away with it in fall 2024.

Day has been trying to get the facility reopened since. He said hospital supporters are now trying to get a company to take over the hospital, and they are working to get the facility classified as a Rural Emergency Hospital, a new type of hospital established by Congress in 2021 to help rural hospitals stay open in some capacity.  

An REH can provide emergency and certain outpatient medical and health services for patients that stay less than 24 hours.  The hospital must operate an emergency department around the clock, and it must have a transfer agreement with a full-service hospital, according to the Center for Medicare Services website.  

Even if the hospital opens, it will be a challenge to get it staffed. Day said Alabama’s low reimbursement rates make the state a tough sell for physicians. Offering to help a new physician pay off their medical school debt doesn’t help much because every community offers that. The state’s low reimbursement rate means “a physician can go to Georgia or North Carolina or Arizona and see the same 30 to 40 patients a day and make $100,000 more a year for the same work,” Day said.  

Thomasville isn’t alone. The University of Alabama report says that 27 rural hospitals in Alabama are in danger of closing, with 19 at immediate risk.  

“In many rural areas, the nearest hospital or clinic can be over an hour away, making timely access to care incredibly difficult for residents,” the report states.  

Telehealth is a promising alternative to having a local provider, but many Black Belt counties don’t yet have high-speed internet. 

Kaiser Family Foundation Health News found that “counties with the highest rates of internet access and healthcare providers correlated with higher life expectancy, less chronic disease and key lifestyle factors such as higher incomes and education levels,” the report states.  

The Black Belt, which has too few health care providers and poor internet access, “consistently ranks lowest in Alabama for critical health outcomes, including rates of diabetes, heart disease and infant mortality,” the report says.  

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Day said that in a 2020 Harvard study the 7th congressional district that includes Selma and much of the Black Belt had the worst health outcomes of any of the nation’s 435 districts.  

The report cited some bright spots in the state’s health care. The Alabama School of Healthcare Sciences in Demopolis is an $80 million investment in building a healthcare workforce. The University of Alabama’s Equitable Neighborhoods Initiative is connecting some Black Belt communities to health education resources.  

The UA report says that Alabama missed out improving community health when it declined to expand Medicaid with federal dollars in 2014, and the Medicaid cuts coming with the passage of the so called Big Beautiful Bill will further impact health care, especially in the Black Belt.  

Twenty-one of the state’s most Medicaid-dependent counties lie within the Black Belt, according to the report. Perry County is the most Medicaid-dependent county in the state, with 38% of its residents on the program. Wilcox is third in the state with 36%, Dallas is fourth with 34%. Lowndes has 33% and Marengo has 29% of its residents on Medicaid, according to the report.  

“As Alabama continues to navigate healthcare policy decisions, the impact on its most vulnerable communities must be a primary consideration,” the report concludes. “The health of the Black Belt reflects the health of Alabama as a whole, and investments in equitable healthcare access today will yield dividends in improved health outcomes, economic vitality and quality of life for generations to come.”

Blue Cross Blue Shield of Alabama supplied the following statement regarding its role in rural health: 

Rural health care is important to Blue Cross and Blue Shield of Alabama and to our customers. We work very closely with our rural hospital partners to ensure our customers have access to quality health care in all areas of the state. Blue Cross collaborates with the Alabama Hospital Association and works directly with rural hospitals to assess and improve the quality of care delivered to our members. Each year we actively reach out to rural hospitals to negotiate rate structures and craft reimbursement arrangements that compensate the facilities for providing care to our customers.

Alabama rural hospitals’ patient mix consists mainly of governmental payers. Medicare and Medicaid comprise well over 50% of rural hospital patient volume, while Blue Cross and Blue Shield comprises 7% to 15%. Thus, the largest financial impact to rural hospitals is the governmental payer sector.

The overwhelming volume of services provided by rural hospitals to Blue Cross and Blue Shield of Alabama members is standard outpatient services (emergency room visits, laboratory, diagnostic and minor outpatient procedures). Inpatient services make up a relatively small volume of services provided to our customers. This was true at Thomasville Regional, where the hospital accounted for less than 100 total inpatient days (less than 50 patients per year) in 2022, 2023 and 2024. Because the volume of Blue Cross inpatient and outpatient services was low, total Blue Cross reimbursement to the hospital was less than $2M annually.   

While Blue Cross does have a large volume of the self-insured market within the state, our market share within the individual ACA Exchange market has reduced to approximately 43 percent. These individual Exchange customers are located throughout the state and tend to be more evenly distributed within rural areas. Therefore, rural hospital commercial insurance volume is likely to be more diverse between commercial carriers.

We launched our medical scholarship program in 2016 to address health disparities and promote access to quality healthcare in rural areas of Alabama. We began funding scholarships at four medical schools in Alabama (VCOM, ACOM, UAB and South Alabama). As a condition of these scholarships, recipients agree to practice as primary care or behavioral health physicians in underserved areas of Alabama after graduation.

38 medical students have graduated and are now practicing in rural areas of Alabama. When all students under the current program graduate and set up practice, approximately 144 medical students will be practicing in underserved areas of our state.

This year we expanded the program to include family obstetricians, dentists, nurse practitioners, or certified nurse midwives.