RHC FAQs

A Rural Health Clinic is a clinic certified to receive special Medicare and Medicaid reimbursement. The purpose of the RHC program is improving access to primary care in underserved rural areas. RHC’s are required to use a team approach of physicians and mid-level practitioners (nurse practitioners, physician assistants, and certified nurse midwives) to provide services. The clinic must be staffed at least 50% of the time with a midlevel practitioner. RHCs may also provide other health care services, such as mental health or vision services, but reimbursement for those services may not be based on their allowable costs.

RHCs receive special Medicare and Medicaid reimbursement. Medicare visits are reimbursed based on allowable costs and Medicaid visits are reimbursed under the cost-based Prospective Payment System (PPS). Ordinarily, this will result in an increase in reimbursement. RHCs may see improved patient flow through the utilization NPs, PAs, and CNMs, as well as more efficient clinic operations.

Not necessarily. It is very important to complete a financial assessment to see if the RHC program is right for your area. Financial benefits of RHC status depend on the mix of payers and services offered. Traditional fee for service could be better in some cases. When evaluating financial feasibility, look at the broader financial picture rather than individual visits. Chapter 3 of Starting a Rural Health Clinic: A How-To Manual (ftp://ftp.hrsa.gov/ruralhealth/RHCmanual1.pdf) discusses financial feasibility analysis for potential RHCs.

You may want to hire a consultant to conduct a financial feasibility study. The National Association of Rural Health Clinics (http://www.narhc.org/index.php) can provide you with a list of consultants. The NARHC does not endorse these consultants but provides the list as a service. You can contact the NARHC at:

Email: info@narhc.org
Telephone: 202.543.0348
Fax: 202.543.2565

RHCs must provide out-patient primary care services and basic laboratory services. They can also offer other services such as mental health services and vision services, but those services may not be reimbursed based on allowable costs.

No. RHCs can be for-profit or not-for-profit, public or private.

Provider-based RHCs are considered an integral part of a hospital, nursing home or home health agency that is already a Medicare certified provider. The provider associated with the RHC handles its reimbursement.

RHCs that are provider based to a hospital with less than 50 beds are exempt from the per-visit reimbursement cap.

Independent RHCs are generally stand-alone clinics. Unlike provider-based RHCs, independent RHCs go through a Fiscal Intermediary (FI) or Medicare Administrative Contractor (MAC) for claims processing and reimbursement.

Yes, RHCs must be located in rural areas with current health care shortage designations.

RHCs must be located in a rural area. Any area that is not in a U.S. Census-designated “urbanized area” is considered rural. You can use RAC’s Am I Rural? (http://maps.rupri.org/circ/racrural/amirural.asp) service too, as a first step to see if your location qualifies:

Go to Am I Rural? (http://maps.rupri.org/circ/racrural/amirural.asp)
Enter your location and click “Next”
Then check the box next to the program “CMS-Rural Health Clinics Program”
Click the “Am I Rural?” button to create a report regarding your location

The final determination of rural status is made by your state agency responsible for RHC certification and CMS regional office. If you have questions or want further verification of your location status, please contact your state agency as a next step.

RHCs must be located in a shortage area that has been designated within the last three years. There are three types or shortage areas that qualify:

• federally designated HPSA (Health Professional Shortage Area)
• federally designated MUA (Medically Underserved Area), or
• state Governor designated underserved area

Your state agency responsible for RHC certification (http://www.cms.gov/SurveyCertificationGenInfo/Downloads/State_Agency_Contacts.pdf) may be able to assist you in determining if your area qualifies as a shortage area. Here are some other resources that may help:

• HPSAs: Health Professional Shortage Area Database (http://hpsafind.hrsa.gov/)
• If your area is not listed, but you think it would qualify:
• How to apply for HPSA designation (http://bhpr.hrsa.gov/shortage/hpsapply.htm)

MUAs: Medically Underserved Area database (http://muafind.hrsa.gov/)

State designated areas: Contact your State Office of Rural Health (http://www.nosorh.org/regions/directory.php/sorhs.php) to find out if there are any designated shortage areas in your state.

Under current rules, no mechanism exists for a Rural Health Clinic to lose its designation because it is located in an area that is no longer designated as medically underserved. However, the Centers for Medicare and Medicaid Services is currently developing rules to address this issue. It is expected that the rules will allow RHCs to apply for an exception to maintain their designation.

No. An RHC can be in a stand-alone building, a part of another building, or a mobile unit.

RHCs must be staffed by at least one nurse practitioner (NP), physician assistant (PA), or certified nurse midwife (CNM). The NP, PA, or CNM must be on-site to see patients at least 50% of the time the clinic is open. A physician (MD or DO) must supervise the midlevel practitioner in a manner consistent with state and federal law.

It is expected that the Centers for Medicare and Medicaid Services will issue a proposed rule sometime after January 1, 2008 that will include requirements for RHCs to have a Quality Assessment and Performance Improvement (QAPI) program. For more information about quality improvement for RHCs please see the Office of Rural Health Policy’s Rural Health Clinics Technical Assistance Conference Call Series (http://www.hrsa.gov/ruralhealth/rhc/) website and Frequently Asked Questions about RHC Quality Improvement. (http://www.hrsa.gov/ruralhealth/policy/RHCFAQ.htm)

RHCs receive an interim payment rate throughout the clinics fiscal year which is reconciled at the end of the fiscal year through cost reporting. The interim payment rate is determined by taking total allowable costs for RHC services divided by allowable visits provided to RHC patients receiving core RHC services.

RHC staff must understand traditional Medicare regulations for coding and documentation as well as unique RHC billing requirements.

Section 911 of the Medicare Modernization Act of 2003 mandates that the Secretary for Health & Human Services replace the current contractors administering the Medicare Part A or Part B fee-for-service programs with new Medicare Administrative Contractors (MACs). Part A/Part B Medicare Administrative Contractors (MACS) will replace the current fiscal intermediaries and carriers and handle administration of both the Medicare Part A and Part B programs in specified geographic regions. CMS plans to award a total of 19 MAC contracts through three procurement cycles, with each cycle lasting approximately 9-12 months from solicitation to award. Fifteen MACs will cover the majority Part A/B service provider types, and four specialty MACs will cover DME suppliers. The A/B MACs will be responsible for the receipt, processing, and payment of Medicare free-for-service claims. In addition, they will be the primary contact for physicians, and will perform functions related to: Appeals, Provider Outreach and Education, Financial Management, Provider Enrollment, Reimbursement, Payment Safeguards, and Information Systems Security. For more information and regular updates, please see the CMS overview and related links regarding Medicare Contracting Reform.
(http://www.cms.gov/MedicareContractingReform/01_Overview.asp)

All state Medicaid programs are required to recognize RHC services. The states may reimburse RHCs under one of two different methodologies:

The first is a prospective payment system. Under this methodology, for FY (fiscal year) 2001, the state calculates a per visit rate based on an average of 100 percent of the reasonable costs furnished in FY 1999 and FY 2000. For each succeeding year, this per visit baseline rate is then increase by the Medicare Economic Index factor. For new facilities after the FY 2001, the state will establish a per visit rate based on 100 percent of reasonable costs of furnishing services during the fiscal year.

The second methodology is an Alternative Payment methodology. Under this methodology, there are only two requirements: 1) the clinic must agree to the methodology, and, 2) the payment to the clinic must at least equal the payment under a prospective payment system.

Medicaid agencies also may cover additional services that are not normally considered RHC services, such as dental services.

For more information about state Medicaid benefits for RHC services, please see this state-by-state guide (http://medicaidbenefits.kff.org/) to Medicaid benefits from the Kaiser Family Foundation and National Conference of State Legislatures.

You can view the Community Information Resource Center’s interactive map (http://maps.rupri.org/circ/racmaps/viewer.htm?JS=layerparam758811026&DATA=,ad1,pos12,,hy1,hy1b,hy1c,ad2,ad2b,ad3,ad3b,ad5,ad9,tr1a,tr1b,tr2,&LEVEL=&APP=RACmaps) of rural health clinics to see locations of current Rural Health Clinics.

Contact the state agency responsible for certify RHCs (http://www.cms.gov/SurveyCertificationGenInfo/Downloads/State_Agency_Contacts.pdf) to request the name of other RHCs in your area. Typically, clinic staff is willing to assist new start-ups as long as the new clinic is not in competition for clients.

The first step is to determine if the site is eligible. Contact your state agency responsible for RHC certification to find out if your site qualifies for Rural Health Clinic status. The site must be in a U.S. Census non-urbanized area and a health care shortage area designated within the last three years.
See “Are there location requirements for RHCs?”

The second step is to evaluate the financial feasibility of RHC status based on estimated (for new clinics) or actual (for existing clinics) data on payer mix Medicare, Medicaid, other. Existing practices that do not have an NP, PA, or CNM on staff must consider whether the cost of hiring one will be offset by increased revenue.

The third step in the certification process is filing an RHC application and a CMS provider enrollment form. Contact your state agency responsible for RHC certification (http://www.cms.gov/SurveyCertificationGenInfo/Downloads/State_Agency_Contacts.pdf) for an RHC application packet. The CMS 855A Medicare Enrollment Application (http://www.cms.gov/CMSForms/CMSforms/ItemDetail.asp?ItemID=CMS019475) – Institutional Providers form is available on the CMS website.

You will be notified that you are eligible for the RHC program after your two applications have been processed. The next step is the RHC Certification inspection. When you are ready for inspection and in compliance with the RHC requirements, notify your state agency. The state agency will then conduct a survey.

The last step of the certification process is the RHC Cost Report. Once a clinic has received its Medicare Provider Letter from CMS, the clinic files a projected cost report to have its Medicare Rate determined. It is important to get expert advice from someone familiar with the CMS-222 Schedule M Cost Report. Accuracy can have significant financial impact on year-end cost report.

Some other options include the Federally Qualified Health Centers (http://www.raconline.org/info_guides/clinics/fqhc.php) program and the Critical Access Hospitals program. See the publication Comparison of the Rural Health Clinics and Federally Qualified Health Center Programs (http://www.ask.hrsa.gov/downloads/fqhc-rhccomparison.pdf) for comparisons of the RHC FQHC options.