The Rural Health Clinic (RHC) program is intended to increase access to primary care services for patients in rural communities. RHCs can be public, nonprofit, or for-profit healthcare facilities. To receive Centers for Medicare & Medicaid Services (CMS) certification, they must be located in a rural area that is designated as an underserved or shortage area. RHCs are required to use a team approach to healthcare delivery, using physicians working with non-physician providers such as nurse practitioners (NPs), physician assistants (PAs), and certified nurse midwives (CNMs) to provide services. The clinic must be staffed at least 50% of the time with an NP, PA, or CNM. RHCs are required to provide outpatient primary care services, basic laboratory services, and be able to provide “first response” services to common life-threatening injuries and acute illnesses.
The main advantage of RHC status for rural providers is enhanced reimbursement rates for providing Medicare and Medicaid services. The CMS Medicare Learning Network Fact Sheet, Information for Rural Health Clinics, describes how RHCs are reimbursed “an all-inclusive rate (AIR) for medically-necessary primary health services and qualified preventive health services furnished by an RHC practitioner.” For Medicaid, a 2016 CMS letter to state health officials details how Medicaid visits are reimbursed under a Prospective Payment System (PPS) or an alternative payment methodology (APM), providing a payment that is at minimum the same amount required under a PPS. For specific Medicare regulations governing the RHC program, see the Centers for Medicare and Medicaid Services (CMS) Medicare Rural Health Clinics Center or the National Association of Rural Health Clinics' Rural Health Clinics - Rules and Guidelines.
The 2022 Rural Monitor article Rural Health Clinic Program at 45 Years: Created for Access and Still Delivering Care details the origin and history of the Rural Health Clinic program.
The Maine Rural Health Research Center's 2022 publication Community Characteristics and Financial and Operational Performance of Rural Health Clinics in the United States: A Chartbook provides an overview of RHCs in the United States, including clinical and operational data.
Frequently Asked Questions:
Complete the RHC application and the Centers for Medicare & Medicaid Services (CMS) provider enrollment form – Contact your state agency responsible for RHC certification for an RHC application packet. The CMS-29, Verification of Clinic Data – Rural Health Clinic Program and CMS 855A Medicare Enrollment Application - Institutional Providers forms are available on the CMS website.
You will be notified whether you are eligible for the RHC program after your applications (the number of applications depends on your state) have been processed.
Establish rates with Medicare and Medicaid – Each Medicare Administrative Contractor (MAC) and state Medicaid agency has its own process to establish RHC rates. It is important to get expert advice from someone familiar with the appropriate cost report. Accuracy can have a significant financial impact on a year-end cost report.
Completing a financial assessment may be helpful to see if becoming a certified RHC is a feasible option and to understand the advantages and disadvantages of becoming an RHC. The financial benefits of RHC status depend on the mix of payers and services offered. Traditional Medicare fee-for-service and state Medicaid provider rates will vary. When evaluating financial feasibility, look at the broader financial picture rather than individual visits. You may want to hire a consultant to conduct a financial feasibility study. National Association of Rural Health Clinics (NARHC) offers a list of consultants and vendors. Please note that NARHC does not endorse these consultants and provides the list as a service.
Provider-based RHCs are owned and operated as an essential part of a hospital, nursing home, or home health agency participating in the Medicare program. RHCs operate under the licensure, governance, and professional supervision of that organization. Most provider-based RHCs are hospital-owned.
Independent RHCs are free-standing clinics owned by a provider or a provider entity. They may be owned and/or operated by a larger healthcare system, but do not qualify for, or have not sought, provider-based status.
According to Community Characteristics and Financial and Operational Performance of Rural Health Clinics in the United States: A Chartbook, a May 2022 publication from the Maine Rural Health Research Center, 33.8% of RHCs were independent RHCs in 2021, with the remaining 66.2% being provider-based RHCs.
Yes. According to statute, RHCs must be located in non-urbanized areas, as defined by the U.S. Census Bureau. However, beginning in March 2022, the U.S. Census Bureau published updated criteria informing how it will define urban areas based on the results of the 2020 Decennial Census, including no longer defining or differentiating between urbanized areas and urban clusters as of the 2020 Census. In March 2023, CMS released an memorandum announcing, until further notice, that a location will meet the location requirements for RHCs if:
There is no restriction on how closely RHCs can be located to one another. If services are provided at more than one permanent location, each location must be independently approved by Medicare. You can use the Am I Rural? tool as a first step to see if your location qualifies, but note that your Am I Rural? report is not a guarantee of your rural status eligibility for the RHC program.
RHCs must also be located in a shortage or underserved area that has been designated within the last four years by the Health Resources and Services Administration. Four types of shortage areas qualify:
Find Shortage Areas by Address is another HRSA tool that determines if a specific address is located in a HPSA or an MUA.
The final determination of rural status is made by your state agency responsible for RHC certification and the CMS regional office. If you have questions or want further verification of your location status, please contact your state agency.
Yes. An RHC must:
Every RHC must be “under the medical direction of a physician” who is an MD or DO, but the physician's level of direct patient care may be very limited. There is no specific full-time equivalent (FTE) percentage or employed/contracted agreement required for physicians in an RHC unless the state has additional compliance standards. Typically, the physician (MD or DO) must supervise each NP, PA, or CNM in a manner consistent with state and federal law. Physicians do not have to be employed by the RHC; they can provide services under contract. The arrangement must comply with state scope of practice laws, and the physician must be on-site for sufficient periods depending on the needs of the facility and its patients. Records review may be conducted via an electronic health record (EHR).
For more information, see the Code of Federal Regulations Title 42, Section 491.8 Staffing and Staff Responsibilities.
Several resources and grant programs help recruit and retain physicians and mid-level practitioners:
Medicare pays RHCs 80% of a flat, all-inclusive rate (AIR) for medically necessary medical and qualified preventive visits delivered on the same day; the remaining 20% is charged to patients as coinsurance. The AIR is subject to payment limits, meaning an RHC will not be paid beyond the prospectively set limit, regardless of the actual cost of the visit. In addition to payment limits, RHC Medicare payments are also subject to productivity adjustments and other factors that can affect payment.
RHCs receive an interim AIR payment per visit throughout the RHC's fiscal year, which is then reconciled through cost reporting at the end of the year. According to CMS's Medicare Benefit Policy Manual – Chapter 13 – Rural Health Clinic (RHC) and Federally Qualified Health Center (FQHC) Services, the interim payment rate is determined by taking the total allowable costs for RHC services divided by the total number of visits provided to RHC patients receiving core RHC services.
RHC staff must meet traditional Medicare regulations for coding and documentation, as well as unique RHC billing requirements.
Each state has its own method of applying the PPS or APM. State Medicaid agencies should be contacted to determine how RHC rates are determined in their state.
RHCs can be an “originating site” for telehealth services. An originating site is the location where an eligible patient gets telehealth services with a provider in a different location. RHCs serving as an originating site can bill Medicare for an originating site facility fee.
In response to the COVID-19 pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), which allowed RHCs to serve as “distant sites” in order to provide telehealth services to patients at any location, including their homes, for the duration of the COVID-19 public health emergency. The Consolidated Appropriations Act, 2023 (P.L. 117-328) extended the ability of RHCs and FQHCs to serve as distant site providers through December 31, 2024.
In addition, the CY 2022 Medicare Physician Fee Schedule Final Rule updated federal regulations to permanently enable RHCs to be reimbursed by Medicare for mental health visits that use interactive, real-time audio-visual and audio-only technology. RHCs are paid for these services at the same rates they are paid for in-person mental health services. Medicare beneficiaries are required to have an in-person, non-telehealth visit with a provider six months before the start of their mental health telehealth services and at least once every 12 months. However, the Consolidated Appropriations Act, 2023 (P.L. 117-328) delays the in-person requirements until January 1, 2025. Additionally, CMS may make exceptions to the in-person requirements based on patient circumstances.
RHC services are exempt from the Merit-Based Incentive Payment System (MIPS) because MIPS applies to payments made through the Physician Fee Schedule. The Quality Payment Program (QPP) was created by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). MIPS is one of two tracks within the QPP designed to provide incentives for high quality care. MIPS requires eligible providers to report on quality improvement, performance assessment, and costs. These categories are factored into a score which affects Medicare reimbursement.
The bulk of RHC payments are exempt from MIPS because RHCs receive cost-based reimbursement for RHC services. However, some RHC clinicians furnish non-RHC services paid for under the Physician Fee Schedule (billed on CMS 1500). These non-RHC services may be subject to MIPS reporting requirements if the clinician exceeds the following low volume threshold: $90,000 Medicare Part B payments, 200 Medicare Part B patients, and 200 covered services to Medicare Part B patients. RHC billing (CMS 1450) and reimbursement would not count toward the $90,000 threshold and those patients would also not count towards the 200 Medicare Part B patients. If an RHC clinician provides a significant amount of non-RHC services on the Physician Fee Schedule (exceeding the low volume threshold), then those payments are subject to MIPS reporting and adjustments.
The November 2022 CY 2023 Medicare Physician Fee Schedule Final Rule finalized policies aimed to increase participation in the Shared Savings Program among ACOs that are low-revenue, inexperienced with performance-based risk Medicare ACO initiatives, new to the Shared Savings Program, and serve underserved populations. Beginning January 1, 2024, entities in rural and underserved areas will be able to form ACOs and receive advance shared savings payments to help build the infrastructure necessary to participate in the Shared Savings Program. This policy builds upon the results and lessons learned from the ACO Investment Model (AIM), which tested whether pre-paid shared savings encouraged new ACOs to form in rural and underserved areas and helped Medicare Shared Savings Program ACOs transition to arrangements with greater financial risk. RHCs & the Medicare Shared Savings Program - What You Need to Know, a March 2023 webinar hosted by the National Association of Rural Health Clinics, discusses these changes and considerations for RHCs.
See Medicare Shared Savings Program for Providers for additional information about joining ACOs, the benefits, and requirements for participation.
| Rural Health Clinics | Federally Qualified Health Centers |
|---|---|
| For-profit or nonprofit | Nonprofit or public facility |
| May be limited to a specific type of primary care practice (e.g., OB-GYN, Pediatrics) | Required to provide care for all age groups |
| Not required to have a board of directors | Required to have a board of directors – at least 51% must be patients of the health center |
| No minimum service requirements | Minimum service required – maternity & prenatal care, preventive care, behavioral health, dental health, emergency care, and pharmaceutical services |
| Not required to charge based on a sliding fee scale | Required to treat all residents in their service area with charges based on a sliding fee scale |
| Not required to provide a minimum of hours or emergency coverage | Required to be open 32.5 hours a week for FTCA coverage of licensed or certified healthcare providers. Must provide emergency service after business hours either on-site or by arrangement with another healthcare provider |
| Required to conduct a biennial program evaluation regarding quality improvement | Required to have ongoing quality assurance program |
| Must be located in a Health Professional Shortage Area, Medically Underserved Area, or governor-designated and secretary-certified shortage area. May retain RHC status if designation of service area changes. | Must be located in an area that is underserved or experiencing a shortage of healthcare providers |
| RHCs must be located in non-urbanized areas | FQHCs may operate in both non-urbanized and urbanized areas |
| Required to submit an annual cost report; however, auditing of financial reports is not required | Required to submit an annual cost report and audited financial reports |
RHCs were first created to meet the primary care needs of rural Medicare beneficiaries. Access and Capacity to Care for Medicare Beneficiaries in Rural Health Clinics, a 2019 policy brief from the University of Minnesota Rural Health Research Center, summarizes the findings of a voluntary survey of 111 RHCs. The survey found that 87% of RHCs accept walk-in appointments and 65% of RHCs had appointments available for existing Medicare beneficiaries. However, 37% of RHCs had appointments available for new beneficiaries within one day, and the average wait time for an appointment for new beneficiaries was 5 days. In addition, the May 2022 Community Characteristics and Financial and Operational Performance of Rural Health Clinics in the United States: A Chartbook from the Maine Rural Health Research Center notes that 12.3% of independent RHCs and 16.4% of provider-based RHCs offered Saturday hours in 2017 to improve access to care. The table below features data on behavioral health and additional services offered by RHCs.
Rural residents, especially those on limited or fixed incomes, may find cost a barrier to accessing care at RHCs. As Cost-Sharing as a Barrier to Accessing Care at FQHCs and RHCs for Rural Medicare Beneficiaries illustrates, rural Medicare beneficiaries experience a higher cost-sharing burden when receiving care at RHCs compared to Federally Qualified Health Centers (FQHCs). Unlike FQHCs, Medicare Part B deductibles do apply to services provided at RHCs. Both FQHCs and RHCs are required to charge Medicare beneficiaries a 20% coinsurance. However, FQHCs base coinsurance on the lesser of their charge or their PPS rate, while RHCs base their coinsurance on total charges to the patient. Additionally, RHCs are not required to utilize sliding fee scales like FQHCs, although many RHCs do offer one. Delaying or postponing primary care due to cost can lead to poor health outcomes.
Community Characteristics and Financial and Operational Performance of Rural Health Clinics in the United States: A Chartbook notes that counties with RHCs had small, but statistically significant, higher rates of unemployment, children in poverty, and individuals reporting fair or poor health in 2021 than counties without RHCs.
In addition, a 2019 report from the North Carolina Rural Health Research Program analyzed 2014 Medicare claims data, and identified the top 5 common medical characteristics of RHC patients to be:
