Rural Health Clinic Requirements and Considerations
Rural health clinics (RHCs) are outpatient facilities regulated by the Centers for Medicare & Medicaid Services (CMS). The RHC designation was developed to improve access to care in underserved rural areas particularly for Medicare and Medicaid patients. Its aim is to support primary care where provider shortages are common. To meet rural health clinic requirements, a practice must meet federal rural area classifications and shortage-area designations, such as Health Professional Shortage Area (HPSA) and/or Medically Underserved Area (MUA).
The 5,200-plus RHCs across the U.S. had to meet federal rural health clinic requirements to receive cost-based reimbursements for Medicare and Medicaid. The effort is worth it. With RHC status, a practice can access enhanced reimbursements and expand services especially when it sees a high number of patients on Medicare or Medicaid.
To help you make an informed choice for your practice, this article breaks down everything you need to know about RHC eligibility requirements, certification steps, and financial considerations (including AIR). It also covers compliance requirements after designation.
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Types of Rural Health Clinics
There are two main types of RHCs.
Independent RHCs are typically freestanding clinics owned by a healthcare provider or entity. They can also be owned by other healthcare organizations, such as nursing homes or home health agencies. The key is that they operate independently and aren’t affiliated with a hospital.
Provider-based RHCs are hospital-owned clinics that operate under the hospital’s administrative supervision. They can be either nonprofit or for-profit entities. They don’t have to be located at or near the hospital.
RHCs qualify for higher Medicare and Medicaid reimbursement rates per visit.
Financial and Other Considerations of RCH Status
Becoming an RHC can strengthen your clinic’s financial stability and broaden your scope of services.
The primary financial advantage is that RHCs use a cost-based reimbursement to receive enhanced Medicare and Medicaid payments based on reasonable cost.
RHCs are paid the Medicare and Medicaid all-inclusive rate (AIR) for medically-necessary primary health service and qualified preventive health services. In 2026, the AIR payment limit for independent RHCs and provider-based RHCs in a hospital with 50 or more beds is $165 per visit.2 That’s a $13 increase over 2025’s AIR of $152. (The Medicare Administrative Contractor (MAC) establishes rates and adjusts them annually using the Medicare Economic Index [MEI].)
Medicaid reimbursements vary by state but are also cost-based for RHCs. State Medicaid agencies are key to rate-setting.
Simple Medicare Reimbursement Example for RHCs
Say that 70% of your clinic’s patients use Medicare and you see 100 patients a month:
- Traditional model at $100/visit equals $7,000 from Medicare visits (70 × $100)
- RHC status at 2026 AIR equals up to $11,550 from Medicare visits (70 × $165) — a 65% increase
Additional Advantages of RHC Status
- Expanded access to patients by permanently serving as a distant site provider for behavioral and mental telehealth services.
- Staffing support and flexibility with equal reimbursement rates for both physician and non-physician providers.
- Operational flexibility by adjusting staffing to better meet community needs.
- Access to grants and technical assistance available exclusively to RHCs.
- Improved community standing with a reputation as a trusted local provider that offers accessible care.
- A recruitment advantage in attracting providers who want to serve in a mission-driven, rural healthcare environment.
Considerations for Getting RHC Status
As you consider becoming an RHC, evaluate whether higher RHC payments for Medicare and Medicaid patients can offset declining reimbursements. Also factor in the cost of hiring a PA or NP if you don’t already have one.
Plan to have a policy in place for how you’ll provide care in locations other than your office, if applicable, such as in-home, other facilities, etc. Also plan to provide cost reporting for services at other locations.
Know that RHCs have to submit cost and credit balance reports each year. They also have to undergo periodic state or federal surveys to ensure they meet standards. Your staff will need trained on RHC-specific billing processes, such as bundled and split billing.
You also want to understand requirements related to EMR/EHR use, such as the ability to generate 8371 electronic claims, comply with HIPAA and other regulations, and support quality reporting.
How to Become an RHC
Transitioning into an RHC involves multiple steps and requires preparation.
Eligibility evaluation: The first step is to determine if your clinic meets the eligibility criteria. This involves assessing your location, HPSA or MUA designation, and other factors.
Financial feasibility study: Conduct a financial feasibility study. Evaluate your patient population, payer mix, and potential costs. If your area has a higher patient census of commercial insurance and lower in Medicare and Medicaid, converting may not make sense.
Facility updates: You need to assess the costs of converting or updating your facility to meet RHC regulations. This may include hiring additional staff or making necessary renovations to the facility to ensure patient accessibility. It can also include added exit signs, emergency exit and preparedness planning and policies, and/or regular janitorial services.
Document preparation: Prepare all the necessary paperwork, including IRS records, incorporation papers, and board member information. Ensure that all information is accurate and up to date. If there was a CEO change or practice relocation it can often show as wrong information within the PECOS system for CMS unless updated.
CMS application and provider enrollment form: Submit your application and enrollment for initial certification. Know that this process can be time-consuming.
State or RHC accreditation organization evaluation: After CMS verifies your eligibility, you need to have your state or an RHC accreditation organization conduct an on-site inspection, which can take from four hours to two days.
Receive tie-in notice (TIN): Once you pass the evaluation, you’ll receive a TIN that lets you bill Medicare and Medicaid at the AIR. You’ll want input from someone familiar with applicable cost reports (see below) to establish Medicare and Medicaid rates as well.
This rural health clinic certification process typically takes several months. And certification is valid for five years, with periodic surveys for recertification.
Rural Health Clinic Requirements After Designation
There are ongoing rural health clinic requirements that you need to understand and meet once you have RHC status.
Post your hours of operations at or near a handicap-accessible area of the entrance to your practice. Hours need to clearly state the days of the week and the hours that your patient services are available. If you’re open in the building for other purposes, that information must also be included.
Specific billing requirements: RHCs require UB-04 forms for facilities and CMS-1500 forms for physicians. Ensure your billing staff is trained on — and your software capable of — compliance. RHCs can’t submit claims under the Physician Fee Schedule (PFS).
Tip: Find an EHR with UB-04 software RCM integration or outsource RCM services to avoid penalties and maximize revenue.
Also, if a patient comes in more than once in a day, you can only bill Medicare for one visit. That applies whether they see one or more practitioners in the day, and usually regardless of the reason for the visits. The exceptions that allow for two visits to be billed on one day are:
- If one visit is medical and one for mental health
- The second visit is due to a separate illness or injury that happens that same day
- One visit is for preventive health and one is for non-preventive medical or mental health
Data capture and reporting: Effective data capture and reporting are critical for compliance and proper reimbursement. Your EHR system should support the unique needs of RHCs, including tracking patient encounters that are RHC-qualified visits, accurate bad debt or writeoff adjustments, and clinical quality measures.
Annual cost reporting: RHCs are required to submit annual cost reports to CMS that detail their expenses and revenues for all services. Preparing these reports accurately is essential to maintain compliance. Reports are subject to audits. If you have multiple sites, you may be eligible to submit a consolidated cost report for all sites.
Cost reporting is done on the following forms:
- Independent or freestanding RHCs: Form CMS-222-17
- Hospital-based RHCs: Worksheet M of Form CMS-2552-10, Hospital and Hospital CareComplex Cost Report.
Use your EHR’s built-in analytic tools to simplify reporting and simplify the process.
Ongoing monitoring of overpayments. RHCs must identify overpayments and report them within 60 days. You want an EHR that automatically flags overpayments for you.
What's Next?
Converting to an RHC takes time, investment, and ongoing compliance. But for clinics serving underserved rural populations, the benefits can be significant — improved reimbursement, expanded services, and a stronger role in community health. By understanding the requirements and preparing, you can position your practice for success as a certified rural health clinic.
Learn more in the cms.gov Rural Health Clinic Fact Sheet.
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Frequently Asked Questions About Rural Health Clinic Requirements
Rural health clinics must operate under physician medical direction and have a nurse practitioner (NP), physician assistant (PA), or certified nurse midwife (CNM) providing patient care services at least 50% of the time the clinic is open. And at least 51% of total operating hours must be dedicated to primary care services.
To qualify, a clinic must be located in a non-urbanized area with a population of less than 50,000 or in a federally designated shortage area, such as a Health Professional Shortage Area (HPSA) or Medically Underserved Area (MUA). CMS uses federal census and designation data to determine eligibility.
For 2026, the Medicare all-inclusive rate (AIR) payment limit is $165 per visit for independent RHCs and provider-based RHCs in hospitals with 50 or more beds. The AIR is adjusted annually based on the Medicare Economic Index (MEI).
Independent or freestanding RHCs use CMS Form 222-17. Hospital-based RHCs report costs using Worksheet M of CMS Form 2552-10. Accurate cost reporting is required annually and is subject to an audit by CMS.
Yes. Mobile clinics can qualify as RHCs if they operate on a set schedule and each service location meets RHC eligibility requirements. All applicable staffing, service, and compliance rules still apply.
The certification process usually takes several months, depending on documentation, CMS review timelines, and state or accreditation organization surveys. Once certified, RHC status is valid for five years, with periodic surveys required for recertification.
Yes. RHCs bill Medicare using UB-04 form (facilities) and CMS-1500 form (physicians). RHCs can’t bill under the Physician Fee Schedule (PFS). Most services are reimbursed under the AIR, and Medicare generally allows for one billable visit per patient per day, with limited exceptions.
Sources
1 Rural Health Information Hub, Rural Health Clinics (RHCs), https://www.ruralhealthinfo.org/topics/rural-health-clinics
2 Center for Medicare and Medicaid Services (CMS), mln Matters, Rural Health Clinic & Intensive Outpatient Program Payment Rates: CY 2026 Update, Dec. 2025 https://www.cms.gov/files/document/mm14303-rural-health-clinic-intensive-outpatient-program-payment-rates-cy-2026-update.pdf
3 Center for Medicare and Medicaid Services (CMS), Medicare Benefit Policy Manual, Chapter 13 – Rural Health Clinic (RHC) and Federally Qualified Health Center (FQHC) Services, Mar. 2025, https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/bp102c13.pdf
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