What is a Rural Health Clinic (RHC) and Why are They Important?

What Is An RHC & Why Are They So Important?

An RHC, or Rural Health Clinic, is a rurally located medical clinic providing healthcare services to patients in underserved areas.

Founded in 1977, the RHC program incentivizes physicians to provide primary care for rural residents while also encouraging the use of mid-level providers.

RHCs go through a strenuous Federal certification process in order to benefit from a higher reimbursement plan from Medicare and Medicaid.

Use the links below to jump around, or read through at your own pace.

Benefits of RHCs in Rural Communities

  • Access to primary care that would otherwise be limited or non-existent
  • Provides local basic emergency care and life-saving services
  • Combats physician shortages by using mid-level providers

RHC Fast Facts

  • Over 4,500 RHCs nationally.
  • RHCs can be designated as independent or provider-based (operated as an essential part of a hospital, nursing facility or home health agency).
  • Provider-based RHCs are classified as small or large based on the parent facility’s bed size (50 beds is the break point). Most provider-based RHCs are hospital owned.
  • Missouri and Texas are home to the most RHCs with over 300 each.
  • CMS lists RHCs publicly on the S&C QCOR website.
  • Reimbursement is a fundamental difference between a Federally-certified RHC and a rurally located medical practice.
  • Although not required to do so, 86% of RHCs offer patients no-fee or sliding-fee schedule care.¹
  • The process of becoming an RHC is challenging, but once certified they enjoy higher reimbursements and simplified Medicare billing procedures.

What Are The Benefits Of RHC Certification?

  • Enhanced Medicare reimbursement – 25-75% increase in revenue²
  • Cost-based reimbursement
  • Visit fee is the same for physicians and mid-level providers
  • Visit fee is the same regardless of E&M level
  • Bad Medicare debt can be recouped
  • Simplified Medicare billing procedures
  • Exempt from MACRA, however it may still be beneficial to submit

Enhanced Medicare reimbursement is the driving force behind a clinic seeking RHC certification.

The U.S. Health Resources & Services Administration (HRSA) has stated that a clinic with a minimum 50% Medicare or Medicaid patient volume will see anywhere from a 25% to 75% increase in revenue.

A typical medical practice is reimbursed based on Medicare’s Fee-For-Service (FFS) schedule.

RHC reimbursement is based on a flat fee per visit with a cost-based reconciliation done at the end of the year.

For independent and large hospital-owned RHCs, the flat fee per visit is capped. In 2019, Medicare set the RHC Cap rate for the per visit reimbursement at $84.70. RHCs owned by small hospitals are not subject to the per visit reimbursement cap.

The end of the year cost report allows RHCs to be reimbursed for:

  • Bad Medicare patient debt (at 65%),
  • Some vaccine costs,
  • lab costs, and the technical part of diagnostic test costs.

It is important to note that it may not be beneficial for all clinics to obtain RHC status as it depends on the clinic’s payor mix. Evaluating the financial feasibility of RHC status is critical in determining if your clinic should proceed with RHC certification.

Beyond reimbursement, RHCs may experience other benefits such as operational efficiency utilizing mid-level providers and may be able to qualify for other federal or state programs.

Can Being An RHC Lower Physician Burnout?

A rural phenomenon, results from a pilot study released in 2018 suggest that practicing in rural areas may actually decrease physician burnout. This is good news as rural areas are already susceptible to physician shortages. In addition to being rurally located, RHCs can stay ahead of burnout with four tips found in How to Overcome Physician Burnout in 2019.

Maximizing Reimbursements

Declining reimbursements rank as the top challenge facing rural healthcare providers, according to the recent State of the Industry: Top Trends for Rural Healthcare Providers. Learn how to overcome this obstacle and how to maximize reimbursements in your practice.

In this webinar we’ll cover best practices for charge capture & claims submission, payment processing, patient registration & financial clearance, denials management & AR follow-up.

What Are The Basic RHC Requirements

  • Location
    • Located in a federally defined non-urban area AND
    • Located in a federally defined shortage area (in past 4 years)
  • Staffing
    • Employ at least one nurse practitioner (NP), physician assistant (PA), certified nurse midwife (CNM) (additional staff can be contracted) AND
    • Staff one NP, PA or CNM during 50% of operational hours
    • Meet minimum annual productivity standards
      • 4,200 visits per FTE physician
      • 2,100 visits per FTE mid-level providers
  • Minimum Patient Care/Service Requirements
    • Must perform all of the following on routine lab services on-site,
      • Pregnancy testing
      • Blood sugar testing
      • Stick or tablet chemical urine examination or both
      • Hemoglobin or hematocrit
      • Occult blood stool specimens examination
      • Primary culturing to send to a certified lab
    • Emergency drugs and biologicals on-site
    • Partnership with hospital to provide supplemental medically necessary services
  • Other
    • Maintain required policies, procedures and patient records
    • Conduct an annual quality assessment and improvement program
    • Cannot be an FQHC or primarily a rehab or mental health facility
    • Other federal and state requirements need to be met to complete the RHC certification process. The above list represents the largest fundamental requirements. Many of the detail-oriented requirements are policy and procedure related.

How To Become An RHC

      1.   Location Eligibility Verification

Determine if your clinic location is eligible for RHC status. Rural Health Information HUB provides an “Am I rural?” Tool, but ultimately you can verify with your state agency.

      1.   Feasibility Study

Before making an investment in becoming an RHC, a thorough financial analysis should be conducted to ensure that converting to an RHC is financially beneficial. An RHC consultant can help conduct the study. HRSA also makes a basic template available.

      1.   Request RHC application packet

Each state’s application packet varies. After completing the RHC application and provider enrollment, you will be notified if approved to continue the RHC process.

      1.   RHC Certification Survey (Inspection)

Once your clinic is in full compliance with RHC regulations, you can contact your state or one of the two CMS-approved RHC certification companies. RHC certification is considered “Tier 4” priority for most states, which can mean waiting months. The RHC certification survey or inspection covers four key areas; policies and procedures, medical records, facility, and program evaluation. For details, reference Chapter 5: Preparing for the RHC Certification Inspection of HRSA’s “Starting a Rural Health Clinic – A How-To Manual

      1.   Cost Report

Once assigned a Medicare number, a projected cost report is filed with Medicare to determine a preliminary per visit fee. The accuracy of this report is imperative as it has a significant impact on reimbursement.

For a complete step-by-step guide, visit HRSA to view “Am I rural?” Tool The entire process may take 6 to 9 months.

22 Tips & Tricks to Increase Practice Reimbursements

Ask yourself: Are we consistently collecting patient co-pays? Are our patients paying on time? Are more than 4% of our claims being rejected? Do we have a monthly period close process? If you can’t answer “yes” to all of these questions, this list is for you!

Learn quick and easy ways to enhance your collection process and increase practice reimbursements

How To Maintain RHC Compliance

  • Annual Cost Reporting
    • Cost reports must be submitted within 5 months of the end of the clinic’s fiscal year.
    • Clinics need a systematic procedure to track number of visits accurately per provider.
    • It is advised to develop a system of checks and balances between scheduling and reporting to verify number of visits.
      • Example: Pull a report in your EHR and PM software and compare the number of visits seen by provider vs NP to the data in the scheduler.
  • Up-to-Date Provider Credentialing
    • Physician and mid-level providers are constantly recredentialed.
    • Visit CMS/Medicaid site quarterly to check if a provider needs to be recredentialed. Notices are publicly posted.
  • Annual Program Evaluation
    • RHCs are required to conduct an annual self evaluation. RHC program evaluation is subject to review by certified surveyors for initial certification and compliance inspections.
    • Surveyors will want to know the following questions were asked and any actions taken based on response.
      • Were RHC services utilized appropriately
      • Did staff adhere to policies?
      • Are any updates warranted?
  • Staff Education
    • Educate staff on RHC policies, regulations, and history. Inspectors can speak with any staff member and expect them to be educated on all aspects of the RHC.

How To Prepare For RHC Inspections

Unscheduled inspections can occur as often as every 3 years. Due to low state funding, surveys may occur less frequently than every 3 years. 

  • 838 RHCs under went a standard survey in 2018. 33 RHC surveys were completed based on complaints.
  • More than 1,600 RHCs are overdue for an inspection.
  • It is important for the front desk or first point of contact to be prepared in greeting and directing the surveyor to make a good first impression for the clinic.
  • Surveyors will be reviewing policies, record keeping, physical clinic requirements, emergency preparedness and more!
  • Policies and procedure topics include HR, administration, clinical protocol, and medical guidelines per RHC Code of Federal Regulations (CFR) §491.7(a)(2). HRSA provides a sample manual as a reference for new RHCs.
  • Inspectors expect everything to be in a file or binder ready to be reviewed. It is not ideal to keep them waiting.

A lot of ongoing compliance and preparation goes into maintaining an RHC’s certification to pass inspection. RHC consultants help RHCs maintain policies and procedures, conduct annual quality evaluation and make improvement recommendations and plan. 

Maintaining compliance is also critical for RHCs to be grandfathered into the RHC program in the event that their location no longer qualifies as RHC eligible.

Survey (Inspection) Results

RHCs must be 100% compliant. If a deficiency is found, clinics have 10 calendar days to submit a Plan of Correction. Depending on the severity, RHCs have 45-60 days to be back in compliance.

What Happens If An RHC Loses Its Certification?

  • Reimbursement reverts back to fee-for-service model, this could be a 25-75% reduction in revenue.
  • Cannot reapply for RHC status for 5 years.
  • When a clinic reapplies, they restart the entire process which could take an additional 6-9 months.

Medicaid RHC Billing

Medicaid’s RHC reimbursement program varies by state. Federal regulations require states to recognize RHC services and minimum reimbursement guidelines exist.

Medicaid’s reimbursement structure was federally established as a prospective payment system (PPS), but states were also given the opportunity to establish an alternative payment model (APM) if agreed to by RHCs.

If a clinic has a large amount of Medicaid patients, it is important to reach out to your state agency to understand your state Medicaid RHC reimbursement structure.

Learn More About RHC Billing by Azalea

RHC vs Federally Qualified Health Clinic (FQHC)

Often confused with or compared to FQHCs, the RHC program precedes the FQHC program by more than ten years. That said, there are more than twice as many FQHCs than there are RHCs. The popularity of FQHCs can be attributed to their higher reimbursements and less restrictive location policy.

Key FQHC differences include: 

  • Can be located in urban areas
  • Stricter operational requirements such as hours open and services offered
  • Required to treat patients of all ages
  • Required to operate on a sliding fee schedule for patients
  • Cannot be a for-profit facility
  • Eligible to receive more federal grants
  • FQHC per visit reimbursement is nearly $80 more compared to some RHCs

For a complete comparison, visit HRSA to view the Comparison Guide.

What Challenges Do RHCs Face?

  1.   Reimbursement

A benefit today, but a challenge in the future. Medicare’s reimbursement cap is the number one issue the RHC program faces. One-third of RHCs³ are affected – independent or large hospital-owned RHCs- are subject to Medicare’s per visit reimbursement cap. This has caused a trend of RHCs being sold to smaller hospitals³ (less than 50 beds).

It is projected that Medicare’s 2020 FFS reimbursement schedule will exceed the RHC per visit reimbursement which undermines the main benefit of RHC designation.

  1.   Survey Process

The RHC “survey and certification” process itself is considered strenuous. “Survey” refers to having a certified “surveyor” visit a clinic to review documents, procedures, and interview staff.

This is the final step in being approved as a Medicare RHC. Every state offers free RHC surveyors, however, states’ have a low prioritization for RHC surveys.

Waiting for the free survey could lengthen an RHC’s certification process. Alternatively, there are two private groups approved by Medicare to perform surveys – Quad A (AAAASF) and The Compliance Team.

Other challenges and focus areas³ the National Association of Rural Health Clinics have identified include:

  • Expanding telehealth use and reimbursement, 
  • Decreasing clinics’ regulatory burden, and 
  • Ensuring the RHC model/reimbursement is protected in the shift from FFS to value-based care.

RHC Billing Updates

CMS has worked to expand reimbursement for RHCs. In 2018, Medicare added reimbursement for RHCs managing chronic conditions for their patients. Starting in 2019, RHCs can now bill for virtual communication services.

Looking Forward: RHC Modernization Act

As healthcare evolves, the programs that supply it need to as well. Proposed legislation, “RHC Modernization Act”, covers 5 topics and makes 6 recommendations to help keep the RHC program viable. The topics include:

  • Payment Options
  • Program Support
  • Services
  • Workforce
  • Lab Requirements

The RHC Modernization Act was formally introduced in the Senate in April 2019 and then in the House in May 2019. NARHC continues to call for grassroots support to rally Senate cosponsors and build bi-partisan House support.

The policy brief and recommendations are available on the HRSA website.

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