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Eligibility Requirements and Potential Benefits of Becoming a Rural Health Clinic

Is your clinic missing out on potential enhanced Medicare and Medicaid reimbursement?

The Rural Health Clinic Service Act of 1977 was established with the intent to increase access to primary care services for Medicaid and Medicare patients in rural communities.

Is my clinic eligible to become a Rural Health Clinic (RHC)?

To be eligible, clinics must be:

  • located in a rural, underserved area as designated by the government and
  • in a health professional shortage area (HPSA) or medically underserved area (MUA) as designated by the Health Resources Services (HRSA), which has received designation within the last four years.

Why should my clinic consider becoming an RHC?

Potential Benefits of being an RHC include:

  • RHCs receive enhanced reimbursement rates for providing Medicare and Medicaid services. These rates do vary depending on which RHC type the clinic is, independent (free-standing) or provider-based. An independent RHC will receive a capped rate while a provider-based RHC will receive an un-capped rate based on cost.
    • Independent RHCs are generally private physician offices or hospital clinics where the parent hospital has over 50 beds.
    • Provider-based RHCs with parent hospital housing less than 50 beds results in an un-capped RHC rate. If the parent hospital has more than 50 beds the RHC will receive the same capped rate as an independent RHC.
    • Pediatrics, family medicine, internal medicine, OB/GYN and mental health services typically have the greatest impact on reimbursement with the RHC status.
      • A RHC can provide specialty services can be provided at the clinic but primary care services must account for 51% of the total services provided.
    • RHCs receive the same payment for patients seen by Physicians or NP/PAs.
    • Separate fee schedule payments are established for Care Management services in RHCs.
    • Provider-based RHCs receive 340B savings as long as the parent hospital is receiving 340B.
    • RHCs providers and other clinical staff are eligible for potential loan repayment through the National Health Service Corp.
    • RHCs are allowed to claim bad debts.
    • RHCs can have multiple encounter rates within a single date of service.
    • RHCs get statutory protection from Medicaid pay cuts – the RHCs are required to be made whole to their approved rate for qualifying RHC services.
    • RHCs are not subject to MIPS/MACRA penalties.

How do we become an RHC?

Blue & Co. has helped multiple facilities make the conversion to RHC, and our team has the knowledge and skills to help through all the phases of obtaining and maintaining RHC status. If you would like to discuss whether making the transition to a Rural Health Clinic is the right move for your practice, please contact us today.

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