Rural health clinic

At the time of creation of an RHC, the clinic must be located in an area that has the following characteristics:^[6]

• defined as a non-urbanized area (fewer than 50,000 inhabitants) by the United States Census Bureau
• defined as medically under-served by one of the following characteristics:
  • Primary Care Geographic Health Professional Shortage Area (HPSA) under Section 332(a)(1)(A) of the Public Health Service Act (PHS Act);
  • Primary Care Population-Based HPSA under Section 332(a)(1)(B) of the PHS Act;
  • Medically Underserved Area under Section 330(b)(3) of the PHS Act; or
  • Governor-designated and Secretary-certified shortage area under Section 6213(c) of the Omnibus Budget Reconciliation Act of 1989.

In addition, a RHC must employ a nurse practitioner (NP) or a physician assistant (PA) and have a NP, PA, or certified-nurse midwife (CNM) available at least 50 percent of the time the RHC operates.

At least 50% of services furnished in an RHC must be services typically performed in an outpatient setting and RHCs are prohibited from primary providing behavioral health services.

RHCs must be certified through a survey process by a State Survey Agency and meet Medicare's Conditions for Certification.^[6] RHCs must undergo an annual program evaluation to ensure quality of care.^[7]

Rural Americans face a number of challenges in accessing healthcare, namely a lack of healthcare professionals and access to providers. Only 10 percent of physicians and 23 percent of specialists reside in rural areas.^[8] Compared to their urban counterparts, rural residents have to travel much farther to receive treatment.^[8] 23 percent of the rural population are Medicare beneficiaries while 45 percent of rural poor are covered by Medicaid.^[8]

To encourage the development of RHCs serving rural, under-served communities, Medicare reimburses RHCs using cost-based reimbursement. RHCs receive an all-inclusive rate (AIR) per visit for all Medicare services rendered.^[9] This is different from most medical providers in the United States, which are paid based on the cost of the services provided using the Physician Fee Schedule (PFS).

If an RHC is owned by a hospital with fewer than fifty beds, there is no cap for the cost-based reimbursement. If, however, the RHC is owned by a hospital with more than fifty beds the cost-based reimbursement is capped at $83.45 per visit.^[10] Reimbursement for independent RHCs is capped at the same rate as provider-based RHCs with more than fifty beds. This cap is adjusted annually based on the percent change in the Medicare Economic Index (MEI).

Prior to 2001, State Medicaid Programs were required to pay RHCs via a cost-based reimbursement model similar to that of Medicare. This methodology required that RHCs submit cost reports in order for states to determine reasonable costs for personnel, services, supplies and other administrative fees. However, the passage of the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA 2000) replaced cost-based reimbursement with a state-specific prospective payment system (PPS). The BIPA PPS model requires states to reimburse RHCs at least 100 percent of the average of the costs of the clinic in fiscal years (FY) 1999 and 2000 trended forward for inflation, creating a "floor" for Medicaid reimbursement. States are allowed to reimburse RHCs for Medicaid via any methodology they chose but the total Medicaid reimbursement must at least exceed this "floor".