Next Steps: Changes to the RHC Program

The year-end COVID-19 relief package made significant changes to Medicare reimbursement for Rural Health Clinics (RHC).  While increases to the cap for freestanding RHCs are a positive development, other changes will have implications for provider-based RHCs.

Attached and below are policy recommendations of further modernizations to be made to the program in the 117th Congress.

Section 130 of the bill made the following notable changes to the RHC Program   

  • Increases the freestanding RHC limit to $100 beginning April 1, 2021 taking it to $190 in 2028.
  • Subjects all “new” (certified after 12/31/19) RHCs, both freestanding and provider-based, to the new per-visit cap.
  • Eliminates the exemption of payment limit for new provider-based RHCs. Any provider-based RHC certified after 12/31/19 will be subject to the same limits as freestanding facilities, meaning no new provider-based RHCs can receive uncapped cost-based reimbursement.
  • Provider-based RHCs in existence as of 12/31/19 would be grandfathered-in at their current All-Inclusive Rate (AIR) and would receive their 2020 AIR plus an adjustment for MEI (the Medicare Economic Index) or their actual costs for the year.

Technical Correction Recommendation

  • Addressing provider-based RHC’s who were under construction and/or in development as of date of enactment. The backdating for new provider-based RHC of the December 31, 2019 is not acceptable and should be changed to April 1, 2021, when the change goes into effect. That will give hospitals currently in the process of converting RHCs an opportunity to address their planning and complete pending conversions.  In the middle of a pandemic, as much flexibility should be given to rural providers as possible.

RHC Modernization Policy Recommendations   

  • Permanently enable all RHCs to serve as distant-site providers for purposes of Medicare telehealth reimbursement and to set reimbursement for these services at their respective AIR. Additionally, these services should be counted as a qualified encounter on the Medicare cost report.
  • Modernize physician, physician assistant, and nurse practitioner utilization requirements to allow for arrangements consistent with State and local law relative to practice, performance, and delivery of health services.
  • Continue cost-based reimbursement without a per-visit cap in exchange for requiring provider-based RHCs reporting of quality measures, perhaps per the Uniform Data System (UDS) or another like system. Provider-based RHCs would use the higher rate to pay for their participation in a quality program.
  • Create an option for low-volume facilities (perhaps those meeting frontier and/or volume threshold) to automatically be eligible to receive a provider-based designation exception to address low-volume issues.
  • Allow RHC’s the flexibility to contract with physician assistants and nurse practitioners, rather than solely employment relationships.
  • Remove outdated laboratory requirements.