Blog, Reimbursement, The Hospital Finance Podcast®

Best of Episode: What it Means to be Designated as a Rural Health Clinic [PODCAST]

besler insights blog corner graphic

The Hospital Finance Podcast

In this best of 2021 episode, we are joined by Andrew Kinnaman, BESLER’s Reimbursement Manager, who talks to us about what it means to be designated as a Rural Health Clinic.

Learn how to listen to The Hospital Finance Podcast® on your mobile device.

Highlights of this episode include:

  • When and why the Rural Health program was established
  • What specific services a Rural Health clinic must provide
  • Qualifications necessary for Medicare certification
  • What changes COVID-19 brought upon RHCs

Mike Passanante: Hi, this is Mike Passanante and welcome back to the award winning Hospital Finance Podcast. Today I’m joined by Andrew Kinnaman of our reimbursement services team here at BESLER, who’s going to talk to us about what it means to be designated a Rural Health Clinic. Andrew, welcome to the show.

Andrew Kinnaman: Well, thank you. And thank you for the invitation and the opportunity to share this knowledge with our listeners.

Mike: Well, we’re looking forward to learning more about it. So, Andrew, why don’t you start off by telling us when the Rural Health Clinic program was established and what was the purpose of the program?

Andrew: Well, actually, I was kind of shocked to find out that it started– back in 1977, it was enacted. And so it’s been here for a long time. Now it’s been updated as times change, but it was really set up– the purpose of the program, I’d really say, would be three fold. And one was it was to address the inadequate supply of physicians who serve Medicare and Medicaid beneficiaries in rural areas. But it also served the purpose to increase the uses of what I call other practitioners, nurse practitioner, physician assistant, certified midwives, in these same rural areas. The payment or the mechanism for what they wanted to provide was that the program provide qualified clinics located in rural and medically underserved communities with the payment on cost related basis for both outpatient physician and certain nonpatient services. So overall, it’s been around for quite a long time, Mike. And so we’ll go over some of the changes that have happened over the years, because they have updated those, later in this presentation.

Mike: That sounds good. Andrew, are there specific services that rural health clinics must provide?

Andrew: Yes, there is. There’s really about six qualifications or services they must provide – I’ll go over them briefly – being that they must provide physician services and services and supplies incident to the services of the physician. Also, with that, almost in the same breath, you could sit there and say they must provide the practitioner services and supplies incident to the services of these group of practitioners, which, when I say other practitioners, this includes the nurse practitioner, physician assistants, certified nurse wife. But it also groups in it clinical psychologists and clinical social worker. So those two have been added as additional services that RHC must furnish. And then they also must have Medicare Part B covered drugs that are furnished by and incident to the services of the rural health clinic. They can provide visiting nursing services to homebound in an area where CMS has certified that there is a shortage of home health agencies. And more recently, you’ll find that they’ve included certain care management services and certain virtual communication services that obviously weren’t there when this was enacted back in 1977.

Mike: That makes sense. Andrew, what are the qualifications necessary for Medicare certification as a rural health clinic?

Andrew: Well, in my opinion, it really comes down to two main facets for Medicare certification, and that is what I call location and service conditions. So I’ll cover kind of the locations at this moment and then we’ll go over the service in the next question. But really, as a location, it has to be a nonurbanized area as defined by the US Census Bureau and an area currently designated by the Health Resources and Service Administration, or as commonly known HRSA, with the previous four years as one of these types of areas. So, again, you have to have one and one of these others, which is a primary care geographic health professional shortage area. A lot to swallow there, but basically that’s an HPSA. Then there’s a primary care population group. HPSA. You can be part of a medically underserved area under Section 330 B3 of the PHS Act. Or finally, a governor designated and secretary certified shortage area under the Section 62 13C of the Omnibus Budget Reconciliation Act of 1989. So again, in locations, you certainly have to meet both of these, one being the nonurbanized area, and secondly, meeting one of those last four criteria’s that I mentioned.

Mike: And Andrew, you alluded to the idea that there are other conditions a facility must meet to be qualified as an RHC. What would those conditions be?

Andrew: Yeah. For my own terminology, I put these in a bucket called service conditions. And there are really 11 conditions an RHC must meet at this point. And I’ll, again, briefly go over each one and direct what is the qualification. So the first one is they must employ a nurse practitioner or physician assistant. Now it can contract with other practitioners when the rural health clinic actually employs at least one NP or PA. So the key there is you must employ a nurse practitioner or a PA and then you can contract other positions out if necessary. You secondly, have to have a nurse practitioner, a physician assistant, or a certified nurse midwife working at the clinic at least 50% of the time that the RHC operates. Okay. Third, directly furnish routine diagnostic and laboratory services. So they have to be able to at least provide services that would be equivalent to some of the patients that they would see and services that they would provide as a rural health clinic. They must have arrangements with at least one or more hospitals to furnish the medically necessary services that are not eligible at the RHC. Okay. They must have available drugs and biologicals necessary for the treatment of emergencies. And for the purposes of laboratory, they must furnish specific onsite laboratory tests. There’s about six of these that we will go through real quickly. I’ll just list them out so that everyone understands that these are at least the minimum that they have to do.

And that is a chemical examination of urine by stick or tablet method or both, a hemoglobin or hematocrit, blood sugar, examination of stool specimens for cold blood, pregnancy test, and primary culturing for transmittal to a certified lab. Now getting more out of the services, but also part of their requirements is they have to have a quality assessment and performance improvement program. They must post operation days and hours. And then there’s a couple negatives here. They cannot be a rehabilitation agency or a facility that is primarily for the treatment of mental disease. They cannot be a federally qualified health center. And last but not least, they must meet other applicable state and federal requirements. So in summary, those are the 11 conditions that an RHC must meet to be certified.

Mike: Okay. What is the payment basis by Medicare for an RHC?

Andrew: Well, for our discussion purposes, I’m going to cover three services that receive payment. There are some additional ones that we’ll get to, but these are the primary ones that you’ll see for an RHC. So rural health clinics are subject to a maximum payment rate per visit. This was established by Congress and is annually updated based on the Medicare Economic Index percentage. The payments are made based on an all inclusive rate or what we have as AIR, air. This is a per covered visit rate with the exception of psychological or psychiatric therapeutic services. Those do not fall into the all inclusive rate. Now Medicare will apply a Part B deductible to rural health care services based on the total charges. But non covered charges, expenses, do not count towards that deductible. But when the deductible is met, Medicare pays the rural health clinics 80% of that AIR or what we call the all inclusive rate, for each rural health clinic visit, except for the preventive services, which Medicare pays those at 100%. Now, there is an exception to this maximum payment rate per visit, and that is if a provider based RHC that are integral and subordinate part of the hospital with fewer than 50 beds, they can receive an exception to the payment limit and would be 100% cost reimbursed. So that’s obviously something you’ll want to look at carefully if you’re a hospital based rural health clinic and you have fewer than 50 beds.

There’s also a separate payment for the cost of the influenza and pneumococcal vaccines and related administration. Now, those are separately reimbursed at the annual cost settlement. So those are information and data you’ll want to collect that will be reported on the cost report for the purposes of settlement. It’s not a claim based or billable service in that process. And then finally, there is also administrative and payment for hepatitis part B vaccine. The rural health clinics’ all inclusive rate covers the cost of this Hep-B and administration. Now, if a beneficiary gets other qualifying RHC services on the same day that they get the Hep-B, the rural health clinic bills the vaccine and then its administration separately. But finally, Medicare also pays for laboratory tests, excluding venipuncture and the technical components of RHC services separately. So there is a separate payment for laboratory tests that are paid to the rural health clinic.

Mike: What other types of services can RHCs get paid for?

Andrew: Well, there are three that I want to cover briefly with you. One is care management services. The other is telehealth services and virtual communication services. Now, a lot of these are all kind of new payment mechanisms from the original act. And that’s why I wanted to kind of separate them from the original payment mechanism. So in essence, RHCs may provide general care management services, which includes chronic care management. It also includes general behavioral health integration and psychiatric collaborative care model services. Well, with this, most RHCs are required to do face-to-face services. But with this services, Medicare waives the face-to-face service requirement for the care management services. And also, auxiliary personnel may furnish these services under a general supervision. Medicare pays the rural health clinics for these care management services using specific HCPCS codes G0511 and G0512. So again, this will be separate from but say what we originally came through on the AIR.

Now, as terms of telehealth services, if it’s an originating site, if the RHC is in a qualifying area– so an originating site is where an eligible Medicare beneficiary is located during that telehealth services. So RHCs that served as an originating site for telehealth services are paid on an originating site facility fee, and charges for the originating site facility fee may be included on a claim. Lastly, starting on January 1st, 2019, Medicare pays rural health clinics for virtual communication services when an RHC practitioner provides a beneficiary at least 5 minutes of a billable RHC communication technology based or remote evaluation services. And that’s a key, that it’s a technology based on remote evaluation services. Now, the beneficiary must have had a billable visit within the previous year to be able to even qualify for a virtual communication services, and the services must meet the following two requirements. One, the beneficiary did not get any rural health clinic services within the previous seven days of that virtual medical discussion or remote evaluation. And two, the beneficiary needs no RHC service within the next 24 hours or at the soonest available appointment.

Now, Medicare requires RHCs to submit the virtual communication service claims with a HCPCS code of G0071 alone, or with other payable services to get the payment. So when an RHC practitioner provides a beneficiary a virtual communication services, obviously Medicare will waive the RHC face-to-face requirement, and it will apply deductible and coinsurances to the services. So these are three different ones that have been updated recently and were not part of the original intent of Congress of the rural health clinic face-to-face visits and part of the AIR.

Mike: Andrew, in a previous question, you made note of an all inclusive rate per covered visit. Can you briefly describe what the definition of a covered visit is?

Andrew: Yes. Well, RHC visits are considered to be medically necessary face-to-face encounters between the beneficiary and a physician, or what I call the other practitioners, which is your NP, PA, your CNM, your CPA or CCW, during which a RHC service is furnished. Now, the service requires the skill level of the RHC practitioner. So you couldn’t have someone do a service that isn’t at the level that is required to provide that service. So that’s an important part. And as this kind of states, it’s a medically necessary face-to-face encounter. Now, we’ve seen that they’ve waived certain things as times have changed. And so not necessarily is everything a face-to-face at this point. But that was the general rule of what a visit would be constitute to be for a covered visit. Now, in certain limited situation, an RHC visit may include a visit by a registered professional nurse or licensed practitioner nurse to a homebound beneficiary. So you do have the opportunity under those situations that it can be a homebound beneficiary that is being serviced. Now, visits can take place in the rural health clinic itself, at the beneficiary’s home, as we just pointed out. It can be in a Medicare covered Part A SNF, or a skilled nursing facility, or at the scene of an accident.

So those are really the basic four places that a covered visit can be provided. Now, visits cannot take place at an inpatient or outpatient hospital, which including the critical access hospital, and a facility with specific requirements that exclude RHC visits. So those are the kind of brief explanation of the visit, what it is, what can be a visit and what cannot be a visit. Now, there’s one other thing to follow up on that and that is encounters or the way you count the visit. So encounters at a single location on the same day with more than one health professional and multiple encounters with the same health professional constitute a single visit. Now, like everything, there are exceptions to that. And so I’ll list these three exceptions. But basically, if you see a patient more than once in a single day by any number of providers at the rural health clinic, unless it meets the exception, it’s going to be just counted as one visit, not multiple visits.

So the exceptions are the patient suffers an illness or injury requiring additional diagnosis or treatment subsequent to the first encounter. Or, the beneficiary has a medical and a psychological visit with a clinical psychologist or clinical social worker. Lastly, the beneficiary has an initial preventive physical examination or IPPE and a separate medical and or psychological visit on the same day. Then you can have a counted visit for that exception. So those are really the basic requirements of what is a covered visit under the all inclusive rate.

Mike: Great explanation, Andrew. Let me ask you, what are the filing requirements for RHCs to receive Medicare reimbursement?

Andrew: Well, annually, RHCs must file an annual cost report and this will be filed just like any other with the MAC or your intermediary. And to report this, it’s really to determine their payment rate going forward and to reconcile any payments that they received during the year, or interim payments. Now, these payments can include graduate medical education costs if they happen to be part of that program, anything for bad debts, for your influenza and pneumonia vaccines and their administration. And so this is usually done on the Schedule M of a provider based rural health clinic. And so we’re going to cover that a lot more. So in an upcoming webinar for rural health clinics, I’ll be going through a much more deeper discussion of the actual reimbursement, what we’re looking for on a cost report, what data sources are required, a whole bunch of other things that will be added to this when it comes to actually filing your Medicare cost report for your rural health clinic. So I hope everyone has a chance to sign up and attend if you can.

Mike: Sounds good. Andrew, one final question for you. What changes did COVID-19 bring upon RHCs?

Andrew: Yeah, I’m going to cover about four different changes that I saw recognized by CMS for the COVID-19. And first and probably most importantly, just like the influenza vaccine, is that COVID-19 vaccines and their administration will be paid the same way as the influenza vaccine and their administrations are paid. What that means is we got to be very conscientious about capturing the the number of vaccines, the costs associated with it, and their administration of it, because it will be cost based through the annual settlement of the cost report, at least at this point. They also changed telehealth services, authorized RHC to furnish distant site telehealth services to Medicare beneficiaries during COVID-19 and the public health emergency. Now, this became in effect– this became effective somewhere around March 1st, 2020, and is effective for the duration of the public health emergency. Next, they did an expansion of the virtual communication services. They now include digital assessment services and digital– so what is a digital assessment service? Really what it is is it’s a non face-to-face patient initiated digital communications using a secure online patient portal. That was the definition of what a digital assessment services are. Now these will be paid and they are effective from March 1st, 2020 for the duration of the public health emergency.

And finally, they have a revision of the rural health clinic HHA shortage requirement for visiting nursing services. This allows RHCs to bill for visiting nursing services furnished by an RN or LPN to homebound individuals under a written plan of treatment in areas with a shortage of HHA. Again, this is effective from the March 1st, 2020 for the duration of COVID-19 PHE or public health emergency. So these are kind of the four major items that changed due to COVID. And I think, again, the principle one, if you offer all these, is the COVID-19 vaccine, so making sure you track that, because obviously that will be cost based on an annual settlement.

Mike: Andrew, that was excellent information. Thank you for that. For everyone in the audience, as Andrew mentioned, there is a webinar on this topic which goes into much greater detail around cost report issues for RHCs. If you weren’t able to catch it live, you can go to, click on the Insights button at the top, and then just go over to the Reimbursement tab and you’ll see a recording of that webinar there that you can watch. Also, if you are in need of a cost report review or even a preparation for your rural health clinic and like some more information about that, just drop us a line at Andrew Kinnaman, thanks so much for joining us today on the Hospital Finance Podcast.

Andrew: Thank you.

The Hospital Finance Podcast

SUBSCRIBE for Weekly Insider Updates

  • Podcast Alerts
  • Healthcare Finance News
  • Upcoming Webinars

By submitting your email address, you are agreeing to receive email communications from BESLER.

BESLER respects your privacy and will never sell or distribute your contact information as detailed in our Privacy Policy.

New Webinar

Wednesday, June 12, 2024

live streaming

Partner with BESLER for Proven Solutions.