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Rural Health Clinics Frequently Asked Questions


What is a Rural Health Clinic and what are the benefits?

A Rural Health Clinic (RHC) is a clinic certified to receive special Medicare and Medicaid reimbursement. The purpose of the RHC program is improving access to primary care in underserved rural areas. RHCs are required to use a team approach of physicians and midlevel practitioners such as nurse practitioners, physician assistants, and certified nurse midwives to provide services. The clinic must be staffed at least 50% of the time with a midlevel practitioner. RHCs are required to provide out-patient primary care services and basic laboratory services.

RHCs receive special Medicare and Medicaid reimbursement. Medicare visits are reimbursed based on allowable costs and Medicaid visits are reimbursed under the cost-based method or an alternative Prospective Payment System (PPS). Ordinarily, this will result in an increase in reimbursement. RHCs may see improved patient flow through the utilization of NPs, PAs and CNMs, as well as more efficient clinic operations.


Will RHC certification guarantee a better financial return?

Not necessarily. It is very important to complete a financial assessment to see if the RHC program is right for your area. Financial benefits of RHC status depend on the mix of payers and services offered. Traditional fee for service could be better in some cases. When evaluating financial feasibility, look at the broader financial picture rather than individual visits. Chapter Three of Starting a Rural Health Clinic: A How-To Manual discusses financial feasibility analysis for potential RHCs.

You may want to hire a consultant to conduct a financial feasibility study. You can find a list of consultants through:

Please note that NARHC does not endorse these consultants, and is only providing the list as a service.


Does a clinic have to be public or non-profit to be an RHC?

No. RHCs can be for-profit or not-for-profit, public or private.


What is the difference between a provider-based RHC and an independent RHC?

Provider-based RHCs are considered an integral part of a hospital, nursing home or home health agency that is already a Medicare certified provider. The provider associated with the RHC handles its reimbursement. RHCs that are provider based to a hospital with less than 50 beds are exempt from the per-visit reimbursement cap. Independent RHCs are generally stand-alone clinics. Both provider based and independent RHCs submit their claims through their Medicare Administrative Contractor (MAC) for processing. You can find contact information for your state's MAC through the CMS Review Contractor Directory Interactive Map.


Are there location requirements for RHCs?

Yes, RHCs must be located in non-urban rural areas with current health care shortage designations however there is no restriction on how closely rural health clinics can be located from one another.

Any area that is not in a U.S. Census-designated "urbanized area" is considered rural. You can use RAC's Am I Rural? tool to as a first step to see if your location qualifies:

  • Go to Am I Rural? tool
  • Enter your location and click "Next"
  • Then check the box next to the program "CMS - Rural Health Clinics Program"
  • Click the "Am I Rural?" button to create a report regarding your location.

The final determination of rural status is made by your state agency responsible for RHC certification and the CMS regional office. If you have questions or want further verification of your location status, please contact your state agency as a next step.

RHCs must be located in a shortage area that has been designated within the last four years by the Health Resources and Services Administration. There are four types of shortage areas that qualify:

  • Geographic-based Health Professional Shortage Area (HPSA)
  • Population-based HPSA
  • Medically Underserved Areas (MUAs)
  • Governor Designated and Secretary certified area

Your state agency responsible for RHC certification may be able to assist you in determining if your area qualifies as a shortage area. Here are more resources that may help you determine if your location is in a shortage area:

For additional information regarding the Health Professional Shortage Area (HPSA) and the Medically Underserved Area (MUA) designations contact the Shortage Designation Branch: sdb@hrsa.gov or 1.888.275.4772. Press option 1, then option 2.

If a location loses its shortage designation, is it possible to remain a Rural Health Clinic?

Yes. Currently pending is the publishing of rules regarding this issue, that states the secretary will not decertify RHC’s that fall outside the designation requirement. For additional information regarding the Medically Underserved Area (MUA) designation, contact the Shortage Designation Branch. You can also call 1.888.275.4772. Press option 1, then option 2.


Do I need a separate building to have an RHC?

No. An RHC can be in a stand-alone building, a part of another building or a mobile unit.


Are there special staffing requirements for RHCs?

RHCs are required to be staffed by at least one nurse practitioner (NP) or physician assistant (PA) or certified nurse midwife (CNM). The NP, PA, or CNM must be on-site to see patients at least 50% of the time the clinic is open. A physician (MD or DO) must supervise the midlevel practitioner in a manner consistent with state and federal law. There is no specific FTE percentage or employed/contracted agreement required for physicians in an RHC, the RHC can contract with the CAH physicians. The physicians do not have to be employed by the RHC, they can provide services under contract to the RHC. There is a minimum federal RHC requirement that the medical director be present at least once every two weeks to assure quality of care and see patients, if necessary. However, a new RHC policy will take effect on July 1, 2014. The new RHC policy will amend the RHC regulations to permit RHCs to contract with PAs and NPs via an independent contractor relationship, as long as one PA or NP working in the RHC is an employee of the clinic (i.e., w-2 employment).

Also under the new ruling effective July 11, 2014, the federal minimum physician on-site requirement in the RHC rules is being modified such that RHCs will be required to follow state law or state regulatory requirements. If there is no physician on-site requirement for NPs or PAs, then as long as the PA or NP is practicing in accordance with state law/state regulatory mechanism you will have satisfied the new requirement. For further clarification on both of these policy changes see the sections: Condition of Participation: Staffing and staff Responsibilities and Staffing and Staff Responsibilities located within the:  Medicare and Medicaid Programs: Regulatory Provisions to Promote Program Efficiency, Transparency, and Burden Reduction; Part II final rule.


Are there Quality Assessment and Performance Improvement (QAPI) requirements for RHCs?

Currently, the requirement for quality improvement is to conduct an annual program evaluation to include volume and type, and review both current and closed charts. Until a rule is published, CMS has stated that if a formal QAPI program is in place this will meet the requirement for annual program evaluation. For more information about quality improvement for RHCs, please see the Office of Rural Health Policy's Rural Health Clinics Technical Assistance Conference Call Series website.


How does Medicare reimburse RHCs?

RHCs receive an interim payment throughout the clinic’s fiscal year which is reconciled at the end of the fiscal year through cost reporting. The interim payment rate is determined by taking total allowable costs for RHC services divided by allowable visits provided to RHC patients receiving core RHC services.

RHC staff must meet traditional Medicare regulations for coding and documentation as well as unique RHC billing requirements.


How do states reimburse RHCs for Medicaid?

All state Medicaid programs are required to recognize RHC services. The states may reimburse RHCs under one of two different methodologies.

The first is a prospective payment system. Under this methodology, for FY (fiscal year) 2001, the state calculates a per visit rate based on an average of 100 percent of the reasonable costs furnished in FY 1999 and FY 2000. For each succeeding year, this per visit baseline rate is then increased by the Medicare Economic Index factor. For new facilities after FY 2001, the state will establish a per visit rate based on 100 percent of reasonable costs of furnishing services during the fiscal year.

The second methodology is an Alternative Payment methodology. Under this methodology, there are only two requirements: 1) the clinic must agree to the methodology, and, 2) the payment to the clinic must at least equal the payment under a prospective payment system.

Medicaid agencies also may cover additional services that are not normally considered RHC services, such as dental services.

For more information about state Medicaid benefits for RHC services, see this state-by-state guide to Medicaid benefits from the Kaiser Family Foundation and National Conference of State Legislatures.


Where are existing RHCs located?

The Centers for Medicare and Medicaid Services (CMS) provides a listing of Certified Rural Health Clinics by state and county. Also, a listing of Rural Health Clinics, obtained from the CMS Provider of Services and current as of July 2010, is available in Excel format, courtesy of The Maine Rural Health Research Center.

You may also contact the state agency responsible for certifying RHCs to request the names of RHCs in your area. Typically, clinic staff are willing to assist new start-ups as long as the new clinic is not in competition for clients.


How do I get certified as an RHC?

The first step is to determine if the site is eligible. Contact your state agency responsible for RHC certification to find out if your site qualifies for Rural Health Clinic status. The site must be in a U.S. Census non-urbanized area and a health care shortage area designated within the last four years. See Are there location requirements for RHCs?

The second step is to evaluate the financial feasibility of RHC status based on estimated (for new clinics) or actual (for existing clinics) data on payer mix – Medicare, Medicaid, other. Existing practices that do not have an NP, PA or CNM on staff must consider whether the cost of hiring one will be offset by increased revenue.

The third step in the certification process is filing an RHC application and a CMS provider enrollment form. Contact your state agency responsible for RHC certification for an RHC application packet. The CMS 855A Medicare Enrollment Application - Institutional Providers form is available on the CMS web site.

You will be notified that you are eligible for the RHC program after your applications (the number of applications depends on your state) have been processed. The next step is the RHC Certification inspection. When you are ready for inspection and in compliance with RHC requirements, notify your state agency. The state agency will then conduct a survey. There are two alternatives to your state survey agency: the American Association for Accreditation of Ambulatory Surgery Facilities, Inc. (AAAASF) RHC program, a private accreditation program that facilitates the inspection process for new clinics or clinics seeking renewal resulting in Medicare Certification for Rural Health Clinics; and The Compliance Team, a nationally recognized healthcare accreditation organization that provides Exemplary Provider® branded accreditation services including Medicare Certification for Rural Health Clinics.

The last step of the certification process is the RHC Cost Report. Once a clinic has received its Medicare Provider Letter from CMS, the clinic files a projected cost report to have its Medicare Rate determined. It is important to get expert advice from someone familiar with the CMS-222 Schedule M Cost Report. Accuracy can have significant financial impact on year-end cost report.


What other options are there for providing primary care in rural areas?

Some other options include the Federally Qualified Health Centers program and the Critical Access Hospitals program. See the publication Comparison of the Rural Health Clinic and Federally Qualified Health Center Programs for comparisons of the RHC and FQHC options.



Last Reviewed: 1/17/2014

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Funding for this project was supported by Grant Number U56RH05539 from the Office of Rural Health Policy, Health Resources and Services Administration, U.S. Department of Health and Human Services. The contents of this website are solely the responsibility of the authors and do not necessarily represent the official views of the funder.