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Rural Health Information Hub

Rural Health Clinics (RHCs)

The Rural Health Clinic (RHC) program is intended to increase access to primary care services for patients in rural communities. RHCs can be public, nonprofit, or for-profit healthcare facilities. To receive Centers for Medicare & Medicaid Services (CMS) certification, they must be located in a rural area that is designated as an underserved or shortage area. RHCs are required to use a team approach to healthcare delivery, using physicians working with non-physician providers such as nurse practitioners (NPs), physician assistants (PAs), and certified nurse midwives (CNMs) to provide services. The clinic must be staffed at least 50% of the time with an NP, PA, or CNM. RHCs are required to provide outpatient primary care services, basic laboratory services, and be able to provide “first response” services to common life-threatening injuries and acute illnesses.

The main advantage of RHC status for rural providers is enhanced reimbursement rates for providing Medicare and Medicaid services. The CMS Medicare Learning Network Fact Sheet, Information for Rural Health Clinics, describes how RHCs are reimbursed “an all-inclusive rate (AIR) for medically-necessary primary health services and qualified preventive health services furnished by an RHC practitioner.” For Medicaid, a 2016 CMS letter to state health officials details how Medicaid visits are reimbursed under a Prospective Payment System (PPS) or an alternative payment methodology (APM), providing a payment that is at minimum the same amount required under a PPS. For specific Medicare regulations governing the RHC program, see the Centers for Medicare and Medicaid Services (CMS) Medicare Rural Health Clinics Center or the National Association of Rural Health Clinics' Rural Health Clinics - Rules and Guidelines.

The 2022 Rural Monitor article Rural Health Clinic Program at 45 Years: Created for Access and Still Delivering Care details the origin and history of the Rural Health Clinic program.

The Maine Rural Health Research Center's 2022 publication Community Characteristics and Financial and Operational Performance of Rural Health Clinics in the United States: A Chartbook provides an overview of RHCs in the United States, including clinical and operational data.

Frequently Asked Questions:

Who do I contact if I have questions regarding the development and ongoing management of RHCs?

How do I get certified as an RHC?

Determine if your clinic is eligible – See Are there location requirements for RHCs? for information about location requirements.

Complete the RHC application and the Centers for Medicare & Medicaid Services (CMS) provider enrollment form – Contact your state agency responsible for RHC certification for an RHC application packet. The CMS-29, Verification of Clinic Data – Rural Health Clinic Program and CMS 855A Medicare Enrollment Application - Institutional Providers forms are available on the CMS website.

You will be notified whether you are eligible for the RHC program after your applications (the number of applications depends on your state) have been processed.

Notify your state agency when you are ready for inspection and in compliance with RHC requirements – If you are determined to be eligible for RHC certification, the next step is the RHC certification inspection. Once you notify your state survey agency that you are ready for inspection and in compliance with RHC requirements, the agency will schedule and conduct a survey. There are two alternatives to your state survey agency, QUAD A and The Compliance Team, both of which are Medicare-approved private RHC accreditation organizations.

Establish rates with Medicare and Medicaid – Each Medicare Administrative Contractor (MAC) and state Medicaid agency has its own process to establish RHC rates. It is important to get expert advice from someone familiar with the appropriate cost report. Accuracy can have a significant financial impact on a year-end cost report.

For more detailed information about becoming an RHC, see CMS's Medicare Benefit Policy Manual – Chapter 13 – Rural Health Clinic (RHC) and Federally Qualified Health Center (FQHC) Services and the State Operations Manual: Appendix G – Guidance for Surveyors: Rural Health Clinics (RHCs).

Are there any other considerations before becoming an RHC?

Completing a financial assessment may be helpful to see if becoming a certified RHC is a feasible option and to understand the advantages and disadvantages of becoming an RHC. The financial benefits of RHC status depend on the mix of payers and services offered. Traditional Medicare fee-for-service and state Medicaid provider rates will vary. When evaluating financial feasibility, look at the broader financial picture rather than individual visits. You may want to hire a consultant to conduct a financial feasibility study. National Association of Rural Health Clinics (NARHC) offers a list of consultants and vendors. Please note that NARHC does not endorse these consultants and provides the list as a service.

RHCs must comply with the No Surprises Act, which aims to protect consumers from high medical bills. Healthcare facilities, including RHCs, must be able to provide a good faith estimate of services in advance, or upon request, to uninsured and self-pay individuals. For more information, see NARHC's Good Faith Estimate Resources.

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

Provider-based RHCs are owned and operated as an essential part of a hospital, nursing home, or home health agency participating in the Medicare program. RHCs operate under the licensure, governance, and professional supervision of that organization. Most provider-based RHCs are hospital-owned.

Independent RHCs are free-standing clinics owned by a provider or a provider entity. They may be owned and/or operated by a larger healthcare system, but do not qualify for, or have not sought, provider-based status.

According to Community Characteristics and Financial and Operational Performance of Rural Health Clinics in the United States: A Chartbook, a May 2022 publication from the Maine Rural Health Research Center, 33.8% of RHCs were independent RHCs in 2021, with the remaining 66.2% being provider-based RHCs.

Ownership Status of RHCs, 2021
Provider-based RHCs Independent RHCs
For-profit 11.0% 74.3%
Nonprofit 63.3% 21.6%
Publicly owned 25.7% 4.1%
Source: Figure 7, Community Characteristics and Financial and Operational Performance of Rural Health Clinics in the United States: A Chartbook.

Are there location requirements for RHCs?

Yes. According to statute, RHCs must be located in non-urbanized areas, as defined by the U.S. Census Bureau. However, beginning in March 2022, the U.S. Census Bureau published updated criteria informing how it will define urban areas based on the results of the 2020 Decennial Census, including no longer defining or differentiating between urbanized areas and urban clusters as of the 2020 Census. In March 2023, CMS released an memorandum announcing, until further notice, that a location will meet the location requirements for RHCs if:

  • the location is in a “non-urbanized area” or “urban cluster,” as indicated by the 2010 Decennial Census Bureau data, or
  • the location is not in an urban area, as indicated by the 2020 Decennial Census Bureau data.

There is no restriction on how closely RHCs can be located to one another. If services are provided at more than one permanent location, each location must be independently approved by Medicare. You can use the Am I Rural? tool as a first step to see if your location qualifies, but note that your Am I Rural? report is not a guarantee of your rural status eligibility for the RHC program.

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

  • Geographic-Based Health Professional Shortage Areas (HPSAs) are population-based areas that have workforce shortages in primary medical care, mental health, or dental health. HRSA's HPSA Find tool, searchable by state and county, determines if your area is currently designated as a shortage area.
  • Population-Group HPSAs have barriers preventing the patient population from accessing primary care providers within their area. The HPSA Find tool will also determine if your area is currently designated as a shortage area.
  • Medically Underserved Areas (MUAs) are designated by HRSA as having a shortage of primary care providers, a high infant mortality, high poverty, and/or a high elderly population. HRSA's MUA Find tool, searchable by state and county, determines if your area has a current MUA designation.
  • Governor-Designated Secretary-Certified are designated by the governor and certified by the Secretary of Health and Human Services as an area with a shortage of healthcare services for the purpose of RHC certification. Contact your State Office of Rural Health for assistance in determining if there are any state designated shortage areas in your state.

Find Shortage Areas by Address is another HRSA tool that determines if a specific address is located in a HPSA or an MUA.

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.

If a location loses its geographic eligibility and/or shortage designation, is it possible to remain a Rural Health Clinic?

Yes. An RHC previously certified as being in a geographically eligible area and designated shortage area that loses either or both designations cannot be decertified by CMS. See the Code of Federal Regulations Title 42, Section 491.5 Location of Clinic for additional information.

Additional rules apply to RHCs that choose to relocate. Any RHC that no longer meets one or both location requirements and chooses to relocate to another non-qualifying area will be terminated from the Rural Health Clinic program. An RHC may maintain RHC status if the new location meets current location requirements. See Interim Rural Health Clinic (RHC) Rural Location Determinations due to Census Bureau (CB) Regulatory Changes for detailed information.

Are there special staffing requirements for RHCs?

Yes. An RHC must:

  • Employ at least one nurse practitioner (NP) or physician assistant (PA)
  • Have an NP, PA, or certified nurse midwife (CNM) working on-site to see patients at least 50% of the time the clinic is open. Other staff may work under contract.

Every RHC must be “under the medical direction of a physician” who is an MD or DO, but the physician's level of direct patient care may be very limited. There is no specific full-time equivalent (FTE) percentage or employed/contracted agreement required for physicians in an RHC unless the state has additional compliance standards. Typically, the physician (MD or DO) must supervise each NP, PA, or CNM in a manner consistent with state and federal law. Physicians do not have to be employed by the RHC; they can provide services under contract. The arrangement must comply with state scope of practice laws, and the physician must be on-site for sufficient periods depending on the needs of the facility and its patients. Records review may be conducted via an electronic health record (EHR).

For more information, see the Code of Federal Regulations Title 42, Section 491.8 Staffing and Staff Responsibilities.

What resources are available to help RHCs maintain their primary care workforce?

Several resources and grant programs help recruit and retain physicians and mid-level practitioners:

How does Medicare reimburse RHCs?

Medicare pays RHCs 80% of a flat, all-inclusive rate (AIR) for medically necessary medical and qualified preventive visits delivered on the same day; the remaining 20% is charged to patients as coinsurance. The AIR is subject to payment limits, meaning an RHC will not be paid beyond the prospectively set limit, regardless of the actual cost of the visit. In addition to payment limits, RHC Medicare payments are also subject to productivity adjustments and other factors that can affect payment.

RHCs receive an interim AIR payment per visit throughout the RHC's fiscal year, which is then reconciled through cost reporting at the end of the year. According to CMS's Medicare Benefit Policy Manual – Chapter 13 – Rural Health Clinic (RHC) and Federally Qualified Health Center (FQHC) Services, the interim payment rate is determined by taking the total allowable costs for RHC services divided by the total number of 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.

In December 2020, Congress passed legislation to update the RHC reimbursement methodology as part of a larger spending package. As a result, the RHC cap will rise each year through 2028, and all new RHCs will have a uniform per-visit cap. Uncapped RHCs that were certified and enrolled in Medicare prior to December 31, 2020, are grandfathered in at the clinic's 2020 all-inclusive rate to establish their cap for subsequent years. For more information, view the Centers for Medicare and Medicaid Services publication Update to Rural Health Clinic (RHC) Payment Limits and the National Association of Rural Health Clinics' webinar Rural Health Clinics Modernization Policy Explained.

How do states reimburse RHCs through Medicaid?

All state Medicaid programs are required to recognize RHC services. The states may reimburse RHCs under one of two different methodologies as outlined in a 2016 CMS letter to state health officials:

  • Prospective payment system (PPS) – Under this methodology, the state calculates a per visit rate based on the reasonable costs of the services provided. Each year, the per visit baseline rate is increased by the Medicare Economic Index (MEI) factor and adjusted to reflect any increase or decrease in the scope of services provided.
  • Alternative payment methodology (APM) – Under this methodology, there are only two requirements: 1) the RHC must agree to the methodology, and 2) the payment must at least equal the payment it would have received under the prospective payment system.

Each state has its own method of applying the PPS or APM. State Medicaid agencies should be contacted to determine how RHC rates are determined in their state.

Medicaid agencies also may cover additional services that are not normally considered RHC services, such as dental services. Contact your state Medicaid Office or CMS Regional Office Rural Health Coordinator for information on how Medicaid pays for RHC services in your state.

Can RHCs be reimbursed for telehealth services?

RHCs can be an “originating site” for telehealth services. An originating site is the location where an eligible patient gets telehealth services with a provider in a different location. RHCs serving as an originating site can bill Medicare for an originating site facility fee.

In response to the COVID-19 pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), which allowed RHCs to serve as “distant sites” in order to provide telehealth services to patients at any location, including their homes, for the duration of the COVID-19 public health emergency. The Consolidated Appropriations Act, 2023 (P.L. 117-328) extended the ability of RHCs and FQHCs to serve as distant site providers through December 31, 2024.

In addition, the CY 2022 Medicare Physician Fee Schedule Final Rule updated federal regulations to permanently enable RHCs to be reimbursed by Medicare for mental health visits that use interactive, real-time audio-visual and audio-only technology. RHCs are paid for these services at the same rates they are paid for in-person mental health services. Medicare beneficiaries are required to have an in-person, non-telehealth visit with a provider six months before the start of their mental health telehealth services and at least once every 12 months. However, the Consolidated Appropriations Act, 2023 (P.L. 117-328) delays the in-person requirements until January 1, 2025. Additionally, CMS may make exceptions to the in-person requirements based on patient circumstances.

For more information on RHC billing and payment requirements for telehealth services, see New and Expanded Flexibilities for Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs).

How does the Merit-Based Incentive Payment System (MIPS) affect RHCs?

RHC services are exempt from the Merit-Based Incentive Payment System (MIPS) because MIPS applies to payments made through the Physician Fee Schedule. The Quality Payment Program (QPP) was created by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). MIPS is one of two tracks within the QPP designed to provide incentives for high quality care. MIPS requires eligible providers to report on quality improvement, performance assessment, and costs. These categories are factored into a score which affects Medicare reimbursement.

The bulk of RHC payments are exempt from MIPS because RHCs receive cost-based reimbursement for RHC services. However, some RHC clinicians furnish non-RHC services paid for under the Physician Fee Schedule (billed on CMS 1500). These non-RHC services may be subject to MIPS reporting requirements if the clinician exceeds the following low volume threshold: $90,000 Medicare Part B payments, 200 Medicare Part B patients, and 200 covered services to Medicare Part B patients. RHC billing (CMS 1450) and reimbursement would not count toward the $90,000 threshold and those patients would also not count towards the 200 Medicare Part B patients. If an RHC clinician provides a significant amount of non-RHC services on the Physician Fee Schedule (exceeding the low volume threshold), then those payments are subject to MIPS reporting and adjustments.

RHCs are allowed to participate in MIPS voluntarily to obtain a MIPS score, but this score will not affect their cost-based reimbursement. Because RHCs may voluntarily participate in MIPS, there is speculation that CMS may include RHCs in MIPS in the future. For more information on MIPS eligibility, see How MIPS Eligibility is Determined.

Can Rural Health Clinics be certified as Patient-Centered Medical Homes (PCMHs)?

Yes, RHCs are eligible to pursue PCMH recognition. The Patient-Centered Medical Home (PCMH) is a healthcare delivery model that requires a patient to have a continuing relationship with a healthcare team that coordinates patient care to improve access, quality, efficiency, and patient satisfaction. Although no federal support program currently exists to assist RHCs in gaining recognition as a PCMH, and they receive no financial benefits from Medicare for PCMH recognition, some state Medicaid programs do offer incentives for pursuing and attaining PCMH recognition. The National Council for Quality Assurance (NCQA) and The Compliance Team have both developed CMS-approved PCMH programs appropriate for rural health providers.

Can RHCs join Accountable Care Organizations (ACOs)?

Yes, RHCs are able to participate in the Medicare Shared Savings Program and become an Accountable Care Organization (ACO) or join an existing ACO. ACOs establish incentives for healthcare providers to coordinate care among different settings — hospitals, clinics, long-term care — when working with individual patients. The CMS Medicare Shared Savings Program rewards ACOs that meet certain performance standards for serving Medicare beneficiaries. CMS has published Program Statutes & Regulations that would help doctors and hospitals coordinate care through ACOs.

The November 2022 CY 2023 Medicare Physician Fee Schedule Final Rule finalized policies aimed to increase participation in the Shared Savings Program among ACOs that are low-revenue, inexperienced with performance-based risk Medicare ACO initiatives, new to the Shared Savings Program, and serve underserved populations. Beginning January 1, 2024, entities in rural and underserved areas will be able to form ACOs and receive advance shared savings payments to help build the infrastructure necessary to participate in the Shared Savings Program. This policy builds upon the results and lessons learned from the ACO Investment Model (AIM), which tested whether pre-paid shared savings encouraged new ACOs to form in rural and underserved areas and helped Medicare Shared Savings Program ACOs transition to arrangements with greater financial risk. RHCs & the Medicare Shared Savings Program - What You Need to Know, a March 2023 webinar hosted by the National Association of Rural Health Clinics, discusses these changes and considerations for RHCs.

See Medicare Shared Savings Program for Providers for additional information about joining ACOs, the benefits, and requirements for participation.

What is the difference between a Federally Qualified Health Center (FQHC) and a Rural Health Clinic (RHC)?

Although FQHCs and RHCs both provide primary care to underserved and low-income populations, there are some fundamental differences. For an additional comparison of FQHCs and RHCs, see Module 1 – An Introduction to the Rural Health Clinic Program from the National Organization of State Offices of Rural Health's Rural Health Clinic Technical Assistance Educational Series.

Differences Between RHCs and FQHCs
Rural Health Clinics Federally Qualified Health Centers
For-profit or nonprofit Nonprofit or public facility
May be limited to a specific type of primary care practice (e.g., OB-GYN, Pediatrics) Required to provide care for all age groups
Not required to have a board of directors Required to have a board of directors – at least 51% must be patients of the health center
No minimum service requirements Minimum service required – maternity & prenatal care, preventive care, behavioral health, dental health, emergency care, and pharmaceutical services
Not required to charge based on a sliding fee scale Required to treat all residents in their service area with charges based on a sliding fee scale
Not required to provide a minimum of hours or emergency coverage Required to be open 32.5 hours a week for FTCA coverage of licensed or certified healthcare providers. Must provide emergency service after business hours either on-site or by arrangement with another healthcare provider
Required to conduct a biennial program evaluation regarding quality improvement Required to have ongoing quality assurance program
Must be located in a Health Professional Shortage Area, Medically Underserved Area, or governor-designated and secretary-certified shortage area. May retain RHC status if designation of service area changes. Must be located in an area that is underserved or experiencing a shortage of healthcare providers
RHCs must be located in non-urbanized areas FQHCs may operate in both non-urbanized and urbanized areas
Required to submit an annual cost report; however, auditing of financial reports is not required Required to submit an annual cost report and audited financial reports

How do RHCs meet the healthcare needs of rural Medicare beneficiaries?

RHCs were first created to meet the primary care needs of rural Medicare beneficiaries. Access and Capacity to Care for Medicare Beneficiaries in Rural Health Clinics, a 2019 policy brief from the University of Minnesota Rural Health Research Center, summarizes the findings of a voluntary survey of 111 RHCs. The survey found that 87% of RHCs accept walk-in appointments and 65% of RHCs had appointments available for existing Medicare beneficiaries. However, 37% of RHCs had appointments available for new beneficiaries within one day, and the average wait time for an appointment for new beneficiaries was 5 days. In addition, the May 2022 Community Characteristics and Financial and Operational Performance of Rural Health Clinics in the United States: A Chartbook from the Maine Rural Health Research Center notes that 12.3% of independent RHCs and 16.4% of provider-based RHCs offered Saturday hours in 2017 to improve access to care. The table below features data on behavioral health and additional services offered by RHCs.

Percent of Rural Health Clinics Offering Behavioral Health and Additional Services
Provider-based RHCs Independent RHCs
Social Work 7.2% 8.3%
Psychology 3.0% 2.0%
Optometry N/A 0.5%
Pharmacy 10.0% 5.4%
Dental 0.6% 1.4%
Source: Community Characteristics and Financial and Operational Performance of Rural Health Clinics in the United States: A Chartbook

While RHCs can provide specialty care, many focus on delivering primary care to rural residents. As a result, RHCs often must refer patients to other providers when specialty care is required. Access to Specialty Care for Medicare Beneficiaries in Rural Communities notes that 22% of Medicare beneficiaries that had appointments at RHCs needed specialty care, but 64% of RHCs had difficulty finding specialists to which they could refer these patients.

Rural residents, especially those on limited or fixed incomes, may find cost a barrier to accessing care at RHCs. As Cost-Sharing as a Barrier to Accessing Care at FQHCs and RHCs for Rural Medicare Beneficiaries illustrates, rural Medicare beneficiaries experience a higher cost-sharing burden when receiving care at RHCs compared to Federally Qualified Health Centers (FQHCs). Unlike FQHCs, Medicare Part B deductibles do apply to services provided at RHCs. Both FQHCs and RHCs are required to charge Medicare beneficiaries a 20% coinsurance. However, FQHCs base coinsurance on the lesser of their charge or their PPS rate, while RHCs base their coinsurance on total charges to the patient. Additionally, RHCs are not required to utilize sliding fee scales like FQHCs, although many RHCs do offer one. Delaying or postponing primary care due to cost can lead to poor health outcomes.

What are the demographics and most common medical characteristics of RHC Medicare patients?

According to the HRSA Data Explorer, there are more than 5,200 RHCs in the United States as of August 2023. The 2013 Profile of Rural Health Clinics: Clinic & Medicare Patient Characteristics findings brief, based on 2009 data, identified several important features:

  • The median number of RHC visits by a Medicare beneficiary was 3 per year while the mean was 4.8
  • The median distance Medicare patients traveled one way to an RHC was 6.2 miles
  • Medicare patients utilizing RHCs were an average age of 71
  • 22% of Medicare patients seen at RHCs were under the age of 65, 38% were 65–74, 27% were 75-84 and 13% were 85 and above
  • 58% of RHC Medicare patients were female
  • 91% of the RHC Medicare patients were White and 6.6% were African American

Community Characteristics and Financial and Operational Performance of Rural Health Clinics in the United States: A Chartbook notes that counties with RHCs had small, but statistically significant, higher rates of unemployment, children in poverty, and individuals reporting fair or poor health in 2021 than counties without RHCs.

In addition, a 2019 report from the North Carolina Rural Health Research Program analyzed 2014 Medicare claims data, and identified the top 5 common medical characteristics of RHC patients to be:

  • Hypertension (10.9%)
  • Diabetes mellitus (6.5%)
  • Disc disorders and back problems (4.9%)
  • Respiratory infections (3.9%)
  • Obstructive pulmonary diseases (3.4%)

Last Reviewed: 9/12/2023