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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 certification, they must be located in rural, underserved areas. They are required to use a team approach of physicians working with non-physician providers such as nurse practitioners (NP), physician assistants (PA), and certified nurse midwives (CNM) to provide services. The clinic must be staffed at least 50% of the time with an NP, PA, or CNM (requirement waived during COVID-19 public health emergency). RHCs are required to provide outpatient primary care services and basic laboratory services.

The main advantage of RHC status is enhanced reimbursement rates for providing Medicare and Medicaid services. The MLN Fact Sheet, Rural Health Clinic, 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 Rural Health Clinics - Rules and Guidelines compiled by the National Association of Rural Health Clinics, or visit the Centers for Medicare and Medicaid Services (CMS) Medicare Rural Health Clinics Center.

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?

First, determine if your clinic is eligible. See Are there location requirements for RHCs? for information about location requirements.

Part of the certification process includes completing the RHC application and 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 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. If eligible, 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 QUAD A and The Compliance Team, both of which are Medicare-approved private RHC accreditation organizations.

One of the final steps of the certification process is to 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 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 also see if becoming a certified RHC is a feasible option. Financial benefits of RHC status depend on the mix of payers and services offered. Traditional Medicare fee-for-service and state Medicaid provider rates could be better in some cases. 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. A list of consultants and vendors is provided by the National Association of Rural Health Clinics (NARHC). Please note that NARHC does not endorse these consultants and is only providing the list as a service.

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. More than half of independent RHCs are owned by clinicians.

Are there location requirements for RHCs?

Yes, RHCs must be located in non-urbanized areas, as defined by the U.S. Census Bureau. 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. During the COVID-19 public health emergency, however, this requirement is temporarily waived in order to provide flexibility to existing RHCs to meet the needs of patients. You can use RHIhub's 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. There are four types of shortage areas that 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 as a next step.

If a location loses its non-urbanized area and/or shortage designation, is it possible to remain a Rural Health Clinic?

Yes. An RHC previously certified as being in a non-urbanized area and designated shortage area that loses either or both of these designations cannot be decertified by CMS. See RHC Rules and Guidelines Condition of Coverage: Location of Clinic for additional information.

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

Are there special staffing requirements for RHCs?

RHCs must employ at least one nurse practitioner (NP) or physician assistant (PA). RHCs are required to be staffed by an NP, PA, or certified nurse midwife (CNM), who must be on-site to see patients at least 50% of the time the clinic is open. However, CMS has waived the 50% requirement for the duration of the COVID-19 public health emergency (PHE). Other staff may work under contract. Typically, a physician (MD or DO) must supervise each NP, PA, or CNM in a manner consistent with state and federal law. During the COVID-19 PHE, however, CMS has waived this supervision requirement for nurse practitioners to the extent allowed by state law.

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 FTE percentage or employed/contracted agreement required for physicians in an RHC unless the state has additional compliance standards. The 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 Section 491.8 Staffing and Staff Responsibilities for Rural Health Clinics, located within the Code of Federal Regulations.

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?

RHCs receive an interim all-inclusive rate (AIR) payment per visit throughout the clinic'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. In addition, RHCs are subject to productivity, payment limits, and other factors which can affect payment.

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

Rural Health Clinic Costs and Medicare Reimbursement, a 2019 brief from the Maine Rural Health Research Center, notes independent RHCs and provider-based RHCs owned by hospitals with 50 or more beds are subject to a per-visit reimbursement rate cap for Medicare payments. In fiscal year 2014, only 45% of the adjusted cost per visit (ACPV) at provider-based RHCs was covered by the Medicare reimbursement rate, while 71% of the ACPV was covered by Medicare at independent RHCs. As the policy brief notes, small independent and provider-based RHCs had higher average costs per visit than other RHCs, likely arising from having lower service volumes than their larger counterparts. A December 2017 National Advisory Committee on Rural Health and Human Services policy brief, Modernizing Rural Health Clinic Provisions, made several recommendations to modernize the Rural Health Clinic program, including a recommendation that the payment cap be reexamined.

In December 2020, Congress passed legislation to update the RHC reimbursement methodology as part of a larger spending package. As a result, beginning in 2021, the RHC cap will rise each year through 2028, all new RHCs will have a uniform per-visit cap, and no RHC will see a reduction in reimbursement. 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. For more information, view the National Association of Rural Health Clinics' webinar Rural Health Clinics Modernization Policy Explained and the Centers for Medicare and Medicaid Services publication Update to Rural Health Clinic (RHC) Payment Limits.

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.

The first is a prospective payment system (PPS). Under this methodology, the state calculates a per visit rate based on the reasonable costs for an RHC's first two years of operation. For each succeeding year, this per visit baseline rate is increased by the Medicare Economic Index factor.

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 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 alternative payment methodology. 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. You can contact your state Medicaid Office or CMS Regional Office Rural Health Coordinator for information on how Medicaid pays for RHC services in your state.

Also, for additional information about individual state Medicaid benefits for RHC services, see Medicaid Benefits: Rural Health Clinic Services from the Kaiser Family Foundation.

Can RHCs be reimbursed for telehealth services?

Traditionally, RHCs and Federally Qualified Health Centers (FQHCs) could only bill Medicare for telehealth services if the clinic was serving as an originating site, or where a Medicare beneficiary went to conduct a telehealth visit with a provider in a different location.

In response to the COVID-19 pandemic, however, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020. The CARES Act allowed RHCs and FQHCs 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 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 make permanent the ability of FQHCs and RHCs to be reimbursed by Medicare for mental health visits that use interactive, real-time audio-visual and audio-only technology. Beginning January 1, 2022, RHCs and FQHCs are paid for these services at the same rates they are paid for in-person mental health services.

For more information on changes to rural healthcare and telehealth as a result of COVID-19, see RHIhub's Rural Response to Coronavirus Disease 2019 (COVID-19).

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

In short, it doesn't. 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 reporting on quality improvement, performance assessment, and costs. These categories are factored into a score which affects Medicare reimbursement.

Because RHCs receive cost-based reimbursement for RHC services, the bulk of their payment is exempt from MIPS. 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 low volume threshold set as: $90,000 Medicare Part B payments, or 200 Medicare Part B patients. Again, 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 your 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)?

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 this, they are eligible to do so. The National Council for Quality Assurance (NCQA) and The Compliance Team (TCT) have both developed CMS-approved PCMH programs appropriate for rural health providers. For additional information about RHCs adopting the PCMH model, see Rural Health Clinic Readiness for Patient-Centered Medical Home Recognition: Preparing for the Evolving Healthcare Marketplace.

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

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

For a more complete comparison, see HRSA's Comparison of the Rural Health Clinic and Federally Qualified Health Center Programs.

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.

While RHCs provide primary services to rural residents, 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. 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 HRSA Data Explorer, there are more than 4,700 RHCs in the United States as of August 2021. 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

In addition, the North Carolina Rural Health Research and Policy Analysis Center 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: 4/22/2021