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Rural Health Clinics (RHCs)

The Rural Health Clinic (RHC) program is intended to increase access to primary care services for Medicaid and Medicare patients in rural communities.  RHCs can be public, nonprofit, or for-profit healthcare facilities, however, they must be located in rural, underserved areas. They are required to use a team approach of physicians working with non-physician practitioners 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 a NP, PA, or CNM. 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 Medicaid and Medicare services. According to Basics of RHC Billing, Medicare visits are reimbursed based on reasonable costs and Medicaid visits are reimbursed under a cost-based method or an alternative Prospective Payment System (PPS). For specific Medicare regulations governing the RHC program, please see the Rural Health Clinics - Rules and Guidelines compiled by the National Association of Rural Health Clinics, or visit the Medicare Rural Health Clinics Center.

The Centers for Medicare and Medicaid Services (CMS) publishes a list of Certified RHCs by state and county.

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?

The first step is to determine if your site is eligible. Using our Am I Rural? tool, enter the facility’s current or proposed address to receive a preliminary determination. You may also contact your state agency responsible for RHC certification to find out if your site qualifies for RHC status. The site must be in a U.S. Census non-urbanized area, and in a health professional shortage or underserved 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 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 American Association for Accreditation of Ambulatory Surgery Facilities, Inc. (AAAASF) RHC program and The Compliance Team, both of which are Medicare-approved private RHC accreditation organizations.

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. Independent RHCs must complete Form CMS-222-92, and hospital-based RHCs must complete Worksheet M of Form CMS-2552-10. 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 Starting a Rural Health Clinic – A How-To Manual.

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 you. 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. 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.

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-urban rural areas with current healthcare shortage or underservice designations; however, there is no restriction on how closely RHCs can be located to one another.

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

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:

  • Primary Care Geographic-Based Health Professional Shortage Area (HPSA) are population-based areas that have workforce shortages in primary medical care, mental health, and dental health. Find Shortage Areas: HPSA by State & County is a HRSA tool to help determine if your area qualifies for this designation.
  • Primary Care Population-Group HPSAs have barriers preventing the patient population from accessing primary care providers within their area. Find Shortage Areas: HPSA & MUA/P by Address is the HRSA tool to help determine if your area qualifies for this designation.
  • Medically Underserved Areas (MUAs) are designated by HRSA as having a shortage of primary care providers, a high infant mortality, a high poverty and/or a high elderly population. Find Shortage Areas: MUA/P by State and County is a HRSA tool to help determine if your area qualifies for this designation.
  • Governor Designated and Secretary Certified Areas are designated by the chief executive officer of the state (the governor) and certified by the Secretary of Health and Human Services as an area with a shortage of healthcare services. Contact your State Office of Rural Health for assistance in determining if there are any state designated shortage areas in your state.

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 shortage designation, is it possible to remain a Rural Health Clinic?

Yes. Currently, CMS cannot decertify any RHC that no longer meets one or both of the location requirements (rural and shortage/underserved area).  However, in the future CMS may publish a rule enabling it to do so.  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.

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. Other staff may work under contract.  A physician (MD or DO) must supervise each NP, PA, or CNM in a manner consistent with state and federal 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. The physicians do not have to be employed by the RHC; they can provide services under contract. The arrangement must comply with state law (scope of practice), 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 EHR.

For more information, see Section 485.631 Condition of Participation: Staffing and Staff Responsibilities and Section 491.8 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.

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

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

How does Medicare reimburse RHCs?

RHCs receive an interim all-inclusive reimbursement payment rate per visit throughout the clinic's fiscal year, which is then reconciled through cost reporting at the end of the year. According to the FORHP's Starting a Rural Health Clinic - A How-To Manual, 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. In addition, RHCs are subject to productivity standards that can affect payment.

RHCs 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, the state calculates a per visit rate based on the reasonable costs for an RHCs 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.

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.

What are the 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. 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 Federal Office of Rural Health Policy's Rural Health Clinics Technical Assistance Conference Call Series.

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

Although no federal support program currently exists to assist RHCs in gaining recognition as a PCMH, they are eligible to do so. The PCMH model of care generally requires that a patient have a continuing relationship with a healthcare team that coordinates patient care to improve access, quality, efficiency, and patient satisfaction.

Can RHCs join Accountable Care Organizations (ACOs)?

Accountable Care Organizations (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. CMS has published regulations that would help doctors and hospitals coordinate care through ACOs, with specific provisions to increase the participation of rural providers. RHCs are able to participate in the Medicare Shared Savings program and become an ACO or join an existing ACO. However, there are special requirements regarding beneficiary assignment that must be met by an RHC. See Medicare Shared Savings Program for Rural Providers for additional information about RHCs 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.

Differences Between RHCs and FQHCs
Rural Health Clinics Federally Qualified Health Centers
For-profit or non-profit 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 hours a week and provide emergency service after business hours either on-site or by arrangement with another healthcare provider
Required to conduct an annual 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 audit; however, without detailed financial reporting requirements Required to submit an annual audit and regular financial reports

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

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

According to CMS, there are nearly 4,000 RHCs in the United States. 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, however in the mountains it was 12.5 miles and in the Pacific region 7.0 miles
  • Medicare patients utilizing RHCs were on average 71 years old
  • 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 years old 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 Profile of Rural Health Clinics: Medicare Payments & Common Diagnoses identified the following common medical characteristics, based on 2009 Medicare claims data:

  • The majority of RHC Medicare claims are for clinic visits at 89%; 9% of the claims were for home, skilled nursing facility (SNF) or long-term care (LTC) visits.
  • The most common medical condition of RHC Medicare patients, ranked by claims, were hypertension at 12.3%, followed by diabetes mellitus at 8.3%, respiratory infections at 6.9% and diseases of the heart at 6.5%.

Last Reviewed: 4/27/2015