RHC Reimbursement Changes Included in Final COVID-19 Package

Thoughtware Alert Published: Jan 04, 2021
Healthcare COVID-19 Paperwork

Congress has passed the Consolidated Appropriations Act (CAA), and the president signed the document on December 27, 2020. Section 130 of the CAA entitled “Improving Rural Health Clinic Payments” included a provision that will increase the Medicare cap for independent rural health clinics (RHC) to $100 per visit. Previously, independent RHC reimbursement had been capped at approximately $87 per visit. The cap also is set to increase annually until the maximum rate of $190 per visit is reached in 2028. After that point, the Medicare reimbursement cap will increase at a rate equal to the Medicare Economic Index. Specifically, the reimbursement caps by year will be: 

Medicare Reimbursement Cap Chart

It should be noted that RHCs aren’t guaranteed to receive the increased rates. If an RHC’s calculated cost per visit rate, which is set by the Medicare cost report, is less than the cap, then the clinic will be reimbursed based on its actual cost per visit.

Provider-based RHCs, which are provider-based to hospitals with fewer than 50 beds, that are certified after December 31, 2019, also will now be subject to a cap to their reimbursement. Previously, the provider-based RHCs could receive uncapped cost-based reimbursement, and their specific rate was calculated using the Medicare cost report. Provider-based clinics that were approved by Medicare prior to December 31, 2019, will be considered grandfathered. Each grandfathered RHC will have a clinic-specific cap established based on their 2020 all-inclusive rate (AIR). The clinic-specific cap for these grandfathered RHCs will then grow annually at the Medicare Economic Index (MEI).  

The National Association of Rural Health Clinics (NARHC) has issued a release regarding these changes. In the article, Director of Government Affairs for NARHC Nathan Baugh stated, “The goal was to protect the business model of our current RHCs, while simultaneously creating a level playing field for all RHCs going forward. This reimbursement policy puts the entire program on a sustainable path and averts cuts to our RHCs.”

Healthcare organizations that either currently operate or are considering RHC designation by CMS should carefully consider the reimbursement effect of these changes. Healthcare organizations operating RHCs also should consult with their cost report preparers to calculate an estimate of the effect to current or future RHCs.

If you have any questions about the new RHC reimbursement methodology or would like assistance in determining the effect, please contact your BKD Trusted Advisor™ or submit the Contact Us form below.

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