Rural Health Clinic Grandfathering Fix Signed into Law

Thoughtware Alert Published: Apr 19, 2021
Healthcare professionals having a meeting

On April 14, President Biden signed H.R. 1868 into law. In addition to extending Medicare sequestration through December 31, 2021, H.R. 1868 makes the following changes to the Rural Health Clinic (RHC) program:

  • Corrects an error in the 2021 Consolidated Appropriations Act (CAA) that incorrectly listed a date of December 31, 2019, as the grandfathering cutoff date. The date was corrected to December 31, 2020, in the new law. This allows all uncapped provider-based RHCs that enrolled in Medicare through December 31, 2020, to obtain grandfathered status and not be subject to the new cost-per-visit caps.
  • Permits RHCs owned by hospitals with fewer than 50 beds and that submitted either form CMS-855A or a PECOS application to establish themselves as an RHC prior to December 31, 2020, to obtain grandfathered status and not be subject to the new cost-per-visit caps. Medicare also must have received the CMS-855A or PECOS application prior to December 31, 2020.
  • Requires that RHCs that obtain grandfathered status continue to be owned by hospitals with fewer than 50 beds. If the parent hospital were to exceed 50 beds in the future, the RHC would lose grandfathered status and be subject to the caps outlined in the CAA.

The cost-per-visit caps weren’t changed by H.R. 1868 and will be the following per year:

Cost-per-visit Caps

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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