The 2021 Consolidated Appropriations Act (CAA) passed in December 2020 included a major change to the way Rural Health Clinics (RHCs) will be reimbursed for services rendered to patients. Section 130 of the CAA entitled “Improving Rural Health Clinic Payments” included a provision that increased the Medicare cost-per-visit cap for new independent or provider-based RHCs to $100 per visit. Previously, independent RHC reimbursement had been capped at approximately $87 per visit. Beginning January 1, 2023, the current annual cap of $113 will increase by $13 to $126 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 (MEI). Specifically, the reimbursement caps by year will be:
|1/1/2029||12/31/2029||$190.00 + MEI|
It should be noted that RHCs are not guaranteed to receive the increased rates. If an RHC’s rate, which is set by the Medicare cost report, is less than the established cap, then the clinic will be reimbursed at the lesser of the two.
Provider-based RHCs, which are provider-based to hospitals with fewer than 50 beds, certified after December 31, 2020, will also now be subject to a cap to their all-inclusive rate reimbursement. Previously, these RHCs were able to receive uncapped cost-based reimbursement and the specific rate was calculated using the Medicare cost report. Provider-based entities that applied to become an RHC prior to December 31, 2020, were granted grandfathered status and will not be subject to the new per-visit cap established by the CAA.
Healthcare organizations that either currently operate or are considering RHC designation by CMS should carefully consider the reimbursement impact of these changes in calendar year 2023 and in the future as the increasing cost-per-visit caps may begin to represent an increased reimbursement opportunity compared to traditional Medicare Part B reimbursement. Organizations also should consult with their cost report preparers to prepare an estimate of the impact to current or future RHCs and if the cost per visit calculated by the cost report will exceed the established cap, as well as what can strategically be done to continue to exceed those caps and increase reimbursement.
If you have any questions about the new RHC reimbursement methodology or RHC eligibility requirements or would like assistance in estimating the financial impact of converting to RHC status, please reach out to a professional at FORVIS or submit the Contact Us form below.