Rural Health Clinics

BACKGROUND

To make quality health care available to millions of children and adults living in medically underserved rural areas, the federal government created the rural health clinics program in 1977. This program, authorized by Public Law 95-210, the Rural Health Clinic Services Act, assures Medicare and Medicaid reimbursement to certified clinics staffed by physician assistants (PAs) and nurse practitioners (NPs) working with physician supervision. The purpose of the rural health clinic (RHC) program is to increase primary care medical services in rural, physician shortage areas by utilizing PAs and NPs and providing cost-based compensation for care of Medicare and Medicaid patients.

The concept of reimbursing clinics for services provided by PAs and NPs to poor and elderly rural Americans had widespread support. The 1977 legislation was endorsed by medical, PA, and nursing organizations, as well as insurers, unions, provider groups, senior citizens, educators, and public officials.1 The program, however, failed to thrive until, more than a decade later, Congress made a series of changes that reduced burdensome paperwork, increased payment levels, and enhanced technical assistance and awareness. Modifications to state PA laws, such as relaxation of on-site supervision requirements and the delegation of prescriptive authority, have also contributed to the program's success. As a result, the number of certified rural health clinics has grown from less than 600 in 1990 to approximately 3600 in 2003.2

The rural health clinic program is fulfilling its goal of increasing access to primary medical care in rural areas. The PAs, NPs, and physicians in these clinics provide access to primary and emergency services in many communities in which medical services would not otherwise exist.Approximately 99 percent of RHCs are located in rural areas as defined by the Rural Health Clinics Services Act; over 97 percent of RHCs are located in areas that are currently designated as having a shortage of primary health care sevices.2.

In addition to increasing access to care, RHCs often stabilize the rural health care delivery system and the economy of rural communities. They help reduce the migration of patients and health care dollars to urban areas. They employ qualified local residents and support local businesses, such as pharmacies, office suppliers, printers, nursing homes, and other merchants. They provide rural residents and businesses with access to needed primary and emergency services and thus make living and working in a rural community possible for many families. RHCs also play an important role in the education of future rural providers by serving as clinical training sites for PA students and others.

Rural health clinics care for large numbers of Medicare, Medicaid, and uninsured patients. A 2003 national survey revealed that approximately 56  percent of patient visits in rural health clinics are covered by Medicare or Medicaid and approximately 15 percent are uninsured.3 Clinics survive only because their reimbursement is based on actual costs. Unlike a fee-for-service practice where Medicare and Medicaid payment is based on the cumulative charges for all services provided, a rural health clinic is paid on a clinic-specific, all-inclusive rate that is adjusted annually and, in a majority of cases, subject to a limit set by the government.2

CHALLENGES AHEAD

Medicare and Medicaid expenditures for rural health clinics have doubled since 1991 because of the dramatic growth of the program. Consequently, state Medicaid directors, already strapped for funds, have recommended repeal of cost-based reimbursement for rural health clinics,5 federally qualified health centers, and community health centers. Medicare officials and the General Accounting Office (GAO) have also cast a critical eye on the RHC program. TThe 1997 Balanced Budget Act would have allowed state Medicaid programs to phase out the cost-based reimbursement requirement over a five-year period. However, new language was adopted in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 providing direction to the states in developing a new prospective payment system for RHCs and FQHCs that is based on an average of their reasonable cost of providing Medicaid services during fiscal years 1999 and 2000 and making adjustments in subsequent years. The law also allows states to develop an alternative Medicaid payment methodology for RHCs and FQHCs, as long as the state and each individual FQHC and RHC agree to the alternative methodology; the alternative methodology results in a payment that is at least equal to that which would have been paid under the Medicaid prospective payment system; and the alternative methodology is described in the approved state plan.3

The program's mandate for utilization of PAs and NPs also is being questioned. The growing number of clinics and occasional difficulty in recruiting qualified providers have led some to call for elimination of the requirement for PA and NP staff.2 However, the rural health clinic program was specifically designed to expand access to care through the utilization of PAs in areas with a shortage of physicians. Moreover, an unlimited number of short-term staffing waivers are available to RHCs that are unable to employ a PA or nurse practitioner. Clinics are not forced to close their doors if they can demonstrate a good faith effort to employ one of the required nonphysician providers. Any difficulty in finding PAs to staff rural clinics may be alleviated by the recent increase in the number of PA educational programs.

Because of the changing health care environment, rural health clinics face other challenges as well, such as Medicaid waivers, managed care, and Medicaid restructuring.

Under the current Medicaid system, the federal government requires states to adhere to basic guidelines about eligibility, services, and payment rates. In order to experiment with innovative methods of delivering and financing medical care, such as requiring Medicaid recipients to use managed care plans, states must obtain waivers from the Centers for Medicare and Medicaid Services. Section 1115 waivers, for example, authorize states to experiment with new approaches to providing care to Medicaid beneficiaries for a five-year period.

If a state wishes to institute a managed care plan for its Medicaid population under a Section 1115 waiver, it may request approval from the Centers for Medicare and Medicaid Services to recognize and pay rural health clinics using a different reimbursement methodology, one that is not cost-based. Another uncertainty is the future structure of Medicaid and the possibility that federal criteria could be removed under a block grant system. This would require rural health clinics, along with all other Medicaid providers, to negotiate with state officials for adequate recognition and payment. Similar challenges face rural health clinics when private managed care networks enter the rural community and compete for patients. Managed care companies sometimes choose not to contract with local providers such as rural health clinics, which can have a serious impact on the community. The federal government's recent encouragement of Medicare managed care plans may exacerbate this situation.

RECOMMENDATIONS

The rural health clinics program is an essential component of rural health care delivery today. It has been successful in delivering health care to previously underserved areas. Despite the current upheaval in the medical marketplace, steps should be taken to insure that this program continues so people in rural areas will have access to primary care and emergency services.

The American Academy of Physician Assistants supports continuation of the rural health clinic program to meet the goal of improving access to care in rural medically underserved areas.

The Academy also supports retention of the original requirement that RHCs utilize PAs in order to extend access to primary care medical services in areas that have a shortage of physicians. The purpose of the RHC program is to increase access to health care in medically underserved rural areas through utilization of PAs and NPs.

In light of the 2004 federal requirements that RHCs establish a comprehensive quality assessment and performance improvement program, the Academy recommends that the cost of developing and maintaining these programs be captured in the clinic's per visit payment rate.

Recognizing the economic difficulties of providing health care services in rural underserved areas, the AAPA recommends the continuation of cost-based reimbursement for RHCs or the development of an alternative payment mechanism that would protect their financial viability and cover the costs of providing services to rural Medicare and Medicaid patients.

The AAPA encourages the federal government to make the following improvements to the Rural Health Clinic Services Act, its regulations, and implementation:
  1. allow PAs and NPs to contract to provide medical services at RHCs;
  2. add preventive primary health services to the list of covered services for which rural health clinics are reimbursed by Medicare and Medicaid;
  3. avoid duplication of RHC services in the same geographic area;
  4. set per visit payment levels that cover the actual costs of providing care;
  5. adjust the per visit payment cap to the same level as rural federally qualified health centers that provide comparable or similar medical services;
  6. permit RHCs to participate in the federal government's section 340B discount drug pricing program so as to increase patient access to needed medications; and
  7. include RHCs in federal funding programs that enhance care for rural underserved populations, such as those programs avilable to community and migrant health centers and FQHCs.

 

REFERENCES
  1. United States Senate, Committee on Agriculture, Nutrition and Forestry. Medicare Reimbursement for Rural Health Care Clinics. March 29, 1977. Washington, DC: US Government Printing Office.
  2. Edmund S. Muskie School of Public Services, University of Southern Maine. The Characteristics and Roles of Rural Health Clinics in the United States; A Chartbook. January 2003.
  3. Rural Assistant Center. Information Guides: Rural Health Clinics Frequently Asked Questions. (www.raconline.org/info_guides/clinics/rhcfaq.php).

Policy Brief: Rural Health Clinics
Adopted 1997, Amended 2004

 

 

Last Revised: 3/19/07