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RHC Cost-Per-Visit Caps Increasing January 1

The Consolidated Appropriations Act, 2021 (CAA), included a major change in how RHCs are reimbursed for services rendered to patients.
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The Consolidated Appropriations Act, 2021 (CAA), passed in December 2020, included a major change to the way Rural Health Clinics (RHC) are 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.

As of January 1, 2024, the cap increased by $13 to $139 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:

1/1/202912/31/2029$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 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, that were certified after December 31, 2020, are now subject to a cap to their 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 under or are considering RHC designation by CMS should carefully consider how these caps will impact their reimbursement programs. The increasing cost-per-visit caps may 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 on current or future RHCs.

If you have any questions about the new RHC reimbursement methodology or RHC eligibility requirements or would like assistance in estimating the financial effect of converting to RHC status, please reach out to your Forvis Mazars professional.

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