Rural Health Clinics
Print E-mail

What is a Rural Health Clinic?

A Rural Health Clinic (RHC) is a clinic certified to receive special Medicare and Medicaid increased reimbursement levels.  A RHC may be a public or private, for-profit or not-for-profit entity.  



RHCs were established by the Rural Health Clinic Service Act of 1977 to address an inadequate supply of physicians serving Medicare beneficiaries in underserved rural areas, and to increase the utilization of nurse practitioners (NP) and physician assistants (PA) in these areas.



RHCs must provide outpatient primary care services and basic laboratory services. RHCs are required to use a team approach of physicians and advanced practitioners such as NPs, PAs, and certified nurse midwives (CNM) to provide services. The clinic must be staffed at least 50% of the time with an advanced practitioner.

To be eligible for RHC certification, a clinic must be located in a non-urbanized area (population less than 50,000) that has one of the following types of shortage area designations:

·         Geographic-based Health Professional Shortage Area (HPSA)

·         Population-based HPSA

·         Medically Underserved Area (MUA)

·         Governor Designated and Secretary certified shortage area

*The shortage designation must be current within the last 4 years.     



RHCs receive special Medicare and Medicaid reimbursement rates. Medicare visits are reimbursed based on allowable costs and Medicaid visits are reimbursed under the cost-based method or an alternative Prospective Payment System (PPS). This results in an increase in reimbursement. RHCs may see improved patient flow through the utilization of NPs, PAs and CNMs, as well as more efficient clinic operations. RHCs are required to file a cost report annually in order to determine their payment rate and reconcile interim payments.


Provider-Based RHCs vs. Independent RHCs

Provider-Based RHCs are clinics owned and operated as an "integral part" of a hospital, nursing home or home health agency.   Provider-Based RHCs are ideal for practices with high Medicare reimbursement.  Internal medicine clinics are the most financially viable for Provider-Based RHCs due to the high Medicare rate.  RHCs that are Provider-Based to a hospital with less than 50 beds (e.g. a Critical Access Hospital) are exempt from the per-visit reimbursement cap.

Independent RHCs are predominately stand-alone clinics.  They are often owned by physicians or clinic administrators.  An Independent RHC’s focus is generally on the higher Medicaid reimbursement.  The clinics that are most commonly financially viable have a Medicaid payer mix of 30% or more.  Pediatric clinics are usually the most successful due to high volume of Medicaid patients.


Other benefits

RHCs may receive direct graduate medical education (GME) payment for training residents.  The RHC must fund all or most of the training program to be eligible.


Overall, establishing a Rural Health Clinic can improve access to primary care in underserved areas and can substantially increase financial return for Medicare and Medicaid services.


Contact HPSA Acumen Inc. for more information and to set up your RHCs.

Call at (716) 483-0888 ext. 202

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it or This e-mail address is being protected from spambots. You need JavaScript enabled to view it






HPSA Acumen Inc.  -  PO Box 274,  201 East 4th Street - 3rd Floor,  Jamestown, NY 14701

Phone: (716) 483-0888  -  Fax: (716) 487-0085