In December 2020, Congress passed the Consolidated Appropriations Act of 2021 (H.R. 133) which included significant comprehensive reforms to the Rural Health Clinic (RHC) Medicare payment system.

Subsequently, in April 2021, Congress passed H.R. 1868 which corrected drafting errors and added additional clarification to the original changes included in H.R. 133.  The below information includes the provisions of H.R. 1868.

Background

Under the previous RHC payment system, independent and hospital-based RHCs affiliated with hospitals with more than 50 beds were subject to a per-visit cap rate that, on average, was exceedingly less than their cost per visit.  As a result, capped RHCs were closing at an alarming rate, and action had to be taken to alleviate the disparity between the per-visit cap rate and cost for the capped RHCs.

Changes in the RHC Payment System

The legislation introduced the following changes to the RHC payment system:

  • Phase-in steady increases to the RHC per-visit cap rate over an eight-year period
  • All new RHCs will be subject to the new per-visit cap rate
  • Controls the annual rate of growth for current uncapped RHCs whose payments are above the new per-visit cap rates
  • Allows RHCs to furnish and bill for hospice attending physician services when RHC patients become terminally ill and elect the hospice benefit beginning January 1, 2022

New Per-visit Cap Rates

The new per-visit cap rates are applicable for all RHCs effective April 1, 2021, unless the RHC qualifies for grandfathered status as discussed below.  The new cap rates for 2021 through 2028 are as follows:

2021 $100 2025 $152
2022 $113 2026 $165
2023 $126 2027 $178
2024 $139 2028 $190

After 2028, the cap rate will be adjusted annually based on the Medicare Economic Index (MEI).

Cap Rate for Previously Uncapped RHCs

RHCs will be grandfathered in at their actual per-visit rate as calculated on the Medicare cost report if they are provider-based to a hospital with less than 50 beds and were either enrolled in Medicare as of December 31, 2020, or had submitted an application for enrollment by that date.  To maintain grandfathered status, the hospital must continue to meet the less than 50 bed criteria.

RHCs who qualify for grandfathered status will be paid the greater of their 2020 per-visit rate (adjusted annually based on the MEI), or the statutory cap rate applicable for that year.  If a new RHC did not have a 2020 per-visit rate established, then their 2021 per-visit rate will be their grandfathered rate.

If you have any questions regarding the RHC payment reform and how it may impact your organization, please contact your Draffin Tucker representative or Ben Glass at bglass@draffin-tucker.com.