In December 2020, Congress passed the Consolidated Appropriations Act of 2021 (“CAA”). The Act was signed into law shortly thereafter as a part of the larger COVID-19 Relief Package. The CAA includes one of the most comprehensive payment reforms in decades for rural health clinics (“RHC”). It established a new capped rate for all RHCs, regardless of provider-based status. Section 130 is entitled “Improving Rural Health Clinic Payments” and will go into effect on April 1, 2021. An overview of the most notable impacts on RHCs is provided below.

Medicare Payment Cap Reform

Section 130 outlines an increase of the Medicare cap for RHCs up to $100 per visit from the previous 2021 cap of $87 per visit. This adjustment to the payment reimbursement methodology is an effort to narrow the gap between capped (e.g., freestanding and provider-based RHCs attached to hospitals with more than 50 beds) and uncapped RHCs (provider-based RHCs attached to critical access hospitals or hospitals with less than 50 beds).

As a result, additionally, the cap is set to increase annually until the maximum rate of $190 per visit is reached in 2028. Thereafter, the Medicare reimbursement cap will increase at a rate equal to the Medicare Economic Index (“MEI”). Specifically, by year the reimbursement caps will be:

It should be noted that RHCs are not guaranteed to receive the increased rates. If an RHC’s calculated cost per visit rate, which is set by the Medicare cost report, is less than the cap, then the clinic will be reimbursed based on its actual cost per visit.

Prior to the CAA Section 130 update, RHCs that were provider-based to hospitals with less than 50 beds were eligible for an uncapped cost-based reimbursement and rates were calculated using their Medicare cost reports. However, provider-based RHCs certified after December 31, 2019 are officially subject to the new cap on reimbursements. Any provider-based RHCs that were approved to participate in Medicare prior to December 31, 2019 will be considered “grandfathered” into the uncapped system and will not be subject to the new reimbursement guidelines.

If you have any questions regarding the establishment of a new RHC or would like to discuss the impact to your current operations, please contact Advis or call (708) 478-7030.

Published: December 2, 2020