What is a rural health clinic?

A rural health clinic (RHC), or rural health center, is an outpatient care facility that provides primary care and routine laboratory services to rural and, often underserved communities. To qualify as a federally certified RHC, the clinic must be in a “non-urbanized” area categorized as federally designated health professional shortage area.

Rural health clinics were established in 1977 when Congress passed the Rural Health Clinic Services Act. This legislation sought to provide underserved rural communities with greater healthcare access by increasing the number of practicing physicians, physician assistants, and nurse practitioners in these areas.

These facilities can be classified as either independent or provider-based clinics. Independent (or freestanding) rural health clinics are physician-owned facilities. Provider-based rural health clinics are operated as part of a hospital, home health agency, or other healthcare facility.

Why are rural health clinics important?

RHCs and other health clinics like federally qualified health centers (FQHCs) provide care to patients who might not otherwise be able to receive the care that they need.

Because of the critical care that these facilities provide, the Centers for Medicare and Medicaid Services (CMS) reimburses rural health clinics in a different way than they do for other healthcare providers.

Care administered to Medicare and Medicaid beneficiaries at an RHC is reimbursed as an all-inclusive rate (AIR) as opposed to a fee-for-service rate. Rural health clinics are reimbursed based on each patient “encounter,” which includes all associated care costs. This is a stark contrast to the fee-for-service model, which reimburses providers at specific rates for each service they provide.