Rural Hospital Revenue Opportunities

1. PPS CAH Rural Hospital Revenue Opportunities Module 2 – Service Expansions Rural Health Clinic Swing Beds

2. Rural Health Clinics • Rural Health Clinics Act – 1977 • Encourages utilization of mid-level practitioners (PA or NP) • An RHC is required to employ a MLP at least 50% of the time the practice is open to see patients. • Cost based reimbursement • Hospital may allocate appropriate costs to the RHC for additional reimbursement

3. Rural Health Clinics • Location Requirements • Non-urbanized area • Shortage area designation • Medically Underserved Area (MUA) • Health Professional Shortage Area (HPSA) • Designations must be reviewed every 3 years.

4. Rural Health Clinics • Primary Care Practice • Primary Health Services • Core Services • Medicare Cost based Reimbursement • Medicaid PPS Reimbursement

5. Rural Health Clinics • Lab Services • Chemical examination of urine by stick or tablet • Hemoglobin or hematocrit • Blood sugar • Examination of stool specimens for occult blood • Pregnancy tests • Primary cultures for transmittal to a certified lab • Bill separately for Medicare. Do NOT bill separately for Medicaid.

6. Rural Health Clinics • Other Services • Emergency Care • Radiological • Pharmacy • Hospital Specialty

7. Rural Health Clinic • Medicare • Interim Payments of an All Inclusive Reimbursement Rate • Estimated during the year and settled at year end based on cost report • Subject to per visit cap except for rural hospitals less than 50 beds • Subject to practitioner productivity standards • Medicare patients pay 20% of charge.

8. Rural Health Clinics • Medicare Reimbursement Caps • Cost > cap amount will not be reimbursed • For 2006, limit is $72.76 per service visit • Cap is updated annually by Medical Economic Index

9. Rural Health Clinic • Medicaid • Based on a Prospective Payment Rate • Includes core and other ambulatory services • Based on 1999 and 2000 cost reports • Updated by Medical Economic Index • Patients pay a $2.00 co-payment.

10. Rural Health Clinics • Cost Reporting • Cost reports are required for Medicare • There is a year end settlement based on actual costs reported, subject to caps.

11. Rural Health Clinics • Productivity standards are used • 4200 annual visits per physician • 2100 annual visits per MLP • In determining all inclusive reimbursement rate either the actual visits is used or a calculated number of visits based on minimum productivity • Allowable costs / RHC visits = AIRR • Productivity only applies to employed practitioners.

12. Rural Health Clinics • Medicare Interim Payments • Medicare will reimburse 80% of the All Inclusive Reimbursement Rate (AIRR) based on the prior year’s cost report. • Patient is responsible for 20% of the Charges.

13. Rural Health Clinics • Advantages • Cost based reimbursement may be better than physician fee schedule reimbursement. • Alternative for higher cost ER setting • Staffed with less costly Mid level practitioners • Allocation of unreimbursed overhead costs to a reimbursable setting • May have higher Medicare utilization in RHC than in CAH

14. Rural Health Clinics • Monitoring of Costs • Year end cost report settlements • If interim rate is too low, the practice may receive cash flow difficulties. • If interim rate is too high, the practice may have a pay back.