As we all know, there has been a large migration of Freestanding Rural Health Clinic certifications to Provider-Based Rural Health Clinic status. Provider-Based Rural Health Clinics attached to a parent hospital – and it is required to be a hospital – of fewer than 50 beds enjoys an uncapped RHC Encounter Rate. Preliminary data suggests that Provider-Based Rural Health Clinics increase costs to the Medicare program by 50% as a result of this migration. Be assured, this has garnered attention.

The Office of Inspector General’s recently released work plan formalizes this scrutiny:

“We will determine the number of provider-based facilities that hospitals own and the extent to which CMS has methods to oversee provider-based billing. We will also determine the extent to which provider-based facilities meet requirements described in 42 CFR Sec. 413.65 and CMS Transmittal A-03-030, and whether there were any challenges associated with the provider-based attestation review process. Provider-Based status allows facilities owned and operated by hospitals to bill as hospital outpatient departments. Provider-based status can result in higher Medicare payments for services furnished at provider-based facilities and may increase beneficiaries’ coinsurance liabilities.

The Medicare Payment Advisory Commission (MedPAC) has expressed concerns about the financial incentives presented by provider-based status and stated that Medicare should seek to pay similar amounts for similar services. (OEI; 04-12-00380; expected issue date: FY 2016)

Comparison of Provider-Based and Freestanding Clinics
We will review and compare Medicare payments for physician office visits in provider-based clinics and freestanding clinics to determine the difference in payments made to the clinics for similar procedures and assess the potential impact on Medicare of hospitals’ claiming provider-based status for such facilities. Provider-based facilities often receive higher payments for some services than do freestanding clinics. The requirements to be met for a facility to be treated as provider based are at

42 CFR § 413.65(d). (OAS; W-00-14-35724; W-00-15-35724; expected issue date: FY 2016)”

U.S. Department of Health and Human Services
WORK PLAN Fiscal Year 2016 Page 6 and 7 publications/archives/workplan/2016/oig-work-plan-2016.pdf

North American Healthcare Management Services has specific expertise in successfully attesting to Provider-Based Rural Health Clinic status for clients.  We are encouraging all of our Provider- Based Rural Health Clinics let us assess their provider-based compliance so that when a re-attestation request comes (giving the clinic 10 days to respond), it is not a reason to panic.  Please call for a consultation.


Charles James

President and CEO

North American Healthcare Management Services