Many Rural Health Clinics were surprised by the PQRS Penalty Letters which were received in late 2014 have generated significant confusion.  We, as Rural Health Clinics, were under the impression that RHCs are exempt from PQRS and the associated penalties.

This IS indeed, the case.  Rural Health Clinics are exempt from PQRS penalties.  The problem is a technical one.  The PQRS penalty is based on fee-for-service, CMS-1500 claim submissions.  These claims are paid based on individual, Medicare Part B provider numbers associated with Medicare Part B, non-RHC, group numbers.

CMS does not have a way to associate these non-Rural Health Clinic provider numbers with Medicare Part A, RHC PTAN numbers.

Keep in mind:  the penalty is NOT assessed against Rural Health Clinic Part A payments.  The penalty is only levied on non-RHC services such as hospital, lab, and x-ray.  Your own exposure to these non-Rural Health Clinic penalties should be limited.

Unfortunately, ANY 1500 non-RHC billing will have the penalty applied if no 2013 quality data was submitted and no qualifying hardship was documented.  CMS recently issued a PQRS FAQ statement to this affect.  The penalties being currently applied are based on data submitted (or not) from 2013.  In order to avoid the penalty for 2016, please refer to the following link:

For the time being, these penalties will continue to be assessed on your non-Rural Health Clinic provider numbers.


Please call with any questions.


Charles James

President and CEO

North American Healthcare Management

Your Rural Health Clinic Experts!