November 2, 2008

To:    RHC Community and Friends

From:  Bill Finerfrock

       Executive Director

       National Association of Rural Health Clinics

Re:    Critical Access Hospitals with Rural Health Clinics

As you know, earlier this year, the Centers for Medicare and Medicaid Services (CMS) proposed severe restrictions on the ability of Critical Access Hospitals to operate certain provide-based facilities.  Specifically, CMS proposed a policy that any CAH that operates a provider-based facility, such as a Rural Health Clinic, acquired on or after January 1, 2008, must comply with the distance requirement of a 35-mile drive to the nearest hospital or CAH (or 15 miles in the case of mountainous terrain or in areas with only secondary roads). The proposal went on to further stipulate that if a CAH with a necessary provider designation enters into a co-location arrangement on or after January 1, 2008, or acquires or creates an off-campus facility on or after January 1, 2008, that does not satisfy the CAH distance requirements CMS would terminate that CAH’s provider agreement.

The effect of this policy, if adopted, could have resulted in either the closure of many provider-based RHCs affiliated with Critical Access Hospitals or the loss of CAH status by many CAHS that operate provider-based RHCs. 

NARHC wrote extensive comments to CMS pointing out the shortsightedness of this policy and strongly recommended that RHCs owned and operated by a CAH, be exempt from this policy. 

I am pleased to report that CMS concurred with our assessment and announced that RHCs will be exempt from this new policy.

On behalf of NARHC and the RHCs we represent, I want to thank CMS for recognizing the important role RHCs and CAHs play in our healthcare delivery system.

Below is CMS’ response to our comments:

Comment:

Numerous commenters requested that rural health clinics (RHCs) be

excluded from the category of provider-based entities that must comply with the proposed change. Some commenters stated that operating an RHC is the only way to provide healthcare to the medically underserved population in their service area. One commenter stated that if CMS does not exempt RHCs from the proposed policy, CMS should allow grandfathered CAH/provider-based RHCs to move the location of the RHC without jeopardizing the CAH status of the parent provider.

Response:

To be certified as an RHC, the clinic must be located in an area

designated, either by population or geographic area or location, as a Medically Underserved Area (MUA) or Health Professional Shortage Area (HPSA). In addition, State governors are allowed to designate areas with a shortage of professional health services through the use of statewide shortage designation plans approved by HRSA’s Bureau of Health Professions. Because RHCs have their own location requirements and because, unlike other provider-based clinics, a provider-based RHC is a separate entity which undergoes a separate certification process and has a unique provider identification number from the base provider, we believe that our concerns leading to our provider-based proposal do not apply to CAH provider-based RHCs. Accordingly, in this final rule with comment period, we are excluding RHCs from the list of provider-based facilities at  §413.65(a)(2) that must comply with this requirement.

________________________________________________________________________________