Feasibility Study


A Feasibility Study can be helpful in making the decision on whether or not to convert a clinic to RHC status.

If the clinic is located in a Health Professional Shortage Area or Medically Underserved Area AND is in a non-urbanized area, there should not be any impediments to getting the application approved and the clinic converted into a RHC.

Anyone thinking about converting their clinic to RHC status should make sure their location is eligible and that their patient “mix” is appropriate for RHC-type services and reimbursements.

Healthcare Horizon will conduct an extensive feasibility study that includes a comparison of revenues as a non-RHC and RHC reimbursements. Being a RHC only impacts the billing and reimbursements from Medicare and Medicaid. All other payer classes are not affected by the conversion of the clinic to RHC status.

As a RHC you will be paid PER VISIT for each Medicare and Medicaid patient encounter. This means you get your RHC encounter rate every time you see the Medicaid or Medicare patient. If you are a free-standing RHC (not owned by a hospital) and your cost per visit is at or exceeds the “cap” reimbursement, you would receive approximately $80 per Medicaid encounter and 80% of that rate for each Medicare encounter.

If the RHC is owned by a Hospital with less than fifty bed average daily census (as reported on the most recently-filed cost report for the Hospital-owner), Medicare does not have an upper payment limit. This means the RHC owned by such an entity will receive an encounter rate based upon actual cost per visit as determined by the cost report filed at the end of each fiscal year. Hosp[ital-owned RHC encounters are generally in the $125 + range.

The actual Medicaid rate is different based on the State Medicaid plan. Some States do not restrict the RHC to the current MediCARE encounter rate cap. These States will pay the actual cost per visit as determined by the first full fiscal year cost report.

The feasibility study can also include a projected encounter rate for your clinic.

The encounter rate is determined by taking your total cost (less non-RHC costs, as defined by the regulations—something we will discuss during the proposed site visit) and then dividing that total cost by the total number of encounters (from all types of patients: Medicaid, Medicare, private pay, commercial insurance, no-pay, etc.). This provides an average cost per visit rate, which is then used as your encounter rate for Medicaid and Medicare patient visits (medically necessary, documented in the chart, with medical services provided only by a MD, DO, NP, PA or CNM).

Medicare pays the RHC 80% of the clinic’s rate per patient visit. The Medicare patient is responsible for 20% co-pay of your TOTAL CHARGES FOR THE VISIT (NOT Medicare Part B allowable, and NOT 20% of your rate: it’s 20% of the total charges for that day’s visit). They must also meet the annual deductible.

Other factors to consider include the fact that global billing does NOT apply to the RHC. This means you charge and collect the encounter rate from Medicare and 20% of the charges from the patient for EVERY visit that patient has with the medical provider at the RHC. A follow-up visit is billable as an encounter (all visits must be medically necessary).

If a site visit is included in the Feasibility Study, Jim will discuss your current computer system and it’s ability to handle filing Medicare claims on the UB04 as well as the HCFA1500 claim forms. We will look at your numbers as they pertain to your costs and encounters. He will provide evidence of whether or not you should convert the clinic, and allow you and/or your management partners to make the decision for or against RHC conversion.

A mid-level provider must be employed at the clinic prior to your State Inspection for RHC certification. This P.A. or N.P. must be at least a half-time employee of the clinic (working at least 50% of the time the clinic is open as a RHC). Your mid-level provider could take care of your Nursing Home patients and receive the same reimbursement you get when they see a patient in the clinic: the RHC encounter rate.

Medicaid will pay 100% of the reasonable cost per visit (which is being interpreted as the current Medicare cap), with that rate being determined by your projected cost report (part of the conversion process) and by comparing your costs to other similar RHCs in that region of the state.

Should you decide to convert to RHC status, you could see your Medicaid total reimbursements increase dramatically, sometimes nearly triple your current revenue from that source. The actual increase in Medicare reimbursements will be determined by how many procedures, injections, and other Part B procedures you are performing. This is an area Jim will investigate during the Feasibility Study.

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