Starting a Rural Health Clinic - A How-To Manual

Chapter Seven - RHC Coding and Billing Issues

The Rural Health Clinics program created a unique opportunity for clinics that meet Federal standards to be paid on a cost-per-visit basis. This payment system is frequently misunderstood by policy makers, and others, as it is believed that one can compare cost-based reimbursement rates with fee-for-service rates. This is incorrect.

The RHC program provides the opportunity for clinics to take the total allowable costs for RHC services divided by allowable visits provided to RHC patients receiving core RHC services. From this equation, the clinic determines an interim payment rate. This interim payment rate is paid throughout the clinic's fiscal year and then reconciled at the end of the fiscal year through the cost reporting methodology. When looking at RHC billing issues, it should be acknowledged that Rural Health Clinics essentially provide Part B services with the payment for those services determined by utilizing a Part A payment methodology.

In order to understand RHC billing, it is important to understand RHC terminology. Therefore, outlined below are explanations of many of the most common terms and issues that are encountered in billing for RHC services. Following these explanations, we provide you with an overview of some of the issues that you will face when attempting to bill for RHC services.

RHC Terms and Explanations

Rural Health Clinic – A facility the meets the standards of the RHC program and regulations as it relates to survey and certification, policy and procedure, as well as staffing (described elsewhere in this publication). A Rural Health Clinic must receive official approval after survey, by an approved State agency. The approval is provided by CMS and the fiscal intermediary that is designated to serve the RHC program within the State in which the RHC is located.

Centers for Medicare and Medicaid Services (CMS) - The Federal agency responsible for overseeing the operation of both the Medicare and Medicaid programs. CMS selects the Fiscal Intermediaries and Carriers and oversees the enforcement of all RHC rules and regulations.

Physician – A licensed physician (MD or DO) who provides services and is authorized by the State in the practice of medicine to provide services to Medicare beneficiaries.

PA, NP or CNM – This refers to the other professional staff required to be in a Rural Health Clinic. A physician assistant (PA), nurse practitioner (NP), or certified nurse midwife (CNM) must be on-site and available to see patients at least 50 percent of the hours the clinic is open and available for patient care. Each State has specific definitions related to the scope of practice for each of these practitioners. Anyone considering the RHC program must become aware of the rules and regulations governing utilization of PAs, NPs or CNMs in their State. Medicare defers to the State as it relates to licensure, certification, and the scope of practice for PAs, NPs or CNMs that are approved for utilization in a Rural Health Clinic.

UPIN – This is the unique provider identification number which is issued after application to Medicare Part B to receive the Medicare Provider Number. It is a requirement under Medicare regulations that whenever services are provided to Medicare beneficiaries, the UPIN number of the provider that is ordering or performing the service shall be provided to the referring facility. The UPIN number is also commonly used by private insurers to identify and track practitioners providing services.

Provider Identification Number – This is a unique number that is issued by payers to each provider to identify that provider as a credentialed and approved provider. In addition, it is used to generate payments under the name and credentials of an individual practitioner. It is appropriate and encouraged that Rural Health Clinics apply and obtain Medicare provider identification numbers and UPIN numbers for all practitioners employed/utilized by the RHC: physicians, certified nurse midwives, nurse practitioners, physician assistants, social workers, and psychologists.

UB92 – Refers to the billing form utilized for billing Medicare for RHC services. It is generally utilized as a hospital outpatient billing format. This requires use of revenue codes for the purposes of generating billing and/or payments.

HCFA-1500 – Part B billing format that is utilized to submit to the carrier to receive payment for Medicare services. This form has frequently been adopted by many State Medicaid programs, and is commonly the uniform format for submitting claims to commercial carriers.

Fiscal Intermediary (FI) – The entity that has been designated by CMS to process RHC claims and make payment for RHC services. The FI will also reconcile costs based on a submitted cost report. Traditionally, the Fiscal Intermediaries processed Medicare Part A claims.

Carrier – Entity that has been designated by CMS to process Medicare Part B claims and make payment for Medicare covered services provided to Medicare beneficiaries. Traditionally the Carrier is focused on Part B services.

Medicaid, Title XIX – This program was developed to provide services to the poor and disadvantaged. Every State has variations within its Medicaid program. It is important to understand your Medicaid program's payment methodology. Does the State utilize a managed care, fee-for-service or some variation of the two? The RHC program allows for cost reimbursement or prospective payment under the Medicaid program.

Medicare, Title XVIII – Provides services to the aged and disabled. This program is designed to provide coverage for the elderly. Medicare also pays based upon full cost for RHC services and the physician fee schedule for Part B services.

RHC Core Services – Rural Health Clinic Core Services are defined within the Rural Health Clinic Manual (referred to as HCFA-Publication 27, US Department of Health and Human Services). Generally, the core RHC services are services that would typically be provided to Medicare beneficiaries in a primary care physician's office, the beneficiary's home, or to Medicare beneficiaries in skilled nursing facilities who are under a non-Part A stay. The RHC Manual defines physician services; services and supplies "incident-to" physician services; services of nurse practitioners, physician assistants, and clinical nurse mid-wives; services and supplies "incident-to" the services of nurse practitioners, physician assistants, and clinical nurse mid-wives; clinical psychologist and clinical social worker services as defined in Section 419; visiting nurse services to home-bound patients with special circumstances; and, services and supplies "incident-to" clinical psychologists and clinical social worker services. A link to the RHC manual is available on the NARHC website: www.narhc.org.

Non-RHC Services – These are services that are covered by Medicare Part B but not considered part of the RHC core services. These services are typically billed to Medicare, however, they are billed to Medicare Part B. Non-RHC services would include inpatient services, services provided to Medicare beneficiaries in a Part A skilled nursing facility, and diagnostic tests such as laboratory and x-ray. These non-RHC services will be paid under the Medicare fee schedule. The RHC manual provides a more exhaustive list of examples of non-RHC services.

Incident-To – This is the mechanism Medicare utilizes to define services that are provided incident-to a professional service of an approved Medicare provider. These might include dressings, supplies and support staff assisting with the provision of a professional service. In order to qualify as "incident-to", the service must generally be provided in a physician's office or a patient's home and be provided under the direct supervision of the Medicare approved provider. Furthermore, the individual providing the incident-to service must be under the control, either through common employment or contractual relationship, of the Medicare provider who is delivering a "physician" service to the Medicare beneficiary. Although non-RHC practices can generally submit a claim for an incident-to service, this is not the case for the Rural Health Clinic. An incident-to service, by definition, cannot meet the RHC test for an "encounter".

Supervision – For the purposes of the Rural Health Clinic program, supervision is defined as a requirement of the physician to ensure that the quality of care is being maintained. The physician must be on-site and physically present a sufficient amount of time to see patients in the clinic and to interact with the Rural Health Clinic's PAs, NPs or CNMs on a regular basis. The minimum Federal requirement for on-site availability is one day every two weeks, unless more frequent availability is required as part of the PA/NP or CNM State practice Act.

Interim Payment Rate – This is the Medicare all-inclusive rate that is established by the Medicare program. The RHC receives this amount for each Medicare covered RHC visit (face-to-face encounter) throughout the Clinic's Fiscal Year. The Interim Rate is determined by calculating the Medicare allowable costs, divided by the number of Medicare allowable encounters. This mathematical equation determines the average Medicare cost per visit. At the end of each Fiscal Year, this Interim Rate is recalculated based upon the previous year's allowable costs and allowable visits. If the clinic's cost-per-visit rate is different from the rate established 12 months previous, the FI reconciles the new rate and uses this to set the interim rate for the next 12 months.

Encounter – An encounter for the RHC program constitutes a medically necessary face-to-face visit between a Medicare approved RHC provider (i.e. physician, PA, NP, CNM, psychologist, or social worker) and a Medicare beneficiary. Please note that the encounter must be both medically necessary AND face-to-face. The test of medical necessity is no different for an RHC service than it is for any other service covered by Medicare. A face-to-face visit with a physician may not necessarily be medically necessary. If it is not medically necessary, it does not meet the standard for an RHC encounter. A face-to-face encounter with a nurse (RN) may be medically necessary; however, a nurse is not a Medicare approved RHC provider, therefore, a nurse-only visit does not meet the standard for an RHC encounter.

Independent Rural Health Clinic – This is a facility that meets the requirements of the Rural Health Clinic program, however, it functions independent of any Medicare provider. Independent RHCs are subject to payment and cost report reconciliation through the identified Rural Health Clinic Fiscal Intermediary. The major RHC Fiscal Intermediaries include Riverbend Government Benefits Administrator, Veritus Medicare Services, and TrailBlazer Health Enterprises, LLC. All independent RHCs are reimbursed by Medicare on their all-inclusive rate (AIR), however, the AIR is subject to a cost-per-visit cap. The cap is set by statute and adjusts each year to reflect medical inflation. Consult the appropriate Fiscal Intermediary to ascertain the current RHC cap.

Provider-Based Rural Health Clinic – This designation refers to a Rural Health Clinic that is an intricate and subordinate part of another provider, such as a hospital, home health agency, or skilled nursing facility. In order to be considered "provider-based", the clinic need not be physically located on the campus of the parent provider. However, to meet the provider-based requirements generally means complying with extensive regulations. Provider-based RHCs must not only demonstrate that they are an integral part of the hospital, but must also serve the same service area as the parent provider. The provider-based designation changes some of the billing and payment methodology and requires billing and cost reconciliation through the fiscal intermediary of the provider. In addition, some provider-based RHCs are exempt from the per visit cap applicable to all independent RHCs and most provider-based RHCs.

Cost Report – This is a document prepared by every Federally-certified Rural Health Clinic at the end of the Clinic's fiscal year. The cost report must be submitted within 5 months of the end of the Clinic's fiscal year in order to reconcile RHC allowable costs and allowable visits with RHC payments. There are two forms of the RHC Cost Report. The Independent RHC cost report is the HCFA-RHC222 and is submitted electronically to the fiscal intermediary. Schedule M of the Parent Provider's cost report is the Provider-Based RHC cost report. Schedule M is similar to the HCFA-RHC222 Form and is an attachment to the parent provider's cost report.

BILLING FOR RHC SERVICES

Generally, billing for RHC services has been referred to as a process that is easier than traditional Part B billing because of the ability to collapse CPT codes into a single Revenue Code (See chart below).

Rural Health Clinic Billing Procedure Codes

Billed on UB-92 to Fiscal Intermediary as an RHC Service:

Billed on CMS-1500 to Part B Carrier:

Although you collapse codes into a single revenue code, it is still important to list the appropriate CPT codes as part of the billing process. These codes will be used to determine medical necessity and will be useful in determining what happened during the encounter.

It is also important to know that not all Medicare covered services provided to Medicare beneficiaries in an RHC are defined as Rural Health Clinic services. It is likely that you will provide services that are covered by Medicare Part B that are non-RHC services. These services are billable under the fee schedule to Medicare Part B. To further clarify the billing responsibilities, it is important to discuss the various components and methodologies of how RHC's bill for services.

For Rural Health Clinic Core Services (see definition above): Medicare uses a Part A payment methodology which includes the professional component (physician, PA, NP, etc.) of services provided in the Rural Health Clinic and those services provided "incident-to" that visit. In the independent Rural Health Clinic, this includes ancillary services, such as injections, dressings, etc. However, in a provider-based Rural Health Clinic, this is not the case. Because of the implementation of the Medicare hospital outpatient payment system (OPPS), the provider-based RHC does not bill for anything as a core service except the professional component of the visit. Provider-based Rural Health Clinics only bill for the face-to-face encounter, as an RHC service. Ancillary services provided during a Provider-Based RHC visit are billed to Medicare Part B under the fee schedule where allowable.

Part-B Billing for Non-RHC Services provided in the RHC: Part B billing for non-RHC services includes the technical component of services that may be provided within an RHC and those services that are provided outside of the Rural Health Clinic. Examples of services that are billable to Part B would include diagnostic tests, such as laboratory tests, lab draws, x-rays, EKGs, pulmonary function testing and technical components of x-ray services. Billing for diagnostic tests requires that you utilize the Part B billing format (HCFA/CMS-1500 Form). You will bill for the technical component to Part B, capturing the professional component as part of the RHC billing. Only the professional costs associated with these tests are captured on the RHC cost report.

Medicare Part B Services Provided in a Hospital: Medicare Part B Services provided in a Hospital are not Core RHC Services, therefore they are billed under the Medicare Part B fee schedule. It is important to recognize that you must bill for these services according to the Medicare billing guidelines for that particular practitioner. For example, if an RHC physician visits a patient in the hospital and provides Medicare Part B covered services, the physician bills for that service using the physician's individual provider number. It is extremely important that ALL costs associated with the delivery of inpatient services being paid to the RHC through Medicare Part B would have to be appropriately allocated out of the RHC cost center for cost reporting purposes. Failure to make this accounting adjustment would result in duplicate payments from Medicare.

Medicare Part B Services Provided in a Skilled Nursing Facility: Payment regulations require the bundling of payment for those Skilled Nursing Facility patients that are under a Part A stay. For these patients it is necessary for the RHC to carve out of the RHC cost report the time associated with the Medicare Part B covered services provided to the Part A stay patient. These services are billed to Medicare Part B.

Medicare covered services provided to non-Part A stay Medicare beneficiaries in skilled nursing facilities, which make up the majority of skilled nursing facility visits, should be billed to the RHC FI as RHC encounters. These will be paid based upon the RHC encounter rate.

Obtaining Provider Numbers: Three specific provider numbers could be utilized when billing for a Rural Health Clinic:

RHC Provider/Billing Number
UPIN Number
Individual Practitioner Provider Number

When you are initially approved as an RHC, you will receive a Rural Health Clinic Billing Number, which is a 6-digit number issued by the Medicare Part A RHC Fiscal Intermediary. This number is utilized when billing for all RHC services.

In addition, it is frequently required that the UPIN number of the Medicare approved practitioner within the RHC must also be included on the billing. The UPIN number, defined above, is a unique provider identification number issued to all Medicare approved practitioners and must be utilized when billing for Medicare services.

The Individual Practitioner Provider Number, which is issued by Medicare Part B Carriers, is necessary to bill for non-RHC Medicare Part B services. When billing Medicare Part B for the technical component of diagnostic services, payment is not reduced or changed simply because the test was provided by an RHC physician, PA or NP.

To apply for and obtain the Individual Provider Number, it is necessary to complete the CMS-855A application form. This form should be submitted to the Medicare carrier and will subsequently be processed within 60 days. At the end of the application process, the Carrier will issue an Individual Practitioner Provider Number. Subsequently a UPIN number will be issued for that Medicare provider. Assignment of payment should be to the Rural Health Clinic for those Part B payment numbers.

BILLING FOR HOSPITAL SERVICES

All Part B services provided in a hospital are defined as non-RHC services and must be billed under Medicare Part B. If the service provided to the Medicare beneficiary in the hospital is provided by a PA, NP or CNM, the approved charge will be the lesser of the actual charge or 85 percent of the physician fee schedule amount for that service. Services that might be provided in the hospital include surgery, outpatient visits such as the emergency department, inpatient care, and obstetrical deliveries. It is important to remember that Rural Health Clinics can bill and receive payment from Medicare Part B for non-RHC services, however, the clinic must allocate the costs (i.e. time and any overhead) associated with the delivery of non-RHC services out of their total costs when completing their cost report.

MEDICAID BILLING FOR RHC's

All State Medicaid programs are required to recognize Rural Health Clinic services. Each State Medicaid plan must define how it will pay for the services provided by a Rural Health Clinic. While minimum Federal requirements exist, States can seek to either waive those requirements or establish a unique Medicaid payment mechanism for RHCs in their State.

In 2000 Congress changed the way Medicaid must pay RHCs from a cost-based system to a prospective payment system (PPS). Included in that legislation was the ability of States to develop an alternative payment methodology, however each RHC in the State must individually agree to the alternative. In no case can the alternative payment methodology result in payments that are less than the payments the clinics would have received under the PPS methodology.

Therefore, Medicaid billing for RHC's is often a unique and sometimes complex story. It is important that you contact your State Medicaid office and obtain basic information on how Medicaid pays for RHC services in your State.

The initial Federally mandated PPS rate is based on an average of the 1999 and 2000 RHC cost reports. Each year, the PPS rate is to reflect changes in the Medicare Economic Index. If a clinic did not exist during 1999 and 2000, then the State is required to develop a methodology for determining any new clinics' initial Medicaid PPS rate. It is important to note that States have chosen to use different methodologies for calculating the initial Medicaid PPS rate. That's why it is important for you to understand how your Medicaid is paying for RHC services.

Generally, State Medicaid agencies have the ability to cover additional services that are not normally considered RHC services. This would include such services as dental and other types of ambulatory services. Medicaid may choose to full-cost reimburse diagnostic services as well, including laboratory and x-ray. It is important that you look at the State Medicaid Plan to determine what are appropriate covered services within the RHC for billing purposes. It is also important that you obtain a copy of the Medicaid Billing Instructions to understand the specific methodology under which your State Medicaid agency will pay. At the time this document is being written, dozens of different methodologies have been established. These range from quarterly wrap-around payments to paying an interim rate with reconciliation at year-end.

Conclusion

The Rural Health Clinics program has become the largest (based on the number of clinics) primary care service delivery program in rural, underserved communities in the country. This program and its emphasis on insuring adequate reimbursement in the rural and underserved areas for Medicare and Medicaid beneficiaries has grown to over 3,000 facilities. It is important when looking at billing for RHC services that one obtain appropriate advice and counsel from individuals with experience and knowledge in the area of Rural Health Clinic billing.

The issues that face Rural Health Clinics are unique in that RHC staff are expected to understand not only traditional Medicare regulations as they relate to coding and documentation, but also to understand the unique characteristics and requirements of billing for RHC services. Therefore, RHC staff must be able to bill two distinctly different programs, while still maintaining the integrity and compliance with Medicare requirements related to coding and documentation.

This manual will not answer every question you might have about the Rural Health Clinics program but it is the hope of the authors that it will answer many. Several resources and contacts have been listed in the Appendix F. The individuals and/or organizations identified in Appendix E may be able to answer more detailed questions not covered by this manual.