An Issue Paper Prepared by the National Rural Health Association-February 1997


Public Law 95-210. In 1977, the U.S. Congress passed legislation that established criteria for the establishment of federally certified Rural Health Clinics. The law was designed to support and encourage access to health care by rural residents.

It was noted that due to economic conditions, the rural population was becoming poorer and more elderly, and that providers were becoming older and not being replaced by younger physicians as the older physicians retired.

It also was noted that provision of health care to the rural poor and elderly was more costly than to those populations in urban areas. Rural health care also is more costly because a limited, constricted patient mix restricts the percentage of revenue from private third-party payers.

The number of these Rural Health Clinics has proliferated in the past 10 years due to decreasing reimbursements from the standard fee-for-service system. Because Rural Health Clinics receive cost-based reimbursement, providers are turning to Rural Health Clinics program to be able to continue providing service to the rural poor and elderly.

As health care providers--both independent and provider-based facilities-strive to maintain service to this vulnerable population, the Rural Health Clinics have become an integral part of this health care system.

As Rural Health Clinics have proliferated, so has scrutiny of the amount of money being spent for the clinics by the federal and state governments on the program. It is important to remember that the Rural Health Clinic status has helped maintain health care in areas that otherwise have not historically been able to recruit or maintain providers.

When examining the cost of a Rural Health Clinic, it must be balanced against the cost of having no access or limited access for the patients the Rural Health Clinic serves. Preventive health care and early intervention in acute illnesses would suffer and the ultimate healthcare cost would increase if there was not such access to that provided by the Rural Health Clinics. Cost also should be evaluated on another less quantifiable continuum-the quality of life issue that either encourages or discourages providers from locating in rural areas. Rural providers are typically within the reach of local citizens 24 hours a day, seven days a week, making quality of life in a rural community more difficult to attain, much less maintain.

Health care provision to rural populations through Rural Health Clinic certification 1) allows access in areas that otherwise would not have sustainable health care; 2) encourages mid-level providers to be an integral part of the health care delivery system; 3) gives rural citizens the opportunity to learn and accept the skills of mid-level providers; and 4) allows the potential for other services to be brought to the rural area that otherwise would not be available in a private practitioner's office, such as dietitian, social and physical therapy services.

Rural Health Clinics receive cost-based reimbursement from Medicaid and Medicare for services already provided to patients and are regulated by and audited by a survey process. This concept of cost-based reimbursement has facilitated the recruitment of providers into rural areas.

The National Rural Health Association (NRHA) fully supports the Rural Health Clinics program as one major component of a rural health care delivery system. As the rural health care concept is re-examined at the national level by federal agencies, the NRHA will be actively supporting the Rural Health Clinics program and will be active in any discussion of revisions.

With the above stated support, it is noted that the Rural Health Clinics program is designed like many other health care delivery programs at the federal and state levels. A program is legislated, qualification requirements are established, certification processes are put in place and ongoing monitoring mechanisms are developed. There is a system of checks and balances for the program to ensure both initial and ongoing compliance with established goals and requirements.

In the case of the Rural Health Clinics program, this system does not appear to have worked as effectively as it was designed, mainly because certain segments of the system have not been regularly instituted, applied or addressed.



  1. Access to care has become a defining argument for and against the establishment of Rural Health Clinics. A working objective definition remains elusive and perhaps arbitrary at some state levels. Access to health care should be defined in workable terms considering both the needs of specific communities as well the short- and long-term primary and emergency health care services needs of those communities.
  2. Rural Health Clinics should be required to serve the populations for which the designation of need for the area was granted and thus provided the eligibility criteria for certification of the clinic.

    For example, Rural Health Clinics should serve all Medicare beneficiaries and Medicaid recipients seeking services at the clinic. Rural Health Clinics originally obtaining certification under a population-based, underserved or shortage area designation should serve members of the population for which the area was certified as needing health care providers. For instance, if a Rural Health Clinic's certification is based on a HPSA-based area with a population below 200 percent of poverty level, that Rural Health Clinic should have to offer services to that population on a sliding-fee basis or a similar mechanism.
  3. Rural Health Clinics should contribute to the overall health of their resident communities by providing primary health care services to indigent and uninsured citizens to the extent financially feasible for that clinic, taking into consideration that no reimbursement typically is received for such services.
  4. Rural Health Clinics are reimbursed for services provided, typically without the benefit of other financial resources such as grants. Therefore, Rural Health Clinics should be reimbursed at reasonable and adequate levels for the primary health care services provided.
  5. The limiting circumstances involved in the establishment and retention of access to care in frontier and other significantly rural areas should be taken into special consideration in any possible revision of the eligibility and reimbursement provisions for Rural Health Clinics.
  6. Provider-based facilities constitute a significant number of Rural Health Clinics. The size and physical location of the provider entity should be a consideration in any possible revision of the reimbursement provisions for Rural Health Clinics, e.g., Rural Health Clinics of hospitals in rural, medically underserved or health professional shortage areas with 75 acute-care hospital beds or fewer should be accorded reimbursement levels commensurate to the critical role played in the delivery of primary health care services in the shortage areas.
  7. Rural Health Clinics also face the onward march of managed care programs across the country. Such clinics should be recognized as historical providers of Medicare and Medicaid services as well as essential community providers and should be afforded inclusion in any such managed care system.
  8. The recent rapid growth in the number of Rural Health Clinics has been noted. Yet, it is too soon to say whether this growth rate is positive or negative. Further study appears warranted and should be directed as specific, measurable aspects of direct access to care-for example, numbers of clients served in the program, increases in number of patients served due to different reimbursement, increases in the cost of care that affects all programs, and increases in the volume of services should be assessed.
  9. Rural Health Clinics should actively serve the specific populations on which the qualifying geographic area was designated as a shortage area. This aspect of access is seen as an integral part of the intent of the original federal legislation and a responsibility that Rural Health Clinics have an obligation to meet.



  1. Rural Health Clinics program eligibility requires only the designation of a medically underserved area (MUA) or a health professional shortage area (HPSA). Originally, designation also included medically underserved populations. No definite measure of ongoing need was established beyond these minimum requirements.

    Such a management function should be developed, or the initial eligibility requirements should be revised. Regular assessments of MUA and HPSA designations for a given area already provided for under existing rules could help to define ongoing need and to address the issue of proliferation. This assessment needs to include protection for existing essential community providers. This does not appear to be a function of Rural Health Clinics themselves, but of the system that applies the criteria for establishment.
  2. Increasing and retaining access to care are both critical considerations for most rural communities as they face the need for provider services today and in years to come. Definition of a community's needs also should include consideration of the retention and recruitment of primary care providers.
  3. There should be a determination of the unmet need in an area and the resources necessary to meet that need before certification of new Rural Health Clinics. The federal government should establish standards to measure this need, and the state should apply them in making recommendations for certification of Rural Health Clinics. Such standards should include, but would not necessarily be limited to, the number of health care providers available to the population or area and also should include community input.
  4. Critical criteria for evaluating need at both the community and state levels should include consideration of actual and potential patient utilization assessed by patient type and patient need, taking into consideration such factors as age, demographics, income and poverty levels, prevalent diagnostic patterns, and community economic needs and planning.
  5. Needs assessments for new rural health clinics should consider the effects on the existing primary care infrastructure in rural communities and should not cause fragmentation of that infrastructure.
  6. Geographic distance, provider type, patient transportation requirements and limitations, and other proven access considerations must be included in evaluating access to health care.
  7. Mid-level providers are required by the enabling federal law to be key Rural Health Clinics components in the delivery of primary health care services by Rural Health Clinics and, therefore, should be included in some objective manner in the assessment of need for Rural Health Clinics at the federal, state and community levels.



Regular and annual surveys of Rural Health Clinics are included in the original requirements of the original legislation, providing a method of checks and balances when applied objectively and consistently. Yet, such surveys have not been conducted in any consistent manner in the Rural Health Clinics program.

Rural Health Clinics of both types (independent and provider based) submit required cost-reporting documents, yet audits of any real meaning either are not conducted at all, or are not conducted in a timely or consistent manner.



Much attention has been focused on provider-based Rural Health Clinics, yet no specific manual of regulations and rules has been developed or implemented pertaining to the functioning of this type of clinic, unlike the rules that have been developed for independent Rural Health Clinics.



Data collection, or the lack thereof, is a serious problem in evaluation of the Rural Health Clinics program and its participating facilities, particularly as such evaluation would relate to access to care. The cost report is the single means through which data is collected beyond individual patient bills submitted to Medicare and Medicaid. Additionally, the cost-report collection of productivity standards, for Medicare utilization, holds true only for independent Rural Health Clinics.



It also should be noted that Rural Health Clinics are fertile ground for the training of primary health care providers and increasing the health care awareness of their resident communities.



Rural Health Clinics provide access to health care services, which may be seen as a multifaceted factor that includes definitions not only of specific utilization by specific types of patients, but also of recruitment and retention of primary care providers and ongoing contributions to the long-term economic and health factors of their local communities.

The aspects of the program that work should be strengthened and the problem areas should be refined and improved. Efforts to change the program entirely would appear to be premature.

Equal emphasis also should be given to the consistent accomplishment of required federal government actions relative to the eligibility and regulatory aspects of the program. Such factors are outside the realm of responsibility of or action by Rural Health Clinics, although responsibility for the integrity of the program is seemingly being placed solely at the feet of the participating Rural Health Clinics and those that operate them.

The risk of too much intervention with Rural Health Clinics could result in the loss of momentum that the Rural Health Clinics program has achieved in helping to address access to primary and emergency health care services in rural communities.

Another long-term risk is that if today's momentum is lost, the issue of access to care in rural communities may have to be dealt with once again years from now. Rural communities and their citizens, as well as federal and state governments, cannot afford this. The NRHA strongly supports the concept of Rural Health Clinics as a major component in improving access to health care services in rural communities and believes that the program deserves careful, rational and objective fine tuning.

The NRHA will join in any discussions and efforts to improve this program and will advocate for changes consistent with the proposals in this paper.