The Effect of Shrinking Rural America on Medicare Productivity Standards

michael-smithIn 1900, some 40 percent of the population worked in agriculture, a century later, only two percent did.1 Manufacturing jobs in most small towns began to disappear by the 1980s. Rural America, more than much of the rest of the country, is the victim of productivity gains. And in rural America, fewer other opportunities materialize to replace the jobs the machines take.

Our transition from rural to metropolitan has been rapid. At the beginning of this century, 60 percent of the people lived on farms or in villages. Today, just 19 percent of Americans live in areas the Census department classifies as rural, down from 44 percent in 1930.

This week’s tip goes hand-in-hand with our previous posting (please see tip #22) on the importance of accurately calculating your physician and mid-level FTEs for Rural Health Clinics (RHCs). The RHCs could receive enhanced reimbursement from Medicare and Medicaid, but this is dependent upon FTE counts and the relationship to productivity thresholds.

In some situations, a RHC has the necessary physician or mid-level to provide care, but due to declining populations, economic conditions or a combination of these, insufficient patient volumes exist to prevent the RHC from being impacted by the thresholds.

Tip #28:

The Medicare Administrative Contractor that processes Part A and Medicare Part B claims has the discretion to make an exception to the productivity standards based on individual circumstances (Chapter 13, Section 80.4).

Further guidance can be found on the Centers for Medicare and Medicaid Services (CMS) website:

Medicare Benefit Policy Manual RHC/FQHC

Questions? Please contact Michael Smith at 701.239.8635 or msmith@eidebailly.com.

1“The Graying of Rural America,” by Alana Semuels, The Atlantic

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