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

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

Herding Cats to Finalize Your Cost Report? No Worries, It Can be Reopened

Stray CatsPreparing the Medicare cost report can be compared to herding cats—you have to gather a lot of data from a lot of people in a short period of time, with rules that seem to be constantly changing. So the odds of “getting it right” the first time are not very good.

The same argument applies to the audit or review of the cost report. In any given year, the Medicare Administrative Contractors (MACs) receive over 40,000 reports from different provider types—and all of these must be finalized in some fashion.

CMS recognizes the challenges of doing this and has included regulations that allow for the finalized cost report to be reopened. The same regulation allows a hospital to request a reopening if they determine something was not properly reported the first time. We recommend you read this regulation and know the process to follow if this situation arises.

Tip #12:

A settled cost report (NPR) can be reopened up to three years after its issuance (Pub. 15-1, §Section 2931.1)

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

Provider Reimbursement Manual 15-1

Questions? Please contact Marie White at 612.253.6546 or