Underutilized Exception – Waiver of RHC Productivity Standard

Welcome to this new entry into my Reimbursement Blog! If you are a new reader, I invite you to take a moment and subscribe to the blog through the link at the bottom of this page.

This entry is important to any hospital that operates or has operated a Rural Health Clinic. Throughout the history of Medicare and no matter what the payment system, the availability of exceptions to the payment rules has been a constant. While some exceptions become well known and eventually become an annual procedure for the hospitals for which they apply (i.e. SNF and TEFRA), other exceptions seem to remain outside of the realm of “common knowledge.” They remain hidden in the details, unknown to most hospitals and their cost report preparers, and underutilized.

As we review hundreds of Medicare/Medicaid cost reports per year, we come across these underutilized exceptions. One of these exceptions is the waiver of the RHC productivity standard, also referred to as a guideline. The Medicare cost report and the applicable instructions specifically reference the fiscal intermediary’s authority to waive the RHC productivity guidelines at a hospital’s request. All a hospital has to do is “reasonably justify” why they have not meet the guideline. It is right there in black and white, but we have seen very few hospitals that have been limited by the guideline actually make such a request. The few waiver requests that we have seen filed have all been accepted by the hospital’s FI and resulted in additional reimbursement to the hospital.

As we studied this opportunity, we wondered just how many hospitals might benefit from this exception/waiver. We analyzed cost reporting data and determined that about 400 small and mid-size hospitals may be able to benefit from this exception. There are over 50 hospitals that could benefit by in excess of $100,000, if they submitted a request and it was accepted.

Hospital executives are always rightfully concerned about any downside risk that could be associated with such a request. What is the downside to requesting this exception? If an exception is requested and denied by the FI, you are right back where you started. The hospital will just have to apply or continue to apply the productivity guidelines. The Hospital loses nothing by making the request.

If your hospital has an RHC, have you been or will your payments be materially limited by the RHC productivity standards? If so, take the time to request an exception or call us we will be happy to help you with the filing. Your hospital may have a lot to gain and nothing to lose by making the request.

I hope this and all future blog entries help you identify the most important reimbursement issues and new developments in the field for you.


Kendall Quisenberry
Reimbursement Counselors

(972) 403-9910

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