Rural Health Clinic Services Act Has Not Met Expectations

HRD-82-62: Published: May 14, 1982. Publicly Released: Jun 14, 1982.

Additional Materials:


Michael Zimmerman
(202) 275-6195


Office of Public Affairs
(202) 512-4800

GAO reviewed the progress made by the Department of Health and Human Services (HHS) to implement the Rural Health Clinic Services Act, the extent to which Medicare beneficiaries use the clinics, and any obstacles preventing broader implementation of the Act.

The expectations of the Act have not been fulfilled. Medicare reimbursement to rural health clinics was approximately three sevenths of the amount expected for the year 1980. Many clinics have chosen not to be certified or have relinquished their certification because of reimbursement limitations and administrative requirements. The Act has not significantly increased clinic financial stability and many clinics will continue to require federal grant assistance to survive. Few clinics attract the majority of Medicare beneficiaries in their service areas because patients are choosing private physicians whose offices are closer. Federal reimbursement guidelines prevent many certified clinics from fully recovering incurred and otherwise allowable costs, and federal administrative requirements are costly, time consuming, and further reduce the financial benefits of participation. Public Health Service grants and National Health Service personnel represent a more significant contribution to clinic financial stability than do Medicare and Medicaid revenues. Certain states refuse to allow physician extenders, nurse practitioners, or physician assistants to practice independently and thus nullify a principal objective of the Act. There has been a lack of effort devoted to encouraging states to permit physician extenders to practice and a failure to implement a reimbursement system which would cover the costs which clinics incur in treating Medicare and Medicaid patients.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Health and Human Services should require the Health Care Financing Administration to: (1) eliminate the administrative cost screen, adopt more realistic and flexible productivity standards, and replace the current rate ceiling with the planned $32.10; and (2) replace the reimbursement system as soon as feasible with a prospective reimbursement system similar to the one currently being discussed: one without screens, with rates based upon the ratio of cost to charges, and with rates limited to the prevailing rate for similar services performed by physicians within the same geographical area.

    Agency Affected: Department of Health and Human Services


Explore the full database of GAO's Open Recommendations »

Mar 1, 2021

Feb 24, 2021

Feb 17, 2021

Feb 11, 2021

Feb 5, 2021

Jan 28, 2021

Jan 21, 2021

Looking for more? Browse all our products here