Rural Health Clinics

This testimony summarizes GAO's recent report on the rural health clinic program. (See GAO/HEHS-97-24, Nov. 1996.) This program, established two decades ago, allows higher Medicare and Medicaid reimbursements to support health care professionals in underserved areas that are too sparsely populated to sustain a physician's practice. GAO addresses two main questions: Is the program serving a Medicaid and Medicare population that would otherwise have difficulty obtaining primary care? Are adequate controls in place to ensure that Medicare and Medicaid payments to rural health clinics are reasonable and necessary? In brief, the answer to both questions is "no." GAO found that most clinics are in fairly well-populated areas that already have extensive health care delivery systems in place. Controls over the amounts that these clinics receive from Medicare and Medicaid are weak or nonexistent, resulting in reimbursements that are in some cases more than five times higher than those paid to other providers. These financial benefits are provided indefinitely, even after an area may no longer be rural or underserved.

GAO noted that: (1) the RHC program needs to be refocused; (2) while some clinics clearly meet the program's initial focus of serving Medicare and Medicaid populations having difficulty obtaining primary care in isolated rural areas, most clinics are in fairly well-populated areas that already have extensive health care delivery systems in place; (3) controls over the amounts that these clinics receive from Medicare and Medicaid are weak or nonexistent, resulting in reimbursements that are in some cases over five times higher than those paid to other providers; (4) these financial benefits are provided indefinitely, even after an area may no longer be rural or uderserved; and (5) success in meeting the original purpose of RHCs requires more active management at the federal, state, and local levels to identify specific locations where clinics are needed and to determine when financial assistance can reasonably be discontinued.