Understanding the RHC All-Inclusive Rate (AIR): A Billing Guide

Billing can often be a complicated and time-consuming process for healthcare providers in rural and underserved areas. To simplify this, the Centers for Medicare & Medicaid Services (CMS) introduced the All-Inclusive Rate (AIR) model for Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs).

Instead of billing separately for every service during a patient’s visit, AIR allows clinics to receive a single, fixed payment that covers all qualifying services provided on the same day. In other words, AIR is a fixed, per-visit payment made to RHCs by Medicare and Medicaid for delivering covered medical and preventive services. This model reduces administrative burden, offers predictable revenue, and helps ensure financial stability for clinics that serve communities where healthcare access is limited.

But to benefit fully, providers need a clear understanding of the components of AIR billing and how to stay compliant.

Key Components of AIR Billing

The AIR model is designed to offer simplicity, but there are several important rules and components that providers must follow. These include:

• Qualifying Encounters

To bill under AIR, a clinic must have a valid, face-to-face medical or qualified preventive service encounter with a Medicare or Medicaid patient. This encounter must be conducted by an approved healthcare provider such as a physician, nurse practitioner, physician assistant, or certified nurse midwife. The visit must be medically necessary and documented properly.

• One Encounter per Day Rule

Under the AIR system, only one encounter per patient, per day, is generally billable, even if the patient receives multiple services. An exception is made when the patient has both a medical and mental health visit on the same day. In such cases, both visits can be billed if documentation supports the need for two distinct encounters.

• Services Included in AIR

The AIR includes a broad set of services such as consultations, exams, lab tests, x-rays, care coordination, and preventive services rated A or B by the U.S. Preventive Services Task Force. This payment model is designed to reduce fragmentation and encourage comprehensive care during a single visit.

• Medicare and Medicaid Payment Structure

Medicare typically covers 80% of the AIR, and the remaining 20% is billed to the patient or a secondary insurer. Medicaid AIR rates may vary from state to state, but the general structure remains the same. Also, it is important to note that payment limits or caps may apply depending on CMS guidelines.

• Cost Report Reconciliation

At the end of each year, RHCs and FQHCs must submit a cost report to reconcile their actual operational costs against what was reimbursed. If their allowable costs exceed what they received through AIR payments, CMS may issue additional reimbursements.

Challenges and Pitfalls in AIR Billing

Though AIR simplifies many aspects of billing, clinics can still face challenges that lead to denials, underpayments, or compliance issues. Such challenges can be:

• Inaccurate Encounter Documentation

One of the most common pitfalls is failing to properly document a billable encounter. If a service is not documented correctly or doesn’t meet CMS’s definition of a qualifying visit, it may be denied during claims processing or cost report review.

• Misunderstanding the One Encounter Rule

Many clinics unintentionally violate the one-encounter-per-day rule, thinking they can bill separately for multiple services performed by different providers. Without a clear medical distinction (such as a mental health visit and a medical visit), this can trigger audits or repayment demands.

• Billing for Non-Eligible Providers or Services

Only specific providers and services are covered under AIR. Billing for visits conducted by non-qualified staff (like RNs or LPNs acting alone) or for services outside the covered scope can result in claim denials.

• Errors with HCPCS Codes and Modifiers

Using incorrect HCPCS codes, such as billing non-RHC-approved codes, or omitting required modifiers, can lead to rejections. For example, chronic care management (CCM) or transitional care management (TCM) services have specific billing codes like G0511, which must be used appropriately.

Best Practices for Accurate AIR Billing

To ensure correct billing and reduce the risk of financial or compliance issues, clinics should adopt a set of best practices that align with CMS rules.

• Train Billing and Clinical Staff Regularly

Ongoing training is crucial for both clinical and billing staff to stay current with evolving AIR billing guidelines. As CMS updates codes, coverage criteria, and documentation rules, untrained staff can easily make costly mistakes. It is important to hold regular in-person or virtual training sessions to ensure everyone understands the requirements. This will ultimately reduce billing errors, speeds up claims processing, and protects the clinic from denials and compliance risks.

• Implement Strong Documentation Protocols

Accurate and detailed documentation is the foundation of successful AIR billing. Clinics should implement standardized templates that capture all necessary information. Such information can be provider credentials, service type, visit date, diagnosis, and justification of medical necessity. It is also important to have well-structured notes to ensure that each encounter qualifies for reimbursement and provide a strong defense during audits or cost reconciliations. Therefore, documentation must reflect the care delivered and support the services billed under AIR.

• Conduct Internal Audits and Reviews

Internal audits help clinics identify issues before they escalate into payment delays, denials, or regulatory violations. Also, reviewing claims and medical records on a monthly or quarterly basis allows billing teams to spot coding errors, missing documentation, or provider habits that may lead to non-compliance. Not only this but audits also reveal trends in denials, enabling corrective action and targeted staff education to maintain billing accuracy and operational efficiency.

• Utilize Billing Software and EHR Integration

Investing in modern billing software and fully integrated electronic health record (EHR) systems can significantly streamline the AIR billing process. These tools reduce manual entry, improve accuracy, and automate error checks, such as missing diagnosis codes or duplicate entries. Furthermore, features like real-time coding prompts, payer-specific rules, and audit trails ensure that every claim meets Medicare and Medicaid standards. Ultimately, this will save both time and resources for busy clinics.

• Outsource RHC Billing and Coding Experts

If internal resources or expertise are limited, outsourcing medical billing and coding to professionals who specialize in RHC and FQHC compliance is a wise decision. These experts understand the complexities of AIR billing, stay updated with CMS policy changes, and use proven processes to reduce denials. Their services not only improve financial performance but also allow providers to focus more on delivering quality patient care instead of managing claim rejections.

One such trusted outsourcing partner is 24/7 Medical Billing Services, a team of seasoned professionals specializing in RHC and FQHC billing. They bring extensive experience in handling AIR-specific billing processes, ensuring full compliance with CMS regulations and payer policies.

Struggling with AIR billing complexities and revenue losses? Let 24/7 Medical Billing Services handle your RHC claims with precision and compliance expertise.

FAQs

Q1. Can AIR payments vary based on the clinic's location?

Geographic adjustments or state Medicaid rules may affect AIR reimbursement.

Q2. Can an AIR rate change mid-year for a clinic?

AIR rates typically remain fixed for the calendar year unless adjusted during cost reporting.

Q3. Are emergency services covered under AIR if provided at an RHC?

If they meet encounter requirements and are provided by eligible staff.

Q4. Does AIR apply to group therapy or education sessions?

Group sessions may fall outside AIR and require specific billing methods.

Q5. Are dental services included in AIR billing?

Routine dental services are not covered under the AIR model.