fbpx

< Back to Thought Leadership

Volume Decrease Adjustment: What You Need to Know

The Volume Decrease Adjustment (VDA) is a lump sum payment available to Sole Community Hospitals (SCH) or Medicare Dependent Hospitals (MDH) who have experienced more than a 5% decrease in total discharges of inpatients as compared to the immediately preceding cost reporting period. The decrease in total discharges must be caused by circumstances that are beyond the hospital’s control.

How to Know if You are Eligible for Volume Decrease Adjustment

To be eligible, the organization must be designated by the Centers for Medicare & Medicaid Services (CMS) as either a SCH or MDH. The provider must also provide documentation that shows greater than a 5% decrease in total discharges. The provider will also be required to submit sufficient correspondence that illustrates the decrease is due to circumstances beyond the provider’s control.

Examples cited by CMS include severe weather events, inability to recruit physician staff, economic recession, or similar occurrences with substantial cost effects, i.e. the COVID-19 pandemic. Finally, the provider must verify that they were paid below their inpatient operating costs.

How Much are You Eligible For?

The MAC determines a lump sum adjustment amount. This is equal to the difference between the Medicare fixed inpatient operating costs and the fixed MS-DRG revenue for the cost report in question. Please note that the cost report must be final settled before the VDA will be issued.

If You are Eligible for Volume Decrease Adjustment

If you believe you are eligible for VDA, our recommendation is to reach out to a Blue & Co. advisor. We can help start gathering information to submit to CMS. Correspondence must show that the decrease in volume was beyond the provider’s control.

Best practice is to prepare this information in tandem with your Medicare Cost Report. To qualify for a payment adjustment the provider must submit its request no later than 180 days after the date on the MAC’s (Medicare Administrative Contractor) Notice of Amount of Program Reimbursement (NPR).

Contact Us

If your organization is eligible for a Volume Decrease Adjustment, reach out to your local Blue & Co. Advisor or a member of our reimbursement team below.

Shawn Adams, Senior Manager
502-992-3508

Clint Brill, Senior Manager
502-992-3512

Jacob Wethington, Manager
614-222-4770

Tina Severs, Manager
317-713-7946

Nick Guisinger, Senior Accountant
614-220-4078

Upcoming Hospital 340B Program Recertification Window

Upcoming Hospital 340B Program Recertification Window

The Health Resources and Services Administration (HRSA) has set the annual recertification period for the 340B Drug Pricing Program for hospitals to begin on August 11, 2025, and end on […]

Learn More
What’s the Difference? Actual Home office expenses vs. the simplified method

What’s the Difference? Actual Home Office Expenses vs. the Simplified Method

Small business owners who work from home could save money on their taxes by taking the home office deduction, as long as they meet the requirements set forth by the […]

Learn More
The Healthcare Roadmap to Success with Network Integrity | Part Four of a Four Part Series | Text overlay on a photo of a hospital.

The Healthcare Roadmap to Success with Network Integrity

In the ever-evolving healthcare landscape, prioritizing initiatives to improve margins is essential for maintaining financial stability. In our previous video and article, we discussed how a healthcare system on the […]

Learn More