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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

Clint Brill, Senior Manager

Jacob Wethington, Manager

Tina Severs, Manager

Nick Guisinger, Senior Accountant

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