CMS Announces Payment Adjustments for Low-Volume and Medicare-Dependent Hospitals


In a notice posted on June 12, 2014, CMS announced changes to the payment adjustment provided to low-volume hospitals and to the Medicare-dependent hospital (MDH) program under the hospital inpatient prospective payment systems (IPPS).   The changes, which are effective for discharges on or after April 1, 2014 and on or before September 30, 2014, were made in accordance with the Protecting Access to Medicare Act of 2014 (PAMA) that was enacted on April 1, 2014. 

The Social Security Act provides for an additional payment to qualifying low-volume hospitals paid under the IPPS, and for federal fiscal years (FYs) 2011 and 2012, the Affordable Care Act (ACA) expanded the definition of low-volume hospitals and revised the procedure used to determine the payment adjustment for qualifying hospitals.  Subsequent legislation continued to extend those changes, with the June 12th CMS notice implementing the extension provided by PAMA.   CMS estimates that 600 hospitals will qualify as low-volume hospitals through the end of FY 2014 and that those hospitals will see a payment increase of $161 million compared to previous estimates.   Hospitals that met the criteria for low-volume hospital payment adjustments for FY 2014 discharges through March 31, 2014 will continue to receive the applicable low-volume hospital payment adjustment through September 30, 2014 if those hospitals continue to meet the 15 mile requirement (i.e.,  the hospital is located more than 15 road miles from any other subsection (d) hospital).  A hospital that did not previously qualify as a low-volume hospital for FY 2014 discharges through March 31, 2014 may notify its MAC and provide appropriate documentation no later than June 30, 2014 to be eligible to receive the payment adjustment for discharges from April 1, 2014 through September 30, 2014. 

CMS also discussed in the notice the extension of special payment protection under IPPS to MDHs. Much like the low-volume hospital adjustments, the MDH program has been legislatively extended a number of times, with PAMA most recently extending the program from April 1, 2014 to March 31, 2015.  CMS provides in the notice a series of examples as to how and when MDH status will be determined for hospitals that were MDHs as of March 31, 2014, which was the date the program previously was to expire. 

Reporter, Christina A. Gonzalez, Houston, +1 713 276 7340,


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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