Payment Adjustments for Low-Volume Hospitals and Medicare-Dependent Hospital Program Extended

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CMS has issued a notice that (1) payment adjustments for certain low-volume hospitals and (2) the Medicare-dependent hospital (MDH) program will be extended through federal fiscal year 2013 (FY 2013). The extension of the low-volume payment adjustment and the MDH program were mandated by the American Taxpayer Relief Act of 2012. In most cases, the adjustments will be applied to reimbursement for discharges that occur between October 1, 2012 and September 30, 2013.

Modifications to the low-volume hospital payment adjustment under the Affordable Care Act (ACA) allowed more hospitals to qualify for the adjustment. As we noted in an earlier article here, the expiration of the ACA’s modifications – and the reversion to the pre-ACA methodology for determining eligibility for the adjustment – would have significantly decreased the number of providers receiving the adjustment. In order to qualify for the low-volume adjustment, a provider must request low-volume hospital status by March 22, 2013. The request must be submitted in writing to the applicable Medicare administrative contractor.

With limited exceptions, providers that were previously classified as MDHs program will not need to reapply for MDH status, and MDH status will be retroactive to October 1, 2012. However, some providers may have applied for classification as sole community hospitals or requested cancellation of their rural classification in anticipation of the MDH program’s expiration. Any such provider will need to reapply for MDH status. If a provider must reapply, then MDH status will not be conferred retroactively. A successful application for MDH status will be effective as of the date of notification to the provider that it meets the requirements for MDH status.

CMS’s notice may be viewed here [PDF].