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From Health Law Daily, June 13, 2014

Low-volume hospital and MDH adjustment implemented to fill six-month gap

By Kathryn S. Beard, JD

Payment adjustments for low-volume hospitals and the Medicare-dependent hospital (MDH) program created by the Patient Protection and Affordable Care Act (P.L. 111-148) and subsequently statutorily extended were announced in a CMS advance release. The payment adjustment is effective for the second half of fiscal year (FY) 2014. The document will publish in the Federal Register on Tuesday, June 17.

Background. A temporary change—FY 2011 and FY2012—in the low-volume hospital and MDH payment policies was provided by sections 3125 and 10314 of the ACA; that temporary change was later extended by the American Taxpayer Relief Act of 2012, the Pathway for SGR Reform Act of 2013, and the Protecting Access to Medicare Act of 2014. These temporary changes are currently extended through the first half of FY 2015, i.e., to March 31, 2015. CMS previously implemented the extensions for the first half of FY 2014 (79 FR 15022) and for the first half of FY 2015 (79 FR 27978).

Low-volume hospitals. Since 2005, low-volume hospitals—defined as being at least 25 road miles from another hospital paid under the inpatient prospective payment system (IPPS) and have fewer than 200 Medicare discharges per year—have received an adjustment in their payments from Medicare. (Soc. Sec. Act sec. 1886(d)(12)). The ACA expanded the original definition to temporarily qualify hospitals that are more than 15 road miles from another IPPS hospital and have less than 1,600 Medicare discharges.

For this implementation of the adjustment extension, hospitals that qualified for the low-volume hospital payment adjustment for the first half of FY 2014 do not need to reapply or give any notice to their Medicare Administrative Contractor (MAC) to continue receiving the adjustment for the second half of FY 2014, providing it continues to meet the mileage criterion. Hospitals that did not qualify for the low-volume payment adjustment for the first half of FY 2014 must notify their MAC that they meet the mileage criterion and provide documentation. Such requests must be received by the MAC by June 30, 2014. Hospitals that qualified for the low-volume payment adjustment but missed the deadline for the first half of FY 2014 does not have to reapply to receive the adjustment for the second half, but must send their MAC written verification that it meets the mileage criterion by June 30, 2014.

Medicare-dependent hospitals. To qualify as an MDH, a hospital must (1) have 100 beds or less; (2) be located in a rural area; and (3) not be a sole community hospital (SCH). In addition, MDHs must have a percentage of Medicare discharges that is not less than 60 percent of its inpatient days on its 1987 cost report or two of the most recently settled Medicare cost reporting years (Soc. Sec. Act sec. 1885(d)(5)(G)). MDHs receive special payment protections under IPPS.

In general, providers that were classified as an MDH as of March 31, 2014, will be reinstated effective April 1, 2014 without the need to reapply. However, MDH classification may not be retroactive to MDHs that classified as SCHs on or after April 1, 2014, or to MDHs that requested a cancellation of their rural classification. Hospitals with SCH status must first cancel that status, and then reapply for MDH status. Similarly, hospitals that requested cancellation of their rural classification must request to be classified as rural and reapply for MDH status. In both situations, MDH status is effective 30 days after the date the MAC provides written notification to the hospital of its approved application. In those cases, there will be no retroactive MDH status.

MainStory: TopStory ReimbursementNews AgencyNews HealthCareReformNews IPPSNews CAHNews DSHNews CMSNews HealthReformNews PartANews RuralNews

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