Skip to the main content.

1 min read

Items to consider before year end – cost report optimization, discharge tracking.

The Volume Decrease Adjustment (VDA) is an important benefit to assist Medicare Dependent Hospitals (MDH) and Sole Community Hospitals (SCH) when they experience a decline in inpatient volume of greater than 5%. There are several steps involved in requesting the money from Medicare, and some of them require attention before the end of the cost report period in which the decline occurs.

Once it is determined that a provider qualifies for a VDA, the payment is calculated over three steps. First, a percentage of fixed costs to total costs is calculated; second, this percentage is multiplied against both the Provider’s inpatient operating costs and their total DRG revenue (the higher of the  Inpatient Prospective Payment System (IPPS)or the Hospital Specific Rate), including low volume add on payments; and third, the fixed portion of revenue is subtracted from the fixed portion of inpatient operating costs.

Of these three items, the Provider has the most control over the inpatient operating costs, and by extension, the fixed portion of these costs. A thorough review of the cost report will ensure that Medicare Inpatient operating costs truly reflects the actual cost of treating Medicare patients.

There are several areas on a cost report to review to ensure accurate Medicare costs. These include, but are not limited to, the following:

  • Square footage assignments
  • Gross or net square footage
  • B-1 Statistical elections
  • Fragmented A&G
  • Trial balance mapping to cost centers

Some of these require prior approval from the Medicare Administrative Contractor (MAC), which must be submitted to the MAC no later than 90 days before the end of the cost reporting period. For this reason, it is important to begin preparing for a potential VDA no later than the mid-way point of the cost reporting period.

The Rybar Group has over 30 years of experience in all areas of the VDA process and is here to help. Please contact Steve Sprague, or 810-853-6169, today to discuss your situation.

Keeping Your Chargemaster Updated is More Important Than Ever

With the recent legislation around price transparency for healthcare providers and insurers, the importance of maintaining your charge description...

Read More

Establishing a Teaching Hospital – Determining FTEs and Other Need-to-Know Items

Based on the Healthcare Cost Report Information System (HCRIS) data from cost reports with fiscal years ending July 31, 2021 through June 30, 2022,...

Read More

What’s What: Medicare vs Medicaid and How They are Related

As providers continue to explore additional reimbursement opportunities, it is important to understand the similarities and differences of Medicare...

Read More