The Bipartisan Budget Act of 2018 modified the qualifying criteria for the low volume hospital (LVH) payment adjustment for fiscal years 2019 through 2022. Under the modified criteria, the payment increases are applicable for hospitals that have less than 3,800 total annual discharges and are located more than 15 road-miles from another hospital (excluding Critical Access, psychiatric, rehabilitation, long-term care, cancer, research, and children's hospitals). For fiscal year 2023 and subsequent fiscal years, the payment adjustment and qualifying criteria will revert to the preexisting requirements – more than 25 road miles and less than 200 total discharges unless further legislative action occurs. 

Our previous study found that:

1. LVHs are typically smaller, government‐owned, more geographically isolated, and have lower total and operating margins than rural non‐LVHs
2. Without the LVH adjustment, qualifying hospitals would have had profitability margins approximately two percentage points lower
3. If the LVH program reverted back to the 2005 standards as scheduled in federal fiscal year 2018, approximately 99% of current LVHs would have lost their eligibility. If the LVH program reverts to the original 2005 program standards, the number of hospitals that would lose LVH status and the financial consequences for these hospitals are unknown.

Using The Healthcare Cost Report Information System ("Medicare cost reports") for financial and hospital characteristic variables, the Hospital Service Area File for hospital market information, and Provider of Services data file for calculation of driving miles to nearest acute care hospital, we updated our previous study with data from 2018-20.

This research is directly relevant to policymakers, federal and state agencies, and regulators interested in whether reverting to the original LVH classification—or eliminating the classification altogether—might impair access to care for Medicare beneficiaries residing in their service areas.

Publications

• The Low-Volume Hospital Adjustment Before and During COVID-19
  Policy Brief
  North Carolina Rural Health Research and Policy Analysis Center
  Date: 07/2024
  This brief uses current low-volume hospital adjustment qualifying criteria to compare low-volume hospitals to other rural hospitals and explores the effect of removing the adjustment before COVID-19 and during COVID.