The standard mechanism for Medicare payment for hospital services is the Prospective Payment System, but hospitals receive an additional payment if they qualify as a low-volume hospital (LVH). Created in 1987, the LVH classification was set to expire at the end of FY 2014 but was extended in the health reform legislation passed by Congress until October 1, 2016. Subsequently, the "Medicare Access and CHIP Reauthorization Act of 2015" increased inpatient hospital payment adjustment for certain low-volume hospitals until October 1, 2017. Unless further legislative action occurs, the LVH classification will cease to exist at this time.

Analysis will include comparison of the long-term profitability of LVHs to other rural hospitals and estimation of the potential profitability consequences of eliminating the payment classification altogether. Project data will come from the hospital market service area file, the hospital Cost Report information system, the area resource file, and census data.

Publications

• How Would Rural Hospitals Be Affected by Loss of the Affordable Care Act's Medicare Low-Volume Hospital Adjustment?
  Journal Article
  North Carolina Rural Health Research and Policy Analysis Center
  Date: 11/2016
  Using data from the Hospital Market Service Area File, the Hospital Cost Report Information System, and Nielsen-Claritas Pop-Facts, this study examined the effect the low-volume hospital payment adjustment has on a hospital's finances. It also looked at the effects of losing the payment adjustment.
• The Impact of the Low Volume Hospital (LVH) Program on the Viability of Small, Rural Hospitals
  Policy Brief
  North Carolina Rural Health Research and Policy Analysis Center
  Date: 10/2016
  This brief compares rural Low Volume Hospital (LVH) to non-LVH characteristics and estimates the financial impact of eliminating the LVH program and reverting to the original (2005) LVH classification and payment adjustment.