Case study: Health system pursues VDA and recoups additional payments
Consultants assessed a health system, made a case for a volume decrease adjustment, and helped the client recoup $5.4 million in payments.
A three-hospital healthcare system in the Northeast.
The situation
The healthcare system engaged the firm to pursue a volume decrease adjustment (VDA) to recoup additional payments for a specific cost reporting period. The healthcare system was unaware of this reimbursement opportunity until the firm identified it during an advisory review.
To pursue a VDA, hospitals must be able to:
- Show a 5% reduction in total discharges in a given cost report period
- Prove that the reduction was beyond the hospital’s control
- Confirm that they met the criteria to be defined as either a Sole Community Hospital (SCH) or Medicare Dependent Hospital (MDH) during some portion of that cost reporting period
- Complete the required financial analysis in accordance with the rules and applicable administrative and judicial decisions that govern these calculations
- Submit by the required deadline
- Successfully navigate the audit of the submission
The healthcare system needed help to assess the potential opportunity, identify and document the allowable and unforeseen circumstances that influenced the hospital’s discharge reduction, prove the reduction was beyond management’s control, and meet the timeframe to submit an application.
The solution and results
The firm prepared an initial assessment and determined that an application was warranted. A deep dive analysis was then prepared after obtaining additional data to analyze comparative utilization and cost data. Data analyzed included costs by department, along with core staff analysis at the department level.
The firm also conducted interviews with system personnel, evaluated other internal documentation, and assessed other internal and external circumstances that would support the request for additional payments through a VDA.
The team prepared, and presented to management, a VDA suitable for submission including a calculation to determine the adjustment amount the hospital was eligible to receive, evidence, and reasoning. The team remained available to support the application through the Medicare Administrative Contractor (MAC) review and approval process.
As a result, the client was able to recoup $5.4 million in payments.