Virginia Medicaid Reforms Get Tentative CMS Nod

The Centers for Medicare and Medicaid Services (CMS) has indicated its general approval to a series of reforms that Governor McDonnell and his administration proposed as a precondition to expanding Virginia’s Medicaid program under the Affordable Care Act.  CMS issued a letter last week to Virginia Secretary of Health and Human Resources William Hazel to outline areas of agreement between the federal and state governments, as well as the additional steps that lie ahead before reforms can be put fully into place.

Secretary Hazel reviewed the letter Tuesday with Virginia Senate budget conferees that will determine amendments to the two-year state budget, most notably whether Virginia will expand its Medicaid program.  The members of the House of Delegates who were on the panel were invited but did not attend the briefing. The Secretary indicated to legislators that putting off the decision on Medicaid expansion would make it harder for the Department of Medical Assistance Services to be ready by next year.

Governor McDonnell and the General Assembly are requiring the proposed changes as a precondition for expanding Medicaid. The proposed House budget also would require changes to parts of the existing Medicaid program, as well as subsequent legislative approval.

Virginia is asking for the reforms under a waiver allowed by Section 1115 of the Social Security Act.  Additionally, the Commonwealth is working with CMS on a proposed Medicare-Medicaid financial alignment demonstration for dual eligibles.  Under this dual demonstration, the majority of Medicaid nursing facility services would transition from fee-for-service reimbursement to payment administered by contracted Medicaid managed care organizations.

The CMS letter outlines three areas of general agreement with the state that would require further negotiation before final approval:

  • simplification of how the state administers the Medicaid program, including unified waiver programs for services delivered outside of institutions to the elderly and people with various disabilities;
  • pilot programs to test changes in how Virginia delivers and pays for health care services under Medicaid; and
  • cost-sharing requirements for people to receive benefits, primarily those who earn more than 100 percent of the federal poverty level, currently $11,170 a year for a single person and $23,050 a year for a family of four. The Affordable Care Act allows extension of Medicaid coverage to people who effectively earn up to 138 percent of the federal poverty level.
It remains to be determined if the letter’s assurances will be sufficient to convince the Governor and House Republican leaders to approve Medicaid expansion effective January 1, 2014.  It is estimated that Virginia could receive more than $2 billion in estimated federal spending in 2014 — 100 percent of the cost of extending coverage to about 250,000 uninsured Virginians.