Veto Session Action on State Budget

Virginia General Assembly

The General Assembly convened in a “veto session” on April 3rd to address amendments that Governor McDonnell made to legislation, including the Biennial Budget that passed in the recent General Assembly Session.  The Governor made no amendments to the provisions affecting nursing facility and assisted living facility reimbursement so these provisions will be enacted as passed in February.  The General Assembly accepted the Governor’s amendments to the section of the Budget addressing Medicaid reform and Medicaid expansion under the federal Accountable Care Act.  

Nursing facilities will receive a 2.2 percent increase scheduled for July 1, 2013.  The adjustment is estimated to increase funding for payment rates by $12 million or $2.00 per patient day on average over SFY 2013 levels.  In addition, the current 90 percent minimum occupancy threshold applied to both Medicaid indirect and capital cost components was reduced to 88 percent adding approximately $1.8 million to nursing facility Medicaid funding.  This lower threshold will also take effect on July 1st of this year.

For Auxiliary Grant recipients residing in assisted living facilities, the Budget adds $2 million to rates resulting in an increase to $1,196 per month with an additional 15 percent differential to assisted living facilities in Planning District 8.

On Medicaid Reform, the Budget establishes a special, 10-member legislative commission to evaluate the progress of Medicaid reforms that would be sufficient to convince the Commonwealth to expand coverage of Medicaid to populations specified by the Accountable Care Act.  Negotiations already underway with the Centers for Medicare and Medicaid Services (CMS) will be expanded to determine whether Virginia will be granted sufficient flexibility to “reform” its Medicaid program such that state policymakers feel comfortable proceeding with Medicaid expansion.  Budget language directs the state to pursue approval of reforms from CMS and to develop and implement programs that yield cost savings and improve quality.  One of the key provisions of the plan outlines triggers for disenrollment of the newly eligible population if the federal government pulls back from its commitment to pay matching funds (100 percent in the first three years and 90 percent starting in 2020 for succeeding years).  Budget language requires the Department of Medical Assistance Services to develop a five-year forecast for costs and savings of expansion and to engage stakeholders in planning for achieving savings targets.

One of the Budget provisions addressing Medicaid reform requires that the dual eligible financial alignment demonstration go forward.  In addition, in the third-phase of the anticipated reforms, DMAS must move toward inclusion of all remaining Medicaid populations and services, including long term care and home and community-based waiver services, in cost-effective managed and coordinated delivery systems.  DMAS must report to the 2014 General Assembly on the design of and progress made toward implementation of managed and coordinated care for all Medicaid populations, including progress toward gaining federal authority to institute any such reforms.  The timing for the completion of this third-phase is not identified in the Budget language.