Governor McDonnell’s Budget Includes Significant Funding Increases for NFs

Earlier this week, Governor Bob McDonnell introduced the 2014 - 2016 biennium State Budget.  For nursing facilities, the two-year budget provides full funding for Medicaid inflation and rebasing adjustments.  Under our current Medicaid payment methodology, cost ceilings for nursing facilities are scheduled to be rebased effective July 1, 2014.  The introduced budget provides $28.6 million to fund the rebasing in state fiscal year 2015.  Additionally, the Governor's proposed budget includes $15.1 million funding for a 1.7% inflation adjustment for the same fiscal period.  Finally, a prior budget adjustment restricting Medicaid capital payments under the Fair Rental Value (FRV) will expire effective June 30, 2014 allowing the FRV rental rate floor to return back to 9.0% in FY 2015.

In total, the proposed budget provides $49.1 million in additional Medicaid nursing facility funding for the upcoming state fiscal year.  This equates to an average per diem increase of $8.00 for the twelve months ending June 30, 2015.

Also contained within the introduced Budget and effective January 1, 2014, the Department of Social Services, in collaboration with the Department for Aging and Rehabilitative Services, is authorized to base approved licensed assisted living facility rates for individual facilities on an occupancy rate of 85 percent of licensed capacity, not to exceed a maximum rate of $1,207 per month, which rate is also applied to approved adult foster care homes, unless modified as indicated below. The department may add a 15 percent differential to the maximum amount for licensed assisted living facilities and adult foster care homes in Planning District Eight (Northern Virginia).

Having the Governor include nursing facility rebasing and inflation in his Introduced Budget is a great first step.  The next steps are to ensure these provisions are not changed by the 2014 General Assembly.