Governor McDonnell Announces Proposed Amendments to the 2012-2014 Budget

On December 17th, Governor Bob McDonnell unveiled his proposed Budget Amendments for state fiscal year 2014 that would give teachers' raises, redirect some general fund revenue for roads and deposit more than $100 million in the state's rainy day fund.  Continuing the positive news from the 2012 General Assembly session, the Governor proposes that nursing facilities receive an increase of 2.2% to rates in SFY 2014 continuing the same adjustment factor that was applied in 2013.  This adjustment is estimated to increase funding for payment rates by $12.0 million or $2.00 per patient day on average over SFY 2013 levels.  Additionally, the increase in the fair rental value (FRV) rental rate floor to 8.5% continues into 2014.  The combined increase for these two provisions is estimated to raise rates by an average of $6.54 per Medicaid resident per day during the two-year budget period over 2012 levels.

Two additional items of note for Medicaid-participating nursing facilities are included in the Governor's proposed Budget Amendments.  The Governor has proposed reducing the current 90% minimum occupancy provision which is applied to Medicaid indirect and capital payment components to 88%.  The estimated fiscal impact of this amendment is $1.8 million annually.  The second item relates to language in the Governor's Amendments that gives the Department of Medical Assistance Services (DMAS) the authority to make changes to the nursing facility reimbursement methodology.  As previously shared with members, VHCA is participating with a nursing facility Medicaid payment workgroup to explore the possible transition to a price-based payment system. This language does not require DMAS to make changes but gives them the authority to do so.  

For assisted living facilities that participate in the Auxiliary Grant program, effective January 1, 2013, the Department of Social 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 $1,161 per month (an $11 monthly increase).  The department may, and typically does, add a 15 percent differential to the maximum amount for licensed assisted living facilities in Planning District Eight.  The monthly personal care allowance for auxiliary grant recipients who reside in licensed assisted living facilities and approved adult foster care homes is increased to $82 per month.  The combination of these two adjustments total $500,000 annually across the Commonwealth.

The General Assembly will consider the Governor's recommendations when it returns for its annual legislative session beginning in January.  His budget is a proposal, but legislators have the power to completely overhaul or ignore the specific recommendations.  VHCA staff will be working over the next several days to fully evaluate the impact on long term care providers of each item contained in the budget proposal.  Early in 2013, members should be on the lookout for requests to reach out to both legislators as well as the Administration as we refine strategies to obtain additional state funding.

The House Appropriations and Senate Finance Committees will hold regional public hearings to hear comments on the Governor’s proposed amendments to the 2012-2014 Biennial State Budget on Friday, January 4, 2013.  The times and locations are listed below:

  • Manassas - Hylton Performing Arts Center, George Mason University, Prince William Campus, 10 am

  • Middletown - Lord Fairfax Community College, Corron Community Development Center, 12 Noon

  • Virginia Beach - Tidewater Community College, Advanced Technology Center Theater, 12 Noon

  • Roanoke - Virginia Western Community College, Business Science Building, Whitman Theater, 12 Noon

  • Richmond Area - Virginia State University, Virginia Hall, Anderson-Turner Auditorium, 12 Noon

Persons wishing to speak may register at each hearing site no earlier than one hour prior to the start of the hearing.  Speakers are asked to limit their comment to three minutes or less.