State Budget Update

Despite a fairly positive fiscal report issued earlier this month indicating revenue above the forecast, the Governor and General Assembly will still have to close a revenue gap currently estimated to be $272 million for State Fiscal Year (SFY) 2016 (begins July 1, 2015).  Therefore, the Governor recently announced budget cuts for the current year, focused primarily on layoffs of state workers in the Department of Corrections.  The Governor did not include any current year reductions in the Medicaid program.  As you recall, last spring we were able to retain most of the new funding for the current fiscal year, but we did our part in closing the revenue gap by absorbing cuts through an accelerated capital cost reimbursement reduction and, unfortunately, a deferral of inflationary adjustments for SFY 2016.

Given the fiscal environment, from the defensive perspective, we will need to be active in staving off any additional NF cuts under Medicaid targeted as part of the $272 million revenue gap the Governor is expected to deal with in December when he proposes amendments to the budget for consideration by the 2015 General Assembly. Offensively, we will be articulating the argument related to the need for recognition of the increase in the cost of caring for the vulnerable population we serve through the restoration of inflation to NF rates July 2015, particularly in light of the increased administrative burdens the CCC program has placed on the NFs.  We want to be a “priority” for what will be a tight budget for “new” funding.  At a minimum, this argument further reinforces the need to avoid additional cuts.

The next step in the budget process from our perspective will be the release of the Medicaid Consensus Forecast in mid-November, followed by the Governor’s Introduced Budget amendments in mid-December.  We will keep you posted as the situation comes into greater focus.

VHCA staff has already had several meetings, and will continue to meet with legislators and the McAuliffe Administration to ask them to prevent cuts to the NF Medicaid reimbursement given the continuing roll-out of CCC.