The 2014 Executive Budget Document
Governor McDonnell's Proposed Budget for the 2014-2016 Biennum
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Released on December 16, 2013 
 
Department of Medical Assistance Services [602]
Secretarial Area: Health and Human Resources
Mission:
To provide access to a comprehensive system of high quality and cost effective health care services to qualifying Virginians.
Operating Budget Summary
This table shows the Governor's proposed budget for the next two years and the agency's official budget for the previous six years.
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Biennium Fiscal Year Source GF NGF Total
2008-2010 2009 Chapter 872, 2010 Acts of Assembly $2,338,073,401 $3,654,454,288 $5,992,527,689
2008-2010 2010 Chapter 872, 2010 Acts of Assembly $2,416,937,883 $4,351,872,172 $6,768,810,055
2010-2012 2011 Chapter 2, 2012 Acts of Assembly $2,822,298,324 $4,710,248,288 $7,532,546,612
2010-2012 2012 Chapter 2, 2012 Acts of Assembly $3,367,186,774 $4,045,504,873 $7,412,691,647
2012-2014 2013 Chapter 1, 2014 Acts of Assembly $3,547,761,312 $4,525,123,550 $8,072,884,862
2012-2014 2014 Chapter 1, 2014 Acts of Assembly $3,669,406,166 $4,829,310,906 $8,498,717,072
2014-2016 2015 Governor's Proposed Budget $4,087,406,030 $4,939,915,133 $9,027,321,163
    Base Budget $3,850,644,557 $4,729,216,748 $8,579,861,305
    Addenda (Changes to the Base) $236,761,473 $210,698,385 $447,459,858
2014-2016 2016 Governor's Proposed Budget $4,223,210,210 $5,082,195,222 $9,305,405,432
    Base Budget $3,850,644,557 $4,729,216,748 $8,579,861,305
    Addenda (Changes to the Base) $372,565,653 $352,978,474 $725,544,127
Positions Budget Summary
Biennium Fiscal Year Source GF NGF Total
2008-2010 2009 Chapter 872, 2010 Acts of Assembly 165.02 187.98 353.00
2008-2010 2010 Chapter 872, 2010 Acts of Assembly 169.02 190.98 360.00
2010-2012 2011 Chapter 2, 2012 Acts of Assembly 169.82 194.18 364.00
2010-2012 2012 Chapter 2, 2012 Acts of Assembly 176.32 204.68 381.00
2012-2014 2013 Chapter 1, 2014 Acts of Assembly 183.82 212.18 396.00
2012-2014 2014 Chapter 1, 2014 Acts of Assembly 198.32 226.68 425.00
2014-2016 2015 Proposed Positions 210.37 216.63 427.00
    Base Budget 198.32 226.68 425.00
    Addenda (Changes to the Base) 12.05 (10.05) 2.00
2012-2014 2016 Proposed Positions 210.37 216.63 427.00
    Base Budget 198.32 226.68 425.00
    Addenda (Changes to the Base) 12.05 (10.05) 2.00
Operating Budget Addenda (in order of greatest impact)
•
Fund Medicaid utilization and inflation Decision Package
  Provides additional funding for the increased costs estimated in the most recent forecast of Medicaid expenditures. Medicaid expenditures are projected to increase 6.6 percent in 2015 and 3.2 percent in 2016. Other than inflation and utilization growth, other major drivers of the general fund need are due to rebasing nursing home rates in 2015 and restoration of prior year reductions for the teaching hospitals. Medicaid enrollment has slowed dramatically since May 2013.
 
  FY 2015 FY 2016
General Fund $255,197,886 $419,208,894
Nongeneral Fund $195,101,529 $297,025,141
•
Account for state intellectual disabilities facility closures Decision Package
  Reduces Medicaid funding for state intellectual disabilities facilities as a result of implementation of the U.S. Department of Justice (DOJ) settlement agreement for transitioning individuals to the community. As individuals are transitioned into the community, four of the state training centers are scheduled to close. This adjustment reflects the Medicaid portion of the on-going facility closure costs and associated facility savings resulting from compliance with the DOJ settlement agreement.CHAR(13) + CHAR(10)
 
  FY 2015 FY 2016
General Fund ($31,400,937) ($53,311,345)
Nongeneral Fund ($31,400,937) ($53,311,345)
•
Adjust base budget to reflect previously authorized waiver slots Decision Package
  Adds appropriation to the base budget for Medicaid to reflect previously authorized waiver slots required by the settlement agreement with the U.S. Department of Justice, related to transitioning individuals with developmental disabilities from institutions to the community. The cost of these slots was appropriated to the Department of Behavioral Health and Developmental Services in 2013 and carried forward to cover the costs in 2014. As a result, there is no appropriation in the Medicaid base budget for these slots and this action reflects the needed funding.
 
  FY 2015 FY 2016
General Fund $39,394,728 $39,394,728
Nongeneral Fund $39,394,728 $39,394,728
•
Provide funding for required waiver slots Decision Package
  Funds the creation of 340 new Intellectual Disability (ID) and 25 Developmental Disability (DD) waiver slots in 2015 and 360 new ID slots and 25 DD slots in 2016 as required by the U.S. Department of Justice settlement agreement. This agreement requires the Commonwealth to transition individuals from state institutions to the community and these waiver slots are necessary to meet this requirement.
 
  FY 2015 FY 2016
General Fund $14,883,111 $30,437,862
Nongeneral Fund $14,883,111 $30,437,862
•
Withhold hospital inflation in 2015 Decision Package
  Eliminates the estimated 2.5 percent inflation increase in 2015 for hospital inflation that is included in the Medicaid expenditure forecast. The 2.5 percent increase estimated for 2016 is not affected by this action.
 
  FY 2015 FY 2016
General Fund ($16,864,215) ($18,424,708)
Nongeneral Fund ($17,871,281) ($18,424,708)
•
Fund Family Access to Medical Insurance Security utilization and inflation Decision Package
  Increases funding for the program to reflect the latest forecast of expenditures. The increase in costs in 2015 is primarily a result of an expected increase in enrollment due to the implementation of the federal exchange as part of the Affordable Care Act. The savings in 2016 is mainly due to a reduction in the state match rate for the Children's Health Insurance Program grant from 35 percent to 12 percent, pursuant to the Affordable Care Act. This change in the match rate is effective September 1, 2015. In addition, lower costs are reflected as the FAMIS MOMS program is phased out as individuals in that program transition to the Federally-Facilitated Marketplace.
 
  FY 2015 FY 2016
General Fund $337,532 ($33,245,261)
Nongeneral Fund $626,845 $37,247,959
•
Fund medical assistance services for low-income children utilization and inflation Decision Package
  Adjusts funding for the Commonwealth's Medicaid Children's Health Insurance program. This program applies to children between the ages of 6 through 19 with family income from 100 to 133 percent of the federal poverty level. The increase in 2015 is primarily due to an expected increase in enrollment related to efforts to enroll individuals in federal exchanges as part of the Affordable Care Act. The savings in 2016 is primarily a result of a reduction in the state match for the Children's Health Insurance program grant, from 35 percent to 12 percent pursuant to the Affordable Care Act. This change in the match rate is effective September 1, 2015.
 
  FY 2015 FY 2016
General Fund $1,308,747 ($22,482,030)
Nongeneral Fund ($500,486) $21,945,705
•
Adjust Health Care Fund appropriation Decision Package
  Modifies the appropriation for the Health Care Fund to reflect the latest revenue estimates. Revenue from the Master Settlement Agreement with tobacco manufacturers is slightly lower than previously estimated. Tobacco taxes are projected to decline each year and Medicaid recoveries are projected to increase slightly. Since the fund is used as state match for Medicaid, any change in revenue to the fund impacts general fund support for Medicaid.
 
  FY 2015 FY 2016
General Fund ($470,536) $11,573,479
Nongeneral Fund $470,536 ($11,573,479)
•
Continue indigent care reductions for teaching hospitals Decision Package
  Continues the prior year reductions for indigent care for the two teaching hospitals in 2015. The Medicaid forecast restored funding for indigent care costs at the teaching hospitals, which typically are reimbursed 100 percent of their Medicaid and indigent care costs. This strategy continues the reduction in 2015, but in 2016 the indigent care reductions for the two teaching hospitals are restored.
 
  FY 2015 FY 2016
General Fund ($14,955,994) $0
•
Adjust base budget to reflect current operations Decision Package
  Adjusts the agency's funding to align with current operations. In addition, the agency's nongeneral fund appropriation in its administrative program is increased to reflect the most recent nongeneral fund revenue estimates. The agency has numerous information technology initiatives underway that are heavily federally funded. This adjustment ensures the appropriate level of federal appropriation to meet these commitments and to reduce administrative requests for increases in appropriation.
 
  FY 2015 FY 2016
Nongeneral Fund $5,877,004 $5,877,004
Positions 0.00 0.00
•
Provide additional funding for Medicaid call center Decision Package
  Funds the full costs of the new Medicaid call center. In the 2013 Session, $1.5 million was initially funded as a down payment until the full contract cost was developed. This call center is a requirement of the federal Affordable Care Act, which requires states to accept telephonic applications for Medicaid; a capability the state did not previously have. A portion of the costs of the call center contract are being offset by reallocating the funding for the FAMIS call center, which is partially integrated into this new center.
 
  FY 2015 FY 2016
General Fund $395,439 $395,439
Nongeneral Fund $5,156,411 $5,156,411
•
Reflect reduced costs due to fewer geriatric patients Decision Package
  Reduces funding for payments to state behavioral health facilities due to a declining population of geriatric patients at Eastern State Hospital’s Hancock Facility. The number of Medicaid-eligible individuals receiving geriatric services at Hancock has declined by 35 percent since 2009, and is anticipated to continue to decline throughout the biennium system-wide.
 
  FY 2015 FY 2016
General Fund ($2,501,774) ($2,501,774)
Nongeneral Fund ($2,501,774) ($2,501,774)
•
Match Medicare competitive bid durable medical equipment rates Decision Package
  Reflects savings by allowing the agency to modify durable medical equipment rates to match Medicare. Through its competitive bidding program, Medicare has established competitive rates for selected items for three major Virginia markets (Richmond, Virginia Beach/Norfolk, Arlington/Alexandria) that are 33 percent lower than the current Medicaid rates. This action allows Virginia Medicaid to utilize the competitive rates that Medicare has experienced.
 
  FY 2015 FY 2016
General Fund ($2,433,000) ($2,433,000)
Nongeneral Fund ($2,433,000) ($2,433,000)
•
Continue prior year inflation reductions for teaching hospitals Decision Package
  Continues the prior reductions for inflation that were applied to the teaching hospitals for inpatient operating and graduate medical inflation rates in 2015. In previous years the withholding of inflation for private hospital rates was applied to the teaching hospitals, which typically are reimbursed 100 percent of their Medicaid and indigent care costs. This strategy continues the inflation reductions into 2015 and then allows the teaching hospitals to be reimbursed for these prior year reductions in 2016.
 
  FY 2015 FY 2016
General Fund ($9,350,040) $0
•
Remove limit on supplemental payments to a freestanding children's hospital Decision Package
  Eliminates the limit on physician supplemental payments for a freestanding children's hospital with a Medicaid utilization over 50 percent. Only one hospital currently meets this criteria and the result of this change increases support for this hospital.
 
  FY 2015 FY 2016
General Fund $1,381,730 $1,381,730
Nongeneral Fund $1,381,730 $1,381,730
•
Reduce clinical laboratory fees to match managed care rates Decision Package
  Lowers clinical lab fees in fee-for-service Medicaid by about 12 percent to match the lab fees paid by Medicaid managed care organizations.
 
  FY 2015 FY 2016
General Fund ($1,063,678) ($1,083,346)
Nongeneral Fund ($1,063,678) ($1,083,346)
•
Enhance the quality review of managed care organizations Decision Package
  Increases funding for the quality review of two managed care organizations (MCOs) recently added to the Medicaid program. Additionally, funds will assist in evaluating MCO claims in order to improve rate setting, program monitoring, and detection of fraud, waste and abuse. This funding will receive a 75 percent federal match.
 
  FY 2015 FY 2016
General Fund $415,000 $415,000
Nongeneral Fund $1,245,000 $1,245,000
•
Fund 24-hour minimum period and extend length of temporary detention orders up to 72 hours Decision Package
  Funds proposed legislation that requires a minimum 24-hour period for a temporary detention order (TDO) and extends the current 48-hour maximum TDO to 72 hours for adults with mental illness. The purpose of the legislation is to ensure that individuals subjected to a TDO are given a sufficient minimum period of time to be properly evaluated and the most appropriate treatment option is determined. In addition, extending the TDO provides more time for individuals to stabilize. Extending the length of a TDO may result in more post-TDO outpatient treatment versus inpatient hospitalizations.
 
  FY 2015 FY 2016
General Fund $1,418,880 $1,721,788
•
Adjust base budget for administrative costs associated with federal settlement Decision Package
  Funds the positions and contract costs related to the implementation of the U.S. Department of Justice settlement agreement, related to transitioning individuals with developmental disabilities from institutions to the community. In 2014, the funding for these costs was administratively transferred from the Department of Behavioral Health and Developmental Services. Therefore, there is no base funding in the Department of Medical Assistance Services' budget to cover the costs of 13 positions and the consumer-directed fiscal agent contract. Without this funding the agency will have to either eliminate the positions or divert funding from other critical projects to cover the personal services costs. The agency has no flexibility in funding the consumer-directed fiscal agent because that contract is based on the number of waiver recipients.
 
  FY 2015 FY 2016
General Fund $739,360 $772,145
Nongeneral Fund $739,360 $772,145
•
Fund additional community mental health audits and reviews Decision Package
  Adds 100 annual audits to the existing mental health audit contract. The current audit contract supports 70 audits each year. In FY 2013, the audits identified recoveries of approximately $2.0 million. The growth in the number of community mental health providers and other recent changes to these services are expected to increase the number of referrals received related to fraud and abuse of behavioral health services.
 
  FY 2015 FY 2016
General Fund ($750,000) ($750,000)
Nongeneral Fund ($750,000) ($750,000)
•
Fund Medicaid related costs of the health information exchange Decision Package
  Provides funding for Medicaid's share of operational costs of the state's health information exchange (ConnectVirginia). ConnectVirginia is the state system that allows the exchange of electronic health records. In addition, funding is provided to cover the cost of transitioning Medicaid providers onto the exchange.
 
  FY 2015 FY 2016
General Fund $250,000 $250,000
Nongeneral Fund $1,050,000 $1,050,000
•
Fund additional costs for the Commonwealth Coordinated Care program Decision Package
  Provides additional funding for the costs related to the managed care enrollment broker and actuarial costs for rate setting. This program integrates the population eligible for both the Medicare and Medicaid programs into managed care, bringing acute and long-term care services together in one program. As the program has been further developed the agency has refined the costs of implementing the program, which are reflected in this funding.
 
  FY 2015 FY 2016
General Fund $557,784 $610,955
Nongeneral Fund $557,784 $610,955
•
Distribute Central Appropriation amounts to agency budgets Base Budget Adjustment
  Adjusts the agency budget to reflect amounts moved to or from Central Appropriations to cover the continued cost of public employee salary increases, increases in state employee health insurance premiums, changes in state employee retirement and other benefit contribution rates, and other centrally funded items being continued from the 2012-14 biennium into the 2014-16 biennium.
 
  FY 2015 FY 2016
General Fund $955,641 $955,641
•
Eliminate one-time funding for health innovation support Decision Package
  Removes one-time funding in the agency's base budget provided to support efforts in health innovation.
 
  FY 2015 FY 2016
General Fund ($870,000) ($870,000)
•
Eliminate emergency room payment reduction for physicians Decision Package
  Eliminates the policy of reducing physician fees for non-emergency visits in hospitals. Originally, this policy was initiated in the early 1990s to incentivize emergency rooms (ERs) to triage and divert non-emergency patients to more appropriate and cost-effective settings. However, after the federal Emergency Medical Treatment and Active Labor Act (EMTALA) was implemented several years later, ERs no longer had any choice but to treat any patient that comes through the door, emergency or not. However, the fee reduction policy for non-emergency claims has continued to this day. The reduction for the hospital claim of an ER visit is currently being eliminated through the adoption of a new payment methodology. This action addresses the reduction for the physician ER claim.
 
  FY 2015 FY 2016
General Fund $430,000 $430,000
Nongeneral Fund $430,000 $430,000
•
Adjust agency appropriation for the cost of Performance Budgeting system charges Decision Package
  Provides appropriation to pay for the agency's share of ongoing Performance Budgeting system operating and maintenance costs. The general fund share of this cost was previously budgeted in Central Appropriations.
 
  FY 2015 FY 2016
General Fund $380,949 $380,949
Nongeneral Fund $467,867 $467,867
•
Transfer administrative funding for the Developmental Disability waiver Decision Package
  Transfers general fund appropriation and nine positions from the Department of Medical Assistance Services to the Department of Behavioral Health and Developmental Services (DBHDS) associated with the Developmental Disability (DD) waiver. This responsibility was transferred by interagency agreement to DBHDS effective November 2013. A companion amendment for DBHDS reflects this transfer.
 
  FY 2015 FY 2016
General Fund ($372,004) ($372,004)
Nongeneral Fund ($372,004) ($372,004)
Positions (9.00) (9.00)
•
Increase staffing to handle appeals caseload Decision Package
  Adds eight positions to handle cases in the provider and client appeals divisions. Both client and provider appeals have increased dramatically in recent years and these positions are needed to handle the caseload.
 
  FY 2015 FY 2016
General Fund $290,841 $298,872
Nongeneral Fund $290,841 $298,872
Positions 8.00 8.00
•
Adjust funding for medical services for involuntary mental commitments Decision Package
  Adjusts funding for the cost of hospital and physician services for persons subject to an involuntary mental commitment. The most recent forecast of expenditures projects lower costs than last year's estimates.
 
  FY 2015 FY 2016
General Fund ($562,575) ($362,875)
•
Adjust funding to agencies for information technology and telecommunication charges Decision Package
  Adjusts the agency budget for information technology and telecommunication charges based on the required cost of living adjustments contained in the Northrop Grumman contract and the elimination of the debt recovery surcharge originally approved by the Joint Legislative Audit and Review Commission on July 12, 2010.
 
  FY 2015 FY 2016
General Fund $30,967 $207,670
Nongeneral Fund $32,607 $218,669
•
Enhance investigations of community mental health services Decision Package
  Funds two positions to investigate and detect provider abuse of patients receiving community mental health services. These staff will substantially increase the agency's ability to protect Medicaid clients from abusive providers. In addition, these investigations will generate recoveries to the Medicaid program, that will offset any new costs and generate a small savings.
 
  FY 2015 FY 2016
General Fund ($104,920) ($115,721)
Nongeneral Fund ($104,920) ($115,721)
Positions 2.00 2.00
•
Fund health innovation activities Decision Package
  Provides funding for the agency to contract with the Virginia Center for Health Innovation for the development and tracking of innovative approaches to healthcare delivery.
 
  FY 2015 FY 2016
General Fund $100,000 $100,000
•
Provide support to disenroll ineligible Medicaid recipients Decision Package
  Funds one position to supplement existing staff to investigate potentially ineligible recipients of Medicaid in Virginia. The federal Centers for Medicare and Medicaid Services (CMS) deployed the Public Assistance Reporting Information System in 2009 which identifies individuals who appear to have access to Medicaid benefits in multiple states. CMS has notified Virginia of approximately 12,000 incidences where recipients were potentially ineligible for Medicaid benefits in Virginia due to their enrollment in another state. These cases must be investigated to identify potential fraud and abuse. Ongoing, the matches will be received quarterly instead of annually and the agency estimates approximately 5,000 referrals from CMS per year.
 
  FY 2015 FY 2016
General Fund ($6,497) ($27,542)
Nongeneral Fund ($6,497) ($27,542)
Positions 1.00 1.00
•
Fund agency costs for the new Cardinal accounting system Decision Package
  Provides appropriation to the agency's budget to pay for the agency's share of the costs for the new Cardinal accounting system. The Department of Accounts allocates the yearly cost of the system to agencies based upon the number of transactions the agency completed in the previous fiscal year.
 
  FY 2015 FY 2016
General Fund $0 $10,892
Nongeneral Fund $0 $13,377
•
Fund changes in state employee workers' compensation premiums Decision Package
  Adjusts the agency's budget for workers' compensation premiums based on the allocation of 2015 and 2016 program costs provided by the Department of Human Resource Management. The allocation is based on the historical experience of the agency and reflects the current policy of providing agencies with 50 percent of any increased costs and allowing agencies to retain 50 percent of any reduced costs.
 
  FY 2015 FY 2016
General Fund ($1,247) ($1,080)
Nongeneral Fund ($2,685) ($2,326)
•
Adjust funding for premium changes in the automobile insurance liability program Decision Package
  Adjusts agency funding for the approved premium changes in the state's automobile insurance liability program.
 
  FY 2015 FY 2016
General Fund $295 $295
Nongeneral Fund $294 $294
•
Expedite implementation for Medicaid innovation pilots Decision Package
  Provides emergency regulatory authority to implement payment and delivery innovation models as part of Medicaid reforms outlined in the 2013 Appropriation Act. While the agency is authorized to pursue pilot projects, it currently does not have emergency regulatory authority to implement them in an expedited timeframe. This action is embedded in budget bill language.
•
Provide authority to modify disproportionate share hospital reimbursement Decision Package
  Establishes a new methdology for hospital Disproportionate Share Hospital (DSH) reimbursement. Currently, the state does not have a stable methodology for determining DSH eligible hospitals and the amount to be paid consistent with the available allotment, which will be reduced over time due to the federal Affordable Care Act (ACA). This new methodology includes: (1) a reliable and comparable basis for determining which hospitals qualify for DSH; (2) a better match of payments to levels of uncompensated care costs; and (3) limits on DSH reimbursement, including reductions in the federal DSH allotment as a result of the ACA. This action is embedded in budget bill language.CHAR(13) + CHAR(10)CHAR(13) + CHAR(10)
•
Provide authority to modify consumer-directed program and service facilitator regulations Decision Package
  Allows the agency to strengthen the regulations and policies for the consumer-directed program. Multiple program, policy, and program integrity issues have been identified that are needed to ensure the health, safety and welfare of waiver individuals, and to protect the fiscal integrity of the Medicaid program. This authority allows the agency to propose regulations and gain public feedback through the normal regulatory process. This action is embedded in budget bill language.
•
Create a non-reverting pay-for-performance fund Decision Package
  Creates a special non-reverting fund to meet a federal requirement for the agency to set-aside a portion of managed care payments to be paid in the next fiscal year to managed care companies that meet the requirements for performance payments as part of the new Virginia Coordinated Care program. This action is embedded in budget bill language.
•
Modify billing rate for mental health support services Decision Package
  Changes the billing rate for mental health support services to a quarter-hour rate. This change allows providers to more appropriately bill for the level of service they provide. This action is embedded in budget bill language.
•
Implement new hospital operating rate reimbursement methodology Decision Package
  Allows the agency to modify the reimbursement methodology for hospital operating payments. The existing methodology can no longer be used after the required implementation of the ICD-10 code set (used for diagnosis codes and inpatient procedures) on October 1, 2014. The new methodology will improve reimbursement since it better recognizes severity and will likely result in payments better aligned with expected costs. The budget language has a transition methodology to limit the financial impact on individual hospitals. This action is embedded in budget bill language.
•
Allow additional providers to adminster developmental disability screenings Decision Package
  Provides authority for the agency to contract with other public or private providers to conduct screenings for the Individual and Family Supports Developmental Disability waiver. Currently, the screenings are handled through the Virginia Department of Health. However, this function is being phased out and the agency needs authority to use alternate providers to conduct the screenings. This action is embedded in budget bill language.
•
Provide authority to modify appeals process for Medicaid recipients Decision Package
  Allows the agency to modify the appeals process due to the interaction between the Federally-Facilitated Marketplace and the Medicaid program. This action is embedded in budget bill language.


pdocagy2014 - Executive Budget Document Agency Details - 06-03-2025 21:02:52