Medicaid Discussions Continue as “Budget Sunday” Approaches

February 15, 2018

As the House Appropriations Committee and the Senate Finance Committee prepare to report their respective budgets on Sunday, February 18, the issue of Medicaid expansion continues to be a major focus of discussion.  The introduced budget proposes to expand Medicaid eligibility to childless adults who are younger than 65 and earn up to 133 percent of the federal poverty level, in accordance with the Affordable Care Act, effective October 1, 2018.  The state share of this expanded coverage would be funded by an assessment on net patient revenue of private acute care hospitals.  The introduced budget assumes savings of approximately $422 million associated with drawing down the additional federal funds that would accompany this coverage expansion.  Medicaid expansion proposals have been rejected by the General Assembly in the past; there appears to be movement on the issue this year, but the House and Senate are taking different approaches, which will ultimately need to be reconciled in the budget conference committee.

Earlier this week, the House passed HB 338 (Miyares), which would direct the Department of Medical Assistance Services (DMAS) to apply for a waiver to allow the state to implement requirements for able-bodied, working-age Medicaid recipients to participate in a new Training, Education, Employment, and Opportunity Program.  Participants would be required to work in subsidized or unsubsidized employment or participate in training, education, or community-service activities, such as job skills training, job searching, or caregiving; the number of hours per week that would be required would gradually escalate with the duration of enrollment in Medicaid.  These requirements would not apply to individuals in several eligibility categories, such as children under the age of 18, individuals diagnosed with serious mental illness, or individuals who are the primary caregiver for a dependent.

DMAS would be permitted to waive the work requirement for areas of the Commonwealth with high unemployment rates, but would not be able to waive the requirement for participation in training, education, or other community engagement opportunities.  The bill provides that Virginia Workforce Centers or One-Stops would provide some services to participants and that existing funding streams available through the Workforce Investment Act, Temporary Assistance for Needy Families, and other similar programs would be used to support the Program.

The expectation that current workforce and related programs would provide services to the new Medicaid enrollees is part of the Joint Legislative Audit and Review Commission’s analysis of expected costs to implement the Program.  JLARC estimates that total costs of case management for the Program would range from $16.5 million to $52.9 million in FY 2019 and from $34.1 million to $110.9 million in FY 2020, depending on the level of involvement of local Department of Social Services Staff; the local component of these costs would range from $2.3 million to $7.4 million in the first year and from $4.8 million to $15.6 million in the second year.  These local costs reflect the traditionally-required 15.5 percent local match for administrative costs and opeations.  The Department of Planning and Budget had assumed higher implementation costs in its fiscal impact statement, based on an expectation that the case management would not overlap with existing workforce programs.

In discussion on this bill in House Appropriations last week, Secretary of Health and Human Resources Daniel Carey estimated that the federal government could take 18 to 24 months to approve the waiver to allow Virginia to implement the new program, based on the experience of other states, which raises the possibility that the delay may preclude the incorporation of the expected federal funds into Virginia’s biennial budget.

Earlier this week the Senate passed SB 915 (Dunnavant), which would direct DMAS to amend the existing GAP program (which covers individuals with serious mental illness who otherwise would not be eligible for Medicaid) to create the Priority Needs Access Program.  The bill would increase the income eligibility from 100 to 138 percent of the federal poverty level; expand program eligibility to individuals with diagnoses of mental illness, substance use disorder, or a life-threatening or complex chronic medical condition; include coverage for inpatient hospital and emergency room services in the benefit package; and place the program under managed care.  The bill would place an overall cap on enrollment of 20,000 people who would be newly-eligible.  The bill also directs the creation of additional Community Living, Family and Individual Support, and Building Independence waivers for individuals with intellectual or developmental disabilities; requires the Department of Behavioral Health and Developmental Services to establish a statewide alternative transportation system for adults and children subject to temporary detention orders; requires DMAS to ensure that children enrolled in Medicaid are screened for adverse childhood experiences; and requires the Department of Aging and Rehabilitative Services to expand services for people with brain injuries.

As introduced, the bill’s coverage expansion and other provisions would have been funded by a provider assessment on private acute care hospitals, but the funding mechanism was removed in the version that ultimately passed the Senate.  The bill contains an enactment clause making its provisions subject to appropriation, which means that it will be part of the budget negotiations.  Since this program would expand an existing waiver program, it would draw down federal funds at the current rate (a 50-50 state/federal split), not at the enhanced rate contemplated by the expansion provisions contained in the introduced budget.  It appears that the Priority Needs Access Program could be implemented in addition to the expansion contemplated in the introduced budget, or in lieu of the proposed expansion – a decision that will likely be made as part of the larger budget conversation.

“An additional proposal was put forward today by Delegate Terry Kilgore, who advocated in a Roanoke Times op-ed for Virginia to pursue a Medicaid waiver similar to the program recently enacted by Kentucky, which involves requirements for recipients to participate in work, education, or community engagement.”

Sunday’s money committee meetings will offer a first look at the House and Senate positions on the issue of expansion; discussions are expected to continue throughout the remainder of the session.

VACo Contact: Katie Boyle

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