Fund Medicaid utilization

Adjust funding for the Health Care Fund

Fund Family Access to Medical Insurance Security plan utilization

Fund medical assistance services for low-income children utilization

Provide funding for medical services for involuntary mental commitments

Reflect Governor’s October reductions in agency budgets

Implement targeted reductions

Increase consumer-directed personal care rates

Allow full federal reimbursement of Medicaid and indigent care costs for Academic Health Centers

Remove home health transportation coverage

This strategy captures higher than expected savings from rebates on physician-administered drugs. Recent changes to federal law require that all states begin to collect rebates from drug manufacturers on this type of drug. Previous savings had been assumed but the rebates collected have been higher than expected.

This strategy captures savings from drug manufacturers from rebates on institutional drugs. These are drugs that are used as part of an institutionalization, like a hospital stay, in which the cost of the drugs are captured in the payment for the inpatient hospital service. Recent changes in federal law require hospitals to report the actual drugs administered and to pass this information on to Medicaid so that states can claim drug rebates from manufacturers.

Currently, Medicaid waiver recipients in some of the home and community-based waiver programs undergo a second screening for mental illness or mental retardation. There is no federal or state requirement that this screening must be performed. This strategy eliminates the secondary screening and will likely speed up placement for waiver recipients.

Eliminates Policy and Planning Specialist position at Office of Community Integration.

On July 1, 2008, the Department of Medical Assistance Services (DMAS) implemented a discounted pricing model for specialty drugs (injectables). This strategy adds additional drug classes to the program. In addition, DMAS will also be adding two atypical antipsychotics to the drugs subject to their dose optimization program.

Medicare and other insurance carriers have instituted Correct Coding Initiative (CCI) edits and this strategy allows the Department of Medical Assistance Services to conform to those standards in its claims editing software. CCI was developed to promote correct coding for health care services by providers and to prevent Medicare from paying for improperly coded services. It involves automated edits used to evaluate claims from a provider when they bill for more than one service for the same beneficiary on the same date.

The Department of Medicaid Assistance Services (DMAS) conducts advertising and outreach activities to promote the FAMIS program and to encourage families to enroll eligible children in the program. Due to the success of outreach activities over the years, the FAMIS program has grown dramatically and now enrolls over 55,000 children across the Commonwealth as of September 2008. This strategy involves scaling back outreach efforts and focusing the remaining resources in the most effective way to continue to promote the program.

This strategy eliminates administrative funding recently provided in the 2008 Appropriation Act for new initiatives, specifically the Integration of Acute and Long-Term Care Integration Initiative and the Chronic Care Management program. The agency will use existing resources to continue the Integration of Acute and Long-Term Care initiative. The Chronic Care Management program is no longer viable to implement due to its high costs, so funding for the program is no longer necessary. In addition, the agency will eliminate two salaried positions and four wage positions, none of which are currently filled. There are no layoffs of full-time positions associated with this strategy.

The agency will achieve savings by reducing contractor expenditures, allowing wage and salaried positions to remain vacant, and bringing the Payment Error Rate Measurement (PERM) contract in house using two full-time positions.

The Virginia Indigent Health Care Trust Fund was created as a public/private partnership with private acute care hospitals in the state in an effort to equalize the burden of charity care among the hospitals. This redistribution program provides funding to hospitals based on the amount of charity care provided. The Commonwealth contributes general fund money to the Indigent Health Care Trust Fund along with hospital contributions. This strategy suspends the general fund contribution. In recent years Certificate of Public Need (COPN) approvals have required significant charity care contributions by hospitals. These funds now provide critical services to bolster our safety net services such as free clinics and are targeted to services for families at or below 200 percent of the federal poverty level.

Places a cap on the Elderly and Disabled Waiver with Consumer Direction of 15,250 slots. This waiver is the largest of the seven Home and Community based waivers and currently has no cap on the number of people it services like the others. This strategy caps the number of slots for the wavier at the estimated number being served on July 1, 2009.

Changes the monthly payment schedule for Managed Care Organizations. Beginning in June 2009, the monthly payment will be delayed one month. The action generates a one-time savings and has no impact on services.

Changes the payment schedule for the fourth quarter hospital payment for FY 2009 to the first quarter of FY 2010. This change generates a one-time savings and will have no impact on services.

Closes Southeastern Virginia Training Center as of July 1, 2009. The facility, located in Chesapeake, has a current census of 175 residents and employs 463 full-time and 33 part-time staff. The agency proposes that 55 of the residents will be transferred to other training centers and the remaining will be transitioned into the community through either the Medicaid Mental Retardation (MR) waiver or the Money Follows the Person (MFP) program. 100 MFP slots will be used and 20 MR waiver slots will be used. This strategy requires the quick transition of individuals into the community in order to achieve savings in FY 2010. The agency proposes to pay the separation costs using proceeds from the sale of the land. Pre-planning funds for community housing were included in Chapter 1 of the 2008 Special Session. The $3.2 million in general fund costs is the cost associated with transitioning residents into community placements. Funding includes the necessary funds for waiver slots and Money Follows the Person slots.

Eliminates five information technology contractors and converts them into full-time employees. The savings are generated from the difference between the cost of paying for the contractors and the cost of the new employees.

Delays implementation of 200 mental retardation waiver slots that were scheduled to be released on April 1, 2009. The 2008 Appropriation Act directed that 600 slots be added to the Mental Retardation waiver. In order to cover the costs of the slots within the funding provided, 400 slots were brought online July 1, 2008 and the remaining 200 slots scheduled for release on April 1, 2009. The 200 slots will be delayed until the 2010-12 biennium.

Eliminates a temporary employee.

Eliminates the State / Local Hospitalization (SLH) program. The program is a cooperative effort between state and local governments that is designed to provide coverage for inpatient and outpatient hospital care, care in ambulatory settings and care provided in local health departments.

Prohibits Medicaid from making payments to hospitals for claims due to the presence HACs. These are conditions that are considered to be the fault of the provider and never should have occurred. The federal Centers for Medicare and Medicaid Services recently implemented new regulations to prohibit Medicare from paying for HACs. Examples of HACs include: pressure ulcers, foreign objects retained after surgery and catheter-associated infections.

Allows the agency to capture five percent of the federal funding the agency passes on to the local school divisions. Currently, the agency draws down federal Medicaid matching funds for participating local divisions for their expenditures associated with special education services for Medicaid eligible children. The local costs serve as state match so the agency only pays the local school division the federal share. This strategy allows the agency to retain five percent of the funding for their related administrative costs.

Establishes a maximum per person expenditure cap for home and community-based long-term care waiver recipients equal to the average institutional placement cost. Federal regulations require that a waiver must be cost effective in comparison to its alternate institutional setting. Currently, the policy is that an individual in a waiver can exceed the costs of an institutional placement, but in aggregate the average costs of all individuals in the waiver cannot exceed it. This strategy changes the policy to say that no individual on a waiver can exceed the costs of the alternate individual placement.

Implements a provider assessment that generates additional state dollars used as match to draw down federal Medicaid funds. This amendment imposes an assessment on the revenues of private and state ICF-MRs. This assessment increases the costs of ICF-MRs which can then be reimbursed by Medicaid.

Implements a two week billing lag for Medicaid payments to providers. Currently, all Medicaid claims submitted in a weekly period are paid one week later. This action changes the cycle such that payments will be made two weeks after the week they were submitted. This action results in a one-time savings.

Adds prior authorization requirements for mental health case management, day treatment services, mental health supports, psychosocial rehabilitation, and intensive community treatment services. Prior authorization of these mental health services will ensure that the services are being properly utilized and will prevent unnecessary services from being provided.

Eliminates special Indirect Medical Education payments to non-Virginia hospitals. In 2005, a special payment for high Medicaid utilization Neonatal Intensive Care Unit (NICU) was provided and due to the wording of budget language resulted in an out-of-state hospital receiving a portion of the payment. This action limits those payments to Virginia hospitals.

Delays payment of the June 2009 Medicaid Part A and B premiums to the federal government into July 2010. This generates a one-time savings and has no impact on services. The federal government allows a grace period for payment, which allows the state to pay it the next month. The June payment for Medicare Part D premiums is already paid in July of each year.

Modifies the Health Insurance Premium Program (HIPP) to make it more cost-effective. HIPP is a Medicaid program that may reimburse some or all of Medicaid eligible person's share of employer group health insurance premiums when it is cost effective to do so. The modifications to the program will exclude certain Medicaid enrollees from HIPP for which the agency has determined as not being cost-effective under current rules.

Modifies the reimbursement methodology for long-stay hospitals. These hospitals are reimbursed under the previous hospital reimbursement methodology that is no longer used for reimbursement of acute and rehabilitation hospitals. This amendment modernizes the payment methodology for long-stay hospitals by eliminating some of the policies that are not cost-effective and have not been used for years to reimburse acute hospitals.

Increases tobacco taxes from $.30 to $.60 per pack. The revenue will be deposited to the Health Care Fund, which is used as state match for Medicaid. The funding will offset the costs of care for tobacco related illnesses paid for by the state's Medicaid program.

Lowers the FY 2010 rate increase of 3.6 percent for congregate residential services to 2.0 percent in FY 2010. The current Appropriation Act provides a 3.6 percent increase for these services beginning in FY 2009. This action lowers that increase beginning in FY 2010.

Reduces inpatient hospital capital reimbursement for private hospitals from 80 percent of allowable Medicaid costs to 75 percent. Hospitals with a Medicaid utilization greater than 50 percent are exempt from this reduction and will still be paid 80 percent of their allowable costs.

Reduces inpatient hospital rates to private hospitals. The hospital adjustment factor is the percentage of allowable Medicaid costs that hospitals are paid for inpatient services. This strategy reduces it from 78 to 75 percent for acute and rehabilitation hospitals and from 84 percent to 81 percent for inpatient psychiatric services. Hospitals with a Medicaid utilization higher than 50 percent are exempt from this rate reduction.

Eliminates part-time staff positions.

Reduces the rates paid to freestanding psychiatric facility rates by subjecting them to rebasing and setting their reimbursement rate to 100 percent of allowable Medicaid costs. These hospitals were exempted from the previous two hospital rebasings. Hospital rebasing aligns hospital rates with their actual Medicaid costs every three years. Freestanding psychiatric hospitals were exempted because rebasing resulted in substantial reductions in their payments and could have had an adverse impact on those hospitals. However, the exemption from rebasing has resulted in payments now exceeding their Medicaid costs. This action limits payments to their Medicaid costs.

Removes the half-percent pay practices funding granted to Executive branch agencies in the 2006-08 biennium.

Removes two newly added services, environmental modifications and assistive technology, from the Elderly or Disabled with Consumer Direction, Technology-Assisted, and HIV/AIDS waivers effective January 1, 2009. As part of the federal Money Follows the Person (MFP) grant, these services were added to help facilitate a person's transition from an institutional setting to a community setting. However, after further consideration it has been determined that the services should only be provided to those recipients participating in the MFP program to help them transition to the community and not to all the waiver recipients. The services are relatively new and little impact will be felt by eliminating these services.

Eliminates funding for a contract that evaluates physical security and other types of security related to the Medicaid program to ensure its integrity. The agency has completed the evaluation and can end the contract.