Medicaid Preview: SFY 2011

VHCA (10/02/09)

The Department of Medical Assistance Services (DMAS) recently shared the results of their data modeling related to Medicaid payments to Virginia nursing facilities for state fiscal year (SFY) 2011 which begins July 1, 2010.  Under current regulations, nursing facilities are scheduled to receive both an adjustment to rates to reflect increases in operating costs as well as an adjustment to the two cost ceilings resulting from the biannual rebasing of the indirect and direct care cost ceilings.

As you are aware, Medicaid rates for nursing facilities have been reduced by both the 2008 and 2009 General Assemblies in response to the Commonwealth’s serious budget problems.  While there are signs that the economy is beginning to rebound, the key drivers of state revenues have yet to turn around.  Without significant short-term improvement in employment, home prices and sales along with corporate profits and expansion, the 2010 General Assembly will again be faced with a very challenging task – adequately funding the core services of government with fewer resources.

In anticipation of the tough budget session ahead, DMAS has modeled Medicaid nursing facility expenditures under three basic scenarios –any number of variations are possible from these three approaches.  The first scenario assumes that rate adjustments for both operating cost increases as well as cost ceiling rebasing are fully funded.  Under this approach, DMAS projects that the average rate for SFY 2011 will be $153.56.  Within the second scenario, the scheduled July 1, 2011 ceiling rebasing adjustment which accounts for a total increase in expenditures of nearly $2 million or about $0.31 per Medicaid patient day is removed.  For the third basic scenario, the full funding of inflation adjustments in SFY 2011 which adds $2.67 per Medicaid patient day to the average rate or just under $17 million in total payments to nursing facilities is removed.  Taken together, the additional dollars required to fully fund both inflation and rebasing total $18.9 million ($2.98 per Medicaid patient day).

It is critical that every facility take the steps now to form a relationship with their state senator and delegate.  After two years of significant Medicaid cutbacks and reduced payment rates, the devastating impact that would result from a third year of cuts must be clearly communicated to the legislators that will begin work in January on the SFY 2011 and 2012 state budget.  Please review the briefing notes available on our website and contact your legislators today!  If you need assistance please contact VHCA staff at 804.353.9101.