GOVERNOR WARNERS 2004-2006 BUDGET PROPOSAL

VHCA (1/1/2004)

VHCA staff met last week with Governor Warner and members of his staff and staff from the Department of Planning and Budget (DPB) to discuss his budget proposal as it relates to Medicaid providers.  Also in attendance at the meeting were representatives from the Virginia Hospital and Healthcare Association.

The Governors Budget Bill contains full inflation updates for direct care and indirect rates and ceilings for both years of the budget.  The Bill also contains funding for rebased ceilings (both direct and indirect) as of July 1, 2004.  Additionally, there is funding in the Bill for a $3.00 PPD add-on to rates in SFY 2006 (beginning July 1, 2005).

VHCA has requested more detailed information regarding the update factors utilized for purposes of calculating the inflation adjustments for both SFY 2005 and 2006.  The Department of Medical Assistant Services (DMAS) has indicated that they used FY 2001 cost report data for purposes of calculating rebased cost ceilings as of July 1, 2004 and not FY 2002 data, as we understood was to be the basis for new cost ceilings.  VHCA is pursuing this issue with both the Governors Office and DMAS.  DMAS staff have estimated that the rebased cost ceilings alone will give providers an additional $32.9 million annually in rates beginning July 1, 2004. 

The Governor has made it clear that most, if not all, of the enhanced funding for both nursing facilities and hospitals included in his Budget Bill is very much tied to his revenue (tax) initiative.  He is seeking our support to make sure that his tax package (or one that looks very similar to it) moves through the General Assembly.  If the measure is stopped, which House Republicans may attempt to do, we could be looking at no additional funding and perhaps even more cuts.  VHCA will continue to work through the Commonwealth Care Coalition to respond to the Governors request for support.