Virginia Medicaid programs poised to receive more funding under budget deal

(Getty Images)

Greater funding and changes to several of Virginia’s Medicaid programs may be on their way after the General Assembly adopted long-delayed amendments to the state’s two-year budget last Wednesday. 

The changes range from an increase in disability waiver slots and higher reimbursement rates for health care and disability service providers to modifying an emergency room use policy and requiring prior authorization for certain diabetic and weight loss drugs.

While lawmakers last week devoted little discussion to the new Medicaid provisions, the top House budget negotiator, Del. Barry Knight, R-Virginia Beach, told the House the spending plan will “help our most vulnerable citizens.”

Those provisions include nearly $16.5 million in funding to add 500 more developmental disability waiver slots effective Jan. 1 of next year. These Medicaid waivers fund services — such as home care attendants, workplace assistance and nursing support — for people with long-term care needs, such as those with developmental disabilities. However, there are a limited number of them because of a shortage of workers who can actually provide the services.

Combined with 600 slots added this July, the new funding will achieve Gov. Glenn Youngkin’s goal of raising Virginia’s total slots to 1,100 as part of his “Right Help, Right Now” plan to improve the state’s behavioral health system. The administration has noted that increasing the number of disability waivers available will help address the approximately 3,000 Virginians on the “priority 1” waitlist, a classification meaning they need services in a year or less. 

Higher reimbursements

Reimbursement rates for workers who provide personal care, companion and temporary services will increase by 5% under the new budget, at a cost of $45 million. Currently, rates for these workers range from $12.70 to $21.79 an hour, depending on what and where services were rendered.

This May, several disability group advocates told the Mercury higher reimbursement rates are needed to help address a workforce shortage “crisis.” 

Although Virginia Poverty Law Center Senior Health Policy Analyst Sara Cariano said a person with a disability waiver is supposed to be able to access a provider within 30 days, it can often be challenging to get care in that time frame because of care worker shortages. 

“We want to make sure on both sides we’re providing the slots and we’re making sure those folks can access the care that they obviously need,” Cariano said. 

Reimbursement rates for services covered under Medicaid also increased 10% for community behavioral health providers and 12.5% for early childhood intervention providers, with nearly $30 million and $1 million in budget funding, respectively.

Emergency room use

Another provision in the budget deal requires the Department of Medical Assistance Services to implement a “modified” form of its emergency room utilization policy, which aims to reduce the amount of people on Medicaid visiting the emergency room for less serious health issues. 

Under an earlier policy created in 2020, the state denied or reduced reimbursements for physicians and hospitals who treated a patient covered under Medicaid with a condition considered an “avoidable emergency room diagnosis.”

However, the U.S. District Court for the Eastern District of Virginia ruled on April 26 the policy was not in accordance with federal law, because it directed DMAS and health care companies to “‘deny payment for treatment obtained’ solely on the basis of ‘lists of diagnoses,’ without further review.”

“Based on this preventable final diagnosis, DMAS essentially acts after the fact as if the hospital expended simpler services and resources in treating the patient than they actually did,” the court wrote. “As a result, the hospital expends resources for which it is not reimbursed.”

A July 12 letter sent to DMAS from the Virginia College of Emergency Physicians, Virginia Hospital and Healthcare Association and Medical Society of Virginia stated that the policy “has caused direct financial hardship and irreparable harm to hospitals and physicians.”

Sen. Barbara Favola, D-Arlington, voiced concern on the Senate floor Wednesday that the current budget language ordering a “modified” policy is too vague and doesn’t provide actual strategies to reduce emergency room utilization. 

“If we could expand, somewhat, the reimbursement for primary care practitioners, perhaps Medicaid patients would be able to find a medical home and that would really help divert emergency room usage,” said Favola. 

Diabetic and weight loss medications

The budget also adds language requiring prior authorization for the prescription of certain diabetic and weight loss medications through Medicaid to make sure the drugs are being used properly.

Virginia Association of Health Plans Executive Director Doug Gray said this provision was added at the request of DMAS to address the nationwide trend of misusing diabetic medications like Ozempic to lose weight, a strategy made especially popular by social media. 

“Celebrities, lots of different people have been sort of pushing the utilization of those drugs — including physicians — to the point that people who have diabetes are having trouble accessing the drugs because of shortages,” said Gray.

Reinsurance

The budget also includes nearly $50 million for the state’s reinsurance program to reduce premium costs by 15% for individuals insured under the federal Affordable Care Act. As first reported by the Richmond Times-Dispatch, the General Assembly’s previous budget impasse meant that individual premium rates were projected to rise by 28.5% in 2024, according to the State Corporation Commission. 

The move comes as more Virginians consider seeking coverage through the federal marketplace as the state continues to terminate Medicaid coverage for those determined no longer eligible. 

“We know that the healthcare system needs work. Most people are one hospital bill away from living in poverty,” said House Minority Leader Don Scott, D-Portsmouth. Funding the reinsurance program helps “to ensure that the cost of healthcare insurance marketplace premiums are reduced, making sure that families have access to care when they need it.”