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Mission Statement Operating Budget Summary

	General Fund	Nongeneral Fund	Personnel Cost
2009 Appropriation	$ 2,338,073,401	$ 3,654,454,288	$ 30,359,529
2010 Appropriation	$ 2,416,937,883	$ 4,351,872,172	$ 29,887,388
2011 Appropriation	$ 2,822,298,324	$ 4,710,248,288	$ 32,648,156
2012 Appropriation	$ 3,483,587,161	$ 4,108,627,754	$ 35,576,046
2013 Base Budget	$ 3,483,587,161	$ 4,108,627,754	$ 34,188,861
2013 Addenda	$ 150,374,563	$ 143,507,157	$ 1,149,995
2013 Total	$ 3,633,961,724	$ 4,252,134,911	$ 35,338,856
2014 Base Budget	$ 3,483,587,161	$ 4,108,627,754	$ 34,188,861
2014 Addenda	$ 331,345,432	$ 1,498,388,465	$ 1,256,197
2014 Total	$ 3,814,932,593	$ 5,607,016,219	$ 35,445,058

Authorized Position Summary

	General Fund	Nongeneral Fund	Total Positions
2009 Appropriation	165.02	187.98	353.00
2010 Appropriation	169.02	190.98	360.00
2011 Appropriation	169.82	194.18	364.00
2012 Appropriation	175.32	203.68	379.00
2013 Base Budget	175.32	203.68	379.00
2013 Addenda	8.50	8.50	17.00
2013 Total	183.82	212.18	396.00
2014 Base Budget	175.32	203.68	379.00
2014 Addenda	8.50	8.50	17.00
2014 Total	183.82	212.18	396.00

• Capture savings from federal bonus payment
  Captures savings from a federal bonus payment. The Children's Health Insurance Program (CHIP) Reauthorization Act of 2009 provided bonuses for states that take measures to improve enrollment in their CHIP programs. Virginia has met the requirements and qualifed for a bonus payment. These funds are used to offset Medicaid costs. The savings is net of the amount of the bonus payment estimated last year.

  		FY 2013		FY 2014
  General Fund		$ (16,452,042)		$ (16,452,042)
  Nongeneral Fund		$ 16,452,042		$ 16,452,042

• Modify the managed care pre-assignment process
  Provides authority and two positions to implement changes that will allow expedited enrollment into Medicaid managed care. Currently, individuals are given 60 days from initial enrollment in Medicaid to decide which managed care company they will join. During this period, all medical claims are covered by the state as fee-for-service. Expedited enrollment is important for pregnant women in Medicaid. As many as half of all pregnant women in Medicaid give birth while under fee-for-service, meaning that a large number may not be receiving proper prenatal care. Quicker enrollment into managed care would help to ensure that pregnant women receive the benefit of maternity programs offered by those companies.

  		FY 2013		FY 2014
  Authorized Positions		$ 2		$ 2

• Fund additional recipient audits
  Provides four audit positions to increase the detection of fraud and abuse by recipients in the Medicaid program. These positions will investigate referrals of fraudulent activity and abuses conducted by individuals that results in improper enrollment in the Medicaid or FAMIS programs. The additional positions are projected to increase collections of overpayments totaling $1.5 million a year.

  		FY 2013		FY 2014
  General Fund		$ (531,407)		$ (518,366)
  Nongeneral Fund		$ 200,593		$ 213,634
  Authorized Positions		$ 4		$ 4

• Consolidate Health Care Fund appropriation within Medicaid
  Transfers the Health Care Fund appropriation in the Family Access to Medical Insurance Security (FAMIS) program to Medicaid and replaces it with general fund from Medicaid. This results in all of the Health Care Fund being consolidated within Medicaid to simplify the accounting and budgeting for the fund. There is no impact to either the FAMIS or Medicaid programs. This action nets to zero.

• Remove one-time funding for HIPPA transaction and code set upgrades
  Removes one-time funding provided for systems changes related to electronic transactions under HIPPA and other federally required upgrades.

  		FY 2013		FY 2014
  General Fund		$ (318,237)		$ (520,037)
  Nongeneral Fund		$ (2,864,135)		$ (4,680,335)

• Adjust funding for Health Care Fund
  Adjusts the appropriation for the Health Care Fund to reflect the latest revenue estimates. Revenue from the Master Settlement Agreement with tobacco manufacturers is lower than previously estimated. However, tobacco taxes are projected to be higher and Medicaid recoveries are also projected to be higher due to increased staffing in the Medicaid Fraud Control Unit. The net impact is a funding need in FY 2013 and higher revenue for the fund in FY 2014. Since it used as state match for Medicaid, the increased revenues result in a reduction in general fund support for Medicaid.

  		FY 2013		FY 2014
  General Fund		$ 8,673,937		$ (12,918,146)
  Nongeneral Fund		$ (8,673,937)		$ 12,918,146

• Eliminate funding for data mining contract
  Eliminates funding for a data mining contract. This is a new effort by the agency that began in FY 2012 to evaluate claims for potentially inappropriate billing behavior. The agency will bring this effort in-house. Therefore, the elimination of this funding will not have an adverse impact on current efforts at recovering overpayments made to providers from erroneous billing.

  		FY 2013		FY 2014
  General Fund		$ (500,000)		$ (500,000)
  Nongeneral Fund		$ (500,000)		$ (500,000)

• Eliminate children's health insurance outreach contract with Virginia Health Care Foundation
  Eliminates a contract with the Virginia Health Care Foundation to perform outreach services related to increasing enrollment in the Family Access to Medical Insurance Security program. The agency has other grant funding to support efforts to increase enrollment.

  		FY 2013		FY 2014
  General Fund		$ (166,524)		$ (166,524)
  Nongeneral Fund		$ (291,259)		$ (291,259)

• Eliminate one-time funding for systems change
  This adjustment eliminates funding that was provided in FY 2012 for a one-time systems change to reflect a new process for assessments of children's mental health services.

  		FY 2013		FY 2014
  General Fund		$ (50,000)		$ (50,000)
  Nongeneral Fund		$ (150,000)		$ (150,000)

• Continue indigent care reductions for teaching hospitals
  Continues the budget reduction from the 2010-12 biennium for indigent care services paid to the VCU and UVA academic health centers. The hospitals will still be paid the full federal share of their indigent care costs.

  		FY 2013		FY 2014
  General Fund		$ (14,955,994)		$ (14,955,994)

• Add anti-psychotic and anti-depressant drugs to the Preferred Drug List
  Adds anti-psychotic and anti-depressant drugs to the Medicaid Preferred Drug List. This list contains preferred drugs that promotes clinically appropriate utilization of drugs in a cost-effective manner. This action does not prevent clients from receiving non-preferred drugs, it simply requires a doctor's justification for why a non-preferred drug is more clinically appropriate.

  		FY 2013		FY 2014
  General Fund		$ (2,100,000)		$ (1,250,000)
  Nongeneral Fund		$ (2,100,000)		$ (1,250,000)

• Transfer funding for intellectual disability case management
  Transfers funding from the Mental Health (45608) service area to the Long-Term Care (45610) service area to align funding appropriately with the agency's official consensus forecast for the Medicaid program. This action nets to zero.

• Transfer funding for mental health prior authorizations
  Transfers funding from the medical budget to the agency's administrative budget to reflect the costs of prior authorization for certain mental health services. This action nets to zero.

• Fund changes in state employee workers' compensation premiums
  Adjusts the agency's budget for the general fund share of state employee workers' compensation premiums based on the allocation of FY 2013 and FY 2014 program costs provided by the Department of Human Resource Management. The allocation is based on the historical experience of the agency and reflects the current policy of providing agencies with 50 percent of any increased costs and allowing agencies to retain 50 percent of any reduced costs.

  		FY 2013		FY 2014
  General Fund		$ 1,057		$ 1,312

• Fund medical services for involuntary mental commitments
  Adjusts funding for the costs of hospital and physician services for persons subject to an involuntary mental commitment. The most recent forecast of expenditures projects higher growth than last year's estimates. The restoration of hospital inflation (which is reversed elsewhere in this budget as a targeted savings strategy) and the expenditure forecast projecting higher growth are the main reasons for the higher costs.

  		FY 2013		FY 2014
  General Fund		$ 2,845,860		$ 3,430,113

• Modify Service Limits in the Children’s Mental Health Program
  s Mental Health (CMH) program to enable transition coordinators to support children and their families for up to one year after they are discharged into the community. The CMH program helps children who have been living in private residential treatment facilities (PRTFs) transition into the community, to be supported by home and community-based care (HCBC) services. Transition coordinators monitor and support this process. Currently, transition coordinators are allowed to provide support for up to three months before a youth leaves the PRTF and for up to 30 days after the youth discharges from the PRTF. Successful transitions are beneficial to the Medicaid member and provide savings for the Commonwealth, as HCBC care is less expensive than full-time facility care. This action is embedded in budget bill language.

• Fund mandated updates to Medicaid Management Information System
  Provides additional funding to make modifications to the Medicaid Management Information System to comply with federal mandates. Federal law requires that all state Medicaid programs upgrade the diagnosis and inpatient hospital code sets by October 2013. Funding for this project was provided last year based on an estimate of costs associated with previous project efforts. The project-specific detailed assessment has now been completed and this action reflects funding for the incremental difference between the preliminary and final estimates.

  		FY 2013		FY 2014
  General Fund		$ 529,668		$ 0
  Nongeneral Fund		$ 4,395,981		$ 0

• Provide appropriation for grant funding
  Provides an appropriation in FY 2013 for a Robert Wood Johnson Foundation grant to increase children's enrollment in the Medicaid and children's health insurance programs. The final year of the grant is FY 2013 and this adjustment provides the appropriation so the agency can expend the funding.

  		FY 2013		FY 2014
  Nongeneral Fund		$ 300,000		$ 0

• Fund Family Access to Medical Insurance Security program utilization and inflation
  Increases funding for the program to reflect the latest forecast of expenditures. The increase in costs is partially a result of a restoration of inflation for hospitals from prior years, as required by regulation. This inflation adjustment is reversed elsewhere in this budget as a targeted savings strategy.

  		FY 2013		FY 2014
  General Fund		$ 2,688,239		$ 6,238,804
  Nongeneral Fund		$ 4,992,444		$ 11,586,351

• Withhold inflation for outpatient rehabilitation agencies
  Reflects savings from withholding the typical inflation adjustments applied to the rates for outpatient rehabilitation agencies.

  		FY 2013		FY 2014
  General Fund		$ (206,872)		$ (402,131)
  Nongeneral Fund		$ (206,872)		$ (402,131)

• Adjust funding to reflect changes in information technology and telecommunication charges
  Adjusts the agency's budget for the general fund share of information technology and telecommunication charges based on changes in utilization, services, and rate changes approved by the Joint Legislative Audit and Review Commission on July 1, 2010, and September 1, 2011.

  		FY 2013		FY 2014
  General Fund		$ 2,257,774		$ 2,257,774

• Fund required quality management reviews in Medicaid waivers
  Provides funding for four Quality Management Review (QMR) positions for the Medicaid home and community-based waivers. The state is required under federal rules to monitor and report on quality assurance measures through QMRs. Currently, there are over 30,000 recipients receiving services through the waivers and over 2,000 enrolled providers, not including consumer-directed attendants which number approximately 16,000. The existing QMR staff of seven results in a 1 to 4,285 recipient ratio and a 1 to 285 provider ratio. Additional staff are needed to ensure the department continues to meet federal waiver requirements.

  		FY 2013		FY 2014
  General Fund		$ 169,627		$ 213,634
  Nongeneral Fund		$ 169,627		$ 213,634
  Authorized Positions		$ 4		$ 4

• Fund increase in information technology costs
  Provides funding to support increased information technology (IT) costs. In FY 2011, the agency began its transformation into the VITA/Northrop Grumman partnership. The increased cost is partially a factor from the additional costs on the agency to support a variety of application software, storage and products/services deemed out-of-scope. In addition, funding is provided for one position for an in-house technician to support the agency's out-of-scope infrastructure. The agency previously had eight technical IT support staff (provided through a contractor) prior to the change over in July 2010 and now has only one to support all IT efforts.

  		FY 2013		FY 2014
  General Fund		$ 271,777		$ 277,307
  Nongeneral Fund		$ 271,777		$ 277,307
  Authorized Positions		$ 1		$ 1

• Fund eligibility review program
  Establishes an on-going eligibility review program to meet federal requirements and to improve eligibility determination for the Medicaid and FAMIS programs in the Commonwealth. The department will contract with a vendor to conduct the federally mandated Payment Error Rate Measurement (PERM) eligibility review and to establish a permanent quality assurance eligibility program. PERM measures improper payments in Medicaid and FAMIS and produces error rates for each program.

  		FY 2013		FY 2014
  General Fund		$ 1,560,913		$ 1,565,151
  Nongeneral Fund		$ 1,560,913		$ 1,565,151
  Authorized Positions		$ 1		$ 1

• Implement federally-mandated physician primary care rate increase
  Provides federal appropriation for an increase in rates for primary care providers in accordance with the federal mandate in the Affordable Care Act (ACA). The mandate requires states to reimburse primary care providers at the Medicare rate in calendar years 2013 and 2014. The ACA provides 100 percent federal matching funds for the difference in costs between the Medicaid rate as of July 1, 2009 and the Medicare rate as of January 1, 2013.

  		FY 2013		FY 2014
  Nongeneral Fund		$ 35,265,514		$ 73,275,375

• Reduce the limit on personal care hours
  Reduces the limit on personal care hours from 56 to 48 hours per week. This limit does not apply to the Intellectual Disabilities or the Individual and Family Developmental Disabilities Support waivers. There is an exception process that allows people to exceed the limit if they meet certain criteria.

  		FY 2013		FY 2014
  General Fund		$ (1,000,000)		$ (1,000,000)
  Nongeneral Fund		$ (1,000,000)		$ (1,000,000)

• Capture savings from the service authorization contract associated with the managed care expansion in southwest Virginia
  Captures savings from the service authorization contract due to the expansion of managed care in southwest Virginia. The managed care companies have their own service authorization function, so the workload of the state's contractor for the fee-for-service population will be reduced. Approximately 49,000 people in the far southwest area will be moving into a managed care organization.

  		FY 2013		FY 2014
  General Fund		$ (159,655)		$ (159,655)
  Nongeneral Fund		$ (478,966)		$ (478,966)

• Modify Institute for Mental Disease policy to conform to federal requirements
  Authorizes the department to develop alternative reimbursement for services to children in an Institute for Mental Disease (IMD) to comply with federal requirements and court decisions. This affects reimbursement to physicians and pharmacies who provide services to children in an IMD (freestanding public / private psychiatric hospitals and residential treatment centers). This amendment authorizes the department to make reimbursement changes that will limit any further liability of potential repayment of past claims that are not compliant with federal rules. The reimbursement changes will have no net financial impact on providers.

  		FY 2013		FY 2014
  General Fund		$ (7,133,899)		$ 0

• Implement federal provider screening regulations
  Authorizes the agency to make necessary changes to comply with a new federal health care reform mandate for screening of Medicaid and FAMIS providers. These changes will require the agency to make significant systems changes, revisions to the provider enrollment contract for increased services, a new contractor to accommodate site visits, and one position to monitor contractor activities and manage the criminal background checks and fingerprinting requirements. The federal requirements are a comprehensive effort designed to enhance the provider and supplier enrollment process to improve the integrity of these programs by reducing fraud, waste and abuse.

  		FY 2013		FY 2014
  General Fund		$ 2,308,220		$ 745,567
  Nongeneral Fund		$ 3,460,999		$ 978,262
  Authorized Positions		$ 1		$ 1

• Consolidate the HIV/AIDS waiver into the Elderly and Disabled with Consumer Direction waiver
  Provides authority for the agency to combine the HIV/AIDS waiver into the Elderly or Disabled with Consumer Direction (EDCD) waiver. Medical advances over time and renewed on-site, in-person, level of care reviews by agency staff have lead to the steady decline of participation in the HIV/AIDS waiver. This action will merge the individuals active in the HIV/AIDs waiver with those in the EDCD waiver upon renewal of both waivers in order to improve administrative and operational efficiencies. As of June 30, 2011, there were 37 individuals in the HIV/AIDS waiver. This action is embedded in budget bill language.

• Withhold inflation for home health agencies
  Reflects savings from withholding the typical inflation adjustments applied to the rates for home health agencies.

  		FY 2013		FY 2014
  General Fund		$ (77,063)		$ (165,496)
  Nongeneral Fund		$ (77,063)		$ (165,496)

• Restore payment delay savings
  Restores the base funding for Medicaid. In the 2011 Session, funding was transferred from FY 2012 to FY 2011 to make certain payments in FY 2011 that would maximize federal revenue under the enhanced federal match of the American Recovery and Reinvestment Act. The enhanced match rate expired on June 30, 2011 and making certain payments in FY 2011 resulted in $18 million in savings to the general fund. However, this action lowered the FY 2012 general fund appropriation by $131.6 million, which is used as the base for the 2012-14 biennial budget.

  		FY 2013		FY 2014
  General Fund		$ 131,568,712		$ 131,568,712
  Nongeneral Fund		$ 131,781,866		$ 131,781,866

• Reduce part-time wage staff
  Reduces funding for part-time wage staff. The agency plans to leave wage positions vacant and to reduce the hours of current personnel, where possible, to achieve savings.

  		FY 2013		FY 2014
  General Fund		$ (146,477)		$ (146,477)
  Nongeneral Fund		$ (146,477)		$ (146,477)

• Capture savings from service authorization contract associated with Roanoke managed care expansion
  Captures savings from the service authorization contract due to the expansion of managed care in the Roanoke area. The managed care companies have their own service authorization function, so the workload of the state's contractor for the fee-for-service population will be reduced. Approximately 24,000 people in the Ronaoke area will be moving into a managed care organization.

  		FY 2013		FY 2014
  General Fund		$ (78,227)		$ (78,227)
  Nongeneral Fund		$ (234,681)		$ (234,681)

• Distribute Central Appropriation amounts to agency budgets
  Adjusts the agency budget to reflect amounts moved to or from Central Appropriations to cover the costs of items such as changes in retirement and other benefit contribution rates, as well as the distribution of other centrally funded items.

  		FY 2013		FY 2014
  General Fund		$ 97,055		$ 97,055
  Nongeneral Fund		$ 160,516		$ 160,516

• Maintain nursing facility rates
  Maintains nursing facility operating rates. This action withholds the annual inflation adjustments and does not rebase rates in FY 2013 as specified in regulation. This action does not impact the nursing facility capital rental rate floor, which is scheduled to increase from 8.0 to 9.0 percent on July 1, 2012.

  		FY 2013		FY 2014
  General Fund		$ (25,739,966)		$ (39,527,811)
  Nongeneral Fund		$ (25,739,966)		$ (39,527,811)

• Fund Medicaid utilization and inflation
  Provides additional funding for the increase in the use of Medicaid services and the higher costs of those services. Medicaid expenditures are projected to increase 10.5 percent in FY 2013 and 23.4 percent in FY 2014. The growth in FY 2014 is mainly attributed to the new population that becomes eligible for Medicaid on January 1, 2014 as a result of federal Health Care Reform. This expanded population, projected to add over 400,000 individuals to Medicaid, includes adults with income up to 133 percent of the federal poverty level.

  		FY 2013		FY 2014
  General Fund		$ 173,026,787		$ 477,452,031
  Nongeneral Fund		$ 102,618,284		$ 1,538,011,250

• Capture savings associated with new Behavioral Health Organization
  Captures savings from the reduced cost of contractors for behavioral health services for service authorization and provider enrollment functions. The agency will be contracting with a Behavioral Health Organization that will take over these functions related to behavioral health services. This will reduce the cost of these existing contracts that provide these services.

  		FY 2013		FY 2014
  General Fund		$ (1,211,693)		$ (1,211,693)
  Nongeneral Fund		$ (3,362,148)		$ (3,362,148)

• Withhold inflation from hospital rates
  Withholds the annual inflation adjustments to operating rates, graduate and indirect medical education payments, and disproportionate share hospital payments for acute and rehabilitation hospitals.

  		FY 2013		FY 2014
  General Fund		$ (98,155,201)		$ (160,446,380)
  Nongeneral Fund		$ (99,162,267)		$ (162,862,900)

• Eliminate public relations and marketing contract
  Eliminates a contract with a marketing firm to prepare marketing materials and media advertising intended to promote enrollment in the Family Access to Medical Insurance Security program.

  		FY 2013		FY 2014
  General Fund		$ (8,750)		$ (8,750)
  Nongeneral Fund		$ (16,250)		$ (16,250)

• Amend appeals regulations
  s authority to administratively dismiss untimely filed appeals. This action is embedded in budget bill language.

• Reduce income limits for optional long-term care eligibility group
  Reduces the income limit, effective January 1, 2014, for the optional Medicaid eligibility group with income up to 300 percent of Supplemental Security Income (SSI). Medicaid recipients with income up to $2,094 per month may qualify for Medicaid for nursing facility or long-term care waiver coverage under this eligibility group. This action reduces the income limit to 250 percent of SSI or $1,745 per month. Most of the individuals impacted will still qualify for limited Medicaid benefits that will provide assistance with Medicare cost-sharing.

  		FY 2013		FY 2014
  General Fund		$ 0		$ (18,217,758)
  Nongeneral Fund		$ 0		$ (18,217,758)

• Maximize federal cost allocation opportunities
  Improves cost allocation within the agency's administrative budget to maximize federal funding from both the Medicaid and Children's Health Insurance Program grants.

  		FY 2013		FY 2014
  General Fund		$ (325,000)		$ (325,000)
  Nongeneral Fund		$ 325,000		$ 325,000

• Fund medical assistance services for low-income children inflation and utilization
  Adjusts funding for the Commonwealth's Medicaid Children's Health Insurance program. Program expenses are expected to be lower as a result of slowing growth in enrollment and lower managed care rates. Beginning in 2014, federal health care reform changes the matching rate for this population group. The enhanced match rate of 65 percent will be lowered to 50 percent. This program applies to children between the ages of 6 through 19 with family income from 100 to 133 percent of the federal poverty level.

  		FY 2013		FY 2014
  General Fund		$ (2,889,046)		$ (18,474,023)
  Nongeneral Fund		$ (5,365,371)		$ (34,308,900)

• Remove one-time funding for Health Information Technology
  Adjusts the funding for the major Health Information Technology project in line with the project's funding projections for the 2012-14 biennium.

  		FY 2013		FY 2014
  General Fund		$ (722,311)		$ (2,446,028)
  Nongeneral Fund		$ (5,382,308)		$ (19,213,467)

• Expand managed care statewide for foster care population
  Adds foster care children as one of the populations covered under Medicaid managed care. The 2011 Appropriation Act directed the department to implement a pilot project with the City of Richmond for the inclusion of foster care children under the traditional capitated managed care program. While foster care children can be enrolled into managed care, challenges related to system changes at the state and local levels, require future implementations be conducted on a regional basis to ensure minimal disruption of services. This action provides the authority and funding for one position to coordinate the enrollment of foster care children into managed care on a regional basis.

  		FY 2013		FY 2014
  General Fund		$ (2,827,678)		$ (2,703,011)
  Nongeneral Fund		$ (2,827,678)		$ (2,703,011)
  Authorized Positions		$ 1		$ 1

• Promote access to federal veterans benefits for Medicaid members
  Provides funding for three positions to pursue a project, in cooperation with the Department of Veterans Services (DVS), to assist veterans, who are also Medicaid members, to access federal veterans benefits. Experience in other states has found that many veterans rely on Medicaid, and do not realize they are eligible for comprehensive federal health care and benefit programs that provide better benefits while preserving their homes and financial assets. This project involves using a federal database to identify Medicaid members who are veterans. The department would then coordinate with DVS to idenitify veterans or their families to inform them of the federal veterans benefits that are available to them. If veterans choose to access medical or long-term care benefits fully paid for by the federal government, the state will achieve savings in Medicaid.

  		FY 2013		FY 2014
  General Fund		$ 130,979		$ 141,521
  Nongeneral Fund		$ 130,979		$ 141,521
  Authorized Positions		$ 3		$ 3