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Mission Statement Operating Budget History

	General Fund	Nongeneral Fund	Positions
2005 Appropriation	$ 1,947,986,146	$ 2,615,488,502	325.00
2006 Appropriation	$ 2,147,195,688	$ 2,773,903,914	331.00
2007 Appropriation	$ 2,408,455,441	$ 2,912,055,424	348.00
2008 Appropriation	$ 2,633,127,039	$ 3,126,849,770	349.00

New Operating Budget Summary

	General Fund	Nongeneral Fund	Positions
2009 Base Budget	$ 2,633,127,039	$ 3,126,849,770	349.00
2009 Addenda	$ 37,302,167	$ 78,168,223	12.00
2009 Total	$ 2,670,429,206	$ 3,205,017,993	361.00
2010 Base Budget	$ 2,633,127,039	$ 3,126,849,770	349.00
2010 Addenda	$ 192,438,522	$ 242,188,416	13.00
2010 Total	$ 2,825,565,561	$ 3,369,038,186	362.00

• Distribute Central Appropriations amounts to agency budgets
  Adjusts the agency budget to reflect amounts moved from Central Appropriations to cover the cost of items such as the continuation of 2007 and 2008 salary and health insurance premium increases, as well as changes in retirement and disability contribution rates and other centrally funded items. For each year, $1.3 million (GF) and $1.3 million (NGF).

• Remove one-time funding for a PACE site in Northern Virginia
  Removes one-time funding of $250,000 in FY 2008 that was provided to start a PACE (Program for the All-Inclusive Care for the Elderly) site in Northern Virginia. This money was start-up funding for one site and must be removed from the base budget. For each year, a reduction of $250,000 (GF).

• Remove one-time funding for the National Provider Identifier
  Funding was provided to the agency for the administrative costs of the National Provider Identifier. This was a federal requirement that went into effect in May 2007 requiring that all providers basically have one identification number to be used across all health plans. Funding was provided for the remediation costs of the Medicaid Management Information System. This adjustment removes the funding from the base budget that was provided in FY 2008. For each year, a decrease of $78,459 (GF) and $657,736 (NGF).

• Provide appropriation for the Uninsured Medical Catastrophe Fund
  Provides additional nongeneral fund appropriation for the Uninsured Medical Catastrophe Fund. The fund has a nongeneral fund appropriation of $30,000 for the interest and donations it receives each year. In FY 2007, donations increased and the amount plus interest was about $40,000. This adjustment increases the appropriation to $40,000. For each year, $10,000 (NGF).

• Provide appropriation for federal revenue maximization contractor costs
  This adjustment provides a nongeneral fund appropriation (0220) for contractor costs for revenue maximization efforts by the Department of Medical Assistance Services. The funding generated from the results of such efforts is transferred to the Health Care Fund after contractor costs are paid. There is no nongeneral fund appropriation for this fund. Previous appropriations have been provided administratively. This adjustment provides an appropriation nearly equal to the amount the agency spent in FY 2007, which was $765,223. For each year, $765,000 (NGF).

• Adjust nongeneral appropriation for State/Local Hospitalization Program
  Reduces appropriation for the State/Local Hospitalization program to match recent expenditure trends in the program. The nongeneral fund share of this program is the amount of funds the localities contribute to the program and it has been below $2.0 million for several years. This adjustment reduces the nongeneral fund appropriation to $2.0 million. For each year, a reduction of $800,000 (NGF).

• Adjust nongeneral fund appropriation for the Indigent Health Care Trust Fund
  Reduces appropriation for the Indigent Health Care Trust Fund to match recent expenditure trends in the program. The nongeneral fund share of this program is from private hospitals that must contribute to the fund by law. Those contributions have been at or below $3.0 million for several years. This adjustment reduces the appropriation to $3.2 million. For each year, a reduction of $1.8 million (NGF).

• Adjust funding for savings related to reduced VITA decentralized rates
  Adjusts the appropriation for the rates the agency pays to the Virginia Information Technologies Agency (VITA) for various information technology services. The move to decentralized rates resulted in a reduction in the costs the agency must pay. This adjustment captures those savings. For each year, a decrease of $181,936 (GF) and $181,936 (NGF).

• Fund Medicaid utilization and inflation
  Increases funding for the use of Medicaid services and the anticipated costs of those services. Medicaid enrollment has begun to increase after a slight decline in FY 2007 and with that growth the costs of the program are increasing again. Since March 2007 enrollment through November 2007 has increased by 2.2 percent. Medicaid expenditures are projected to increase by 6.1 percent in FY 2009 and 5.4 percent in FY 2010. For 2009, $98.7 million (GF) and $110.1 million (NGF). For 2010, $245.3 million (GF) and $253.8 million (NGF).

• Provide funding for the Payment Error Rate Measurement Program
  Provides funding for the agency to participate in the federal Payment Error Rate Measurement (PERM) program during federal fiscal year 2009. The federal government requires the state to participate in order to review the Medicaid and State Children's Health Insurance Program (SCHIP) programs, which are considered susceptible to significant erroneous payments. The purpose of the program is to estimate the amount of improper payments, to report those estimates, and to submit a report on actions being taken to reduce erroneous expenditures. Federal contractors will review medical claims, but the state must review eligibility determinations at a cost of $800,000 ($340,000 general fund and $460,000 federal funds). A savings of about $1.0 million ($425,000 general fund and $575,000 federal funds) is expected from potential errors that may be uncovered. For 2009, a decrease of $85,000 (GF) and $115,000 (NGF).

• Fund Family Access to Medical Insurance Security plan utilization and inflation
  Provides funding for the program to reflect an increase in the use of services and higher medical costs. Enrollment for the program continues to increase, which results in higher costs. For 2009, $6.2 million (GF) and $11.4 million (NGF). For 2010, $10.8 million (GF) and $19.9 million (NGF).

• Fund medical assistance services for low income children utilization and inflation
  Increases funding for the Commonwealth's Medicaid Children's Health Insurance Program. This adjustment reflects an increasing enrollment in the program and higher medical costs for services. This program applies to children over age six who fall within an income limit of 100 to 133 percent of the federal poverty level. For 2009, $4.1 million (GF) and $7.6 million (NGF). For 2010, $6.2 million (GF) and $11.4 million (NGF).

• Adjust funding for medical services for involuntary mental commitments
  Decreases funding for the costs of hospital and physician services for persons subject to an involuntary mental commitment. The projection of costs for the program based on the latest data is less than in the base budget for the program, which results in a budget savings. For 2009, a decrease of $1.0 million (GF). For 2010, a decrease of $796,166 (GF).

• Adjust appropriation for Health Care Fund
  Reduces funds used as state match for Medicaid due to higher revenue estimates for the Health Care Fund. While revenues from tobacco taxes are expected to decrease slightly, increased revenues are expected from Medicaid recoveries and Master Settlement Agreement payments from tobacco companies. The end result is additional revenue that can be used to offset general fund appropriation that is used as state match for Medicaid. For 2009, a decrease of $7.2 million (GF) and an increase of $7.2 million (NGF). For 2010, a decrease of $11.2 million (GF) and an increase of $11.2 million (NGF).

• Continue 2008 budget reductions
  Continues the budget reductions included in the Governor's 2008 reduction plan into the 2008-10 biennium. For 2009, a decrease of $69.1 million (GF), $60.5 million (NGF), and an increase of eight positions. For 2010, a decrease of $69.1 million (GF) and $60.5 million (NGF).

• Implement a Chronic Care Management program
  Provides funds to implement a chronic care management program within the state's Medicaid program. The most significant costs within Medicaid accrue from those clients that have multiple chronic conditions. This new program would provide a better way to manage the conditions of those clients in the most cost-effective way possible while improving their quality of the life. The annual costs for the agency is one position at $87,807 ($43,904 general fund) to administer the contract with the vendor and the vendor cost of $1.7 million ($835,544 general fund). Expected savings are about $3.3 million per year ($1.7 million general fund). The net savings after accounting for the costs are $1.6 million per year ($791,641) general fund). For 2009, a decrease of $791,641 (GF), $791,641 (NGF), and an increase of one position. For 2010, a decrease of $791,641 (GF) and $791,641 (NGF).

• Reduce funding for the Alzheimer's waiver
  Reduces funding for the Alzheimer's waiver in the Medicaid program. Since the waiver was implemented the agency has had a difficult time getting providers interested in providing services to waiver recipients. The waiver has had minimal expenditures to date and the remaining appropriation will be sufficient to cover any expenditures for the waiver. For each year, a decrease of $200,000 (GF) and $200,000 (NGF).

• Limits the primary care case management program to certain localities
  Limits the MEDALLION program under Medicaid to localities in the state with only one participating managed care organization. The MEDALLION program was the agency's first step into managed care. It requires enrollees to have a primary care doctor, who is paid a case management fee, to manage their care. However, with the implementation of disease management and chronic care programs the need for this program has disappeared. The program will have to be maintained in the Roanoke region, because there is only one other managed care plan that operates in the region. MEDALLION serves as the other managed care plan and two are necessary to require all Medicaid enrollees in the region to be enrolled in managed care. For 2009, a decrease of $464,518 (GF) and $464,518 (NGF). For 2010, a decrease of $470,093 (GF) and $470,093 (NGF).

• Fund administrative costs for implementation of the Acute and Long-Term Care Integration Initiative
  Provides funds for the implementation costs to implement a regional model for the integration of acute and long-term care services. Specifically, the funds will be used to cover the increased costs of agency contractors that support managed care enrollment, the actuarial analysis for new rates, and external quality reviews. This funding is necessary to ensure the success of such a complex integration of acute and long-term care services. For 2009, $239,944 (GF), $239,944 (NGF), and one position. For 2010, $358,944 (GF), $408,944 (NGF), and one additional position.

• Expand prenatal coverage for women
  Provides funding to expand eligibility for prenatal coverage of women from 185 to 200 percent of the federal poverty level. By expanding coverage to the same eligibility level for children covered under the Family Access to Medical Insurance Security (FAMIS) plan, the mother of any child covered by FAMIS will also be more likely to receive prenatal care. This expansion will cover about 400 additional women per year. For 2009, $1.0 million (GF) and $1.9 million (NGF). For 2010, $1.6 million (GF) and $2.9 million (NGF).

• Provide funding for the VirginiaShare Health Insurance program
  Creates a program to provide health insurance coverage for the uninsured that work in small businesses. The Commonwealth would provide premium assistance of up to one-third (not to exceed $75) of the costs, with one-third being paid by the employer and the remaining third paid by the individual. Individuals with incomes less than or equal to 200 percent of the federal poverty level would be eligible. Over 5,000 Virginians are expected to gain health insurance through the program. For 2009, $2.6 million (GF) and two positions. For 2010, $5.1 million (GF).

• Provide coverage for all newborn births plus two months after delivery through the Family Access to Medical Insurance Security plan
  Provides funds to cover newborns plus up to two months of care after delivery for the newborns of Family Access to Medical Insurance Security plan (FAMIS) enrollees even if eligibility is never established for the newborn. Federal Medicaid rules permit Medicaid coverage for infants born to Medicaid recipients, for the birth month plus two additional months. Even if eligibility for continued coverage is never established on behalf of the newborn, the two plus months of postpartum eligibility remains valid. Federal matching funds are not available for this eligibility expansion. For 2009, $43,480 (GF). For 2010, $46,741 (GF).

• Increase federal funding for long-term care pre-admission screening at the Department of Health
  Provides an increase in federal appropriation for payments to the Virginia Department of Health (VDH) for pre-admission screening for long-term care services. VDH is involved in helping determine whether or not Medicaid clients are eligible for long-term care services. The agency has been paid a low rate for many years. A recent evaluation of the costs to VDH shows that they are not recouping all of their costs to perform the service. For 2009, $865,989 (NGF). For 2010, $902,836 (NGF).

• Add community mental retardation waiver slots
  Adds 75 new mental retardation (MR) waiver slots in FY 2009 and 75 new slots in FY 2010 for a total of 150 new slots by the end of the biennium. Each slot costs approximately $35,000 general fund per year. These slots are for individuals who are currently in the community that are waiting for services on the urgent waiting list. For 2009, $2.3 million (GF) and $2.3 million (NGF). For 2010, $4.9 million (GF) and $4.9 million (NGF).

• Provide funding for the Uninsured Medical Catastrophe Fund
  Provides funding for the Uninsured Medical Catastrophe Fund. This program provides funds to uninsured individuals with a family income at or below 300 percent of the federal poverty level who need treatment for a life threatening illness or injury. The only funding source for the program is from donations through a tax-check off on Virginia individual income tax returns. This funding would increase the resources available in the fund to help uninsured individuals. For 2009, $150,000 (GF).

• Provide authority to implement prior authorization and utilization reviews for community-based mental health services
  Provides authority for the agency to implement utilization reviews and prior authorization for community-based mental health services. These services currently have no such requirements. The agency will be able to better manage the use of these services to ensure that they are needed. This language is necessary to implement a budget reduction strategy, which captures the associated savings. This amendment is embedded in budget language.

• Provide authority to include life estates as part of eligibility determination
  Authorizes the agency, once a report is provided to the Governor on the impact of this change, for the agency to implement changes in how life estates are treated in the eligibility determination for covered groups for which a resource determination is required, including those individuals requesting Medicaid payment of long-term care services. A life estate gives an individual certain rights in a property for his/her lifetime. The owner of a life estate may live on the property, keep any earnings from the property, and may sell his/her life interest, unless restricted by the will or deed granting the life estate. Current Medicaid policy does not count the value of a life estate in the resource eligibility determination. Additionally, there is no limit to the number of life estates an individual may own under current Medicaid policy. This amendment is embedded in budget language.

• Increase Mental Retardation and Developmental Disability waiver slots for the Money Follows the Person demonstration
  Provides authority to increase the number of Mental Retardation waiver slots by 220 and the number of Development Disability waiver slots by 30 over the two years of the biennium. These slots are necessary to implement the federal "Money Follows the Person" demonstration, which requires dedicated slots in the community to ensure that people can be moved from the facilities to earn the enhanced federal match the grant allows. This amendment is embedded in budget language.

• Eliminate reporting requirement for Maximum Allowable Cost program
  Eliminates a reporting requirement for the Maximum Allowable Cost program. This program was implemented several years ago as an initiative to reduce prescription drug costs in the Medicaid program. At this point, reporting on the annual costs savings is no longer necessary because any such savings is reflected in the annual forecast of Medicaid expenditures. This amendment is embedded in budget language.

• Implement site-of-service differential for physician services
  Provides authority for the agency to implement a site-of-service differential to reimbursement rates for physician/practitioner services as defined by Medicare. Annually, Medicare updates the physician fee schedule based on the Resource Based Relative Value Scale (RBRVS) methodology which includes different rate factors for facility and non-facility procedures. DMAS employs the RBRVS methodology to develop reimbursement rates for physician services; however DMAS only uses the non-facility rate factors to develop physician rates. Application of differential rate factors will bring the agency's reimbursement practices in line with Medicare. The implementation of the differential will occur in a budget neutral fashion over a four-year time period. This amendment is embedded in budget language.

• Eliminate outdated revenue maximization reporting and approval requirements
  Eliminates a requirement that the agency report on revenue maximization efforts each year. The agency already reports on monthly budget expenditures information that captures the information. In addition, the agency currently only has two revenue maximization initiatives underway, which does not offer much for the agency to report on. This language change also deletes a paragraph related to the approval process for such initiatives, which is unnecessary since the agency must develop an interagency agreement or seek approval through the budget process to implement any new proposal.