Cheryl Roberts, Medicaid director at the Virginia Department of Medical Assistance Services, told the Health and Human Resources Appropriation Subcommittee that the agency’s current appropriation is about $24,000,000,000 and that the agency is planning 18 items in the governor’s budget to address staffing, program changes and federal rule changes.

Roberts said the agency has reached “99% at the unwinding,” and that the department’s financing and program changes are being driven by federal oversight from the Centers for Medicare & Medicaid Services and the governor’s office as well as the General Assembly. “For everything that we do, we have accountability, obviously, to the governor, to you, and to CMS,” she said.

Why it matters: The presentation laid out funding and operational requests that would reshape Medicaid administration and provider payments for the coming biennium, while flagging implementation deadlines required by federal rules and an ongoing major procurement that the department says it must begin to implement despite pending litigation.

Key budget and program highlights

- Overall spending and funding split: Roberts said the agency’s appropriation is “at 24,000,000,000 and counting,” funded roughly 51% with federal funds and 49% with general funds as of Jan. 1. She emphasized the role of the Medicaid expansion in covering more adults and the program’s continued large role in children’s coverage.

- SMI waiver and crisis beds: Roberts described a state request for a serious mental illness (SMI) Medicaid waiver designed to allow larger crisis facilities to be reimbursed. She said the waiver application was submitted “on 31st” and that the agency “expect[s] it to go through.” Roberts said the waiver normally takes about two-and-a-half years but her team “did it in 6 months.” The waiver is intended to let facilities exceed the current 16‑bed constraint tied to institutional rules and allow Medicaid to pay for larger, cost‑effective crisis facilities.

- Implementation and staffing requests: The largest set of requests includes additional full‑time employees to support quality and compliance work tied to expanded waiver slots and other program changes. Roberts said the FTE request supports oversight of community services providers and other contractors.

- Juvenile prerelease case management: Roberts said CMS required states to establish a process to handle release of children from juvenile justice facilities; Virginia must submit a plan and implement by Jan. 26. The proposal seeks funds to provide targeted case management before and after discharge so children do not have a service gap.

- Adult day health reimbursement change: The budget would move adult day health services from a daily rate to an hourly rate with a six‑hour cap to better match shorter‑duration use.

- Long‑acting injectable antipsychotics for schizophrenia: Roberts said the agency proposes paying for long‑acting injectables as a separate line item (outside the hospital DRG payment) for people with schizophrenia to improve stability prior to discharge. Roberts said this proposal “does take advantage of the expansion population” and noted the large federal match on some proposals.

- Graduate medical education stipends: Roberts said the agency seeks to raise certain graduate medical education stipend positions (psychiatry and OBGYN) from $100,000 to $150,000 to encourage trainees to enter shortage specialties.

- Mailroom and customer service centralization: Following lessons from the coverage unwinding, Roberts said DMAS centralized returned mail operations and seeks a language change to the budget language authorizing the consolidation.

- Nursing home payment methodology: Roberts outlined a required federal move from the RUGS methodology to the patient‑driven payment model (PDPM) that focuses more on clinical needs and case mix than volume; she warned providers the change may have effects they will comment on to the committee.

- Regulatory clarifications and other technical items: The agency asked for authority language to speed rate changes and regulations, clarification on elimination of cost sharing that was already enacted, and authority to update regulations connected to several proposals.

Procurement and managed‑care concerns

Roberts said DMAS legally awarded a managed‑care procurement on Dec. 30 and issued a public interest determination because holding the award was “actually hurting us in many ways.” She told the committee the award relates to an approximately $18,000,000,000 contract and that the Commonwealth had filed for a status hearing on Jan. 3, with implementation work already begun. “The public interest dominated and we went forward with the award,” she said.

At the same time, Roberts said the composition of Medicaid enrollment after the unwinding is shifting toward higher‑need members, which has raised capitation rate concerns for managed care organizations (MCOs). She told the committee actuaries are reviewing rates and that DMAS expects an analysis by Jan. 22. “We don’t know” yet whether the analysis will require raising capitation rates, she said, adding the agency is conducting its usual acuity adjustment and other reviews.

Eligibility study and systems work

Roberts summarized a consulting review by Boston Consulting Group (BCG) of eligibility operations, IT and processes, which included 75 stakeholder interviews and two surveys. She said the report — about 100 pages — gives short‑term and transformational options and that the study was provided after the administration’s budget was complete.

Other updates

Roberts mentioned a new DMAS website and dashboards, receipt of an Auditor of Public Accounts report with four minor findings, contract escalation requests for providers facing inflation, and a proposal to establish a budgetary reserve to cover the multi‑year ramp of new initiatives that may not show utilization until years three to five.

Quotes

“We are at 99% at the unwinding,” Roberts said, naming the unwinding milestone.

“We submitted it in on 31st. We expect it to go through,” she said of the SMI waiver submission.

“The public interest dominated and we went forward with the award,” Roberts said of the procurement decision.

Ending

Roberts closed by urging the subcommittee to review the eligibility study and to consider short‑term and long‑term investments in systems and governance. She also thanked staff who worked on the forecast and operational responses to the unwinding.

(Transcript: DMAS presentation to the Health and Human Resources Appropriation Subcommittee.)