Good news: On February 22 the General Assembly passed the budget and adjourned its regular 2025 session. We are happy to report that the budget includes funding and language related to VHCA-VCAL’s priorities for Medicaid base rates and the Value-Based Purchasing (VBP) Program.

VHCA-VCAL is grateful to the General Assembly for its continued investments in Medicaid care for residents in nursing centers in Virginia.

• The budget will be forwarded to Gov. Glenn Youngkin, who will have an opportunity to make modifications. The General Assembly will reconvene on April 2 to consider any amendments offered by the governor.

Here are the details:

1. Direct Care Base Rate Reform: The budget provides $21.65 million for two years (Total = $43.3 million) to increase Medicaid base rates by moving the starting point of the underlying rate methodology from the cost of the facility with the 50^th percentile day (known as the Day Weighted Median cost) up to the facility with the 59^th percentile day. This will be in place beginning with rates effective July 1, 2025 until the next rebasing (two rate years). In the interim, VHCA-VCAL will work to make this or something better, permanent.
2. Medicaid VBP Payment Workgroup: The budget establishes a DMAS and stakeholder workgroup to design how the payment delivery could be modified. The workgroup is directed to complete its work and report to policymakers prior to the 2026 Session, thus setting up the possibility of moving forward with an alternative payment design for SFY 2027 (beginning July 1, 2026).

The big picture: The $21.65 million for base rates in SFY 2026, when combined with the $40.8 million in funding for the VBP Program in both SFY 2025 and 2026, brings the biennial total of payment enhancements to over $100 million for the two year budget.

• This is in addition to the nearly $100 million increase associated with the rebasing and inflation for SFY 2025. The rebasing impact will continue into 2026.
• Additionally, the SFY 2026 inflation adjustment will be released closer to July 1.

How it happened: VHCA-VCAL achieved significant success this session, despite some significant challenges thanks to the tremendous grassroots member and leadership support for our advocacy efforts. Read this article for details on key legislation.