On December 16 Gov. Ralph Northam presented his proposed amendments to the state’s biennial budget. In terms of direct impacts on nursing facilities, the proposed amendments do not affect the $20 per day Medicaid rate enhancement and continue to fully fund the rebasing fix set for implementation on July 1, 2021. The governor’s amendments do not include language around the annual inflationary adjustment, so the rates should be inflated on July 1, 2021. DMAS’s current preliminary assumption for inflation is just under 3 percent.

The only direct impact of the governor’s amendments on nursing facilities is an increase in the appropriation from the civil monetary penalty fund of $225K each year of the biennium. These funds are designated at the federal level for specific purposes related to improving nursing facility care. The increase will allow more funding for eligible projects and other initiatives.

The federal extension of the public health emergency into January is also having an indirect impact on the budget. Virginia will continue to receive the enhanced Federal Medical Assistance Percentage (FMAP) through March 31, 2021 (versus ending on December 31, 2020). This 6.2 percentage point increase in FMAP provides $205 million in additional federal Medicaid funds. This essentially offsets state matching funds thereby “freeing them up” for any budgetary purposes. While nursing facilities have not directly benefited from the enhanced FMAP, it relieves fiscal pressure on the state budget as a whole, which increases our chances for additional payment reforms. There is significant speculation that the federal emergency will be extended well into calendar year 2021. To the extent that happens, there will be further relief in the state budget through the extended FMAP.

In terms of process, the governor’s amendments for the current fiscal year (2021) and the second year (2022) of the biennial budget will be taken up in the upcoming session, which begins January 13.