State social services workers signed up homeless residents for Medicaid at a resource fair in Richmond in 2018. Enrollment in the program has more than doubled since Medicaid expansion, leading to rising demand for mental health services. (Ned Oliver/ Virginia Mercury)
About 35,000 Virginians are still waiting to find out if they remain eligible for Medicaid, as Virginia’s Department of Medical Services projects it will use its $95 million reserve fund to cover delayed payments for fiscal year 2025, according to a presentation agency leaders made to the state Senate Finance Committee Tuesday.
This also means that until it’s sorted out, the state is paying capitation fees, fixed amounts of money to healthcare providers, in order to cover healthcare for those patients. Medicaid is a state and federal program that provides insurance coverage to low-income people or people with disabilities.
The pending redeterminations are part of ongoing national efforts to sort out who should stay on Medicaid and who is no longer eligible. Typically eligibility determinations are made annually, but they’d been on pause nationwide amid the pandemic due to federal policy.
That’s changed over the past year in what’s colloquially referred to as “Medicaid Unwinding,” as provisions of federal law have expired.
A top reason for unenrolling people from Medicaid is that they no longer meet the financial requirements to be eligible — such as income at or below 80% of federal poverty levels. While the ineligibility data could signal higher incomes, which can be a good thing for people, policy analysts at The Commonwealth Institute cautioned over the summer that this is not always the case when it comes to health insurance coverage.
For example, someone could hold a combination of part time jobs that contribute to their overall income — which wouldn’t entail employer-sponsored insurance. Others might have a temporary spike in income through seasonal work that kicks them off eligibility for Medicaid.
So far, more than 2 million Virginians have been redetermined, according to DMAS director Cheryl Roberts, and over the next year the remaining 35,000 people will be sorted out.
The process is not always swift, said DMAS chief financial officer Chris Gordon.
During the Tuesday presentation, he told members of the Virginia Senate Finance Committee that “some of those folks are easier to be redetermined and decide if they qualify to remain on Medicaid” but that other demographics take more time, such as people in nursing facilities or who are in home-care.
“Those people take longer because it’s a paper application,” he said. “It’s 14 pages, and we have to determine if their assets and resources allow them to continue to be members in our Medicaid population.”
He added that the Centers For Medicaid and Medicare Services have indicated the unwinding process should be completed by the end of next year.
Though total enrollment trended higher than DMAS had forecast for much of the year, it is now lower, totaling 1.97 million people as of Oct. 1.
DMAS receives quarterly pharmacy rebates from drug manufacturers to offset the overall cost of prescription drugs in the Medicaid program. DMAS then returns those rebates to federal and state-share accounts.
But, Gordon said, after the previous fiscal year closed and DMAS received details from Virginia’s pharmacy benefit manager, “we learned that $41 million out of the $60 million we applied in the state actually should have been applied — instead of being dropped into the state general fund — should have been applied to the coverage assessment fund.”
He said that meant DMAS didn’t have enough money at the end of the fiscal year to resolve it in that year, which ended June 30.
“We only ended with $22 million in state general funds, at the lowest this agency has ever had in state general funds ever in the history of this agency,” Gordon said.
He said that DMAS needs to correct overpayment to the general fund and underpayment to coverage assessment and federal accounts.
The department may also have some funding aid from $88.5 million earmarked specifically as a “Medicaid Contingency,” according to a presentation to both the Senate and House finance committees this past August. The overall presentation reviewed 2024’s fiscal year revenues and the financial condition of the state. Gov. Glenn Youngkin has until mid-December to present any amendments to the 2024-2026 budget to both committees.
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