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Virginia’s Medicaid Program at a Crossroads

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The Virginia General Assembly is grappling with decisions of whether or not to expand the number of individuals served under the Virginia program, the cost of doing so, the consequences of not doing so, and in either case the most cost-effective manner of providing services.

The Virginia Association of Personal Care Providers (VaPCP) represents agency-directed care with over 70 member firms across the state.  Association members care for thousands of elderly and disabled Virginians.  With the aging population, the number of individuals requiring assistance will swell significantly in the coming years.  Absent family members who can provide daily aid, the only options are in-home care or institutionalization – including nursing homes and assisted care facilities.  In-home care is the least expensive of these options and there is general agreement that individuals benefit from familiar surroundings.

Medicaid Waiver Programs are designed to protect our communities’ indigent and most vulnerable population. Waiver programs provide much needed assistance to the elderly and disabled. The vast majority of providers that furnish these services, like members of VaPCP, are small businesses. These businesses work tirelessly to ensure the highest quality care is delivered to a significantly at risk population.  However, the efforts of providers are consistently challenged by low reimbursement rates, complex regulatory requirements, and an unduly punitive audit processes.  Not to mention, the constantly changing healthcare environment provides its share of hurdles to small businesses – particularly those in the health care industry.

In addition to the high risk nature of our business, Medicaid reimbursement rates for Virginia personal care providers rank third lowest in the nation.  Despite multiple studies over the past two decades that recommend an increase in the hourly reimbursement rate, little has been done to correct this inequity.  Virginia providers are faced with the challenge of fighting yearly to maintain the status quo while all other business costs continue to increase.  Low reimbursement, draconian regulations that increase the cost of doing business, and the administrative burden that will be placed on providers as a result of the Affordable Care Act may have the ultimate consequence of driving providers out of business.  That would have an enormously negative effect on all involved.

Medicaid is the second largest program in Virginia’s budget.  While personal care providers comprise a relatively small percentage of that total expenditure, our services save millions of dollars which would otherwise be spent on nursing homes, hospitals, and assisted living facilities.  In the face of a Medicaid program that suffers from waste, fraud and inefficiency, agency-directed providers are among the most compliant and verifiable.  Even so, with such a small margin for any administrative error, oftentimes it is the provider that is “left holding the bag”.

A Joint Legislative Audit and Review Commission (JLARC), the oversight arm of the Virginia General Assembly established to evaluate the operations and performance of agencies and programs in the Commonwealth, conducted a 2010 study which highlights the fact that 87% of non-fraudulent improper payments came from provider claim errors. The study attributed that problem to a complex regulatory process that was difficult to follow.  The most significant issue for the provider community is the compliance threshold imposed by the Department of Medical Assistance Services (DMAS).  DMAS has the authority to withhold Medicaid reimbursement payments, in whole or in part. Home and community based providers are the only Medicaid providers held to a standard that requires total and absolute compliance with regulations and manual requirements. Any infraction, including those that are purely administrative, can result in a retraction of the entire billed and expended amount.

Furthermore, the JLARC study identified the harsh truth that instead of prosecuting Medicaid fraud, the recovery of funds was most often made through retractions for alleged provider error. Annually since 2008 the provider community has submitted proposed framework for fair and equitable retractions based on insubstantial compliance. Budget language adopted in 2011 was supposed to address these concerns; however, only two minor audit changes were made and these were not accomplished via the General Assembly directed workgroup.  As a result, the General Assembly’s efforts aimed at holding DMAS accountable had no effect on audits of community based care providers.  So, the problem and burden continue.

Agency-directed personal care providers offer a more cost-effective alternative to nursing home placement. However, these small businesses will struggle to provide essential assistance to a vulnerable population if low reimbursement rates and a total retraction standard of compliance are kept in place. Personal care brings value and quality to the health care delivery system. No matter how you slice it, community based care is the preferred and most cost-effective option.

The long term issue is whether or not, without changes to the system, there will be enough providers to meet the ever-growing needs of the Commonwealth.

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