Gov. Ralph Northam is protecting a $130 million budget increase in state and federal Medicaid funds to boost rates for organizations providing personal care and other services to elderly and disabled Virginians in communities across the state.
The provision for almost $65 million in state funds — to be matched equally with federal Medicaid money — is a crucial exception to Northam’s strategy of suspending new spending in the two-year budget that take effect on July 1. It is meant to allow Virginia more time to weather the public health and economic crises caused by the coronavirus pandemic.
“These are the same people who are responding to the crisis,” Secretary of Finance Aubrey Layne said on Monday.
The increase will boost rates for providers of personal care, respite and companion services in a wide range of Medicaid programs to care for Virginians in their homes and communities instead of state institutions and nursing homes.
The pending budget would increase those rates by 5% in the first year and 2% in the second, providing critical financial help for organizations that are trying to survive the economic fallout of the public health crisis.
“That’s terrific,” said Del. Mark Sickles, D-Fairfax, vice chairman of the House Appropriations Committee and the chairman of the House Health Welfare and Institutions Committee. “We cannot be cutting back on our personal care reimbursements, especially in the times we’re in today.”
However, Sickles expressed concern about the governor’s decision to suspend $43 million in state funds to update rates for organizations that provide community-based services to people with intellectual and developmental disabilities. The population includes people covered by a 2012 settlement between Virginia and the U.S. Department of Justice to serve as many people as possible in their communities instead of in state institutions.
“They’re both in crisis situations,” he said of organizations that provide community-based services for the disabled, as well as those that give personal care to other vulnerable Virginians.
Organizations that serve Virginians with intellectual and developmental disabilities say they face potential insolvency if they don’t get financial help soon.
“We have yet to see any significant relief or financial help from the state,” said Stephanie Lynch, a Richmond city councilwoman who is director of governmental affairs for Good Neighbors Community Services, which cares for 290 people in residential facilities and 4,000 people with mental health services across the state.
The state budget has become the primary vehicle for Northam to direct new forms of aid to the organizations most affected by the spread of COVID-19, such as nursing homes. Last week, he proposed to increase the daily rate that Virginia’s Medicaid program pays for residents of nursing homes, which would cost the state almost $14 million every three months
Electronic skill games
Northam also wants to create a new fund within the budget to respond to the crisis with money that would come from electronic skill games that the General Assembly had voted to ban.
The governor proposed on Saturday to delay the ban for a year and tax the games at 35% of the revenues they produce, minus prize money payouts. The new gaming tax would generate $150 million a year that the governor wants to dedicate to the new fund to help support small businesses, prevent evictions and homelessness, and boost health care providers.
“We appreciate the governor’s leadership in this matter as he worked in a bipartisan manner with both legislative houses to address a revenue stream which greatly assists local small businesses and their employees,” said Mike Barley, a spokesman for Pace-O-Matic, a skill game manufacturer that operates about 7,500 games in Virginia as Queen of Virginia Skill & Entertainment.
“Additionally, we are pleased that the majority of the tax revenue generated by our skill games will go to support a COVID-19 response fund to help small businesses, protect people’s housing, support nursing homes and other health care providers,” Barley said in a written statement on Monday.
Layne, whose office would oversee the new fund, said the administration proposes to funnel the aid through existing programs for small businesses and housing that the Virginia Department of Housing and Community Development already runs.
The fund also would be another way to help organizations that care for the most vulnerable populations, including assisted living facilities that don’t receive Medicaid funding as nursing homes do.
“We haven’t decided how the money is going to be split yet,” he said.
Layne said Northam’s proposal, subject to approval by the General Assembly when it reconvenes April 22, would “give us time to really get a handle on these stimulus funds,” which Congress and President Donald Trump approved late last month in response to the crisis.
The CARES Act includes $2.2 trillion in federal emergency aid, including $3.3 billion in state and local government relief in Virginia, but the state remains uncertain how it will be allowed to spend the money. The law forbids state and local governments from using the money to back fill the loss of tax revenues, but they are urging guidance that gives them more flexibility in using the federal aid to avoid major cuts in programs and jobs that would make the crisis worse.
Medicaid could be a major source of relief. The federal government and states share the costs of the health insurance for the poor, elderly and disabled, based on a matching formula that varies from state to state.
In Virginia, the state and federal government share those costs equally, but the Families First Coronavirus Response Act, the second of three emergency relief bills Congress adopted last month, would boost the federal share by 6.2% and lower the state’s share by a corresponding amount.
Virginia finance officials say that would free about $150 million in state funds every three months, dating back to Jan. 1, but they have resisted requests from a wide range of organizations seeking a share of the savings. The finance officials’ strategy for surviving the crisis depends on maintaining as much liquidity as possible to ensure the state has cash on hand to pay for core services.
“That is the most flexible pool of federal funds we have to work with right now,” said Deputy Secretary of Finance Joe Flores, a former budget analyst on health and human resources issues for the Senate Finance Committee.