Jeffrey Leonardi, chief deputy director of the Department of Medical Assistance Services, told the Virginia Disability Commission on June 5 that the House version of the federal budget reconciliation package does not include direct reductions to the federal matching share for Virginia’s Medicaid program, Cardinal Care.

"The key takeaway if I leave you with nothing else is ... the current proposals leave Virginia's Medicaid program intact," Leonardi said, citing language in the House draft now with the Senate. He added that the federal bills include many provisions aimed specifically at the Medicaid expansion population rather than people enrolled because of disability.

Leonardi walked commissioners through Cardinal Care’s scope and budget. As of May 1, he said, Virginia covered about 1.9 million people — roughly 22% of the Commonwealth — at an FY2025 appropriation of about $26.3 billion total: $7.2 billion state general fund, $16.8 billion federal funds and $2.3 billion other dedicated revenues. He described Medicaid as a federal–state partnership and emphasized that policy changes with a state fiscal effect require General Assembly authorization.

Leonardi said the House reconciliation language would: permit states to implement work or community engagement requirements for parts of the expansion population while statutorily exempting children, parents, older adults and people with disabilities; require eligibility redeterminations every six months instead of annually for the expansion group; and allow federally capped cost-sharing (co‑pays) for some services. "The current language does ... require states to redetermine that an individual is still eligible for Medicaid every 6 months," Leonardi said.

He explained how frequent renewals would affect operations: roughly 600,000 additional renewals annually, about a 30% increase in workload, and that the department will provide a prioritized set of recommendations this fall that came from a Boston Consulting Group review of eligibility processes.

On cost sharing, Leonardi said the House draft would permit co‑payments for some services in the expansion population and set federal maximums. He described the proposed cap for low‑acuity emergency room visits as a potential maximum copay of $100 and a $35 cap for other nonemergency services, while noting preventive services would remain exempt.

Commissioners raised concerns about provider participation, reimbursement limits and implementation timelines. Senator Fevella said she feared providers could withdraw from Medicaid if federal restrictions reduced available funding. "I fear that we might very well lose some Providers and that equates to losing access for individuals who are eligible for Medicaid," she said. Leonardi clarified the House draft does not set per‑service reimbursement caps but would limit future use of supplemental or directed payments and could cap certain reimbursements relative to Medicare going forward.

Leonardi also described other provisions in the House draft that could affect Virginia, including limits on some supplemental payment strategies, restrictions related to funding for gender‑dysphoria services and non‑citizen coverage, and pharmacy contract changes such as prohibiting spread pricing in PBM arrangements and requiring MCO contracts to pay dispensing fees at least as high as fee‑for‑service levels — a potential cost pressure for the November budget forecast.

On timing, Leonardi said the reconciliation measure had passed the House and was with the Senate; Senate leaders were targeting a July 4th self‑imposed deadline. He said states and associations were watching closely and the department would continue to model impacts and brief the General Assembly.

Commission direction: staff agreed to prepare modeling and potential budget impacts if this reconciliation language becomes law; commissioners asked DMAS to return recommended administrative upgrades and implementation planning in fall reports.