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Medicaid managed‑care changes, provider‑payment rules and hospital tax proposals could reshape provider revenue
Summary
DMAS Director Cheryl Roberts and CFO Chris Gordon briefed the committee on Medicaid managed‑care rollouts (Cardinal Care), new federal policy proposals affecting eligibility and provider payments, and how proposed federal limits on state-directed hospital funding could hit supplemental payments and rural hospitals.
Cheryl Roberts, director of the Department of Medical Assistance Services (DMAS), told the Senate Finance Committee June 4 that DMAS will launch Cardinal Care managed care on July 1, transferring roughly 1.4 million enrollees into the new contracts and adding Humana Healthy Horizons for about 100,000 people.
Roberts said the unwinding of pandemic-era renewals is complete and DMAS now serves about 1.8 million Virginians. She described contract changes that incorporate requests from the General Assembly, expanded compliance and oversight functions, and a consolidation of foster-care enrollments into a single plan to improve service continuity for children.
On federal reconciliation, Roberts said the largest Medicaid policy concern is new "community and work engagement" requirements for the expansion population. She said the change could affect about 400,000 expansion enrollees, require six‑month eligibility verification for some enrollees, and impose new administrative work across IT, eligibility, workforce and local partners. Exceptions and exact ages vary between the House and Senate texts; Roberts said CMS and the State Medicaid Directors are working on guidance.
DMAS also highlighted provider and payment policy changes in the federal text. Roberts said the bill calls for ending certain pharmacy spread‑pricing practices and moving toward a dispensing‑fee model; because Virginia eliminated spread pricing earlier, implementing the new federal approach would increase costs — DMAS preliminarily estimated a pharmacy dispensing‑fee impact in excess of $150 million. Other federal provisions would limit coverage of gender‑affirming transition services and require routine provider screenings.
Separately, DMAS CFO Chris Gordon reviewed how the reconciliation drafts would interact with state hospital supplemental payments funded by provider taxes. Gordon said the House text would allow states to submit provider‑tax changes up to enactment, but the Senate text included a May 1 deadline; because Virginia's enacted budget and provider‑tax changes were signed May 2, the Senate version, if it prevailed, could block Virginia's newly expanded tax base and the additional ~$1.3 billion in hospital supplemental payments the state intended to fund this year.
Gordon said the Senate approach would also require a phased reduction in allowed supplemental payments toward 100% of Medicare (or 3.5% tax base in later years), which he said would eliminate roughly $2.3 billion in supplemental payments over time and would particularly affect rural critical‑access hospitals. He and Roberts said hospital and provider associations are lobbying federal negotiators; they are tracking the policy closely because either federal outcome would require state adjustments to provider funding and payments.
