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Virginia Legislature Rejects Medicaid Oversight Bill

April 24, 2019

Virginia lawmakers failed to push through a bill to create a Medicaid oversight office after faulty forecasting resulted in a $462.5 million Medicaid shortfall over two years.

stethoscope and insurance docs

Medicaid costs in Virginia have risen steadily in the past decade. Between fiscal years 2012 and 2016, state spending on the program rose by about 24 percent. In November 2018, the state Department of Medical Assistance Services (DMAS) announced the cost projections for the program were off by $462.5 million, a shortfall that would have to be covered over the next two years. The money will be pulled from the state government’s general fund over the next two years. The announcement was made as enrollment opened for Virginia’s expanded Medicaid program, but state Secretary of Finance Aubrey Lane said the unexpectedly high costs were not related to that.

To prevent inaccurate estimates in the future, Virginia state Sen. Ryan McDougle (R-Hanover) introduced Senate Bill 1352 to move responsibility and oversight of Medicaid from DMAS to a new state agency to be called the Office of Medicaid Fiscal Oversight.

The bill made it through the Senate on a 22-18 vote but stalled in a House subcommittee before the legislative session ended.

“I was very disappointed that the House took that direction,” McDougle said. “The arguments were that we already have this oversight. I don’t think that is a persuasive argument, because the things in place are to identify when a problem occurs, not to [predict and avoid] problems; $465.2 million is too high a number.”

Removing the Politics

The nearly half-billion-dollar shortfall accompanying the state’s Medicaid expansion should not have come as a surprise, McDougle said.

“Medicaid is the fastest-growing expense in our state budget,” McDougle said. “The only way I could see to ... add some nonpolitical certainty that our numbers were accurate and plan so our numbers were better, was to create a system that was more transparent to the public, not just the executive and legislative branch, where we could see how the numbers were moving month to month, and not just at the end when we see we have a problem.”

The proposed office McDougle helped design would do more than issue cost forecasts. It would also provide monthly oversight of Medicaid expenditures and review the potential impact of proposed policy changes. Employed actuaries would determine projections for growth in managed care rates, and the office would include an economist and data information analyst.

Changing the System

“These estimates were derived under the previous director of the previous governor, not the current director or current governor,” McDougle said. “But this shouldn’t be about individuals; this should be about a system. I wanted to put in a system that prevented it from happening again.”

The proposed Office of Medicaid Fiscal Oversight would remove politics from the process, McDougle says.

“Outside the executive and legislative branch, we still have oversight, but it has a level of scrutiny [independent of] the individual political sections,” McDougle said.

“I plan to introduce this again in future sessions,” said McDougle


Ashley Bateman writes from Alexandria, Virginia.