What Will HR1 Do To Virginia Medicaid? Here is a First Look . . .
July 16, 2025
Based on a presentation made today by Cheryl Roberts, Director of DMAS, to the General Assembly’s Joint Committee for HHR Oversight, we can report several things, but few details. As Director Roberts pointed out, the bill was not signed until July 4th and was in a state of continuous change until literally the day before!
What we did learn:
- The majority of the provisions require further guidance from CMS which will be forthcoming in the next weeks (?) — so some of the decisions about implementation will not be made as quickly as we would like..
- Eligibility re-determinations for the expansion population will occur every six months vs annually – this will be, of course, an expense to the Commonwealth in staff time and effort. [effective on January 1, 2027]
- To ensure that individuals are only enrolled in Medicaid in one state and are alive, two additional data checks will be required – again, staff time and effort and system changes [January 1, 2027 and January 1, 2028]
- Payments for services for emergency medical care furnished to an individual in the expansion population who is eligible except for their citizenship status shall be limited to 50% instead of 90% Federal match (FMAP). Clearly this will result in both operational impacts and a general fund impact. [October 1, 2026]
- Narrows the definition of qualified alien from current law. Certain groups will no longer be considered qualified aliens for the purposes of Medicaid or CHIP and will be eligible for emergency services only (see previous bullet). [October 1, 2026]
- Pending CMS guidance, the intent is to allow recoupment of erroneous payments beyond the current Payment Error Rate Measurement (PERM). Virginia currently has a PERM error rate below the 3% threshold. [October 1, 2029]
- Limits the period of retroactive payments to one month for the expansion population and two months for all other Medicaid populations and CHIP/FAMIS (it is currently 3 months for all but CHIP/FAMIS) [January 1, 2027]
- Delay the implementation of the nursing home final rule (staffing rations) until October 1, 2034.
- For the expansion population, implements a requirement that to retain eligibility they must be engaged in a qualifying activity at least 80 hours per month which must be verified by DMAS upon application and every six months thereafter. This will obviously take staff time and effort. There are some exceptions, but CMS has not drafted guidance yet. [December, 31 2026]
- Also for the expansion population there is a cost-sharing requirements up to $35 per service with exceptions for primary care, SA and BH services. This is another item with operational impact. [October 1, 2028]
- Creates a new option for a 1915c waiver not dependent on having an “institutional” alternative placement. There are some requirements (eg cost neutrality, etc) and “Payments may not be made under the waiver to third parties for benefits such as health insurance, skills training, and other benefits customary for employees.”
- Effective July 4, 2025 there can be no new provider taxes – Virginia has three and only the ICF-ID tax will not be reduced (currently contributes $15M annually to the Virginia Health Care Fund). The other two taxes both begin to “step-down at .5% beginning October 1, 2027. The impact of these changes along with those to State Directed Payments (for MCOs) and Supplemental Payments (for FFS) will require additional analysis.
Bottom line – additional cost in both staff effort and time and in real dollars which will, by necessity, come from the General Fund.