2007 Session

Budget Amendments - HB1650 (Committee Approved)

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Medicaid Rate Increase for Rural Hospitals

Item 302 #6h

Item 302 #6h

First Year - FY2007 Second Year - FY2008
Health And Human Resources
Medical Assistance Services, Department of FY2007 $0 FY2008 $584,142 GF
FY2007 $0 FY2008 $584,142 NGF

Page 313, line 30, strike "$5,433,850,896" and insert "$5,435,019,180".
Page 333, after line 25, insert:
"PPP.  The Department of Medical Assistance Services shall amend the State Plan of Medical Assistance Services governing Medicaid reimbursement for hospitals to eliminate the rural wage index category used to adjust the labor portion of the statewide operating rate per case for acute care payments and the statewide operating rate per day for rehabilitation and psychiatric payments.  Affected hospitals will have their labor share of costs adjusted using the nearest metropolitan wage area or their effective Medicare wage index, whichever is higher."

(This amendment increases Medicaid reimbursement for rural hospitals by eliminating the rural wage index category to adjust the labor share of the statewide operating rate per case for acute care payments, and the per diem payments for rehabilitation and psychiatric hospitals. The federal Medicare program has narrowed the group of hospitals which comprise the rural wage index in Virginia, resulting in a negative impact on Diagnostic Related Group rates (per case rates) for the hospitals remaining in the group. At the same time, workforce shortages and the addition of several new Metropolitan Statistical Areas (MSAs) have resulted in tighter labor markets and the remaining rural hospitals must compete with nearby urban or small-urban areas for staff. Moving rural hospitals into the nearby MSA wage index will simplify and help to correct these inequities.)