Here’s why Medicaid in Virginia will cost $200 million a year more than expected
That -- along with mis-estimates for hospital and nursing home bills and other payment issues -- means
None of the additional money is needed for the expansion of Medicaid the
But the additional predicted expense is a big -- and completely unexpected -- bump in the system's current
The Medicaid agency's biggest miss, state and insurance officials say, was an over-optimistic view of the savings that could come from signing up some 210,000 elderly and disabled Virginians with managed care companies.
"The adjustment in the general fund forecast relates to existing Medicaid members with disabilities and the elderly, the most expensive Medicaid population," said
Behind the forecast of savings was the idea was that paying health plans a set per-person fee would lead the insurers to steer elderly and disabled Medicaid recipients to better -- and less costly -- care.
But the experience of other states shows it takes time -- longer than
That was a benchmark the agency cut from its original promise of 7 percent savings after health plans pointed out no other state launching managed care programs for the elderly saw any savings at all for the first three years.
"I think they were trying to keep the program budget neutral," said
The revised forecast calls for a 6.2 percent increase this year and 3.5 percent next year, excluding those who are signing up under the Medicaid expansion program.
"They shouldn't have missed it by that much," Tweedy said.
What the actual impact of the missing savings from the managed care program for the elderly and disabled will be is still not completely certain. The Medicaid agency and its actuary are crunching the numbers to decide how much they will pay insurers to cover people next year.
Gray said rates are set to rise because the plans lost money over the past year. Federal law requires Medicaid managed care per-person rates be "actuarily sound" -- that is, high enough to cover likely cost of care.
The Medicaid agency now expects managed-care costs to be
Another major forecasting miss involved hospital bills.
The Medicaid agency increased its forecast for those expenses by
It also underestimated a rise in the number of children covered by Medicaid by about 10,000. Currently, there are roughly 470,000 children in
Also contributing to the increase in money needed for Medicaid are some one-time expenses -- delayed payments totalling
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