A Report of Health Care Legislation, Studies and Budget Language Approved in the 2013 General Assembly Session


The expansion of Virginia’s Medicaid program became one of the most contentious issues that the General Assembly debated in the final hours of the 2013 Session.

Governor Bob McDonnell had sent a letter to chief budget negotiators that said he would oppose any language in the budget that authorized the expansion of Medicaid unless and until “major reforms are authorized and completed, and until we receive guarantees that the federal government's promises to the states can be kept without increasing the immoral national debt.” Fearing the Republican dominated Virginia House of Delegates would oppose Medicaid expansion after receiving this letter, Senate Democrats threatened to oppose the Governor’s and House of Delegates’ transportation funding package, the Governor’s primary legislative goal for the 2013 Session, if the House of Delegates and Governor opposed the inclusion of language in the budget to receive initial funding from the federal government to expand Medicaid and reform the program.

In the end, the two chambers created compromise language that created a ten member joint legislative Commission (consisting of five Senators and five Delegates), the “Medicaid Innovation and Reform Commission.” This Commission will be responsible for identifying and seeking federal approval for (if necessary) reforms to Virginia’s existing Medicaid program that will control costs, link payment and reimbursement to quality and cost containment outcomes and develop a commercial insurance-like benefit that includes cost sharing, among many other reform proposals. The full list of proposed ideas for reforms and respective phases for reform can be found here:

http://leg2.state.va.us/WebData/13amend.nsf/e23f6fe4c26e8cb1852568 9e00349982/1c6d29fff614c86e85257b1b00756af1?OpenDocument.

Any savings derived from the reform measures are to be dedicated to the newly created “Health Reform and Innovation Fund.” Beginning in 2015, any projected savings (from approved reform measures) shall be reflected in reduced appropriations to the affected agencies and deposited into the Fund to be used to pay for the costs the state will incur as federal financial support begins to decrease.

If at any time the expected financial support for expansion falls, the Department of Medical Assistance Services (DMAS) is authorized to disenroll and eliminate coverage for the Medicaid expansion population at the direction of the Commission.

While Governor McDonnell wrote a letter to Senate Democrats indicating his support for the concept of this Commission and its efforts to create reforms, it is still possible that he could veto or amend this language at the reconvened legislative session scheduled for April 3, 2013. On March 5, Governor McDonnell issued a press release to clarify that, despite “some media outlets and elected officials labeling [the language included in the final budget] as an approval of Medicaid expansion in Virginia, this is absolutely incorrect.” The Governor’s release stated that he sent a letter to the United States Secretary of Health and Human Services explaining that the language in the budget places a firewall against expansion consideration, unless real, sustainable cost saving reforms are implemented at the state and federal levels. He went on to say that several members of the newly appointed Commission have expressed deep concerns about expansion and that his office is currently reviewing the budget language to see what changes may be necessary during the reconvened veto session. In his letter to Secretary Sebelius, the Governor included tenets of Medicaid reform that must be developed and/or approved by the Centers for Medicare and Medicaid Services in order to ensure his support of Medicaid expansion. Those tenets include:

  • The delivery of Medicaid services through a market–based delivery system
  • Reasonable assurance from the federal government that Virginia Medicaid expansion will not contribute to a future increase in the national debt
  • CMS granting a §1115 Waiver to allow Virginia to implement Medicaid payment and delivery reforms
  • Greater flexibility beyond what is currently allowed under federal law to implement cost sharing for services provided to Medicaid recipients and the ability to require recipients to participate in mandatory wellness and preventative services
  • Flexibility around the requirement that Virginia provide all essential health benefits and mandatory services
  • Buy-in from stakeholders to design, engage in and implement cost savings strategies

Also, the Attorney General could still issue an opinion that the language is unconstitutional in some way, as he attempted to do in the final hours of the negotiations. The Attorney General’s opinion was disregarded as changes to the negotiated language negated his argument that this Commission could not appropriate funds, as it is not permitted to do now. The Commission may only declare that states funds cannot be used. Members of the General Assembly have publicly said that they are hiring counsel to determine if the budget language is legal.

Finally, recall that the authorization of Medicaid expansion is in the hands of the appointed members of the Commission. The House members include the following: Delegate Steve Landes (R-Augusta), Delegate Jimmie Massie (R- Henrico), Delegate Bev Sherwood (R- Winchester), Delegate John O’Bannon (RHenrico) and Delegate Johnny Joannou (D- Norfolk). The members from the Senate have not yet been named. It will take a vote of three of the five members from each Chamber to approve the expansion and reform of Medicaid. Convincing the members of the Commission to move forward with expansion will be challenging, as they will be fearful of the possibility of the state having to pay for expansion if the federal government’s financial support decreases in the initial years and/or the expected savings from reform are not projected to cover the potential costs of expansion, but the right proposals that prove real savings can be achieved can propel the group to continue to move forward. In addition, all members of the House of Delegates are facing re-election in November. The Commission members from the House will likely consider how their actions might affect their own, and also other House members’, campaigns for reelection, as perceived support for Medicaid expansion could become a significant campaign issue. Governor McDonnell’s term also ends in January. Thus, the new Governor elected in November will also have the opportunity to amend this budget language if expansion is not approved and implemented by the Commission before the start of the next legislative session.

The Williams Mullen Government Affairs team continues to talk to members of the Governor’s staff as well as members of the General Assembly to learn more details about the possibility of Medicaid reforms and expansion moving forward, what specific changes are being considered and when reforms and expansion would occur if agreements can be reached. The team welcomes any specific questions you may have or ideas for reform.


Virginia’s decision to have a federal exchange but conduct plan management functions

(HB1769 - http://lis.virginia.gov/cgi-bin/legp604.exe?131+sum+HB1769 and

SB922 - http://lis.virginia.gov/cgi-bin/legp604.exe?131+sum+SB922)

Governor McDonnell declared to the federal Secretary of Health and Human Resources that Virginia opted to have a federal exchange and would not create either a state-based exchange or a partnership exchange.

However, the General Assembly did approve legislation stating that the Virginia Bureau of Insurance, a division of the State Corporation Commission (the SCC), should oversee the management of the plans that are a part of the federal exchange as the SCC now does in the commercial market. The SCC will enter into a memorandum of understanding with the appropriate federal agency that can allow the Bureau to approve and set rates for the plans within the federal exchange. In addition, the Bureau is authorized to certify, decertify, and recertify plans and the collection of data necessary to perform such functions.

Creation of a Joint Commission to oversee implementation of health reform

(HB2138 - http://lis.virginia.gov/cgi-bin/legp604.exe?ses=131&typ=bil&val=hb2138)

This legislation creates the Health Insurance Reform Commission (the Commission) as a legislative commission.

The Commission will be compromised of ten members, including eight legislative members and two nonvoting ex-officio members, the Secretary of Health and Human Resources and the Commissioner of Insurance. The Commission will be responsible for the following:

  • monitoring the implementation of the PPACA
  • determining whether Virginia should establish a state-run health benefit exchange and under what conditions
  • recommending what health benefits should be required to be included as essential health benefits provided under health insurance products offered in the Commonwealth
  • providing an assessment of the existing and proposed mandated health insurance benefits and providers
  • developing recommendations to increase access to health insurance coverage, ensure that the costs of health insurance coverage are reasonable, and encourage a robust market for health insurance products.

The Commission will expire on July 1, 2017. The measure eliminates the Commission on Mandated Health Insurance Benefits.

Legislation to conform Virginia law to PPACA requirements

(HB1900 - http://lis.virginia.gov/cgi-bin/legp604.exe?ses=131&typ=bil&val=hb1900 and

SB921 - http://lis.virginia.gov/cgi-bin/legp604.exe?ses=131&typ=bil&val=sb921)

This bill states that Virginia law should include:

  • premium rate restrictions on health benefit plans providing individual and small group health insurance coverage
  • prohibition of discrimination based on health status
  • the requirement that individual and small group health insurance coverage include the essential health benefits
  • a limit of the waiting periods for health plans offering group health insurance coverage to 90 days
  •  authorization for the SCC to establish geographic rating areas

There has been some discussion and speculation that the Governor may amend one of the bills to include language that the plans within the Exchange will not be required to provide coverage for abortions. This could lead to a debate during the reconvened session.

Legislation to regulate Health Insurance Navigators assisting individuals who are enrolling in plans within a heath exchange

(HB2246 - http://lis.virginia.gov/cgi-bin/legp604.exe?ses=131&typ=bil&val=hb2246 and

SB1261- http://lis.virginia.gov/cgi-bin/legp604.exe?ses=131&typ=bil&val=sb1261)

This legislation creates parameters under which navigators are able to advise people enrolling in plans within an exchange and ensures that they are not performing the duties of a licensed insurance agent.


Investigatory power of Attorney General as to Medicaid fraud

(SB1186 - http://lis.virginia.gov/cgi-bin/legp604.exe?ses=131&typ=bil&val=sb1186)

The language of this bill states that subpoenas issued by the Attorney General or his authorized representative during an investigation of providers of services under the State Medical Assistance Plan are excepted from provisions related to health records privacy and notice provisions (HIPAA) and that information developed during a civil investigation is privileged.

The health care attorneys of Williams Mullen worked through the Health Law Section of the Virginia Bar Association and in concert with various provider groups to explain how language within the bill that would have required fee-for-service Medicaid providers to bill Medicaid the lowest of the price paid by any other language.

Practitioners whose licenses have been suspended or revoked cannot practice until an appeals decision is made

(HB1791 - http://lis.virginia.gov/cgi-bin/legp604.exe?131+ful+HB1791ER)

This bill specifies that any practitioner whose license, certification, registration or permit is suspended or revoked by a health regulatory board of the Department of Health Professions is prohibited from engaging in practice in the Commonwealth pending appeal of the board's order.

Practitioners required to disclose information to patients about false positive Lyme disease tests

(HB1933 - http://lis.virginia.gov/cgi-bin/legp604.exe?131+ful+HB1933ER and

SB971 - http://lis.virginia.gov/cgi-bin/legp604.exe?ses=131&typ=bil&val=sb971)

This legislation requires the Department of Health, through its website and through written communication that it provides to practitioners, to inform patients who have undergone testing for Lyme disease that the test results are not perfect and that accuracy may vary. The Act expires in June 2015.

Interchangeable biosimilars legislation

(HB1422 - http://lis.virginia.gov/cgi-bin/legp604.exe?131+ful+HB1422ER and

SB1285 - http://lis.virginia.gov/cgi-bin/legp604.exe?ses=131&typ=bil&val=sb1285)

This legislation allows a pharmacist to dispense the interchangeable of a biosimilar once the FDA has licensed the product as interchangeable with the biological product (which has not yet been done by the FDA to date), so long as the pharmacist informs the patient that the interchangeable was substituted for the biosimilar and has informed the physician of the dispensing of the interchangeable within five business days of doing so. The pharmacist must also provide the patient with the retail cost of both the biosimilar and the interchangeable.

Ability of physicians or patients to decide that patients do not have to participate in pharmacy collaborative programs

(HB1501 - http://lis.virginia.gov/cgi-bin/legp604.exe?131+sum+HB1501)

This bill states that a patient who does not wish to participate in a collaborative procedure must notify the prescriber of his decision and provides that a prescriber may elect for a patient not to participate in a collaborative agreement by contacting the pharmacist or his designated alternative pharmacist or by documenting his decision on the patient's prescription.


A study of the possibility of health plans developing procedures to provide payment plans for individuals who take high cost prescription medications

This study, which originated as legislation but evolved into a study instead as directed by the patron of the bill through a letter to the Joint Commission on Health Care, directs the Joint Commission to study if and how insurers could develop payment plans for patients purchasing specialty tier drugs. It will also explore opportunities to expand the relationships between the Commonwealth and its pharmaceutical, insurance, specialty-tier safety net.

A study of the factors affecting the cost of health care and an examination of the impact of the PPACA on the cost of health care

(HJ 687 - http://lis.virginia.gov/cgi-bin/legp604.exe?131+sum+HJ687)

This study, which was proposed by the Virginia Chamber of Commerce, will be conducted by the Joint Commission on Health Care and will address:

  • promising policies, practices, and initiatives expected to help control health care costs while maintaining quality of care
  • factors considered to be the primary contributors to the increase of health care costs
  •  approaches undertaken in other states and countries to control health care costs
  •  the likely impact of federal PPACA provisions on the cost of health care

A study of potential shortages of physicians in the Commonwealth, including primary care but also specialty care physicians in the state and in regions throughout the state

(HJ689 - http://lis.virginia.gov/cgi-bin/legp604.exe?131+sum+HJ689)

This study will examine if a shortage of primary care physicians and specialty care physicians in particular regions exists. It will also look at the costs of medical education, and the effect of excessive malpractice insurance premiums, malpractice laws and caps, the shortage of nurses, and ancillary regulations such as the Certificate of Public Need.


84 #2c

Language to require the state employee health plan to implement a Medication Therapy Management program

This amendment modifies language adopted in Chapter Three regarding a Medication Therapy Management pilot program. The amended language instructs the Department of Human Resources to implement the pilot program

307 #6

Funding for the Center for Health Innovation

This amendment provides $800,000 from the general fund in the first year to the Center for Health Innovation for grants to organizations for projects that are designed to reduce the rising cost of health care. The language requires a report on the grants.

307 #7c

An increase in funding for private duty nurses

This amendment provides $754,854 from the general fund and $754,854 in matching federal funds in the second year to increase Medicaid reimbursement for private duty nursing services under the Technology Assisted (TECH) waiver by 5 percent. The TECH Waiver provides a community-based alternative to placement in an acute care hospital, long stay hospital or specialized care nursing facility. Eligible individuals include children and adults who are chronically ill or severely impaired, needing both a medical device to compensate for the loss of a vital body function and requiring substantial and ongoing skilled nursing care to avert further disability or to sustain their lives.

307 #8c

An increase in the reimbursement rate for Medicaid adult day health services

This amendment provides $667,902 from the general fund and $667,902 from matching federal Medicaid funds to provide a $10.00 per unit increase in the Medicaid waiver reimbursement rate for adult day health services. Adult day health care is a less expensive alternative to placement in a nursing facility for which these clients qualify. Providers of adult day health care report a gap of $18.13 per client per day between actual costs and Medicaid reimbursement, which must be made up through contributions from individuals, churches, corporations and foundations. This amendment will increase the statewide rate paid for Medicaid adult day health care services from $50.10/unit to about $60.10/unit in Northern Virginia and from $45.65/unit to about $55.65/unit in the rest of the state. A "unit" represents six or more hours in a day.


Establishment of a Medicaid Physician and Managed Care Liaison Committee

This amendment adds language directing the Department of Medical Assistance Services to establish a Medicaid Physician and Managed Care Liaison Committee to ensure access to quality, cost-effective care through the Medicaid program.


Establishment of a workgroup to improve the audit process for home and community-based services

This amendment adds language directing the agency to establish an ongoing work group to continue improving the home- and community-based utilization and review audit process in order to reduce the number of retractions that are subsequently overturned on appeal.

314 #4c

Evaluation and assessment of residents of Virginia’s Training Centers prior to closing

This amendment requires the Commissioner of the Department of Behavioral Health and Developmental Services (DBHDS) to evaluate the needs of individuals residing in Intellectual Disabilities Training Centers at least six months prior to the closure of such facilities. The survey is designed to assess the patients’ medical care treatment needs and the capacity of the community to address those needs. The Commissioner is required to provide quarterly reports on his findings beginning October 1, 2013.