Virginia Localities Continue to Oppose, Reject State’s Medicaid Loophole Plan

A lack of local support is causing Virginia Gov. Jim Gilmore's (R) plan to obtain $259 million through the Medicaid loophole to "disintegrat[e]," the Richmond Times-Dispatch reports (Fischer et al., Richmond Times-Dispatch, 10/25). Under the loophole, states pay city- or county-owned care facilities more than the actual cost of health services, receive additional matching funds from the Centers for Medicare and Medicaid Services and then require the facilities to return the extra state funds. The states sometimes pay the facilities a small fee for participating, and use the extra federal funds for both health and non-health programs. In January, federal officials issued final rules to close the loophole gradually; following a 60-day delay on implementation ordered by President Bush, the regulations took effect in mid-March (Kaiser Daily Health Policy Report, 10/10). Under Gilmore's plan, seven state localities were asked to provide the state with funding, which would be returned to the localities in the form of Medicaid payments. However, only two "small" localities -- Bedford County, Va., and Petersburg, Va. -- have agreed to the deal. The full cost of the state's "loan and payback" plan will exceed $500 million, a total that Bedford County and Petersburg cannot afford to finance alone. The Times-Dispatch reports that "ethical concerns" about the plan have "sparked a revolt" among the localities asked to participate. Local administrators in both Prince William County and Norfolk have "officially" opposed the loophole plan and Orange County officials have indicated they will vote against participation. Also, a majority of the members of Richmond's city council have said they will vote against participation. Three of the five members of the Chesterfield County Board of Supervisors have also said they would oppose the plan, even though they voted in favor of it earlier this year (Richmond Times-Dispatch, 10/25). While the Chesterfield Board of Supervisors had voted in favor of the plan, the commission that operates the county's public nursing home, Lucy Corr Village, has opposed it. Members of the nursing home board said they will resign if the county accepts the state plan (Kaiser Daily Health Policy Report, 10/24).

Candidates Weigh In
The state's gubernatorial candidates have also addressed the Medicaid loophole plan. Democratic candidate Mark Warner said the plan was "questionable," adding that the he thought the federal government would close the loophole before it could be used. However, David Botkins, a spokesperson for Republican candidate Mark Earley, said the state should obtain the extra money "as long as it goes to health care and the needs of seniors" (Whitley, Richmond Times-Dispatch, 10/25). According to state Health and Human Resources Secretary Louis Rossiter, the Gilmore administration has "no specific plan for the money," adding that the loophole funds will be "available" to the governor and state General Assembly when they consider budget amendments later this year (Fischer et al., Richmond Times-Dispatch, 10/25). For further information on state health policy in Virginia, visit State Health Facts Online.