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    Document Summary
    - Report Published -

    House Document No. 5

    Document Title
    Technical Report: Review of the Medicaid Forecasting Methodology

    Joint Legislative Audit and Review Commission

    Enabling Authority
    SJR 143 (Regular Session, 1996)

    Executive Summary
    The Virginia Medical Assistance Program, more commonly known as Medicaid, is the largest health care financing program available to indigent persons in Virginia. It provides reimbursement for a variety of health care services on behalf of qualified indigent persons. Medicaid is also among the fastest growing segments of the State’s budget. In the past 10 years, Medicaid’s percentage of the general fund budget has grown from approximately six percent to almost 15 percent.

    Because approximately one out of every seven dollars that the State now spends is on Medicaid, legislative budgeting has become more dependent on reliable and accurate Medicaid expenditure forecasts. Legislative concern regarding the Medicaid forecasts themselves increased with the recent divergence between Medicaid forecasts generated by the Department of Medical Assistance Services (DMAS) and those generated by the Department of Planning and Budget (DPB). Consequently, House Joint Resolution 143 of the 1996 General Assembly Session directed JLARC to study “the current methodology used to forecast Medicaid expenditures.” Further, JLARC is directed to “make recommendations regarding the soundness and usefulness of the methodology for decision-making.”

    This report first provides a description of Medicaid expenditures, and how they are forecasted by DMAS and by DPB. Then it assesses the accuracy of the forecasts in past years. Finally, it evaluates the adequacy of the Medicaid forecast models and process.