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    Document Summary
    - Report Published -

    Senate Document No. 22

    Document Title
    A Review of Selected Programs in the Department of Medical Assistance Services

    Joint Legislative Audit and Review Commission

    Enabling Authority
    SJR 441 (Regular Session, 2001)

    Executive Summary
    Senate Joint Resolution (SJR) 441 from the 2001 General Assembly Session directs JLARC to conduct an evaluation of the development, management, utilization, and funding of the health and mental health services provided through the Department of Medical Assistance Services (DMAS). This resolution reflected legislative concern about the effectiveness and efficiency of DMAS' management of the Medicaid program and other State programs.

    DMAS administers the State's Medicaid plan, certifies provider eligibility, and makes payments to Medicaid providers for services rendered to individuals eligible for Medicaid. In FY 2000, DMAS expended $2.7 billion for medical care services to more than 600,000 recipients, including low-income children and individuals, pregnant women, and individuals who are aged, blind, or disabled. In addition to administering Medicaid, DMAS administers a number of other State programs, including the Indigent Health Care Trust Fund, the State and Local Hospitalization Program, the Involuntary Mental Commitment Program, the Health Premium Assistance Program for HIV-Positive Individuals, Regular Assisted Living Payments for residents of adult care residences, and the Virginia Family Access to Medical Insurance Security Plan Trust Fund.

    This report focuses on four program areas that require immediate review because they are in a period of transition or because of escalating costs. These programs are: the child health insurance program, the mental retardation waiver program, the nonemergency transportation program, and the pharmacy program.

    Based on the review of the four programs, JLARC staff found that DMAS' development, implementation, and management of programs have been hindered to some extent by inconsistent direction from the leadership at DMAS and by the agency's overall lack of clear, consistent, and timely communication with consumers, families, providers, and legislators. Since 1997, there have been five different Medicaid directors, and each has had a different view on how programs should be developed. Historically, DMAS has not sought external input to the development or revision of health and mental health policies and services unless directed to do so by outside sources (such as by the General Assembly or the Secretary of Health and Human Resources). This report recommends that DMAS provide a status report to the General Assembly on all four programs and how it has implemented the JLARC recommendations prior to the 2003 session.

    The primary findings of this report for each of the four programs include:

    • Virginia's newly implemented child health insurance program, known as Family Access to Medical Insurance (FAMIS), eliminated some critical obstacles to enrollment associated with the Children's Medical Security Insurance Program (CMSIP), but appears to have created some new program design and operational issues. The key problems are that 4,006 former CMSIP children have dropped from the FAMIS rolls, 2,049 families (representing 3,270 children) are scheduled to lose FAMIS coverage for failure to pay the initial monthly premiums, and 40 percent of families with children enrolled in FAMIS also have children enrolled in Medicaid. Overall, the child health insurance enrollment figures have lagged behind all projections, and the State has forfeited more than $55 million in federal dollars. As of October 2001, DMAS has not spent any of the allotments for FFY 2000 and FFY 2001. Virginia is ranked 40th out of 50 states for expenditures made as a percent of the State's federal allotment.

    • The mental retardation waiver program has been in a state of flux for the last year and a half due to legislative and State-level management changes. Contrary to legislative intent, DMAS assumed all policy development and management activities of the waiver, which caused the denial or delay of needed MR waiver services. An underlying problem, however, has been DMAS' poor communication with other State staff, task force members, consumers, and legislators. The management of the MR waiver slots has now been returned to the local level. Recently, the administration announced plans to provide funding for an additional 150 waiver slots, but this is not adequate to address the needs for 1,666 persons on the waiting list who currently need services.

    • The new transportation brokerage system appears to be an appropriate model for providing non-emergency transportation for recipients to medical care. It will enable the Commonwealth to avoid cost increases of $56 million dollars over the next two years (based on the difference between projected increases using historical cost data and contract costs). However, the implementation of the new service was problematic because the contractor responsible for a majority of the State did not have enough transportation providers, phone lines, or staff, and routine transportation visits were not scheduled prior to the start-up date. While DMAS should have delayed implementation of this program until the contractors were ready, it is now addressing current concerns with the program.

    • DMAS currently has in place most of the common strategies for controlling pharmacy costs, but many are less restrictive than other state's Medicaid programs. Based upon a broad review of how DMAS' strategies compare with other state Medicaid programs, three improvements to achieve additional cost savings were identified: improve the prior authorization process, lower pharmacy reimbursement rates, and improve the recovery of third party payments.