Virginia emergency physicians urge General Assembly and Gov.-elect Youngkin to remove ER penalty budget item

Plus: What VACEP and our allies can do about it (see bottom of article)

It is disappointing to see that despite a huge surplus in the Medicaid program, Governor Ralph Northam’s introduced 2022-2024 biennial budget preserves a harmful policy that improperly penalizes emergency physicians and frontline healthcare professionals who have been providing care to all Virginians, including Medicaid patients.

Despite a similar policy being removed from the Virginia budget a few years ago due to being at odds with state and federal law, this policy was enacted at the urging of Medicaid managed care organizations and enacted during the COVID-19 budget uncertainty.

For the past two years, Virginia’s budget has inappropriately and automatically cut Medicaid reimbursements for emergency department visits that are on a list of 790 diagnoses. This diagnosis list was created to identify high-risk patients that health insurance managed care organizations should focus on to avoid unnecessary ER visits, not penalize emergency departments. Most of these are common and acute diagnoses that can be medically serious and life-threatening, and emergency physicians cannot and should not turn these patients away without providing appropriate evaluation and care. Based solely upon the patient’s final diagnosis, if the condition falls on the list, Virginia cuts Medicaid reimbursements to a paltry $15.45 per visit (see the list of diagnoses).

This policy is wrong and fundamentally flawed on several levels. It: 

• Threatens access to emergency care for low-income Virginians, most of whom already struggle with access to care issues

• Penalizes emergency physicians, emergency department staff, and hospitals by $40 million every year in state and federal dollars for patients they are required to see by law

• Is at odds with federal law requiring emergency departments to treat all patients seeking care

• Runs counter to guidance from the U.S. Centers for Medicare & Medicaid Services, stating that no claim for payment of a service rendered in the emergency department can be denied, in whole or in part, based solely on the final diagnosis

• Is inconsistent with Virginia’s Medicaid managed care contract, which bars retroactive claim denials for emergency medical conditions

• Penalizes healthcare providers to the financial benefit of Medicaid managed care organizations, many of which saw record profits during the pandemic

With Virginia currently enjoying a significant Medicaid surplus, the ER penalty in Virginia’s budget is not only fiscally unnecessary, but shows an astounding level of disregard for the frontline physicians and teams who have battled the COVID-19 pandemic for nearly two years.

We are encouraged by the House Republican Caucus leadership statement saying the budget will be “reviewed and revised” in coming months.

We urge the incoming General Assembly and Governor-elect Glenn Youngkin to remove from the state budget this needlessly punitive provision whose continued presence only serves to weaken our health care system and harm quality patient care.

So, what are our next steps to getting the penalty removed?

1. 2022 General Assembly Session

The proposed budget heads to the legislature where it will be reviewed, amended and debated. We will propose amendments to remove the language yet again in the House and Senate.

2. CMS Review of VA’s Medicaid State Plan Amendment (SPA)

The “Downcoding Provision” program began in July 2020 without CMS approval, as was allowed by the state. But we believe CMS may have grounds to reject the program as it violates applicable federal law, regulations, and CMS guidance. We are approaching the home stretch for this process, which started in September 2020. After 18 months of back-and-forth between the Virginia Department of Medical Assistance Services, CMS, and a half-dozen letters from VACEP and our partners, we had one final call with CMS this week. We learned CMS has to deny or approve the SPA by January 4. We remain cautiously optimistic they will rule in our favor, especially since the decision will have far reaching, national significance.

3. Lawsuit

VACEP also filed a federal suit in August 2020 asking a judge to end the program. The court dismissed the case. We filed an appeal. We continue to check on this process, but there are no timelines at the moment. Oral arguments occurred in March 2021.