The General Assembly commissioned this study because Virginia Medicaid reimbursement for these facilities has not been inflated since 2008 and has not changed since 2011. Current regulations do not require annual inflation adjustments to these facilities’ rates unlike other institutional providers (e.g., hospitals, nursing facilities). Psychiatric Residential Treatment Facility (PRTF) enrollment in Medicaid has increased from 30 providers in State Fiscal Year (SFY) 2014 to 32 providers in SFY 2018.

The Department of Medical Assistance Services (DMAS) reviewed cost data for current providers for SFY 2018 to determine the adequacy of current rates in meeting providers’ costs. DMAS analyzed current rates and cost data from 19 in-state providers. Options for rate changes included: eliminating the statewide maximum rate, maintaining the maximum rate, and developing a statewide maximum rate based on the median cost per day or weighted average cost per day. The fiscal impact of potential rate changes for these providers ranges from $10.9 million to $22.7 million in Total Funds ($5.4 million to $11.4 million in General Funds).