RD542 - Report of the Veterans Care Center Workgroup – November 15, 2020

Executive Summary:

The Commonwealth of Virginia operates two Veterans Care Centers (VCC) and is building two additional VCCs. These VCCs provide skilled nursing care for Virginia’s veterans. Chapter 1289, 2020 Acts of the Assembly, directed the Secretary of Veterans and Defense Affairs and the Secretary of Finance to oversee the development of business plans for operations at all four VCCs. Chapter 1289 also instructed the Secretaries to submit reports to the Chairs of the House Appropriations and Senate Finance and Appropriations Committees no later than November 15, 2020.

To meet this requirement, the Secretaries convened a workgroup with representation from staffs of the Secretary of Veterans and Defense Affairs and the Secretary of Finance, and a variety of agencies. Agency representatives included leadership and staff from: the Department of Veterans Services, Department of Planning and Budget, Department of Medical Assistance Services, staff from the House Appropriations Committee and Senate Finance and Appropriations Committee, members from the Board of Veterans Services (BVS), including Legislators who are members of the BVS, and the Chairman of Joint Leadership Council of Veterans Service Organizations (JLC).

Virginia currently has two operating VCCs, also known as State Veterans Homes (SVH); one is located in Richmond near McGuire VA Medical Center and one is in Roanoke, near Salem VA Medical Center. Two new care centers are under construction in Fauquier County near the Vint Hill area and in Virginia Beach, near the Municipal Center.

The care centers operate as symbols of Virginia’s commitment to veterans by providing holistic care that focuses on resident physical and mental health, while serving the greatest amount of veterans. Care includes skilled nursing, Alzheimer’s care, rehabilitation, and domiciliary care (assisted living – Roanoke only). Hundreds of employees staff the care centers 24 hours a day, 7 days per week. They provide a full range of services that includes medical care, pharmacy, dietary, housekeeping, therapy, social services, and transportation. To receive care at a VCC, a resident must be an honorably discharged veteran with a medical need for this level of care, and have an eligible payer source.

More than a dozen federal, state, and local agencies regulate State Veterans Homes and several funding sources reimburse costs for care center operations and capital improvements. The care centers do not receive General Fund appropriations for their operations, but rely on a combination of private pay, Medicaid, Medicare, and US Department of Veterans Affairs reimbursements.

The existing VCCs typically operate with a small revenue surplus that enables them to fund maintenance and small capital improvements once the costs of daily operations are covered. This surplus is also vital to a care center absorbing perturbations in census, and they can to some degree, help a VCC weather small-scale, more drastic events. To undertake larger capital improvements, the VCCs request grants from the U.S. Department of Veterans Affairs for a portion of the costs and then fund the remaining costs through state capital funding or facility operational cash reserves. One care center is waiting for the VA to release funds to start a capital improvement project; VDVS requested grant federal funding for four additional projects at the existing VCCs, with state capital funding and facility reserves committed for a portion of the projects.

As construction nears completion at the two new care centers in FY 22, they will begin hiring staff to care for the residents. This process starts eight months prior to opening. Each facility will obtain certification (Medicaid, Medicare, VA) in the first two months of operation, after which they will be able to step up the census from six to 128 (maximum capacity at each new care center). The estimated time to reach full census (95% occupancy or higher) is 17 months while the operating break-even point should occur 19 months from opening. Therefore, each new care center will require supplemental funds for their first 27 months of operations.

During the workgroup process, the Department of Medical Assistance Services identified potential additional Medicaid revenue that would require a language change to Virginia Code. VDVS submitted that requested change as part of a language-only decision brief for FY 2022 budget actions.

The current plan to provide supplemental funds to support initial operations at the two new care centers through working capital advances (WCA) will allow the new VCCs to be up and operating at full occupancy within approximately two years. Based upon the experiences of the two existing VCCs, it will take some amount of time until those VCCs are financially healthy enough to begin substantial, if any, repayment of that WCA. Therefore, this workgroup recommends proceeding as planned and reassessing the business plans when the new care centers have had a substantial amount of time operating at full occupancy.