RD835 - Analysis of the Impact of Merging the Children’s Medical Assistance Programs – November 1, 2021

Executive Summary:

In addition to the state’s Medicaid program for children, Virginia also operates a State Children’s Health Insurance Program (S-CHIP) called Family Access to Medical Insurance Security (FAMIS). States have the option to enroll their CHIP populations in the Medicaid children’s program while retaining the enhanced CHIP federal reimbursement rate. In FY2003, Virginia moved part of the FAMIS population to CHIP-funded Medicaid—also called M-CHIP. Today, just over half of the state’s CHIP children are in the M-CHIP group, while the other half remain in the separate FAMIS program.

As part of the process of merging Virginia’s Medicaid managed care programs as directed in the 2021 Appropriations Act, DMAS recommends that the remaining FAMIS population transition into CHIP-funded children’s Medicaid to create a unified Virginia Medicaid children’s program. This change would create administrative efficiencies and ensure equitable benefits and health care access for all children served in Virginia’s medical assistance programs. It would also enable the Commonwealth to collect sizeable federal drug rebates that are available through Medicaid but not CHIP.

Virginia would need to file a CHIP State Plan Amendment (SPA) and take legislative and regulatory steps to make this change. In addition, modifications to managed care contracts would be required. Changes would simplify and streamline the contracts by removing sections unique to FAMIS, allowing for one set of provisions governing a unified children’s program. Projecting an effective date of July 1, 2023, DMAS estimates the budget impact of this change at $806,351 GF ($1.8 million NGF) in FY23; $5.6 million GF ($10.4 million NGF) in FY24, and $3.8 million GF ($7.1 million NGF) in FY25 and beyond.