Commenter:
Virginia Hospital & Healthcare Association
VHHA Comment Letter - Rehab Rate Methodology
September 25, 2026
Ms. Meredith Lee Policy Supervisor
Department of Medical Assistance Services 600 East Broad Street
Richmond, 23219
Re: Public Notice - Intent to Amend State Plan - Rehabilitation Hospital Reimbursement
Dear Ms. Lee,
On behalf of the Virginia Hospital & Healthcare Association (VHHA) and its member hospitals and health systems, we write regarding the Department of Medical Assistance Services’ (DMAS) August 27, 2026, Public Notice of Intent to Amend the Virginia State Plan for Medical Assistance concerning reimbursement for rehabilitation hospitals.
VHHA is deeply concerned about the lack of information and transparency accompanying this public notice. The notice states that DMAS intends to update the reimbursement methodology for rehabilitation hospitals “to provide more equitable reimbursement rates for each rehabilitation hospital relative to its total cost of services provided to Medicaid recipients” and that the change will be budget neutral. However, DMAS has not made available for public review the proposed reimbursement methodology, the data or assumptions underlying it, the calculations used to determine revised payments, or the anticipated impact on individual rehabilitation hospitals.
At the same time, the notice specifically solicits input from stakeholders and providers regarding the potential impact of the proposed changes. Providers are unable to offer meaningful comments on the impact of a reimbursement methodology that has not been disclosed.
VHHA strongly believes that Medicaid reimbursement methodologies and changes should be developed and implemented through a transparent process. Budget neutrality could mean that increases in reimbursement for some rehabilitation hospitals may be offset by reductions for others. Affected hospitals should have an opportunity to understand the methodology, review the underlying data, assess the financial impact, and provide informed feedback before the methodology is finalized or submitted for federal approval.
The General Assembly directed DMAS to update its reimbursement methodology to provide more equitable reimbursement relative to each rehabilitation hospital’s total cost of services provided to Medicaid recipients. Meaningful stakeholder review is important to determining whether the proposed methodology accomplishes that objective. Without access to the methodology and supporting information, stakeholders cannot assess whether the proposed approach appropriately treats similarly situated providers consistently, or produces the equitable distribution contemplated by the General Assembly.
Accordingly, VHHA respectfully requests that DMAS:
1. Publish the complete proposed reimbursement methodology, including the formulas, definitions, data sources, cost measures, base periods, and other assumptions used to calculate reimbursement;
2. Provide hospital-level modeling of the proposed methodology, including current reimbursement and projected reimbursement under the proposed methodology, so affected providers can understand the impact of the change to Base Operating rates and capital percentages and rates;
3. Explain how the proposed methodology implements the General Assembly’s direction, including how DMAS defines and measures each rehabilitation hospital’s “total cost of services provided to Medicaid recipients” and how budget neutrality will be achieved; and
4. Provide a meaningful opportunity for public comment after this information is released. At a minimum, DMAS should extend or reopen the comment period, so stakeholders have sufficient time to review the complete proposal and provide informed comments before the methodology is finalized or submitted to CMS; and
5. Provide a timeline for completion that allows for retroactive reimbursement changes to the beginning of SFY27.
VHHA supports the General Assembly’s objective of establishing equitable Medicaid reimbursement for rehabilitation hospitals. Our concern is not with that objective, but with attempting to solicit public comment on a material reimbursement change without providing the information necessary to evaluate it.
Transparency is particularly important when the proposal determines how limited Medicaid funding will be allocated among Virginia rehabilitation hospitals. Providers should not be asked to comment on, or ultimately be reimbursed under, a methodology whose underlying calculations and impacts are not available for review.
For these reasons, VHHA urges DMAS not to consider the current public comment period sufficient to satisfy meaningful stakeholder review of the proposed methodology. DMAS should publish the complete methodology and supporting analyses and then extend or reopen the comment period to provide affected hospitals and other stakeholders a meaningful opportunity to evaluate and respond to the actual proposal before DMAS moves forward with the State Plan amendment.
VHHA appreciates the opportunity to comment and respectfully asks DMAS to make the proposed methodology and supporting analyses publicly available and provide stakeholders an appropriate opportunity to review and comment on that information before moving forward with the State Plan amendment.
Sincerely,
Sean T. Connaughton
President & CEO Virginia Hospital & Healthcare Association
