LEGAL NOTICE

COMMONWEALTH OF VIRGINIA

DEPARTMENT OF MEDICAL ASSISTANCE SERVICES

NOTICE OF INTENT TO AMEND

(Pursuant to §1902(a)(13) of the Act (U.S.C. 1396a(a)(13))

THE VIRGINIA STATE PLAN FOR MEDICAL ASSISTANCE

This Notice was posted on August 26, 2026

The Virginia Department of Medical Assistance Services (DMAS) hereby affords the public notice of its intention to amend the Virginia State Plan for Medical Assistance to provide for changes to the Methods and Standards for Establishing Payment Rates — In-Patient Hospital Care (12 VAC 30-70). 

This notice is intended to satisfy the requirements of 42 C.F.R. § 447.205 and of § 1902(a)(13) of the Social Security Act, 42 U.S.C. § 1396a(a)(13).  A copy of this notice is available for public review from Meredith Lee, DMAS, 600 Broad Street, Suite 1300, Richmond, VA  23219, or via e-mail at: Meredith.Lee@dmas.virginia.gov. 

DMAS is specifically soliciting input from stakeholders, providers and beneficiaries, on the potential impact of the proposed changes discussed in this notice.  Comments or inquiries may be submitted, in writing, within 30 days of this notice publication to Meredith Lee and such comments are available for review at the same address.  Comments may also be submitted, in writing, on the Town Hall public comment forum attached to this notice.

This notice is available for public review on the Regulatory Town Hall (https://townhall.virginia.gov) on the General Notices page, found at:  https://townhall.virginia.gov/L/generalnotice.cfm

In accordance with the 2026 Appropriations Act, DMAS will be making the following changes:

Methods & Standards for Establishing Payment Rates-In-Patient Hospital Care (12 VAC 30-70)

• Item 291.JJ.10: The state plan is being revised to make supplemental payments through an adjustment to the formula for indirect medical education (IME) reimbursement, using managed care discharge days, for an acute care hospital system whose Virginia hospitals are located entirely in planning districts 1, 2, and 3, upon the execution of affiliation agreements with public entities that are capable of transferring funds to the department for purposes of covering the non-federal share of the authorized payments.

The expected increase in annual fee-for-service aggregate expenditures is $28,492,410 in federal funds in federal fiscal year (FFY) 2027 and in FFY 2028. The expected non-federal share will be $7,733,548 in FFY 2027 and in FFY 2028.  

• Item 291.JJ.11a-b: The state plan is being revised to make supplemental IME payments for managed care services for private teaching hospitals that have executed affiliation agreements with public entities that are capable of transferring funds to the Department for purposes of covering the non-federal share of the authorized payments.

The supplemental indirect medical education payments for managed care services shall be based on the Medicare formula using total residents reported to the Department annually by the hospital prior to the beginning of the fiscal year for the resident to bed ratio applied to managed care hospital payments reported to the Department through the encounter system adjusted to cost minus IME payments for managed care services currently authorized. The Department shall calculate these supplemental indirect medical education payments prior to the beginning of the fiscal year based on the most recently available data and these payments shall be final.

The expected increase in annual fee-for-service aggregate expenditures is $15,733,656 in federal funds in federal fiscal year (FFY) 2027 and in FFY 2028. The expected non-federal share will be $6,880,560 in FFY 2027 and in FFY 2028.  

• Item 291.JJ.14: The state plan is being revised to make supplemental payments through an adjustment to the formula for IME reimbursement, using managed care discharge days, for an acute care hospital chain with a level two trauma center in the Peninsula EMS region in 2023, upon the execution of affiliation agreements with public entities that are capable of transferring funds to the department for purposes of covering the non-federal share of the authorized payments. The level of these additional IME supplemental payments may be up to the amounts supported by the formula applicable to Type One hospitals.

Item 291.JJ.14: The expected increase in annual fee-for-service aggregate expenditures is $29,754,471 in federal funds in federal fiscal year (FFY) 2027 and in FFY 2028.  The expected non-federal share will be $10,118,719 in FFY 2027 and in FFY 2028.  

Public entities that are capable of transferring funds to the department for purposes of covering the non-federal share of the authorized payments related to Items 291.JJ.10, 291.JJ.11a-b, and/or Item 291.JJ.14 would enter into an Interagency Agreement with the department for this purpose. Public entities are authorized to use general fund dollars to accomplish this transfer. The funds to be transferred must comply with 42 CFR 433.51 and 433.54. As part of the Interagency Agreements the department shall require the public entities to attest to compliance with applicable CMS criteria. The department shall also require any private hospital and related health systems receiving payments to attest to compliance with applicable CMS criteria. In addition, the non-federal share of the agency’s administrative costs directly related to administration of the programs, including staff and contractors, shall be funded by participating public entities.

• Item 291.JJ.12: The state plan is being revised to add qualified charitable contributions as a source for the non-federal share of enhanced indirect medical education reimbursement for teaching hospitals affiliated with Virginia Tech Carilion School of Medicine. 

There are no expected increases or decreases in annual fee-for-service aggregate expenditures in federal fiscal year 2027 or in federal fiscal year 2028.