Virginia Medicaid agency selects auditor to review forecasting

Dr. Jennifer S. Lee, director of the Virginia Department of Medical Assistance Services. (Ned Oliver/Virginia Mercury)

As the House of Delegates prepares to consider adding a brand new agency with oversight over Virginia’s Medicaid forecasting in response to an unexpected half-a-billion dollar bill, the department currently responsible for Medicaid expenses is trying to fix problems its own way.

The Department of Medical Assistance Services has hired Milliman, a Seattle-based actuarial and consulting firm, to “conduct a top-to-bottom review of the agency’s forecasting and rate-setting processes over 60 days,” according to a news release.

In November, DMAS told lawmakers that the state would have to pay an unexpected $462.5 million in the biennium budget due, in part, to forecasting miscalculations.

The surprise bill frustrated some lawmakers, particularly Sen. Ryan McDougle, R-Hanover, who has submitted legislation this session that would create an independent state agency responsible for overseeing Medicaid forecasting and expenditure. The bill squeezed through the Senate earlier this week.

During committee hearings, some Democrats raised concerns over McDougle’s proposal, pointing to the plan DMAS already has in place to improve its forecasting.

Sen. Janet Howell, D-Fairfax, argued that the legislation is premature and that DMAS should have the opportunity to correct the errors first.

Hiring an auditor is one of the steps that DMAS’ director, Dr. Jennifer Lee, has outlined to address the forecasting problems. Milliman has worked with 20 other state Medicaid agencies and will compare Virginia’s processes against those used in at least five other states, “as well as internationally recognized best practices,” the news release states.

“Our agency is taking swift and decisive action to ensure that we have a sound financial structure in place to guide budgetary decisions,” Lee said in the release.

Milliman is due to lead the “comprehensive review” in early April, with a final report due later that month. The auditor’s recommendations will then be implemented by a new “internal cross-agency financial review unit,” according to the release run by the department’s new chief financial officer, Chris Gordon, who formerly worked for the Department of Health.

The new unit will be “responsible for continuous monitoring of the agency’s forecasting and rate-setting procedures to provide real-time evaluations of each step in the decision-making process and advanced notion of necessary adjustments,” the release states.