By Seth McLaughin

RICHMOND– A sizable slice of Virginia’s new two-year budget could depend more on lawmakers inside Congress than their counterparts inside Virginia’s Capitol.

That’s because the enhanced Medicaid match provided to the states through the federal stimulus program is scheduled to  expire on Dec. 31, 2010 – the middle of Virginia’s fiscal year.

Congress raised the federal matching funds – known as the Federal Medicaid Assistance Percentage or FMAP — to help states bear the cost of the recession and handle additional people on the rolls of Medicaid, the joint federal-state health care program for the poor and disabled.

The basic thinking: As unemployment rose, Medicaid rolls would follow. And they have.

“We still are in a recession, a very deep recession and the unemployment rate has not improved in a substantial way, and we are still getting more people on the Medicaid roll,” said Joy Johnson Wilson, health policy director at the National Conference of State Legislatures (NCSL). ”If the money doesn’t come through, most states will have to do some fairly big reductions in Medicaid.”

That’s why Congress is considering extending the program through June 30, 2011, which for Virginia and many other states marks the end of the fiscal year. As a result, state lawmakers across the country are scrambling to figure just how much, if any, money they can count on getting from the federal government.

“We hope it will come in,” said Gov. Robert F. McDonnell, a Republican. “It will be a significant help to us in the next six months in Virginia.”

With less than a week left before their scheduled March 13 adjournment, Virginia lawmakers are cautiously optimistic that Congress will extend the enhanced  FMAP through June 30, 2011. But they might not know for sure until after they ink the biennial budget, which begins July 1.

That has served as a part of the backdrop to the budget conversations this week where lawmakers argued over the basic revenue assumptions they will use to carve out a budget that covers the projected $4.2 billion budget shortfall and pay for the basic government services such as education and public safety.

Without the cash infusion, the current House and Senate budget proposals would slash about $1 billion in Medicaid funding, says Laurens Sartoris, president of the Virginia Hospital and Health Association. Sartoris said the proposed cuts are wide-ranging, but similar.

However, the plans for the possible influx of increased FMAP dollars —  an estimated $320 million in Virginia –  are worlds apart. The disagreement could impact how care is paid for, how a patient receives care and the level of quality in access over the next two years.

The House wants to use a piece of the additional funds to reverse a proposed income eligibility cap for Virginia’s Family Access to Medical Insurance Security (FAMIS), the state’s health insurance program for children. The remaining money — estimated to be about $294 million – would go to one-time expenditures, including money for higher education, a 3 percent bonus for state employee and $100 million for community revitalization projects in southwest Virginia.

The Senate plan uses the money to restore proposed Medicaid cuts. They say that would allow the state to receive another federal Medicaid match somewhere in the ballpark of $300 million.

Sartoris said the Senate plan would limit Medicaid cuts to about $373 million, while the House plan would equate to about $978 million in cuts.

“[House lawmakers] have taken the FMAP anticipated to come in and spent it for all types of things other than health care,” said Sen. Edward Houck, D-Spotsylvania. “We’ve taken those same dollars and applied them to hospitals, nursing homes and doctors, thereby getting the federal match.”

Asked whether it is smart to use the one-time infusion of money on Medicaid, Houck said, “If you have doctors, dentists and other providers who simply stop taking Medicaid patients because the funding is so low, you are going to increase the rolls of those who have no access to health care.

“This is a pretty critical time and at least it gives us a funding mechanism — a dollar-for-dollar match with federal dollars –  that we can at least go that far for this length of time,” he said.

Del. M. Kirlkland Cox, R-Colonial Heights, defended the House plan.

“We just felt like the majority of our actions on FMAP should be one-time and they disagree,” said Cox, the the top Republican on the Appropriations Committee. “The problem we see with that is that FMAP is one-time money.”

He suggested that by relying on a one-time cash infusion, the Senate plan could saddle the state with Medicaid costs that it may not be able to handle in the future.

“What do we do in 2013-2014 when we don’t have that money anymore?” he said. “It just builds the base too much. Even if you are right in getting the FMAP money, you’re still in trouble because you fall of the cliff later on.”

Wilson, of the National Conference of State Legislatures, said that is a legitimate concern.

“We have to hope that we are going to come out of this recession,” she said. “Traditionally states come out of the recession 12-to-18 months after the federal government, but none of us are coming out yet. So this doesn’t bode well. We are in unchartered waters.”

Then she added, “I would not want to be a legislator and have to make those calls.”