Before the Virginia legislature approved its two-year state budget on June 21, lawmakers in the state Senate and House gave SNFs what one stakeholder termed a “major victory” when it included a three-year delay on rebasing and $70 million for SNFs in the budget.

The issue was subject to analysis by Jay Gormley, chief investment officer and COO, Advisory, Zimmet Healthcare Services Group, who said a three-year delay in rebasing is not a bad thing for SNFs in this case.

“Much of this dynamic is the result of the intersection between Virginia's transition from RUGs to PDPM and the sharp decline in direct care costs that occurred as providers reduced their reliance on agency staffing,” he said.

The most recent rebasing year captured a period when agency utilization and labor costs were artificially elevated due to pandemic-related workforce shortages.

“Above and beyond any additional funding ultimately included in the budget, we continue to believe the transition to PDPM will place upward pressure on rates over time as coding accuracy improves across the state,” Gormley continued.

The rates published in September/October 2025 reflected baseline acuity levels derived from MDS assessments completed before many providers fully understood the new system or began focusing on documentation and coding accuracy, the analysis said.

Accuracy Rises

Gormley said in nearly all states that have transitioned to PDPM-based Medicaid reimbursement, providers have become progressively more proficient at identifying, documenting, and accurately coding resident acuity.

“As operational teams gain experience, rates tend to increase as the system more accurately captures the clinical complexity of the population being served. We expect that trend to continue in Virginia. Because Virginia operates a day-weighted system in which each resident classification carries its own specific reimbursement value, improvements in coding accuracy should continue to drive average rates upward over time, independent of any additional state funding,” he said.

Taken together, Virginia should be viewed as a strong Medicaid state. The combination of PDPM maturation, improving coding accuracy, and the potential for future funding enhancements should continue to support rate growth over the medium term, even if the rebasing timeline is extended, Gormley said.

Comments or questions on this article? Please contact Patrick Connole at pconnole@parkplacelive.com.