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Building and Transforming Coverage, Services and Supports for a Healthier Virginia Approval Period: August 1, 2026 through December 31, 2031 Page 38 of 51

iii. Changes in federal statute or regulations, not directly associated with Medicaid, which impact expenditures; iv. State legislated or regulatory change to Medicaid that significantly affects the costs of medical assistance; v. When not already accounted for under Emergency Medicaid 1115 demonstrations, cost impacts from public health emergencies; vi. High-cost innovative medical treatments that states are required to cover; or, vii. Corrections to coverage/service estimates where there is no prior state experience (e.g., SUD) or small populations where expenditures may vary widely. c. Budget Neutrality Update. The state must submit an updated budget neutrality analysis with its adjustment request, which includes the following elements: i. Projected without waiver and with waiver expenditures, estimated member months, and annual limits for each DY through the end of the approval period; and, ii. Description of the rationale for the mid-course correction, including an explanation of why the request is based on changes to the state’s Medicaid expenditures that are unrelated to the demonstration and/or outside the state’s control, and/or is due to a new expenditure that is not a new demonstration-covered service or population and that is likely to further strengthen access to care.

XI. MONITORING BUDGET NEUTRALITY FOR THE DEMONSTRATION

56. Monitoring Budget Neutrality for FFCY. CMS has determined that FFCY demonstration coverage is budget neutral based on CMS’s assessment that the expenditure authority granted for the demonstration has minimal federal Medicaid expenditures and these populations could have been covered through waiver only authority. The state will not be allowed to obtain budget neutrality “savings” from FFCY demonstration coverage. The demonstration will not include a budget neutrality expenditure limit for FFCY; however, the state is required to report total expenditures and member months in their demonstration monitoring reports, per STC 35. The state must still report quarterly claims and report expenditures on the CMS 64.9 WAIVER form. Failure to report FFCY expenditures and member months will result in reinstatement of the budget neutrality requirement. CMS reserves the right to request budget neutrality worksheets, requirements, limits, and analyses from the state at any time, or whenever the state seeks a change to the demonstration, per STC 7.

57. Limit on Title XIX Funding. The state will be subject to limits on the amount of federal Medicaid funding the state may receive over the course of the demonstration approval. The budget neutrality expenditure limits are based on projections of the amount of FFP that the state would likely have received in the absence of the demonstration. The limit consists of one or more Hypothetical Budget Neutrality Tests, as described below. CMS’s