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expenditures on those services. When evaluating budget neutrality, however, CMS does not offset non-hypothetical expenditures with projected or accrued savings from hypothetical expenditures; that is, savings are not generated from a hypothetical

population or service. To allow for hypothetical expenditures, while preventing them

from resulting in savings, CMS currently applies separate, independent Hypothetical Budget Neutrality Tests, which subject hypothetical expenditures to pre-determined limits to which the state and CMS agree, and that CMS approves, as a part of this demonstration approval. If the state’s WW hypothetical spending exceeds the Hypothetical Budget

Neutrality Test’s expenditure limit, the state agrees (as a condition of CMS approval) to offset that excess spending through savings elsewhere in the demonstration or to refund

the FFP to CMS. 62. Hypothetical Budget Neutrality Test: SUD #1 and SMI/SED #2. The table below identifies the MEGs that are used for Hypothetical Budget Neutrality Test. MEGs that are designated “WOW Only” or “Both” are the components used to calculate the budget neutrality expenditure limit. The Composite Federal Share for the Hypothetical Budget Neutrality Test is calculated based on all MEGs indicated as “WW Only” or “Both.” MEGs that are indicated as “WW Only” or “Both” are counted as expenditures against this budget neutrality expenditure limit. Any expenditures in excess of the limit from Hypothetical Budget Neutrality Test are counted as WW expenditures under the Main Budget Neutrality Test. Table 5. Hypothetical Budget Neutrality Test WOW PC |} Only, or | WW | Trend MEG Ag | Only, | Rate DY 13 DY 14 DY 15 DY 16 DY 17 DY 18 g* or Both SsuD PC | Both | 6.0% | $4,507.63 | $4,697.57 | $4,979.42 | $5,278.19 | $5,594.88 | $5,930.57 SMI/SED | PC | Both 5.0% | $6,755.97 | $6,993.96 | $7,344.15 | $7,711.87 | $8,097.46 | $8,502.33 63. Composite Federal Share. The Composite Federal Share is the ratio that will be used to

convert the total computable budget neutrality limit to federal share. The Composite Federal Share is the ratio calculated by dividing the sum total of FFP received by the state

on actual demonstration expenditures during the approval period by total computable

demonstration expenditures for the same period, as reported through MBES/CBES and summarized on Schedule C. Since the actual final Composite Federal Share will not be known until the end of the demonstration’s approval period, for the purpose of interim

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

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