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Virginia's Medicaid costs down $212M this year with expansion, but projected to rise $674M in 2-year budget

Expansion of Virginia’s Medicaid program helped lower the state’s costs by $212 million in the current fiscal year that began July 1, but the program’s expenses are expected to rise about $675 million in the next two-year budget that Gov. Ralph Northam will propose on Dec. 17.

The expected savings this year represent a reversal from a year ago, when a $462.5 million increase in the previous two-year forecast came as an unwelcome surprise to General Assembly budget leaders.

Most of the savings will come from lower enrollment in the most costly program for people in long-term care. Another key factor was reduced payments for uncompensated medical care because of Medicaid expansion under the Affordable Care Act that took effect on Jan. 1, state officials said in releasing the new two-year forecast on Monday.

The projected increase in Medicaid costs in the 2020-22 budget is driven primarily by expected increases in rates paid to managed-care companies. They suffered big losses last year, especially in the Commonwealth Coordinated Care Program for elderly and disabled Virginians with long-term care needs.

Expenditures for the $10 billion Medicaid program, shared by the state and federal governments, as well as private hospitals, are expected to grow just 1% in the current fiscal year, compared with the previous year.

“A lot of this has to do with expansion,” said Rob Chapman, Medicaid forecast manager at the Department of Medical Assistance Services.

The new forecast includes “a lot of positives,” said Senate Finance Committee Co-Chairman Emmett Hanger, R-Augusta, who reached a budget deal with House Appropriations Committee Chairman Chris Jones, R-Suffolk, to expand the program last year after a five-year political battle in the General Assembly.

The state has enrolled more than 331,000 people in Medicaid under the expansion, which reduces the state’s share of the cost for some patients, including people with serious mental illness and low-income parents, from 50% to 10%.

“I’ve been thinking as the dust settles on Medicaid expansion, some good things are out there,” Hanger said.

Managed-care companies

Chris Gordon, chief financial officer at the Medicaid office, estimated that six managed-care companies lost $268 million last year on services they provided under fixed, per-person monthly rates for serving people who need nursing home care and other expensive long-term services.

“In order to maintain access, we need to make sure rates are appropriate,” said Gordon, who was hired in February as part of a major overhaul of how the state estimates future Medicaid costs.

The new forecasting process, brought by the big increase in the off-year forecast a year ago, “does address confidence in the program,” Secretary of Health and Human Resources Dan Carey said Monday.

The $674.9 million, two-year projected increase in Medicaid costs includes an additional $174.4 million in the first year that also is built into a $500.5 million increase in the second. The Medicaid office issues a new forecast every two years for the governor to use in building a proposed budget, just as the Department of Education does for K-12 public school costs.

The new forecast is about $50 million above the 10-year average of $625 million, but Deputy Secretary of Finance Joe Flores said it represents “the lower bound” expected in the two-year forecast for the program.

It’s not clear whether the forecast meets the targets for limiting growth in Medicaid spending that the General Assembly included in the budget this year. The Joint Subcommittee on Oversight of Health and Human Resources recently informed Northam that it had set targets of 5.8% growth in the first year and 6% in the second. The state is required to inform the assembly money committees if growth in program costs will exceed the targets and, if so, why.

The new forecast exceeds the target for the first year at 7.2% growth, but that’s based on the lower cost in the revised projection for the current year. Based on last year’s forecast, the program’s cost is projected to grow at 3.2%, or almost half of the target rate. In the second year, program growth is projected at 5.9%, or just under the target.

Those targets do not include the cost of serving people under the expansion, which pushed the total number of people on Medicaid to about 1.3 million this year.

The federal government pays 90% of the cost of people who became eligible for Medicaid under the expanded eligibility guidelines in the Affordable Care Act, compared with 50% for those who qualified under Virginia’s previous, more stringent eligibility limits.

Private hospitals

Private hospitals are paying the state’s 10% share of the cost under a provider assessment that they hope to recover with payments for previously uninsured patients, as well as higher Medicaid reimbursement rates under a second assessment levied in the budget last year.

Hospitals are paying about $261 million for the state’s share of the $3 billion expansion this year. The new forecast expects the hospital share to increase to about $405 million of the $4 billion expansion cost in the second year of the next budget.

The Virginia Hospital & Healthcare Association is asking Northam to propose additional money for the Virginia Trauma Center Fund, which lost its primary source of revenue this year in a budget deal that ended the practice of suspending driver’s licenses for unpaid court fines and fees.

The budget inadvertently left an $11 million hole in the fund, which the association said is a “critically important source of funding” for Virginia’s 19 hospital trauma centers.

“Its purpose is to defray the costs of providing lifesaving emergency medical care to trauma patients and support the vast administrative infrastructure needed to provide such care,” the association told the governor and assembly budget leaders in a letter on Friday.

In addition to restoring money cut from the fund this year, the association asked Northam for a “more sustainable and robust revenue source.”

The provision that ended the practice of suspending driver’s licenses for unpaid costs will expire with the budget June 30 unless the assembly acts to prohibit it by statute or in the next budget.

127-room Residence Inn planned for western edge of Museum District - a few blocks from Carytown

A five-story Residence Inn by Marriott is being planned for the northwest corner of North Thompson Street and Floyd Avenue on the western edge of the Museum District just a few blocks from Carytown.

The 127-room extended-stay hotel would be built off the Floyd Avenue exit ramp from Interstate 195. The hotel, which also would have about 5,600 square feet of ground floor retail or restaurant space, would be across the street from the Patient First urgent care center.

A five-story parking deck would be built across Berrington Court just west of the hotel, close to I-195, where a surface parking lot exists now. The parking deck would have 193 spaces, 148 of which would be for the hotel, restaurant and retail uses while the remaining 45 spaces would be used by the existing property owner.

Henrico County-based KM Hotels has 10 parcels — or about 0.915 acre — under contract for the hotel and has signed a ground lease of 0.41 acre for the parking deck.

KM Hotels, which operates 19 hotels in five states including five properties in the Richmond area, filed a special use permit with Richmond on Monday for the hotel project. Richmond attorney Andrew M. Condlin with Roth Jackson Gibbons Condlin PLC filed the request.

“It is a unique location,” said Mayur Patel, the president and chief operating officer of KM Hotels.

The hotel is within walking distance of Carytown and the planned Carytown Exchange development, a 120,000-square-foot center that will include a Publix grocery story and 20 to 25 tenants for retail and restaurant space.

It also would be the closest hotel to the Virginia Museum of Fine Arts and the Virginia Museum of History & Culture, Patel said. Scott’s Addition, a growing neighborhood of new apartments, offices, breweries, cideries, restaurants and entertainment venues, isn’t that far away.

Doing a hotel development along the 1-mile stretch of West Cary Street in Carytown would be difficult, he said, because there is limited availability of parcels large enough for a hotel development.

“We felt this was the best option,” Patel said, noting the hotel’s close proximity to an exit ramp off I-195 as well as having an entrance ramp a couple blocks to the north.

The closest hotel to the area now is the Clarion Hotel Richmond Central on North Arthur Ashe Boulevard, a couple of blocks from The Diamond. Otherwise, there are hotels in downtown Richmond or farther west along West Broad Street, but none close to Carytown, the Museum District or Scott’s Addition.

If all goes according to plan, construction on the Residence Inn could start about a year from now and take about 18 months to two years to complete, Patel said.

The company has been negotiating a deal for the project for more than two years, he said.

Most of the dwellings along North Thompson Street, Floyd Avenue and Berrington Court were built in the late 1940s as single-family homes, but are now used as offices.

KM Hotels wants the exterior of the new hotel to mimic or blend into the area. “We have spent a lot of time on what the facade will look like,” Patel said.

Seven of the hotel’s guest rooms would be located on the ground floor. The remaining 120 guest rooms would be on the four upper floors — 30 rooms per floor. Plans call for a central courtyard in order to provide ample natural light for the rooms while also providing usable open space on the site.

The ground floor would have the front desk, fitness room, workspaces, meeting rooms and hotel management offices.

The restaurant and bar would be at Floyd Avenue and North Thompson Street and would have its own public entrance.


KM Hotels has other projects underway in the Richmond region.

It plans to build a nine-story hotel along the Kanawha Canal in downtown Richmond for an AC Hotel by Marriott, a relatively new high-end boutique brand by Marriott.

The 150-room hotel would be built on property that is now a surface parking lot between South 12th and Virginia streets, just south of the Kanawha Canal and across the canal from the historic Lady Byrd Hat building.

The project would include about 14 residential condos on the top two floors and a 4,000-square-foot rooftop restaurant.

Plans call for construction to begin during next year’s second quarter, pending approvals from the city. It would take about 18 months to two years to complete once work has begun.

In addition to that project downtown, KM Hotels is redeveloping a hotel property at 6531 W. Broad St., sandwiched between Altria Group’s corporate headquarters and a Home Depot. It had been used as a hotel for 45 years, including being the Holiday Inn-Fanny’s for three decades.

Plans call for tearing down the original four-story main hotel building closest to Broad Street. In its place, KM Hotels wants to construct a four-story office building housing its corporate offices, medical offices and some retail on the ground floor.

The seven-story tower, which was added to the rear of the property in 1980, would be completely renovated and turned into a 100-room La Quinta Inn & Suites.

In the Richmond area, KM Hotels owns the Hampton Inn & Suites on Glenside Drive just north of West Broad Street; the Candlewood Suites on Dickens Road; the Holiday Inn Express on Staples Mill Road across from Anthem’s offices; the Hampton Inn & Suites on Technology Park Drive near Virginia Center Commons; and a Red Roof Inn in Ashland.

The company is building a Residence Inn by Marriott, which should open in first quarter of 2020, on Glenside Drive in front of the Hampton Inn. The site had been the home of the Skilligalee seafood restaurant, which closed in 2013.

It also is developing a five-story Tru by Hilton hotel at state Route 54 and Interstate 95 in Ashland.

City Council, School Board members call for change to how Richmond awards school construction contracts

Some Richmond City Council and School Board members want the city to change its procurement methods after a report highlighting how much Richmond is spending to build three schools.

The Richmond Times-Dispatch published a story Sunday detailing how Richmond is spending $71 million to build two elementary schools while neighboring Chesterfield County is building three elementary schools for about $75 million. The cost per square foot for the city’s construction is significantly higher than Chesterfield’s, according to an analysis from the Virginia Contractor Procurement Alliance.

Richmond used a procurement method known as “construction manager at risk” that, while competitive, weighs cost at only 20% of a bid. Chesterfield — along with Henrico County — uses a competitive, sealed bid, which awards contracts to the lowest bidder.

“[Mayor Levar Stoney] and the city administration failed our public school kids, teachers, staff and parents,” said Kim Gray, who represents the city’s 2nd District on the City Council and is a frequent Stoney critic. “Because of their actions, a generation of 750 schoolchildren will not be getting a new school.”

Plans approved by the School Board in 2017 called for building five schools. Instead, just three are being rebuilt — thanks to $150 million from an increase to the city’s meals tax — and Woodville Elementary and George Wythe High remain open with no set plans for new construction. The cost to build the new schools, some of which are being built to larger capacities than the Chesterfield schools, was initially estimated at $110 million but has climbed to $146 million.

Lincoln Saunders, Stoney’s chief of staff, and Jim Nolan, the mayor’s spokesman, defended the decision Monday, saying it resulted in three new schools opening in the fall of 2020 when a different procurement method would have delayed the opening.

“We’re prioritizing kids over contractors,” Nolan said. “That’s why we did what we did.”

Said Saunders: “This is about getting kids into high-quality, 21st century learning environments as quickly as possible.”

Gray and others are calling for reform. At a news conference Monday outside Richmond City Hall, Gray said she would introduce an ordinance that would require competitive, sealed bids for the building of new schools. She said the plan would give “each contractor a fair shake.”

She was joined by 4th District City Council member Kristen Larson, 3rd District School Board member Kenya Gibson and members of the Virginia Contractor Procurement Alliance, among others. In 2018, Gray and Larson voted against the meals tax increase being used to pay for the new schools.

“This process failed to best serve our students and city,” Gibson said. “These high costs leave me with a pit in my stomach.”

Gibson renewed her calls for the school system to oversee the construction of new schools, something Larson — inspired by hiccups stemming from the construction of Huguenot High School in 2015 — proposed in April 2018.

Instead, a team of city and school officials — a group known as the Joint Construction Team — is overseeing construction. That team includes a member from the international consultant AECOM, who recommended using construction manager at risk.

Jonathan Young, who represents the city’s 4th District on the School Board, called the board’s trust in the city to build the new schools “misplaced and misguided.”

Like Nolan and Saunders, the leaders of the School Board stood behind using the construction manager at risk method.

“We want our students in state-of-the-art facilities as soon as possible, and believe that the construction approach that we have utilized has ultimately been in their best interest,” School Board Chairwoman Dawn Page and Vice Chairwoman Liz Doerr said in a joint statement. “Construction comparisons aside, the bottom line remains the same: Our students deserve the best and we must continue to put them first.”

Here's what you need to know for Election Day

Poll hours

Tuesday, 6 a.m. to 7 p.m. Anyone in line at 7 p.m. will be allowed to vote.


Richmond has a slight chance for sprinkles at daybreak, giving way to a mostly sunny and dry day. Temperatures will range from upper 40s in the morning to mid-60s in the afternoon.

Poll information

Bring photo identification. Voters in the Richmond area will cast paper ballots. They will fill in ovals and insert the ballots into optical scanning machines.

What’s on the ballot?

Across the state, all 100 seats in the House of Delegates and all 40 seats in the Virginia Senate are up for election. Heading into Election Day, Republicans hold a 51-48 edge in the House and a 20-19 edge in the Senate, with one seat vacant in each chamber.

Greater Richmond features 18 contests for House and Senate seats. Go to Richmond.com to review our coverage, including Q&As with Richmond-area legislative candidates and with candidates for local offices.

The boundaries of several Richmond-area House of Delegates seats changed in January because of court-ordered redistricting. Go to the Citizen Portal at the Virginia Department of Elections — https://www.elections.virginia.gov/citizen-portal/ — to determine your House and Senate districts and your polling place.

In Richmond, voters will choose among seven candidates who are seeking to replace City Councilman Parker Agelasto in a special election for the 5th District seat.

In Chesterfield County, there is a contest for every seat on the Board of Supervisors, and change is coming to the School Board, as no incumbents are seeking re-election. County voters also will cast ballots in contests for commonwealth’s attorney, sheriff and commissioner of the revenue, and in Chesterfield’s first contested election for treasurer in 40 years.

In Henrico County, all five current members of the Board of Supervisors are seeking re-election. Due to retirements, voters will select at least three new members of the School Board. Commonwealth’s Attorney Shannon Taylor faces a challenge from former county prosecutor Owen Conway, and three candidates are vying to succeed Sheriff Mike Wade, who is retiring.

In Hanover County, more than half of the seats on the Board of Supervisors are contested.

Registrar contacts

Richmond: (804) 646-5950

Chesterfield: (804) 748-1471

Hanover: (804) 365-6080

Henrico: (804) 501-4347

You also can call the state Department of Elections at (800) 552-9745

Live coverage online

Throughout the day Tuesday, get the latest election news and results at Richmond.com.

Home delivery

Readers can expect complete coverage of Tuesday’s election results in Wednesday’s Richmond Times-Dispatch. That means later print deadlines and a chance that Wednesday’s delivery will be later than normal. We appreciate your patience.


VCU (shown above in November 2017) has gone 113-21 at home over the course of the sellout streak, which began on Jan. 29, 2011.

Sellout streak for men’s basketball at 134
On its 20th birthday, Siegel Center celebrated as a key factor in VCU's basketball success

In February 2014, sports columnist, author and commentator John Feinstein was planning a drive to Richmond from Washington for that night’s men’s basketball game between Virginia Commonwealth University and George Washington University at the Stuart C. Siegel Center.

He wanted to write a column from the game but had heard that a snowstorm was rolling in.

The closer he got to Richmond, the heavier the snow became. Because of the conditions, Feinstein expected that the streak of consecutive sellouts at the Siegel Center would end that day at 47.

Instead, fans filled the arena once again.

“There wasn’t an empty seat in the building,” Feinstein said. “I mean, it was a blizzard ... but everybody came. They all came, they all showed up. It was amazing.”

That has been the norm at the Siegel Center, where the sellout streak for men’s basketball games — now at 134 entering Tuesday’s season opener against Saint Francis (Pa.) — lives on.

The building on Broad Street has been a boon for the program throughout its lifespan where, inside, the Peppas pep band blares and the fans cheer loudly, creating a notoriously raucous environment.

This month marks 20 years since the first VCU basketball games were played there.


In July 1986, Richard Sander arrived at VCU as athletic director after serving as an assistant athletic director at Memphis State, overseeing fundraising. VCU played its home games at the Richmond Coliseum at the time.

The venue was fine, Sander said, but securing dates for games was a challenge. It didn’t provide the kind of home-court advantage the school wanted.

Plans for a new facility took shape in the early 1990s. Sander created a neighborhood and university group to examine VCU facilities. A comprehensive athletic and recreational facility plan was assembled.

“And so that was kind of the genesis of the Siegel Center,” Sander said.

An on-campus basketball facility was viewed as the next step in elevating the program.

As the building was being developed, there were multiple elements that Sander felt were crucial to its design.

He wanted it to be low in height, so as not to overwhelm the surrounding community, but for it to still feel massive inside.

Sander wanted fans to walk into the building at the highest level so that they wouldn’t walk up to their seats. The psychology there, he said, is that walking up to a seat is associated with a bad seat, while walking down to a seat is associated with a good seat.

Sander also wanted the seats to be close to the floor. And he preferred to have a smaller-capacity building that was jampacked rather than one that was bigger. The facility’s current capacity is 7,637.

“It wasn’t that the building couldn’t be built bigger,” said Ben Cox, vice president of Marcellus Wright Cox Architects, which worked on the Siegel Center project. “It was they wanted it designed so that it always felt full, packed and everybody had a good seat.”

It was also important to VCU to have a landmark — something identifiable with the school, its athletics and its basketball program — which spurred the addition of the tower in front of the Siegel Center, at the corner of West Broad Street and North Harrison Street.

A relatively low ceiling was desired, too, helping to reverberate the noise emitted by fans and by the pep band.

“It’s a lot of, just, hard surfaces,” said Eddie Fraher, a partner/executive vice president at DMWPV, a structural firm that was involved in the project. “And so it does get loud in there.”

Vacant warehouses were demolished to make way for the Siegel Center, and the project’s groundbreaking came in April 1996. At that point, the target for its opening was June 1998.

But things didn’t go so smoothly. Delays racked up. Sander called the process a “nightmare.”

“That’s the only word I could use for it,” he said.

There were multiple factors that pushed the project off schedule, among them issues with the process of installing the maple wood that makes up the court. There was a problem with the concrete subflooring not being sufficiently flat, and humidity-regulation troubles added time, too.

After missing the early target of a summer 1998 opening, VCU wound up having to move home games to the University of Richmond’s Robins Center during the 1998-99 season.

But, at last, in 1999, the Rams’ palace was complete. A ceremonial opening was held that June.

“I think as soon as people got in there and saw it and how clean it was and how well it was thought out and all the good points to it, it started building a lot of excitement,” Sander said.

The cost of the facility was $30.1 million. A big portion came from student fees, which, according to a 1996 Richmond Times-Dispatch report, were due to cover $13 million of the project. Another major contribution ($8.5 million, according to the report) came from Pepsi, which the school signed a contract with.

Also, it was decided that the building would be named the Stuart C. Siegel Center in 1994 after Siegel donated investments then worth $2.3 million. Siegel is a Richmond native, the former CEO and board chairman of the menswear retailer S&K Famous Brands, and a member of VCU’s board of visitors.


Nov. 19, 1999, was the day that VCU basketball officially debuted at the Siegel Center. The men’s and women’s teams both played that night — the women against West Virginia at 5 p.m. and the men against Louisville at 8 p.m.

The women’s team fell, 63-56. And the men’s team fell behind by 20 to the Cardinals in the first half. But the Rams stormed back with the help of 19 second-half points by Bo Jones. They won, 79-74.

Sander believes it may have been as exciting of a game that’s ever been played in the Siegel Center.

“You just couldn’t have drawn up a more storybook scenario,” said Sander, who later served as director of athletics at East Tennessee State. He currently is executive director of the Global Sports Leadership doctoral program at the school.

That first night perhaps foretold the kind of home-court advantage VCU would go on to derive from the Siegel Center. The Rams are 263-45 all-time there.

Fans’ noise level rises to a crescendo as VCU players disrupt on defense, then again when they cash in on offense, injecting an extra dose of energy into each game.

Senior point guard Marcus Evans said it’s a huge impact.

“We know what the Siegel Center brings to this team,” he said. “I mean, playing at home, sometimes when guys are dead or when the game gets a little flat, they bring energy like nobody else can.”

From his vantage point, Feinstein has always considered the Siegel Center one of the best atmospheres in college basketball.

“I love going to games there,” he said. “I’ve loved it right from the start.”

An average of 5,366 fans attended men’s basketball games at the Siegel Center each year from its opening through 2010-11, which is the last season not filled entirely with sellouts.

The sellout streak began on Jan. 29, 2011, a 79-70 victory over UNC Wilmington. The Rams have gone 113-21 at home over the course of the streak.

Ed McLaughlin, VCU’s vice president and director of athletics who was hired in July 2012, has never had a game that wasn’t sold out since he’s been at the school. He doesn’t take it for granted.

“I always want one less seat than a fanny to put in it,” he said when asked if he’s still happy with the facility’s current seating capacity. “We work really hard to sell every game out and we have, and we’ve been very fortunate. But if we had 3,000 extra seats, we’d probably have 2,000 of them empty.”

The most important factor to continue selling out games is having a good team, McLaughlin said. VCU advanced to the Final Four the same season the sellout streak started and has played in eight of the last nine NCAA tournaments.


As with any building, there’s an assortment of maintenance and repair required to keep the Siegel Center up to snuff. Tiles in the lobby break, plumbing starts to fail and more.

“Trying to keep up, and that’s the key,” said Tim Lampe, senior associate athletic director for facilities.

But, with the Siegel Center now 20, there’s one project on the horizon that would seem to be more sentimental.

As soon as this season is done, VCU will replace the main game floor for the first time since the building was built. The wood has gone down with sanding over the years.

The process will begin in mid-March and be complete by the start of May.

After two decades, the memories the current floor holds are many. And the next one figures to hold many more.

“Unbelievable place,” said VCU assistant men’s basketball coach Brent Scott. “I’ve been to a lot of gyms, a lot of places. A lot of loud places.

“But there’s not many places like the Siegel Center.”