The puzzling aspect of this change is that there is no information about the actual breadth of the problem statewide. It appears to be a problem in part of one area of the state, or less than 5% of he localities in the state, not including the unknown "Bristol County". There is no mention of AG recipients  from NC, WVA, or MD "taking" AG beds in VA, so the necessity of taking any action outside of these localities seems unclear. After all, localities in northern Virginia receive a higher rate of payment, so exceptions can be made to overall regulation. 

That said, the change will likely not accomplish the reduction in funding "out of state" residents as the six month with relatives provision will defeat the 90 day residency provision. There will be a way devised to increase family relations and the "out of state" flow will continue.  There is no information on how many VA residents were denied AG placement in these areas. Just because beds will not be filled by out of state residents doesn't mean there will be VA residents who qualify to be in the ALFs. Nor does it guarantee there will be a demand from  VA residents and localities to fill these beds. That the market will somehow result in a reduction in what ALFs charge makes no sense. A possible outcome could be a reduction in the number of ALFs, as operators will not accept residents for whom they will not receive payment for 90 days, if the resident qualifies for AG or if they stay 90 days.  

If there is an unmet demand for AG beds in this area perhaps the Governor should consider incentives to develop unused buildings in the Southwest MH facility. A likely outcome of fewer  AG beds could be increased homelessness, demands on adult and social services, demands on the mental health agencies and hospitals. As proposed, this should not be adopted.  
More study and information are needed. 

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