Behavioral Health Policy and Budget Changes to Increase Bed Capacity, Including Long-Term Psychiatric Bed Capacity

October 14, 2021

 

Purpose

This bulletin informs hospitals about behavioral health policy bills and budget items that passed with the assistance of WSHA’s advocacy during the 2021 legislative session. The highlights include:

  • Certificate of Need (CN) exemption for psychiatric beds extended through June 30, 2023. Under this exemption, acute care hospitals continue to have the ability to add an unlimited number of psychiatric beds. As of July 1, 2021, freestanding psychiatric hospitals may add (one-time) up to 30 psychiatric beds for patients on 90- and 180-day civil commitment orders and (one-time) up to 30 psychiatric beds for all other types of patients. The Department of Health is working on operational modifications to accommodate this change, and WSHA is advocating strongly to continue this exemption.
  • New capital funding opportunities to increase behavioral health capacity. This includes $18 million in competitive grants for hospitals interested in increasing long-term psychiatric bed capacity. Through the Behavioral Health Facilities (BHF) program, applications are now open for organizations to apply for grants in a variety of funding categories. Entities eligible to apply for funding include hospitals, non-profit and for-profit organizations, tribes, and local governments. Grant funds can be used for construction, renovation, or acquisition, as long as the number of community beds or service capacity increases. WSHA continues to advocate to the legislature about the need to increase access to behavioral health services.
  • New Medicaid per diem rate methodology for acute care and freestanding psychiatric hospitals that provide services to long-term psychiatric patients (those on a 90- or 180-day civil commitment order). The legislature adopted this methodology after more than two years of negotiations between WSHA and the Health Care Authority (HCA).

Recommendation and Next Steps

  1. Review the available categories of capital funding aimed to expand behavioral health capacity and determine if your hospital or health system, or a community partner, could benefit from these opportunities. The Department of Commerce (DOC) is currently accepting applications for these competitive grants. The DOC will host an informational webinar on Thursday, October 21, to provide more information about these opportunities. For additional information about this funding opportunity, please see the BHF program website.
  2. Review the other topics in this bulletin and share with staff, as appropriate.

Overview

The Certificate of Need Exemption for Psychiatric Beds Extended Through June 30, 2023

Recognizing the need to increase behavioral health capacity for both short-term and long-term psychiatric patients in the community, the legislature passed Senate Bill 5236. The bill extends the CN exemption for new psychiatric beds for two more years – it now expires on June 30, 2023.

  • For acute care hospitals, this means they can continue to add new psychiatric beds (short-term, long-term, voluntary, and involuntary) without a CN for two additional years (see RCW 70.38.111(11) and RCW 70.38.260(2)(a) for details).
  • For freestanding psychiatric hospitals, there is a change to the one-time addition of up to 30 new psychiatric beds. Effective July 1, 2021, if a freestanding psychiatric hospital has not already done so, it may add (one-time) up to 30 new long-term psychiatric beds, in addition to up to 30 other types of psychiatric beds (see RCW 70.38.260(3)(a) for details). Please contact the Department of Health’s CN Program with any questions (FSLCON@doh.wa.gov).

New State Capital Funding Available to Increase Long-Term Psychiatric Bed Capacity and Other Investments

In the 2021-23 capital budget, the legislature continued its trend of investing capital funds in psychiatric capacity. This includes $18 million in competitive grants for hospitals and freestanding evaluation and treatment (E&T) facilities (but not IMD facilities) to increase capacity for patients on 90- and 180-day civil commitment orders. The DOC, under the Behavioral Health Facilities program, will administer these grants. It anticipates having more information about this, and other 2021-23 competitive grants in early fall.

Other notable investments, which will be administered by the DOC include:

  • $14.5 million for enhanced adult residential care facilities for long-term patients with dementia who have been discharged or diverted from state psychiatric hospitals.
  • $11.6 million for at least six enhanced service facilities for long-term placement of patients who have been discharged or diverted from state psychiatric hospitals.
  • $9.4 million for at least three intensive behavioral health treatment facilities for long-term placement of behavioral health patients with complex needs.
  • $8 million for two 16-bed crisis triage and stabilization facilities in King County.
  • $3.1 million for at least two mental health peer respite centers.
  • $2 million for at least one facility with secure withdrawal management and stabilizing treatment beds.
  • $2 million for at least one crisis triage and stabilization facility.
  • $2 million for grants for community providers to increase behavioral health services to children and minor youth.

The state also appropriated almost $80 million for various state facilities. These capital funds will go towards either constructing new or renovating existing state-owned or operated behavioral health facilities.

New Medicaid Per Diem Rate Methodology for Hospitals Treating Long-Term Psychiatric Patients

A critical component of ensuring sufficient long-term psychiatric bed capacity in the community is ensuring that Medicaid pays hospitals a sustainable per diem rate for these patients. The legislature recognized this need but took small, incremental steps. WSHA and its members negotiated with the HCA over several years to develop a rate methodology that addresses the concerns and priorities of both hospitals and the State.

The 2021-23 operating budget includes a proviso that outlines a rate methodology for both acute care and freestanding psychiatric hospitals caring for long-term psychiatric patients. The HCA is currently working to operationalize this new rate methodology. WSHA will provide details in subsequent communications. The budget also appropriates about $100 million to support the rates paid to hospitals and residential E&T facilities for these services.

Highlights of the rate methodology, which is effective as of July 1, 2021, include:

Acute Care Hospitals

  • For an acute hospital that has not completed a Medicare cost report with more than 200 Medicaid inpatient days (newly providing inpatient long-term psychiatric services), the HCA will establish the hospital’s Medicaid per diem rate at the higher of the hospital’s existing inpatient psychiatric rate or the statewide average of the per diem rate of all existing all acute care hospitals (statewide average rate will be updated annually).
  • For an acute care hospital that has completed a Medicare cost report with more than 200 Medicaid inpatient days (currently providing inpatient long-term psychiatric services), the HCA will establish the hospital’s Medicaid per diem rate at 100% of allowable costs, based on the most recent Medicare cost report.

Freestanding Psychiatric Hospitals

  • For a freestanding psychiatric hospital that has not completed a Medicare cost report with more than 200 Medicaid inpatient days (newly providing inpatient long-term psychiatric services), the HCA will establish the hospital’s Medicaid per diem rate at the higher of the hospital’s existing inpatient psychiatric rate or the statewide average of the per diem rate of all existing freestanding psychiatric hospitals.
  • For a freestanding psychiatric hospital that completed a Medicare cost report with more than 200 Medicaid inpatient days (currently providing inpatient long-term psychiatric services), the HCA will establish the hospital’s Medicaid per diem rate at $940. The hospital may also provide the HCA with supplemental data on costs related to providing long-term psychiatric services but are not allowable on the Medicare cost report. The HCA may adjust rates as appropriate.

Vacant Beds

Beginning in fiscal year 2023 (which starts on July 1, 2022), provider payments for vacant bed days shall not exceed six percent of their annual contracted bed days.

HCA Implementation

The HCA is working on implementing the rate methodology. WSHA will issue another bulletin once details become available.

Background and References

In 2018, the state announced a five-year plan to modernize and transform Washington’s mental health system. A key part of the effort is to move most patients on 90- and 180-day civil commitment patients out of Eastern and Western State Hospitals and place them in smaller, community-based facilities. These facilities will include acute care hospitals, freestanding psychiatric hospitals, residential E&T facilities, and various types of state-owned or operated facilities. Eastern and Western State Hospitals will continue to focus on forensic patients and certain hard-to-place civil commitment patients. WSHA has continually raised concerns that the state hospitals need to maintain their beds until appropriate community resources are open and accepting patients.

As 2023 approaches, the Legislature will be focusing on making ongoing financial investments and policy changes needed to accomplish this goal. In the 2021 legislative session, legislators continued to take the right steps, but more needs to be done. We must continue to ensure that community hospitals have the right resources to take on these services.

WSHA’s 2021 New Law Implementation Guide

Please visit WSHA’s new law implementation guide online. The Government Affairs team is hard at work preparing resources and information on the high priority bills that passed in 2021 to help members implement the new laws, as well as links to resources such as this bulletin. In addition, you will find the Government Affairs team’s schedule for release of upcoming resources on other laws and additional resources for implementation.

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