When the Vermont State Hospital was abruptly closed on Aug. 28 after Tropical Storm Irene floodwaters inundated Waterbury, workers quickly evacuated the facility and state officials found emergency placements at local hospitals and small private mental health institutions for the 50-plus patients who were suddenly displaced.
Since the storm hit, the scrambling hasn’t stopped. For the last five months, Shumlin administration officials, lawmakers and providers have been weighing options for replacing the hospital. In the short term — until lawmakers and the Shumlin administration can cement an interim plan — Vermonters who need intensive psychiatric care are being treated at Fletcher Allen Health Care in Burlington, Rutland Regional Medical Center, Brattleboro Retreat and several small residential mental health care facilities.
Long term, the state suddenly has an opportunity to reimagine what the system might look like after nearly a decade of intense debate over what to do with the old facility, which was decertified by the Centers for Medicaid and Medicare Services in 2005 and was no longer eligible for Medicaid funding.
The Shumlin administration is betting on a decentralized system that relies more on community and peer services, and less on institutional care. Under the governor’s plan, about 41 patients would receive care in intensive institutional settings and an additional 40 patients would be treated in community based residential programs. The state would plow new money — about $9 million a year — into local support services.
Making the new system work financially is difficult because much of what the state wants to do is tied to complex rules and formulas for federal funding. It’s possible, for example, that the Federal Emergency Management Agency will largely back the construction of a new facility with a 90 percent federal, 10 percent state match, after the state’s insurer pays its share of the cost.
Though federal funding will likely be available for the structure, it’s possible the Centers for Medicaid and Medicare could drop funding for annual operating costs if the state builds a facility with more than 16 patients, according to lawmakers and Shumlin administration officials.
On Friday, legislators in the House Human Services Committee agreed in a 9-1 vote to approve plans for a 25-bed facility in Central Vermont that would take the place of the Vermont State Hospital. The measure includes the outline for a complex system of decentralized care that would include 13 additional programs or facilities proposed by the Shumlin administration.
House Appropriations will examine the budget impacts of the proposal on Monday; House Corrections and Institutions will consider the financial implications of the proposal on the capital bill Tuesday.
Gov. Peter Shumlin wants a plan for a 16-bed facility from lawmakers on his desk by Feb. 17, and he made it clear in his press conference last week that he won’t budge on the number of beds he has specified.
The number 16 has particular financial significance. If a global commitment waiver provision for the state hospital set to expire in 2014 isn’t reauthorized by the federal government, operating costs at “institutions for mental disease,” or standalone psychiatric facilities, won’t be eligible for Medicaid reimbursements unless they have 16 or fewer patients or have an affiliation with a medical hospital.
The difference between operating the 16-bed facility and a 30-bed hospital, which many in the medical community feel is needed, could be as much as $15 million in state money under the worst case scenarios. Privately, some lawmakers have suggested the operating cost figures are a rough ballpark guess at best in any case and don’t factor in economies of scale. Though the new facility would likely to be located near the Central Vermont Medical Center, there is no formal affiliation between the state and the center.
The Shumlin administration has pitched a 16-bed facility because officials say more institutional beds aren’t necessary. According to statistics from the Department of Mental Health, nearly half of the 54 patients at the Vermont State Hospital didn’t need to stay at the hospital because they were ready to be discharged or moved to other facilities.
A 16-bed facility also happens to be the threshold for match rate eligibility (currently 57 percent federal funds, 43 percent state monies) for operating costs — even if the global commitment waiver isn’t approved. Projections from the Joint Fiscal Office show the state’s share would be $3.37 million of the annual estimated operating cost; Medicaid reimbursements would be about $4.7 million.
The Vermont State Hospital wasn’t eligible for federal match money after it was decertified by the Centers for Medicaid and Medicare in 2003 for a number of safety problems. (It regained certification in November 2004 for 60 days but lost it again in Februrary 2005.) When the facility in Waterbury was closed because of the flood, the federal government began matching the state’s costs for qualified patients who are placed in hospitals and small psychiatric facilities with 16 or fewer beds.
The total amount the state expects to receive for acute psychiatric patients in fiscal year 2012 is about $11 million.
Rep. Alice Emmons, D-Springfield, said the state has been struggling to figure out how to develop a long-term plan for a replacement facility based on the federal criteria.
“The federal government considers 17 beds on up, if not affiliated with a hospital, they consider that an institution for mental disease and that has been what we’ve been struggling with since 2005 as we’ve tried figure out how to replace the state hospital,” Emmons said. “That’s a fundamental piece all the way through this.”
Emmons said the state will be negotiating the global commitment waiver with the feds through 2013 before it expires in January 2014. “The question then becomes will be able to continue with that waiver provision and we don’t know,” she said.
Patrick Flood, the commissioner of the Department of Mental Health, said going beyond the 16-bed threshold means that “we (the state) would go back into the world we were in when we were not certified.”
The Brattleboro Retreat, which is classified as an institution for mental disease, would cost $7.5 million a year to operate and would not be eligible for a federal match should the global commitment waiver change, according to a spreadsheet from the Joint Fiscal Office. The pricetag for Windsor would be $2 million without federal support.
Payments for treatment at Rutland Regional would be matched, Flood said. Other facilities, including the secure treatment center at the Windsor Correctional Facility and five other “step down” residential care programs would be Medicaid reimbursed as well, according to JFO data.
The cost to rebuild
Emmons and others on the committee said the new psychiatric hospital is expected to take at least 3.5 years to build, which offers some leeway on the complex issue.
The capital costs for a new facility are roughly $1 million per bed. The cost of retrofitting the Brattleboro Retreat is $4 million; Rutland is $6 million and Windsor would run $1.8 million.
The state’s match would be 10 percent. At this point, the total cost is estimated at $27.8 million for all four facilities. The state’s match, after insurance estimates is $2.58 million.
Emmons suggested a reasonable course of action considering “so much uncertainty” was to pass out a bill authorizing state buildings officials to proceed with a certain facility size, knowing lawmakers had time to revisit the issue next session.
By then, she said, the state would know how much Irene insurance and federal FEMA funds had come in to pay for building the facility and the state would have a better handle on costs and how a raft of new community mental health programs the administration has proposed are working – which might reduce pressure for acute care psychiatric beds.
“As people have said, It’s very fluid,” she said.
Emmons also reminded her panel to consider that a larger psychiatric hospital that costs more to run would reduce funds available for community programs. “They’re interconnected,” she said.
Total expenditures would go up
Under the plans now under consideration, patients who need acute care would no longer be sent to one main psychiatric facility. Instead they would be sent to Brattleboro, Windsor, Rutland or the facility to be built in central Vermont.
Lawmakers and the Shumlin administration appear to have a similar take on the regional services, but there are three different scenarios for the central Vermont psychiatric hospital. Each scenario comes with a different pricetag.
The total cost of intensive institutional care, which would provide 41 beds (including the 16-bed facility in central Vermont), would be $20.5 million. That number bumps up to $25 million with a 25-bed facility (50 beds in all) and $27.5 million for a 30-bed plan (55 beds total). The Vermont State Hospital cost about $23 million a year.
Without a global commitment waiver to use institutions for mental disease, the state’s share goes up considerably for the central Vermont, Rutland and the secure Windsor beds. The state could have to pay the full $7.5 million a year for Rutland and $2 million a year for Windsor. Depending on the size of central Vermont facility, the state’s share ranges from $3.371 million to $15 million.
In addition, patients would receive treatment through geographically distributed peer services, emergency services and small residential facilities in southern and northern Vermont. The state would spend about $9 million a year on community based services and sub acute care.
The total cost of community based mental health care, including the regional designated agencies or nonprofits that provide outpatient and crisis services, is projected to be $130 million. The state’s share of that total is $52.9 million.
The grand total for the cost of Vermont’s mental health system, including the designated agency expenditures, was $153 million before Irene, and the state’s share was $72.8 million.
All three of the new proposals leverage more federal dollars and increase the overall cost of the system. The governor’s plan, the most conservative of the three, costs the state $76 million (without the global commitment match). With federal dollars, the total is $171 million. The 25-bed option with no global commitment matches for the new state hospital, Rutland or Windsor costs the state a total of $85.7 million. The total cost, including federal match, is $176 million. The most expensive option, including the 30-bed facility, Rutland and Windsor, comes in at $178 million total, with federal money, and a $88 million match from the state.
Editor’s Note: Andrew Nemethy contributed to this report. An update of this report was posted at 6:15 a.m. Jan. 30. A second update was posted at 10:30 a.m. Jan. 30.
