Summer 1997 - Washington: The Next Phase of State Mental Health Reform

xxAACP Newsletter, Volume 11, Number 3, Summer 1997

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Washington: The Next Phase of State
Mental Health Reform

The State of Washington Mental Health Division is still awaiting approval by the Health Care Financing Administration (HCFA) of its Medicaid waiver. This proposal will integrate voluntary inpatient dollars into the Regional Support Network (RSN) prepaid health plan (PHP) outpatient budgets. It will put each RSN at risk for inpatient cost overruns but also give each RSN the ability to use any inpatient cost savings to expand outpatient services.

While waiting for HCFA, the state has moved ahead by asking the RSNs to submit applications demonstrating their abilties to take on this added responsiblity and risk. RSNs have the first right of refusal, meaning that the application process is not competitive at this stage. If an RSN can demonstrate its abilities to manage the upcoming integrated system, the RSN will be awarded the contract. Each RSN must make its decision sometime over the next two years. So far, most RSNs have chosen not to move ahead this fall with the first wave of integration. There appears to be too many unknowns.

For most RSNs, community-based psychiatric hospitals are unknown territory. The RSNs have only limited experience in the authorization of admissions and length of stay extensions at community hospitals and good information on the persons who receive state-funded hospitalizations is hard to come by. At this point, a big concern is that there may not be enough resources to develop alternatives to hospitalization. A second concern is that there may be too many regulations to promote the most efficient use of the inpatient dollars.

Aside from the clinical and financial issues regarding managing the inpatient dollars, RSNs are being asked to make other changes. One change is to cap administrative costs to 25% of the total RSN budget. This would include the provider agency's administrative costs and since the costs are not calculated consistently and routinely, it is difficult to tell how far we are from the 25% lid. A second potentially significant change will be tighter control of the state hospital census and penalties related to exceeding quotas.

Several clinical requirements are being proposed. One is a requirement that RSNs establish, implement and maintain policies concerning advanced directives for psychiatric care. This means that persons with mental illness will be encouraged to specify in advance while competent their health care preferences for care when in crisis and/or incompetent. This is a relatively new concept in the area of psychiatric care in our state and will require psychiatrists to learn their responsibilities in promoting patient choice. Other clinical requirements will be the timely outpatient follow-up of persons discharged from hospitals and the timely assessment and treatment of persons in nursing homes. There will be enhanced emphasis on referrals to primary medical care.

When completed, this phase of mental health reform will bring the RSNs a big step closer to the goal of local control of all public funding streams for the care of persons with mental illness. The main missing piece will be the local control of the state hospital budgets.

Sharon Farmer, MD
Seattle, WA

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