Feds Deny Vermont State Hospital Funding

By Louis Porter Vermont Press Bureau MONTPELIER — Even as they were giving final approval to their version of the state budget Friday, lawmakers learned that federal regulators had again denied certification of the Vermont State Hospital — a decision that could leave a hole of as much as $9.7 million in that plan. The problems, according to state and federal officials, are in patient care, handling of problems caused by patients and with the 70-year-old hospital building in Waterbury. Vermont officials have been trying to regain certification of the hospital from the U.S. Centers for Medicare and Medicaid Services for more than two years, a designation that would allow the state to collect federal health care money for patients treated there. It had seemed hopeful. Last December the feds sent officials at the state-run hospital for mentally ill patients a notice saying they were in compliance with some of the national requirements. And things had improved enough that budget writers — both in the administration of Gov. James Douglas and in the Legislature — assumed that the hospital would regain certification and be eligible for Medicaid and Medicare money in fiscal year 2011, which begins in July. However, according to a letter sent Thursday by CMS officials to the state, the federal regulators have determined the Vermont State Hospital has not improved enough to warrant certification. It is quite common for the numbers that make up the state budget to change during the time it is being written, either in the administration or in the Statehouse. However, lawmakers in the House were just concluding their work on the budget Friday after closing a $150 million gap when they learned on the floor about the federal decision. That means when the Senate takes up the task they could have more to find. About $8 million in Medicaid money and $1.7 million in Medicare money is at risk next year, according to estimates, although it is still possible the hospital could be certified during the next several months. Where legislators will turn to fill the hole is unknown. One possibility is an expected $62 million in additional federal Medicaid money from the federal government as part of the negotiations over the federal health care legislation. Other cuts in programs or other spending — or reimbursements to health care providers — could also be possible, lawmakers and administration budget writers said. The federal ruling is disappointing, and shows that more work must be done to bring the hospital up to standards, said Michael Hartman, commissioner of mental health. But the standards required of the hospital are higher than they would have been had the federal regulators not revoked its certification and higher than those required by other evaluation and review organizations. "A hospital that has been involuntarily terminated by CMS for failure to meet the requirements must apply to CMS for readmission," according to the letter from the federal authorities. "The hospital must give reasonable assurance that the conditions that led to the termination have been corrected and will not recur." In February, just 10 days before federal regulators visited the facility, a patient blocked the door to a room with a mattress and would not open it, Hartman said. Hospital staff, able to see the patient sitting on the mattress through a window, were not worried the patient would be able to cause self harm and were fairly quickly able to coax the patient out of the room, he said. But federal regulators — although they did not object to how the situation was handled — did object to how it was documented how the hospital treated the incident, Hartman said. There was a similar problem last year after a patient injured oneself with a broken lamp, he added. "This is another serious setback in the quest to close the state hospital," said Ken Liebertoff of the Vermont Association of Mental Health. "It certainly makes the sense of crisis in the mental health system more acute. We face the prospect of spending $8 million of (state) General Fund on a hospital, which is not up to standard." Liebertoff said Hartman deserves a lot of credit for trying to improve the hospital and regain federal certification. But the reality is the mental health system in the state — including the hospital — is under tremendous strain, he said. The certification problems for the hospital can be traced, in part, back to the 2003 deaths of two patients. The hospital lost federal certification, temporarily regained it, and then lost that designation again. "There was a breakdown in care at the hospital," Hartman said. However a great deal of progress has been made in care and administration at the hospital since and he hopes that the state — by working with a consulting firm and the federal authorities — will be able to gain certification during the next fiscal year, Hartman said. That could mean that not all of the federal money in jeopardy will ultimately be lost, Hartman said. In any case whoever pays — the state or the feds — for care given at the hospital the changes required by CMS must be made anyway, Hartman said. That's because they are also questions of the quality of care at stake, he said. "There are folks who are in the custody of the state and we have to make sure we have safe and appropriate care for them," he said. State officials and lawmakers are trying to figure out how to replace the Vermont State Hospital. The federal findings — particularly those dealing with the adequacy of the hospital structure itself — show how necessary that is, Hartman said. The changes must be made no matter what the replacement schedule for the hospital is because the patients — lately an average of 44 per day — must be cared for in the meantime. "It underscores the need to come to a decision about the next steps here about funding a closing of this facility," he said. "We can only do so much to make a building that is 70-plus-years-old work for care. We need to be out of here." As for lawmakers, some House members said they would have liked to have the information on the state hospital certification before voting the final time on the state budget. "We just voted on a budget with an $8 million hole in it," said Rep. Oliver Olsen, R-Jamaica. Rep. Martha Heath, D-Westford, head of the House budget committee, said it was reasonable for the administration and lawmakers to think the hospital would regain certification given the progress that had been made on the issue. And Hartman said that although it was clear federal regulators still had concerns about the Vermont State Hospital it was impossible to predict they would deny the certification request before the decision was reached and issued. Now that the House is done — for now — the Senate will take over work on the budget. "We will have to make cuts anew," said Sen. Richard Sears, D-Bennington, a member of the Senate budget committee that was the first legislative committee to learn of the federal ruling. "I keep hearing we are going to be O.K. We still haven't come to a solution" on the state hospital, he said.