State psychiatric hospital will lose Medicaid funding

After months of investigations and warnings following four patient deaths, Montana’s only public psychiatric hospital is poised to lose federal Medicaid and Medicaid funding this week.

Beginning Tuesday, the Montana State Hospital (MSH) in Warm Springs will no longer receive federal Medicaid and Medicare reimbursement for future patient treatment. The news was first reported by Lee newspapers. It is the latest development in a protracted crisis at the hospital, which houses some of the highest-need patients in the state, and is compounded by a critical staffing shortage and a growing reliance on contract workers.

The 2021 Legislature allocated roughly $97 million in state funds to the state Department of Public Health and Human Services to operate the 174-bed hospital through fiscal year 2023. DPHHS spokesman Jon Ebelt said the state is reimbursed an average of $7 million per year from Medicaid and Medicare for services at the hospital.

DPHHS was notified of the termination in a Friday letter from the federal Centers for Medicare and Medicaid Services (CMS). 

CMS first determined that the hospital was out of compliance with the Medicare program in early February. Investigators faulted the hospital for failing to create an infection control plan for COVID-19 and for not sufficiently protecting patients from serious falls — issues that resulted in four patient deaths between January 2021 and February of this year.

Later that month, CMS placed the facility on “immediate jeopardy” status, meaning that it would lose federal funding if the safety issues weren’t addressed. On Feb. 23 and 24, federal inspectors conducted another survey of the facility. The two pre-existing issues were not adequately addressed, CMS said Friday, and another infraction “related to the use of psychotropic medications” was also identified. A third inspection on March 9 found that all three noncompliance issues remained.

“Overall, Montana State Hospital remained out of compliance with Medicare Conditions of Participation for Hospitals,” the CMS letter said.

Responding to CMS’s decision Monday, DPHHS Director Adam Meier said the state is committed to serving current patients and “reforming the facility for future generations.”

“The struggles at MSH have existed and remained unaddressed for far too long, spanning multiple governors,” Meier said. “As I have said before, we must approach MSH comprehensively, strategically, and in a data-informed manner. There are no quick fixes for what MSH is currently facing.”

The state is in the process of hiring a contractor to oversee the management of all state-run health facilities but has not yet announced awarding that contract.

Democratic lawmakers including Sen. Mary McNally of Billings and Rep. Sarah Novak of Anaconda on Monday released sharp criticisms of the state’s handling of the crisis, which they characterized as insufficient. Among other proposed actions, Democrats have pushed to boost worker pay with federal pandemic funds and to dispatch members of the National Guard to the hospital to assist staff. Neither suggestion has been implemented.

“Now the costs of that inaction are hitting home, and it’s the most vulnerable Montanans who will bear the worst of those burdens,” Novak said.

Helena Rep. Mary Caferro, a Democrat and member of the legislative committee that has oversight of DPHHS, parked responsibility for the hospital’s emergency at the governor’s office.

“If the administration was really interested in keeping people safe and saving lives, both workers and patients, and providing appropriate treatment, they’d be laser focused on this,” Caferro said in a Monday phone call. 

“This has happened under [Gov.] Gianforte’s watch,” she added. “And they need to do something to respond to the problems before more people die.”

In response to Caferro’s comments, a spokesperson for the governor’s office said it is “unfortunate” that some politicians are attempting to “score political points” over issues at the hospital. 

“Since the governor was made aware last year of the longstanding challenges at MSH, he has shared DPHHS’ commitment to reforming MHS and ensuring there are no disruptions to patient care,” said press secretary Brooke Stroyke. “After previous administrations ignored the problem, the governor is encouraged by the diligent work of his administration to address this longstanding issue.”