RD187 - Annual Report on Community Services Board Contracts for Private Inpatient Psychiatric Treatment Services July 1, 2004 - June 30, 2005


Executive Summary:
The 2005 General Assembly included language in item 330 L of the 2005 Appropriation Act to require the Department to submit a report annually to the Chairmen of the House Appropriations and Senate Finance Committees, beginning on October 1, regarding community services board (CSB) contracts with private service providers for local inpatient psychiatric treatment services. CSBs contract with private providers of local inpatient psychiatric treatment services in two ways. Historically, a few CSBs have contracted individually with various private providers for local inpatient psychiatric services. Based on survey results, CSBs paid $257,787 to 12 private providers for 714 bed days of inpatient psychiatric treatment for 154 individuals in FY 2005. Now, CSBs also contract with private providers of local inpatient psychiatric services on a regional basis through the Local Inpatient Purchase of Services (LIPOS) mechanism. In FY 2005, CSBs paid $11,773,898 of LIPOS funds to 38 private providers for 20,864 bed days of inpatient psychiatric treatment for 3,389 consumers. University of Virginia Hospital and VCU Medical College of Virginia Hospitals are included, even though they are not private providers in the same sense as the others in this report, because they are valuable resources for the CSBs that contract with them. Thus, in FY 2005, CSBs reported that they paid a total of $12,031,685 to 38 private providers for 21,578 bed days of inpatient psychiatric treatment for 3,543 individuals.

The purchase of these services by CSBs and the diversion of consumers receiving those services had a significant impact on state hospital expenditures, utilization, and operations. Any savings realized by community-based inpatient psychiatric treatment services would be reflected in avoidance of increased state hospital expenditures and in decreased demand for state hospital beds. Of the 3,543 consumers served in FY 2005 through these contracts, 435 or 12.3 percent were admitted to a state hospital upon their discharge from private providers. These individuals needed longer term extended rehabilitation services offered by state hospitals. As a result of these contracts, 3,108 consumers were diverted from possible admission to state hospitals. In FY 2005, 2,658 individuals were served in state hospital admissions units, excluding geriatric beds. If all 3,108 diverted consumers had been admitted, this would have increased the number of individuals admitted to state hospitals by 117 percent in FY 2005.

In conclusion, CSB contracts for local private inpatient psychiatric treatment services served more individuals than state hospital admission units in FY 2005, 3,543 versus 2,658 consumers. Those contracts obtained services for these individuals at far less cost than they could have been served in state hospitals, $12,031,685 in the community versus up to $93,625,392 in state hospitals, depending on assumptions made about average lengths of stay in state hospital admission units and the proportion of those consumers who might have been admitted to state hospitals. Therefore, it is vitally important that funding for the purchase of local inpatient psychiatric treatment services delivered through contracts with private providers be maintained and even increased as Virginia moves to transform its public mental health, mental retardation, and substance abuse services system to serve individuals with serious mental illnesses most appropriately and effectively.