RD600 - Plan for the Financial Realignment of Virginia’s Public Behavioral Health System – December 1, 2017

Executive Summary:

In the past several years, Virginia has been making concentrated and meaningful efforts to reform its strained behavioral health system. Virginia’s funding has historically placed the greatest emphasis on state hospital beds, leading to insufficient community services that would allow people to treat behavioral health symptoms early and maintain wellness in their own communities. Most notably, the System Transformation Excellence and Performance (STEP-VA) effort requires all of Virginia’s 40 community services boards (CSBs) to provide the same services, such as same day access, outpatient services for mental health and addictions, crisis services, and other critical services. This will help people to access services promptly and head off crisis situations leading to emergency department visits, hospitalization, homelessness or interaction with the criminal justice system.

However, the hydraulics of Virginia’s complicated behavioral health system often cause actions that help in one area to create challenges in others. In fact, consequent to changes made to fix system gaps through last resort legislation (which requires individuals under a temporary detention order (TDO) to be admitted to a state hospital at the end of the eight-hour emergency custody order (ECO) period if no alternative bed is found), Virginia’s short ECO period, and obligations to the forensic population, Virginia cannot fully control the admissions to its state hospitals. As a result, Virginia’s nine state mental health hospitals are under tremendous strain as they are weathering a 224 percent increase in TDO admissions and a 58 percent increase in total admissions since FY 2013. There are additional pressures as the state hospitals maintain a list of individuals residing in state hospitals who have been clinically ready for discharge for more than 14 days but are unable to leave because the necessary community housing and support services are not available to ensure a safe discharge. This list (called the extraordinary barriers to discharge list or EBL) has recently averaged about 170 individuals, or 13 percent of the total state hospital census.

In Virginia’s current public behavioral health system, 50 percent of the general fund dollars support just three percent of the individuals the system serves because of the Commonwealth’s historic emphasis on costly state hospital services. While efforts have been made in the past to shift state hospital resources to build needed community services, none has been far-reaching enough to correct Virginia’s imbalance. Also, an analysis of more encompassing efforts in other states has revealed a number of lessons, including that significant upfront investment in community housing and support services are necessary to rebalance systems away from psychiatric hospital-based care.

To help address this issue, the 2017 General Assembly required the development of a plan for the financial realignment of Virginia’s public behavioral health system, including the elimination of the EBL. Notably, however, the EBL is not static but features constant additions (nearly 600 per year) so the list cannot be fully eliminated. DBHDS’ goal would be to reduce the EBL and ensure that no one remain on the list beyond 60-90 days. This goal results in better outcomes for individuals and fewer bed days spent at the state hospitals.

The Department of Behavioral Health and Developmental Services (DBHDS) has been working with stakeholders, including the CSBs, to develop the financial realignment plan. The intention of financial realignment is to shift Virginia’s imbalanced system from costly state hospital beds towards community services. Through redistributing a portion of state hospital funds to the community, the community behavioral health system would finally be positioned to purchase the services required for each individual, whether the appropriate care be state hospital services or specific community services. If the community could provide the right amount of services for individuals at a lesser cost than state hospital care, then a balance of dollars would be available for the community to build and sustain additional capacity to serve more individuals in the community.

DBHDS crafted a four-year phased plan to reduce the EBL and implement financial realignment across the Commonwealth. A general overview of DBHDS’ four-year plan includes:

• FY 2019 – As preparation for the financial realignment plan, a community integration plan is implemented to discharge clinically-ready individuals from state hospitals and reduce the EBL. The investment of community-based residential and permanent supportive housing services facilitates the prompt discharge of individuals who are clinically ready to leave state hospitals. DBHDS included funds in its budget request for these services. These plans include specific funding for permanent supportive housing to facilitate individuals transitioning from new supervised living homes and assisted living facilities to integrated placements. In a separate budget item, DBHDS requested funds for four safe and appropriate transitional supervised living homes specifically for the individuals who have been found Not Guilty by Reason of Insanity (NGRI) and are court-determined to be ready for discharge from state hospitals. These two elements together constitute the community integration plan for start-up and ongoing support. The community integration plan steps in FY 2019 pave the way for financial realignment and make its implementation significantly less challenging. Also in FY 2019, DBHDS will begin a standard utilization review process to ensure that individuals no longer meeting continued stay criteria in state hospitals are promptly identified.

• FY 2020 – Once the community integration plan services are in place, DBHDS will continue to work with the CSBs in FY 2020 to make final determinations on the target state hospital bed reduction for each CSB along with other procedural decisions. DBHDS and the CSBs have started work on preliminary estimates for these targets – for each CSB, these targets will be based on factors such as the CSB’s utilization of state hospitals per 100,000 population, the local state hospital’s average daily census, access to private hospitalization, regional and geographic factors, and judicial practices. In addition, at DBHDS’ request in 2017, CSBs submitted plans for what housing and support services they believe will be necessary to reach these targets; however, DBHDS understands that the needs may change once the effects are measured of the community integration plan and other community services required by STEP-VA. As a result, CSBs’ final plans will be due in FY 2020 to be reviewed and approved by DBHDS.

• FY 2021 – Importantly, following the community integration plan mentioned above, there will need to be an additional start-up and building phase for community services for financial realignment that the CSBs believe will be necessary to meet their state hospital bed reduction targets. The plans for these community housing and support services that were approved by in FY 2020 by DBHDS will be built in FY 2021. Also, the end of FY 2021 marks the goal of reducing the state hospital average daily census (ADC) by 80 “units." An ADC unit is equivalent to 365 bed days and approximately four individual discharges.

• FY 2022 – The payment for bed utilization targets are established in FY 2022 for each CSB. State hospital usage above the monthly target will result in the CSB being billed for the additional beds days, and usage below the target will result in a refund the CSBs can use to build additional community services. Today, DBHDS projects that the rapidly increasing state hospital census will lead to a census on 1,460 in FY 2022, which would be 99 percent of the total state hospital capacity. With the full implementation of financial realignment, the inpatient census during FY 2022 should be 1,280.

The following pages detail a plan that would realign the financial structure of Virginia’s behavioral health system. With implementation of this plan, instead of unsustainable state hospital utilization rates exceeding 100 percent capacity, state hospital utilization would decline to closer to the best practice rate of 85 percent, where safety levels are improved for patients and staff alike. Financial realignment would work alongside STEP-VA to build the comprehensive community services needed to ensure that state hospital care is used only when clinically necessary and is available and effective when it is necessary. Through STEP-VA and by starting by building the community housing capacity needed to target discharge-ready individuals in state hospitals, Virginia’s imbalanced system will steadily evolve toward one with stronger community services and more integrated housing and supports for individuals. This shift permits and enables the successful implementation of the significant changes called for in financial realignment, leading to better use of limited state general fund dollars and far better outcomes for individuals.