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On January 1, 2017, the KHI News Service became part of KCUR public radio’s new initiative, the Kansas News Service. The Kansas News Service will continue to cover health policy news and broaden its scope to include education and politics. All stories produced by the former KHI News Service are archived here. Stories and photos may be republished at no cost with proper attribution and a link back to KHI.org.

KDADS policy change creates new budget worries for youth psychiatric facilities

By Meg Wingerter | December 05, 2016

KDADS policy change creates new budget worries for youth psychiatric facilities
Photo by KHI News Service Florence Crittenton Services is a psychiatric residential treatment facility in Topeka that has 10 beds for young patients. A new policy from the Kansas Department for Aging and Disability Services will reduce “reserve day” payments to Florence Crittenton Services and 10 other facilities in Kansas that provide care for Kansas children with serious mental health needs.

Dana Schoffelman sees one way to keep serving Kansas children with serious mental health needs without going under financially: taking fewer of them and supplementing with out-of-state children.

Schoffelman, executive director of Florence Crittenton Services in Topeka, has new financial concerns because of a policy change by the Kansas Department for Aging and Disability Services.

KDADS recently announced a plan to reduce payments to psychiatric residential treatment facilities, or PRTFs, that provide care for children whose mental health needs are too severe to safely treat as outpatients. The change for Florence Crittenton Services and the other 10 PRTFs across the state will take effect in March.

The department will reduce Medicaid payments by 40 percent on “reserve days,” when a child is temporarily away from the facility but it needs to hold the child’s bed open, said Angela de Rocha, spokeswoman for KDADS. The change will bring the facilities’ reimbursements in line with those paid to nursing homes, save the state general fund about $350,000 and reduce total payments to the PRTFs by about $800,000, she said.

“They will still be reimbursed 60 percent of their daily rate even when they are not providing care for the patient,” she said.

But Schoffelman said the state already was paying less than what it actually costs to provide services to children after a 4 percent cut to Medicaid reimbursements earlier this year made to fill part of a state budget hole.

“It really just does guarantee a loss for providers,” she said.

Facilities like Florence Crittenton can’t cut back on reserve days because the goal is to reintegrate children with their families, Schoffelman said, and many children need to practice the coping skills they are learning during short home visits before they are ready to go home permanently.

That leaves the facilities looking for other financial options, such as fundraising or accepting children from states willing to pay the full rate, which isn’t ideal because most facilities already have a waiting list, she said. Florence Crittenton has 10 beds, and six children were on a wait list last week.

“When you start serving out-of-state kids, the waiting list for in-state kids gets longer,” she said. “My biggest concern is that there will be PRTFs that won’t be able to offset and will have to close beds.”

The new policy also could create problems for treatment because it limits each child to 10 reserve days per year, said Lesley Munoz, director of recruitment and compliance at Pathways Family Services in Topeka, which has 31 beds. Some children need to go home multiple times for short visits before they and their families are confident that they can control their symptoms at home, she said.

“The only time a kid would be on home pass would be when they’re ready to discharge,” she said. “I see it being quite a mess, to be honest with you.”

While it might seem like a facility shouldn’t be paid as much when the child isn’t there, it often costs as much or more to serve a child on a reserve day, Munoz said.

If a child is in a hospital, a staff member must stay with them at all times. Even when the child is at home, Pathways still pays for medications, has support available by phone for the family and has to be prepared to take the child back early if something goes wrong, she said.

“You can’t just withdraw when the kid is home on pass,” she said.

 “The challenge is providing the quality of care we provide with that much less revenue coming in.”

- Gordon Docking, president and CEO of Kids TLC, a 61-bed psychiatric residential treatment facility based in Olathe

Facilities submit their costs to the state, which uses a formula to come up with the average daily cost of serving a child, said Gordon Docking, president and CEO of Kids TLC, a 61-bed PRTF based in Olathe. The facilities also submit their costs for days when children are home or in the hospital, so those days already are “built into” the average, he said.

Docking estimated Kids TLC will lose about $500,000 out of its $15 million budget from the 4 percent cut and the reserve day reduction. About $129,000 of that will come from the latest changes, he said.

“Before the 4 percent cut, it was always our goal to break even,” he said. “The challenge is providing the quality of care we provide with that much less revenue coming in.”

The state recalculates the average daily cost of serving children every six months and reapplies the reserve day cut to the average cost each time. So even if a PRTF managed to reduce its current costs by 4 percent overall and 40 percent on reserve days, the state would apply the reduction to the new, lower costs, necessitating another round of reductions. That isn’t sustainable, the PRTF executives said.

Lynn Lemke, president and CEO of Marillac Center for Children, a PRTF in Overland Park, estimated the two cuts will take about $250,000 out of its budget.

Marillac Center may have to reduce the number of children it takes from the current capacity of 32 in order to keep staffing costs down, he said, but it can’t make deep payroll cuts because KDADS requires it to offer certain services and maintain core staffing levels.

PRTFs offer family, individual and group therapy for children who couldn’t stabilize in the community or during a short psychiatric hospital stay, Lemke said. Essentially, they act as a safety net when nothing else will work, he said.

“There’s no way we can take $800,000 out of this program and think it’s not going to affect children and families,” he said.