The local Regional Planning Council and the local Kentucky Agency for Substance Abuse Policy have endorsed the following issues as our priorities for 2004. The Mental Health Association of NKY, as a member of both groups fully agrees and supports the following positions.

These priorities still are intact even with the conclusion of the recent legislative session. Currently the proposals would result in a 2.5% decrease in funding for services and still not extend the Medicaid coverage for Substance Abuse services to those in need.

State proposal to close eastern and central state hospital

plan for new facility and programs

The State department of mental health and substance abuse has issued a proposal to close both Eastern State (Lexington) and Central State (Louisville) Hospitals and replace them with a new, somewhat larger facility in Frankfort. The state believes some savings can occur and money re-invested in programs for mental health/substance abuse. Immediately following is their concept paper as of July 2004. The State will also be conducting hearings and soliciting input on the proposal and any comments from the public. When we have locations, dates and times we will post them as well.

CONCEPT PAPER

DEPARTMENT FOR MENTAL HEALTH/MENTAL RETARDATION SERVICES

Psychiatric Hospital Relocation and Consolidation

Information and Issues

Objective: To promote quality mental health in-patient services by building a new 300 bed psychiatric hospital to treat patients currently served by Central State Hospital and Eastern State Hospital.

Background: The Cabinet for Health and Family Services is committed to maintaining an active role in ensuring that only high quality services are provided to individuals with mental illnesses. The replacement hospital would become a fully integrated partner into the Commonwealth’s mental health delivery system. Current facilities are inefficient and costly to operate. Much of our available resources have to be reserved to fund maintenance and repairs rather than to provide services to those in need. By relocation and merger of existing facilities, resources can be best utilized for service delivery.

Benefits:

• Improved quality of care with new state-of-the-art facilities including opportunities for physical design changes to enhance service delivery and the potential to increase physical health services provided on-site, thus achieving a more holistic treatment approach.

• Development of new treatment programs and better operating procedures by identifying and combining the best of what CSH and ESH have to offer.

• Aversion of cost to maintain the current hospital. Currently, $28 million in bond funded projects/improvements are identified in the capital plan for Eastern State Hospital & Central State Hospital that can be cost avoided with a new facility. Contractor would secure construction funding negating additional strain on the Commonwealth’s capital funding resources and limitations.

• Development of a single story replacement facility for Central ICF-MR would improve the quality of care as well as the quality of life for both clients and employees, and reduce operating inefficiencies.

• Reduction of inefficiencies by combining operations.

• Flexibility of contractors to operate under a less restricted and usually less costly environment, i.e. construction requirements, mandated pay raises, etc.

• Reduction of liability for services rendered via contractual agreement is somewhat reduced

• Increase in agency revenue by the attractiveness of a new hospital to more insurance

• Decrease the overhead allocation of the Department by contracting the facility

• Ability to absorb state employees working at Central State Hospital into other state operations within Jefferson County.

• Ability to locate the facility on other state property, which could be leased to the contractor.

Method of Operation: The Commonwealth would solicit RFP proposals for the construction and operation of a new 300-bed psychiatric hospital. The Commonwealth would be the official provider of record and contract for a term of 18 years (3-year construction period and 15 years of operations). The contract would contain a bargain purchase option at the end of the 18 year term allowing the Commonwealth to buy the facility. The contractor would operate the hospital within the Department’s approved budget and would be fully reimbursed for leasing costs (depreciation, interest, and start up costs) during the 15 year operating term. No payments would be made to the contractor until the hospital becomes operational. Eastern State Hospital and Central State Hospital would continue to operate until completion of the new facility. The contractor would earn a fixed management fee for this service.

Basic Financial Information: The construction cost for a new 300 bed hospital facility meeting all applicable licensing and accreditation standards is projected to be between $60 and $70 million. Operating the hospital with an assumed patient load of 250 (equivalent to current average daily census at CSH & ESH) is expected to cost $54.5 million annually. By securing a new hospital and gaining certain economies of scale, it is conservatively projected there will be $5.2 million annual operating fund savings to the Commonwealth. Of this amount, approximately $4 million will be the result of eliminating duplicative salaries and contract labor costs. The remaining $1.2 million savings would come from efficiencies gained in plant operations, housekeeping, and management fees, etc.

Location: The replacement facility would be built between downtown Louisville and downtown Lexington. The facility would be required to be located within 10 miles of an interstate and labor markets would be analyzed to determine sufficiency of technical personnel and the cost of labor in the various markets. A portion of the operating savings identified above would allow instituting a free shuttle service for client visitors. The client visitors, which would include family, friends, guardians, etc., would be transported from designated pick-up areas to the new hospital and back. The shuttle service could be operated 7 days a week to ensure that clients have full access to visitors.

Creation of Mental Health Mental Retardation Trust Fund: A trust fund would be established to receive all receipts generated from the sale of the Central State Hospital and Eastern State Hospital campuses. This trust fund would be earmarkedexclusively for uses that improve and promote the quality of mental health and mental retardation services provided to the citizens of the Commonwealth. Furthermore, both Central State Hospital (approximately 43 acres) and Eastern State Hospital (approximately 65 acres) have significant value and the receipts recognized from the sale of these properties would have the potential to noticeably impact services in a positive way.

Potential Challenges:

• Applicability of closure provisions contained in KRS 210.047 (which are attached for reference) and how to best deal with them.

• Securing through the legislature an 18-year commitment to the contractor.

• Securing and providing support for the personal care homes, Central ICF-MR, and KCPC as hospitals are merged from current locations.

• Obtaining a decision from Certificate of Need regarding replacement bed licenses.

• Maintaining “state-owned” DSH pool status with Medicaid for replacement hospital.

• Addressing opposition to the sale of ESH due to the historic nature of buildings.

• Obtaining alternative resources for services provided to KCPC, Central State ICF/MR, and two personal care homes due to closures.

Relocation of Psychiatric Hospitals

Timeline

June 7, 2004 – Discuss replacement hospital plans with full HB 843 Commission Membership.

June 8 – 30, 2004 – Discuss plans with groups impacted to include executive management of Central State Hospital, Bluegrass Regional MH/MR Board, Seven Counties Services and the parent/family group for Central State Intermediate Care Facility for persons with Mental Retardation (ICF/MR).

July 1, 2004 – Issue press release describing RFP for merger of hospitals

July 1, 2004 to December 31, 2004 – HB 843 Commission addresses actions that must be taken in the January 2005 legislative session to allow issuance of a RFP during the state fiscal year 2005-2006. Topics to include:

• Legislation allowing certain contracts to extend beyond the current biennium.

• Closure provisions contained in KRS 210.047. Determine any legislative action required and obtain a sponsor, if necessary.

• Legislation required to protect Trust Fund established to receive proceeds from sale of property.

January 2005 – Present statutory language to the legislature.

April 15, 2005 – Statutory changes enacted by the legislature become effective.

January 1, 2005 to April 15, 2005 – Develop specifications for Request for Proposal (RFP). Also, determine individuals and organizations adversely impacted by relocation of current facilities and prepare preliminary transition plans for each.

April 16, 2005 – Issue RFP for construction of and management of state hospital facility. Allow RPF to remain open for a three month period.

July 1, 2005 – Responses to RFP due. Evaluations of proposals and the preliminary negotiation process shall proceed through October 31, 2005.

November 1, 2005 – Final negotiations are made and award is issued.

January 1, 2006 – Contract is finalized and construction process begins. Issue press release.

January 1, 2006 – Begin process to dispose of Central State and Eastern State Hospital campuses.

July 1, 2006 – Property disposal complete and funds transferred to Trust Fund.

February 1, 2008 – Target date – substantial completion and first patients move in.

January 1, 2009 – Operations are fully transferred.

NORTHERN KENTUCKY RPC TOP PRIORITIES

OCTOBER 2003

• Adequate Funding of Mental Health and Substance Abuse Services To Allow Individuals To Receive Needed Services Remains The Overarching Need/Priority

Providing adequate funding is consistent with the recommendations in the report from President Bush’s New Freedom Commission on Mental Health (July 2003).  Adequate funding promotes reduction of stigma of MH and SA treatment, increases parity with other healthcare problems, fosters the use of evidence-based practices and supports a system of care for these treatable disorders.

Steps

• Northern Kentucky needs a plan from the Department of Mental Health to increase per capita state dollars to be consistent with our population percentage

• Medicaid funding needs to be appropriate to establish appropriate provider rates, provide adequate eligibility requirements and cover necessary MH and SA services

• NorthKey (CMHC) alone loses over $380,000 dollars per year

• Medicaid eligibility is now being reduced (eliminating services for some older adults and some children with disabilities) - which places additional burden on State general fund dollars to support service for these individuals … or leaves them without services

•     Psychiatric Residential Treatment Facilities (PRTF) rates are inadequate to support delivery of this service in our region … this results in 0 beds operating in Northern Kentucky of the 32 planned beds

•     Coverage of SA services is not included in the regular Medicaid plan for services – this seriously impedes its utility as a payer for needed services to vulnerable individuals and again increases the burden for state general fund dollars to support these services

• Increased flexibility for the use of state general fund dollars to allow region specific targeted service funding based upon defined regional needs

• Get on schedule, and remain on schedule, to move Kentucky to 25^th nationally in per capita support for Mental Health and Substance Abuse services

•     Projects to a 25 million dollar increase in MH/SA state dollar budget for services support each year for ten years through 2012 … only about 25% of this amount was included in the 2002/2003 budget cycle

Several options are available for budgeting the necessary funding resources … Some options:

• Straight forward allocation (budgeting) of appropriate dollars for Medicaid and General Fund supported mental health and substance abuse services – achieved through straight forward decision to make mental health and substance abuse services a priority

• No legislation required

• Requires valuing the delivery of needed services as a community and Statewide priority

• Passage of a Tax on Tobacco Products …

• Health benefit (preventing smoking) for youth is well substantiated

• Initial revenues will help fund important health care and education needs in the short run

•  Initial revenues will also help fund treatment of the adults who require sustained medical treatment resulting from tobacco use

• Modernization of State Tax Code

• Goal is to have resources to adequately support regional and statewide critical needs for services

“Our country must make a commitment.  Americans with mental illness deserve our understanding and they deserve excellent care”

- President George W. Bush  (April 29, 2002 at announcement of the formation of The New Freedom Commission on Mental Health)

Specific Northern Kentucky Service Development Priorities

• Residential treatment services for youth with MH and SA service needs

• No clinically-focused residential programs in the region for SA

• Too few clinically-focused residential programs in the region for MH

• Timely access to Psychiatric Medications

• Quick access for individuals diagnosed with severe and persistent mental illness (SPMI), including follow-up after inpatient treatment

• Access for individuals in jails

• Access for individuals living in temporary shelters  

• Supports for Individuals with Mental Health and Substance Abuse recovery needs

• Housing supports

• Employment supports

• Transportation supports in rural counties

• Targeted MH and SA services for older adults

• Requires an initial period of education for older adults, healthcare professionals and clergy to identify when treatment is necessary

• Requires training for providers to develop an appropriate knowledge base of intervention strategies and protocols

• Older adults represent a rapidly expanding population group in our region

• Increase availability of IMPACT and IMPACT Plus services

• These approaches are designed to identify problems early and intervene early in the problem-cycle to reduce the need for more intensive and more costly services

• These are targeted toward the most seriously mentally ill youth in our region and provide services to intervene, stabilize and maintain these youth in our community and with their family members and/or guardians

• Inadequate funding of these early intervention approaches often leads to a greater use of service dollars for high intensity treatment and/or a revolving door situation that does not promote recovery

• Financial Support for development of consumer-run supports for individuals with MH and SA recovery services

• Education supports

• Employment support

• Peer support groups

• Service information and referral

The funding of these service needs brings the Northern Kentucky region closer to having a system of care that identifies treatment needs early in their development, treats mental health and substance abuse problems effectively and supports a “recovery model” as outlined in the final report of

President Bush’s New Freedom Commission on Mental Health.

The Mental Health Association of Northern Kentucky, as a member of the Regional Planning Council (RPC), and the KYASAP-NKY (Kentucky Agency for Substance Abuse Policy) strongly endorses the above positions. 

In addition we strongly support any legislation to improve the process for those individuals seeking to better utilize the Ticket to Work resources.  Specifically we endorse and support the State of Kentucky adopting the Medicaid buy-in for those affected individuals.  This will permit any disabled person who returns to work to continue their needed medical coverage by  paying established premiums indexed to their income.  This has been the major barrier to most disabled individuals making a meaningful attempt to return to work.