Kansas State Mental Hospital Loses Medicare Certification

State officials have not decided whether to seek federal recertification of the Osawatomie State Hospital for Kansans with mental illness.

The Centers for Medicare & Medicaid Services decertified the hospital earlier this month because of the state’s failure to address security and safety issues cited by federal inspectors, who concluded the sexual assault of a hospital worker by a patient in October was due in part to lax security.

Decertification is expected to cost the hospital approximately $1 million a month in Medicare reimbursements and other federal payments.

Even so, Kari Bruffett, secretary of the Kansas Department for Aging and Disability Services, told members of a legislative oversight committee Tuesday that there are other issues to consider before deciding whether to pursue recertification.

“Part of the question for the agency, the administration, legislators and policymakers is what is the trade-off for the bed capacity versus the funding that comes with certification,” Bruffett said.

Renovations prompted by an earlier federal inspection have reduced the hospital’s capacity by 60 at a time when in-patient psychiatric beds are in short supply across the state. Recertification would require additional renovations, which Bruffett said would force the state to continue limiting admissions.

The hospital is licensed for 206 beds, but the renovations have reduced its capacity to 146 beds. Osawatomie is one of two state-run inpatient treatment facilities for Kansans with severe and persistent mental illness. The other is in Larned.

Recertification also would require the state to administratively separate the portion of Osawatomie hospital in which Medicare patients would be treated from the rest of the facility and to maintain separate nursing staffs. That could be difficult, Bruffett said, given the problems officials have staffing the existing facility.

“It’s very difficult (to recruit staff) in an area that’s close to the Kansas City metro area,” Bruffett said, explaining that the state often can’t match the salaries offered by private hospitals. “Absolutely, that ability to compete on salary is part of the issue.”

The cost of maintaining separate nursing staffs is another consideration, she said.

“It isn’t about providing more care, it’s about meeting an administrative requirement to have separate nursing staff,” Bruffett said.

Rep. Jim Ward, a Wichita Democrat and member of the joint legislative committee charged with overseeing KanCare, the state’s privatized Medicaid program, criticized Bruffett and other state officials for failing to address longstanding problems at Osawatomie that led to decertification.

“The (federal) findings say there’s been a systemic failure at the hospital to provide basic services,” Ward said. “That’s shameful, and it should be fixed.”

Privatizing some or all of the hospital’s services is among the options being considered, Bruffett said. She said finding a private partner to help maintain and operate the psychiatric hospital could be a way to fund needed improvements.

“Any discussion of privatizing some or all of the hospital’s services, beds or whatever has to be tied to an increase in investment,” Bruffett said. “We’ve looked at other states where they’ve worked with private partners and got new hospital construction as part of the deal.”

The question of whether to pursue recertification has added urgency to the privatization discussions, said Bruffett, who is in her last days as KDADS secretary. She will start work in 2016 as director of policy for the Kansas Health Institute, parent organization of the editorially independent KHI News Service.

The KHI News Service is an editorially independent initiative of the Kansas Health Institute.