Montana State Psychiatric Hospital (Warm Springs) Loses Federal Funding; Failed to Correct Deficiencies

March 1, 2023

The Montana State Hospital will lose its federal funding on Tuesday as it has failed to meet basic federal health and safety requirements, according to a letter sent to the hospital’s administrator on Friday.

It was unclear Monday how much money the hospital will lose due to the move. However, the loss of funding could be a significant blow for the hospital, which is already $7 million over budget for the fiscal year, and as of April, was serving 238 patients including 142 at the main facility in Warm Springs.

Department of Public Health and Human Services spokesperson Jon Ebelt said the hospital is reimbursed around $7 million per year through Medicaid and Medicare with the revenues going into the state general fund.

The loss of funding is the latest challenge in the psychiatric hospital’s saga of struggles to comply with federal standards. In February, the Centers for Medicare and Medicaid Services investigated the hospital and found the facility had no COVID-19 protection plan, which led to three deaths and failed to prevent patient falls, including one woman who died after falling 13 times in the course of just months.

“CMS requires facilities to meet certain health and safety standards to be certified as Medicare providers. Involuntary termination of a provider agreement is generally a last resort after all other attempts to remedy the deficiencies at a facility have been exhausted. In this instance, CMS has found that Montana State Hospital is out of compliance with CMS basic health and safety requirements,” another letter to the state sent on Friday read.

“The Medicare program will not make payment for covered services furnished to patients whose plan of treatment was established on or after April 12, 2022,” CMS told the state on Friday. “For Medicare patients whose plans of treatment were established prior to April 12, 2022, payment is available for inpatient hospital services (including inpatient psychiatric hospital services) and post-hospital extended care services furnished up to 30 days after the effective date of termination.”

Ebelt said the department does not expect the loss of funding to cause any disruptions at the state hospital.

“Despite today’s news, I want to be clear that our commitment to serving the patients at Montana State Hospital now and reforming the facility for future generations has never been stronger. The struggles at MSH have existed and remained unaddressed for far too long, spanning multiple governors. As I have said before, we must approach MSH comprehensively, strategically, and in a data-informed manner. There are no quick fixes for what MSH is currently facing,” said Adam Meier, executive director for DPHHS, in a statement.

After the February investigation, CMS put the hospital on immediate jeopardy status, meaning it was at risk of losing federal money. The Warm Springs hospital initially had until March 13 to comply with federal standards but received an extension because of the hospital’s integral role in providing care for patients who have few other options.

According to the letter, CMS revisited the hospital in late February and again on March 9 and found deficiencies in the hospital were not corrected. And CMS investigators were forced to return in late March to investigate an assault allegation where a male patient assaulted and sent a female patient to the hospital while they were not being supervised.

During the last investigation, the letter said CMS found the hospital was still out of line with federal standards and issued another citation stemming from the assault for “patients being free from abuse.” According to the letter, the female patient will require a reconstructive survey as a result of the assault.

The budgetary problems are primarily due to the hospital’s increased reliance on more expensive travel nurses as full-time employees have been leaving the hospital at a high rate citing poor working conditions.

In response to the shortcomings, the State Department of Public Health and Human Services has agreed to do a “root-cause analysis” of the hospital’s problems in cooperation with CMS. It has also contracted Mountain-Pacific Quality Health to conduct an analysis of the hospital and come up with a Corrective Action Plan, focusing on the issues identified by CMS, according to DPHHS.

“DPHHS has retained experts to address the immediate issues at MSH raised by CMS. These efforts are ongoing and the department is making considerable progress,” Meier said in the statement. “It took many years for MSH to get to this point, and it’s going to take significant time to truly fix the problem. DPHHS continues to reevaluate Montana’s behavioral health system and ensure MSH is operating in a more productive, safe, efficient, and effective manner.”

The state has 60 days to appeal the decision, according to the letter. While Ebelt did not say the state plans on appealing the decision, he did say it will reapply for recertification when it is ready.

“MSH will reapply for certification when ready programmatically. Once an application is submitted, MSH will have to successfully undergo two surveys before it will be a certified facility again. The timeframes are contingent on when MSH is ready,” Ebelt said via email.

Calls to several different legislative and administrative leaders on Monday morning were not immediately returned.

Democrats have said the current administration has failed to prioritize the situation in Warm Springs by not taking immediate steps to address problems.

“This is the awful but unsurprising result of the Gianforte Administration’s failure to treat this situation like the emergency that it is, and I can’t imagine the weight of uncertainty felt by the patients and staff at Warm Springs today,” said Rep. Sara Novak, D-Anaconda, in a Monday press release. “Now the costs of that inaction are hitting home, and it’s the most vulnerable Montanans who will bear the worst of those burdens.”

In February Children, Families, and Health and Human Services Interim Committee called an emergency meeting in February after the hospital was put on immediate jeopardy status. At the meeting, lawmakers from both parties agreed to start drafting legislation to ease patient loads at the hospital and implement more third-party oversight of operations.

“This goes far beyond politics – this is a crisis of leadership,” Sheila Hogan, executive director of the Montana Democratic Party, said in a press release. “This is not an issue that exists simply inside the four walls of the State Hospital. This has far reaching consequences for our most at-risk patients, the Warm Springs and Anaconda workforce, our already overburdened criminal justice system, and our community public safety statewide.”

Source: Keith Schubert, “Montana State Hospital to lose federal funding on Tuesday,” Daily Montanan, Apr. 11, 2022, URL:  


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