State psychiatric hospitals accredited; billing changes and staffing drive budget requests

Alex Williamson, budget and policy analyst with the Legislative Services Office, reviewed the Division of Psychiatric Hospitalization budget (pages 2-097) and said the division is authorized for 467 FTP across State Hospital South (Blackfoot), State Hospital North (Orofino) and State Hospital West (Nampa).

The hospitals recently completed accreditation and are billing Medicaid for eligible stays. "We are pleased that all three facilities are now accredited," Alex Adams, director of the Department of Health and Welfare, told the committee. He said accreditation lets hospitals bill Medicaid (increasing federal receipts) and that State Hospital West has billed about $1.6 million and already received $1.3 million in receipts tied to billing.

Why it matters: accreditation changes federal reimbursement dynamics. The department requested receipt authority to spend billing receipts and a set of supplemental and fund‑shift requests tied to changes in patient stays and federal matching (FMAP) adjustments. Williamson highlighted a $2.6 million one‑time supplemental request (General Fund) to address increased civil-commitment expenditures in FY2025 and additional one-time fund shifts moving dollars from federal to general and dedicated funds for specific hospitals.

Civil commitments, long‑term stays and the 60‑day rule: Director Adams explained a federal billing rule tied to length of stay: Medicaid reimburses for certain stays of 60 days or less; stays longer than 60 days may not be reimbursable. "If the patient is not ready to be released back into the community at day 59, the medical and clinical need will override the billing realities," Adams said. The department reported that the share of admissions exceeding 60 days rose from about 17% previously to about 37%, increasing state costs when federal billing is unavailable.

Staffing, capacity and admissions backlog: Adams and Ross Edmonds, division administrator for behavioral health, said staffing directly influences how quickly patients move from community hospitalization to state hospitals. Reported vacancy rates were: State Hospital West: 0% vacancy; State Hospital South: 2.8% vacancy; State Hospital North: 11.5% vacancy. Waitlists noted in testimony were roughly eight individuals for State Hospital North and about 18 for State Hospital South at the time of the hearing.

Restoration‑to‑competency cases: Ross Edmonds told the committee restoration‑to‑competency admissions (individuals found not competent to proceed in criminal cases and sent for restoration) have grown sharply. "Over the last 10 years, we've seen about a 600% increase," Edmonds said. He added that most restoration cases are psychiatric, and the division estimates that roughly 90–95% of restoration cases are successfully restored during the statutory period; only a small share are not restorable.

Other recent investments: the hospitals requested funding for an electronic medical records update, facility alterations and accreditation updates in prior years, and last year the legislature approved receipt authority and staff additions tied to billing changes. The committee was told population‑forecast and FMAP adjustments are also driving the division’s FY2026 request.

Takeaway: accreditation has begun to produce Medicaid receipts that offset state costs, but longer stays, civil‑commitment expenditures and rising restoration‑to‑competency admissions are increasing pressure on budgets and capacity. The department asked the committee for supplemental appropriations and fund‑shift authority to manage those changes.

Details not specified in the hearing: the precise long‑term fiscal impact of rising long‑stay admissions and restoration caseload growth was presented as forecasts and will be further examined in later budget work, according to department staff.