September 30, 2024
Purpose
This bulletin is intended to inform hospitals licensed under chapter 70.41 RCW and psychiatric hospitals licensed under chapter 71.12 RCW of a new law that reinstates a Certificate of Need (CN) exemption for the construction of psychiatric hospitals and the addition of new psychiatric beds under SSB 5920 (Chapter 165, Laws of 2024).
Applicability/Scope
This law applies to psychiatric hospitals and acute care hospitals. Acute care hospitals are eligible for a CN exemption if they add new psychiatric beds to their facility or change the use of existing beds to provide psychiatric services. It grants a four-year exemption to the CN requirements. The CN exemption is available to:
- An acute care hospital that changes the use of existing beds to provide psychiatric services, including involuntary treatment services;
- A psychiatric hospital that adds additional psychiatric beds in their facility (this is a one-time addition); and
- The construction, development or establishment of a new psychiatric hospital with no more than 16 beds, a portion of which are to be used for treating adults on 90-or 180-day involuntary commitment orders.
Recommendations
- If intending to pursue a CN application for psychiatric beds or facilities, review this bulletin and visit the Department of Health Certificate of Need (CN) designated webpage to check your facility’s eligibility for a CN exemption.
- To stay up to date on Department of Health CN rulemakings that are in progress, please visit the Rules in Progress – Certificate of Need designated webpage.
Overview
Health care providers are required to obtain a Certificate of Need (CN) from the Department of Health (DOH) prior to commencing construction and operation of certain health care facilities and services.
Facilities that must apply for a CN before beginning major projects include:
- Hospitals;
- Nursing homes;
- Home health and hospice agencies;
- Kidney dialysis centers and;
- Free-standing ambulatory surgery centers.
Certain health services also require CN.
The Law
Recognizing the need to increase behavioral health capacity for both short-term and long-term psychiatric patients in the community, the legislature enacted SSB 5920. SSB 5920 reinstates the Certificate of Need (CN) exemptions that expired on June 30, 2023, for psychiatric beds and new psychiatric hospitals. The exemption now exists until June 30, 2028. If new psychiatric beds are added under this exemption, the beds must remain as designated psychiatric beds until June 30, 2029.
The Department of Health has the authority to grant Certificate of Need exemptions, and under this law DOH is once again authorized to grant exemptions for:
- A hospital licensed under chapter 70.41 RCW, that changes the use of licensed hospital beds to increase the number of beds for the provision of psychiatric services, including involuntary treatment services; or
- A psychiatric hospital licensed as an establishment under chapter 71.12 RCW.
Psychiatric Hospital Certificate of Need Exemption Requirements
Until June 30, 2028, psychiatric hospitals are exempt from CN requirements for the addition of:
- No more than 30 new psychiatric beds for 90-day and 180-day civil commitment services; and
- No more than 30 new voluntary psychiatric beds or involuntary psychiatric beds for patients on a 120-hour detention or 14-day civil commitment order.
Psychiatric hospitals are eligible for an exemption if they meet the following:
- The facility makes a commitment to maintain a payer mix of at least 50% Medicare and Medicaid. This will be based on a calculation using patient days, for a period of 5 consecutive years after the beds are made available for use by patients;
- If the facility demonstrates that its most recent 2 years of fiscal year-end report data shows a payer mix of a minimum of 50% Medicare and Medicaid based on a calculation using patient days; and
- The facility makes a commitment to maintain the payer mix for a period of 5 consecutive years after the beds are made available for use by patients.
DOH must be notified of any new psychiatric beds and will provide the facility with a CN exemption within 30 days. Beds granted an exemption must remain psychiatric beds, as indicated to the department, unless a CN is granted to change their use.
Until June 30, 2028, an entity seeking to construct or establish a psychiatric hospital will be exempt from CN requirements if the facility intends to have no more than 16 beds, and to dedicate a portion of those beds to treatment to adults on 90 or 180-day involuntary commitment orders. The psychiatric hospital is authorized to also provide treatment to adults on a 120-hour detention or 14-day involuntary commitment order.
Note: If an organization applied for a certificate of need prior to this law becoming effective, and the application would otherwise be exempt under the new law, the organization would still have to complete the CN review. The organization would also have the option to withdraw their application under review, and resubmit for an exemption.
Background
Since 2014, the legislature has approved multiple extensions and expansions of the Certificate of Need exemption to add short- and long-term psychiatric beds in a hospital setting without undergoing the lengthy health planning regulatory process administered by DOH.
This exemption remains necessary as the need for this level of care continues to grow in Washington state. As WSHA attested to in a 2021 policy brief on the subject, for individuals seeking psychiatric treatment, living closer to a support network eases the transition into an outpatient care setting and further reduces the likelihood of hospital readmission.
WSHA’s 2024 New Law Implementation Guide
Please visit WSHA’s new law implementation guide online. The Government Affairs team is hard at work preparing resources and information on the high priority bills that passed in 2024 to help members implement the new laws, as well as links to resources such as this bulletin. In addition, you will find the Government Affairs team’s schedule for release of upcoming resources on other laws and additional resources for implementation.
References
Certificate of Need Webpage – Department of Health
