The 2021-22 Budget: Behavioral Health: Community Care Demonstration Project

analysis full gutter The 2021-22 Budget: Behavioral Health: Community Care Demonstration Project FEBRUARY 2021 This budget series post provides (1) an assessment of the Governor’s proposal, and (3) our overview of the Governor’s budget proposal to recommendations on this proposal. provide $233.2 million General Fund in 2021-22 This budget post is one in a series of posts that and $136.4 million General Fund in 2022-23 and we are releasing on major behavioral health-related ongoing for the Department of State Hospitals proposals. In separate posts, we analyze the (DSH) to establish a demonstration project—that Governor’s proposals to (1) provide grant funds to would be optional for counties to participate in—in counties to acquire and renovate behavioral health which responsibility for treating individuals found facilities and (2) provide incentive payments through incompetent to stand trial (IST) facing a felony charge Medi-Cal managed care for student behavioral health. would be realigned to participating counties, (2) an Background Felony ISTs and the Waitlist. Currently, counties provide competency restoration treatment to felony are responsible for almost all mental health treatment ISTs who do not require the higher level of care for low-income Californians with severe mental health that state hospitals provide. When contracting with needs. One exception, however, is treatment for counties, DSH still retains responsibility for felony individuals found IST and who face a felony charge IST treatment, but provides funding to counties to (we refer to these individuals as “felony ISTs”). The treat felony ISTs on its behalf. County-provided IST state treats almost all felony ISTs in state hospitals; felony treatment includes (1) the establishment of however, many individuals wait in county jails for Jail-Based Competency Treatment (JBCT) programs many months given the limited number of DSH beds, in which competency restoration treatment is which has resulted in a waitlist of felony ISTs who have provided to felony ISTs while they are in county not been admitted to DSH. The treatment provided jails and (2) Community-Based Restoration (CBR) to felony ISTs—known as “competency restoration programs, in which counties receive funding to treatment”—differs from general mental health provide competency restoration treatment in a treatment. The objective of competency restoration variety of community behavioral health treatment treatment is to treat a felony IST until he or she is settings. Figure 1 on the next page describes these competent enough to face their criminal charge, county-operated programs. rather than provide comprehensive treatment for his Some County Contracts in Place in Regions or her underlying mental health condition. While the Where Referral Rates Are Highest. There is state is responsible for treating felony ISTs, counties significant variation by county in the rate of felony are responsible for treating misdemeanor ISTs. IST referrals for competency restoration, as shown DSH Received Funding Augmentations in Prior in figure 2 on the next page in 2018-19. (We use Years to Treat Felony ISTs, Including Through 2018-19 data because this is the most recent full year Contracts With Counties. To increase capacity of data that precedes any pandemic-related changes for felony IST treatment, in prior years, DSH has to the process of referring felony ISTs to treatment.) received funding to both (1) expand bed capacity Prior-year efforts to provide funding for county-based in state hospitals and (2) contract with counties to treatment have tried to provide more competency 2021-22 LAO Budget Series 1 analysis full gutter Figure 1 County-Operated Felony IST Treatment Programs 2018-19 Felony ISTs Program Year Established Funding Level Treated in 2018-19 Jail-Based Competency Treatment 2007-08 $59.8 million GF 1,739 Community-Based Restoration 2018-19 $15.6 million GF 165 IST = incompetent to stand trial and GF = General Fund. Figure 2 Rate of Felony IST Referrals Varies Significantly by County Felony IST Referrals Per 10,000 Population, 2018-19 Felony ISTs Per 10,000 Population 10 5 Average (1.7) 1 County includes a Community-Based Restoration program. County includes a Jail-Based Competency Treatment program. IST = incompetent to stand trial. 2021-22 LAO Budget Series 2 analysis full gutter restoration treatment options for felony ISTs. In some state hospitals in the initial months of the pandemic. cases, these county-based treatment options have This, combined with reduced capacity in local been established in counties with relatively high court systems due to COVID-19-restrictions, led to rates of IST referrals. Importantly, counties can send a decline in the number of felony ISTs referrals as felony ISTs to other counties’ competency restoration shown in figure 4. (From March 2020 to April 2020, programs. Accordingly, counties with high rates of felony IST referrals Figure 3 that do not operate programs Monthly Felony IST Waitlist Has Reached New High are typically located adjacent to Monthly Statewide Felony IST Waitlist, January 2020 to January 2021 counties that do. Felony IST Waitlist Has 1,800 Reached New High, in Part Due 1,600 to COVID-19 Restrictions. Prior to the ongoing coronavirus disease 1,400 2019 (COVID-19) pandemic, 1,200 the number of felony ISTs on 1,000 the waitlist for competency restoration was typically around 800 800 individuals (with an average 600 wait time exceeding 100 days). Since the initial months of the 400 pandemic, the number of felony 200 ISTs on the waitlist has grown to about 1,600 individuals as Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2020 2021 of January 2021. This increase predominantly is attributed to IST = incompetent to stand trial. (1) DSH suspending admissions of all patients for the first few Figure 4 months of the pandemic and (2) DSH admitting patients Monthly Felony IST Referrals Have in smaller batches once the Generally Returned to Pre-Pandemic Levels suspension of admissions was Monthly Statewide Felony IST Referrals, lifted. Figure 3 illustrates growth January 2020 to November 2020 in the felony IST waitlist since 450 January 2020. 400 Monthly Felony ISTs Referred 350 to DSH Generally Have Returned to Pre-Pandemic Levels. In prior 300 years, DSH experienced gradually 250 rising numbers of felony ISTs 200 referred for competency restoration treatment. The average number 150 of felony ISTs referred per month 100 increased by roughly 20 percent 50 between 2015-16 and 2018-19. However, in response to the Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov COVID-19 pandemic, DSH imposed a suspension of all admissions into IST = incompetent to stand trial. 2021-22 LAO Budget Series 3 analysis full gutter referrals declined 63 percent.) DSH continued to into competency restoration treatment in a timely experience lower numbers of felony IST referrals until manner. A California Superior Court ruled that DSH August 2020, when COVID-19-related restrictions is required to place felony ISTs into competency were lifted. In the months since then, the number restoration treatment within 28 days, and gave DSH of felony IST referrals has returned to roughly until October 2020 to comply with the order. DSH pre-pandemic levels. appealed the ruling and the effect is on stay pending Stiavetti v. Ahlin. In 2016, the American Civil results of the appeal. If DSH’s appeal is unsuccessful Liberties Union filed a lawsuit against DSH alleging (and DSH is unable to meet the 28 day time frame that the constitutional rights of felony ISTs were order by the court), the department potentially being violated due to DSH failing to place felony ISTs could be subject to fines or placed under federal receivership. Governor’s Proposal Establish County Felony IST Demonstration that participating counties would treat an estimated Project. This proposal would provide $233.2 million 1,252 felony ISTs annually. The estimated number of General Fund in 2021-22, and $136.4 million in felony ISTs is based on the actual number of felony IST 2022-23 and ongoing, to establish a county felony IST referrals from a sample of three undisclosed counties demonstration project known as the Community Care (The administration has stated that it will update this Demonstration Project (CCDP). Under this proposal, cost estimate at the May Revision based on further DSH would contract with some counties—those information about which counties will participate in the choosing to participate in the project at their option— program.) This estimate represents roughly 30 percent to provide competency restoration treatment. DSH of total felony IST referrals statewide. Counties could would provide fixed ongoing funding to participating use this funding to provide competency restoration counties for these services. Any funding provided to treatment in the same treatment settings as existing counties in excess of their treatment costs would be DSH programs (JBCT and CBR programs). required to be used to increase community behavioral Participating Counties Also Would Receive health services. The intent of this requirement is to One-Time Funds. Under the CCDP, DSH also expand access to behavioral health treatment broadly would provide the following General Fund amounts in order to prevent felony ISTs. to participating counties on a one-time basis: Participating Counties Would Assume (1) $49.8 million to treat felony ISTs on the existing Responsibility for All Felony ISTs. In contrast IST waitlist on July 1, 2021, (2) $35 million to build to existing programs where DSH contracts with infrastructure capacity (including securing additional counties to treat some felony ISTs, under the CCDP, housing and beds across counties and hiring staff), participating counties would assume responsibility— and (3) $11.9 million to treat felony ISTs sent to the as of July 1, 2021—for treating all felony ISTs in their current CBR program prior to July 1, 2021. (DSH is counties. This would result in an optional realignment requesting a current-year augmentation to expand of responsibility for treating felony ISTs to counties. capacity at its CBR program, and also expects that Participating Counties Would Receive Fixed the county which operates its existing CBR program Annual Funding to Treat Felony ISTs. Under the will participate in the CCDP. This one-time funding CCDP, DSH would provide $136.4 million General in 2021-22 would be provided to treat the additional Fund annually on an ongoing basis (transferred felony ISTs who entered the CBR program prior in monthly increments) to counties that elect July 1, 2021 since treatment of these ISTs would not to participate in the CCDP. According to the be built into the county’s fixed annual funding amount administration, this amount is based on (1) the cost under the CCDP.) of care at DSH for a felony IST and (2) an assumption 2021-22 LAO Budget Series 4 analysis full gutter DSH Would Reassess Methodology for Ongoing counties is below what DSH estimated or (2) if Funding Amount After Three Years. Under the participating counties are able to reduce the rate— CCDP, DSH would reassess the methodology for through their own actions—at which individuals determining the ongoing funding amount provided are found to be IST in felony cases. If participating to participating counties after three years. Notably, counties have available funds left over, they would any adjustments would be based on “natural be required to use them to expand capacity for growth” factors such as overall population changes community behavioral health treatment. The in participating counties. Adjustments would not administration’s intent is that this requirement would be based on changes in the felony IST population, help reduce the overall rate at which felony ISTs are despite the original methodology being based on referred to competency restoration. Specifically, the number of felony ISTs participating counties are the goal is to increase access to behavioral health estimated to be responsible for. treatment (beyond just competency restoration) Participating Counties Would Be Charged a in order to treat individuals before they commit an Premium for Use of State Hospital Beds. Not every offense that could render them IST. Counties would felony IST can be treated adequately by counties, as be required to use the available funding to focus on some felony ISTs require a higher level of care that individuals at particular risk of ultimately being found only can be provided in state hospitals. In recognition IST. of this need, DSH would allocate a set number of state Proposal Would Require DSH to Collect Some hospital bed days for use by participating counties. Data and Report to Legislature on Effectiveness Counties would pay 150 percent of DSH’s current of County Strategies. Under the CCDP, participating daily bed rate for these stays. For any state hospital counties would be required to submit community bed days in excess of the set amount, counties would treatment plans and specified data to DSH annually. pay an additional premium according to a tiered This data could include the recidivism rates for structure that has yet to be released. DSH intends this felony ISTs restored to competency by participating pricing structure to act as a disincentive for counties counties. DSH plans to use this information to to send felony ISTs to DSH. assess feasibility for statewide implementation of Counties Required to Invest Any Remaining this project. In addition, under this proposal, DSH Funds Into Community Behavioral Health. There would be required to report to the Legislature by are two ways in which participating counties could February 1, 2025 on the effectiveness of county have funds left over after treating their felony ISTs: strategies to treat felony ISTs and reduce the amount (1) if the actual number of felony ISTs in participating of individuals found to be IST. Assessment Concept of Realigning Treatment of Felony In Contrast to Existing DSH Programs, Proposal ISTs to Counties Has Merit. Given that the treatment Attempts to Reduce Rate at Which Individuals needs of felony ISTs generally are similar to those of Are Found to be IST… In contrast to the existing misdemeanor ISTs (with the exception of a subset of programs discussed above—in which counties are felony ISTs who require a higher level of care), counties provided funding to provide competency restoration are already positioned to treat felony ISTs. Counties treatment to felony ISTs on the state’s behalf—this also already are responsible for mental health proposal makes an attempt to reduce the rate at treatment for individuals with severe mental illness, which individuals are found to be IST and referred such as under the Medi-Cal program. In addition, for treatment in the first place. In concept, the added the Legislature has approved several DSH programs value that this proposal would provide over existing in recent years that provide for county treatment of DSH felony IST treatment programs is the potential for felony ISTs, including the JBCT and CBR programs. counties to use available funds to help reduce felony 2021-22 LAO Budget Series 5 analysis full gutter IST referrals through investments in their community • Proposal Not Designed to Reduce Felony IST behavioral health systems. Specifically, the proposal Referrals Statewide. Funding for the CCDP intends for counties to treat individuals before the would only affect the assumed small number point when they commit an offense that could render of participating counties, and whether those them IST. Increasing community behavioral health counties could reduce the number of individuals services to prevent felony IST referrals in the first place found to be IST and referred for treatment is could improve overall delivery of county services and highly uncertain. Given the degree of urgency mitigate pressures on state hospitals. associated with reducing felony IST referrals ...But Is Not Well Structured to Achieve Goals, statewide, we find that this proposal is unlikely to Leading to Questionable Added Value Over make a meaningful impact in this regard. Existing DSH Programs. While the Governor’s Ongoing Funding Does Not Make Sense for proposal has merit in concept, it is not well structured a Demonstration Project. The administration to achieve its stated goal for several reasons. has characterized the CCDP as a demonstration • Proposal Lacks Strong Incentives for project, intended to help provide insight on the Counties to Participate. While counties cover proposed program’s effectiveness and the feasibility the costs of felony ISTs on the state hospital for statewide implementation. However, the waitlist, counties do not pay for their ultimate administration is proposing to fund the CCDP on treatment costs. Consequently, the primary an ongoing basis prior to the state being able to fiscal incentive for counties to take on felony IST make these assessments. As a result, providing treatment would be to avoid the costs incurred ongoing funding to the proposal prior to making these while individuals await a state hospital bed. assessments is premature. Counties would need to weigh this potential Overlap With Existing Programs Raises benefit against (1) the added responsibility of Concerns. As noted earlier, the novel part of the treating all felony ISTs and (2) the premium they CCDP proposal is the potential for reducing felony IST would have to pay to send select felony ISTs to referrals. Our assessment of this element, however, DSH. Moreover, DSH cannot guarantee these finds the proposal is unlikely to achieve this benefit. individuals would be admitted to a state hospital The remainder of the proposal has significant overlap in a timely manner. Some of these felony ISTs with existing programs for county-based competency could still end up on the waitlist, waiting in restoration treatment. Moreover, DSH is requesting county jails for transfer to DSH for treatment. additional funding in the Governor’s budget to support • Whether Counties Would Have Funds these existing programs. These include (1) $6.3 million Available to Reduce Rate of Felony IST General Fund ongoing to establish additional JBCT Referrals Is Unclear. Reducing the rate at programs and (2) $4.5 million in 2021-22 (increasing which individuals are found to be IST in the first to $4.9 million in 2022-23 and ongoing) to expand the place requires addressing individuals’ underlying current CBR program to additional counties. Given behavioral health needs prior to the point at that DSH already is requesting funding for programs which an individual commits an offense that that will also provide competency restoration could render them IST. To do this, counties treatment, creating a new program that will largely would need to invest in overall behavioral serve the same function does not appear justified. health service activities (that are targeted at Other Governor’s Budget Proposals May Have individuals especially likely to be found IST), More Meaningful Impact in Reducing Felony IST not just competency restoration. The CCDP Referrals. The Governor’s budget includes several does not directly fund investments in overall major behavioral health proposals outside of the behavioral health, despite this being a priority of DSH budget that relate directly to the provision, or the proposal. Moreover, whether counties would expansion of capacity, of community behavioral have funds available for these investments health services. These include (1) a major new benefit would be subject to considerable uncertainty. proposed for Medi-Cal (California’s state Medicaid 2021-22 LAO Budget Series 6 analysis full gutter program) known as Enhanced Care Management proposals directly relate to community behavioral (ECM) that would provide care management services health service delivery, we find that they present to high-cost and high-need beneficiaries (including an opportunity for DSH to coordinate with other justice-involved individuals) and (2) $750 million in departments to make individuals at particular risk the Department of Health Care Services (DHCS) to of being declared IST a target population for these provide grants to counties to acquire or renovate proposals. facilities for behavioral health services. Since these Recommendations Reject Proposal. Given that counties already are earlier, there are several major Governor’s budget responsible for treatment of misdemeanor ISTs and proposals outside of DSH for behavioral health. for overall mental health treatment for individuals These proposals could provide an opportunity for with severe mental illness, we find that, in concept, coordination between DSH and other departments on realigning responsibility for treatment of felony ISTs to how to include individuals at risk of being found IST as counties has merit. For the various reasons discussed a target population in these other efforts. This could above, however, we do not find this budget proposal include, for example, working with DHCS to determine to be well structured to achieve its goal of reducing how to incorporate these individuals into the new the rate at which individuals are found to be IST proposed ECM benefit or as a target population in and referred to competency restoration. Moreover, the DHCS-proposed $750 million grant program creating a new program that largely would serve the for community behavioral health facility acquisition. same function as existing programs does not appear Finally, some other existing programs outside of DSH to be justified. We therefore recommend rejecting the offer additional opportunities for interdepartmental proposal. coordination. For example, counties currently fund Consider Redirecting Funding to Existing programs called Full Service Partnerships (FSPs), County Treatment Programs. Should the Legislature which are funded through the revenues they receive wish to increase the state funding for competency from the Mental Health Services Fund. These restoration treatment for felony ISTs, we recommend partnerships are meant to provide comprehensive considering directing additional funding to existing services to individuals with severe mental illness (with programs such as JBCT or the CBR program. a particular focus on justice-involved individuals). DSH could work with counties to try to make individuals at Explore Alternative Options for Investment in particular risk of being found IST more of a focal point Community Behavioral Health Treatment Focused of FSP programs. on “at-Risk-of-IST” Population. As discussed LAO Publications This report was prepared by Corey Hashida, and reviewed by Mark C. Newton and Carolyn Chu. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. 2021-22 LAO Budget Series 7