PROVIDENCE, R.I. (WPRI) — State officials on Monday confirmed Eleanor Slater Hospital has too many psychiatric patients, making the state-run facility ineligible to receive millions of dollars in federal support until at least May.

The R.I. Executive Office of Health and Human Services released its biannual report that examines the balance between medical and psychiatric patients at Eleanor Slater, a state-run acute care hospital comprising Zambarano in Burrillville and three more units in Cranston.

The report shows psychiatric patients made up more than half of the roughly 200 people living at the hospital in December, giving Eleanor Slater a technical designation as a psychiatric hospital — also known as an Institution for Mental Disease, or IMD. The designation makes the hospital ineligible to receive federal reimbursements for patients under the age of 65 from the U.S. Centers for Medicare and Medicaid Services. Target 12 first reported the out-of-whack patient mix in December.

“EOHHS has determined that the Dec. 1, 2021, ESH census for qualifying psychiatric patients was 55.5% of the total population,” the state’s interim Medicaid director, Kristin Sousa, wrote in a Feb. 4 letter to Richard Charest, director of the R.I. Department of Behavioral Healthcare, Development Disabilities and Hospitals, which oversees Eleanor Slater.

“As such, EOHHS determines that ESH remains in an IMD status and therefore continues to be unable to claim [federal reimbursement] from Dec. 1, 2021,” Sousa added.

The state has been grappling with Eleanor Slater’s IMD status since fall 2019, when a group of state workers raised concerns that Rhode Island was improperly billing the federal government and unnecessarily treating patients at the long-term acute care hospital who could receive the same services in less-restrictive settings. Rhode Island immediately stopped billing CMS at the time and has since struggled to return to compliance.

R.I. Attorney General Peter Neronha has been investigating patient care and billing at the hospital for more than a year. A Target 12 investigation last year examined how the IMD mix has influenced decisions at the hospital for the past decade, spurring one former executive to describe the practice as manipulative.

At any given time, Eleanor Slater’s various units have about 200 patients, and most of the people receiving treatment for mental health issues are ordered there by a judge through the criminal court system. Those individuals are known as “forensic patients,” and Eleanor Slater is required by law to provide treatment for them.

The state did not immediately provide an estimate for how much money the state would continue to miss out on because of the IMD designation, which has been in place since last May. But the House Fiscal Office has previously estimated the federal support for Eleanor Slater totals upwards of $60 million per year — an amount that is now falling on state taxpayers to cover. (Improving tax revenue and a flood of federal relief money has helped the state manage the expense.)

Eleanor Slater is now seeking regulatory approvals to split the system into two entities: one for medical patients under its current license and a second standalone facility for psychiatric patients. The latter facility wouldn’t be eligible for federal support, but state officials are hopeful the separation will allow the state to more predictably collect Medicaid reimbursements through the medical hospital without having to worry about the overall patient mix.

Gov. Dan McKee has proposed $30.6 million in his 2022-23 budget plan to create the standalone psychiatric facility as a 52-bed hospital housed in Cranston at the Benton facility, where most forensic patients receive treatment already. The budget proposal includes funding for five new executive positions, including a CEO, chief medical officer and chief nursing officer — all jobs that have been replaced at Eleanor Slater within the past year.

“Since the expense for forensic patients at the Benton facility are not eligible for Medicaid reimbursement, this action separates them from the approximately 150 medical and civil psychiatric patients, which gives the state a better opportunity to come into compliance with a patient mix to maintain federal compliance in order to bill Medicaid,” House fiscal staff wrote in an initial analysis of McKee’s budget proposal unveiled last month.

The state Medicaid office will next examine the hospital’s patient mix for the IMD issue in May.

Eli Sherman (esherman@wpri.com) is a Target 12 investigative reporter for 12 News. Connect with him on Twitter and on Facebook.