The largest state mental hospital, Western State, already plagued by staff shortages and assaults on the campus, is at risk of losing its certification and $64 million in annual federal funding.

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OLYMPIA — State officials are negotiating with the federal government on a plan to keep Western State Hospital from losing $64 million a year in federal money.

If approved, the agreement would give the troubled hospital, managed by the state Department of Social and Health Services (DSHS), more time to confront a range of issues.

But under what’s known as a Systems Improvement Agreement with the federal Center for Medicare & Medicaid Services (CMS), the stakes are high.

Under the agreement, DSHS would not be able to appeal an unfavorable ruling that could cause the hospital to lose certification and funding, according to DSHS Acting Secretary Pat Lashway.

“When we enter into this improvement plan, we will be marching forward knowing fully that we will either comply … or the feds will terminate us,” said Lashway. “We do not have any longer the administrative options to dispute any of their findings.”

Lashway made her remarks Friday at the first meeting of a new legislative committee that will help oversee the state’s two psychiatric hospitals.

The development comes after a rough year for Western State, an 827-bed facility in Lakewood, Pierce County, the larger of the state’s two psychiatric hospitals.

Western State has been plagued by severe staff shortages, as well as assaults against patients and workers.

Last autumn, an inspection by CMS put the hospital in jeopardy of losing its certification and funding. The hospital has since been working to come into compliance.

This month, two patients escaped through a hospital window, leading to a statewide manhunt and the firing of the hospital’s chief executive officer.

In response to the CMS investigation and multiple lawsuits challenging the state’s treatment of psychiatric patients, lawmakers and Gov. Jay Inslee have poured tens of millions of dollars into the state’s mental-health system. That money is going toward opening up new psychiatric beds, recruiting and retaining needed staff and improving safety conditions at state facilities.

Based on similar agreements at other facilities around the country, Lashway said the improvement plan with CMS could last six months or more.

The agreement likely would include having a full-time consultant from CMS at Western State.

Lashway said that would allow the state to “get clarity” on a regular basis about the expectations of federal regulators. Right now, the hospital typically gets feedback from periodic visits by inspectors, she said.

During the negotiations, DSHS has been given a deadline extension — to June 3 — to correct the problems at Western State or agree on the improvement plan.

At the meeting, Andi Smith, a senior policy adviser to Inslee, said the agreement with CMS would represent a “tremendous opportunity” to help fix Western State’s troubles.

But state Sen. Randi Becker, R-Eatonville, said she worried about the inability to appeal CMS’s ultimate decision.

“Without a dispute process,” Becker said, “it’s very concerning to me.”