6. BHT Fiscal Policies

A. Funding Overview

This chapter provides requirements from the Behavioral Health Services Act (BHSA) including but not limited to allocation methodologies, reporting requirements, local Prudent Reserve (PR) levels, and local Behavioral Health Services Fund (BHSF) requirements, effective July 1, 2026.

B. Behavioral Health Services Act Fiscal Policies

B.1 Allocation Methodology

The allocation methodology for the Behavioral Health Services Act (BHSA) remains the same as under the Mental Health Services Act (MHSA). The allocation schedule is developed using a methodology established in Fiscal Year (FY) 2005-06 by the former Department of Mental Health, in consultation with the County Behavioral Health Directors Association of California (CBHDA). In FY 2015-16, the methodology was amended by removing the uninsured population as a factor. The criteria and data sources used to establish the allocation schedule for current fiscal years remains the same as in prior years. However, the data are updated each year with what is most currently available.

W&I Code Section 5891, subdivision (c) requires the Department of Health Care Services (DHCS) to provide the State Controller’s Office (SCO) a schedule for the monthly distribution of funds from the state-level Behavioral Health Services Fund (BHSF) to each county’s local BHSF. The schedule is provided to the SCO in August for the current fiscal year, and the SCO publishes the monthly distribution schedule on its website.

The allocation methodology is developed in two phases. The first phase involves calculating a need for services for each county based on each county’s share of the state population, population at poverty level, and prevalence of mental illness and substance use disorders in each county. The second phase involves adjusting the need for services, based on the cost of being self-sufficient in each county and other resources available to each county.

DHCS publishes guidance on the allocation methodology each year. This notice communicates the allocation schedule that DHCS provided to the SCO, describes the methodology used to determine those allocation schedules, and provides the amount of money the Governor’s budget has estimated will be available in the BHSF.

B.1.1 Funding Allocations

Counties are required to establish a local Behavioral Health Services Fund (BHSF) and appropriately allocate BHSA funds that have been distributed by the SCO.^[1] Additionally, counties are required to spend funds consistent with the proposed activities and projected expenditures that have been approved in their Three-Year Integrated Plan (IP), intermittent updates, and/or annual update (AU).^[2] The allocation of money would include any re-distributed reverted funds and will be based on the percentages outlined below, unless they receive an approved exemption or funding transfer from DHCS. Counties are required to establish and maintain sub-accounts for each funding component (Housing Interventions, Full Service Partnership (FSP), Behavioral Health Services and Supports (BHSS)) within their local BHSF. In addition, it is recommended that counties maintain sub-accounts for each of the suballocations listed below under each component, particularly for those with additional reporting requirements (Housing Interventions, Early Intervention) and those with longer reversion periods (Workforce Education and Training (WET), Capital Facilities and Technological Needs (CFTN)).

• 30 percent to Housing Interventions programs.^[3]

  • Of the funds distributed for the Housing Interventions program, counties are required to use 50 percent of funds for housing interventions for persons who are chronically homeless, with a focus on encampments.^[4]

  • Of the funds distributed for the Housing Interventions program, counties are required to expend no more than 25 percent of funds for capital development.^[5]

• 35 percent to Full Service Partnerships programs.^[6]

• 35 percent to Behavioral Health Services and Supports.^[7],[8]:

  • Adult, Older Adult, and Children’s system of care, excluding the services provided by Housing Interventions and FSP programs.

  • Early Intervention

    • Of the funding allocated for BHSS, at least 51 percent must be used for early intervention programs.^[9]

    • Of the funding allocated for early intervention programs, at least 51 percent must be used to serve individuals 25 years of age and younger.^[10]

  • Outreach and Engagement.

  • Workforce education and training.

  • Capital facilities and technological needs.

  • Innovative behavioral health pilots and projects.

Further guidance regarding allowable expenditures for programs and services for Housing Interventions, FSP, and BHSS will be found in their corresponding section of this Policy Manual.

B.2 State Directed Funding

Beginning on July 1, 2026, prior to the state distributing local funds to counties each month, up to 10 percent of total annual revenues for the State BHSF will be allocated to the state-level initiatives listed below.

1. California Department of Public Health (CDPH)

a. The state will allocate a minimum of 4 percent of total funds to provide population-based mental health and substance use disorder prevention programs. At least 51 percent of these funds must be used for programs that serve individuals 25 years or younger.^[11] For more information regarding CDPH and their prevention programs, please visit their website.

2. Department of Health Care Access and Information (HCAI)

a. The state will allocate a minimum of 3 percent of total funds to support initiatives focused on building the behavioral health workforce.^[12] For more information regarding HCAI-led initiatives to build the behavioral health workforce, please visit their website.

3. State-directed Purposes

a. The state will allocate 3 percent of total funds to support the operations of state agencies and the BHSA Innovation Partnership Fund where up to $20M will be allocated annually for Fiscal Years (FY) 2026-27 to 2030-31.^[13] State-directed purposes include developing statewide outcomes, conducting oversight of county outcomes, training and providing technical assistance to counties, providing assistance to consumers and their family members, conducting research and evaluation, and administering programs.

B.3 Local Prudent Reserve

Counties are allowed to use local BHSF money to fund their local Prudent Reserve (PR), which they are required to establish and maintain, to ensure Housing Intervention programs, FSP, and BHSS are not significantly impacted in years in which revenues for the Behavioral Health Services Fund are below recent averages.^[14] Counties may transfer funds out of the PR for the purpose of expending those funds consistent with the requirements set forth in this policy manual in years where BHSF revenues are below recent averages adjusted by changes in the state population and the California Consumer Price Index. This information will be posted annually to the DHCS BHSA webpage.

B.3.1 Prudent Reserve Assessment

Counties must assess their PR funding levels every three years and include the assessment in their IP, beginning with the Fiscal Year (FY) 2026-29 IP.^[15] Additionally, counties must include a plan on how they will spend any funds exceeding the maximum amount in their IP.^[16] The reassessment must include the maximum and the actual funding levels of the county's PR.^[17]  DHCS will complete this annual calculation for all counties and post it on the DHCS BHSA Webpage. Counties will utilize the adjusted PR levels when submitting their annual IP update.

B.3.2 County Prudent Reserve Maximums

DHCS will calculate the maximum local PR levels for each county annually. The county will use the amount determined by DHCS as the maximum amount to establish the local PR based on deposits into the BHSF.^[18] Counties are then required to have their PR assessment certified by the Behavioral Health Director for every PR assessment. Counties are not required to maintain a minimum level of PR. Counties may transfer funds from their monthly disbursement to their local PR after allocating funds to each component. Counties cannot transfer more than the calculated PR maximum, which is the percentage of the average total funds of the previous five years.^[19] The new PR maximums will take effect July 1, 2026.^[20]

• A county with a population of more than 200,000 will be considered a large county and will have a PR maximum that does not exceed 20 percent of the average of total funds distributed to the county in the previous five fiscal years.

• A county with a population of less than 200,000 will be considered a small county and have a PR maximum that does not exceed 25 percent of the average of total funds distributed to the county in the previous five fiscal years.

The calculation for PR maximum funding levels are as follows:

1. Add the total funds allocated to the county's total BHSF account over the previous five (5) fiscal years;

2. Divide the amount in #1 by five (5); and,

3. Multiply the amount in #2 by 20 percent for large counties and 25 percent for small counties to determine the maximum level.

B.3.3 Allowable Transfers

A county may transfer funds from its PR into its Housing Interventions, FSP, and/or BHSS account in a year in which DHCS determines BHSF revenues  are below the average of the five previous fiscal years adjusted by changes in the state population and the California Consumer Price Index.^[21] This information will be posted annually to the DHCS BHSA webpage.

When DHCS has determined that counties may access their PR, DHCS will provide guidance on the process and expenditure timeframes. Once this determination has been made, the counties must meet the following requirements:

• The transfer must be included in a county’s IP, AU, or intermittent update;

• The transfer must be reported in their annual Behavioral Health Outcomes, Accountability, and Transparency Report (BHOATR); and

• The transfer must be within the county’s allowable PR maximum.

B.3.4 Transfers into the Prudent Reserve

Counties may transfer funds to their local PR through the IP or annual update process. Funds may be transferred from any BHSA component. There is no restriction on the amount of funds that can be transferred from one component up to the maximum PR level. After the PR transfer occurs, counties must still meet the suballocation requirements for each component.

B.3.5 Transfers out of the Prudent Reserve

PR funds may be used on programs and services for any of the following BHSA components regardless of where the component funding came from when the initial transfer into the PR was done:

• Housing Interventions Programs

  • Exception: A county may not spend PR funds on capital development projects.

• Full Service Partnership

• Behavioral Health Services and Supports

  • The children’s system of care, adult and older adult system of care.

  • Early Intervention programs.

  • Outreach and Engagement.

B.3.6 Excess Prudent Reserve Funding

A county in excess of their PR allowable maximum, shall spend excess funds on programs and services for the following BHSA Components:

• Housing Interventions Programs

• Full Service Partnership

• ·Behavioral Health Services and Supports

B.4 Funding Transfer Requests

Starting with the fiscal year (FY) 2026-2029 IP, all counties can request changes to the funding allocation percentages outlined in Table B.5.1 below. Counties may ask to transfer funds between these three components to change their funding allocation percentages. However, these changes in funding allocation percentages cannot exceed 7 percent of total funds allocated to the county in one fiscal year from any one component. Counties may only request a maximum of 14 percent of total funds allocated to the county to transfer in any given fiscal year.^[22] Adjusting the distribution of funds within a county according to these guidelines does not exempt the county from adhering to any additional applicable laws or to the sub-allocation requirements.^[23]

In a fiscal year, a county may transfer from its housing intervention funds up to 7 percent of its total BHSA allocation for that fiscal year. However, if a county uses housing intervention funds (up to 7 percent) to provide outreach and engagement, the amount of funds the county can transfer out of the housing intervention component must be decreased by a corresponding amount.^[24] For example, if County A chooses to use 3 percent of its annual Housing Intervention funds for outreach and engagement, then County A would be able to transfer no more than 4 percent out of its Housing Interventions component into another funding component. Counties are not required to utilize Housing Interventions funding for outreach and engagement. Counties are also not required to transfer funds out of Housing Interventions. Counties shall retain discretion to transfer up to a total of 14 percent of its total BHSA allocation in a fiscal year.  

All transfer requests between Housing Interventions, FSP, and/or BHSS components must be submitted to DHCS through the county portal and include all required information and documentation.^[25] This includes details and rationale for the funding allocation transfer request. The rationale must specify how the transfer request is responsive to community needs and include local data and community input in the planning process. For instance, a county might demonstrate significant need within a particular component by showing that programs are unable to meet the demand of their community. Or, if a county is interested in decreasing a funding allocation percentage for a component, a county should demonstrate that there is limited need or show where there is sufficient funding from other sources.

Funding transfer requests must be submitted within the draft IP by March 31st of the year prior to the fiscal years the IP covers. Counties must also include a letter from the County Administrative Officer approving the IP, including funding transfer requests.  DHCS will review transfer requests based on compliance with statutory requirements, evidence of alignment with local priorities, and community input.^[26] For transfer requests, counties are also required to adhere to local stakeholder consultation requirements.^[27] Additional information about the community planning process can be found in Chapter 3, Section B.1 of this policy manual.

B.5 Funding Component Allowances

The table below lays out the funding allocations and their corresponding sub-allocations for each BHSA component, beginning July 1, 2026.^[28]

Table B.5.1 Overview of Funding Allowances

B.5.1 Adjusting a Previously Approved Funding Allocation Percentage Change

Approved funding allocation percentage changes are final and cannot be adjusted again for the duration of the three-year plan, unless an annual change is approved by DHCS due to a state or local emergency.^[29] To be granted an annual change, a county shall demonstrate to DHCS that it is experiencing a state^[30] or local^[31] emergency, and the change is necessary because of the emergency. Counties may only request an annual change in funding allocations percentages for previously approved funding allocation percentage changes.^[32] If a county seeks to adjust the percentage allocations that were previously approved by DHCS as part of the IP, the county will submit the funding allocation percentage change request in the county portal. Counties are required to adhere to local stakeholder consultation requirements to adjust funding allocations.^[33]

B.5.2 Process for Approval and Denial

DHCS has 30 calendar days to approve or deny funding allocation transfer requests following receipt of the request. The approval and/or denial of the transfer request will be completed through the county portal. If DHCS does not respond within 30 calendar days, the funding allocation transfer request will be considered approved.^[34] 

If the transfer request is approved, funding allocation adjustments cannot be changed during the three-year IP period, unless an annual change is approved by DHCS.^[35] If the transfer request is denied, justification will be included with the decision. The county will be required to update their Integrated Plan (IP) to reflect the denial. Counties should be transparent with stakeholders throughout the community planning process and acknowledge where the IP will need to be adjusted if the exemption request is not approved.

If the county does not agree with DHCS’s decision to deny the transfer request, the county may submit an appeal to DHCS within 30 calendar days of receipt of the denial. The appeal must include an explanation stating the basis of the appeal and supporting documentation. Appeals must be submitted through the county portal. DHCS has 30 calendar days to approve and/or deny the appeal, starting with the date that DHCS confirmed receipt of the appeal.

DHCS will have 10 calendar days from confirming receipt of the appeal to request additional documentation from the county. Counties will supply additional documentation within 10 calendar days of confirming receipt of the request.

If the appeal is denied, justification will be included with the decision. If an appeal is submitted after 30 calendar days from receipt of the denial, the appeal will be automatically denied.  

If the county already submitted their IP and budget and the county receives notice that their funding transfer request was denied, the county is required to update the IP and budget to reflect the correct allocation amounts within 90 days of receipt of the denial from DHCS, unless the county receives approval for an extension to this timeframe.

 B.5.3 Reporting Requirements

Transfers between components will change the required allocation of BHSA funds dedicated to Housing Interventions (30 percent), FSP (35 percent), and BHSS (35 percent). As a result, counties are required to report approved transfers and updated BHSA allocations on the BHOATR, consistent with the transfers approved as part of the IP.^[36]  

Funds transferred between FSP, Housing Interventions, and BHSS components are subject to the same reversion requirements as before the transfer. Transferring funds does not alter the reversion period associated with those funds. The reversion period is the length of time a county has to spend its local Behavioral Health Services Fund (BHSF) money; the reversion period begins the fiscal year in which funds are transferred from the state BHSF to the local BHSF. For more information on reversion, please see the Reversion section of this policy manual in Chapter 6, Section B. 

B.6 Reversion Policy

BHSA funds distributed to a county revert to the state Behavioral Health Services Fund (BHSF) if the county has not spent the funds within a specified period of time (i.e., reversion period). The reversion period depends upon the county’s population and the program component.^[37]

B.6.1 Reversion Period

The “reversion period” refers to the length of time a county has to spend its local money before the funds become subject to reversion and return to the state BHSF. Large counties are required to spend BHSA (Housing Interventions, FSP and BHSS) funds, within three years, and small counties within five years. Workforce Education and Training (WET) and Capital Facilities and Technological Needs (CFTN) funds must be spent within ten years, regardless of county size. Any funds not spent within these time periods are subject to reversion.

B.6.2 Determining Population

DHCS will use the Department of Finance (DOF) January 1 population estimates for the prior fiscal year as reported in the DOF Population and Housing Estimates for Cities, Counties, and the State Report. DHCS will annually publish the county population data.

“Small county” means a county in California with a total population of less than 200,000, according to the most recent estimate by the California State DOF, as of the first day of the fiscal year.

“Large county” means a county in California with a total population of 200,000 or more, according to the most recent estimate by the California State DOF, as of the first day of the fiscal year.

B.6.3 Behavioral Health Outcomes, Accountability, and Transparency Report Submission Required to Calculate Reversion

Every Fiscal Year (FY), each county is required to submit a Behavioral Health Outcomes, Accountability, and Transparency Report (BHOATR) to DHCS by the required deadline for DHCS to be able to calculate the amount of a county’s unspent funds are subject to reversion.^[38] The first BHOATR will cover FY 2026-27 and is due to DHCS on January 30, 2028. All subsequent BHOATRs will be due annually on January 30 of the following years.

B.6.4 Failure to Submit the Behavioral Health Outcomes, Accountability, and Transparency Report

If the county does not submit the BHOATR by January 30, DHCS will notify the county’s behavioral health director and BHSA coordinator by email within five business days. The behavioral health director and BHSA coordinator will also be notified by email if DHCS has determined the county has not submitted a complete or accurate BHOATR within 15 business days after the due date.

Counties have 30 calendar days from receipt of the email to submit a complete and accurate BHOATR to DHCS. If the county fails to do so, DHCS will instruct the State Controller’s Office (SCO) to withhold 25 percent of the monthly distribution until the county becomes compliant with their BHOATR submission.^[39] Once DHCS determines the county has submitted a complete and accurate BHOATR, the county will be removed from the monthly withhold and the SCO will release the withheld funds to the county.

B.6.5 Notice of Funds Subject to Reversion

After the BHOATR submission and review process, DHCS will send a notice via email to each county notifying them of the amount of county BHSA funds that are subject to reversion. The notice will include a schedule of the county’s BHSA funds subject to reversion from each component and will include data from the county’s BHOATR that DHCS used to determine the amounts subject to reversion.

B.6.6 Methodology for Calculating Reversion

DHCS will calculate reversion amounts using the first-in-first-out methodology for components with revenue distributed to the county. The first-in first-out methodology assumes that the first dollar received is the first dollar spent. Reversion will be calculated by component. For components with suballocation requirements, counties will be expected to apply the reversion equally across the suballocations. DHCS will subtract BHSA expenditures reported in the BHOATR for each component from the remaining balance of funding in the oldest fiscal year within the reversion period for the county and component. If the expenditures minus the remaining balance of funding are greater than zero, DHCS will subtract the remaining balance of expenditures from the remaining balance of funding in the next fiscal year. DHCS will repeat this process until the balance of expenditures subtracted from the balance of funding is less than or equal to zero. DHCS will revert the balance of funding for a county and component that is greater than zero at the end of the reversion period. DHCS will continue to provide technical assistance to counties regarding reversion calculations.

B.6.7 County Submission of Appeal

If a county disagrees with DHCS’s determination of the reversion amount, the county may submit an appeal to DHCS. To appeal, the county must submit the following documents through the county Portal.

• A completed Adjustments to Revenue or Expenditure Summary form.^[40]

• An executed BHSA Fiscal Accountability Certification form.^[41]

The county must submit an appeal within 30 calendar days of receiving the notice of the amount of the county’s funds that are subject to reversion.^[42] DHCS will not consider late appeals. DHCS will review the appeal documents and email a written decision to the county within 45 calendar days of receiving the appeal.^[43]

B.6.8 Offsetting Reverted Behavioral Health Services Act Funds Against Future Behavioral Health Services Act Allocations

If a county has not spent all their BHSA funds within the required time period, DHCS will revert unspent BHSA funds from a county and deposit the reverted funds into the State’s Reversion Account. DHCS will instruct the State Controller’s Office (SCO) to redistribute reverted funds back to all other counties for future use as BHSA funds consistent with the requirements set forth in this manual. Counties are required to spend BHSA funds within three or five years, depending on county size.^[44] Counties have ten fiscal years to spend BHSS funds specified for Workforce Education and Training (WET) and Capital Facilities and Technological Needs (CFTN) projects.

If DHCS has determined that a county has BHSA funds that are subject to reversion, DHCS will instruct the SCO to offset the amount of reverted funds from the county’s future monthly BHSA distribution and transfer the funds into the state’s Reversion Account.^[45]

The SCO will continue to offset the monthly distribution until the county has remitted all reverted funds. The offsetting of funds may extend over multiple months until the full amount the county owes to DHCS is offset. The SCO will transfer the funds into the state’s Reversion Account. Previously, counties were required to remit a check to DHCS with the amount of funds that were subject to reversion within 60 days of receiving the final reversion notice. Offsetting funds from county’s monthly distributions is a more efficient process than requiring counties to remit checks for reverted funds to DHCS, allowing DHCS to reallocate the reverted funds to counties more quickly. This process is also less administratively burdensome on counties. DHCS will instruct the SCO to begin offsetting a county’s monthly BHSA distribution 60 days after the reversion notice is sent to the county (e.g., if a county receives a reversion notice in April, funds will be offset beginning with June’s monthly distribution payment). DHCS will notify the counties after the reversion timeframe to appeal has ended to let them know when the SCO will begin offsetting the monthly distribution.

If a county has BHSA funds that are subject to adjustment due to a fiscal audit or other reasons, as determined by DHCS, the amount that is owed to the county will be transferred from the Reversion Account. If the balance of the Reversion Account is insufficient, the funds that are owed to the county will be offset from the monthly distributions from other counties based on DHCS Allocation Methodology.^[46]

DHCS will prioritize offsetting reversion funds before implementing withholds (e.g., due to a late BHOATR).^[47] If DHCS is actively withholding a county’s monthly BHSA distribution due to not meeting statutory requirements, any funds that are subject to reversion will be offset first. If there are any remaining monthly distribution funds, DHCS will calculate the withhold amounts based on the remaining balance.^[48]

The frequency of offsetting and reallocating BHSA funds will be determined by DHCS. The SCO posts online the monthly BHSA distribution and will also reflect any offset and redistribution amounts.

B.6.9 Reversion Notice, Appeals, and Offsetting Timeline

1. DHCS reviews each county’s BHOATR to determine the amount of unspent funds subject to reversion.

2. DHCS will send each county a reversion notice indicating the amount of funds subject to reversion and indicate when funds will begin to be offset (60 calendar days from the notice).

3. If the county disagrees with the reversion amount, the county may submit an appeal to DHCS. The county must submit an appeal within 30 calendar days of receiving the initial reversion notice. If a county does not submit an appeal, DHCS will assume the county agrees with the amount of unspent funds subject to reversion.

4. DHCS will review and approve or deny the appeal within 45 calendar days of receiving the county’s appeal. After the appeal period has ended, DHCS will send the county a revised final notice of unspent funds subject to reversion and indicate when funds will begin to be offset (60 calendar days from the final notice).

5. DHCS will instruct SCO to begin offsetting the county’s funds from the monthly distribution until the full amount has been offset depending on the amount subject to reversion, the full monthly distribution amount and subsequent monthly distributions may be offset, if necessary.

6. DHCS will reallocate reverted funds to other counties.

B.7 Mental Health Services Act to Behavioral Health Services Act Transition

B.7.1 Mental Health Services Act to Behavioral Health Services Act Transition Policy

Counties must continue to spend Mental Health Services Fund (MHSF) dollars consistent with an approved Integrated Plan (IP) or annual update through June 30, 2026. If counties are unable to spend all local MHSF before June 30, 2026, counties are required to direct any unspent MHSF towards the programs and components that fall under the BHSA. Beginning July 1, 2026, any unused MHSF monies are “converted” into BHSA monies and must be expended consistent with the requirements set forth in this manual. Beginning July 1, 2026, counties will no longer be allowed to allocate funds to Community Services and Supports (CSS), Prevention and Early Intervention (PEI) and Innovation (INN) components.^[49] Instead, Behavioral Health Services Fund (BHSF) dollars will be used towards BHSA programs and components FSP, BHSS, Housing Interventions). Counties will have flexibility to allocate their unspent MHSA funds to the BHSA components (BHSS, Housing Interventions, FSP) at local discretion. However, once the unspent MHSA funds are allocated, counties will need to follow the suballocation requirements for each component, outlined in Chapter 6, Section B.1.1 (i.e., suballocations required for Early Intervention/youth within BHSS and chronically homeless/capital development within Housing Interventions). All unspent MHSA funds must be used for services and supports that are allowable within the BHSA components.

All funds transitioned from MHSF to BHSF will be subject to BHSA component requirements. This may mean that unspent MHSF that were dedicated to certain programs or services may no longer be used for those purposes, unless they align with new BHSA component requirements. Counties must consult BHSA requirements to determine whether existing uses of unspent MHSF are allowable under BHSA or whether funds need to be used for a new program or service. More detailed guidance regarding the new service components will be laid out in the (Housing Interventions, FSP, BHSS) sections below.

Counties must report in the IP how they allocated all unspent MHSA funds. For all BHSA funds that are distributed after July 1, 2026, counties will be required to allocate those funds in the following percentages: 30 percent Housing Interventions, 35 percent FSP, and 35 percent BHSS. The reversion period does not change when unspent MHSA funds are transferred into the new BHSA components.

B.7.2 Innovation Funding

Under the MHSA, counties were able to encumber INN funds upon approval by the Mental Health Services Oversight and Accountability Commission (MHSOAC). Once the project was approved by the MHSOAC, the funds were encumbered for the term of the approved INN project. If a county currently has INN funds that were encumbered prior to July 1, 2026, and the INN project is operational, those INN funds will remain encumbered for the duration of the first IP, Fiscal Year (FY) 2026-29. Operational means any funds spent on the project prior to July 1, 2026. Counties will be required to report which INN projects are operational in the FY 2026-29 IP. This will allow counties time to complete approved INN projects that are currently operational. All INN projects are expected to be complete by July 1, 2029. If the funding encumbered for the INN is not expended by June 30, 2029, any remaining INN funds that are not reverted will become BHSA funds and will be tracked according to their original reversion period.

Counties must include the INN project in the IP and report all expenditures on the BHOATR. Counties may continue to keep separate fund accounts to track encumbered INN funds through June 30, 2029. Counties will not be allowed to newly encumber any BHSA funds for INN beginning July 1, 2026. Counties may pilot and test innovative behavioral health models of care programs or innovative promising practices for programs in all BHSA funding components (BHSS, FSP, Housing Interventions).

If the county’s INN funds are encumbered in a previously approved INN project, but that project is not operational on July 1, 2026, those funds will be disencumbered and may be subject to reversion. The reversion period remains the same when funds are disencumbered.

B.7.3 Workforce Education and Training and Capital Facilities and Technological Needs Funding

Under the BHSA, WET and CFTN now fall under the BHSS component. MHSA funds for WET and CFTN will remain available for WET and CFTN expenditures within BHSS; the reversion period for these MHSA funds does not change. MHSA WET or CFTN funds transferred into BHSA BHSS will remain WET or CFTN funds and will not be subject to the suballocation requirements. Counties may set aside BHSS funds for WET and CFTN; the reversion period for these specific funds is ten years. All transfers into WET and CFTN are irrevocable and cannot be transferred out of WET and CFTN. Counties may continue to keep separate fund accounts to track their WET and CFTN funds.

B.7.4 County Transition Planning

In preparation for this transition from MHSA to BHSA, counties will need to start planning early to determine how this may affect their current existing programs and funding. Counties are required to include this transition planning in their FY 2026-29 IP.

B.7.5 Reporting Requirements

Until June 30, 2026, counties must continue to expend MHSA funds for programs consistent with their current approved MHSA plan. Counties will still be required to report program expenditures on their county’s Annual Revenue and Expenditure Report (ARER) for FY 2023-24, FY 2024-25 and FY 2025-26.^[50]

Once BHSA becomes effective starting July 1, 2026, counties will be required to report program expenditures on their county’s new BHOATR beginning with FY 2026-27 and expenditures must be consistent with the three-year IP.^[51]

B.7.6 Mental Health Services Act to Behavioral Health Services Act Transition and Reversion

Counties remain subject to the requirements to expend MHSF money and interest within the applicable reversion periods. This transition from MHSA to BHSA will not have any impact on reversion policy or timelines for MHSA funds already received by June 30, 2026. The same reversion requirements still apply for new BHSA funds that are distributed to counties starting on July 1, 2026, except for INN funds (please refer to Chapter 6, Section B.7.2 Innovation Funding).^[52] Counties must spend BHSA funds for their authorized purpose within three years and CFTN and WET funds within ten years.^[53]

B.8 Cost Principles

B.8.1 Administrative Costs

Starting July 1, 2025,^[54] 2 percent, and up to 4 percent for small counties, of local MHSA revenue may be used to improve planning, quality, outcomes, data reporting, and subcontract oversight for all county behavioral health funding.^[55]

After July 1, 2026, counties may use 2 percent, and up to 4 percent for small counties, of local BHSA revenue for the same purposes as above and for fiscal and programmatic data reporting for the BHOATR. These types of administrative costs can be covered under BHSA for all county behavioral health programs including, but not limited to, county Medi-Cal behavioral health delivery system, programs funded by the Substance Abuse and Mental Health Services Administration (SAMHSA) Projects for Assistance in Transition from Homelessness grant, the Community Mental Health Services Block Grant (MHBG), Substance Use Block Grant (SUBG), and other SAMHSA grants. Administrative costs for county-contracted providers may be included as part of the total costs of contracted services and do not need to be reported as part of the county’s administrative costs.

Administrative costs are costs that support the operations and overhead of county behavioral health programs.^[56],[57] Administrative costs for BHSA do not include costs incurred as planning costs (outlined in Chapter 3, Section B.4) or service expenditures. Counties must report administrative costs consistent with 2 CFR 200 to ensure consistent claiming across funding sources. Administrative costs must be reported in the county Integrated Plan (IP) and Behavioral Health Outcomes, Accountability, and Transparency Report (BHOATR).^[58]

B.8.2 Direct Costs and Indirect Costs

The classifications of activities that fall under direct and indirect costs are described in B.8.2.1 and B.8.2.2. BHSA aims to align the direct and indirect classifications with Medi-Cal behavioral health and Federal Grant (e.g., SUBG, MHBG) wherever possible.

B.8.2.1 Direct Costs

Direct costs are those costs that can be identified specifically with a particular final cost objective, such as an internally or externally funded activity, or costs that can be directly assigned to such activities relatively easily with a high degree of accuracy.

Direct costs may include, but are not limited to:

• Compensation of employees for the time devoted and identified specifically with the delivery of behavioral health services and supports or performing utilization review and quality assurance activities.

• Cost of materials and supplies.

• Cost of necessary services provided by contract.

• Travel expenses incurred.

Direct costs do not include:

• Capital improvements (unless amortized).

• Purchase or construction of buildings.

• Compensation to members of a local behavioral health board.^[59]

B.8.2.2 Indirect Costs

Indirect costs are those costs that are incurred for a common or joint purpose benefitting more than one cost objective, including general costs associated with organization-wide activities, and support the provision of behavioral health services and utilization review/quality assurance activities. Indirect costs cannot be identified specifically with a particular final cost objective relatively easily with a high degree of accuracy.

Indirect costs include, but are not limited to:

• Compensation of county behavioral health employees for time not devoted and identified specifically with the delivery of a reimbursable activity, performance of a specific administrative activity, or performance of a specific utilization review/quality assurance activity

• Legal services

• Personnel administration

• Procurement

• Accounting

• Executive officers’ compensation

• Depreciation expense

• Interest expense

• Operating and maintaining facilities

• Depreciation or lease costs of buildings and equipment

Additional Notes

• The county must charge indirect costs to a BHSA program through an acceptable allocation method (2 CCR 200) that allocates the costs of support and administrative services to the benefiting programs.

• The share of costs attributed to BHSA funding should be in proportion to the extent the BHSA program benefits from the support activity. For example, if a county behavioral health department has a single administrative team that oversees both BHSA-funded programs and other general behavioral health services, the administrative costs should be split based on the proportion of clients served by each program.

• Proper documentation of the allocation methodology must be kept by the county to justify the use of BHSA funds for indirect administrative costs.

C. Promoting Access to Care Through Efficient Use of State and County Resources

C.1 Introduction

This section outlines the Department of Health Care Services (DHCS’) fiscal policy for counties and Behavioral Health Services Act (BHSA)-funded providers (both county- operated and contracted).^[60] Counties may use BHSA dollars to serve any individuals who meet the eligibility criteria for the particular service, including individuals who are uninsured.^[61] Counties may, in addition, use BHSA funds to support behavioral health programs authorized under other federal or state laws — such as financing their non-federal share for Medi-Cal and other federal matching grants, subject to compliance with applicable requirements for each program (e.g., medical necessity, individual consent) and the BHSA expenditure guidance in this manual.^[62] The policy described in this section focuses on services that can be funded directly with BHSA dollars, and that are also eligible for payment under Medi-Cal, commercial insurance, or another funding sources. The goal is to expand access to high-quality care through the efficient use of state and county resources, ensure that BHSA funds are not used to wholly pay for services that Medi-Cal and commercial payers are obligated to cover, and to ensure that BHSA funds are directed where they are most needed.

DHCS’ requirements for counties to meet the legislative intent of Senate Bill (SB) 326 are summarized in the text box below.^[63]

In this section, DHCS defines requirements for counties on the appropriate and efficient uses of BHSA funds. Counties are, in turn, responsible for working with their contracted providers to meet these requirements (e.g., through updated requirements in their BHSA provider contracts), in addition to ensuring compliance by county-operated providers. As discussed further below, it is important to note that these policies apply only to services that are eligible for both BHSA funding and another funding source, such as Medi-Cal payment, commercial payment, or a federal block grant.

C.2 Securing Medi-Cal Payment

When an individual receives behavioral health services through the Medi-Cal delivery system, county Medi-Cal BHDS—together with Managed Care Plans (MCPs) and DHCS—take on responsibility for ensuring that individual has access to the full scope of Medi-Cal covered benefits. Moreover, unlike BHSA-funded services, the federal government contributes a percentage of the cost of eligible Medi- Cal expenditures. For these reasons, Welfare and Institutions (W&I) Code section 5891, subdivision (a)(2) directs counties to maximize Medi-Cal federal financial participation (FFP) for BHSA-funded services.^[66] The policy in this section applies to providers (county- operated or contracted) who deliver “BHSA-funded and BHDS-covered services” – meaning the providers receive BHSA funding for Full Service Partnership (FSP) or Behavioral Health Services and Supports (BHSS) for activities that are also covered by the Medi-Cal BHDS in that particular county. DHCS requires each county to ensure providers meet the following three requirements:

1. Participate in the County Medi-Cal BHDS: Providers contract to deliver services/supports with their county Medi-Cal BHDS (including Medi-Cal enrollment and certification, as applicable).

2. Check for and Support Medi-Cal Enrollment: Providers check whether individuals are enrolled in Medi-Cal (and also for Other Health Coverage (OHC)). If they are uninsured, the provider refers them for eligibility screening.

3. Consistently Bill Medi-Cal BHDS: Medi-Cal-enrolled providers submit claims for Medi-Cal eligible services, in accordance with Medi-Cal billing rules.

C.2.1 Policy 1: Participate in the County Medi-Cal Behavioral Health Delivery System

If a provider delivers services that are both BHSA-funded and BHDS-covered, the county must ensure the provider participates in the county’s Medi-Cal BHDS if eligible to do so.

Depending on the provider type, this process may include one or more of the following:

• Ensuring all individual practitioners are credentialed.^[72]

• Becoming certified as a specialty mental health services (SMHS)^[73] and/or Drug Medi-Cal (DMC) provider.^[74]

• Enrolling as a Medi-Cal provider in the Provider Application and Validation for Enrollment (PAVE) portal if there is a state-level pathway for the provider to do so.^[75]

• Contracting with the county Medi-Cal BHDS to deliver SMHS and/or DMC/DMC- ODS services in the county (not applicable to county-operated providers.^[76]

• DHCS requires that a provider receiving BHSA funds from multiple counties will participate in the Medi-Cal BHDS for each county (assuming each county’s Medi-Cal BHDS covers the provider’s services).

C.2.2 Policy 2: Check for and Support Medi-Cal Enrollment

For BHSA-funded providers who are contracted with the Medi-Cal BHDS (in accordance with Policy 1), counties must require that these providers check whether individuals are enrolled in Medi-Cal (or potentially eligible for Medi-Cal) when delivering a BHDS- covered service. Counties must ensure their providers take the following steps (which are outlined in a process flow in Appendix C.1):

1. Inquire if the individual has Medi-Cal and Other Health Coverage:

a. Providers must check for health coverage at the time an individual first seeks BHSA-funded services, unless crisis or outreach services are needed urgently.^[77]

b. For services that do not require prior authorization (e.g., assessment or crisis services), providers can submit the claim to the county within a certain time period after delivering the service per the terms in the county contract, even if the provider was not aware of the individual’s coverage information at the time services were rendered. So, where a provider delivers BHSA-funded services and later discovers that the individual is enrolled in, or eligible for, Medi-Cal or OHC, the provider may bill for those services, as long as the provider has appropriate documentation and submits a claim within the billing window defined in the county contract (for Medi-Cal, counties then have twelve months from the date of service to submit the Medi-Cal claim).

2. If the individual says they are enrolled in Medi-Cal, confirm their enrollment:

a. Ask to see the individual’s Benefits Identification Card (BIC). Regardless of whether or not the individual has their BIC, the provider must check the individual’s enrollment status (and OHC) through the AEVS – including the MCP’s provider portal – or Medi-Cal Eligibility Data System Lite (MEDSLITE).^[78]

3. If the individual says they are uninsured, or declines to answer:

a. Document the date of the inquiry.

b. Check the individual’s enrollment status through the AEVS, if the individual provided enough information.

c. Refer the individual to Department of Social Services (DSS) for eligibility screening and enrollment support. Providers should reach out to County Eligibility Workers at the county social services agency.^[79]

d. At least monthly, conduct a new coverage check, as described above.

C.2.3 Policy 3: Consistently Bill Medi-Cal Behavioral Health Delivery System

Counties must ensure that BHSA-funded providers submit claims to the Medi-Cal BHDS for all BHDS-covered services. This policy applies to BHSA-funded providers who are contracted with the Medi-Cal BHDS (as described above in Chapter 6, Section C.2.1 Policy 1) and providing a Medi-Cal covered service to an individual who is enrolled in Medi-Cal (as described in Chapter 6, Section C.2.2 Policy 2).

DHCS requires counties to help providers to understand and comply with Medi-Cal claiming requirements. Among other elements, counties must provide guidance to providers to support them to:

• Identify services that can readily be covered through Medi-Cal (and distinguish them from services that may not be covered).

• Confirm which services have prior authorization requirements and, when necessary, submit a prior authorization request.

• Maintain appropriate documentation in the member’s medical record.

• Submit claims in accordance with Medi-Cal billing and coding requirements. If the claim is denied due to improper billing, the provider must correct the deficiencies and resubmit the claim to the county and the county must consistently correct claims submitted to DHCS.

DHCS reminds providers that they are required to comply with any plan-specific claiming requirements, including those in contracts with the county. To support providers identifying whether BHSA fiscal policy applies to them, DHCS has outlined process flows in Appendix C.1. Medi-Cal billing and documentation resources are provided in Appendix C.2.

In addition to using BHSA as the non-federal share for Medi-Cal covered services (consistent with all BHSA expenditure guidance in this manual), counties may continue to use BHSA funds (and other sources of funds) to cover costs not included within Medi- Cal payment rates and/or activities not billable under Medi-Cal or BHSA-funded providers.

C.2.4 Implementation Timeline for Securing Medi-Cal Payment

DHCS requires counties to implement the fiscal policies described above by July 1, 2027, allowing counties one year to implement this policy guidance after submitting the first IP by June 30, 2026. DHCS will use the Integrated Plan (IP) as a key tool to understand where counties are in implementing the fiscal policy requirements and gain visibility into how counties use BHSA funds. In the first IP due by June 30, 2026, and in the annual updates for 2027 and 2028, counties will be required to report data such as:

• Progress toward meeting the fiscal requirements described in Chapter 6, Section C.2.

• Report the number of BHSA providers who do and do not participate in the county’s Medi-Cal BHDS network (excluding providers who do not offer BHDS- covered services).

• Beginning with the annual update due in 2027, counties will explain their progress toward meeting these fiscal requirements and any challenges counties have encountered in meeting these three fiscal requirements related to securing Medi-Cal payments and explain how the county is working to overcome those challenges.

Upon submission of the second IP, due by June 30, 2029, DHCS will establish a concrete benchmark for counties regarding the proportion of BHSA-funded providers participating in Medi-Cal. To develop this benchmark, DHCS will review the data submitted by counties from 2026 to 2028, consult with counties, and consider factors such as the types of services the county funds with BHSA and the county’s demographics (e.g. rates of uninsurance and Medi-Cal coverage). DHCS will establish fiscal benchmarks for counties after DHCS begins collecting data from counties via the Behavioral Health Outcomes, Accountability, and Transparency Report (BHOATR).

C.3 Securing Payment from Commercial Health Insurance

For individuals with commercial health insurance, Welfare and Institutions (W&I) Code section 5891, subdivision (a)(3) requires counties and providers to make a good faith effort to seek payment from the commercial plan for any BHSA-funded services that the commercial plan covers.^[80] State law allows counties to use BHSA funds before exhausting commercial insurance coverage.^[81]

To meet these requirements, counties must require all providers delivering a BHSA-funded service that is covered by commercial health plans make a good faith effort to meet the following requirements. For county-contracted providers, the county will meet these requirements if it contractually requires BHSA-funded providers to take the following steps:

1. Check Insurance Status: Providers check whether individuals are enrolled in a commercial health plan.

2. Consistently Bill Commercial Insurance: Providers make a good faith effort to seek payment from commercial health plans, in accordance with each health plan’s billing requirements, including obtaining prior authorization from the plan, when applicable. This may include seeking a network provider agreement.

3. Report Complaints About Commercial Health Plan Conduct: Counties and providers are encouraged to report complaints through the process defined below to DMHC, CDI, or DHCS’ Third-Party Liability and Recovery Division (TPLRD), as applicable, if a commercial health plan fails to make a good faith effort to contract, enter into agreements, or timely reimburse the county for services.

These policy requirements apply only where (1) an individual receiving a BHSA-funded service has commercial insurance, and (2) the individual’s commercial health plan covers the BHSA-funded service. State-regulated commercial plans are required to cover medically necessary clinical services for behavioral health diagnosis and treatment, as well as mobile crisis services, as described in the textbox below.

If a provider follows DHCS’s recommended billing approach and the commercial plan denies the claim or pays below the county’s standard rate, counties may use BHSA funds to supplement the payment. In instances where the commercial plan reverses a denial and pays a claim after the county pays the provider with BHSA funds for the service, the BHSA funds must be used for another BHSA eligible service. Counties may manage this through their own reconciliation process. DHCS encourages counties to report complaints to DMHC, CDI, or DHCS’ TPLRD, as applicable, when commercial health plans fail to timely reimburse for services.

If an individual receiving a BHSA-funded service has both Medi-Cal and commercial coverage, the provider must follow existing DHCS procedures for OHC detailed in OHC Provider Manuals described in the textbox below.^[85]

C.3.1 Policy 1: Check Insurance Status

For any BHSA-funded service that could be covered under a commercial health plan, counties must require that providers make a good faith effort to check the health insurance status of all individuals receiving those services. These procedures resemble the procedures for checking for Medi-Cal coverage, as described above. For any BHSA-funded service that is both covered by the county BHDS and typically covered by commercial plans, providers should check for both types of health coverage. If the individual has Medi-Cal, the provider should follow OHC procedures, as described above.

If the individual does not have Medi-Cal, then providers must make a good faith effort to check for commercial insurance using the following steps:

1. Inquire if the individual has insurance. Providers must generally check for health coverage at the time an individual requests and receives BHSA-funded services, unless one of the following applies:

a. The provider reasonably expects that commercial payment is not available for specific services (e.g., non-medical FSP supports) and/or the provider reasonably expects that the individual does not have commercial health plan (e.g., those experiencing homelessness or at risk of homelessness).

b. The provider reasonably believes that crisis services are needed urgently.

Note: In instances where a provider delivers BHSA-funded services and later discovers that the individual is enrolled in a commercial health plan, the provider may bill those services after providing services as long as the provider has appropriate documentation, requests authorization, and submits a claim within the payer’s billing window. However, requesting authorization after providing the service may increase the likelihood of claim denial, particularly for services that require prior authorization. For services that commonly require prior authorization, counties must ensure that providers make a good faith effort to seek prior authorization from the commercial plan, as described below under Chapter 6, Section C.3.2.

2. If the individual says they have insurance, the provider must confirm their enrollment. The provider should ask the individual to allow the provider to make a copy of the individual’s insurance card. The provider must seek authorization from the individual to submit a claim for payment, as described below.

3. If the individual says they are uninsured or declines to answer the provider’s question about their commercial health insurance, the provider should:

a. Document the individual’s response to the inquiry,

b. Refer the individual to the Department of Social Services (DSS) for eligibility screening and enrollment support. Providers should reach out to County Eligibility Workers at the county social services agency.^[89]

c. At least monthly, conduct a new coverage check, as described above.

See Appendix C.1 for diagrams outlining these process flows for both Medi-Cal and commercial insurance.

C.3.2 Policy 2: Consistently Bill Commercial Insurance

When a commercially insured individual receives a BHSA-funded service that is likely covered by the individual’s commercial plan, counties must require that providers make a good faith effort to seek payment from the commercial plan, including MCPs, as outlined briefly below, and as discussed in more detail in Appendix C.3. At a minimum, BHSA-funded providers should make a good faith effort to bill as out-of-network providers. However, they may wish to consider seeking network provider agreements with commercial plans as this may support timely and accurate billing and payment.

Standard Billing Requirements for Out-of-Network Providers. In the event the provider does not have a network agreement, an out-of-network provider should contact the individual’s commercial health plan to confirm:

1. Whether the plan covers this service provided by an out-of-network provider.

2. Whether prior authorization is required (never required for emergency or mobile crisis services), and if so, what process to use and what information must be submitted.

3. What billing and coding requirements apply.

4. For higher-cost or longer-term services, any coverage limits (e.g., a maximum duration of services).

After providing the service, the out-of-network provider should:

1. Submit a complete claim, in accordance with the plan’s requirements. For example, there may be a special claim form for out-of-network claims.

2. Bill at the provider’s standard rate.

3. If necessary, pursue the plan’s provider dispute resolution process^[90] and file a complaint with the state if the outcome of the plan’s provider dispute resolution is not satisfactory to the provider.

Prior Authorization. Counties must require providers make a good faith effort to comply with the commercial health plan’s requirements for prior authorization, including what information must be included in a request for prior authorization, and how prior authorization requests must be submitted.^[91]

Single Case Agreements, Letters of Agreement, and Network Contracts. See Appendix C.3 for definitions and additional details). Under certain circumstances, it may be most effective or efficient for an out-of-network provider to establish a more formal agreement with a commercial plan rather than simply submitting claims for out-of- network payment. These circumstances may include a treatment plan involving longer- term services (e.g., weekly services for several months) or higher-cost services (e.g., crisis, residential, or inpatient services). In addition, an agreement may be helpful if a specific plan has denied or delayed payment for multiple claims, despite the provider following all the plan’s requirements.

Counties may explore the possibility of contracting with a commercial health plan on behalf of a group of BHSA-funded providers (potentially including both county- operated and county-contracted providers) offering services coverable by commercial plans, including mobile crisis service.

C.3.3 Policy 3: Report Complaints about Commercial Health Plan Conduct

DHCS encourages counties and providers to report complaints about health plan’s failure to make a good faith effort to enter into agreements or timely reimburse the county for services to the State, as described in Tables 6.C.1 and 6.C.2 below. W&I Code section 5891, subdivision (a)(4)(A) requires that DMHC or CDI timely investigate these complaints.

(More than 90 percent of state regulated commercially covered individuals are enrolled in plans regulated by DMHC. See the footnote for additional information).^[92]

Table 6.C.1 summarizes which types of complaints should be submitted to TPLRD, in addition to DMHC or CDI. Table 6.C.2 lists contact information for submitting complaints to each agency.

Table 6.C.1. Submitting Types of Complaints about Health Plan Conduct

Table 6.C.2. Contact Information for Submitting Complaints to Regulatory Agencies

C.4 Appropriate Use of Other Non-Behavioral Health Services Act Funds

In accordance with Welfare and Institutions (W&I) Code section 5891, subdivision (a)(3), DHCS requires counties to optimize the use of funding other than Medi-Cal federal financial participation (FFP) and commercial insurance (e.g., federal, state, and local funds) to support their behavioral health delivery systems. However, counties may use BHSA funds, before exhausting these other funding sources.^[94] DHCS recognizes that counties generally receive fixed funding allocations and must make choices about the mix of services. This BHSA fiscal policy for use of other funds carries forward DHCS’ policies on blending and braiding funds.

See Appendix C.4 for additional detail regarding various sources of funding for behavioral health services, supportive services, and Housing Interventions, beyond Medi-Cal and commercial insurance.

Counties must continue to comply with all applicable federal, state, and local requirements for other funding sources, including:

• Permissible use of funds, consistent with state and federal laws.

• Non-supplantation and “maintenance of effort” requirements. For example:

  • BHSA funds may not supplant existing state or county funds that had previously paid for mental health services or substance use disorder (SUD) treatment services (except that this non-supplant rule does not apply to the use of 2011 realignment funds).^[95]

  • Maintenance of effort and non-supplantation requirements also exist for certain federal grants, such as the Community Mental Health Services Block Grant (MHBG) and the Substance Use Prevention, Treatment and Recovery Services Block Grant (SUBG, and referred to under federal law as SUPTBG).^[96]

• “Payer of last resort” requirements continue to apply to certain federal funds (e.g., SUBG block grants).^[97]

• “Set-aside” funding requirements continue to apply to some federal funds (e.g., SUBG prevention and perinatal set-aside's, MHBG crisis and first episode psychosis/Early Serious Mental Illness (ESMI) set-asides).^[98]

• Counties should consult applicable state and federal guidance for each funding source for more information. In addition to directly funding the provision of BHSA-funded services, counties may use BHSA funds (as well as realignment funds and county general funds) to finance their required non-federal share for the Substance Abuse and Mental Health Services Administration (SAMHSA) Projects for Assistance in Transition from Homelessness (PATH) matching grant, and Medi-Cal non-federal share.

^[1] W&I Code § 5892, subdivision (g)

^[2] W&I Code § 5892, subdivision (h)

^[3] W&I Code § 5892, subdivision (a)(1)(A)(i)

^[4] W&I Code § 5892, subdivision (a)(1)(A)(ii)

^[5] W&I Code § 5892, subdivision (a)(1)(A)(iii)

^[6] W&I Code § 5892, subdivision (a)(2)(A)

^[7] W&I Code § 5892, subdivision (a)(3)(A)

^[8] W&I Code § 5892, subdivision (a)(3)(B)

^[9] W&I Code § 5892, subdivision (a)(3)(B)(i)

^[10] W&I Code § 5892, subdivision (a)(3)(B)(ii)

^[11] W&I Code § 5892, subdivision (f)(1)(E)

^[12] W&I Code § 5892, subdivision (f)(1)(D)

^[13] W&I Code § 5892, subdivision (f)(1)(A)(F)

^[14] W&I Code § 5892, subdivision (b)(1)

^[15] W&I Code § 5892, subdivision (b)(5)

^[16] W&I Code § 5892, subdivision (b)(5)

^[17] W&I Code § 5892 subdivision (b)(5)

^[18] W&I Code § 5892, subdivision (b)(1)

^[19] W&I Code § 5892, subdivision (b)(3-4)

^[20] PR maximums listed align with current statute. The maximums are subject to change based on decisions made by the Revenue Stability Workgroup. The Revenue Stability Workgroup Report outlining updates in policy is set to be published in 2025.

^[21] W&I Code § 5892, subdivision (b)(2)

^[22] W&I Code § 5892, subdivision (c)(1)

^[23] W&I Code § 5892, subdivision (c)(2)

^[24] W&I Code § 5892, subdivision (c)(4)

^[25] W&I Code § 5892, subdivision(c)(4)

^[26] W&I Code § 5892, subdivision (c)(4)(A)

^[27] W&I Code §§ 5963.02 and 5963.03

^[28] W&I Code § 5892, subdivision (l)

^[29] W&I Code § 5892, subdivision (c)(4)(C)

^[30] Gov. Code, § 8625

^[31] Gov. Code, § 8630

^[32] W&I Code § 5892, subdivision (c)(4)(C)

^[33] W&I Code § 5963.03(c)(1)

^[34] W&I Code § 5892, subdivision(c)(4)

^[35] W&I Code § 5892, subdivision (c)(4)(C)

^[36] W&I Code § 5963.04, subdivision (a)

^[37] W&I Code § 5892, subdivision (i)

^[38] W&I Code § 5963.04, subdivision (a)(1)

^[39] W&I Code § 5963.04, subdivision (e)(3)(A)(i)

^[40] DHCS Form 1821

^[41] DHCS Form 1820

^[42] California Code of Regulations Title 9 § 3420.65, subdivision (b)

^[43] California Code of Regulations Title 9 § 3420.65, subdivision (c)

^[44] W&I Code § 5892, subdivision (i)

^[45] W&I Code § 5892, subdivision (i)(2)(A)

^[46] W&I Code § 5892, subdivision (i)(2)(B)

^[47] W&I Code § 5892, subdivision (i)(2)(C)

^[48] W&I Code § 5892, subdivision (i)(2)(C)

^[49] W&I Code § 5892, subdivision (a)(1-3)

^[50] W&I Code § 5899

^[51] W&I Code § 5963.04

^[52] As outlined in Chapter 6, Section B.7.2 Innovation Funding, if a county currently has INN funds that were encumbered prior to July 1, 2026, and the INN project is operational, those INN funds will remain encumbered for the duration of the first IP, FY 2026-29.

^[53] W&I Code § 5892, subdivision (i)

^[54] W&I Code § 5892, subdivision (e)(2)(C)

^[55] W&I Code § 5892, subdivision (e)(2)(B)

^[56] W&I Code 5963.04, subdivision (a)(2)(F)

^[57] W&I Code § 5963.02, subdivision (c)(2)

^[58] W&I Code § 5963.04, subdivision (a)(2)(F)

^[59] Except for reimbursement of expenses per W&I Code § 5604.3.

^[60] For the purpose of this chapter, “county-operated provider” means a provider who is employed, owned, or operated by a county government. Likewise, for the purpose of this chapter, “county-contracted provider” means a community provider (i.e., a provider who is not employed, owned, or operated by the county) that contracts with the county to furnish BHSA-funded or Medi-Cal services.

^[61] W&I Code § 5892, subdivision (k)(7)(8). For additional discussion of BHSA eligibility criteria and priority populations, see Chapter 2, Section B.3. For additional discussion of the eligibility requirements for specific BHSA services and supports, see Chapter 7.

^[62] These DHCS-approved uses of BHSA funds are deemed to comply with the population prioritization rubric in W&I Code § 5892, subdivision (d).

^[63] Codified in W&I Code §§ 5813.5, subdivision (c), 5878.3,subdivision (a), 5830, subdivision (c), and 5891, subdivision (a).

^[64] W&I Code § 5891, subdivision (a)(2); For the definition of the county’s Medi-Cal Behavioral Health Delivery System, please see W&I Code § 14184.101(i).

^[65] W&I Code § 5891, subdivision (a)(3)

^[66] W&I Code §§ 5878.3, subdivision (a)(2) and 5813.5, subdivision (c) have similar operative language, respectively applicable to children/youth and adults/older adults.

^[67] W&I Code § 5891, subdivision (a)(3)

^[68] W&I Code § 5830, subdivision (c)(2)

^[69] More information on AEVS is available in DHCS’ “Medi-Cal Program and Eligibility Manual.” Providers can access AEVS in DHCS Provider Portal for Transaction Services, Login to Medi-Cal.

^[70] More information on clean claims can be found in APL 23-020. Questions providers should ask MCPs are: What is your policy on timely filing? What are your clean claim billing instructions and requirements? How should I submit claims? Which clearinghouses do you accept?

^[71] For timely payment of provider claims, see Medi-Cal Managed Care Plan Contract, Exhibit A Attachment III, section 3.3.5, “Claims Processing,” and APL 23-020, “Requirements for Timely Payment of Claims.” For access requirements, see Medi-Cal Managed Care Plan Contract, Exhibit A Attachment III, sections 5.2.5, “Network Adequacy Standards,” 5.2.7, “Out-of-Network Access”, and 5.5.3 “Non-specialty Mental health Services Providers,” and APL 23-001, “Network Certification Requirements,” and Attachment A, “Network Adequacy Standards.” 

^[72] These requirements are stated in BHINS 18-019 and 22-070.

^[73] SMHS certification and recertification requirements are outlined in 9 CCR § 1810.435, the Mental Health Plan: Certifications (MHP-owned & operated Clinics) materials and the current county SMHS contract with DHCS, Exhibit E, Attachment 1, Definitions.

^[74] DMC certification is described on DHCS’s webpage, Drug Medi-Cal Certification. DHCS’s SUD Licensing and Certification Toolkit outlines the full process for Medi-Cal certification and enrollment for DMC/DMC-ODS providers, DHCS Level of Care Designation and ASAM Level of Care Certification.

^[75] The full list of providers and facilities eligible and required to enroll in Medi-Cal through PAVE is available on DHCS webpage “Provider Enrollment Options.” See also DHCS webpage Application Information by Provider Type. Providers apply for Medi-Cal enrollment with the Provider Enrollment Division. Almost all individual SMHS providers and facilities are required to enroll in Medi-Cal, as described in BHIN 20-071. SUD providers must become DMC certified before they can be county-contracted providers, as described in W&I Code § 14124.24(e) and are required to enroll in Medi-Cal, as described in BHIN 20-071.  

^[76] Unlike DMC/DMC-ODS providers, SMHS providers are permitted to contract with a BHDS and begin claiming for Medi-Cal services while their certification is pending.

^[77] For more information about OHC, please see the DHCS Third Party Liability and Recovery Division webpage for Other Health Coverage.

^[78] More information on AEVS is available on DHCS webpage “Medi-Cal Program and Eligibility Manual.” Providers can access AEVS in the DHCS Provider Portal for Transaction Services, Login to Medi-Cal. The MEDS Account Request form is available: “ Medi-Cal Eligibility Data System (MEDS) Account Request”. Once a provider verifies an individual’s enrollment, the provider is accepting the individual as a Medi-Cal patient and must make a good faith effort to verify an individual’s identity, as described in W&I Code § 14018.2 and DHCS Eligibility: Recipient Identification.

^[79] A comprehensive list of county social service agencies is available on DHCS website “County Offices.” An overview of information an individual must provide when applying for Medi-Cal is available on DHCS website “Confirm Eligibility.”

^[80] The guidance in this section applies only to a service that is paid in whole or in part with BHSA.

^[81] W&I Code § 5891, subdivision (3)(A)

^[82] H&S Code § 1374.72; Ins. Code § 10144.5.; APL 24-007 – Implementation of Senate Bill 855 Regulation, Mental Health and Substance Use Disorder Coverage; 28 CCR §§ 1300.74.72, 1300.74.72.01, 1300.74.721.

^[83] 29 U.S.C. § 1144

^[84] 45 CFR § 146

^[85] Other Health Coverage (OHC) provider manuals can be found on DHCS website “Other Health Coverage Resources.”

^[86] W&I Code § 14124.90;42 CFR § 433 Subpart D.

^[87] Other Health Coverage (OHC) provider manuals can be found on DHCS website “Other Health Coverage Resources.”

^[88] DHCS Third Party Liability and Recovery Division

^[89] A comprehensive list of county social service agencies is available on DHCS website “County Offices.” An overview of information an individual must provide when applying for Medi-Cal is described on DHCS website “Confirm Eligibility.”

^[90] H&S Code § 1367, subdivision (h)(2) requires the commercial plan to make this dispute resolution process available for out of network providers.

^[91] W&I Code § 5891, subdivision (a)(3)(C)

^[92] A full list of the plans DMHC regulates is available on DMHC’s website “Choose a Health Plan.” The plans CDI regulates are available on CDI’s website “List of Insurers Providing Health Insurance Coverage.”

^[93] State-regulated health plans are required to pay all clean claims within 30 working (or business) days of receipt (45 working days for HMOs) unless the claim or portion of the claim is contested by the plan. See H&S Code §§ 1371, subdivision (a)(1), 1371.35, subdivision (a), 1373.10, subdivision (b); 28 CCR §§ 1300.71, subdivision (a)(9), 1300.71, subdivision (g), 1300.71, subdivision (h), 1300.71, subdivision (g)(3).

^[94] W&I Code §§ 5813.5, subdivision (c)(2), 5878.3, subdivision (a)(3)(A), and 5891, subdivision (a)(3)(A).

^[95] W&I Code § 5891, subdivision (a)(1)(B). Note that this prohibition on BHSA funding supplanting state funds does not apply to counties’ use of 2011 realignment funds.

^[96] DHCS, SUBG Policy Manual, Version 3.0 (5.21.2024), Sections 1.3.3 and 1.5.1, ;SAMHSA, FFY 2024-2025 Combined Block Grant Application

^[97] 45 CFR § 96.137; DHCS, SUBG Policy Manual, Version 3.0 (5.21.2024), Sections 1.3.3 and 1.5.1;SAMHSA, FFY 2024-2025 Combined Block Grant Application; BHIN 21-055 (September 2021).

^[98] Detailed in SAMHSA, FFY 2024-2025 Combined Block Grant Application