The 2022-23 Budget: Analysis of the Governor’s Major Behavioral Health Proposals

2022-23 BUDGET The 2022-23 Budget: Analysis of the Governor’s Major Behavioral Health Proposals Summary In this brief, we analyze the Governor’s three major behavioral health budget proposals. Behavioral Health Bridge Housing Proposal. The Governor’s budget proposes $1 billion General Fund in 2022-23 and $500 million General Fund in 2023-24 to provide short-term housing intended to transition individuals with significant behavioral health needs out of unsheltered homelessness into a stable living environment in advance of further placement into permanent housing. While we find that this proposal appropriately targets a gap in the behavioral health treatment continuum and current state homelessness efforts, further specifics are necessary to fully assess the proposal’s merits. We recommend the Legislature adopt trailer bill language to specify its intent and terms for this proposed funding, including key details such as the balance of funding between tiny homes—a potentially promising approach that comes with trade-offs— and more established bridge housing options. We also recommend that the Legislature consider trade-offs between the proposal and modifying or expanding existing state homelessness programs, which may have greater capacity to deploy bridge housing immediately. Incompetent to Stand Trial (IST) Workgroup Solutions Package. The Governor proposes an additional $317 million General Fund one time and $33.6 million General Fund ongoing to implement certain solutions from a workgroup convened to develop solutions to address the growing waitlist of felony ISTs awaiting admission to the Department of State Hospitals for competency restoration treatment. Although the priorities reflected in the solutions package are reasonable, we find that further efforts are needed to address underlying factors that impact the number of felony IST referrals. We recommend the Legislature use the budget process to provide input on the package and monitor the status of other promising ideas from the workgroup. We also find that the proposed cap on the number of county felony IST referrals (above which a county would pay a share of cost for felony IST treatment) raises state reimbursable mandate questions. Finally, we recommend that the Legislature direct the administration to explore the feasibility of counting additional funding as excluded from the State Appropriations Limit. New Medi-Cal Mobile Crisis Intervention Services Benefit. The Governor proposes $16 million General Fund ($108 million total funds) in 2022-23—with funding ramping up in subsequent years—to add mobile crisis intervention services as a new Medi-Cal benefit for five years. Although this proposal appropriately targets treatment gaps, we find that key details remain outstanding. We recommend the Legislature gather information before acting on this proposal and consider ways to ensure local capacity to provide this new benefit. Overarching Comments. The Legislature may wish to consider how behavioral health fits within the state’s homelessness strategy, what the long-term vision for the crisis continuum is, and how cross-departmental coordination to address behavioral health issues can be facilitated. GABRIEL PETEK | LEGISLATIVE ANALYST MARCH 2022 www.lao.ca.gov 1 2022-23 BUDGET INTRODUCTION This brief provides an analysis of the Governor’s and $571.6 million General Fund in 2022-23 when three major behavioral health budget proposals: combined with already authorized funding) to the (1) $1 billion General Fund in 2022-23 and Department of State Hospitals (DSH) to implement $500 million General Fund in 2023-24 to the certain solutions developed by the Incompetent to Department of Health Care Services (DHCS) Stand Trial (IST) workgroup that convened last fall to provide short-term behavioral health bridge in response to the substantial backlog of individuals housing options—through the existing Behavioral found IST awaiting treatment in a DSH program; Health Continuum Infrastructure Program and (3) $16 million General Fund ($108 million total (BH-CIP)—for individuals experiencing unsheltered funds) to add mobile crisis intervention services as homelessness with behavioral health needs; a new mandatory covered benefit in the Medi-Cal (2) an additional $317 million General Fund one program. We conclude this brief with some time and $33.6 million General Fund ongoing (for overarching issues for the Legislature to consider in a total of $93 million General Fund in 2021-22 its review of behavioral health proposals in general. BEHAVIORAL HEALTH BRIDGE HOUSING PROPOSAL BACKGROUND (There is possible overlap between these two populations, the degree to which is unknown.) In California, Behavioral Health Services for The prevalence of behavioral health disorders the Most Severe Needs Primarily Are Funded also appears to differ for distinct categories of and Delivered Through Counties. Counties have people experiencing homelessness. For example, the primary role in the funding and delivery of public researchers have estimated that the prevalence behavioral health—encompassing both mental of mental illness and SUD is higher for people health and substance use disorder (SUD)—services. experiencing unsheltered homelessness than In particular, counties generally are responsible sheltered homelessness. Available research also for arranging and paying for community behavioral indicates that experiencing homelessness may lead health services for low-income individuals with some individuals to develop or exacerbate existing the highest service needs. While some counties behavioral health issues, due to the chronic stress may provide short-term housing supports to help of living without stable housing. stabilize individuals with significant behavioral …And Would Benefit From Receiving health needs, generally this is not a focus of county Housing Support Paired With Behavioral behavioral health programs. Health Services. For individuals who both Many Individuals Experiencing Homelessness experience homelessness and have significant Also Have Significant Behavioral Health behavioral health needs, behavioral health services Needs… Although housing affordability is a major can be an essential component of addressing factor in the state’s homelessness crisis, there their homelessness. As discussed earlier, the are many individuals experiencing homelessness chronic stress of living without stable housing who also have significant behavioral health needs. can lead an individual to develop a behavioral Estimates vary on exactly how many individuals health disorder. In turn, this can make it more experiencing homelessness also suffer from difficult for an individual to escape homelessness behavioral health disorders. In 2020, the U. S. as their behavioral health issues make it even Department of Housing and Urban Development more challenging to maintain housing stability. estimated that 23 percent of people experiencing Accordingly, these individuals particularly benefit homelessness in California suffered from severe from a more comprehensive approach to care that mental illness and 22 percent suffered from SUD. 2 LEGISLATIVE ANALYST’S OFFICE 2022-23 BUDGET includes housing supports paired with behavioral operate Full Service Partnership programs, which health services. For example, under permanent provide a comprehensive suite of services to people supportive housing models targeted at people with with severe mental illness under a “whatever it mental illness, mental health services are provided takes” approach. Under these programs, counties on-site to individuals residing in designated housing can elect to provide permanent supportive housing units. These models also may help coordinate paired with mental health services. residents’ access to any necessary additional BH-CIP May Benefit Individuals Experiencing social services. Homelessness. Last year, the state also began Most Recent State Homelessness to take a more active role in providing funding and Investments Have Not Focused on Behavioral support for local governments’ efforts to alleviate Health. Historically, most homelessness assistance the behavioral health issues in their jurisdictions. in California has been provided at the local level. Specifically, the 2021-22 budget created BH-CIP, However, in recent years, the state has begun to which provides temporary grant funding to support take a more active role in providing funding and the development of new behavioral health treatment support for local governments’ efforts to alleviate facilities. (We provide an implementation update for the homelessness issues in their jurisdictions BH-CIP later in this brief.) However, although people (generally on a one-time or limited-term basis). experiencing homelessness may receive behavioral Accordingly, there are several major state-funded health treatment at BH-CIP facilities (and treatment programs that support homelessness relief. for people with behavioral health disorders at Two of the larger programs have provided these facilities may help prevent them from (1) flexible funding to local governments to entering homelessness), they are not designated address homelessness and (2) funding to invest in as a specific population of focus for this program infrastructure—such as the purchase, renovation, (which is intended for people with behavioral health and modification of facilities—to house people needs broadly). experiencing or at risk of homelessness. (For more California Advancing and Innovating information on the state’s recent efforts to address Medi-Cal (CalAIM) Reforms Make Available homelessness, see The 2022-23 Budget: The Housing-Related Services for Individuals Governor’s Homelessness Plan.) With Behavioral Health Needs. The CalAIM Notably, most of these programs generally initiative is a far-reaching set of reforms to expand, are not targeted at individuals experiencing transform, and streamline Medi-Cal service homelessness who also have behavioral health delivery and financing. The state (in conjunction needs and are not required to include the provision with counties and Medi-Cal managed care health of behavioral health services. One notable plans) currently is underway on implementation exception is the No Place Like Home Program of several major components of CalAIM. CalAIM (NPLH), which allocates $2 billion (one time) to includes several reforms broadly intended to counties to construct new and rehabilitate existing increase access to behavioral health services for permanent supportive housing for individuals Medi-Cal beneficiaries. For example, it includes struggling with severe mental illness who are revisions to the criteria used to determine eligibility homeless or are at risk of becoming homeless. for certain Medi-Cal behavioral health services to The housing support provided through NPLH is make it easier for Medi-Cal beneficiaries to receive paired with mental health services provided on-site those services. at the housing unit. In addition, local governments CalAIM also includes the addition of two may (at their own discretion) choose to operate new Medi-Cal benefits targeted at the subset of mental health programs focused on individuals Medi-Cal beneficiaries with the most complex care experiencing homelessness. For example, counties needs. These complex care needs include issues are required to use a substantial share of their related to homelessness and behavioral health. dedicated Mental Health Services Act (MHSA) Specifically, CalAIM includes (1) a new enhanced revenues (roughly $1.4 billion annually statewide) to care management (ECM) benefit to assist high-need www.lao.ca.gov 3 2022-23 BUDGET beneficiaries with navigating Medi-Cal’s delivery residential care facilities, and other facilities that systems and (2) a suite of new benefits—to be can be converted and rehabilitated to provide provided at the discretion of the managed care permanent housing for persons experiencing health plans that provide health care coverage to homelessness or at risk of homelessness, and who a majority of Medi-Cal beneficiaries—known as also are impacted by COVID-19.) In addition, as is “Community Supports,” which are nonmedical the case for most permanent housing programs, benefits aimed at addressing social factors that the state homelessness programs that do provide impact Medi-Cal beneficiaries’ health status. for bridge housing generally do not require targeting Notably, several housing-related services—such individuals with behavioral health disorders. as housing navigation services and term-limited (For example, the Roomkey program provides hotel payments for housing (such as for security deposits and motel rooms to provide immediate housing to or first month’s rent)—are included as Community vulnerable individuals experiencing homelessness Supports options. Importantly, these Community at risk of contracting COVID-19, and is intended Supports do not include funding to build housing to serve as an intermediate step to permanent infrastructure or pay for beneficiaries’ housing on housing. This program does not pair available a long-term basis. housing options with the provision of behavioral What Is Bridge Housing and Why Is It health services.) Important? Bridge housing—often known BH-CIP Implementation Update as transitional housing—is housing intended Below, we provide an implementation update to transition individuals immediately out of for BH-CIP, the most recent state investment for homelessness into a stable living environment the creation of new behavioral health facilities. in advance of further placement into permanent (As discussed earlier, although individuals housing. (Typically, applying, locating, and experiencing homelessness are not a designated ultimately obtaining permanent housing takes some target population for this program as currently time.) Bridge housing can serve as a link between designed, they may ultimately access behavioral the homelessness shelter system and long-term health treatment at BH-CIP facilities.) housing options. It often includes supportive services (such as employment and financial literacy 2021-22 Budget Established BH-CIP. The counseling) provided on-site at the bridge housing 2021-22 budget package included $445.7 million unit. In contrast to homelessness shelters (which General Fund ($755.7 million total funds) in 2021-22, in many cases do not provide a 24-hour duration of $1.2 billion General Fund ($1.4 billion total funds) in residency), bridge housing residents typically are 2022-23, and $2.1 million General Fund in 2023-24 able to remain in their housing unit for a relatively to implement BH-CIP. Under this program, DHCS extended period of time. This stability, combined provides competitive grants to cities, counties, with the supportive services received during tribes, nonprofits, and corporations to increase bridge housing stays, increases the likelihood that behavioral health infrastructure, predominantly by an individual will be able to move into permanent constructing, acquiring, or renovating facilities for housing and not fall back into homelessness. community behavioral health services (contingent If bridge housing is targeted at individuals on these local entities providing matching funds experiencing homelessness who also have and committing to providing funding for ongoing behavioral health disorders, then it may also include services). Grants provided under this program fund the provision of behavioral health services on-site. a variety of community behavioral health facility types to treat individuals with varying levels of Bridge Housing and Recent State behavioral health needs. For example, funds could Investments. The majority of the state’s recent be used on (1) short-term crisis treatment beds, major homelessness investments supported (2) residential treatment facilities in which treatment programs that are intended to provide permanent typically lasts for a few months, or (3) longer-term housing, rather than temporary bridge housing. rehabilitative facilities. Certain portions of the total (For example, the Homekey Program provides amounts discussed above for this program are funding for the acquisition of hotels, motels, 4 LEGISLATIVE ANALYST’S OFFICE 2022-23 BUDGET set aside for more specific purposes or targeted 20 percent of the total funding for BH-CIP at more specific populations. For example, some to distribute at its discretion depending on funding is reserved for the establishment of mobile ultimate statewide demand. behavioral health crisis teams and for community • Local Application Requirements. In order behavioral health facilities targeted at children to obtain BH-CIP funding, local entities will and youth. be required to participate in a pre-application Since Legislative Approval, DHCS Has consultation on project readiness. (These Developed Funding Plan and Key Program consultations provide an opportunity to Details. When BH-CIP was approved, several key discuss, for example [1] identified local implementation details were not fully developed yet. regulatory hurdles to creating new facilities These outstanding details concerned (1) the funding and [2] how proposed projects would address allocation plan, (2) what requirements local entities local needs.) Following this, when applying would need to meet to apply for and obtain funds, for funds, local entities will be required to and (3) what the ultimate match requirement from submit documentation of (1) control over local entities would be. Below, we discuss recent the property to be acquired or rehabilitated developments related to these key program details. (such as by providing a letter of intent that outlines the terms of a sale or lease contract), • Funding Allocation Plan. DHCS intends to (2) approval for any necessary local permits, make BH-CIP grant funds available through (3) adherence to behavioral health facility six rounds. Under this schedule, funding licensing requirements, (4) preliminary through rounds one (focused on mobile construction plans and time lines, (5) capacity crisis infrastructure) and two (focused on to meet the local match requirement (further local planning activities) were made available discussed below), and (6) engagement with in 2021. (DHCS awarded $138.8 million the local community (including any necessary through round one and $1.5 million through contracts to ensure that Medi-Cal services are round two.) For the later rounds, round three provided in facilities proposed for acquisition ($518.5 million) will be focused on launch or construction). Local entities also will be ready projects, round four ($480.5 million) required to share results from local behavioral will be focused on children and youth health needs assessments (which inform facilities, and rounds five and six ($960 million which facility types they will prioritize) and combined) will be focused on priorities how they intend for projects to advance identified in DHCS’ behavioral health racial equity. Continuum of Care assessment report. (We discuss this assessment report later in • Local Match Requirement. The amounts this brief.) This funding plan results in shifts that local entities will be required to provide in the estimated payment timing for BH-CIP, as the match for BH-CIP funding vary by such that less funding than initially anticipated applicant type. Specifically, (1) tribal entities will be distributed in 2021-22 and more than will be required to provide a 5 percent match; anticipated will be distributed in 2022-23. (2) counties, cities, and nonprofits will be In addition, DHCS intends to apply regional required to provide a 10 percent match; caps to most BH-CIP funding across the state. and (3) for-profit or private organizations, in The program’s seven regions are (1) the Bay partnership with counties, will be required to Area, (2) the Central Coast, (3) Los Angeles provide a 25 percent match. In addition, under County, (4) the Sacramento Area, (5) the BH-CIP, the local match can be provided San Joaquin Valley, (6) Southern California, in the form of cash or in-kind contributions and (7) the remaining balance of the state. (such as land or existing structures) subject to (These caps would be determined by these approval from the state. regions’ share of 2011 realignment funds for behavioral health.) However, DHCS will reserve www.lao.ca.gov 5 2022-23 BUDGET Behavioral Health Continuum of Care Behavioral Health Assessment Report Assessment Report Identifies Key Gaps in Continuum of Care, Including for Bridge Housing… As discussed, DHCS Recently Released Assessment DHCS’ behavioral health assessment report of Current Capacity for Behavioral Health concerns the statewide capacity to provide Services Statewide. Given the increased state behavioral health services across the full spectrum focus on behavioral health as a major policy issue, of behavioral health care. (For example, it includes DHCS attempted to assess the current landscape an assessment of statewide capacity for outpatient for behavioral health services throughout the behavioral health care, crisis behavioral health state (using a combination of available data and care, and inpatient behavioral health care, among qualitative interviews with key behavioral health other types of behavioral health treatment.) Notably, stakeholders). The findings from this assessment this assessment report also includes a discussion were released in January 2022 in a report titled of the landscape for housing options available to “Assessing the Continuum of Care for Behavioral individuals with behavioral health disorders (including Health Services in California.” This report examines short-term housing options such as bridge housing). the statewide capacity to provide behavioral health To assess the need for housing options for individuals services across the full spectrum of behavioral with behavioral health needs, the report relies on health care. qualitative focus group interviews with key behavioral Assessment Intended to Shape State Funding health stakeholders. The majority of participants in Priorities for Behavioral Health, Including for these focus group interviews identified a need for Later Rounds of BH-CIP. The administration additional housing options for people with behavioral intends to use the findings from its behavioral health health disorders (including in certain state-licensed assessment report to help inform state priorities for facilities that can be used as a bridge housing option). behavioral health going forward. For example, it has …But Does Not Provide Estimate of Additional stated that the identified need for certain behavioral Bridge Housing Beds Needed. While the health facilities will inform the design of the later assessment report provides some information on the rounds of BH-CIP (resulting in a targeting of BH-CIP current number of housing options (including bridge grant funds for behavioral health facility types for housing) for individuals with behavioral health needs, which statewide need is particularly acute). it does not provide an estimate of what additional In addition, as part of the CalAIM initiative, the housing capacity is necessary. administration plans to pursue a federal waiver opportunity—known as the Serious Mental Illness PROPOSAL (SMI)/Serious Emotional Disturbance (SED) $1.5 Billion General Fund One Time for demonstration opportunity—to potentially receive Counties and Tribes to Provide Bridge federal reimbursement for services provided to Housing Options for Individuals Experiencing individuals with severe mental illness that are Homelessness With Significant Behavioral normally not eligible for federal funding. In order Health Needs. The Governor’s budget proposes to gain approval from the federal government for $1 billion General Fund in 2022-23 and $500 million this waiver opportunity, the state will need to build General Fund in 2023-24 to be distributed to counties out necessary behavioral health infrastructure to and tribes to provide bridge housing that includes address identified statewide gaps for community behavioral health services for people experiencing behavioral health care. DHCS’ behavioral health unsheltered homelessness with significant behavioral assessment report is intended to help inform what health needs. The funding would be administered specific additional investments will be made going by DHCS through BH-CIP. This funding is intended forward to fill these gaps in community care. to provide immediate bridge housing options for this population until the longer-term housing and behavioral health facilities authorized as part of the 2021-22 budget come online. 6 LEGISLATIVE ANALYST’S OFFICE 2022-23 BUDGET Funding Could Be Used to Purchase and implement this proposal (which would allow the Install Tiny Homes, Secure Beds in Existing Legislature to specify its intent and terms for this Bridge Housing Settings, or Provide Behavioral proposed funding). Health Services. The administration indicates Proposal Appropriately Targets Gap in that counties and tribes could use this proposed Behavioral Health Treatment Continuum funding to (1) purchase and install tiny homes to and Current State Homelessness Efforts… serve as bridge housing units, (2) secure bridge As discussed earlier, people experiencing housing for individuals experiencing homelessness homelessness who also struggle with behavioral with significant behavioral health needs in existing health disorders particularly benefit from housing housing settings—such as board and care facilities, support that is paired with the provision of and (3) provide time-limited behavioral health behavioral health services. In addition, while some services in these tiny homes or in other existing existing state programs to address homelessness bridge housing settings. do provide bridge housing, these programs do not target individuals experiencing homelessness ASSESSMENT who also have behavioral health disorders (nor Further Specifics of the Proposal Needed is there any established strategy as part of these to Fully Assess Its Merits. Further details are programs to address the needs of this population). necessary to fully evaluate this proposal. For We also understand that, currently, people with example, these details include specifics about significant behavioral health needs may not be able (1) how available funds would be targeted to regions to access bridge housing options through existing of the state that experience more substantial need state programs due to their needs, potentially for behavioral health bridge housing; (2) how funds making current broader homelessness programs ultimately would be distributed to counties and inaccessible to this population. Furthermore, DHCS’ tribes (for example, whether this proposal would behavioral health assessment report identifies be structured as a competitive grant program or a need for additional bridge housing for this include a formula-based allocation); (3) what, if population. Given this proposal’s primary focus— any, requirements counties and tribes would need providing short-term immediate housing combined to meet in order to obtain funds; (4) how funds with a suite of behavioral health services to stabilize would be prioritized between the construction of people experiencing unsheltered homelessness tiny homes and supporting existing bridge housing in advance of moving into long-term housing—we settings; and (5) what oversight and evaluation find that this proposal appropriately targets a gap activities DHCS would conduct for the proposal. in current state homelessness and behavioral health efforts. Highly Conceptual Nature of Proposal and Lack of Trailer Bill Language Could …But Extent of Gap and Degree to Which Limit Legislative Input on Ultimate Design of Proposal Fills Gap Is Unclear. Although we find Proposal. Given the highly conceptual nature of that this proposal is appropriate in its focus on this proposal as submitted to the Legislature— behavioral health bridge housing, the ultimate which provides a broad purpose and a high-level number of additional bridge housing units needed description of how funding could be used to meet to meet statewide need—both in the short that purpose, with many key details outstanding— and longer term—is unclear. Furthermore, the we find that legislative approval of this proposal in administration has not provided an estimate of how its current form could limit the Legislature’s input many additional bridge housing units would be on the ultimate design of this proposal. That is created if this proposal is approved. to say, key decisions governing the structure of Ensuring Duration of Bridge Housing Stays this program likely would be ceded to DHCS to Aligns With Ultimate Availability of Longer-Term implement administratively. Compounding this Housing Options Is Critical. The administration issue, we understand that the administration has indicated that this proposal is intended to does not plan to propose trailer bill legislation to provide immediate bridge housing to people www.lao.ca.gov 7 2022-23 BUDGET experiencing unsheltered homelessness and • Trade-Offs of Tiny Homes as Approach for who suffer from behavioral health disorders for a Addressing Homelessness. While there is limited period of time until more permanent housing no standard definition for what constitutes a options are available (such as those permanent tiny home, this term is often used to refer to a options funded through recent state investments). small house typically under 400 square feet in We find that ensuring that the ultimate duration of size. These houses vary in their construction bridge housing stays aligns with the availability of design and what amenities they contain. While permanent housing is critical. If these longer-term they can be built relatively quickly compared housing options are not ready by the time individual with traditional housing units, whether they stays in this bridge housing end, these individuals are suitable for longer-term housing is unclear. may face unsheltered homelessness again and Tiny homes also do not necessarily have bridge housing units may not be vacated in time to the same land requirements as multifamily accommodate additional individuals. housing units, but their placement still raises Existing Homelessness Programs May land use challenges and moreover typically Have Greater Capacity to Provide Immediate do not result in housing density. Tiny homes Homelessness Relief. BH-CIP is a relatively new may be suitable as a component of the state’s state program, and it took some time for DHCS to homelessness response, but whether they develop key program details and ultimately make could be used at a large scale is unclear. funding available for new behavioral health facilities. • Trade-Offs of Tiny Homes as Component In addition, only a fraction of the total funding for the of This Proposal. As a bridge housing option program has been distributed to local entities thus (intended to house an individual temporarily far. Although the intent of this proposal is to make until a permanent housing unit is available), funding available immediately for behavioral health tiny homes may make sense, as they can bridge housing, the additional capacity DHCS has fulfill an immediate priority to house people to immediately develop key program modifications experiencing unsheltered homelessness in to BH-CIP (if necessary) and ultimately disburse the a stable environment due to their relatively proposal’s funds to counties is unclear. Accordingly, fast construction time and lower cost when existing state homelessness programs—such compared to conventional housing. Whether as the Roomkey or Community Care Expansion this approach could be scaled up for the (CCE) programs—may have greater capacity to purposes of this proposal, however, is unclear. deploy bridge housing more immediately. Moreover, Counties likely would face challenges in the some of these programs have more experience timely acquisition and placement of relatively making housing options available for individuals large numbers of these units. Consequently, experiencing homelessness on a short-term basis. whether this approach would be significantly A modification or expansion of these existing faster than using existing infrastructure or programs—to target bridge housing at individuals funding the acquisition or construction of with behavioral health needs—could result in more new units is unclear. Moreover, there likely immediate relief for this population. will be ongoing needs for bridge housing—as Tiny Homes Are Potentially Promising, but opposed to a one-time need. While tiny homes Present Trade-Offs. Tiny homes are a potentially could be more mobile, whether they could promising approach to providing bridge housing to be maintained over time to support ongoing individuals with behavioral health needs. However, transitions to permanent housing is unclear. they present trade-offs when compared to other Strategy for Overcoming Local Opposition approaches to providing bridge housing. Below, to Tiny Homes May Be Needed. As discussed, we discuss tiny homes and these trade-offs in we understand that local jurisdictions have further detail. experienced challenges related to local opposition to the construction and placement of tiny homes for people experiencing homelessness. The Governor’s 8 LEGISLATIVE ANALYST’S OFFICE 2022-23 BUDGET proposal does not include a state-level strategy these new CalAIM benefits—would provide for navigating this potential local opposition or these benefits on-site at behavioral health bridge how tiny homes should be distributed (whether by housing units operated by counties and tribes consolidating many tiny homes in specific locations and (2) CalAIM housing navigation services or distributing them throughout jurisdictions). would be provided to individuals in these units to Without a clearly articulated strategy for doing support these individuals locating and securing so, we find that this proposal’s capacity to permanent housing. make additional tiny homes available for people Proposal May Increase Likelihood of Federal experiencing homelessness with behavioral health Approval for Key CalAIM Demonstration needs may be significantly diminished. Opportunity. As discussed earlier, in order to Local Capacity to Continue Behavioral Health gain approval from the federal government for the Bridge Housing Supports After Exhaustion SMI/SED demonstration opportunity—to receive of State Funding Is Unclear. The Governor’s federal reimbursement for services provided to proposal would provide funding for behavioral individuals with severe mental illness that are health bridge housing on a limited-term basis in normally not eligible for federal funding—the state 2022-23 and 2023-24. While the behavioral health will need to build out necessary behavioral health bridge housing options funded by the proposal are infrastructure to address identified statewide intended to serve as a temporary housing option gaps for community behavioral health care (such until longer-term housing options funded by other as those identified in DHCS’ behavioral health state investments come online, there likely would assessment report). The activities funded by this be some need to continue operating these bridge proposal—providing behavioral health bridge housing settings once state funding is exhausted. housing to individuals experiencing unsheltered If counties and tribes elect to continue operating homelessness with significant behavioral health these behavioral health bridge housing options, needs—could be considered by the federal they would need to do so using alternative funding government as evidence of this commitment and sources. Accordingly, what capacity counties help contribute to the state’s application for this and tribes have to use alternative funding sources demonstration opportunity. to continue operating these housing options is unclear. RECOMMENDATIONS How Proposal Would be Coordinated With Consider Trade-Offs Between Proposal Implementation of New CalAIM Benefits Is and Modifications to Existing Homelessness Unclear. As discussed earlier, in addition to Programs. As discussed earlier, we find that reforms intended to broadly increase access to existing state homelessness programs—such as Medi-Cal behavioral health services, the CalAIM the Roomkey program—may have greater capacity initiative includes the addition of a new ECM benefit to deploy bridge housing more immediately. for individuals experiencing homelessness who Accordingly, the Legislature may wish to consider also struggle with behavioral health disorders. the trade-offs between the Governor’s proposal— CalAIM also includes the addition of several which would provide additional funding to BH-CIP new Community Supports benefits that provide (which has still not disbursed the majority of its housing-related services and time-limited housing existing funds, which are focused on a related, but payments for this population. The administration different, purpose)—and modifying or expanding has not provided a clear strategy for how the existing state homelessness programs to focus provision of the ECM and Community Supports specifically on individuals who also have behavioral benefits would be coordinated with the availability health needs. of behavioral health bridge housing units funded Consider Planning Funds Instead for New by this proposal. For example, this coordination State Approaches. Developing novel approaches could include a plan for ensuring that (1) Medi-Cal to provide bridge housing very likely will take time. managed care plans—tasked with providing For instance, the construction and placement of www.lao.ca.gov 9 2022-23 BUDGET tiny homes as bridge housing would be a new state • Strategy for Navigating Local Opposition activity (in contrast to securing beds in existing to Construction of Tiny Homes for People housing facilities) and likely would be new for some Experiencing Homelessness. Trailer bill counties and tribes as well. Given this, developing language could provide direction on how a plan for the disbursement of funds to counties to navigate potential local opposition to and tribes for this specific purpose may take time. the construction of tiny homes, such as by Moreover, counties’ and tribes’ ability to deploy streamlining local approval requirements or these resources also would take time. Should the requiring counties and tribes to demonstrate Legislature wish to move forward with the approach community engagement in the decision to construct tiny homes—or some other novel to pursue tiny homes for behavioral health approach—to meet the state’s bridge housing bridge housing. needs, it may wish to consider providing planning • Allocation Methodology. Trailer bill language funds to the state and local governments (while could specify what the allocation methodology still providing funds to secure bridge housing in for this behavioral health bridge housing existing settings). should be. For example, this language would If Legislature Approves of Proposal in specify whether the proposal would be Concept, Ensure Input on Ultimate Design implemented as a competitive grant program of Program Through Trailer Bill. As discussed (which may result in more sustainable earlier, given the highly conceptual nature of models by requiring counties and tribes to this proposal, we find that legislative approval demonstrate their capacity to operate these of this proposal in its current form could limit bridge housing settings on a longer-term the Legislature’s input on the ultimate design of basis) or be subject to a formula-based bridge housing. To help ameliorate this issue, allocation formula to counties and tribes we recommend the Legislature adopt trailer bill (which may result in funds being distributed language to govern the implementation of this more quickly). program and provide more opportunities for • Long-Term Planning. Trailer bill language oversight. Below, we provide some examples of key could specify how bridge housing should be program details, including oversight provisions, that targeted to meet immediate needs, as well this trailer bill language could address: as how assets purchased under the program • Additional Details About Proposal’s should be maintained to provide ongoing Program Design. Trailer bill language for options. As there likely is a need for ongoing this proposal could specify additional details bridge housing supports, statute could lay about program design. These additional out the Legislature’s longer-term vision for details could include, for example, (1) what this intervention. requirements counties and tribes would need • Oversight, Evaluation, and Reporting to meet in order to obtain funding and (2) how Requirements to the Legislature. Trailer funding would be prioritized for different bill language could specify what oversight regions of the state. and evaluation activities the administration • Appropriate Balance Between Prioritizing would conduct for this proposal after funds Tiny Homes and More Established Bridge are distributed to counties and tribes. It also Housing Options. As discussed earlier, could specify what information—and with we find the construction of tiny homes a what frequency—the administration would be promising, yet relatively new, approach to required to provide to the Legislature (such filling the need for bridge housing. Trailer bill as the number of individuals successfully language could delineate the appropriate transitioned to permanent housing or who balance of funding to be provided towards this have received the new Medi-Cal services purpose relative to securing bridge housing in created under CalAIM). existing facilities. 10 LEGISLATIVE ANALYST’S OFFICE 2022-23 BUDGET IST WORKGROUP SOLUTIONS PACKAGE BACKGROUND Conditional Release Program (CONREP), in which supervised felony ISTs reside in the community Felony ISTs and the Waitlist. Currently, counties and receive outpatient mental health treatment; are responsible for almost all mental health treatment and (4) IST diversion programs, in which courts can for low-income Californians with severe mental health refer felony ISTs (or those likely to be found IST) to needs. One exception, however, is treatment for mental health treatment in exchange for dropped individuals found IST and who face a felony charge or reduced charges upon completion of the mental (we refer to these individuals as “felony ISTs”). Felony health program. These county treatment options have ISTs typically are referred by a state trial court to DSH resulted in some reduction in the pressures DSH faces to receive treatment. The state treats the majority to find treatment capacity for felony ISTs. (For example, of felony ISTs in state hospitals; however, many as of June 2021, 458 individuals were referred to individuals wait in county jails for many months given county mental health treatment programs as part of the limited number of DSH beds, which has resulted the DSH IST diversion program, rather than a state in a waitlist of felony ISTs who have not been admitted hospital bed.) In 2019, county-based competency to DSH. The treatment provided to felony ISTs— restoration programs served roughly 2000 felony ISTs known as “competency restoration treatment”— compared to about 4000 treated in state hospitals. differs from general mental health treatment. The In addition, the 2021-22 budget included objective of competency restoration treatment is to $267.1 million General Fund in 2021-22—ramping treat a felony IST until they are competent enough down to $145.5 million General Fund in 2024-25 and to face their criminal charge, rather than provide ongoing—for DSH to contract with counties for (and comprehensive treatment for an underlying mental for the department to subsequently oversee) additional health condition. While the state is responsible for treatment bed capacity in the community. DSH has treating felony ISTs, counties are responsible for begun to engage with counties on securing contracts treating misdemeanor ISTs. for this funding, but has not disbursed any funds yet. DSH Received Funding Augmentations in Felony IST Waitlist Has Reached All-Time Highs. Recent Years to Treat Felony ISTs, Including Prior to the onset of the COVID-19 pandemic, the Through Contracts With Counties. To increase number of felony ISTs on the waitlist for competency capacity for felony IST treatment, in prior years, DSH restoration was typically around 800 individuals. has received funding to both (1) expand bed capacity Since the initial months of the pandemic, the number in state hospitals and (2) contract with counties to of felony ISTs on the waitlist has grown to over provide competency restoration treatment to felony 1,700 individuals as of December 2021 (with an ISTs who do not require the higher level of care average wait time for treatment exceeding 100 days). that state hospitals provide. When contracting with Figure 1 on the next page illustrates growth in the counties, DSH still retains responsibility for felony felony IST waitlist since December 2019. IST treatment, but provides funding to counties to treat felony ISTs on its behalf. County-provided After Brief Dip Due to COVID-19, Monthly IST felony treatment includes (1) the establishment Felony IST Referrals Generally Have Risen to of Jail-Based Competency Treatment programs, Above Pre-Pandemic Levels. In prior years, DSH in which competency restoration treatment is experienced gradually rising felony IST referrals for provided to felony ISTs while they are in county jails; competency restoration treatment. The average (2) Community-Based Restoration (CBR) programs, in number of felony ISTs referred per month increased which counties receive funding to provide competency by roughly 20 percent between 2015-16 and 2018-19. restoration treatment in a variety of community However, in response to the COVID-19 pandemic, behavioral health treatment settings; (3) the DSH DSH imposed a suspension of all admissions into state hospitals in the initial months of the pandemic. www.lao.ca.gov 11 2022-23 BUDGET This, combined with reduced Figure 1 capacity in local court systems due to COVID-19-restrictions, led to a decline Felony IST Waitlist Has Reached All-Time Highs in the number of felony IST referrals as Monthly Statewide Felony IST Waitlist shown in Figure 2. (For example, from March 2020 to April 2020, referrals 1,800 declined 62 percent.) DSH continued to experience lower numbers of 1,600 felony IST referrals until August 2020, 1,400 after which time COVID-19-related 1,200 restrictions limiting referrals generally 1,000 were lifted. (The department did later suspend admission of certain patients 800 from January 2021 to February 2021.) 600 For the months since then, the number 400 of felony IST referrals generally has risen 200 to above pre-pandemic levels, as shown in Figure 2. In part, this rise reflects Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec the backlog of cases resulting from 19 20 20 20 20 20 20 21 21 21 21 21 21 pandemic-related restrictions. IST = incompetent to stand trial. Stiavetti v. Clendenin. In 2016, the American Civil Liberties Union filed a lawsuit against DSH alleging that the constitutional rights of felony ISTs were being violated due to DSH failing Figure 2 to place felony ISTs into competency restoration treatment in a timely manner. Monthly Felony IST Referrals A California Superior Court ruled that Have Generally Risen to Above Pre-Pandemic Levels felony ISTs have a constitutional right to Monthly Statewide Felony IST Referrals competency restoration services within a reasonable period of time, and found that DSH had violated this right by failing 500 to secure treatment for felony ISTs in a timely manner. Accordingly, the superior 400 court required DSH to place felony ISTs into competency restoration treatment 300 within 28 days. DSH appealed this ruling to the California Supreme Court, but the department’s appeal was denied in 200 2021. DSH is now required to provide competency restoration treatment for 100 felony ISTs according to a phased-in schedule of (1) within 60 days by August 2022, (2) within 45 days by February Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec 19 20 20 20 20 20 20 21 21 21 21 21 21 2023, (3) within 33 days by August 2023, and (4) within 28 days by February 2024. IST = incompetent to stand trial. If DSH is unable to meet these specified requirements, the department potentially could be subject to substantial fines or placed under federal receivership. 12 LEGISLATIVE ANALYST’S OFFICE 2022-23 BUDGET IST Solutions Workgroup. 2021-22 to implement these solutions). We understand that budget-related legislation established a workgroup— the administration intends to revise this proposed appointed by the California Health and Human package based on legislative and stakeholder Services Agency (CalHHS) Secretary—that convened feedback, and update the proposed package last fall and developed short-, medium-, and at May Revision with this funding reflected in long-term solutions to address the growing felony the DSH budget. Below, we describe the initially IST waitlist. As required by statute, these solutions proposed package of select IST solutions. were submitted to CalHHS on November 30, 2021. Additional $317 Million General Fund One The 2021-22 budget package also authorized the Time and $33.6 Million General Fund Ongoing to Department of Finance to increase the DSH budget Implement IST Solutions Package. The Governor by up to $75 million General Fund in 2021-22 and counts a total of $93 million General Fund in 2021-22 provided $175 million General Fund in 2022-23 and (of which $66.4 million is one time and $26.6 million is ongoing to implement solutions identified by the ongoing) and $571.6 million General Fund in 2022-23 workgroup. If the identified IST solutions are unable (of which $233 million is one time and $338.6 million is to be implemented, the budget-related legislation ongoing) as funding in support of the initially proposed authorizes DSH to (1) discontinue admissions IST solutions package. This total amount reflects both for certain non-IST patients (in order to prioritize (1) additional proposed funding of $317 million General competency restoration), (2) impose patient reduction Fund one time and $33.6 million General Fund targets, and/or (3) charge a premium bed rate to ongoing in 2022-23 and (2) $93 million General Fund counties that refer greater numbers of felony ISTs to in 2021-22 and $221 million General Fund in 2022-23 the department. in already authorized funding (both to implement the solutions developed by the IST solutions workgroup PROPOSAL and for activities within existing DSH programs that The Governor’s budget reflects a funding the administration now considers as IST solutions). set-aside for a proposed package of select We describe all the components of the proposed IST solutions developed by the IST solutions IST solutions package (with all funding to be provided workgroup (accompanied by trailer bill language to DSH) below in Figure 3. Figure 3 Proposed IST Workgroup Solutions Package General Fund (In Millions) 2021-22a 2022-23a Previously Newly Previously Newly Authorized Proposed Authorized Proposed Solutions Focused on Early Stabilization and Community Care Coordination Provide early treatment upon arrival in jail $24.9 — $38.5 $28.3 Improve patient tracking and case management 1.7 — — 4.9 Solutions Focused on Expanding Capacity for CBR and Diversion Programs Provide housing to felony ISTs $60.0b — — — Acquire or renovate residential housing facilities for felony ISTs 6.4b — $46.0b $187.0b Create additional CBR and diversion programs or expand existing programs — — 136.5 130.0b Solutions Focused on Facilitating Increased Placements to CONREP Pilot independent panel to determine CONREP placement — — — $0.4c Totals $93.0 — $221.0 $350.6 a All amounts ongoing unless otherwise noted. b One time. c $1.2 million in 2023-24 and ongoing. IST = incompetent to stand trial; CBR = Community-Based Restoration; and CONREP = Conditional Release Program. www.lao.ca.gov 13 2022-23 BUDGET IST Workgroup Solutions Package Priorities. • Improving Patient Tracking and Case Below, we describe the major priorities reflected in Management. As a result of expanding the the Governor’s proposed IST solutions package. suite of community-based treatment options available for felony IST treatment, DSH has • Providing Housing for Felony ISTs. We identified a need to improve its capacity for understand that one of the major barriers— patient tracking and case management. identified by the IST solutions workgroup—to Accordingly, the proposed IST solutions ensuring that felony ISTs have access to package includes $1.7 million General Fund community-based treatment programs is in 2021-22 and $4.9 million General Fund a lack of available housing options for this in 2022-23 and ongoing to enhance these population. To that end, the proposed IST functions. Specifically, this funding would solutions package includes a combined support (1) teams to screen all IST patients $66.4 million General Fund in 2021-22 and to determine appropriate placement, (2) case $233 million General Fund in 2022-23 one management for felony ISTs, (3) development of time to increase housing availability for a statewide transportation contract to facilitate felony ISTs. Specifically, this funding would appropriate placement for felony ISTs, and support (1) securing housing for felony ISTs in (4) improved capacity to collect patient data. existing facilities and (2) investing in housing infrastructure for felony ISTs participating in • Increasing CONREP Placement. To increase community-based programs by acquiring and the number of felony ISTs placed into renovating properties to house felony ISTs. CONREP (furthering the goal of increasing community-based treatment for felony ISTs), • Expanding or Creating New the proposed IST solutions package includes Community-Based Treatment Programs. $433,000 General Fund in 2022-23 and The proposed IST solutions package also $1.2 million General Fund in 2023-24 and includes $266.5 million General Fund in ongoing to pilot a new independent panel that 2022-23 and ongoing to expand or create would use a revised assessment process to new community-based—meaning CBR or determine CONREP eligibility. diversion—felony IST treatment programs. • Providing Stabilization and Early Access to Proposed Package Includes Cap on Felony Treatment for Felony ISTs. We understand IST Referrals From Counties, With Cost-Sharing that another of the major barriers—identified for Counties That Exceed Cap. The proposed by the IST solutions workgroup—to referring IST solutions package includes a cap on the total felony ISTs to any of the various alternatives number of felony IST referrals from each county, to treatment within a state hospital is a lack of with a requirement that counties share in the cost of early mental health treatment and stabilization treatment for felony ISTs referred to DSH in excess of (including by administering medication) as the cap. (This proposed cap was not developed as soon as an individual is booked into jail. part of the IST solutions workgroup and originates To that end, the proposed IST solutions from the administration.) These county caps would package includes $24.9 million General Fund be set at the number of felony ISTs referred from in 2021-22 and $66.8 million General Fund each county in 2021-22. While forthcoming additional in 2022-23 to provide early mental health trailer bill language to implement the proposed IST treatment and medications for felony ISTs to solutions package may provide further details on increase the number of individuals eligible for the specific cost-sharing methodology, DSH has community-based treatment programs (and indicated that county shares of cost would depend reduce the number of felony ISTs in need of a on what DSH determines the appropriate treatment state hospital bed). settings for felony ISTs referred to the department are. (For example, county shares of cost would differ for felony ISTs placed in CBR programs and felony ISTs placed in a state hospital.) 14 LEGISLATIVE ANALYST’S OFFICE 2022-23 BUDGET Bulk of Funding for Proposed Package package are reasonable, we also find that further Excluded From State Appropriations Limit efforts are needed to address the underlying (SAL). The SAL constrains how the state can factors that impact the number of felony ISTs spend revenues that exceed a specific threshold. statewide. Specifically, the selected IST solutions Appropriations required to comply with federal in the proposed package seek to facilitate greater government or court mandates are excluded from capacity for treatment of existing felony ISTs, the SAL. Accordingly, funding within the DSH rather than seek to address the underlying factors budget intended to provide competency restoration that determine the number of future felony ISTs. treatment to felony ISTs in a timely manner Addressing these underlying factors would require (in response to court rulings) can be excluded providing treatment for individuals’ underlying from the SAL. Within the proposed IST solutions mental health needs prior to the point at which package, the administration considers $75 million they commit an offense that could render them General Fund in 2021-22 (reflecting already IST. Although the Governor’s approach to provide authorized funding) and $525 million General Fund greater treatment capacity for existing felony ISTs in 2022-23 (reflecting both already authorized and would help DSH meet court-ordered time frames newly proposed funding) as excluded from the SAL for commencing treatment for felony ISTs, we for this reason. find that addressing these underlying factors is important to reduce the rate at which individuals ASSESSMENT are found to be IST in the first place. Some Proposed Trailer Bill Language Not Initial Workgroup Efforts on Addressing Yet Available for Review. The administration These Underlying Factors Are Promising. has proposed trailer bill language to implement As discussed earlier, reducing the number of the proposed IST solutions package. However, future felony ISTs requires providing mental language surrounding the proposed cost-sharing health services to an individual in advance of methodology for counties (that exceed the them committing an offense. In California, other proposed cap on felony IST referrals to DSH) is state entities besides DSH are tasked with not yet available for review in order to assess this overseeing the provision of overall mental health component of the proposed package. services. In particular, counties play a key role in the provision of mental health services as they Priorities Reflected in Solutions Package have primary responsibility for providing mental Appropriately Target Gaps in Current health treatment for individuals with the most Felony IST Treatment Continuum and severe mental health needs. Accordingly, efforts Are Reasonable... We find the selected IST to reduce the number of future felony ISTs will solutions included in the proposed package require significant coordination with these other to be reasonable, as they appropriately target state entities and counties to ensure that adequate key barriers to increasing the number of felony mental health services are provided to people with ISTs receiving community-based treatment, severe mental health needs. which would help DSH commence treatment for felony ISTs in a timely manner in accordance We find that a few ideas developed by the with court orders. For example, lack of available IST solutions workgroup—while still in a very housing and a need for stabilization and early conceptual stage—appear promising in this regard. treatment for felony ISTs were identified by the For example, we understand that the IST solutions IST solutions workgroup as key priorities for workgroup discussed (1) how to improve transition addressing the substantial backlog of felony ISTs planning for individuals leaving DSH treatment awaiting treatment. programs to ensure that they are linked with county services, (2) the inclusion of justice-involved …But Further Efforts Are Needed to Address individuals as a population of focus in the Underlying Factors for Number of Felony IST administration of broader state homelessness Referrals. Although we find that the selected IST and behavioral health programs such as the solutions included in the Governor’s proposed www.lao.ca.gov 15 2022-23 BUDGET CCE program and BH-CIP, (3) how to ensure Ongoing Funding for Independent Panel Pilot that justice-involved individuals have access Is Premature. The Governor is proposing to fund to new Medi-Cal benefits available under the the independent panel pilot (to facilitate increased CalAIM initiative, and (4) how to leverage broader placement in CONREP) on an ongoing basis prior state funding for behavioral health workforce to the state being able to assess whether it has development programs to ensure an adequate been successful at achieving this goal. As a result, behavioral health workforce that focuses on the providing ongoing funding for this pilot prior to needs of justice-involved individuals. making these assessments is premature. County Referral Cap May Make Sense, but Additional Funding in Proposed Solutions Local Capacity to Stay Under Cap Unclear. Package and in Overall DSH Budget May Be The proposed package’s inclusion of a cap on Eligible for Exclusion From SAL. As discussed the number of felony ISTs counties can refer to earlier, the administration considers the bulk of DSH may make sense, as it could incentivize funding within the proposed IST solutions package counties to partner with DSH on the set of as excluded from the SAL (as this funding is IST solutions included in the package. Counties intended to address the substantial backlog of have some ability—by increasing the availability felony ISTs awaiting treatment, in accordance with of county mental health services—to help reduce court rulings). However, we find that the remaining the number of felony ISTs referred to DSH, but funding within the IST solutions package— the determination of IST status also depends on specifically the already authorized funding for court proceedings that are not directly tied to existing DSH community-based programs— the ultimate availability of county mental health may also be eligible for exclusion from the SAL. services. Accordingly, what control counties have This is because these existing programs also are over the ultimate number of felony ISTs referred intended to help address the substantial backlog to DSH is unclear. Moreover, while counties could of felony ISTs awaiting treatment in line with court impact future IST referrals through enhanced requirements. Furthermore, the overall DSH mental health services, they cannot directly impact budget includes a substantial amount of funding to the existing waitlist. increase capacity for felony IST treatment in order Proposed County Referral Cap Raises to address the substantial felony IST waitlist— Reimbursable Mandate Questions. The State including funding to establish or expand capacity Constitution generally requires the state to for felony ISTs within county jails—that also reimburse local governments for the costs of a may be eligible for exclusion from SAL for court “new program” or “higher level of service” (when mandate reasons. imposed by the state). While determining whether certain requirements are state reimbursable RECOMMENDATIONS mandates can be complex, generally if the state Use Budget Process to Provide Legislative requires local governments to provide a new Input on Package. As discussed earlier, we governmental program, the state is required to understand that the administration plans to revise reimburse those costs. Although counties have the proposed IST solutions package based on primary responsibility for providing mental health stakeholder and legislative feedback and provide services to individuals with the most severe an updated version of the package at May Revision needs, the state is responsible for treating felony (reflecting funding for the proposed package ISTs. Consequently, the administration’s proposal within the DSH budget). We recommend that the to require counties to pay a share of cost for Legislature use the budget process to provide felony IST treatment above a particular level input on the proposed IST solutions package (the cap) likely would impose a new requirement given this opportunity to make adjustments to the on counties that could be found to be a state proposal. This input could include the addition reimbursable mandate. of other solutions developed by the IST solutions workgroup that were not included in the Governor’s proposed package, for example. 16 LEGISLATIVE ANALYST’S OFFICE 2022-23 BUDGET Monitor Status of Other Promising Ideas panel pilot (to facilitate greater placement in From IST Workgroup. As discussed earlier, the CONREP) to be premature, we recommend the IST solutions workgroup included a discussion Legislature instead provide limited-term funding for of additional ideas beyond the specific set of this pilot until its effectiveness can be assessed. solutions included in the Governor’s proposed Direct Administration To Explore Counting package. These additional ideas, while still very Additional DSH Funding as Excluded From conceptual, appear to show promise in that they SAL. As discussed earlier, we find that additional seek to address the underlying factors that impact funding within the proposed IST solutions package whether individuals are found IST in the first place. and within DSH’s overall budget may be eligible We recommend that the Legislature monitor the for exclusion from the SAL (given that these status of these additional ideas and their potential other activities also are intended to bring DSH in development into additional IST solutions for DSH compliance with court mandates). Accordingly, or counties to implement at a later time. we recommend that the Legislature direct the Provide Limited-Term Funding for administration to explore the feasibility of counting Independent Panel Pilot. Given that we find the this additional DSH funding as excluded from proposed ongoing funding for the independent the SAL. NEW MEDI-CAL MOBILE CRISIS INTERVENTION SERVICES BENEFIT BACKGROUND Availability of Mobile Crisis Teams Throughout the State Varies. In California, Mobile Crisis Intervention Services. While counties play a major role in the funding and there is no standard definition for what constitutes delivery of public behavioral health services. mobile crisis intervention services, the main In particular, counties generally are responsible objective of mobile crisis intervention services for arranging and paying for community behavioral is to rapidly provide behavioral health services health services for low-income individuals with the to individuals experiencing a behavioral health— highest service needs. Accordingly, to the extent including mental health or SUD—crisis in the that mobile crisis intervention services are provided community. The exact model for how this service in California, they are provided by counties delivery occurs varies, but generally, mobile crisis rather than the state. Counties generally have intervention services are provided by “mobile crisis some degree of discretion over what behavioral teams” of trained behavioral health professionals health programs they elect to operate (with some that are deployed in the community to meet an exceptions which we discuss later). Due to this, individual wherever they are experiencing crisis. counties have discretion over whether to establish The specific services provided by these teams also mobile crisis teams for the provision of mobile crisis may vary, but generally can include (1) behavioral intervention services. This leads to the availability health assessments, (2) behavioral health services of mobile crisis teams varying by county, as shown to stabilize an individual experiencing crisis, and in Figure 4 on the next page. in some cases (3) the provision of necessary Funding for Mobile Crisis Intervention medications. Mobile crisis teams also can provide Services. Counties receive a variety of dedicated referrals and warm handoffs to necessary follow-up revenue streams (which they generally can care for individuals after their immediate crisis, and flexibly make use of) to fund their behavioral also may provide an alternative to law enforcement health programs. Accordingly, counties may engagement for an individual experiencing a choose to use these dedicated revenues behavioral health crisis. to fund mobile crisis intervention services. www.lao.ca.gov 17 2022-23 BUDGET In particular, we understand that Figure 4 counties that elect to fund mobile crisis intervention services do Availability of Mobile Crisis Teams Varies by County so using their dedicated MHSA 2021 revenues. In addition to these dedicated revenues, there are a few state programs that make available grant funding to Mobile Crisis Teams Per 10,000 Population counties to support infrastructure development for mobile crisis intervention services. These 0 5 10 state programs include (1) the Investment in Mental Health Wellness Act of 2013 Grant Program and (2) DHCS’ Crisis Care Mobile Units program (which is funded with the portions of BH-CIP that are earmarked for mobile crisis services). We understand that some counties have applied for and received funds for mobile crisis intervention services infrastructure through these programs. Furthermore, counties currently can obtain federal reimbursement for certain mobile crisis intervention services through Medi-Cal. (We discuss the relationship between county mobile crisis intervention services Source: LAO estimate based on Department of Health Care Services survey of county behavioral health directors. and the Medi-Cal program further in the following section.) crisis intervention services in the community Mental Health Crisis Intervention Services in through mobile crisis teams, they may obtain federal Medi-Cal. As discussed earlier, counties generally reimbursement for these service costs. have some degree of discretion over what behavioral American Rescue Plan Act of 2021 (ARP Act) health programs they elect to operate. However, Mobile Crisis Intervention Services Option. counties are required to provide certain behavioral The ARP Act makes available an option for states health services that are part of the Medi-Cal to add qualifying mobile crisis intervention services program. Of these required Medi-Cal behavioral as a covered Medicaid benefit for a five-year health services, counties are required to provide period. These qualifying mobile crisis intervention mental health crisis intervention services (including services have increased federal requirements the provision of assessments and mental health relative to what counties currently can provide services to stabilize an individual experiencing through Medi-Cal, such as a requirement that crisis). Medi-Cal crisis intervention services may services be available to Medi-Cal beneficiaries be provided anywhere in the community. However, 24/7 and be provided by a multidisciplinary mobile counties are not required to make these crisis crisis team of behavioral health providers. In intervention services available through mobile crisis addition, the ARP Act provides an opportunity to teams. Should counties provide these Medi-Cal 18 LEGISLATIVE ANALYST’S OFFICE 2022-23 BUDGET receive enhanced federal funding—85 percent ASSESSMENT of costs—through Medicaid for these qualifying Proposed Trailer Bill Language Not Yet mobile crisis intervention services for a period Available for Review. The administration plans of three years, after which these services would to propose trailer bill language to implement the be reimbursed according to standard federal Governor’s proposal to add these new qualifying cost-sharing rules. mobile crisis intervention services to the Medi-Cal program. However, this language is not yet available PROPOSAL for review (to comprehensively assess the merits Add New Mobile Crisis Intervention of the Governor’s proposal). Some additional Services to Medi-Cal, on a Statewide Basis. details necessary to assess this proposal may be The Governor proposes to add—beginning included in the forthcoming trailer bill language. January 1, 2023—these new qualifying mobile (For example, the language could include further crisis intervention services as a mandatory information about how statewide standards for statewide benefit in the Medi-Cal program these mobile crisis intervention services would be for a five-year period (with forthcoming trailer determined, or how the bundled payment rates bill language to implement the proposal). The for these services and associated activities would Governor’s proposal assumes that enhanced be developed.) federal funding (of 85 percent of costs) would Proposal Appropriately Seeks to Address be available for three years, and that the new Gaps in Behavioral Health Crisis Continuum… benefit would be reimbursed at standard federal We find that the Governor’s proposal to add new cost-sharing rules for the remaining two years. qualifying mobile crisis intervention services to the The total costs of adding this new benefit to the Medi-Cal program appropriately seeks to address Medi-Cal program are assumed to be $16.2 million gaps in the behavioral health crisis continuum. General Fund ($108.5 million total funds) in As part of its behavioral health assessment report, 2022-23, and over the five-year period total costs DHCS also (using available data and qualitative are assumed to be $335 million General Fund interviews with key behavioral health stakeholders) ($1.4 billion total funds). The Governor’s proposed examined the level of need for mobile crisis teams new Medi-Cal services would be implemented by throughout the state. Key behavioral health counties through their existing behavioral health stakeholders identified a need for additional mobile delivery systems. Specifically, the proposal would crisis teams. DHCS found that a significant number add new benefits for mobile crisis intervention of counties did not operate any mobile crisis teams, services to both counties’ mental health systems and the counties that elected to operate teams did and SUD systems. (The new benefit in counties’ not have enough available to make mobile crisis mental health systems would be distinct from the services accessible 24/7. current Medi-Cal mental health crisis intervention …However, Gaps May Vary Substantially by benefit.) We also understand that additional County. As discussed earlier, the degree to which activities beyond just service costs would be mobile crisis teams are available throughout the eligible for federal reimbursement through these state varies by county. Although additional mobile new benefits. Specifically, activities related to crisis capacity is an appropriate priority overall, the transportation and the idle time associated with degree of need for these teams varies by county. being on-call 24/7 also would be eligible for federal As part of its behavioral health assessment report, reimbursement. To that end, DHCS intends to DHCS relied on the Crisis Resource Calculator—a develop a bundled payment rate that will account tool developed by a national advocacy organization for all of these costs. which aims to quantify the level of need for certain behavioral health treatment modalities—to estimate very roughly how many additional mobile crisis teams would be needed in each county to www.lao.ca.gov 19 2022-23 BUDGET properly meet their need. (DHCS notes that these Act provides states with the option to add these estimates are very rough and are not intended to new mobile crisis intervention services to their be a precise estimate of the exact level of need in Medicaid programs for a period of five years. The each county.) As shown in Figure 5, according to federal government has not provided information the Crisis Resource Calculator, this need may vary on whether these new Medicaid services would substantially by county. be allowed to continue beyond that time period. Local Capacity to Meet Requirements of Although DHCS has expressed a willingness New Services Unclear. Whether the proposed to continue these new Medi-Cal mobile crisis statewide requirement to provide qualifying mobile interventions services on an ongoing basis, the crisis intervention services through Medi-Cal administration has not proposed funding to do so. would result in additional capacity for mobile crisis In addition, how the state would provide these new intervention services depends on whether there is Medi-Cal services on an ongoing basis (given that sufficient local capacity to meet this requirement. federal intent to allow this is uncertain) is unclear. We find that counties’ capacity to provide these new services (especially on a 24/7 basis) is unclear. For example, (1) counties may not have adequate Figure 5 behavioral health workforce to staff Estimated Need for Mobile Crisis Teams these new mobile crisis teams and Varies Substantially by County (2) rural counties may experience 2021 difficulty ensuring 24/7 access to mobile crisis care in more sparsely populated areas. How Will Best Practices Estimated Additional Mobile Crisis Teams Needed be Included in Design of New Services? In addition to federal requirements surrounding the -5 0 25 provision of these new qualifying mobile crisis intervention services, federal guidance also includes suggestions for best practices for mobile crisis services to be incorporated into states’ efforts to provide these new services. For example, it suggests that states consider ways (1) to minimize law enforcement involvement in the provision of mobile crisis services, and (2) coordinate with school systems to address youth-specific needs. The administration has not yet provided information on its approach to incorporating these best practices into the Governor’s proposal. Provision of New Mobile Crisis Intervention Services After Source: Department of Health Care Services behavioral health assessment report. Period Authorized by ARP Act Unclear. As discussed, the ARP 20 LEGISLATIVE ANALYST’S OFFICE 2022-23 BUDGET RECOMMENDATIONS Consider Ways to Ensure Sufficient Local Capacity to Provide New Services. Given Gather More Information Before Taking that we find that counties’ capacity to meet the Action on Proposal. While we think the Governor’s requirements of these new Medi-Cal services proposal in concept has a policy basis warranting is unclear, we recommend that the Legislature serious consideration, we recommend that the consider ways to ensure that there is sufficient local Legislature gather more information about the capacity to provide these new services. If needed, proposal before taking action. This additional the Legislature could consider making funding information could include, for example, (1) what available to counties to develop the infrastructure the statewide standards would be for these mobile needed to provide these services on a 24/7 basis. crisis services, (2) how payment rates would be It also could explore ways to leverage workforce determined, or (3) how best practices for mobile funding—including workforce funding proposed crisis teams would be incorporated into the state’s in the Governor’s budget—to ensure that there is approach to providing these new services. sufficient staff to comprise these multidisciplinary mobile crisis teams. OVERARCHING COMMENTS Below, we provide some overarching issues for are just one piece of the overall behavioral health the Legislature to consider in its assessment of crisis continuum. The federal Substance Abuse behavioral health proposals in general. and Mental Health Services Administration Consider How Behavioral Health Fits describes the three components of a robust Within Broader State Strategy for Addressing behavioral health crisis system as (1) a 24/7 call Homelessness. Although housing affordability is center that can serve as a hub for the behavioral a major driver of homelessness, there are many health crisis system, (2) mobile crisis teams, individuals experiencing homelessness who also and (3) short-term crisis facilities that provide an struggle with behavioral health needs. As we alternative to emergency room care for people have noted in the past, the Legislature may wish in crisis. State investments (both approved and to consider how behavioral health considerations proposed) have focused on each of these three can be incorporated into the broader state components, for example, the state is underway strategy for addressing the state’s homelessness on implementation of the new 9-8-8 mental health crisis. Generally, recent state-funded efforts crisis call centers, has proposed the new mobile to address the homelessness crisis have not crisis intervention services benefit (discussed included an explicit focus on people experiencing earlier), and will make infrastructure funding homelessness with behavioral health disorders, available to develop more crisis facilities (as part who have unique care needs. Conversely, recent of BH-CIP). However, a comprehensive long-term state behavioral health infrastructure investments and state-level strategy for how these separate have not included an explicit focus on people components will be synthesized with each other to experiencing homelessness. Synthesizing these produce a robust behavioral health crisis system two policy areas would provide the state with a (reflecting the most cost-effective use of funding) more comprehensive approach to tackling the has not been developed. The administration has state’s homelessness crisis. stated that it will work (at the CalHHS level) on a statewide plan for crisis of care, including how to What Is the Long-Term Vision for the support coordination between the new proposed Behavioral Health Crisis Continuum? Although mobile crisis intervention services benefit and the we separately analyzed the Governor’s proposal new 9-8-8 mental health crisis call centers. This to add a new Medi-Cal mobile crisis intervention represents a positive step forward toward this goal. services benefit in this brief, mobile crisis teams www.lao.ca.gov 21 2022-23 BUDGET Going Forward, Cross-Departmental For example, coordination between the Department Coordination to Address Behavioral Health of Housing and Community Development, Issues Will Be Critical. As our prior overarching Department of Social Services, DHCS, and DSH will comments have noted, the state has an opportunity help facilitate greater state capacity to respond to to approach complex behavioral health issues both behavioral health and homelessness-related (such as its interaction with homelessness and issues. The Legislature also can take an active role what an appropriate crisis system of care should in ensuring this coordination occurs through its look like) in a more comprehensive way by taking information requests, budget hearings, and other a broader approach that does not examine oversight mechanisms. We suggest the Legislature individual proposals in a siloed way. To facilitate keep these coordination needs front of mind this comprehensive approach, significant moving forward. cross-departmental coordination will be required. 22 LEGISLATIVE ANALYST’S OFFICE 2022-23 BUDGET www.lao.ca.gov 23 2022-23 BUDGET 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. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, California 95814. 24 LEGISLATIVE ANALYST’S OFFICE