Building California’s Behavioral Health Infrastructure: Progress Update and Opportunities for the Proposition 1 Bond

2025-26 BUDGET Building California’s Behavioral Health Infrastructure: Progress Update and Opportunities for the Proposition 1 Bond GABRIEL PETEK | LEGISLATIVE ANALYST FEBRUARY 2025 www.lao.ca.gov 1 AN LAO REPORT Cover Photo: The cover image depicts the South Modesto Wellness Center that was built using a BHCIP grant. Photo courtesy of Sierra Vista Child & Family Services. 2 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT Executive Summary Program Is Building Wide Variety of Much Needed Behavioral Health Infrastructure. The behavioral health needs of Californians are not being met. The Behavioral Health Continuum Infrastructure Program (BHCIP) was created in the 2021 budget to help address the shortage of services. So far, BHCIP has awarded $1.8 billion in grants to build facilities meant to expand mental health and substance use disorder (SUD) treatment in California. This funding is being used to build a wide variety of facilities that will support a range of services for many Californians in need. These facilities are estimated to offer inpatient treatment to more than 2,600 people at any time and outpatient treatment to over 280,000 people annually. Proposition 1 (2024) will provide an additional $4.4 billion to the program. This report assesses the allocation of the $1.8 billion in awards already made to give the Legislature the tools to conduct oversight of the Proposition 1 funding that will be provided by way of BHCIP beginning May 2025. Bulk of Dollars Being Used to Benefit Medi-Cal Enrollees; Challenging to Assess Outcomes for Other Populations of Concern. BHCIP grant awards have broadly been focused on projects serving high shares of Medi-Cal enrollees. Given that Medi-Cal enrollees disproportionately experience serious mental health and SUD challenges, the program has been well targeted in this respect. Also, at least $540 million will go to projects focused on children and youth, who data show to face particularly great behavioral health challenges. Addressing BHCIP’s outcomes for other populations of concern, however, is more difficult. We suggest questions the Legislature can ask the administration in conducting oversight over this aspect of BHCIP. Awards Could Be Better Aligned With Needs. Limited data on facility capacity poses challenges for assessing awards made for most facility types. In one area where a robust needs assessment has been performed (inpatient mental health facilities), however, we found that a majority of new capacity is being added in four (out of ten) regions of the state estimated to have the least need. Moreover, BHCIP has not made any progress in building these facilities in the region that was identified as having the greatest need (southern San Joaquin Valley). We also found that the methodology used by the administration for allocating funding may be reinforcing historical regional inequities in behavioral health infrastructure. BHCIP Not Working Well in All Small Counties. The bulk of BHCIP funding was awarded in three main rounds of competitive grants, the same general structure that is being used in administering the Proposition 1 bond. On a per-person basis, small counties overall received disproportionately more BHCIP dollars than larger counties in these grant rounds. This funding, however, has been concentrated within 11 out of 30 small counties. The remaining 19 small counties did not receive any awards in these rounds. In addition, there has been mixed success in siting behavioral health infrastructure in counties where it did not exist prior to BHCIP. BHCIP May Not Be Working Well for All Grant Applicants. We identified a few program design details that may be posing barriers for potential applicants. For example, the administration has provided scoring preferences for launch-ready projects throughout BHCIP, and continues to prioritize launch-ready projects for awards made using Proposition 1 bond dollars. This approach may create a significant challenge for small and disadvantaged applicants and may be limiting the program’s success in siting the hardest-to-build facilities. www.lao.ca.gov 3 AN LAO REPORT Oversight of BHCIP Needed to Maximize Success of Proposition 1 Bond. Proposition 1 adds another $4.4 billion to the BHCIP program, or about three times the amount of funding provided to BHCIP so far. This means that substantial resources exist that can be used to address the opportunities for improvement identified in this report. The administration is working quickly to allocate the first $3.3 billion of Proposition 1 bond dollars in May 2025, leaving a brief window in which to assess program outcomes achieved with the initial $1.8 billion and consider whether any changes in program administration are merited. This report includes findings and suggested questions the Legislature can use in conducting oversight over the program. 4 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT INTRODUCTION In March 2024, voters approved Proposition 1. oversight of the program and influence the In addition to making broad changes to the Mental administration’s program administration decisions. Health Services Act, Proposition 1 authorized a This report focuses on the allocation of the $6.4 billion general obligation bond, $4.4 billion $1.8 billion in awards already made to give the of which is dedicated to building behavioral Legislature the tools to conduct oversight of the health infrastructure. The $4.4 billion comes on Proposition 1 funding that will be provided by way of top of $1.8 billion in state and federal funds that BHCIP beginning May 2025. This report begins with have already been dedicated to this purpose in a background information on the state of behavioral multiyear spending initiative begun in 2021-22— health in California, behavioral health facilities, and the Behavioral Health Continuum Infrastructure BHCIP. Next, we assess outcomes achieved with Program (BHCIP). (Behavioral health infrastructure the $1.8 billion, examining the types of facilities includes inpatient and outpatient facilities at which being built, regional distribution of awards, potential individuals receive treatment for mental illness barriers for small and disadvantaged applicants, and/or substance use disorders [SUD], typically the extent to which the program is benefitting for a period of up to one day to several months.) populations of concern, and the extent to which The administration is working to allocate the workforce shortages could pose challenges for bond funding quickly, with plans to award up to BHCIP’s success. Throughout our assessment, $3.3 billion in May 2025 and a stated commitment we offer suggested questions the Legislature can to award all funding by 2026. This leaves a brief ask the administration and others to assess the window in which the Legislature can conduct program’s efficacy in addressing behavioral health infrastructure gaps. BACKGROUND THE STATE OF BEHAVIORAL (from 4.9 per 100,000 residents to 19.6 per 100,000 residents). From 2008-2010 to 2017-2019, HEALTH IN CALIFORNIA the share of California young adults surveyed Rising Prevalence of Behavioral Health who indicated having serious thoughts of suicide Conditions and Adverse Consequences. increased by about 50 percent, from 6.6 percent According to national survey data, the share of to 10.1 percent. From 2008-10 to 2018-20, rates Californians experiencing serious mental illness of suicide in California among youth aged 15 (SMI) and SUD increased during the 2010s at through 24 increased by more than 20 percent. alarming rates. From the three-year period of These troubling trends have accelerated since the 2008-2010 to three-year period of 2017-2019, the COVID-19 pandemic and have made improving share of California adults with SMI increased by California’s behavioral health system a priority for around 50 percent, with the share of California the state’s policymakers. young adults with SMI nearly doubling over the Demand for Behavioral Health Services period. The share of Californians aged 12 and Not Being Met. National survey data indicate over having an SUD in the past year rose nearly that more Californians need behavioral health 10 percent between 2015-2017 and 2018-2019. services than are receiving them. In 2021-2022, The consequences of these behavioral health 17 percent of Californians aged 12 and over had an challenges have also grown more severe. SUD, but in 2022 fewer than 20 percent of those For example, from 2016 to 2023, the rate of needing SUD treatment received it. (SUD rates opioid-related overdose deaths increased four-fold www.lao.ca.gov 5 AN LAO REPORT cited here are significantly higher than in prior health services and nearly 800 facilities provide years due to an updated methodology used by SUD services. DHCS also estimated that over the federal Substance Abuse and Mental Health 100 facilities provided inpatient care. Behavioral Services Administration, or SAMHSA.) Similarly, health facilities are operated by various entity in 2021-2022, 22 percent of California adults had types, including public, private nonprofit, and a mental illness. In 2022, fewer than 80 percent of private for-profit entities. The nearby box details those with a mental illness received mental health the types of services provided in the behavioral treatment. The shortage of mental health services health facilities that are of particular relevance is more severe for young adults, with 34 percent to this report. of individuals aged 18 through 25 having a mental Shortage of illness in 2021-2022 and less than two-thirds of young adults with mental illness receiving Behavioral Health Facilities services in 2022. Recent Study Assessed Statewide Need for Adult Inpatient Mental Health Beds. A 2022 BEHAVIORAL HEALTH study released by the RAND Corporation assessed INFRASTRUCTURE IN CALIFORNIA the state of adult inpatient mental health beds in California. (The researchers did not estimate Behavioral Health Facility Types the statewide need for beds for children and adolescents due to differences in the care needs Individuals Receive Treatment in Many for this population.) The study was funded by Facility Types Across Behavioral Health Continuum. As an individual’s behavioral health the California Mental Health Services Authority, needs change, the level of service they receive a county-level joint powers authority, to assess and setting in which they receive care also ideally both the capacity and unmet needs of this key change. In order to provide individuals appropriate component of the public behavioral health system. care, the behavioral health system must offer a wide Generally, the researchers used state licensure range of services in a variety of settings, commonly data to estimate the capacity (as of 2021) of adult referred to as a continuum of care. Ideally, beds in the state. RAND used three approaches behavioral health services would be provided in for estimating the shortage of beds: (1) surveying the right settings and offered in sufficient supply to psychiatric facilities to gather data on bed allow for individuals to move through this continuum occupancy, wait list volume, and other information; as their needs change. Otherwise, individuals may (2) convening an expert panel to estimate bed need receive care at a higher or lower level of acuity than based on available research; and (3) assessing they need. One of the Department of Health Care national and state survey data concerning the Services’ (DHCS’) goals for the behavioral health prevalence of SMI to determine the regional system in California is for services to be provided variation in the need for beds. The study classifies in the least restrictive setting that is appropriate for psychiatric beds in three categories: acute the care and supports needed by the individual. (individuals with the highest level of needs, typically served for days to weeks), subacute (moderate Californians Receive Behavioral Health to high level of needs for multiple months), and Services in a Variety of Settings. In January community residential (lower level of need for up 2022, DHCS released a report titled, “Assessing the to multiple years). Continuum of Care for Behavioral Health Services in California.” The report examines the statewide Study Found Significant Shortage of capacity to provide behavioral health services Adult Inpatient Beds. The RAND researchers across the full spectrum of behavioral health care. estimated that the shortage of adult beds Based on data from SAMHSA, DHCS estimated totals about 2,000 beds at the acute level, that over 600 facilities provide outpatient mental 2,800 beds at the subacute level, and about 3,000 beds at the community residential level. 6 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT Background on Selected Behavioral Health Facilities The Behavioral Health Continuum Infrastructure Program has provided grants to build over 20 different types of behavioral health facilities. Here we provide background information on the facility types that represent the bulk of added capacity. Inpatient Mental Health Facilities. Individuals who need intensive mental health services to treat serious mental health challenges receive treatment in a variety of inpatient mental health facility types. These facilities range in terms of the needs of the individuals they serve. We use the same classification system as the RAND Corporation, due to our reliance on their work in estimating regional shortfalls in inpatient mental health facility capacity. • Acute care facilities provide relatively short-term care to those with the highest needs. Acute care facilities include acute psychiatric hospitals, psychiatric health facilities, and general acute care hospitals with psychiatric wards. • Subacute care facilities provide somewhat lower-acuity care, typically for a matter of months, and principally include mental health rehabilitation centers. • Community residential facilities, such as social rehabilitation facilities, provide lower-acuity care, often for multiple years, that is focused on recovery and transitioning individuals back to the community. Crisis Stabilization Units. These facilities provide nonhospital-level care that offers consistent monitoring and support for up to 23 hours to individuals experiencing a mental health crisis. Residential Substance Use Disorder (SUD) Treatment. Residential SUD facilities offer clinically managed SUD care in 24-hour supportive living settings. Medication Assisted Treatment Facilities. Some medications, including buprenorphine, can be prescribed by a wide range of practitioners and used to treat opioid use disorder with relatively little supervision in either a home or outpatient setting. Other forms of medication, however, including methadone, require greater supervision and are typically administered in a facility. Sobering Centers. These facilities provide a safe place where individuals can wait for the effects of drugs and/or alcohol to wear off while being monitored for medical issues. Sobering centers can provide opportunities for handoffs to SUD treatment. Recent data from the Department of Health Care Services indicate sobering centers are uncommon, with statewide capacity estimated in 2022 to be for 168 individuals. Relatively Low-Intensity Outpatient Facilities. Relatively low-intensity mental health and SUD services are provided in a variety of facility types. Examples of these facilities include community wellness centers and community mental health clinics. www.lao.ca.gov 7 AN LAO REPORT As shown in Figure 1, particularly Figure 1 severe at the community residential level. RAND estimated that the Estimated Shortage in Adult Inpatient Mental Health shortage varied substantially by Beds Is About One-Third of Estimated Need region, as illustrated in Figure 2. Beds, 2021 Across all bed types, the shortage is generally most severe in the southern San Joaquin Valley, Inland Empire, Central Coast, and San Francisco Acute Existing Capacity Shortage Bay Area. As Figure 3 shows, however, the shortages in these regions vary considerably across acute, subacute, and community Subacute residential facilities. In Los Angeles County, the northern San Joaquin Valley, San Diego-Imperial, and Community Residential the Superior region (generally, the northern inland counties, including 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Sacramento County), RAND estimated a shortage in some bed types but excess capacity in others. Shortages of Other Facility Types: Limited Quantitative Assessments but Evidence of Figure 2 Insufficient Supply. Beyond the Shortage of Adult Inpatient RAND work on adult inpatient Mental Health Beds Varies by Region mental health beds, there are few Beds Per 100,000 Residents, 2021 statewide quantitative assessments of shortages in behavioral health facilities. One key reason seems Southern Existing Capacity Shortage San Joaquin to be limited data on the existing Inland Empire capacity—in terms of inpatient Central Coast beds or outpatient slots—in most Bay Area behavioral health facility types. While the quantitative estimates of North Coast shortages of other facility types may Orange be limited, alternative evidence of Superior the need for more behavioral health Los Angeles facilities comes from the survey data Northern described earlier indicating that more San Joaquin Californians need behavioral health San Diego services than are receiving them. 10 20 30 40 50 60 70 80 Note: Includes acute, subacute, and community residential bed types. 8 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT Figure 3 Shortage of Adult Inpatient Mental Health Beds Varies by Region and Facility Type Beds Per 100,000 Residents, 2021 Acute Beds Subacute Beds Community Residential Beds Southern Existing Capacity Shortage San Joaquin Inland Empire Central Coast Bay Area North Coast Orange Superior Los Angeles Northern Excessª San Joaquin San Diego 5 10 15 20 25 30 5 10 15 20 25 30 35 5 10 15 20 25 a Excess bed capacity at individual levels of care exist in a few regions of the state. Consequences of Behavioral Health Facility appropriate levels of care, and excessive patient Shortages. Insufficient capacity in behavioral stays in hospital emergency departments. RAND health facilities can negatively impact individuals also noted that insufficient crisis care capacity receiving or in need of care, providers, and can result in an overreliance on law enforcement government agencies. For example, RAND found in dealing with individuals experiencing behavioral that the shortage in adult inpatient mental health health crisis, potentially leading to excessive beds results in occupancy rates that are higher than justice involvement. The state has a clear interest generally accepted levels, long wait lists, facilities in building out behavioral health infrastructure in unable to transfer patients to settings of more California to avoid these consequences. BEHAVIORAL HEALTH CONTINUUM INFRASTRUCTURE PROGRAM Program Overview and Budget key component of this overall strategy as it aims to address the significant shortfall of behavioral BHCIP a Key Component of Overall State health infrastructure. Strategy to Increase Supply of Behavioral Health Services. A major theme of recent state BHCIP Created in 2021-22 Budget. budgets has been to increase the supply of The 2021-22 budget plan included $2.2 billion behavioral health services. Strategies to do so (later reduced, as described below) to create have included expanding the behavioral health BHCIP. (This amount was originally the sum workforce; adding benefits and increasing rates of $1.7 billion General Fund and $530 million in Medi-Cal; and increasing capacity through in federal funding, but the federal funding was managed care plans, schools, and in other settings. shifted to the General Fund in December 2024, The box on the next page provides details on making the General Fund the sole funding source these other major recent initiatives. BHCIP is a for BHCIP.) The program provides grants to www.lao.ca.gov 9 AN LAO REPORT Selected Recent Initiatives Increasing Access to Behavioral Health Services The Behavioral Health Continuum Infrastructure Program is just one piece of the state’s overall strategy to increase access to behavioral health services. Other initiatives include the programs described below. Children and Youth Behavioral Health Initiative (CYBHI). The CYBHI is a $3.8 billion multiyear package of augmentations beginning in 2021-22. CYBHI is increasing access to behavioral health services in the following ways that are of particular relevance to this report: • Workforce Programs ($740 Million). CYBHI is increasing behavioral health workforce capacity targeted at children and youth ($427 million) and developing a counselor and coach workforce ($278 million). • Virtual Services Platform ($723 Million). This platform provides behavioral health services to children and youth aged 25 and younger—regardless of payer source—through (1) interactive exercises and games, (2) automated screening and assessment tools, and (3) direct services delivered by peers and coaches. • Medi-Cal Dyadic Services Benefit ($510 Million). CYBHI makes dyadic care—a model of care which provides integrated physical and behavioral health screening and services to children and youth and their families—an ongoing covered Medi-Cal benefit funded at roughly $100 million per year. • School Behavioral Health Infrastructure Grants ($400 Million). These grants to educational, governmental, and health care entities fund infrastructure and capacity aimed at better coordination of school behavioral health services. • Grants to Support Evidence-Based Practices ($380 Million). These grants to plans, providers, and other entities support evidence-based behavioral health interventions for children and youth. Provider Rate Augmentations. The managed care organization tax, a tax on health plans that allows California to draw down additional federal funding for Medi-Cal, is supporting provider rate increases for a variety of services. Proposition 35, which voters passed in November 2024, makes the tax and an associated spending plan permanent in state law. The spending plan includes hundreds of millions of dollars in increases for non-specialty mental health services and for services provided in certain behavioral health facilities. Medi-Cal Mobile Crisis Benefit. Effective January 1, 2023, this benefit provides, for a five-year period, certain community-based mobile crisis intervention services to Medi-Cal members. Spending on this benefit is estimated to be about $250 million in 2024-25. Behavioral Health Bridge Housing. From 2022-23 through 2025-26, this program provides $1.1 billion in funding to counties and tribes to develop transitional housing with services for individuals experiencing homelessness who also have behavioral health conditions. (This amount reflects a $118 million total funds reduction proposed in the Governor’s 2025-26 budget.) Opioid Settlements Fund. As a result of recent national opioid settlement agreements, the state has been receiving funding that can be used for statewide opioid remediation activities. In the first few years, a few hundred million dollars has been allocated from the settlement fund. About one-third of the funding has gone to the Naloxone Distribution Project, which aims to reduce opioid overdose deaths through the provision of free naloxone. Other activities funded with the settlements include prevention and harm reduction grants and an education and awareness campaign. Behavioral Health Community-Based Organized Networks of Equitable Care and Treatment (BH-CONNECT) Demonstration. In December 2024, the federal government approved the state’s Medicaid waiver request for the BH-CONNECT demonstration, which expands the number of federally reimbursable Medi-Cal behavioral health services. The demonstration also authorizes up to $1.9 billion total funds for behavioral health workforce programs to be implemented by Department of Health Care Access and Information (HCAI) over the five-year demonstration period. Behavioral Health Services Act (BHSA) Workforce Funding. Proposition 1 (2024) changed how revenue from the BHSA is spent by the state and counties. The BHSA requires that up to 3 percent of annual revenue (up to about $100 million) is spent on statewide behavioral health workforce initiatives administered by HCAI. 10 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT construct, acquire, or rehabilitate facilities in which supplanting existing funds for facility expansion, to provide behavioral health services. BHCIP certain reporting requirements, and a commitment can be used to fund a variety of facility types to to operate services in the financed facility for the treat individuals with varying levels of behavioral intended purpose for at least 30 years. Statute, health needs. Eligible entities include counties, however, also provided DHCS discretion in tribes, nonprofits, and corporations. DHCS was the extent to which some of these conditions granted broad authority to implement the program, are required in order to receive grant funding. including discretion to determine how to allocate In practice, these conditions of assistance have the funding; however, the budget plan specifically been applied throughout the program. set aside $150 million for mobile crisis infrastructure 2024-25 Budget Package Reduced Funding and $245 million for facilities targeted at children by $451 Million. Beginning in 2023-24, the state and youth. was facing General Fund budget shortfalls. As a Budget Included State Operations part of addressing those budget problems, a Resources for DHCS to Contract With a portion of funding for BHCIP was delayed in Third-Party Administrator (TPA). Of the 2023-24. Later, in the 2024-25 budget, program original $2.2 billion total allocated to BHCIP, funding was reduced by $451 million General Fund, about $80 million is expected to be allocated for leaving $1.8 billion in funding remaining. Figure 4 state administration of the program. In general, shows the multiyear expenditure plan for BHCIP as justification for this level of administrative funding of the Governor’s 2025-26 budget (after accounting was based on the large number of eligible entities for the reduction). and complex task of awarding such a significant Proposition 1 Bond Infuses Program With amount of grant dollars effectively, equitably, and Additional $4.4 Billion. In March 2024, voters transparently. In addition, DHCS indicated it would approved Proposition 1, which made broad need to contract for expertise in implementing real changes to the Mental Health Services Act estate acquisition and capital improvement and to (including renaming the act the Behavioral Health provide applicants with technical assistance. As of Services Act). Proposition 1 also authorizes the December 2024, DHCS estimates the state will state to sell $4.4 billion in general obligations provide the TPA $72 million (including $61 million bonds for BHCIP, bringing total funding for the from the General Fund and $12 million from federal program to over $6 billion. Of this amount, at least funds) for administration of the program. $1.5 billion is set aside for local governments, Conditions of Assistance. Trailer bill legislation including $30 million for tribes. The grant creating the program detailed several conditions for application process is currently underway for an applicant to meet in order to receive assistance. the first $3.3 billion of this funding, with awards These conditions include providing matching expected to be announced in May 2025. DHCS funds or real property, supplementing and not is prioritizing regional models or collaborative Figure 4 Behavioral Health Continuum Infrastructure Program: Multiyear Funding Plan General Fund (In Millions) Totals, 2021-22 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 Through 2026-27 Grants — $543 $73 $531 $412 $117 $1,675 State operations $6 12 15 21 12 13 79 Totals $6 $555 $88 $552 $423 $129 $1,754 Note: Figure reflects administration cash-basis projections as of the January 2025 Governor’s budget. Does not include $4.4 billion in general obligation bond authority provided by Proposition 1 (2024). Also does not include $50 million in federal grant funding administered through the Behavioral Health Continuum Infrastructure Program. www.lao.ca.gov 11 AN LAO REPORT partnerships, as well as campus models that site BHCIP-funded facilities began to open in multiple levels of care in the same location, with the spring 2024. New groundbreakings have continued first round of Proposition 1 bond dollars. Because to occur through at least fall 2024. Figure 6 shows the bond funding has not yet been awarded, our the administration’s stated priorities for BHCIP that assessment covers the $1.8 billion in funding were included in grant documents for Rounds 3 allocated prior to the bond’s approval. through 5. Notable Implementation Details. Rounds 3 BHCIP Implementation through 5 of BHCIP awarded the bulk of grant BHCIP Funds Awarded in Five Rounds. dollars and funded a wide variety of behavioral As shown in Figure 5, DHCS awarded BHCIP health facility types. We refer to these rounds as grants in five rounds in 2022 and 2023. The focus the three main infrastructure rounds. The grant of Round 1 was expanding mobile behavioral health administration approach for these rounds was services, mostly in the form of mobile crisis teams. broadly similar. Key grant features include: Round 2 supported county and tribal planning efforts. Specifically, Figure 5 awardees used funding to engage BHCIP Awards Made in Five Funding Rounds with the community, counties, and providers in producing an action (In Millions) plan with goals, objectives, and strategies for building behavioral Round 1: Mobile Crisis Servicesa $206 Round 2: County and Tribal Planning 7 health infrastructure. Round 3, for Round 3: Launch Ready 522 launch-ready projects, was initially Round 4: Children and Youth 471 funded with federal funds from the Round 5: Crisis and Behavioral Health Continuum 445 American Rescue Plan Act of 2021. Totalb $1,651 As such, the projects funded in a Includes $56 million in federal grant funding that was in addition to state funding. b Excludes $30 million that was to be distributed in a planned sixth round. Excludes $4.4 billion in this round were required to comply general obligation bond authority provided by Proposition 1 (2024). with certain federal reporting and BHCIP = Behavioral Health Continuum Infrastructure Program. other requirements. (Importantly, projects funded in Round 3 had to Figure 6 have all funds obligated by June 2024 and liquidated by December Administration Priorities for BHCIP 2026 to meet federal spending time 9 lines.) The focus of Round 4 was Invest in behavioral health options that advance racial equity. children and youth ages 25 and 9 Seek geographic equity of behavioral health options. younger, including pregnant and postpartum individuals and their 9 Address urgent gaps in the care continuum for people with behavioral health children, and transition-age youth, conditions, including seniors, adults with disabilities, and children and youth. along with their families. Round 5 9 Increase options across the life span that serve as an alternative to included a wide variety of eligible incarceration, hospitalization, homelessness, and institutionalization. facility types, but was focused on 9 crisis care. According to DHCS, Meet the needs of vulnerable populations with the greatest barriers to access, BHCIP has been oversubscribed, including people experiencing homelessness and justice involvement. with $2 billion in applications for 9 Ensure care can be provided in the least restrictive settings to support $519 million available in Round community integration, choice, and autonomy. 3, $1 billion in applications 9 for $481 million available in Leverage county and Medi-Cal investments to support ongoing sustainability. Round 4, and $2 billion for 9 Leverage the historic state investments in housing and homelessness. $430 million available in Round 5. BHCIP = Behavioral Health Continuum Instrastructure Program. 12 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT • Regional Funding Approach. BHCIP is a providers and/or private organizations. competitive grant program. To “ensure the A wide variety of state and local funding equitable and fair distribution of funds,” BHCIP sources can be used for the match, with employs a regional funding approach that the notable exception of state General designates portions of overall funding for Fund and realignment funding. The match seven regions of the state. Applicants within also can also be met in the form of land or each of these regions compete amongst existing structures. themselves rather than competing statewide. • 30-Year Commitment to Operate Facilities. Seventy-five percent of funding in the main State statute that established BHCIP requires infrastructure rounds was set aside in this awardees to commit to operate funded manner, with another 5 percent designated facilities for at least 30 years. for tribal entities. The remaining 20 percent • Letters of Support. Applicants are required was available on a statewide basis for DHCS to submit letters of support with their to award to projects at its discretion. Amounts applications that vary depending upon the set aside for the seven regions were based entity type. For example, city, nonprofit, and on the methodology used to allocate 2011 private applicants are required to include a realignment funding. letter of support from their county behavioral • Matching Requirements. BHCIP awardees health agency. These letters of support are required to match state dollars, with the are one factor used by DHCS in making amount of match varying depending upon the award decisions. entity type. Specifically, applicants provide • Scoring Preferences for Project Readiness. matching funds as follows: 5 percent for Generally, as proposed projects are closer to tribal entities; 10 percent for cities, counties, being shovel ready, they are scored higher. and nonprofits; and 25 percent for for-profit BHCIP: OUTCOMES, LAO ASSESSMENT, AND OPPORTUNITIES FOR LEGISLATIVE OVERSIGHT In this section, we provide our assessment and outpatient capacity (measured by DHCS in of BHCIP awards made in 2022 and 2023. individuals served annually), respectively. DHCS We examine outcomes from the $1.8 billion indicates that a majority of the $1.4 billion in awards awarded so far, and what those outcomes indicate made in the three main infrastructure rounds has about the extent to which BHCIP is building the been provided to the inpatient facility types in most needed behavioral health infrastructure in Figure 7. As the figures show, the types of facilities the places where shortages are most acute. To funded by BHCIP have been fairly evenly split the extent that our assessment suggests that across SUD and mental health services, consistent opportunities exist for improving the program, with broad need in the state. (The services provided we highlight those issues and offer suggested in behavioral health facilities do not always fit neatly questions for legislative oversight. within the categories of mental health and SUD treatment, however. For example, acute psychiatric What New Capacity Has Been Created hospitals, which principally provide mental health Across Facility Types? treatment, can provide services to individuals with BHCIP Has Supported Mostly Inpatient only a severe SUD under certain circumstances. Facilities Thus Far. Figures 7 and 8 on Thus, the figures are meant to provide the reader pages 14 and 15 show how BHCIP has been used with a general sense of the services provided in to build new inpatient capacity (measured in beds) these facilities and should be treated as illustrative.) www.lao.ca.gov 13 AN LAO REPORT Challenging to Assess Figure 7 Allocation of Awards by Facility Type. While survey data on the New Inpatient Capacity Has Been Roughly Split supply and demand for behavioral Between Mental Health and SUD Treatment health services indicate a clear Beds need for both mental health and SUD facilities, limited data on capacity poses challenges for assessing whether the mix of facilities being built by BHCIP— Acute Care both by service type and level of Psychiatric Beds 494 acuity—reflect the highest needs. The Legislature may want to ask the administration for its rationale for the mix of facility types funded by BHCIP awards. Psychiatric Mental Inpatient Leg S i u s g la g t e iv s e te O d v Q er u s e ig st h i t o : ns for A 1, d 2 u 97 lt R S T 1, r U e 3 e s 8 D a i 5 d t m e n e t n ia t l 1 S T , r U 4 e 1 D a 3 tment H T B 1, r e e 1 e d a 8 a l s 8 t t h ment 940 S P u sy b c a h c i u a t t e ri c C B ar e e ds • Does DHCS anticipate any 446 shift in the facility types prioritized for awards using Residential 248 Proposition 1 as opposed to the earlier rounds of BHCIP? Crisis Care • Can DHCS indicate how 142 BHCIP dollars have been allocated by facility type? • Given the challenges in Social Rehabilitation Facility 64 assessing whether the mix Children and Youth STRTP 88 42 of facilities funded by BHCIP Recovery is reflective of the highest Housing 28 needs, do community SUD = substance use disorder and STRTP = Short-Term Residential Therapeutic Program. members and/or providers have feedback for legislative projects estimated to serve at least 80 percent consideration on the distribution of facilities Medi-Cal enrollees. About three-quarters of being built by the program? In their view, awards have been for projects serving a higher should there be more (or less) focus on any of concentration of Medi-Cal enrollees than the these facility categories or types? statewide average (40 percent). Focus on Medi-Cal Population Reasonable. What Has Been the Population of Focus Given the state’s direct responsibility for the of the Funding Awards? Medi-Cal program, it makes sense that the BHCIP Projects Mostly Focused on Medi-Cal state would prioritize this population over others Population. Figure 9 on page 16 shows the that are the responsibility of either the federal share of grant dollars awarded in the three main government (Medicare) or the private sector. infrastructure rounds by the concentration of Prioritizing Medi-Cal enrollees in this way also Medi-Cal enrollees projected to be served by the targets resources to Medi-Cal enrollees who are projects. As shown in the figure, over half of the disproportionately affected by SMI and SUD. $1.4 billion in total funding has been awarded to 14 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT How Has Funding Been Figure 8 Distributed Across Types New Outpatient Capacity Spread Across of Awardees? Several Behavioral Health Facility Types Distribution of Funding by Individuals Served Annually Entity Type. Figure 10 on the next page, shows the distribution Intensive Support Services Other Outpatient of $1.4 billion in BHCIP funding (6,925) (746) allocated in the three main infrastructure rounds by entity type. As shown in the figure, we Urgent Care estimate that just over half of this (20,658) funding has flowed to counties, Crisis Stabilization with the remainder going to Units (66,523) all other eligible entities. (The BHCIP grant data to which we have access does not include General Mental Health information on the tax status of Behavioral Treatment Health (98,201) private providers and does not Community Treatment specifically identify cities and Wellness Center (122,656) (94,327) Other tribes, so we are unable to provide SUD Outpatient a further breakdown of funding by (31,678) Treatment entity type.) (60,289) Challenging to Assess Distribution of Awards by Medication-Assisted Entity Type. Given that counties Treatment Sobering (32,709) in California are responsible Centers for providing behavioral health (24,689) services to Medi-Cal enrollees with the highest needs, it is reasonable Other Outpatient (2,891) to expect they would receive a substantial share of BHCIP awards. SUD = substance use disorder. Because counties contract for the provision of these services to some Suggested Questions for Legislative degree, and because some of the BHCIP awards Oversight: are for facilities providing relatively low-acuity • About 5 percent of program dollars have services, it is also reasonable to expect noncounty gone to projects estimated to serve less than entities to receive a significant share of BHCIP 20 percent Medi-Cal enrollees. While a small awards. It is difficult to say, however, whether the share of BHCIP dollars, in general, what does split shown in Figure 10 is the “right” split. The DHCS see as the benefit to the state from Legislature may want to ask counties, providers, funding projects with such low concentrations and other advocates for their perspectives on the of Medi-Cal enrollees? allocation of BHCIP awards. www.lao.ca.gov 15 AN LAO REPORT Suggested Questions for Figure 9 Legislative Oversight: Over Half of BHCIP Awards for Projects Estimated to • Has BHCIP struck the right Serve at Least 80 Percent Medi-Cal Enrollees balance between awards for counties and awards for noncounty entities? 35% • How much BHCIP funding 30 has been allocated to for-profit entities? 25 What Has Been the 20 Process to Identify Local 15 Needs? 10 Letters of Support May Not Be a Well-Functioning Process 5 for Identifying Highest Local Needs. As described earlier, there Up to 10% 10% 20% 30% 40% 50% 60% 70% 80% Over are statewide quantitative needs to to to to to to to to 90% assessments for a few facility 20% 30% 40% 50% 60% 70% 80% 90% types. For some other facilities, Percentage of Medi-Cal Enrollees Projected to Be Served by the Project we have data on the number of BHCIP = Behavioral Health Continuum Infrastructure Program. facilities in counties, but not the actual capacity of those facilities (that is, inpatient beds or outpatient slots). For remaining facility types, there are limited to no capacity data. To help guide award decisions in the absence of information on capacity, applicants are required to submit letters of support. Noncounty entities are required to submit a letter of support from their county behavioral health agency. While the exact details and requirements have changed over Rounds 3 through 5, in general, these letters seem to be meant to demonstrate that proposed projects are high priorities in local communities. We have identified two main problems with these letters of support. • The competitive nature of BHCIP seems to limit the value of the letters. Generally speaking, projects within a given region are competing against one another for awards. These include both county and noncounty projects. This means that noncounty projects require letters of support from the county behavioral health departments that are also vying for limited BCHIP dollars themselves. This creates a conflict of interest that conceivably could be preventing some high-priority projects from receiving funding. 16 LEGISLATIVE ANALYST’S OFFICE sralloD fo egatnecreP Figure 10 BHCIP Funding Roughly Split Between Counties and Noncounty Entities LAO Estimate Cities, Tribes, Nonprofits, Counties and For-Profits BHCIP = Behavioral Health Continuum Infrastructure Program. AN LAO REPORT • At the same time, in our conversations with estimated that the statewide shortfall in beds was individuals in the behavioral health community, nearly 8,000—equal to more than half of current we have also heard of some counties capacity. In 2022 and 2023, we estimate that providing letters of support for any project BHCIP made awards for about 800 adult inpatient that seeks one in order to maximize regional mental health beds, or just over 10 percent of the funding flowing to projects within that county. estimated shortfall. This would also dilute the value of the letters A Change in Focus or Additional Funding in identifying projects that are the highest Is Apparently Needed if State Is to Meet local needs. Estimated Need for Adult Inpatient Mental Health Beds. Proposition 1 infuses the program For these reasons, the letters of support process with $4.4 billion—or about three times the funding in and of itself may not to be a well-functioning that has been provided through the three main system for identifying local needs. DHCS also infrastructure rounds. As shown in Figure 11, indicates that other factors—including feedback if BHCIP awards made with the bond funds from oversight agencies, community engagement, prioritize adult inpatient mental health beds to the and the description of needs in the grant same extent as in the three main infrastructure applications—are also used to gauge need. rounds, the program will ultimately only address Suggested Questions for Legislative less than half of the remaining shortfall in adult Oversight: inpatient mental health beds. (This does not • Has DHCS considered improvements to the account for the possibility that new capacity in letters of support process that could help other parts of the behavioral health system is address problems of conflict of interest potentially reducing the need for adult inpatient and improve identification of projects of mental health beds to some degree, nor does it highest need? account for changes in adult inpatient mental health • Should a more thorough needs assessment be bed capacity occurring outside of BHCIP.) conducted to inform awards made in the second planned round of bond funding? Figure 11 • Is DHCS considering any Projected Progress in Addressing modifications to BHCIP to Need for Adult Inpatient Mental Health Beds improve its ability to fund projects of highest local need? What Has Been Progress in Addressing Identified Existing Capacityª Shortage in Adult Inpatient Mental Health Beds? BCHIP Has Addressed Roughly 10 Percent of Estimated 5,000 10,000 15,000 20,000 25,000 Shortage of Adult Inpatient Mental Health Beds. In 2022, RAND estimated that the baseline level of adult inpatient mental health beds statewide in 2021 was about 14,600 (excluding capacity in state hospitals). RAND also www.lao.ca.gov 17 PICHB b1 porP Remaining Shortage a Estimated by RAND as of 2021. b LAO Estimate. BHCIP = Behavioral Health Continuum Infrastructure Program. Note: Assumes share of Proposition 1 awards for adult inpatient mental health beds reflects earlier rounds. Estimates do not account for changes in capacity made outside of BHCIP, nor do they account for changes in supply or demand for adult inpatient mental health beds due to other types of infrastructure added by BHCIP. AN LAO REPORT BHCIP Does Not Appear to Be Addressing A Closer Look at Awards for Acute Beds Regional Inequities in Adult Inpatient Mental Raises Questions About Whether Award Health Bed Capacity. Figure 12 shows progress Decisions Are Consistent With Program Goals. made in filling shortfalls in adult inpatient mental Figure 13 shows acute adult inpatient mental health health beds by region. As shown in the figure, bed capacity added by the three main infrastructure inpatient bed capacity has been added in most rounds. The acute level provides the highest-acuity regions of the state. Notably, however, no adult inpatient care and includes acute psychiatric beds have been added in the region estimated by hospitals, psychiatric health facilities, and general RAND to have the greatest need for adult beds— acute care hospitals with psychiatric wards. As the the southern San Joaquin Valley region (including figure shows, about three-quarters of the acute Fresno, Inyo, Kern, Kings, and Tulare Counties). (We bed capacity added by BHCIP have been in regions are aware of at least two projects funded outside of of the state where RAND estimated there was BHCIP that are expected to bring a small increase already sufficient acute bed capacity. We estimate in beds to this region.) Moreover, 55 percent of these beds represent roughly $130 million, or the beds built have been in the four regions of the nearly 10 percent, of awards made in the three state estimated by RAND to have the least need— main infrastructure rounds. It is not the case that including San Diego, Los Angeles, the northern these beds will go unused, at least not in the near San Joaquin Valley, and Superior. This indicates term. In both regions, RAND estimated shortages that the program so far has not been successful in at the subacute and community residential levels, addressing geographic inequities in adult inpatient so these beds can alleviate pressures in other mental health bed capacity. parts of the behavioral health system. That said, building excess capacity at the highest level of care seems Figure 12 inconsistent with DHCS’ stated program goal of providing care in BHCIP Not Addressing Geographic Inequities in the least restrictive setting that Adult Inpatient Mental Health Bed Capacity is appropriate for the care and Beds Per 100,000 Residents supports needed by the individual. Suggested Questions for Through three rounds of awards totaling $1.4 billion, no beds have Legislative Oversight: been added in the region RAND estimates to have the greatest need. • Will DHCS use a greater share Southern San Joaquin Existing Capcacitya Remaining Shortage of the Proposition 1 bond Inland Empire dollars for inpatient mental BHCIP Central Coast Awards health beds than it has in prior rounds in order to get Bay Area closer to fully addressing the North Coast shortage of these beds? Orange • Given that we have a rigorous Superior assessment of unmet need for this part of the Los Angeles behavioral health system, Northern San Joaquin why not set aside a specific San Diego amount of the Proposition 1 10 20 30 40 50 60 70 80 bond for building inpatient mental health beds and a RAND estimates as of 2021. Note: Includes acute, subacute, and community residential bed types. allocate funding to regions BHCIP = Behavioral Health Continuum Infrastructure Program. according to their identified relative shortfalls? 18 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT Does Regional Funding Figure 13 Model Target Highest Most Acute Beds Added Have Been in Regions Needs? Already Estimated to Have Sufficient Capacity Awards Could Be Better Beds Per 100,000 Residents Aligned With Needs. The box on the next page describes the methodology we use to assess the Three-quarters of the acute bed capacity awarded by BHCIP was in regions where RAND had estimated there was already sufficient acute bed capacity. extent to which BHCIP awards for Southern most facility types reflect relative San Joaquin Existing Capacityª Remaining Shortage regional need. We assessed Inland Empire awards across several different Central Coast facility types in each of ten regions. BHCIP Awards Bay Area Our assessment indicates that some regions have consistently North Coast received fewer awards than we Orange expected them to receive based on Superior our assessment methodology while other regions have consistently Los Angeles received more awards than Northern San Joaquin expected. Specifically, the San San Diego Diego region—consisting of 5 10 15 20 25 30 San Diego County and Imperial a RAND estimates as of 2021. County—received fewer awards BHCIP = Behavioral Health Continuum Infrastructure Program. than expected across all facility types. Similarly, the Inland • What is DHCS doing to ensure that future Empire—consisting of San awards address geographic inequities in adult Bernardino County and Riverside County—also inpatient mental health beds? received fewer awards for all but two facility types. • What is DHCS doing to work with applicants On the other hand, Los Angeles County received in the southern San Joaquin Valley region more awards than expected in all but one facility to ensure that future awards are used to type. Outside of these regions, the story is more build adult inpatient mental health beds in mixed, with regions generally receiving more that region? awards than expected in some facility types and fewer awards than expected in others. • How is the siting of acute care facilities in excess of estimated need consistent with Regional Funding Approach Appears to the goal of treating individuals in the least be Driving Force. As described earlier, DHCS’ restrictive setting possible? approach for allocating funds in the three main infrastructure rounds of BHCIP was to set aside • Given the time that has passed and the 75 percent of total funding for seven specified several other behavioral health initiatives that regions and require that counties within those indirectly affect the shortage of adult inpatient regions compete for the set aside amounts. mental health beds, should an updated After accounting for 5 percent designated for tribal version of the RAND report be conducted entities, DHCS reserved the remaining 20 percent in order to inform the allocation of the final to be awarded on a discretionary statewide $1.1 billion of Proposition 1 bond dollars? basis. The regional set asides were based on the methodology used to allocate realignment funding to counties from the Behavioral Health Subaccount. www.lao.ca.gov 19 AN LAO REPORT LAO Assessment Approach LAO Assessment Approach for Most Facility Types. In the cases where quantitative assessments of the shortage of behavioral health facilities do not exist, we developed an approach for assessing the reasonableness of Behavioral Health Continuum Infrastructure Program (BHCIP) awards. Specifically, we developed regional estimates of expected awards and compared these expected awards with actual award decisions. Our approach uses incidence of behavioral health conditions in the Medi-Cal population, opioid overdose deaths, and the county’s share of the statewide Medi-Cal population. For example, in assessing awards for medication-assisted treatment facilities, we used rates of substance use disorder (SUD) in the Medi-Cal population and overdose death rates. In the case of mental health clinics and other low-acuity facilities focused on mental health we used rates of serious mental illness (SMI) in the Medi-Cal population. These rates serve as a proxy of the relative need for behavioral health services—that is, a region with higher rates of SMI and SUD and higher overdose death rates could be expected to have a greater need for behavioral health infrastructure than a region with lower rates. This proxy is given a weight of 75 percent. We use the county’s share of the statewide Medi-Cal population for the other 25 percent, reflecting the importance of fulfilling the state’s responsibility to provide access to behavioral health services to Medi-Cal enrollees. Illustration of How Assessment Works. To illustrate how this approach works, our assessment methodology suggests that Los Angeles (LA) County should have received between about 20 percent and 25 percent of statewide awards for medication-assisted treatment facilities. This is based on rates of SUD in the Medi-Cal population in LA County, rates of opioid overdose deaths in LA County, and the county’s share of the statewide Medi-Cal population. BHCIP awarded LA County 27 percent of statewide awards for medication-assisted treatment facilities, suggesting that in this particular case, BHCIP awards were broadly reasonable. Figure 14 shows these regional set asides, both in Regional Set Aside Methodology Potentially total and on a per capita basis, for the three main Reinforces Inequities in Behavioral Health infrastructure rounds of BHCIP combined. (The Infrastructure. The methodology used to set the county groupings used by DHCS in determining allocations for the Behavioral Health Subaccount these regional set asides differ from the groupings base is mostly based on claims for behavioral health we use in our report that are based on the RAND groupings.) As the Figure 14 figure shows, Los Angeles County Regional Set Asides Vary Widely on a Per Capita Basis received the most funding on a per (In Dollars) capita basis, and more than twice the per capita funding set aside for Set Asides Southern California—consisting Total Set Asidesa (Per 100,000 Residents) in of Imperial, Orange, Riverside, Los Angeles $393,734,636 $3,931,509 San Bernardino, San Diego, and Balance of State 48,326,634 3,864,690 Ventura Counties. This generally San Joaquin Valley 127,084,123 2,949,166 mirrors our assessment findings Bay Area 228,512,223 2,948,630 Central Coast 42,538,558 2,824,671 that Los Angeles County received Sacramento 67,186,504 2,599,257 more than their expected awards Southern California 216,657,322 1,786,617 and that the San Diego and Inland Statewide $1,124,040,000 $2,842,668 Empire regions generally received a Amounts shown are total for Rounds 3 through 5 of Behavioral Health Continuum Infrastructure less than their expected awards. Program. 20 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT services, with a smaller share based on Medi-Cal How Well Is BHCIP Working for enrollment. Using this methodology for establishing Small Counties? regional set asides in BHCIP seems problematic Small Counties Biggest Beneficiaries because historical service claims are not a direct of DHCS’ Discretionary Grant Allocations. measure of behavioral health infrastructure need. As described earlier, 20 percent of funding in the Moreover, basing regional set asides mostly three main infrastructure rounds was allocated on historical service claims could actually be on a statewide basis at the discretion of DHCS. counterproductive in addressing geographic Figure 15 shows amounts awarded by DHCS inequities in behavioral health infrastructure. This is region via set asides and at the discretion of DHCS. because, to the extent there have been historical As shown in the figure, DHCS made discretionary relative differences in access to behavioral health allocations in all regions of the state. But the services due in part to relative differences in Balance of State region, encompassing 23 small infrastructure capacity, the regional set aside counties outside of the other regions, received methodology may work to reinforce these historical one-quarter of DHCS discretionary grant funds, the inequities. This means that the regional set aside largest of any DHCS region. On a per capita basis, methodology may be hamstringing the program awards to projects in these small counties were in meeting its goals of improving geographic about twice as much as in any other region. More equity. Ideally, funding would be allocated based than half of awards to projects in small counties on identified relative need for behavioral health in these rounds came via DHCS discretionary infrastructure, or proxy measures of that need, allocations. This suggests that projects in these such as rates of SMI and SUD. The $1.5 billion small counties were a priority for DHCS in BHCIP. portion of BHCIP bond funding that is designated for local governments and tribes is not being administered with these Figure 15 regional set asides, which seems to us to be an improvement in Small Counties Biggest Beneficiaries of program administration; however, DHCS' Discretionary Awards DHCS continues to use the regional (In Millions) set asides in allocating most of the Proposition 1 bond dollars. Suggested Questions for Balance of State Discretionary Legislative Oversight: Southern California Regional Set Aside • Why are regional set asides necessary for administration San Joaquin Valley of BHCIP grants? • Why did DHCS decide to not Bay Area apply regional set asides to the $1.5 billion of bond Sacramento funding designated for local Central Coast governments and tribes? • Should DHCS consider an Los Angeles alternative methodology for 50 100 150 200 250 300 350 400 $450 determining regional set asides in order to better target funds to areas with DHCS = Department of Health Care Services. greatest local needs. www.lao.ca.gov 21 AN LAO REPORT A Closer Look at Awards in Small Counties Mixed Success in Adding Infrastructure Where Tells a More Mixed Story. Figure 16 shows It Did Not Exist Previously. Figure 17 shows awards made for projects in the 30 counties with counties that were estimated by DHCS in 2022 to populations under 200,000 as of January 1, 2022. not have any of the behavioral health facility types (We chose this threshold because it is the same shown in the figure. (DHCS indicated that the data used in Proposition 1.) While on a per capita basis, used in the figure may not have been inclusive of all there has been a relatively large allocation of BHCIP facilities in the state.) While the figure is not limited to awards to projects in small counties, the awards small counties, counties lacking these facility types have been concentrated in 11 of these counties, tend to be small counties. As shown by the figure, with no awards being made in the other 19 small BHCIP awards made in 2022 and 2023 have resulted counties through the three main infrastructure in mixed progress in adding infrastructure of a facility rounds. These 19 counties are mostly located in type where it did not exist previously. All of the the northern inland and central parts of the state. facility types shown in the figure either existed in at (Twenty-seven of these 30 small counties received least one small county previously or were a part of a $41 million collectively in Round 1 of BHCIP focused BHCIP award for a small county. Siting facilities of a on mobile crisis teams. In addition, no projects were particular type in all counties may not be reasonable awarded in the three main infrastructure rounds in or even feasible. Still, the chart provides further one large county, Fresno County, with a population indication of BHCIP’s limited impact in some small of around 1 million.) counties. (Mobile crisis teams have been funded by BHCIP in more counties than are Figure 16 shown in the figure. As of October About Two-Thirds of Small Counties Left Out of 2024, however, 7 of 53 mobile crisis grantees are not providing services BHCIP’s Three Main Infrastructure Rounds due to workforce/hiring challenges, County Awards Per 10,000 Residents and these teams are not reflected Glenn $17,278,529 $6,004,284 in the figure. DHCS indicates that Calaveras 25,929,361 5,759,393 they are working closely with these Tuolumne 13,940,073 2,557,812 grantees to support them in getting Humboldt 30,209,240 2,251,615 Mendocino 17,079,947 1,892,997 services online.) Imperial 29,498,033 1,635,200 Suggested Questions for Madera 24,989,161 1,591,261 Legislative Oversight: El Dorado 14,027,556 741,046 Nevada 6,149,363 608,366 • What issues are preventing Napa 8,085,736 596,452 more small counties from Lake 2,000,000 295,871 Alpine — — benefitting from BHCIP? Amador — — • What is DHCS doing to Del Norte — — address any barriers keeping Inyo — — Kings — — small counties from benefitting Lassen — — from BHCIP? Mariposa — — • With 19 small counties Modoc — — Mono — — and one larger county not Plumas — — receiving awards in the three San Benito — — main infrastructure rounds, Shasta — — should a different funding Sierra — — Siskiyou — — approach for a portion of Sutter — — the $4.4 billion bond be Tehama — — considered in order to ensure Trinity — — that progress is made in Yuba — — building out behavioral health Total $189,186,999 infrastructure in all counties? BHCIP = Behavioral Health Continuum Infrastructure Program. 22 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT funded due to these requirements, Figure 17 we think the trade-offs we identify below warrant consideration of Mixed Success in Adding Infrastructure ways to make the program more Where it Did Not Exist Previously accessible to all applicants. Number of Counties Scoring Preference for Projects Closer to Launch Community Mental Newly Served Ready. As described earlier, Not Reached by BHCIP Health Clinicsa by BHCIP Round 3 of BHCIP was initially Crisis Stabilization funded with federal COVID-19 relief Units dollars that came with strict time Inpatient Mental Health Bedsb lines for the expenditure of funds, requiring liquidation by December Narcotic Treatment Programsc 2026. In addition, state budget bill language required funding provided SUD Residentiald in Rounds 4 and 5 to be liquidated STRTPs by June 2027. Given these time lines, the focus of Round 3 on Mobile Crisis Teamse launch ready projects and the scoring preferences provided in 10 20 30 40 Rounds 4 and 5 were reasonable. a Data on community mental health clinics based on SAMHSA Behavioral Health Treatment Services Locator The first round of grants funded and may not be inclusive of all facilities. While these clinics are still not located in many counties, nearly all counties have other mental health and/or SUD outpatient facilities. with Proposition 1 bond dollars is b Includes acute or subacute level beds in psychiatric units within general acute care hospitals, psychiatric acute also being administered with higher care hospitals, psychiatric health facilities, or mental health rehabilitation centers. c While over 20 counties were reported by DHCS in 2022 as not having NTPs, there are buprenorphine prescribers scores being provided to projects in nearly all counties. that are further along in the project d Reflects SUD residential facilities providing levels of care consistent with the Drug Medi-Cal ODS waiver, which has not been implemented in 16 of the 20 counties shown in grey. development process. Projects e Six of the nine counties shown in grey have received awards for mobile crisis units but teams are not operational in receiving a scoring preference these counties as of July 2024. Based on information posted to the mobile units dashboard shortly before this report was finalized, a few additional units have come online since that time. must demonstrate ownership of a BHCIP = Behavioral Health Continuum Infrastructure Program; SUD = substance use disorder; STRTP = Short-Term site, have completed architectural Residential Therapeutic Program; SAMHSA = Substance Abuse and Mental Health Services Administration; and engineering work, and DHCS = Department of Health Care Services; NTP = Narcotic Treatment Programs; and ODS = Organized Delivery System. show the ability to have building permits and start construction Are Potential Barriers Preventing within several months of funding. Relatively Small and Disadvantaged Further scoring preferences are provided to shovel ready projects that are in possession of Applicants From Benefitting From a site, are at or near completion of construction BHCIP? drawings, have building permits, have selected Some Program Requirements Seem a contractor, and can start construction within Challenging, Especially for Small and Relatively 60 days. While certain sunk costs were made an Disadvantaged Applicants. Our review of the allowable source of match beginning with Round 4, requests for applications and various applicant applicants require a good deal of resources, guidance documents, along with our conversations staff (either in-house or on a consultant basis), with those in the behavioral health community, and time to present a relatively competitive suggest that some aspects of BHCIP can be project. Relatively small and disadvantaged challenging for certain applicants. While we do not applicants likely may struggle to compete in know how many potential applicants may not have this environment, especially with the three main submitted applications or seen their applications infrastructure rounds having been oversubscribed. www.lao.ca.gov 23 AN LAO REPORT While the rising incidence of behavioral health behavioral health community with whom we spoke, conditions and adverse consequences make a including county behavioral health directors and case for urgency, the program’s prioritization of providers with direct experience in the program, speed in building out the continuum seems at odds expressed frustration with the administrative burden with making the program accessible to all potential of participating in the program. Examples include applicants. Moreover, the emphasis on awarding challenges associated with the submission of grant dollars as quickly as possible may be limiting information (both during the application process the program’s ability to help build the most complex and during project implementation) and the and hardest to site projects for which BHCIP can process for receiving reimbursements. In addition, have the greatest impact. DHCS has indicated that it may impose reporting 30-Year Commitment to Operate Facilities. requirements for up to 30 years after project State statute establishing BHCIP requires awardees completion. That said, we spoke with others in the to commit to operate funded facilities for at least community who offered praise for the support they 30 years. Again, this requirement is reasonable received from the administration and the TPA in the for a few reasons. For one, the state has a clear form of expertise and technical assistance. interest in ensuring that the facilities being funded Suggested Questions for Legislative by state resources will benefit the behavioral Oversight: health system for a long time to come. The basis • What is the basis for continuing to provide a for the 30-year requirement has arguably been scoring preference to launch-ready projects in strengthened with regard to the $4.4 billion funded administering the Proposition 1 bond? via Proposition 1’s general obligation bond. Given • Does DHCS agree that the prioritization of that bonds are typically repaid over a roughly similar launch-ready projects creates barriers for time frame, the state would want to ensure there relatively small and disadvantaged applicants? is a similarly long public benefit. Moreover, the • Does the prioritization of launch-ready projects 30-year requirement is required as a part of certain limit BHICP’s ability to build relatively complex statutory provisions that allow for the expediting and hard-to-site projects? of projects. • What approaches would awardees suggest All this said, requiring awardees to commit to the state undertake to ensure the long-term operating facilities for 30 years is a significant financial stability of these facilities? commitment given the state’s role in Medi-Cal financing. As shown in Figure 9, the majority • What feedback has DHCS heard on the of BHCIP grant dollars have been awarded to administrative burden of the program? projects expected to serve predominantly Medi-Cal Are there any changes that could be enrollees. Thus, BHCIP-supported facilities by made in the grant application process and and large will be fiscally dependent on payments program administration to reduce the burden in the Medi-Cal program. To ensure the long-term on awardees? success of the facilities, the state has a vested How Is BHCIP Helping interest in assessing rate sufficiency over time. To this end, the Legislature could consider a formal Populations of Focus? process to monitor Medi-Cal rates for behavioral Challenging to Assess Program Outcomes. In health services to help ensure rates are sufficient to their 2022 behavioral health continuum assessment support these facilities over the long term. report, DHCS identifies three populations of focus— General Administrative Burden. The state is children and youth, justice-involved individuals, and allocating a large amount of resources to building American Indian/Alaska Native (AI/AN) for whom local behavioral health infrastructure, making it “disparities and poor health outcomes for people of reasonable to expect awardees to demonstrate that color are particularly prominent.” For the most part, projects will be successful and that funding is being our ability to analyze BHCIP outcomes specifically used appropriately. But anecdotally, those in the for these populations is limited; however, we 24 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT highlight what information we can and offer • Justice-Involved Individuals. In general, the suggested questions that can help the Legislature BHCIP grant data to which we have access examine the extent to which BHCIP is working for do not identify the extent to which projects these populations. (These three populations are will benefit justice-involved individuals. Grant not the only ones that face unique behavioral health applications, however, asked applicants to challenges. For example, RAND found that half of identify how projects target state priorities, psychiatric facilities were unable to place adults including meeting the needs of individuals with with co-occurring conditions, such as dementia. justice involvement. We focus on these three populations to help Suggested Questions for gauge the extent BHCIP is addressing challenges Legislative Oversight: for populations of concern previously highlighted by DHCS.) • Can DHCS provide greater detail on the extent to which BHCIP awards in Rounds 3 and 5 are • Children and Youth. Given the focus of benefitting children and youth? Round 4, $470 million awarded in that round • Can DHCS provide a breakdown of the is expected to primarily benefit children and types of facilities awarded to tribes funded in youth. In addition, about $70 million from Rounds 3 through 5? Rounds 3 and 5 was directed to projects • What percentage of grant awards were indicating that they will exclusively serve associated with projects indicating a focus children and youth. (Additional projects are on meeting the needs of individuals with expected to serve both adults and children justice involvement? and youth, but we are unable to assess the extent to which these projects will benefit • What key challenges remain in addressing the children and youth specifically due to data needs of these populations of focus and how limitations.) Geographically speaking, these is DHCS working to address those needs with awards for children and youth were broadly the Proposition 1 bond? reflective of the distribution of BHCIP dollars • Applications required applicants to estimate overall. Nearly half of the children and youth the racial demographics of those projected to inpatient capacity built with these amounts be served by proposed projects. Can DHCS was for residential SUD treatment, with provide the Legislature summary data for another third for acute care psychiatric beds. projects awarded BHCIP funds? About two-thirds of the outpatient capacity for children and youth was for low-intensity BHCIP and Behavioral Health Workforce behavioral health facilities, with most of the Challenges in the Behavioral Health Safety remainder for crisis stabilization units. Net Workforce. Researchers and government • AI/AN. As described earlier, DHCS’ set agencies alike have identified shortages in the aside 5 percent of funding in the three main behavioral health workforce. A February 2023 infrastructure rounds for tribal entities. These study conducted by researchers at the University set asides totaled nearly $75 million. The grant of California, San Francisco’s (UCSF’s) Healthforce data to which we have access, however, do Center, commissioned by the County Behavioral not specifically indicate whether an applicant Health Directors Association, is particularly was a tribal entity, so we are limited in instructive, given its focus on challenges in our ability to analyze the types of facilities California’s safety net behavioral health system. funded with these awards. In addition to the At a high level, the assessment indicates that three main infrastructure rounds, 23 tribal the supply of the workforce varies regionally, but grantees received $7.5 million in Round 1 is lowest in the Inland Empire and San Joaquin of BHCIP, which was focused on mobile Valley. The UCSF researchers surveyed county crisis infrastructure. These tribal awards behavioral health directors and broadly found funded vehicles and vehicle-related costs to that recruiting and retention in the behavioral provide both crisis and non-crisis behavioral health safety net workforce is a major challenge. health services. www.lao.ca.gov 25 AN LAO REPORT In particular, counties broadly identified challenges Suggested Questions for recruiting individuals who specialize in treating Legislative Oversight: specific populations, including adolescents and • To what degree will the expansion of people with criminal justice system involvement. behavioral health facilities increase the According to the report, a key retention challenge demand for behavioral health workers? with new graduates is their lack of preparation to • Are the state’s recent efforts to increase provide specialty mental health services. Given the supply of behavioral health workers the types of facilities being built by BHCIP and the sufficient to cover already identified workforce program’s focus on the Medi-Cal population, the shortages and the additional need resulting expansion of behavioral health infrastructure will from BHCIP projects? increase demand for safety net behavioral health • Will the increased demand for workers place professionals, thus straining this system further. additional strains on the safety net behavioral DHCS indicates that the TPA is providing technical health workforce? assistance and resources on workforce. In addition, the box on page 10 outlined state efforts to increase • What is the administration’s plan for meeting the supply of behavioral health workers. Ultimately, the increased demand for safety net the Legislature will want to understand the extent behavioral health workers? to which these workforce efforts are successful in • How are the state’s current behavioral health ensuring that workforce challenges do not limit the workforce efforts addressing the unique success of BHCIP facilities. challenges facing the safety net behavioral health system highlighted in the UCSF report? SUMMARY OF BHCIP OVERSIGHT ISSUES Our review of the state’s efforts to build The Legislature has a brief window in which to use behavioral health infrastructure highlights our findings and suggested questions for oversight opportunities for improvement with regard to to assess the extent to which program changes how funding is being allocated and the extent are merited for the administration of Proposition 1 to which the program is meeting Californians’ bond dollars. needs. These issues are summarized in Figure 18. 26 LEGISLATIVE ANALYST’S OFFICE AN LAO REPORT Figure 18 Summary of BHCIP Oversight Issues Types of Behavioral Health Facilities 9 Is BHCIP building the right mix of facilities in the right places? 9 Does the DHCS anticipate any changes in prioritization with the awards made using Proposition 1 bonds? 9 We estimate that $100 million has been used to build high-acuity inpatient mental health beds in regions where needs assessments suggest there was already sufficient capacity. • How is this consistent with DHCS’ goal of providing care in the least restrictive setting appropriate for the individual? Geographic Inequities 9 BHCIP has not improved geographic inequities in inpatient mental health beds, nor has BHCIP awarded funding to the region with greatest need for these beds (southern San Joaquin Valley). • What is DHCS doing to ensure awards using Proposition 1 bond dollars will improve geographic equity? Regional Funding Model 9 Could an alterative approach for allocating BHCIP funding better target regional needs? Small and Disadvantaged Applicants 9 19 of 30 small counties did not receive funding in the three main competitive grant rounds. • What issues are preventing more small counties from benefitting from BHCIP? • What is DHCS doing to address these barriers? • Should a different funding model be considered for small counties to ensure progress is made in building out behavioral health infrastructure in all counties? 9 Does the continued prioritization of launch-ready projects create barriers for relatively small and disadvantaged applicants and/or limit the program’s ability to build relatively hard-to-site projects.? 9 Awardees are required to commit to operate facilities for at least 30 years. • Should the state consider any actions to help awardees meet their commitments? For example, should the state consider a formal process to monitor the sufficiency of Medi-Cal rates for behavioral health services? Awards for Counties vs. Others 9 Has BHCIP struck the right balance between awards for counties and non-county entities? 9 How much BHCIP funding has been allocated to for-profit entities? Populations of Focus 9 How is BCHIP benefitting DHCS’ populations of focus (children and youth, justice-involved individuals, and AI/AN)? 9 What does DHCS see as the benefit to the state from about $70 million in awards for projects projected to serve relatively low shares of Medi-Cal enrollees? Behavioral Health Workforce 9 Are the state’s recent efforts to increase the supply of behavioral health workers sufficient to cover the demand once BHCIP facilities are operational? 9 Are there particular challenges for the safety net behavioral health workforce that need to be addressed in order for BHCIP to be successful? BHCIP = Behavioral Health Continuum Infrastructure Program; DHCS = California Department of Health Care Services; and AI/AN = American Indian/Alaksa Native. www.lao.ca.gov 27 AN LAO REPORT LAO PUBLICATIONS This report was prepared by Ryan Miller, 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. 28 LEGISLATIVE ANALYST’S OFFICE