Skip to Main Content

​​​​​​​​​​​​​​​​​​​​​​​​​​Home / Behavioral Health Transformation / Resources​​ ​/ BHSA Facts vs. Reality​​​​

Understanding The Behavioral Health Services Act:
Myths vs. Reality

Overv​iew

In March 2024, voters passed Proposition 1, a transformation of California’s behavioral health system, strengthening California’s ability to meet the needs of individuals living with behavioral health needs. The new law includes two parts: the Behavioral Health Services Act (BHSA) and a $6.4 billion Behavioral Health Bond for community infrastructure and housing with services.

The BHSA, which goes into effect on July 1, 20​26, replaces the Mental Health Services Act (MHSA) of 2004. It reforms behavioral health care funding to prioritize services for people living with the most significant mental health needs, while adding the treatment of substance use disorders (SUD), expanding housing interventions, and increasing the behavioral health workforce. It also enhances oversight, transparency, and accountability at the state and local levels.

The BHSA made no cuts to behavioral health funding. Instead, the BHSA requires a needed change: county behavioral health care1 must now focus on helping the most seriously ill and unhoused, and counties will have increased accountability for achieving results. Change to the status quo can be hard; some local services may see funding decrease or shift to another source, and other services will be increased with this new focus. But the system of publicly funded behavioral health care we all need and deserve will be stronger in 2026, thanks to the BHSA.

The BHSA is a transformation for behavioral health care that strengthens California’s ability to meet the often complex needs of individuals living with mental health and SUD challenges. It reforms funding allocations, expanding access and increasing the types of support available to all Californians — not just Medi-Cal members — in need, including the uninsured. It prioritizes early intervention, community-based services, and housing solutions for individuals with the greatest need while maintaining a strong commitment to cultural competence and serving populations that have historically faced barriers to accessing care.

The BHSA and the Behavioral Health Bond work in concert with a host of other behavioral health initiatives that have launched in recent years to bolster existing projects and provide counties with additional federal funding opportunities and support from other payers, including the California Advancing and Innovating Medi-Cal (CalAIM) initiative, Behavioral Health Community-Based Organized Networks of Equitable Care and Treatment (BH-CONNECT) initiative, Children and Youth Behavioral Health Initiative, Contingency Management, Mobile Crisis, and more.

This document is intended to clarify and dispel frequent misconceptions or “myths” about the BHSA.


Funding

Myth: The BHSA reduces the amount of behavioral health funding available to counties.

Reality: The BHSA shifts the way funding is utilized for behavioral health services in California, within a broader context of new and additional funding opportunities available to counties that make the BHSA dollar go farther.


Since 2004, the MHSA has been funded by a 1% tax on personal income over $1 million per year. The change from MHSA to BHSA under Proposition 1 does not impact this tax funding available for county behavioral health care. Moreover, between state fiscal year (FY) 2014–15 and FY 2024–25, annual behavioral health funding available to counties more than doubled, increasing from $6.7 billion in FY 2014–15 to $14.4 billion in FY 2024–25. When adjusted for inflation, this marks a 50% increase in available behavioral health funding to counties. When accounting for inflation and population growth (funding per Medi-Cal-eligible individual), the increase is 30%, still a significant increase compared to FY 2014–15. The chart below illustrates this profoundly increased investment in behavioral health funding.           

The BHSA also encourages the efficient use of all behavioral health funding available to counties. The BHSA requires counties to ensure that providers consistently bill Medi-Cal and make a good faith effort to pursue reimbursement from commercial plans and Medi-Cal managed care plans when providing covered services to insured individuals. Increasing reimbursement of covered services delivered to insured individuals will lead to more funding being available to county behavioral health agencies to support BHSA-eligible services and activities with no other funding source.           

For more information see:
Chart displaying Public Community Behavioral Health Funding Available to Counties. State Fiscal Year 2014-2015 vs 2024-2025


Notes:          

  • Funding sources are listed in the order they are displayed. Behavioral Health Bridge Housing and CARE Act Administrative Funding were not available in SFY 14-15.
  • This funding does not represent the $1.7B in BH infrastructure through Behavioral Health Continuum Infrastructure Program (BHCIP) in 2021 and $4.4B for Bond BHCIP in March 2024.
  • *Funding sources that contribute to Medi-Cal non-federal share
          


Myth: Counties must bill Medi-Cal for all allowable services under the BHSA to receive BHSA funding. Requiring Medi-Cal billing will limit the funding available for behavioral health services.

Reality: Being a Medi-Cal certified provider does not prevent you from delivering BHSA-eligible services and activities not covered by Medi-Cal or from providing BHSA services to non-Medi-Cal covered individuals. However, counties must bill for all Medi-Cal eligible services prior to utilizing BHSA funding.


Currently, there is a wide range of practices in how counties braid available funding to provide behavioral health services. If all counties drew down federal financial participation (FFP) on MHSA-funded services the way that counties such as Colusa County, El Dorado County, Glenn County, Los Angeles County, Modoc County, Santa Barbara County, and Santa Clara County have done in the recent past, DHCS estimates that an additional almost $1 billion in federal funds would be available to counties each year to support access to quality behavioral health services.           

Maximizing federal funds under Medi-Cal is fiscally responsible, and the BHSA directs counties to seek Medi-Cal payment when Medi-Cal eligible individuals receive services covered by Medi-Cal. This includes supporting BHSA-funded providers to participate in Medi-Cal: by July 2027, counties must ensure providers are contracted to deliver Medi-Cal services, but in the first year of BHSA implementation providers do not need to be enrolled with Medi-Cal to deliver and receive payment for BHSA services. This will lead to more funding being available to county behavioral health agencies overall, allowing them to contract for more services.           

Counties are now able to cover care under Medi-Cal that was previously funded under MHSA, such as Peer Support Services, Mobile Crisis, Community Health Workers, Assertive Community Treatment (ACT), Coordinated Specialty Care for First Episode Psychosis (CSC for FEP), Transitional Rent, and more. This represents new, additional federal funding available to counties that makes the BHSA dollar go farther.           

Importantly, counties have flexibility to use BHSA funds for services not reimbursable by Medi-Cal and to serve individuals who are not Medi-Cal eligible. The priority is meeting community needs, and BHSA allows counties to fund necessary services accordingly. Over the long term, this blended investment expands access, improves service quality, and ensures the sustainability of critical behavioral health resources.           

For more information see:           


Myth: Counties must cut contracts now to be ready for future funding cuts.

Reality: Counties should prioritize strategic planning and system adaptation over preemptive cuts that risk harming vulnerable communities. .


In practice, prematurely cutting contracts based on anticipated future resources is not a responsible approach. Counties should engage in careful planning, needs assessment, and stakeholder input before making any decisions about service reductions.           

Counties should review all Medi-Cal billing opportunities to identify where they may be leaving federal dollars on the table, including for the new Medi-Cal services described above as well as for longstanding Medi-Cal Specialty Mental Health Servies that have always been billable but that counties exclusively funded using MHSA – this is key to avoid needlessly cutting contracts.           

          


Myth: The BHSA will significantly shift county behavioral health funding toward housing and intensive treatment, reducing the resources available for upstream, preventive services such as peer-support centers, outpatient care, and mobile crisis response.

Reality: The BHSA requires counties to strategically allocate all county behavioral health funds holistically across the mental health and SUD care continuums, including investments in peer support services and mobile crisis response.


The BHSA’s goal is to create a more effective and integrated system, not to dismantle existing services. Counties need to conduct a thorough needs assessment and develop a three-year plan that balances prevention, early intervention, and intensive services across all county behavioral health funding sources, including SAMHSA and Opioid Settlement Fund funding, which may be used for prevention activities. Counties must prioritize services based on local needs and informed by stakeholder engagement through their Community Planning Process.           

For more information see:           


Myth: Unlike the MHSA, the BHSA does not prioritize prevention and instead focuses on downstream funding for those needing the most support.

Reality: The BHSA rebalances funding priorities without abandoning prevention efforts, including prevention and early intervention services for individuals at risk of a mental health or substance use disorder who do not have a diagnosis.


While there is a strong emphasis on housing and services for individuals living with the most significant behavioral health needs, prevention remains a crucial component of a comprehensive behavioral health system. The BHSA aims for a more integrated system where early intervention works in concert with intensive services, and prevention is coordinated and monitored effectively for statewide population health. To this end, BHSA prevention funding through the California Department of Public Health (CDPH) will support statewide population-based prevention strategies. Further, the BHSA maintains MHSA Early Intervention funding under the Behavioral Health Services and Supports (BHSS) funding allocation, requiring counties to spend at least 51% of their BHSS funding allocation on Early Intervention.           

County Early Intervention programs may fund indicated prevention programs and services for individuals who are at risk of, or experiencing, early signs of a mental health or substance use disorder. Individuals do not need a behavioral health diagnosis to receive prevention and early intervention services.           

Additionally, other sources of funds that support prevention activities, such as the Community Mental Health Services Block Grant (MHBG), Substance Use Disorder Block Grant (SUBG), 1991 and 2011 Realignment, and Opioid Settlement Funds, are not impacted by BHSA and continue to support primary prevention activities.           

For more information see:           
          
Provider and System Capacity

Myth: Because I am a Medi-Cal certified provider, all services that I provide need to be Medi-Cal covered services.

Reality: For BHSA contracted providers, being a Medi-Cal certified provider does not prevent you from delivering BHSA-funded services outside Medi-Cal’s scope.


Like counties, providers must comply with applicable program rules for each type of service, meaning that Medi-Cal coverage rules apply to Medi-Cal services, while BHSA funding rules apply to BHSA-funded services. Providers are encouraged to leverage BHSA and Medi-Cal funding to create a more comprehensive and effective behavioral health safety net for the individuals they serve. This includes flexibility for non-housing providers who can or already do offer services covered by Medi-Cal to participate in Medi-Cal and maximize available funding. When using BHSA funds, providers are not limited to only services that can be billed to Medi-Cal.           

For more information see:           


Myth: We don't have enough providers.

Reality: The BHSA does not create or worsen the behavioral health workforce shortage. Counties have access to significant funding to strengthen the workforce and increase provider capacity through the BHSA, the Behavioral Health Continuum Infrastructure Program (BHCIP), and the BH-CONNECT Workforce Initiative.


The BHSA increases workforce development funding and innovative solutions to expand the provider pool and the quality of services being delivered through the BHSS Workforce Education and Training (WET) subcomponent. The BHSA aims to improve the behavioral health system as a whole, and addressing the workforce shortage is a key component. The state is working on strategies to recruit, train, and retain behavioral health providers. The BHSA also allows funding to be used for land and buildings, including administrative offices, that support behavioral health administration and services through the BHSS Capital Facilities and Technological Needs (CFTN) subcomponent.           

BHCIP adds a total investment of over $6 billion in grant funding to increase brick and mortar facility expansion for mental health and SUD treatment facilities.           

Additionally, as part of BH-CONNECT, DHCS and the Department of Health Care Access and Information (HCAI) are implementing five statewide workforce initiatives totaling $1.9 billion to improve recruitment, retention, and availability of behavioral health professionals. Counties and their behavioral health providers can receive funding for loan repayment, scholarships, recruitment and retention bonuses, backfill payments when providers participate in trainings for evidence-based services, funding to expand the workforce of community health workers and peer support services, and more.           

The first round of loan repayment program applications launched in July 2025, in which DHCS and HCAI received more than 5,000 applications from behavioral health practitioners and anticipate awarding over $100 million in the first round of loan repayment funds. Awards will be announced in November of 2025, and additional loan repayment awards will be available annually. Applications for other workforce programs will also be released in the coming months, including the first round of scholarships and community-based provider training program awards.           

For more information see:           
          
Stakeholder Engagement

Myth: The BHSA reduces stakeholders’ abilities to engage in the community planning process.

Reality: Counties are required to demonstrate a partnership with constituents and stakeholders throughout the process that includes meaningful engagement on mental health and SUD policy, program planning and implementation, monitoring, workforce, quality improvement, evaluation, health equity, and budget allocations.


Meaningful stakeholder engagement requires that counties conduct a Community Planning Pprocess that is open to all interested stakeholders and that stakeholders have opportunities to provide feedback on key planning decisions. The BHSA requires that counties engage an expanded set of key constituents in the Community Planning Process, including but not limited to SUD advocates, Tribal Consultation Designees, and Local Health Jurisdictions and Managed Care Plans through Community Health Assessments and Community Health Improvement Plans, Veterans, and continuums of care, among others. The Community Planning Process also requires participation of individuals representing diverse viewpoints and demonstration of meaningful partnerships with constituents through specific types of stakeholder engagement. Further, counties are required to provide 30 days for stakeholder comment on each Integrated Plan. Counties must outline all stakeholder engagement activities, as well as summarize substantive written recommendations received and revisions made as a result of stakeholder feedback in the County Integrated Plan for DHCS’ review.           

For more information see:           
          
Behavioral Health Services

Myth: The BHSA only serves people covered by Medi-Cal.

Reality: The BHSA encompasses more than just services for Medi-Cal members; it supports a broader behavioral health continuum for all Californians.


While Medi-Cal plays an important role, the BHSA is designed to serve a broader population, including those who are uninsured or not eligible for Medi-Cal. Its goal is to reach those living with the greatest needs, regardless of insurance status. BHSA requires counties to make a good faith effort to pursue reimbursement from commercial plans and Medi-Cal managed care plans when providing covered services to individuals. DHCS is collaborating with the Department of Managed Health Care (DMHC) to ensure commercial payors appropriately reimburse for eligible services. Coordination with Medi-Cal and other insurers is important, but BHSA funding is not limited to Medi-Cal members and/or those with some form of insurance.           

For more information see:           

Myth: The BHSA does not support culturally responsive services.

Reality: Cultural responsiveness is not optional under the BHSA. It is a mandated component of service delivery.


The BHSA continues California’s commitment to providing services that are culturally and linguistically competent and responsive. Effective behavioral health care must be tailored to the specific needs of diverse communities. Counties are required to engage with stakeholders and incorporate cultural considerations into their planning and service delivery.           

Under the BHSA, each county is required to ensure its county-operated and county-contracted behavioral health workforce is culturally and linguistically competent and can meet the needs of the population to be served. Counties must ensure that their BHSA-funded providers comply with all nondiscrimination requirements and deliver services in a culturally competent manner.           

Beyond requiring cultural responsiveness, the BHSA also introduces accountability by linking reduction of identified disparities to outcomes reporting in the upcoming Behavioral Health Outcomes Accountability and Transparency Report (BHOATR). Counties must show measurable progress in reducing disparities, not just commit to culturally responsive planning.           

For more information see:           

Myth: Proposition 1 will force counties to cut Full Service Partnership (FSP) programs and serve fewer people because counties can't meet program fidelity standards.

Reality: The BHSA will support FSP programs to align with evidence-based standards and, in turn, will improve service delivery and outcomes.


The BHSA requires counties to implement Assertive Community Treatment (ACT), Forensic ACT (FACT), the Individual Placement and Support (IPS) model of Supported Employment, High Fidelity Wraparound (HFW), and Assertive Field-Based Initiation for SUD Services as required parts of FSP programs.           

As noted in the Mental Health Services Oversight and Accountability Commission’s 2023 Report to the Legislature on Full Service Partnerships, “FSP programs under the MHSA are team-based and recovery-focused, typically based on intensive case management or assertive community treatment (ACT)… Early evidence on the effectiveness of FSPs suggests that these programs, when implemented with fidelity, can reduce hospitalizations, criminal justice contacts, and improve housing stability for consumers with severe and persistent mental illness.” (emphasis added)           

The BHSA supports fidelity implementation for services that are the cornerstone of FSP programs and are scientifically proven to improve outcomes for Californians experiencing the greatest inequities, including children and youth involved in child welfare, individuals with lived experience with the criminal justice system, individuals living with significant medical and substance use comorbidity, and individuals at risk of or experiencing homelessness. These services have been available in some form across the state at different points in time, but they are not widely available or consistently delivered with fidelity to the evidence-based models. This means FSP programs have not been delivered at the intensity level or using the multidisciplinary team-based care models that are widely demonstrated to improve outcomes, improve quality of life, and ensure that individuals can remain and thrive independently in the community.           

In addition, historically, FSP programs have not always prioritized individuals living with the most complex needs. Instead, FSP program slots were sometimes used for individuals to cover their rent or for individuals who needed ongoing support, such as case management or peer support services, but not intensive care. Restructuring FSP programs will ensure that FSP slots prioritize individuals living with the most significant and complex needs that cannot be met through other programs, while other BHSA programs, including Housing Intervention programs, can be utilized for individuals with less complex behavioral health needs.           

Strengthening FSP programs to align with evidence-based standards takes time. Counties will not be held to fidelity standards for ACT, FACT, IPS, and HFW for the first three-year Integrated Plan. This initial Integrated Plan period should be used to meet with Centers of Excellence (COEs) for these services, assess where adjustments need to be made, and take active steps in aligning FSP programs with fidelity standards. COEs will provide training, technical assistance, and fidelity support to county FSP programs free of charge, ensuring county funds can be used to implement services. Adherence to fidelity standards will begin with the second Integrated Plan beginning in FY 2029-2030.           

Finally, counties will be required to deploy Assertive Field-Based Initiation programs that proactively engage individuals living with SUD and offer low barrier access to medications for addiction treatment (MAT). Assertive Field-Based Initiation promotes a proactive “no-wrong door” approach to connect more individuals living with SUD to MAT on a voluntary basis, thereby increasing access to life-saving medication, reducing overdoses, and engaging Californians in their recovery journey.           

For more information see:           

Myth: There is not enough funding to implement evidence-based services with fidelity.

Reality: Counties have access to significant federal funding to support implementation of evidence-based services with fidelity. For example, new Medi-Cal funding is available for ACT, FACT, IPS, CSC for FEP, and HFW, and SAMHSA and Opioid Settlement Fund funding is available for the Assertive Field-Based Initiation for SUD Treatment Services.


ACT, FACT, IPS, and CSC for FEP are currently covered under Medi-Cal with bundled monthly rates for counties that opt in to service coverage under BH-CONNECT2. DHCS collaborated intensively with the California Behavioral Health Directors Association (CBHDA), the California Mental Health Services Authority (CalMHSA), and counties during the rate-setting process for these services to ensure that payment rates reflect comprehensive clinical and programmatic considerations. Under CalAIM Behavioral Health payment reform, Medi-Cal rates are comparable with industry standards, and in the case of outpatient rates, are significantly higher—including higher than commercial and Medicare rates. The Medi-Cal rates for ACT, FACT, IPS, and CSC for FEP are similarly robust. Counties have access to payment rates that are more than sufficient to implement these evidence-based services with fidelity. Interested stakeholders and providers should refer to a letter sent to county behavioral health directors to learn more about the Medi-Cal behavioral health rate-setting process and the flexibilities available to counties for strategic implementation.           

Further, COEs will provide training, technical assistance, and fidelity support to counties and providers in establishing evidence-based services free of charge, ensuring county funds can be used to implement services.           

Additionally, the BH-CONNECT Access, Reform and Outcomes Incentive Program includes $1.9 billion for counties to increase utilization of and access to Medi-Cal services, including ACT, FACT, IPS, CSC for FEP, and HFW. Forty-five counties are participating in the program and will be eligible to earn funds they can use to support fidelity implementation of these services, further reducing the financial burden for counties and providing additional federal funding to counties to start delivering these services.           

While counties are required to expend BHSA funds for the Assertive Field-Based Initiation for Substance Use Disorder Treatment Services EBP, other funding sources may supplement BHSA efforts. These funding sources include Medi-Cal, SAMHSA, and Opioid Settlement Funding.           

For more information see:
  • BHIN 25-009 to learn more about Medi-Cal coverage of evidence-based practices
  • COE Resource Hub to learn more about the role of COEs and services offered
  • BHIN 25-006 to learn more about the Incentive Program
          

Myth: The requirement to spend 30% of BHSA funding on Housing Interventions reduces funding available for other needed behavioral health services.

Reality: Housing is integral to behavioral health recovery.


Nearly half (48%) of people experiencing homelessness in California are living with complex behavioral health needs.3, 4 , When excluding individuals living with a substance use disorder, 22% of people experiencing homelessness nationally are living with a Serious Mental Illness.5 Additionally, individuals living with complex behavioral health needs in California were over twice as likely to have entered their current episode of homelessness from an institutional setting (e.g., jail, prison, residential drug treatment setting) as those who did not meet the criteria (27% versus 12%). However, robust data demonstrate that individuals living with significant behavioral health needs (with or without co-occurring substance use disorders) have better outcomes when placed in permanent housing that is combined with supportive services, such as through programs like ACT and Intensive Case Management (ICM).6, 7 , For example, a randomized control trial in Santa Clara County found that permanent housing combined with ACT or ICM is associated with increases in housing placement, housing retention, outpatient mental health service utilization, and decreases in psychiatric-related emergency department utilization among individuals with the most acute needs.8           

Reality: The BHSA offers counties flexibility to meet their local service and housing needs.

Counties may request to transfer up to seven percent out of their 30 percent BHSA Housing Interventions allocation into Full Service Partnership or Behavioral Health Services and Supports and transfer up to 14 percent into their 30 percent BHSA Housing Interventions allocation. However, if a county uses Housing Intervention funds to provide outreach and engagement, the amount of funds the county can transfer out of Housing Interventions must be decreased by a corresponding amount. Counties with a population of less than 200,000 may request an exemption beyond the transfer allowance in their Integrated Plan for Fiscal Years 2026–2029 and 2029–2032 and all counties regardless of size may do so beginning with the Integrated Plan for Fiscal Years 2032–2035.           

Reality: Medi-Cal Community Supports address Medi-Cal members’ health-related social needs and are covered by Managed Care Plans, freeing up BHSA dollars and expanding the breadth of services for Californians.

Historically, services that addressed health-related social needs were funded under MHSA. In 2022, the launch of CalAIM brought many reforms to the delivery system, including the launch of the Enhanced Care Management (ECM) benefit and a list of 14 Community Supports that have been covered by MCPs since that time. With services including, but not limited to, Transitional Rent, Housing Tenancy and Sustaining Services, and Housing Deposits covered by MCPs, this has “freed up” dollars that counties historically spent under MHSA, thus allowing more flexibility and available funds under BHSA.           

For more information see:           

  1. “County behavioral health care” is inclusive of the Mental Health Plan (MHP) and Drug Medi-Cal (DMC) and/or Drug Medi-Cal Organized Delivery System (DMC-ODS) program in each county, as well as other county behavioral health services and programs that are funded with a combination of federal, state and/or local funding sources. The MHP and DMC/DMC-ODS programs are responsible for the delivery of Medi-Cal-covered specialty behavioral health services to Medi-Cal members. Other county behavioral health services and programs may serve Medi-Cal members and/or other Californians living with behavioral health needs. ↩
  2. In July 2025, DHCS released the High Fidelity Wraparound (HFW) Concept Paper, seeking stakeholder comment on its initial vision for Medi-Cal HFW payment and monitoring policies and updated service standards for service delivery in both Medi-Cal and BHSA, to be implemented in July 2026. AB 161 specifies that DHCS will implement “a case rate or other type of reimbursement” for HFW as a Medi-Cal SMHS for members under 21 years of age. As described in the BHSA County Policy Manual, counties must also implement HFW under the FSP program beginning in July 2026.↩
  3. UCSF Benioff Homelessness and Housing Initiative. The California Statewide Study of People Experiencing Homelessness. 2025. ↩
  4. Complex behavioral health needs is defined as one or more of the following: Regular (three times per week or more) illicit drug use (methamphetamine, non-prescribed opioids, or cocaine); Heavy episodic alcohol use (six or more drinks in one sitting at least weekly); Current hallucinations (defined as a self-report of hallucinations in the past 30 days); Psychiatric hospitalization within the last six months. ↩
  5. Kaiser Family Foundation. Five Key Facts About People Experiencing Homelessness. 2025. ↩
  6. Health Affairs. ‘Housing First’ Increased Psychiatric Care Office Visits and Prescriptions While Reducing Emergency Visits. January 24, 2024. ↩
  7. Science Direct. Evaluation of New York/New York III permanent supportive housing program. April 2023. ↩
  8. Journal of the American Medical Association. Effect of scattered site housing using rent supplements and intensive case management on housing stability among homeless adults with mental illness: A randomized trial. 2015. ↩
          
          
​
Last modified date: 10/13/2025 10:48 AM