​​​CALIFORNIA SECURES UNPRECEDENTED FEDERAL FUNDING FOR CRITICAL BEHAVIORAL HEALTH SUPPORTS

State Receives Federal Approval for BH-CONNECT Initiative

Medi-Cal will Make Transitional Rent Coverage Available in July 2025 and Cover a New $1.9 Billion Behavioral Health Workforce Initiative​

SACRAMENTO — California has secured federal and state funding to revolutionize behavioral health care for Medi-Cal members. The Department of Health Care Services (DHCS) announced today that the Centers for Medicare & Medicaid Services (CMS) approved the Behavioral Health Community-Based Organized Networks of Equitable Care and Treatment (BH-CONNECT) demonstration. This transformative initiative establishes a robust continuum of evidence-based community services for people with significant behavioral health needs, including providing up to six months of transitional rent for qualified members, funding new training for providers and counties, and addressing disparities through targeted funding and innovative programs. By expanding community-based services and integrating evidence-based practices, BH-CONNECT​ aims to reduce costly emergency department visits, hospitalizations, and institutional stays, including in carceral settings.  
 
“The importance of BH-CONNECT cannot be overstated," said DHCS Director Michelle Baass. “BH-CONNECT equips California with critical resources to partner with counties in strengthening and expanding behavioral health services—making sure that the system will work for Californians that need services and support. In the face of a historic mental health crisis, we are ensuring that Medi-Cal members living with significant behavioral health needs receive equitable, community-based care to thrive where they live."

Two important components of BH-CONNECT are the provision of up to six months of transitional rent assistance and a $1.9 billion behavioral health workforce initiative.

"BH-CONNECT builds upon California's unprecedented investments and transformative policies to ensure Medi-Cal members with the greatest behavioral health needs have access to community-based care that promotes recovery, stability, and dignity," said State Medicaid Director Tyler Sadwith. "BH-CONNECT provides essential stability for Medi-Cal members transitioning from institutional settings or homelessness by offering up to six months of transitional rent assistance. Coupled with our commitment to expanding the continuum of behavioral health care and investing in our workforce, this initiative ensures that individuals receive the comprehensive, community-based care they need to thrive."

WHY THIS IS IMPORTANT: Mental illnesses are among the most common health conditions faced by Californians, with nearly 1 in 26 residents experiencing severe mental illness. In 2022, two-thirds of adults with mental illness did not receive treatment. These individuals have historically faced expansive challenges when leaving institutional settings or while experiencing homelessness and stand the most to gain in terms of recovery and community stabilization by accessing services provided through BH-CONNECT. This initiative will help Medi-Cal members with significant behavioral health needs, including children and youth involved in child welfare, individuals and families experiencing or at risk of homelessness, and people involved in the justice system.

BH-CONNECT is a key pillar of Governor Newsom's Mental Health for All and is strategically aligned with Behavioral Health Transformation efforts underway as part of Proposition 1 to modernize California's behavioral health system, expand access to evidence-based service models on a statewide basis, and address the housing needs of Californians with significant behavioral health conditions. 
   
TRANSFORMATIVE FEATURES: BH-CONNECT represents a strategic shift in how California addresses behavioral health care. In partnership with county behavioral health plans, BH-CONNECT strengthens California's behavioral health workforce, incentivizes measurable outcomes, and fills critical service gaps to create a more equitable and effective system of care. Key features include:

• Workforce Investments: Supports a $1.9 billion robust and diverse behavioral health workforce initiative that includes scholarships, loan repayment programs, recruitment incentives, residency and fellowship expansions, and professional development. The workforce initiative will be managed by the Department of Health Care Access and Information.
• Transitional Rent Assistance: Provides up to six months of rental support, through a member's managed care plan, for eligible Medi-Cal members transitioning from institutions, congregate settings, or homelessness. This support is crucial in stabilizing individuals during vulnerable periods, significantly reducing the risk of returning to institutional care or experiencing homelessness. Transitional rent will serve as a bridge to permanent housing for members who need it. For members with significant behavioral health needs, the Behavioral Health Transformation funding dedicated to Housing Interventions will provide permanent rental subsidies and housing following transitional rent, providing seamless continuity and supporting members in achieving long-term housing stability.
• Support for Children and Youth: Includes activity funds to improve access and outcomes for youth involved in child welfare receiving specialty mental health services.
• Incentives for Counties: Supports a $1.9 billion Access, Reform, and Outcomes Incentive Program to reward county behavioral health plans for improving access, reducing disparities, and strengthening behavioral health quality improvement.
• Community Transition In-Reach Services: Supports members transitioning from long-term institutional stays to ensure continuity of care and successful reintegration into the community.
• Short-term Inpatient Psychiatric Care: Provides new flexibility for federal Medi-Cal funding for short-term mental health care provided in inpatient and residential treatment settings that meet the federal institution for mental diseases criteria.

In parallel with the expenditure and waiver authorities granted as part of the Section 1115 demonstration approval, DHCS is implementing other features of the BH-CONNECT demonstration that do not require Section 1115 demonstration authority, including:

• Medi-Cal coverage for evidence-based practices (EBP), including (available at county option):  
• Assertive Community Treatment (ACT), a comprehensive, community-based, interdisciplinary team-based service model to help individuals with serious mental illness cope with the symptoms of their mental health condition and develop or restore skills to function in the community.
• Forensic ACT, an ACT program tailored for individuals who are involved with the justice system.
• Coordinated Specialty Care for First Episode Psychosis, a comprehensive, community-based, interdisciplinary team-based service model to help individuals cope with the symptoms of early psychosis and remain integrated in the community.
• Individual Placement and Support Model of Supported Employment, community and team-based services that help individuals with behavioral health conditions to lead functional and productive lives in the community, including acquiring and/or maintaining competitive employment.
• Community Health Worker Services, preventive services delivered through the specialty behavioral health delivery systems by trusted community members provide health education, advocacy, and navigation services to support members with accessing need health care and community resources to address social drivers of health. 
• Clubhouse Services, services offered within rehabilitative programs that provide a physical location for people living with significant behavioral health needs to build relationships, engage in work and education activities, and receive supportive services.
• Clarification of Medi-Cal coverage requirements for EBPs for children and youth, including Multisystemic Therapy, Functional Family Therapy, Parent-Child Interaction Therapy, and High-Fidelity Wraparound (implemented statewide). By providing clearer guidelines and coverage requirements for these EBPs, BH-CONNECT aims to ensure that more children and youth in California have access to these effective treatments.
• A management-level County Child Welfare Liaison within managed care plans to oversee and deliver Enhanced Care Management, attend Child and Family Team meetings, ensure managed care services are coordinated with other services, and serve as a point of escalation for care managers if they face operational obstacles (implemented statewide).
• ​Centers of Excellence providing training and technical assistance to behavioral health delivery systems and providers to support the integrity of treatment and delivery of EBPs (implemented statewide). 
• Child welfare/specialty mental health joint visit when a child enters welfare (implemented statewide). 
  

“The BH-CONNECT Demonstration will be a transformative step forward in improving Riverside County's behavioral health system," said Dr. Matthew Chang, Behavioral Health Director for Riverside University Health System. “By building a more organized and equitable network of community-based services, we can enhance access to timely, comprehensive care for our most vulnerable populations, ensuring they receive support when and where they need it most."

"Kaiser Permanente supports programs and policies that ensure all individuals have access to affordable, high-quality health care, and we applaud DHCS for its efforts to address health-related social needs for Medi-Cal members. We are excited by the transformative potential of transitional rent and are committed to partnering with DHCS as it develops a transitional rent program that will improve the health and well-being of our most vulnerable members and communities," said Amanda Flaum, Kaiser Permanente Vice President for Medicaid in California and Hawaii.

In 2022, DHCS commissioned Assessing the Continuum of Care for Behavioral Health Services in California to study and make recommendations about the missing gaps in access and infrastructure needed to create a more seamless, coordinated network of behavioral health care—ensuring that communities that have historically faced barriers to accessing care can navigate a full spectrum of services easily, ultimately improving health outcomes for all members. The BH-CONNECT waiver application, submitted to CMS in October 2023, focused on closing key service gaps along the continuum of behavioral health care, such as increasing evidence-based treatment options for vulnerable populations, including children and youth involved in child welfare, members at risk of or experiencing homelessness, and members with justice system involvement, and increasing equity for Medi-Cal members.

BIGGER PICTURE: BH-CONNECT builds on nearly $15 billion in state investments and aligns with transformative initiatives such as Behavioral Health Transformation-Proposition 1, the Children and Youth Behavioral Health Initiative, Behavioral Health Continuum Infrastructure Program, Behavioral Health Bridge Housing program, Justice-Involved Reentry Initiative, Behavioral Health Payment Reform, Medi-Cal Transformation, 988 expansion, and more.​