It is important to note that this budget recommendation serves as a jumping off point to get the negotiations with the House and Senate started. Many priorities the Governor announced will be replaced with those of legislative leaders. More likely than not, we expect negotiations to continue throughout the summer, past the July 1st statutory deadline into September, with a final FY 26 budget being presented to the Governor days before the October 1st fiscal year start date.
More specifically, here are the items of significance to the public mental health system:
Links to budget documents Executive Budget and Associated Documents
Links to budget bill (DHHS begins on page 114): FY26-General-Omnibus.pdf
Specific Mental Health/Substance Abuse Services Line items
FY’24 (Final) FY’25 (Final) FY’26(Exec Rec)
-CMH Non-Medicaid services $125,578,200 $125,578,200 $125,578,200
-Medicaid Mental Health Services $3,160,958,400 $3,387,066,600 $3,422,415,900
-Medicaid Substance Abuse services $95,264,000 $95,650,100 $98,752,100
-State disability assistance program $2,018,800 $2,018,800 $2,018,800
-Community substance abuse $79,599,700 $79,626,200 $80,207,900
(Prevention, education, and treatment
programs)
-Health Homes $53,400,100 $53,418,500 $53,239,800
Program
-Autism services $279,257,100 $329,620,000 $458,715,500
-Healthy MI Plan (Behavioral health) $590,860,800 $527,784,600 $535,508,300
-CCBHC $386,381,700 $525,913,900 $916,062,700
-Total Local Dollars $10,190,500 $10,190,500 $9,943,600
Other Highlights of the FY26 Executive Budget:
Proposed FY26 Investments The FY26 Executive Budget provides $62 million ($15.2 million general fund) in new supports to address the opioid epidemic and provide behavioral health services for those in need. Proposed funding includes:
- $15.2 million to begin operating the new state psychiatric hospital in Northville, bringing 264 new beds online and increasing capacity by 54 beds (32 adult beds and 22 pediatric beds). This investment includes operational support and hiring staff to provide services at the new facility.
- $46.8 million of Michigan Opioid Healing and Recovery Fund dollars for prevention, treatment, harm reduction, recovery, and data collection for those affected by the opioid epidemic. This additional allocation will expand services to reduce the number of opioid users and overdoses.
- $15 million one-time to invest in new programs to reduce opioid usage and overdoses.
- $31.8 million ongoing to continue existing, successful programs, including efforts to address the racial disparities in overdose deaths statewide. This brings the total annual ongoing funding to $55 million per year, supported by incoming settlement dollars.
- The department’s three-year plan will drive the use of these resources. The plan represents a comprehensive, multifaceted, data-driven approach intended to strategically leverage available resources and take full advantage of this generational opportunity in the most impactful yet sustainable way possible. The plan includes:
- Increasing the age of first opioid use though new and expanded programs. The department will partner with nonprofits, youth engagement organizations, and existing partners to expand prevention programing in schools. They will also conduct public awareness campaigns.
- Reducing overdose deaths and addressing racial and geographical disparities. Those disparities are demonstrated in the chart below. DHHS will use resources to award multi-year grants to organizations working in underserved or under resourced communities. DHHS will also provide annual grants or contracts with organizations addressing racial disparities in opioid deaths and continue distributing naloxone in areas that need it most.
- Growing the behavioral health workforce through scholarships to prospective students, paid internships, and loan repayment.
- Prioritizing work to increase recovery beds and access to affordable housing. This will include reimbursing the cost of stay of residents and expansion of recovery housing. It also includes permanent affordable housing and investing in wraparound support programs like transportation and employment that enable people to stay in stable housing.
- Investing in administrative infrastructure to gather data to track success and provide technical assistance to local governments. This ensures these funds are being utilized for maximum impact and allows the department to partner with local governments to collaborate on ways to address opioid usage
- $96.4 million to expand Medicaid eligibility ($33.1 million general fund) with a new income disregard that will allow more people to gain access to coverage.
- Currently Medicaid requires elderly and disabled enrollees with income above 100% of federal poverty limits (FPL) to spend the majority of their income on health care costs each month – until their remaining income is less than 40% FPL – to access Medicaid. This proposal would shift this level to 100% FPL, broadening access to Medicaid supports and preventing excessive spend down to help keep more seniors in their homes and prevent individuals from spending down into poverty.
- Certified Community Behavioral Health Clinics (CCBHC)
- Adds $39.3 million Gross ($6.3 million GF/GP) for utilization and cost adjustments for the CCBHC demonstration program. Also includes a net $0 transfer of $350.8 million Gross ($75.7 million GF/GP) of base CCBHC payments currently within the Medicaid Mental Health and Healthy Michigan Plan – Behavioral Health lines into the supplemental payments CCBHC line.
- $400,000 to explore the feasibility of expanding Medicaid eligibility for children aged 0 – 6 years ($200,000 general fund).
- This will allow DHHS to prepare a feasibility study to determine long-term costs, benefits, potential barriers and any associated nuances of implementing continuous eligibility for Medicaid beneficiaries aged 0-6.
- $40 million for the community reentry of incarcerated individuals ($20 million general fund) to provide coverage starting 90 days before an individual’s scheduled release.
- This will allow for health screenings and other services prior to reentry to identify key health needs and social determinants to facilitate a successful transition. Investing in these transition services will help improve health outcomes and access to community services, all of which will reduce recidivism.
- $2.5 million for access to mental health services (general fund, one-time) to support behavioral health resources for first responders and public safety staff.
- $258 million to support the mental and emotional wellbeing of 1.4 million students through continuation of mental health and safety grants to school districts.
- $5 million to support the MiABLE program expansion.
Behavioral Health Boilerplate Changes from FY 25 à FY 26
REMOVED: Sec. 902. (1) From the funds appropriated in part 1, the department shall make a final authorization to a CMHSP or PIHP on the execution of a contract between the department and the CMHSP or PIHP. The contract must contain an approved plan and budget and any policy and procedure governing the obligations and responsibilities of each party to the contract.
REMOVED: Sec. 912. The department shall contract directly with the Salvation Army Harbor Light program, at an amount not less than the amount provided during the fiscal year ending September 30, 2020, to provide non-Medicaid substance use disorder services if the local coordinating agency or the department confirms the Salvation Army Harbor Light program meets the standard of care. The standard of care shall include, but is not limited to, utilization of the medication assisted treatment option.
REMOVED: Sec. 8-913. (1) From the funds appropriated in part 1 for behavioral health program 8 administration, the department shall allocate $1,025,000.00, for the autism navigator program. The department shall require any contractor receiving funds under this section to comply with performance-related metrics to maintain eligibility for funding. (EXCERPT)
EDITED: Sec. 8-917. (1) From the funds appropriated in part 1 for opioid response activities, the department shall allocate $55,000,000.00 from the Michigan opioid healing and recovery fund created under section 3 of the Michigan trust fund act, 2000 PA 489, MCL 12.253, to create or supplement opioid-related programs and services in a manner consistent with the opioid judgment, settlement, or compromise of claims pertaining to violations, or alleged 16 violations, of law related to the manufacture, marketing, distribution, dispensing, or sale of opioids.
REMOVED: Sec. 920. As part of the Medicaid rate-setting process for behavioral health services, the department shall work with PIHP network providers and actuaries to include, as part of the Medicaid rate, state and federal wage and compensation increases that directly impact staff who provide Medicaid-funded community living supports, personal care services, respite services, skill-building services, and other supports and services that the department determines are similar.
REMOVED: Sec. 924. From the funds appropriated in part 1, for the purposes of actuarially sound rate certification and approval for Medicaid behavioral health managed care programs, the department shall maintain a fee schedule for autism services reimbursement rates for direct services. Expenditures used for rate setting shall not exceed those identified in the fee schedule. The rates for behavioral technicians shall not be less than $53.20 per hour and not more than $58.20 per hour
EDITED: Sec. 929. From the funds appropriated in part 1 for Michigan Clinical Consultation and Care, the department shall allocate at least $325,000.00 to address needs in a city in which a declaration of emergency was issued because of drinking water contamination.
REMOVED: Sec. 964. By October 1 of the current fiscal year, the department shall provide the house and senate appropriations subcommittees on the department budget, the house and senate fiscal agencies, the house and senate policy offices, and the state budget office with the standardized fee schedule for Medicaid behavioral health services and supports. The report shall also include the adequacy standards to be used in all contracts with PIHPs and CMHSPs. In the development of the standardized fee schedule for Medicaid behavioral health services and supports during the current fiscal year, the department must prioritize and support essential service providers and must develop a standardized fee schedule for revenue code 0204.
EDITED: Sec. 1001. Not later than May 15 of the current fiscal year, each CMHSP shall submit a report to the department that identifies populations being served by the CMHSP broken down by program eligibility category. The report must also include the percentage of the operational budget that is related to program eligibility enrollment. Not later than February 15 of the current fiscal year, the department shall submit the reports described in this section to the standard report recipients.
REMOVED: Sec. 8-1002. The department shall expand the certified community behavioral health clinic demonstration to include organizations that meet the following criteria: (a) The organization must be a current CMHSP or an eligible organization as defined in section 223 (a)(2)(F) of the protecting access to Medicare act, Public Law 113-93, with a CCBHC grant from the federal substance abuse and mental health services administration for at least one year; (b) The organization must achieve CCBHC certification by meeting all state and federal requirements by September 1, 2024, unless otherwise specified in the CCBHC 29 Demonstration Handbook; and (c) The organization must have implemented the following evidence-based practices by July 1, 2024: (i) Air Traffic Control Crisis Model with the Michigan Crisis and Access Line; (ii) Assertive Community Treatment; (iii) Cognitive Behavioral Therapy; (iv) Trauma-Focused Cognitive Behavioral Therapy; (v) Medication Assisted Treatment; and (vi) Motivational Interviewing.
REMOVED: Sec. 1003. The department shall notify the Community Mental Health Association of Michigan when developing a policy or procedure that will impact a PIHP or CMHSP.
REMOVED: Sec. 1004. The department shall submit a report to the report recipients required in section 246 of this part on any rebased formula changes to either Medicaid behavioral health services or non-Medicaid mental health services 90 days before implementation. The notification shall include a table showing the changes in funding allocation by PIHP for Medicaid behavioral health services or by CMHSP for non-Medicaid mental health services.
EDITED: Sec. 1006. From the funds appropriated in part 1 for certified community behavioral health clinics, not later than May 1 of the current fiscal year the department shall submit to the standard report recipients an outcomes report for CCBHCs during the previous fiscal year that includes both statewide and CCBHC site-specific information on all of the following.
EDITED: Sec. 8-1014. (1) From the funds appropriated in part 1 to agencies providing physical and behavioral health services to multicultural populations, the department shall award grants in accordance with the requirements of subsection (2). This state is not liable for any spending above the contract amount. The department shall not release funds until reporting requirements under section 1014 of article 6 of 2022 PA 166 are satisfied. (2) The department shall require each contractor described in subsection (1) that receives greater than $1,000,000.00 in state grant funding to comply with performance-related metrics to maintain their eligibility for funding. (3) The department shall require an annual report from the contractors described in subsection (2). The annual report, due 60 days following the end of the contract period, must include specific information on services and programs provided, the client base to which the services and programs were provided, information on any wraparound services provided, and the expenditures for those services. By February 1 of the current fiscal year, the department must submit the annual reports to the report recipients required in section 246 of this part.
REMOVED: Sec. 1051. The department shall continue a revenue recapture project to generate additional revenues from third parties related to cases that have been closed or are inactive. A portion of revenues collected through the project’s efforts may be used for departmental costs and contractual fees associated with retroactive collections under the project and to improve ongoing departmental reimbursement management functions.
REMOVED: Sec. 1062. Not later than March 1 of the current fiscal year, the department shall provide an update on their 5-year plan from the fiscal year ending September 30, 2022 to address the need for adult and children’s inpatient psychiatric beds to the standard report recipients. The report must include updated recommendations for utilizing both public and private partnership beds, including the following information.
REMOVED: Sec. 1929. CCBHC Study – Sec. 1929. (1) From the funds appropriated in part 1 for certified community behavioral health clinics study, the department shall allocate $250,000.00 to complete a comprehensive quantitative spatial analysis to evaluate cannibalization effects on existing enrolled locations of community behavioral health clinics. The purpose of this evaluation is to provide actionable insights into the extent of cannibalization and inform strategic decision-making processes related to site selection, network optimization, and future certified community behavioral health clinic expansion. The comprehensive quantitative spatial analysis shall include, but not be limited to, the following.