To: Board of Supervisors
From: DHHS: Behavioral Health
Agenda Section: Consent
Vote Requirement: 4/5th
SUBJECT:title
Intergovernmental Agreements with the California Department of Health Care Services (DHCS) Regarding the Transfer of Public Funds for the Period of July 1, 2023 through Dec. 31, 2026 and Related Supplemental Budget in the Amount $16,602,644 for Department of Health and Human Services (DHHS) Behavioral Health Budget Unit 1170424 and $792,178 DHHS - Behavioral Health Budget Unit 1180-425 (4/5 Vote Required)end
RECOMMENDATION(S):Recommendation
That the Board of Supervisors:
1. Waive the requirements of the Humboldt County Nuclear-Free Ordinance with regard to the attached intergovernmental agreements with the DHCS; and
2. Approve, and authorize the DHHS - Behavioral Health Director, or a designee thereof, to execute, the attached intergovernmental agreements with the DHCS regarding the transfer of public funds for the period of July 1, 2023 through Dec. 31, 2026; and
3. Authorize the DHHS - Behavioral Health Director, or a designee thereof, to execute any and all subsequent amendments to the attached intergovernmental agreements with the DHCS, after review and approval by County Counsel, Risk Management and the County Administrative Office; and
4. Authorize the DHHS - Behavioral Health Director, or a designee thereof, to execute any and all subsequent agreements substantially similar to the attached intergovernmental agreements with the DHCS, and any amendments thereto, after review and approval by County Counsel, Risk Management and the County Administrative Office; and
5. Approve the attached fiscal year (FY) 2026-27 supplemental budget in the amount of $16,602,644 for DHHS - Behavioral Health (1170-424) and $792,178 for Substance Use Disorder (1180-425) (4/5 Vote Required); and
6. Direct the Clerk of the Board to provide the DHHS - Contract Unit with one certified electronic copy of the Board order related to this item.
Body
STRATEGIC PLAN:
The recommended actions support the following areas of the Board of Supervisors’ Strategic Plan:
Area of Focus: Core Services/Other
Strategic Plan Category: 9999 - Core Services/Other
DISCUSSION:
On June 22, 2023, the DHCS issued Behavioral Health Information Notice No. 23-026 for the purpose of notifying Mental Health Plans, Drug Medi-Cal Organized Delivery System counties and Drug Medi-Cal counties of changes to DHCS policies and procedures related to behavioral health intergovernmental transfers. Specifically, Behavioral Health Information Notice No. 23-026 discussed DHCS’ responsibilities for implementing behavioral health payment reform related to the California Advancing and Innovating Medi-Cal Act (CalAIM). In accordance with CalAIM, DHCS designed, and implemented, a new intergovernmental transfer-based payment methodology, which became effective on July 1, 2023.
CalAIM behavioral health payment reform and the intergovernmental transfer process required the Humboldt County DHHS - Behavioral Health to transfer funds to DHCS, as the Medicaid Single State Agency, in order to cover the County of Humboldt’s portion of the nonfederal share of Medicaid payments for Medi-Cal covered behavioral health services, on a monthly basis. On Oct. 17, 2023 the County of Humboldt entered into two separate, but functionally similar, intergovernmental agreements with DHCS regarding Specialty Mental Health Services and Drug Medi-Cal Organized Delivery System in order to meet the requirements set forth in Behavioral Health Information Notice No. 23-026.
DHCS made available two methods for transferring funds, including: via routine manual transfers made using a check or Electronic Funds Transfer; or via DHHS - Behavioral Health authorizing the California State Controller’s Office to withhold a fixed percentage of funding allocated to DHHS - Behavioral Health from one or more of the following three state funds: 1991 Realignment, 2011 Behavioral Health Realignment and/or Mental Health Services Act. After discussions between DHHS - Behavioral Health, the Humboldt County Administrative Office and the Humboldt County Auditor-Controller’s office, there was consensus on recommending that the County of Humboldt use the second method of transfer involving automatic withholdings each month. This method was recommended as it was more efficient when it comes to minimizing administrative burden and procedural complexity. However, as set forth in the previous intergovernmental agreements, the County of Humboldt could modify withholding percentages, make additional manual transfers, or change between the transfer methods during the contract year through an amendment. As such, DHHS - Behavioral Health had the ability to adapt to unforeseen circumstances should any arise.
On April 30, 2026 the Local Governmental Financing Division of DHCS notified counties that the intergovernmental transfer withhold option would be discontinued effective May 30, 2026. This change occurred due to the expiration of the interagency agreement between DHCS and the California State Controller’s Office, which currently authorizes the California State Controller’s Office to process county withholds. As a result, withholds will no longer be available as a funding mechanism.
The April 2026 withhold amounts will serve as the last withhold processed under the previous intergovernmental agreements with DHCS. DHCS will no longer withhold county realignment or Mental Health Service Act funds for intergovernmental transfer purposes beginning in May 2026 and moving forward. Counties will be required to enter into new intergovernmental transfer agreements for the manual intergovernmental transfer process.
Counties must send DHCS intergovernmental transfers through wire transfer, electronic funds transfer or via physical check. Monthly intergovernmental transfers are necessary, unless a county has sufficient funds in their County Fund Account. A county can make additional deposits if the county anticipates the need for a higher County Fund Account balance to support claiming.
It is important that counties transfer an amount of money to DHCS that is sufficient to cover the county share of all approved service payments as those service claims are approved, to avoid delays. As such, DHCS recommends that each county maintain a balance within each County Fund Account set up by DHCS that is greater than or equal to 300% of the average monthly county share of all service payments from the prior State FY. It is worth noting that funds transferred to DHCS via the intergovernmental transfer process will accrue interest, and any earned interest will be allocated back to each delivery system on a quarterly basis using methodology outlined in Behavioral Health Information Notice No. 23-026.
To assist counties with tracking their balance on deposit with DHCS, including any earned interest, DHCS will post a County Fund Account Report for the Specialty Mental Health Services Program and the Drug Medi-Cal Organized Delivery System to the DHCS portal by the 15th day of each month. Counties may file an appeal with DHCS if there are any disagreements with what is outlined on the monthly County Fund Account Report. DHHS - Behavioral Health will coordinate with the Humboldt County Auditor-Controller’s Office to ensure a seamless transition from automatic DHCS withholding to monthly transfers to the County Fund Account.
The attached intergovernmental agreements with DHCS will allow DHHS - Behavioral Health to manually transfer public funds to DHCS in accordance with any and all applicable CalAIM behavioral health payment reform requirements as part of the new intergovernmental transfer process. It should be noted that the attached intergovernmental agreements with DHCS come to the Board after the start date thereof due to the DHCS terminating the current agreements that allowed the withhold option and providing new retroactive agreements that allow for manual transfers only.
Accordingly, DHHS - Behavioral Health recommends that the Board approve, and authorize the DHHS - Behavioral Health Director, or a designee thereof, to execute the attached intergovernmental agreements with DHCS regarding the transfer of certain public funds for the period of July 1, 2023 through Dec. 31, 2026. It is also recommended that the Board authorize the DHHS - Behavioral Health Director, or a designee thereof, to execute any subsequent amendments, and other intergovernmental agreements that are substantially similar to the attached intergovernmental agreements with DHCS, after review and approval by County Counsel, Risk Management, and the County Administrative Office, in order to avoid any unnecessary delays in the transfer of Specialty Mental Health Service and Drug Medi-Cal Organized Delivery System funds.
SOURCE OF FUNDING:
Behavioral Health Fund (1170-424; 1180-425)
FINANCIAL IMPACT:
|
Expenditures (1170-424) |
FY 25-26 Adopted |
FY 26-27 Adopted |
FY 27-28 Projected* |
|
Budgeted Expenses |
$15,981,755.00 |
$16,602,644.00 |
$16,981,392.00 |
|
Total Expenditures |
$15,981,755.00 |
$16,602,644.00 |
$16,981,392.00 |
|
Funding Sources (1170-424) |
FY25-26 Adopted |
FY 26-27 Adopted |
FY 27-28 Projected* |
|
State/Federal Funds |
$15,981,755.00 |
$16,602,644.00 |
$16,981,392.00 |
|
Total Funding Sources |
$15,981,755.00 |
$16,602,644.00 |
$16,981,392.00 |
*Projected amounts are estimates and are subject to change.
|
Expenditures (1180-425) |
FY 25-26 Adopted |
FY 26-27 Adopted |
FY 27-28 Projected* |
|
Budgeted Expenses |
$792,178.00 |
$792,178.00 |
$792,178.00 |
|
Total Expenditures |
$792,178.00 |
$792,178.00 |
$792,178.00 |
|
Funding Sources (1180-425) |
FY 25-26 Adopted |
FY 26-27 Adopted |
FY 27-28 Projected* |
|
State/Federal Funds |
$792,178.00 |
$792,178.00 |
$792,178.00 |
|
Total Funding Sources |
$792,178.00 |
$792,178.00 |
$792,178.00 |
*Projected amounts are estimates and are subject to change.
The transition to manual transfer of funds as part of the intergovernmental transfer process has not been reflected in the approved FY 2026-2027 budgets for DHHS - Behavioral Health budget units 1170-424 and 1180-425. The attached supplemental budget increases the appropriation to DHHS - Behavioral Health budget unit 1170-424 by $16,602,644 to facilitate the transfer of funds to County Fund Account for the Specialty Mental Health Services Program and increases the appropriation to Substance Use Disorder budget unit 1180-425 by $792,178 to facilitate the transfer of funds to the County Fund Account for the Drug Medi-Cal Organized Delivery System. Offsetting revenues include State Drug Medi-Cal funds in the amount of $255,140, Federal Drug Medi-Cal funds in the amount of $1,445,790 and Patient Revenue funds in the amount of $132,394.
STAFFING IMPACT:
Approval of the attached intergovernmental agreements with DHCS will not impact current staffing levels.
OTHER AGENCY INVOLVEMENT:
None
ALTERNATIVES TO STAFF RECOMMENDATIONS:
The Board may choose not to approve the attached intergovernmental agreements with DHCS, and related supplemental budget, regarding the transfer of certain public funds for the period of July 1, 2023 through Dec. 31, 2026. However, this alternative is not recommended because it might negatively impact DHHS - Behavioral Health’s Medi-Cal provider status, the existing network of care and the funding associated therewith.
ATTACHMENTS:
1. Intergovernmental Agreement with the DHCS Regarding the Transfer of Public Funds (Drug Medi-Cal Organized Delivery System)
2. Intergovernmental Agreement with the DHCS Regarding the Transfer of Public Funds (Specialty Mental Health Services Program)
3. FY 2026-27 Supplemental Budget Unit 117-424 and 1180-825
PREVIOUS ACTION/REFERRAL:
Meeting of: 10/17/2023
File No.: 23-1300