This week’s edition tracks how federal policy shifts, especially the OBBBA (H.R. 1) and proposed FY26 budget cuts, are expected to impact behavioral health funding and Medicaid infrastructure. At the state level, MDHHS outlined its plan to consolidate PIHPs into three regions by 2027, prompting further debate about the rationale and stakeholder input behind the redesign. Meanwhile, opponents to the redesign issued a FOIA for documents to look into the state’s decision to redesign the system of care and for surveys the MDHHS sought to redesign the system. Pull Up Your Chair & Let’s Start the Conversation.

OBBBA Update

Slotkin Briefing on H.R.1 and Michigan Nonprofit Leaders

Please join U.S. Senator Elissa Slotkin for a Zoom meeting to address President Trump’s ‘Big Beautiful Bill,’ and its impacts in our local communities. The virtual meeting will be held on Tuesday, July 22 at 10:15AM EST and is open exclusively to nonprofit leaders in Michigan to engage directly with one of our U.S. Senators. Register here.

OBBBA Amendment on Medicaid Introduced

According to the National Council for Mental Wellbeing. Sen. Josh Hawley, R-Mo., introduced legislation that would repeal some of the Medicaid funding reductions included in the OBBBA. Specifically, the Protect Medicaid and Rural Hospitals Act would repeal provider tax and state directed payment provisions within the OBBBA. Hawley’s proposed legislation would also double funding for the Rural Health Transformation Fund, established as part of the OBBBA, from $50 billion to $100 billion and extend the lifespan of the fund from five years to 10. Hawley Aims to Roll Back Medicaid Cuts He Voted for Just Two Weeks Ago, New York Times

A Closer Look

Medicaid Updates

FY26 Budget Cuts Could Undermine Mental Health Progress, Why Advocacy Still Matters

House Republican leadership appeared ready to delay consideration of the FY26 Labor, Health and Human Services, Education and Related Agencies (L-HHS) Appropriations Act until the fall, likely after August recess (Politico Pro subscription required) according to Subcommittee Chair Rep. Robert Aderholt, R-Ala. The President’s FY26 budget proposal would reduce discretionary funding for HHS from $127 billion to $94.7 billion and restructure key agencies, including folding SAMHSA into a new Administration for a Healthy America. Several critical programs are proposed for elimination—Mental Health Awareness Training, Primary and Behavioral Health Care Integration, Comprehensive Opioid Recovery Centers, and others, at the same time demand for care is growing.

The proposed Behavioral Health Innovation Block Grant would consolidate existing funding streams but represents a $500 million reduction compared to FY25. While funding for CCBHCs remains intact, the broader landscape points to significant losses unless action is taken. Charles Ingoglia, CEO of the National Council for Mental Wellbeing, calls on advocates to act now and urge lawmakers to protect this funding. Source National Council for Mental Wellbeing.

Dive Deeper

MDHHS Redesign Update

MDHHS Outlines Plan to Consolidate PIHP System into Three Regions by 2026
The Michigan Department of Health and Human Services (MDHHS) unveiled more details of its proposed procurement strategy to redesign the state’s specialty behavioral health system last week. Under the plan, the current ten Prepaid Inpatient Health Plan (PIHP) regions would be consolidated into three larger regions through a competitive bidding process. MDHHS expects to release the request for proposals (RFP) in summer 2025, with contracts awarded in winter 2026 and implementation slated for October 2026.

Key changes include a shift to a payor-only model, requiring all selected contractors to operate independently from service providers and focus exclusively on managed care functions. Only nonprofit organizations will be eligible to bid, and proposals must demonstrate independent governance with meaningful consumer representation. MDHHS will standardize practices statewide, including rate-setting, care coordination, and quality oversight, to promote equity, transparency, and accountability across the system.

To ensure a smooth transition, MDHHS will offer technical assistance, engage stakeholders throughout the process, and establish monitoring protocols post-implementation. The Department’s goals are clear: streamline oversight, reduce administrative duplication, and improve consistency in how behavioral health care is delivered to Michigan’s Medicaid population.

CMHA FOIA’d the 2,624 Survey Responses to MDHHS Survey on the Redesign

According to a July email from the Community Mental Health Association of Michigan (CMHAM), the organization has received 2,624 raw survey responses from the MDHHS following a Freedom of Information Act (FOIA) request. The responses stem from a statewide survey related to MDHHS’s behavioral health procurement process, found here. In the email, the CMHAM confirmed that it now possesses all reform survey responses via FOIA.

In an initial review of several hundred responses, CMHAM identified recurring concerns related to workforce shortages, high caseloads, and funding limitations impacting recruitment, retention, and service duration. Respondents also cited administrative burdens, limited access to inpatient psychiatric care and long-term residential options for youth, and inconsistent provider contracts. Additional issues raised included confusion around PIHP roles and challenges accessing behavioral health services managed by Medicaid Health Plans. CMHAM stated it will share a full analysis of the responses with members and stakeholders upon completion.

Earlier this month the CMHAM sent a FOIA request to the MDHHS asking for documents that show the federal government (specifically, the Centers for Medicare and Medicaid Services or CMS) told Michigan to stop using public agencies (PIHPs) in no-bid contracts to manage Medicaid behavioral health services. MDHHS responded by saying: They looked and don’t have any documents showing that CMS required them to stop the current sole-source contracting process (where only public PIHPs get the contracts without a competitive bid). According to the CMHAM email, MDHHS also confirmed: “CMS has not required that we change or halt our sole source process.”

In making these FOIA requests, those opposing the states efforts to create a better system are trying to create doubt among legislators in the reasons why the MDHHS is working to redesign a system that is more accountable and efficient.  By requesting documents that would show whether CMS required Michigan to change or halt its sole-source contracting with PIHPs, and in evaluating survey responses CMHAM could try to make the argument that the MDHHS lacks the justification for the rebid or questions its legitimacy, which those wanting to maintain the status quo could use to influence legislative and public opinion.

By requesting all responses to MDHHS’s procurement-related survey, the CMHAM conducted its own analysis of stakeholder feedback. By gaining access to the full set of responses, CMHAM can surface concerns that support its advocacy position (e.g., workforce strain, administrative burden, limited access to care), and potentially question whether stakeholder input truly supports the system redesign being pursued by the state. In short, those opposing reform are using FOIA as a tactical transparency tool, to contest the narrative that the rebid is federally required, and to arm itself with data that may bolster its case for retaining the current public PIHP structure.

In related news

ICYMI

CCBHC

Head Start

Foster Care

MDHHS Updates

The following proposed policy has been issued for public comment by the MDHHS:

Proposed Medicaid policies may be accessed here on the MDHHS website. Comments on both proposed policies are due August 22, 2025 and should be forwarded to Dana Moore at [email protected].