The RFP may be canceled, but the underlying problems remain, and providers are still operating in uncertainty. The path forward doesn’t require starting over, it requires using the tools already available to strengthen consistency, reduce disruption, and protect the provider network that delivers care every day. What matters now is moving from debate to practical action that stabilizes the system and keeps the focus on access, continuity, and the people who rely on these services. Pull Up Your Chair & Let’s Start the Conversation.
Redesign
After the RFP: Practical Steps to Strengthen Michigan’s Behavioral Health System
The cancellation of the behavioral health redesign RFP did not resolve the problems that drove the state to pursue reform. Access remains uneven. Standards vary by region. Administrative burden continues to pull resources away from care. Conflicts of interest persist where funders also provide services. Workforce instability has not improved, and in a story about OCHN being unable to handle crisis services below, the PIHPs and CMHSPs are still threatening to take a way services providers have been performing for decades. The question in front of the state is no longer whether change is needed, but how to move forward in a way that improves the system without creating more disruption.
In an industry that demands certainty, providers continue to operate in an environment of uncertainty. While MDHHS determines its next steps, speculation continues about what will happen next, ranging from a new RFP, to one-year contract extensions, to legislative action. At the same time, the political calendar is accelerating. The Governor will release her budget on February 11 and deliver her State of the State on February 25, 2026, in her final year in office, during a highly divisive legislative session with limited capacity for large-scale structural changes. That context is important to whatever happens next.
What we do know is that we don’t have to accept the status quo and we do not need to start over in the absence of the “redesign” RFP. Many improvements can be made using existing authority, contracts, policy guidance, and the FY27 budget process. This starts be enforcing existing laws and regulations, such as uniform statewide credentialing from Public Act 282 of 2020. Given OCHNs recent actions over Common Ground, the Department should have more oversight over the PIHP/CMHSPS and other safeguards should be set in place to reduce conflicts of interest by setting guardrails on funders’ direct service roles. At the same time, we should be having conversations on how to simplify administrative requirements; and strengthen accountability and transparency.
The FY27 budget provides a near-term opportunity to reinforce these priorities. Targeted boilerplate, reporting requirements, and funding conditions can support provider stability, improve data transparency, and ensure public dollars reach direct services as intended. Executive leadership can align MDHHS, set clear expectations for statewide consistency, and document guardrails that carry forward beyond this administration. Where legislative changes are necessary, they should be focused, provider-informed, and tied directly to access, quality, and stewardship of public funds.
Michigan’s behavioral health system demands clarity, consistency, and collaboration. A system that works requires shared rules, fair contracting, and accountability that flows in all directions. There is a practical path forward that strengthens oversight, reduces friction, and protects the provider network that delivers care every day. The next phase should be measured by outcomes, not process or politics. It time we focus on the people we serve.
Read more,
Michigan cancels bidding for billions in Medicaid mental health services after court ruling, Crain’s Detroit Business
Michigan mental health service shift blocked by Court of Claims, Watershed Voice
OUTSTANDING MDDHS LITIGATION WITH PIHPS
While the Court of Claims issued their judgement in one lawsuit brought by the PIHPs, one more remains, NorthCare Network, Northern Michigan Regional Entity, and Region 10 v. the State of Michigan (24-000198). The dispute centers on funding for the Substance Use Disorder Health Home (SUDHH) program and the terms of the FY25 Medicaid contract. The PIHPs argue that certain contract provisions exceed statutory and federal authority, while the state maintains that execution of the contract is necessary to administer the program. In addition the PIHPs did not sign their contracts. That case remains active, and the underlying legal questions are still unresolved.
PIHP UPDATE
OCHN Puts Oakland County’s Safety Net at Risk
One week after Oakland Community Health Network abruptly assumed full responsibility for adult crisis services once provided by Common Ground for decades, new developments raise serious questions about whether OCHN was prepared to take over a critical piece of the county’s safety net and what they are doing to maintain the adequacy of the provider safety net. Despite public assurances that adult crisis services at the Resource and Crisis Center (RCC) remain operational, OCHN issued a written notice to law enforcement, last week (see below), requesting that law enforcement immediately stop bringing people in crisis to the RCC and instead transport them to already overburdened emergency departments, calling the diversion “temporary” while the transition continues
OCHNs request directly underscores the haste with which OCHN moved to displace a longtime nonprofit provider with deep clinical expertise, established workflows, and trusted relationships across law enforcement, courts, and hospitals. The result is a system scrambling in real time, shifting responsibility onto emergency rooms that are ill-equipped to absorb behavioral health crises, while patients, first responders, and hospitals bear the consequences of a transition that appears driven more by administrative fiat than operational readiness.
For decades, Michigan’s provider community has worked deliberately to reduce unnecessary emergency room utilization by building specialized, community-based crisis systems designed to meet people where they are.
This situation highlights a troubling pattern in which PIHPs and CMHSPs are asserting expanded control over direct services by selectively interpreting laws and regulations to suit their own interests, with little transparency or accountability, rather than investing in and stabilizing the provider networks that have delivered care for decades.
When funders become competitors, the result is system disruption, workforce instability, and increased risk to people in crisis. That is one of the reasons why the current system needs to change.
Read more from other regions,
CONGRESSIONAL UPDATE
Last week, Congress passed a package of funding bills to allocate resources to health agencies that fund mental health and substance use programs.
Today, we are writing to summarize the results of your continued advocacy for federal mental health resources and for better access to mental health care. Many mental health and substance use programs were funded at the same level as last year, or with a slight increase.
For FY 2026 federal funding:
The Substance Abuse and Mental Health Services Administration (SAMHSA) received roughly level funding, with the community mental health block grant receiving a slight increase of $5 million. SAMHSA remained a separate agency in the bill and was not merged into a larger one.
The National Institute of Mental Health also had a slight increase, and the Centers for Disease Control’s Injury Center was level-funded, with continued funding for opioid overdose and suicide prevention programs.
The package of legislation also included a major win for people seeking mental health care: the REAL Health Providers Act. The REAL Health Providers Act includes three key protections that will help people access mental health care when they need it:
Mandatory 90-day provider verification: Medicare Advantage plans must verify and update provider directory information every 90 days. Providers who cannot be verified must be clearly flagged or removed, helping end the frustrating experience of calling long lists of unavailable clinicians.
Cost-sharing protections for enrollees: When inaccurate directory information leads a patient to see an out-of-network provider, the plan, not the patient, will bear the cost. Enrollees will only be responsible for in-network cost-sharing.
Targeted oversight of behavioral health networks: Given the historically high inaccuracy rates in behavioral health provider listings, the law authorizes CMS to conduct specialized audits and publish public “accuracy scores,” increasing transparency and accountability. (Source: Mental Health America)
You can read the report language here. The National Council for Mental Well Being put together this chart comparing this years numbers with last years.
ICYMI
WORKFORCE
New OU program aims to fill need for social workers, Oakland Press
INVESTIGATIONS
LEADERSHIP
Honoring beloved activist Ismael Ahmed (Former MDHHS Director),Bridge Magazine
SUD
HHS Secretary Kennedy announced a $10 million Assisted Outpatient Treatment (AOT) grant program in alignment with the administration’s July 2025 executive order Ending Crime and Disorder on America’s Streets. Grant eligibility is limited to, “States, counties, cities, mental health systems (including state mental health authorities), mental health courts, or any other entity with authority under the law of the state in which the applicant grantee is located to implement, monitor, and oversee AOT programs.” (Source: National Council for Mental Well Being)
UPDATES FROM OTHER ADVOCACY GROUPS: Direct Care Wage Coalition
The Direct Care Worker (DCW) Wage Coalition is urging Michigan leaders to pair wage commitments with the administrative fixes needed to make them real for workers and families. While the state has pledged to strengthen DCW pay, FY26 exposed serious implementation failures, funding did not consistently reach providers, wages stalled, and workforce instability deepened. For FY27, the Coalition’s agenda focuses on protecting existing wages, advancing toward a $22/hour benchmark, enforcing wage pass-through accountability, and replacing expiring ARPA dollars with sustainable General Fund support. Equally critical, the Coalition is calling for administrative efficiencies that reduce unnecessary burden on providers and workers, including uniform statewide contracting standards and the consolidation of overlapping Medicaid funding streams for community living supports and home help. Together, these reforms would stabilize the workforce, improve recruitment and retention, and ensure that Michigan’s commitments to people with disabilities and the workers who support them are honored in practice, not just on paper.
MDHHS Updates
MDHHS requests letters of interest from organizations interested
in developing Recovery Community Centers by March 1
Grants up to $75,000 available to help launch peer-led recovery support in high-need communities
The Michigan Department of Health and Human Services (MDHHS) is requesting letters of interest from organizations interested in grant funding to develop Recovery Community Centers (RCCs) and Recovery Community Organizations (RCOs). The grants, funded through the State of Michigan Opioid Healing and Recovery Fund, are intended to help organizations cover start-up and early operational costs, including peer and administrative staffing, staffing training, facility lease and utilities, licensing and other necessary fees related to small business set up.
RCCs and RCOs help strengthen local recovery systems by offering peer-based advocacy and connections to services. RCCs typically provide a physical, welcoming space for recovery-focused activities. RCOs are independent, nonprofit entities led and governed by local recovery community representatives and may provide peer-based recovery support, community education and outreach and recovery-focused advocacy. Special consideration will be given to applicants that can implement services within three months of award notice and can demonstrate the ability to serve high-need areas and populations. Maximum grant funding available per applicant is $75,000. The grant period is Wednesday, April 1, 2026, through Wednesday, Sept. 30, 2026. The Deadline to submit letter of interest to [email protected], March 1, 2026 For more information and instructions, visit the Opioid Settlement Spending website to review the letter of interest documentation.
Michigan is slated to receive more than $1.8 billion from national opioid settlements by 2040, with half being distributed to the State of Michigan Opioid Healing and Recovery Fund and the other half being distributed directly to county, city and township governments across the state. For more information about SUD resources, visit Michigan.gov/SUD. Source:Letters of intent for RCOs NR.pdf.
Youth Treatment Provider Sues MDHHS Over St. Clair Facility Contract Termination
A Nevada-based youth services provider has sued the Michigan Department of Health and Human Services, alleging the state breached its contract after directing and approving an expansion of bed space at the St. Clair Youth Treatment Center, then abruptly backing out. Right of Passage claims MDHHS induced it to invest in licensing, staffing, and program expansion, only to terminate the agreement days after final approval and redirect youth to another provider. The lawsuit alleges breach of contract and related claims, including that MDHHS later copied the organization’s proprietary program materials after taking over the facility, leaving dozens of newly hired staff without jobs. (Source MIRS)
Partner Updates
If you are a nonprofit behavioral health provider in Michigan, and not a member of the MI Care Council, MI Behavioral Health & Wellness Collaborative, or the Michigan Association of Substance Addiction Providers, or just interested in collaboration, please contact [email protected], for more information on the value of membership. If you know of someone who might find this content, please share this link to the newsletter.
Disclaimer: This newsletter is intended for informational purposes only. Sources have been cited where applicable, and while some content may have been drafted with the assistance of AI, all material has been reviewed and edited by humans. We strive for accuracy, but if you believe something is incorrect or misrepresented, please reach out via direct message so we can review and correct the record if necessary.
